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Is DOM worth using if I only have access to best 5 bid and ask levels?


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Is DOM worth using if I only have access to best 5 bid and ask levels?

  #11 (permalink)
 
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 AllSeeker 
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bavan666 View Post
Sadly I think you're right, Indian markets are pretty underdeveloped in terms of data access, which is surprising considering it is one of the most heavily traded markets in the world, but recently truedata (a data vendor) has collaborated with Bookmap and rumors are that they plan to make level 2 data available to retailers in the next few months (which means it will be out in the next few years ) but still excited to become one of the early adopters whenever it comes around, sticking to footprint charts for now.

Hmm, again in my personal opinion, DOM is just one of the new trends in the "tools" market. It will also pass like many did, after having its honeymoon period.

What I'm trying to say there is, not to invest too much time and thought into it if its not easily available to us atm. When it is, sure, we will look into it.

Think of it like this, I feel average number of traders in US making money are probably not going to be far off from what we have in India, of course in % wise of whole. And I've no data to back this up, but just an overall observation on communities I'm part of. Assuming DOM being the new hot thing in the market, I would like to also assume that DOM is something which is used heavily in the US.

So, while it could be misrepresenting of some math, wrong assessment on correlations and wild assumptions on my part, but DOM probably hasn't brought any ground breaking new thing to traders arsenal, so no reason to lust after it.

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  #12 (permalink)
bavan666
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Jigsaw Trading View Post
HFT isn't quite what you think - the overwhelming majority is in equities markets, where they buy order flow to execute and then they have an information advantage. IMO Companies like this for example Virtu Financial are a decent longer term trade because they profit from volatility, their share prices shouldn't get hit so hard by a crash because that's where they (theoretically) make decent money.

The DOM has never been about the limit order levels, it's always been about 10% the levels and 90% what's trading at them. When you have consistent high volume (TT shows this with LTQ) and movement and a "cause" - that's what the DOM is used for.

Of course, you can see people bumping the market around but in Futures, I wouldn't worry much about "HFT Scalping Algos" - that's an equities game and even then it's somewhat illegal to trade the info you have. So an HFT can't see a bunch of buy orders come in and then just buy before executing them, but they could pull their sell orders. It's very complex but Futures does not give them the opportunities the stock markets do.

Plus DOM traders aren't there for a tick, they should be going for bigger prizes, following the trading with some other reason to enter a trade. At that point HFT becomes largely irrelevant. Looking at the DOM yesterday (note I am 12 hours ahead of Chicago so this was most of the morning...




In the middle of that, the DOM wouldn't have been much use to you because not much would - it was horrible action. Sure - you'd have found some opportunities bouncing up off the extremes with high volume traded but it's a game of catch the rabbit and likely you'd have found just as many losers with a pure DOM focus because yes there were peaks in volume, but very brief and you would end up jumping at shadows/looking for a trade when really the market was largely directionless.

That makes a lot of sense, thanks! I had one last question, as per my understanding, people generally use orderflow to look at the bid/ask imbalance to see if buyers are more aggressive or sellers are more aggressive.

So what exact advantage does the DOM provide over footprint charts? don't footprint charts also give you the same information (footprint charts show the active market orders while DOM shows the passive limit orders, so shouldn't footprints be more useful when it comes to trying to understand what kind of traders are currently dominating the market?)

And I've seen some traders that use both DOM and footprint together, so what need does the DOM fulfill that footprint doesn't and vice-versa?

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  #13 (permalink)
 
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AllSeeker View Post
Hmm, again in my personal opinion, DOM is just one of the new trends in the "tools" market. It will also pass like many did, after having its honeymoon period.

What I'm trying to say there is, not to invest too much time and thought into it if its not easily available to us atm. When it is, sure, we will look into it.

Think of it like this, I feel average number of traders in US making money are probably not going to be far off from what we have in India, of course in % wise of whole. And I've no data to back this up, but just an overall observation on communities I'm part of. Assuming DOM being the new hot thing in the market, I would like to also assume that DOM is something which is used heavily in the US.

So, while it could be misrepresenting of some math, wrong assessment on correlations and wild assumptions on my part, but DOM probably hasn't brought any ground breaking new thing to traders arsenal, so no reason to lust after it.

The DOM is the primary tool used by prop traders in real prop firms. It was invented to help floor traders move to screen trading.

https://blog.ampglobal.com/trading-legend-pit-trader-and-inventor-of-tt-dom-technology

TT Got the patent after many years in 2004. CTS DOM screens were visible all over the chicago floor if you ever got chance to see it.

So it's not by any means new tech, it is the preferred tool by proprietary trading firms that day trade.

