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Quite a strong statement there... And I beg to differ. With a statement like that, it sounds like you know with 100% certainly where the market is going by using volume and DOM? No guessing. Just 100% knowing. Unless, you have a 100% win rate, regardless of method, I think you are still guessing price direction. Some make better educated guesses than others, but everyone is still guessing.
I have several systems trading off weekly and even monthly bars. I couldn't care less about volume or the DOM. Also with most of my option trading, I don't pay attention to volume or DOM either.
Indicators, are just it. They indicate something. They don't dictate anything. IMHO, this is the difference many don't recognize.
Stopped using standard indicators years ago. They did not work for me.
There are some that can give you hints of what is to come but the accuracy is to poor, like flipping a coin.
In my opinion an indicator is a distraction of what really is important and you focus on wrong things. Also if indicator worked, why are there millions out there?
I use trendlines because they represent a combination of time and supp/res levels. You have to know how to draw them properly - the placement is crucial. I also look at delta volume per bar.
But the best indicator of all is psychology. How you feel.
If you trade based on volume how do you account for dark pools? They are not run across
the tape in a timely manner. Therefore you are not seeing all the volume.
Persistence! Nothing in the world can take the place of persistence.
Talent will not ... nothing is more common than unsuccessful men with talent.
Genius will not ... Unrewarded genius is almost a proverb.
Education will not ... The world is full of educated derelicts.
Persistence and determination alone are omnipotent! Calvin Coolidge
If the large orders don't affect me, and I'm not allowed to access them then why would I care at all about dark pools? Just another thing to worry about and can't do anything with.
I use cumulative delta and footprints...I'm guessing but would rather do it based on actual market transactions than squiggly lines.
Its not that strong...would you rather your guess based on market transactions? or squiggly lines. Feel free to try to argue about nothing, I won't participate. This is also a futures forum, not options...nobody cares.
Lastly, I don't have a 100% win rate....but only lose maybe 2 days a month. So I think I'm doing ok.
So much interest in "indicators" that I am prompted to make a distinction between two types. Internal analytics, and External events/analytics as predictors.
What we're talking about here is Prediction. Future price, based upon "signals" we get from our Indicators. ALL of my Indicators are highly customized; since "following what other traders do" is simply not, for me, how to Win in a niche which is highly specialized.
I trade 2 extremes, the Nasdaq NQ/MNQ pair; and the S&P ES/MES pair. They are vastly different, and their Internal Analytics can be determined with some very advanced approaches, in many cases. HOWEVER...
The above analytics, based upon DOM, or Time and Sales, and so on..... of which I do Many.... are INTERNAL analytics, taken from the symbol itself. And NQ versus MNQ will differ from each other; just as ES versus MES will differ. The Micro contracts are perhaps the "small fry", and the eMini sized contracts may be considered the "smarter money"... Those eMini versus Micro differences in Buy/Sell patterns, etc..... do present an issue for Prediction. Do we merge them, somehow? or do we pick one of them which seems to predict Price better?.... many choices.
BUT, to get to the point here; I recently noticed how there is generally a conflict between Internal and what I call EXTERNAL factors. Everyone knows that News Events are "external" influences on price movement; but what I noticed, and what was rather bizarre; is that BOTH ES and NQ appear "compelled" for some reason to follow the Dow; specifically the DJIA updates.
I asked myself, "Why would that be?" and really dug into the matter after setting up a feed of the DJIA into my Analytics Engine. What aspects of the DJIA updates, which occur roughly every 1 second or so; could I use to try and Predict where DJIA was going to move and, therefore, where my futures contract prices were going to move??? And could it be a Leading Predictive Indicator? Seemed unlikely....
But I dug "deeply" into the DJIA feed; and found that there were variations in inter-update latencies; plus there were differences in Index values which I might be able to use. The Faster the updates were (compared with the Average Stabilized Update rate) combined with the Deltas in the Index on successive updates turn out to be Predictive of future short term Price movements.
It's no good if it just "follows" but it needs to be a Leading (Predictive) Indicator to give my system time to anticipate the futures price moves...
Moral of the Story could be: Be creative, and think laterally about Indicators. Realize that even though the Internals may be predicting a turn of Trend; that Externalities, such as the DJIA could also be governing where they will move.....
CREATIVITY, and "thinking laterally" can sometimes surprisingly pay off; even though one may not exactly understand, at first, why this External linkage or Correlation appears to exist between the DJIA and these futures contracts I mentioned.
Prediction of the future is the only real value of any Indicator; and I fear many people may lose sight of that fact, perhaps.....?
Not for me. I use indicators to identify what is currently happening (ie price is going up down or sideways). I don't need indicators for that but it is nice to easily see it. I also use indicators to identify extremes (again don't need it but makes it easier and quick). The only prediction is that the longer timeframe wins over the shorter until it doesn't.
Example: price *is* going down for the last 24+ hours, also price *is* going up for the last couple hours. So I short the extremes until that situation changes.
also on an even longer timeframe price is going up (8 days) so being aware of that changes position size and risk management. If it had instead been going down for several days and the same shorter term situation then more size and and/or loose stops would be appropriate.
The large orders that you do not see are masking the true supply/demand picture. If you knew of large volume transactions occurring at certain levels
would it not affect your decision making process? With the Dark Pools we are not getting a true picture of the supply/demand situation in the market
which is what drives price in the first place!
Persistence! Nothing in the world can take the place of persistence.
Talent will not ... nothing is more common than unsuccessful men with talent.
Genius will not ... Unrewarded genius is almost a proverb.
Education will not ... The world is full of educated derelicts.
Persistence and determination alone are omnipotent! Calvin Coolidge
