Newbie question on bidxask and delta - Traders Hideout | futures io social day trading
futures io futures trading


Newbie question on bidxask and delta
Updated: Views / Replies:859 / 7
Created: by IequalsS Attachments:0

Welcome to futures io.

(If you already have an account, login at the top of the page)

futures io is the largest futures trading community on the planet, with over 90,000 members. At futures io, our goal has always been and always will be to create a friendly, positive, forward-thinking community where members can openly share and discuss everything the world of trading has to offer. The community is one of the friendliest you will find on any subject, with members going out of their way to help others. Some of the primary differences between futures io and other trading sites revolve around the standards of our community. Those standards include a code of conduct for our members, as well as extremely high standards that govern which partners we do business with, and which products or services we recommend to our members.

At futures io, our focus is on quality education. No hype, gimmicks, or secret sauce. The truth is: trading is hard. To succeed, you need to surround yourself with the right support system, educational content, and trading mentors Ė all of which you can find on futures io, utilizing our social trading environment.

With futures io, you can find honest trading reviews on brokers, trading rooms, indicator packages, trading strategies, and much more. Our trading review process is highly moderated to ensure that only genuine users are allowed, so you donít need to worry about fake reviews.

We are fundamentally different than most other trading sites:
  • We are here to help. Just let us know what you need.
  • We work extremely hard to keep things positive in our community.
  • We do not tolerate rude behavior, trolling, or vendors advertising in posts.
  • We firmly believe in and encourage sharing. The holy grail is within you, we can help you find it.
  • We expect our members to participate and become a part of the community. Help yourself by helping others.

You'll need to register in order to view the content of the threads and start contributing to our community.  It's free and simple.

-- Big Mike, Site Administrator

Reply
 
Thread Tools Search this Thread
 

Newbie question on bidxask and delta

  #1 (permalink)
Elite Member
Washington DC
 
Futures Experience: None
Platform: Ninjatrader, IRT
Favorite Futures: ES
 
Posts: 95 since Feb 2016
Thanks: 82 given, 47 received

Newbie question on bidxask and delta

Can someone please explain a newbie question, I've got myself confused.
I need an explanation of what is happening at the bid price and the ask price and how that shows up as delta.
I'm I right, that sellers transactions happen at the bid and buyers transactions happen at the ask.

Follow up question is delta. If a candle has more transactions at the bid price (i.e. negative delta), then sellers were more aggressive.

Please explain like I'm five. Thank you all

Reply With Quote
The following user says Thank You to IequalsS for this post:
 
  #2 (permalink)
Quick Summary
Quick Summary Post

Quick Summary is created and edited by users like you... Add FAQ's, Links and other Relevant Information by clicking the edit button in the lower right hand corner of this message.

 
  #3 (permalink)
Elite Member
Chicago, IL
 
Futures Experience: None
Platform: NT8,NT7,TWS,FOREX.COM app
Broker/Data: InteractiveBrokers, NinjaTrader Brokerage FOREX.COM, IQFeed
Favorite Futures: The one I'm creating in the present....ES, ZF, ZN, ZB, FX pairs
 
Blash's Avatar
 
Posts: 1,560 since Nov 2011
Thanks: 4,527 given, 2,340 received
Forum Reputation: Legendary

Answer
This post has been selected as an answer to the original posters question Answer



IequalsS View Post
Can someone please explain a newbie question, I've got myself confused.
I need an explanation of what is happening at the bid price and the ask price and how that shows up as delta.
I'm I right, that sellers transactions happen at the bid and buyers transactions happen at the ask.

Follow up question is delta. If a candle has more transactions at the bid price (i.e. negative delta), then sellers were more aggressive.

Please explain like I'm five. Thank you all

Limit orders only pair with market orders. Buy limits stack up at each price below and at the current market, the best bid and then all the rest below it. Sell limits stack up at each price above and at the current market, the best ask (or also called "offer") and then the rest above it. So a buy limit order can only pair with a sell market order. And a sell limit order can only pair with a buy market order. Market orders in a general sense can be viewed as being more aggressive and limits in the same general sense can be viewed as more passive. But this is not always the case. Limits can be aggressive at times (ice bergs for example) and markets can be slightly passive at times (low volume perhaps). But it's safe to say generally this is how it is, market orders aggressive, limit orders passive.

