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Trading ES with Depth of Market
Started:July 8th, 2014 (12:37 PM) by isla Views / Replies:5,279 / 54
Last Reply:October 12th, 2015 (03:09 AM) Attachments:40

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Trading ES with Depth of Market

Old July 25th, 2015, 02:47 PM   #51 (permalink)
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TickedOff View Post
If you want to scalp with DOM, the no BS daytrading videos by John Grady are excellent. I should warn you though he is very skeptical about charts in his videos. I find them very useful for overall market structure. Even if you don't scalp, reading order flow can help u with entries and tell you whats going at at particular levels. So pretty much what isla said. Also the Jigsaw DOM (available on ninjatrader, S5 trader and soon multicharts) is pretty much the best you can get.

Did you also take his courses and webinars? I'm thinking of giving him a try.

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Old July 25th, 2015, 04:05 PM   #52 (permalink)
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Macan View Post
Did you also take his courses and webinars? I'm thinking of giving him a try.

I watched the beginner and intermediate course. Definately have a look at the beginner one, its not too expensive, and if you like that get the intermediate one. A lot of his trades revolve around market gaming, and that has helped me read markets (and charts) a lot better. For example I now notice that when market has strong momentum downward, often u see continuation patterns like pennants and what not break their upper trend line, and then whip back down before the market continues. I bring that to mind because I distinctly remember that exact scenario and I bought the pop up, and took a loss and was wondering why the market just crashed after that. Its large trades who push the market up or down to trigger stops so they can get fills on their position. So having an understanding of market gaming will help u whether or not u use DOM orderflow. If u have cumulative delta on ur chart on a 1 minute time frame, u will be able to spot plays like that when you see a sudden flux of buy market orders, and then a sell off immediately after (either leaving a selling wick on cumualtive delta, or u just get negative delta following the push up). Maybe send me a PM if you have more questions, this is Isla's journal after all.

Understanding yourself is just as important as understanding markets.
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Old July 25th, 2015, 04:15 PM   #53 (permalink)
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Old October 12th, 2015, 02:44 AM   #54 (permalink)
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isla View Post
"One of the great disappointments I encounter when I read writings on the topic of trading psychology is that they invariably touch upon the same themes: discipline, controlling emotions, etc. Having worked with traders and portfolio managers for over a decade now, there is so much more to the psychology of trading than "sticking to your process" that I decided I had to write a book about what I was experiencing but wasn't reading. The title reflects that interest: Trading Psychology 2.0: From Best Practices to Best Processes.

I think Ted Hayes hit on something important in his recent interview. He pointed out that the personality traits relevant to success among early career traders are different from those that generate success for experienced ones. Perhaps so much writing concerns discipline and emotional control, because those are the dominant concerns of the new traders who buy the books, haunt the websites, and seek the help.

At several of the firms where I work, no one even gets an interview unless they have years of experience managing significant capital with a solid track record of profitability and risk management. So by the time those traders join the firm, discipline and emotional control are not screaming priorities. Instead, they deal with other challenges. In Trading Psychology 2.0, I refer to these challenges by A-B-C:

* Adapting to changing markets
* Building on strengths
* Creating creativity

In adapting to different markets by leveraging their strengths and generating new ideas, successful market participants are not so different from successful businesses in fast-changing industries, such as technology or social media. When markets change from year to year, stasis is a formula for failure. The successful trader, like the successful tech firm, must constantly innovate. Moreover, once traders generate those innovations, they must turn best practices--what they do that is successful--and turn them into robust, best processes.

I think this is very, very important: What makes a trader successful is discipline: doing the right thing with fidelity. Whatkeeps a trader successful is innovation: doing new things and turning them into disciplines. Conscientiousness makes for success, but it is openness that makes for adaptation. Trading psychology as a field has done a fine job of articulating the importance of discipline. My hope is that the new book will broaden the discussion to include a research-informed look at mastering change and innovation."

Thank you for bringing this author and book to my attention. Generally I don't read too much on trader psycology for the reasons he states. After 25+ years in the markets and far longer in business his observations resonate.
Cheers John

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Old October 12th, 2015, 03:09 AM   #55 (permalink)
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isla View Post
In other threads I read about traders' experiences trading on the floor or on screen with prop firms. I thought I'd share some of mine as it seems to be more recent.

These are just my thoughts and conclusions based on personal experience.

I joined a prop firm in February of 2011. I was in the first intake with 6 other guys. Our office mainly traded European STIR products through spreads and strategies like butterflies and boxes. Within 6 months we got involved in softs and energies spreads as well.

We had support from senior guys with couple of years of experience as well as our managers who traded longer. Occasionally we had visits from our company's directors and they had chats with us about trading and how things were going generally.

Essentially, we were market makers, liquidity providers. We were selling volatility expecting to get filled on the other side for a tick. That's what we were taught and that's how our group started seeing first positive results.

Now, some people may think there was more to it. And I will agree. Unfortunately, I could never understand what it was.

Some things in trading take time, like gaining experience, but I think I gave it a good shot. I must admit I wasn't among the best when I decided to leave 2.5 years after I started, but I wasn't among the worst either.

I made money both years but never even close to the bonus territory. The most disturbing thing for me was my complete disbelief in what I was doing. To me positive results didn't feel like a sign of my skill, nor did I think I had an edge. The way I saw it, people who made bonuses took more risks, made more intuitive decisions and enjoyed what they were doing (presumably).

Another important factor for me was that nobody could really explain logically why we were expected to make money trading for a tick or how to determine conditions when the market may strip 10 prices one way. I heard quite a few vague explanations and was satisfied with them while I was still in a "take a leap of faith" mode. I should mention that, in my view, it was a proper trading firm and we even got paid straight away to keep us going.

As I said, I was profitable. 2011 and first half of 2012 were quite active with a lot of uncertainty about European economies and interest rates. There was a lot of paper in the market and things looked rosy. But then something changed.

I noticed this change only on my year end review. I stopped making money in STIRs, which was my main market, and couldn't find another explanation to this fact apart from market being "slow".

That's when I turned my attention to outrights. Partially because how uncomfortable I felt trading spreads, partially because of the abundance of information available online. But intellectually I believed that this should be my future path.

I did economics at uni and after years of research I knew enough about market inefficiencies and changes that take place. I believed that manual market making in spreads would have the same story end as in outrights. Obviously the drop in volume, that could have been temporary, didn't help either.

I think being able to make decisions on your own is one of the main advantages an individual trader has compared to any institution. Now I trade what I got an understanding of working for a firm, which is how traders position themselves and how those positions influence future decisions.

Markets are always changing, I agree. But, in my view, an edge must be based on actual market mechanics, not on a temporary inefficiency or correlation.

If anything, what I wanted to say with this story is that there are no secrets in trading. The market generates more than enough information to enable a trader make decisions about what works and what doesn't. Keep track of your ideas and results and you will have as big edge in current markets as any veteran trader.

An excellent post. Thank you very much. Cheers John

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