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Why do you thiis about the second chart?
I use this chart a lot !
I use ir to find entries and to manage the tardes, looking when enter and when go out.
The first chart is for watching the levels , the trend etc...
As I said it's up to you to decide what's useful for your strategy. If it's useful to you that's all that matters.
The 2nd chart shows a simplified aggregated version of the DOM. I'd rather use the live DOM, so I can see when people are adding or pulling limit orders.
The first chart you posted was a volume profile, the second was a footprint. Both have potential merits - it comes down to a) the type of data displayed and b) the use it is put to.
Volume Profile and/or Market Profile help provide context - where has most volume and/or time been spent (Volume Profile focuses on the former, Market Profile on the latter). This helps determine key levels that, in future, market participants may have interest in engaging at. The profile provides an insight that is not possible to gain when just looking at price alone. It helps identify where the market recognizes value as being and it is possible to see whether the consensus on value is changing. For example, yesterday crude oil was demonstrating value between points x and y. Now, following release of the oil inventory report, the perceived value area has shifted up or down, depending on the interpretation of that report. A profile would not be a substitute for a DOM. It would facilitate trade planning, ahead of a trading session and perhaps for keeping an eye on relevant key levels, during the session. Some traders, as part of their morning routine, will transfer profile key levels to the notes column in their DOM, to facilitate focusing on one set of data. For example, they will mark up yesterday's open, close, high, low, point of control, value area high, value area low.
The footprint chart provides a record of executed trades that have occurred at the bid and ask. It helps to identify where there may have been an imbalance that's indicative of aggressive buying or selling. If such aggressive action has not been rewarded by a subsequent move of price in that direction, then the footprint can clue you into the idea that the move is potentially being rebuffed by passive buyers or sellers.
It is important to understand that the footprint and the DOM are not wholly interchangeable. As had already been said, the DOM provides a view on to the limit order book (i.e. resting orders that have not yet been executed - and which may or may not be turned into market orders). The DOM provides this view of the limit book in numerical form. Other tools - such as Bookmap or Jigsaw's Vista provide the same in graphical form.
The reason why some traders like to use the footprint is that it can be difficult to keep in your head what happened on the DOM over the course of a session. For example, the last time the market traded at this level (which may have been some time ago) how did market participants react? Your DOM may show a profile on the side that provides some insight into that history but it won't show it in such a granular form. In this sense, the footprint and the DOM can potentially be complementary. Some traders don't need such, as they have developed the ability to retain a mental map of market developments, over time - hence why they may just trade off of the DOM alone.
As a final contribution on this topic, I would just reiterate the advice to focus on understanding auctioning process conceptually first and then augment this with active, concentrated market observation. Only then can you make an informed decision as to which data points and which tools are most relevant to you. Asking others which type of chart you should use is comparable to asking a carpenter which tool you should use. This depends on the job at hand, the person's level of experience, the objective being aimed for and upon personal preference.
I think your second screen looks good. Some people prefer DOMS, some prefer the data laid out on a footprint charts. Personal taste. Your footprint chart shows the order book as well so that is everything (footprint for traded volume and the order book down the side of the screen from the DOM).
One advantage of the DOM is that it is narrow so a person can have a number of them, each for a different contract, all on one screen for watching correlations, or keeping an eye on the different products. A footprint chart takes up a lot of space by comparison, often a standard screen just to itself.
Also with a DOM price just goes up and down in real time, with a chart you have the problem of what time frame to choose (minutes, volume, point and figure size etc) which influences how the aggregated volume is displayed and can lead to a quest for "the perfect time frame" as at the end of the day one time frame would always have looked clearer for trade setups in retrospect than another, and the risk of focusing on charts patterns more than what the volume/orderflow is telling you. For example the footprint chart shows a double top so you decide to sell because of that despite the fact that volume is aggressively being traded in to the offer at that moment and the bid is well supported. The DOM is much more "in the now".
But at the end of the day, different people prefer different visual presentations of the same data. Choose the one that is clearest to you.
You do not win as a trader, you just get to play again the next day. If that game doesn’t appeal to you then you should not trade. Gary Norden
Yes, look up Tom Grady and Pete Davies. Plan on at least 1 year of study and daily screen time to "see" the inside behaviors between buyers and sellers. -namaskaram