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  #14 (permalink)
 tr8er 
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AllSeeker View Post
Hmm, again in my personal opinion, DOM is just one of the new trends in the "tools" market. It will also pass like many did, after having its honeymoon period.

What I'm trying to say there is, not to invest too much time and thought into it if its not easily available to us atm. When it is, sure, we will look into it.

Think of it like this, I feel average number of traders in US making money are probably not going to be far off from what we have in India, of course in % wise of whole. And I've no data to back this up, but just an overall observation on communities I'm part of. Assuming DOM being the new hot thing in the market, I would like to also assume that DOM is something which is used heavily in the US.

So, while it could be misrepresenting of some math, wrong assessment on correlations and wild assumptions on my part, but DOM probably hasn't brought any ground breaking new thing to traders arsenal, so no reason to lust after it.

No idea what you want to tell us??? As Pete already said, DOM is nothing new, I trade since 15+ years and always have used the DOM, I couldn't trade w/o a DOM.

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  #15 (permalink)
 
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bavan666 View Post
That makes a lot of sense, thanks! I had one last question, as per my understanding, people generally use orderflow to look at the bid/ask imbalance to see if buyers are more aggressive or sellers are more aggressive.

So what exact advantage does the DOM provide over footprint charts? don't footprint charts also give you the same information (footprint charts show the active market orders while DOM shows the passive limit orders, so shouldn't footprints be more useful when it comes to trying to understand what kind of traders are currently dominating the market?)

And I've seen some traders that use both DOM and footprint together, so what need does the DOM fulfill that footprint doesn't and vice-versa?

The DOM contains a number of components - but it's all about the right now - but it's not about looking for imbalances. Like for example - you will almost always see offers stacked at the high of the day - doesn't mean it'll hold, doesn't mean anything really.

It's about pace and volume trading right now.

Like for example if a move is under way and it's all 1's and 2's - there's no interest. If it's all 100's and 200's trading - that is of interests. So (for example) as price climbs and we are seeing good participation, then falls back with low numbers trading - you are safe in your long generally speaking. LTQ column in TTs DOM did that, Jigsaw invented the current trades columns that do it in a way that's more visible - because I couldn't read LTQ and I wanted more like a time & sales within the DOM.

The advantage over FP charts is you are seeing here and now - on the FP, it's very timeframe dependent. Let's say market moved up on strong volume on your 5 min FP, then started to fall back - it would be updating the same values and you'd need to have a trick memory to see that the values being updated are being updated by small amounts vs big amounts. The DOM doesn't have that issue - it's all about right now, and sticking with momentum moves.

Also - it's just a tool, like a chart - it isn't a methodology. Hence different people use it in different ways, the common misconception is that it's for scalpers only.

To a chartist, it is a challenge because it moves up and down (just like the market), whereas charts move left to right and up and down.But the left to right is an optical illusion created by mapping ovet time. It's not that charts are bad but I see prop traders with 30 DOMS and about 4 charts up and flipping between markets depending on where the flow is.

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  #16 (permalink)
 
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 AllSeeker 
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Jigsaw Trading View Post
The DOM is the primary tool used by prop traders in real prop firms. It was invented to help floor traders move to screen trading.

https://blog.ampglobal.com/trading-legend-pit-trader-and-inventor-of-tt-dom-technology

TT Got the patent after many years in 2004. CTS DOM screens were visible all over the chicago floor if you ever got chance to see it.

So it's not by any means new tech, it is the preferred tool by proprietary trading firms that day trade.

Informative article, thanks!

"New tech" there meant for Indian markets, its the buzz right now in the retail world. Just like Market profile was for last decade and order flow is for this. Again talking for Indian market only, don't know about US/EU.

Also, if you are wondering, there is nothing called DOM in the prop firms or large trading firms here.

So the relevance is for the OP just like me since we are from same place. Not necessarily for others.

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  #17 (permalink)
VirtualMark
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AllSeeker View Post
Hmm, again in my personal opinion, DOM is just one of the new trends in the "tools" market. It will also pass like many did, after having its honeymoon period.

What I'm trying to say there is, not to invest too much time and thought into it if its not easily available to us atm. When it is, sure, we will look into it.

Think of it like this, I feel average number of traders in US making money are probably not going to be far off from what we have in India, of course in % wise of whole. And I've no data to back this up, but just an overall observation on communities I'm part of. Assuming DOM being the new hot thing in the market, I would like to also assume that DOM is something which is used heavily in the US.

So, while it could be misrepresenting of some math, wrong assessment on correlations and wild assumptions on my part, but DOM probably hasn't brought any ground breaking new thing to traders arsenal, so no reason to lust after it.

It's great if you can trade without it, but many people rely on it and some use it exclusively. And a bit ignorant to assume that it's just a new trending tool, it's been around for years.

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