So if we only have a bunch of limit orders stacked up above and below the current market price making the bids and offers, great, but price is not going to move, at all! So to have a healthy market, or market at all, there has to be people willing to hit into the bid or lift the offer. In other words someone to hit the market button (screen based trading). But by the same token we need the limits too. We need both. People willing to wait for a fill and others wanting to get filled right away. So if one guy wants to buy 10 contracts 2 ticks below the market he could place a buy limit order for 10 there. If the market made it's way down to him he has to have somebody (or a few) on the other side wanting to sell to him on a market order, hit his bid. If he does the trade happens and a 10 lot counts as a sell on the delta. Vice versa of course for buy delta. Sell limit placed above etc etc.......

The only way to make sense of this, truly, to the extent possible, is in the context of the current market. So if there is more negative delta and it's far from value, below lets say, there could very well be a higher probability it is selling exhaustion. Meaning the sellers dry up afterwards, get exhausted, no more sellers etc and price moves back toward value. So the trade was a long even though we saw a negative delta. We need to find the value on the chart (this is how I understand it many do things different) and trade it. Value is where the market trades the most, has the most volume for an area IMHO. ............ Peanut butter is $5 most of the time, lets say. But the store advertises it for $4. We don't sell it at $4. We buy it at $4. And then it goes back to $5. Some will sell it that don't understand value. And that's fine. We need those people to supply the profits.....lol.


Hope this makes some sense....I think my 8 year old would understand this.....but I can't be sure.....lol... would have to be repeated many times.....

Ron

It is an axiomatic fact that while you meditate you are speaking with your own spirit. In that state of mind you put certain questions to your spirit and the spirit answers: the light breaks forth and the reality is revealed.
The steed of this Valley is pain; and if there be no pain this journey will never end.
Buy Low And Sell High (read left to right or right to left....lol)
Reply With Quote
The following 4 users say Thank You to Blash for this post:
 
  #4 (permalink)
Elite Member
Buenos Aires Argentina
 
Futures Experience: Advanced
Platform: NT, MT4, Sierra
Favorite Futures: S&P, Bonds, Crude, FX
 
Posts: 250 since Sep 2014
Thanks: 37 given, 239 received

Answer
This post has been selected as an answer to the original posters question Answer

You're a condo developer, you have 500 condos to sell, and your advertised price is $100k per condo. I put in an offer at $99k. What happens? Nothing. Either you lower your price to the "bid" which is my 99k offer, or I raise my offer to $100k (the "ask). Until that happens, we just stare at each other all day.

While we're in this Mexican standoff, Blash comes in and offers you $98k per condo. What happens now? Still nothing.

Eventually, let's say you get bored, and decide to accept my offer at $99k. You've crossed the spread is the technical lingo here, and voila, one condo gets sold. Delta in this case notches a -1.

What happens next? Nothing, because the only offer to buy is still waiting at $98k. So if you want to sell another condo, you have to lower the price again to $98k, and then delta moves down again.

So yes, in this case, more transactions happened at the bid, the condo developer was less patient and wanted to transact immediately by accepting the bid price instead of waiting for someone to pay the asking price.

Reply With Quote
The following 4 users say Thank You to MacroNinja for this post:
 
  #5 (permalink)
Elite Member
Washington DC
 
Futures Experience: None
Platform: Ninjatrader, IRT
Favorite Futures: ES
 
Posts: 95 since Feb 2016
Thanks: 82 given, 47 received

Thanks both

You have cleared my confusion. @Blash, thanks for the thorough explanation, @MacroNinja thanks for the practical example

Don't think hard, Think clearly. - Me
You don't get smarter IN a trade - FT71
Ever wonder how Jon Snow trades?
Follow here. Vote for Jon Snow's King of the pits! here
Reply With Quote
The following 2 users say Thank You to IequalsS for this post:
 
  #6 (permalink)
Elite Member
Calgary, Alberta
 
Futures Experience: Intermediate
Platform: NinjaTrader 8
Broker/Data: Kinetick
Favorite Futures: ES
 
JonnyBoy's Avatar
 
Posts: 938 since Apr 2012
Thanks: 378 given, 1,837 received


MacroNinja View Post
Until that happens, we just stare at each other all day.

