The volume profile shows how many contracts have traded in the current session. Over time you will begin to recognise when someone is trying to build a position, when somebody is in a bad position and needs to get out, when a level is being defended, when the market is being made to look artificially weak or strong and when two large players take each other on in a ‘battle’ (Time to stand aside). The fact that it is manipulated is what makes it useful. Some people will say that “The DOM is useless because it is manipulated”. In some ways, it’s a bit like a game of poker. The DOM is often manipulated to look strong to attract buyers and to look weak to attracts sellers. This pulling/adding limit orders is not just going on at the current price, it’s going on at all prices. Other times, a lot fewer contracts trade because people pulled the limit orders. Sometimes a lot more trade at the level than was shown because people add more limit orders at that price. Most of the time there is a discrepancy between what was on the limit order and what actually traded. With Depth and Sales, we are showing the limit orders AND the market orders that fill against them.
Market orders you only see when someone actually submits the order and a trade occurs. You can see these ahead of time, long before they are traded. Limit orders show an intent to trade at a price. If the market sell order was more than 24 contracts, then 24 contracts would be filled at 1236 and the remaining at the price(s) lower down. A market sell order will ‘hit’ this highest Buy Limit order (in this case 24 contracts at 1236.00). Market Sell Orders – These are orders sent to the market to sell at the best price available. Limit orders to sell (red background) are called OFFERS or ASKS. Limit orders to buy (blue background) are called BIDS. If the price moves up to that level and people place market orders to buy, then these people will be sellers. If they want to sell, they put in a limit order above the current market price. Limit Sell Orders – These are orders people place waiting for the market to come to them. In the above image we can see we have two columns for buyers and two for sellers. So – where are the buyers and sellers on Depth & Sales? Every transaction has a buyer AND a seller. A trade only occurs when a buyer and a seller are willing to transact at a price. This is nonsense, the markets are a mechanism for matching buyers and sellers.
#JOHN GRADY NO BS DAY TRADING FULL#
Internet forums are full of people saying that price went up because there were more buyers than sellers. The first thing to consider is where the buyers and sellers are. Where are the buyers & where are the sellers? It’s simply a matter of practise, just like riding a bike… Two weeks later, I was doing the same thing. It was John Grady at No BS DayTrading that told me he watched three DOMs, at the time I was quite shocked.
#JOHN GRADY NO BS DAY TRADING WINDOWS#
I regularly watch two or three Depth & Sales windows at a time. Unless you are already someone that uses the DOM or advanced DOM products such as TTs XTrader, do not switch this on and try to trade off it. You have two skills to develop, the first is to be able to read Depth & Sales and the second is to use the information to make trading decisions. At first, you will simply not be able to absorb all of the information, just like most people can’t get in a car and drive the first time they try. There is a lot of information on the screen. The comments made about the learning curve for the other products goes double for Depth & Sales.
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