I'm going to try to make this thread very similar to the "Tape is my shape (tape reading, time and sales)" created by bloom. Only difference being that this one will be for currencies mostly the 6E (eur-usd) unlike the other thread which was for ES.
I would like this thread to be a discussion where other traders can discuss and share ideas.
Please ONLY keep this thread regarding Currencies!!
You need to keep in mind there are a few differences between ES and 6E. Most of the volume in ES is from the futures market, while the 6E is opposite. It mostly follows the spot market price.
I been trading like this for over 2 years or so. Not much has changed in the past couple of years. I only use the futures data to filter trades pretty much.
I only use this when the big players are buying the Euro Dollar, when they are buying the crosses such as Eur/Jpy or Eur/GBP, I avoid and might focus on indices like DAX30 or metal like Gold.
In the other thread what was discussed alot was about "large bids/offers" and "large market orders hitting bids/offers". For example, there was a large 2000 offer, and some large buyer hit the offer using a 2000 lot market order. What that means is you have a large seller and large buyer.
On 6E is slightly different. You will typically see a large offer, and then spot price will advance and a bot will typically take out that large offer to avoid price deviation which can cause arbitration.
I know this is probably very confusing to understand but I will post photos and maybe some videos.
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This is one of the VERY EASIEST types of trading opportunies you can discover.
Very easy to see and very easy to confirm.
What do you see at 1.3020?
A large bid that stands out. THis is what you need to look out for.
You MUST confirm that this order fills, because sometimes it might get pulled from the DOM.
Confirming if it fills is VERY EASY, look at the T&S and make sure an order thats rougtly between 100-150 lots gets recorded when its hits the bid. It might not be one 150 lot order, it can be separted into smaller orders such as (1,1,1,2,3,5,6,25,25,75,2,5,1,2,1) and most will typically fill as roughtly the same time stamp.
ONLY take that long if price is on support! If this is the low of the day, don't go catching a falling knife, because 1.3020 might be where a large player is taking profit NOT opening a long position.
You basically need to use some basic technical analysis here.
SIMPLE? Yes however there is one problem.
This isnt 100% accurate. Sometimes large player are wrong, sometimes they use stops which are much much too large for most, and sometimes the trade just doesn't work. BUT it works very well at filtering trades.
Second problem is that, its RARE to see this setup. Most large bids/offers are hidden or executed in a different fashion, which I will get into later.
Ninjatrader is a GREAT platform because you can program your own indiciators to help you find these setups.
You should program a simple script that can alert you when there is a large difference on any of the DOM levels and get an audio alert.
This can EASILY be achieved using a simple code such as
What the code does is, it looks only in LEVEL 2 to LEVEL 5 of the DOM, Not the inner level and compares for a difference in bids and asks, if there is a difference which you get to set in "block" it alerts you.
This script needs work however because I get too many false alerts, but you get the general idea. You can also set it to only alert you when a DOM level is greater than a certain value rather than just calculate the difference.
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There is no tape in Spot Forex. And the 6E is such a tiny tiny part of the FX market and something that lags behind the moves in the OTC markets anyway.
There is no edge that you can gain by watching the DOM in 6E that you couldn't gain by simply watching the $EURUSD chart. As for the sub-second arbitrage opportunities you think you can beat the algos, trading at home in Ninjatrader?
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