I don't know why but that just made me laugh pretty hard. :-)

Must be my warped sense of humour...great explanation by the way.

--------------------------------------------------------
- Trade what you see. Invest in what you believe -
--------------------------------------------------------
Reply With Quote
The following 2 users say Thank You to JonnyBoy for this post:
 
  #7 (permalink)
Elite Member
Paris France
 
Futures Experience: Beginner
Platform: TradingView
Broker/Data: CQG
Favorite Futures: ES1!, CL1!, DY1!
 
Pharmakon's Avatar
 
Posts: 45 since Jan 2016
Thanks: 115 given, 26 received

Your post is very understandable and helpful to me. Many thanks to you Ron.

So if I've understood well Delta is the sum of all market sell orders and all market buy orders ? Please correct me if I have not.


Regards,
P.

Reply With Quote
The following user says Thank You to Pharmakon for this post:
 
  #8 (permalink)
Elite Member
Chicago, IL
 
Futures Experience: None
Platform: NT8,NT7,TWS,FOREX.COM app
Broker/Data: InteractiveBrokers, NinjaTrader Brokerage FOREX.COM, IQFeed
Favorite Futures: The one I'm creating in the present....ES, ZF, ZN, ZB, FX pairs
 
Blash's Avatar
 
Posts: 1,560 since Nov 2011
Thanks: 4,527 given, 2,340 received
Forum Reputation: Legendary


Pharmakon View Post
Your post is very understandable and helpful to me. Many thanks to you Ron.



So if I've understood well Delta is the sum of all market sell orders and all market buy orders ? Please correct me if I have not.





Regards,

P.



You are very welcome my friend. I think you got it. I think of it as the market orders. The aggressive side of the trade. Even though it could not of happen with out the limit orders. The aggression side takes precedents and is what we see in the cumulative delta.

Ron

It is an axiomatic fact that while you meditate you are speaking with your own spirit. In that state of mind you put certain questions to your spirit and the spirit answers: the light breaks forth and the reality is revealed.
The steed of this Valley is pain; and if there be no pain this journey will never end.
Buy Low And Sell High (read left to right or right to left....lol)
Reply With Quote

Reply



futures io > > > Newbie question on bidxask and delta

Thread Tools Search this Thread
Search this Thread:

Advanced Search



Upcoming Webinars and Events (4:30PM ET unless noted)

Jigsaw Trading: TBA

Elite only

FuturesTrader71: TBA

Elite only

NinjaTrader: TBA

Jan 18

RandBots: TBA

Jan 23

GFF Brokers & CME Group: Futures & Bitcoin

Elite only

Adam Grimes: TBA

Elite only

Ran Aroussi: TBA

Elite only
     

Similar Threads
Thread Thread Starter Forum Replies Last Post
Newbie question about ATR Schopenbauer NinjaTrader 5 November 12th, 2014 03:14 PM
Another CrossBelow/Above question from newbie Al2010 NinjaTrader Programming 3 December 4th, 2010 08:15 PM
is there a BidXAsk indicator adaseb Traders Hideout 3 September 20th, 2010 06:02 AM
Newbie Question about Forex jra_020883 Beginners and Introductions 5 March 8th, 2010 07:05 PM
ZN Newbie question NMTrader Traders Hideout 8 July 19th, 2009 10:59 PM


All times are GMT -4. The time now is 09:29 AM.

Copyright © 2017 by futures io, s.a., Av Ricardo J. Alfaro, Century Tower, Panama, +507 833-9432, info@futures.io
All information is for educational use only and is not investment advice.
There is a substantial risk of loss in trading commodity futures, stocks, options and foreign exchange products. Past performance is not indicative of future results.
no new posts
Page generated 2017-12-14 in 0.15 seconds with 33 queries on phoenix via your IP 54.82.56.95