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Hi everyone. Just wanted to say that I've really enjoyed this thread. As a newcomer to futures trading, I was hoping to incorporate tape reading into my trading.
I don't mean to speak for bloom, but if you are referring to NinjaTrader - and if my memory serves - you just right-click in the window and set the colors from the properties menu.
Bloom has two T&Ss in his/her setup; the NT's in-built T&S and the commercial Tape product of Jigsawtrading.
This is my setting for the NT T&S and as shown in this video. Note that you need to Right-click on the T&S window, just as Mike mentioned in his post #286 above.
1. What to do if I see professionals are buying , and I bought too.But the price didn't go up for that day... Should I hold the position overnight in hope that it will go up tomorrow or some other day?
In my case, I saw "Repeated buying" as mentioned by Bloom in an earlier post(post # 206), but price ended within a range. No upside breakout for that day...Support was not broken too. Should I hold it for next day?
2. Shall I hold it as long as selling is not seen ??
I wish this thread existed a few years ago because a few years ago this was my EXACT way of trading.
I traded this way day-in and day-out for almost a year; 16 hours a day and i've pretty much seen everything.
To make a long story short, this "futures data" is not a holy grail, and I will get into it later.
Pretty much you can use any DOM that is thin, meaning there aren't thousands of contracts on either side of the DOM. I posted a picture of the ES (which you can't use this method on) but what you are pretty much looking at is a large difference between the bid/ask values.
Take a look at the pic. Do you see the 6000 lot bid at 1347.25. This value stands out because its more than double than any other value on the DOM. So does this mean you should go long at 1347.25? No.
What you need to do next is make sure this large bid isn't pulled from the market, the only way to do this is to watch the tape. What you are looking for are a large 1347.25 sells. Why sells? because the market will tick down and these buys will look like sells because bots and algo robots will hedge with the 500 stock tickers and that order will have to be filled. So even though it looks like large selling, because that large DOM bid appeared this means somebody big is buying? So after seeing about 3000 sells at 1347.25 fill, does it mean to go long at 1347.25? No.
The reason is because you have no idea if that was someone buying to go long, hedging, or buying to cover his short.
What I used to do is wait until there was a breakout up or down, and if there were any large bid/asks going towards the direction of the breakout, I would join the bid/ask on the DOM and use a very tight stop and usually the trade worked out. The reason why I only did it during a breakout is because there is a very good chance that if there is a breakout up, and a large bid appears, it most likely will be a buy order. I highly doubt that during a breakout north, a large trader would put a large bid to cover his short losing position.
So are you going to make money if you wait for a breakout to occur and if you find a large bid/ask on the DOM and join at the price, will you make bazillions? No because in my experience there are large bid/asks during almost all breakouts whether they are fake or real.
The only way in my opinion on how you can profit is to wait for anticipation of a large breakout on a large timeframe and enter with a tight stop (<5 pips) and set a TP of 100 pips and just walk away from the computer. And I do mean walk away. What you will find is that many 15-20% of all your trades will actually work out and this will be a profitable way to trade. However the problem with trading like this is that its rare to get a good breakout setup, so you can trade like this but you would have to be very very patient. Probably about 1 or 2 trades a week on some pair like the 6E. However due to the human psychology most will never trade this way profitably. Why? Suppose you took 5 trades, all were losers, and finally you get a good trade that nets you 25 pips, scared of losing this profit you will most likely close the trade at +25 and you are at breakeven for the entire month. Then you will be banging your head against the wall because that trade ended up going +200 pips.
Another way to trade using this information is to simply learn some basic technical and use it in conjunction with the available DOM data. For example, say that price is on some minor support and at that exact price there is a large bid, you can use that info as confirmation and get in the trade. But trading like this is not good for a few reasons. One of them is that in my experience its rare to find a confirmation of a trade on both the chart and DOM. You will end up waiting 16 hours a day just to take 1 trade, that isn't guaranteed to work in the first place. So if you are a patient person, then by all means trade like this, most likely you will filter out many losing trades by using the DOM info. But like I said before you will need to stare at this DOM all day just for one trade. Another reason why trading like this isn't good is because most large players or hedge funds or banks they don't just put out a bid to enter a trade at a certain level? Why, because if you are a technical trader, you will never enter using limit orders because a particular support/resistance area on a chart might not hold and it would be like jumping infront of a moving train. So what you can do is just wait for price to reach an area, let support hold and when support is clearly holding then look for some bids that you can join. So basically let price visit the area at least once and then look for any bids/asks.
Now many of you will ask why I started looking at this information to trade? The answer is simply because if there is some dude who is trading 6E at $1250/pip, then he most know what he is doing and I should just following his trades. Makes sense doesn't it?
There are also many games that are placed on the DOM. I noticed that from time to time large bid/asks will appear on both sides on the DOM that will never filled, they will just keep getting pulled. They do this so you can't tell whether they are buying or selling.
Other times there will be flash bids/asks at a certain price. Basically there might be no contracts to buy at a certain price but whenever price attemps to break that area, there are hundreds of contracts at a size of 1 that end up being traded. So basically its some ultra fast bot that put a bid at 1 at a price, and when that fills it add another contract to buy. However this happens so fast that you might not notice, they do this because they know alot of traders look for large lot orders. So instead of filling a 100 lot order once, it gets filled 100 times each in literally a split second. If you watch the DOM and t&s long enough you will notice this practice.
If I remember anything else I will post it again in the thread but I don't want to be the bearer of bad news but I just don't find any of this info useful if you are a daytrader and someone who isn't patient. Primarely because it will be rare to find a trade that you would usually take on the chart, appear on the DOM. And even if a chart like that appears you have no guarantee that it will work out 100% and you have no idea when that large trader will take profit.
So if anyone can use any of the information that I posted useful and maybe improve, then I might go back and glance over trading this way.
By its late and I didn't proof read what I wrote so I appologize for any spelling/grammar mistakes.
