Short Term Trading Strategies Using Market Depth - Page 3

Gregory McLeod · #31 (**permalink**) 04-28-2009, 01:28 PM

Market depth signaled another Imbalance for another 10 pips. 18M Bid versus only 11.1M Offered produced the short-term support and eventual rise that allowed this trade to be successful.

Gregory McLeod · #32 (**permalink**) 04-28-2009, 01:32 PM

Using Market Depth is like having X-ray vision showing the integrity of a short-term support or resistance level. It is the difference between "walking out" on "thin ice" or a solid piece of "tundra" while scalping for pips

Gregory McLeod · #33 (**permalink**) 04-29-2009, 08:13 AM

Fast 10 pips from Market Depth Imbalance on EUR/USD and EUR/JPY. Prices moved much higher but I was content at grabbing 10 pips out of the market as I had other things after my attention. The market was moving quickly and I was profitable almost from entry. CLICK HERE to see more of what you can do with Active Trader.

Gregory McLeod · #34 (**permalink**) 04-29-2009, 08:16 AM

Fast 10 pips from Market Depth Imbalance on EUR/USD and EUR/JPY. 22 Million was Bid, however only 15M was offered. This illustrates short-term support as there are more buyers than sellers at this area. Long scalping trades would be favored as a result. Prices moved much higher but I was content at grabbing 10 pips out of the market as I had other things after my attention. The market was moving quickly and I was profitable almost from entry. CLICK HERE to see more of what you can do with Active Trader.

Gregory McLeod · #35 (**permalink**) 05-05-2009, 11:14 AM

Market Depth signaled a short term bottom in EUR/JPY after sharp sell off. After the U.S. open, EUR/JPY broke south and plunged as low as 131.68. In trading, there is an old saying "never try and catch a falling knife.." however, Market Depth revealed short-term support was forming that would allow us to scalp 10 pips. There was 18.7 Million on the Bid and only 5.7 Million Offered. This is an over a 3:1 imbalance favoring long trades.

Gregory McLeod · #36 (**permalink**) 05-05-2009, 11:16 AM

10 pips from Market Depth.

Market Depth signaled a short term bottom in EUR/JPY after sharp sell off. After the U.S. open, EUR/JPY broke south and plunged as low as 131.68. In trading, there is an old saying "never try and catch a falling knife.." however, Market Depth revealed short-term support was forming that would allow us to scalp 10 pips. There was 18.7 Million on the Bid and only 5.7 Million Offered. This is an over a 3:1 imbalance favoring long trades.

CLICK HERE to see more of what you can do with Active Trader.

Gregory McLeod · #37 (**permalink**) 05-06-2009, 01:01 PM

No imbalance in Market Depth is a signal in itself that a trade can be placed without being against the tide of buyers on the BID or sellers on the Offer. So was the case in my EUR/USD trade. I was using the 1-minute MACD strategy and combined it with a trend line break for added confirmation. Market Depth was flat so I entered the trade Long the break out at 1.3304. As the Euro moved above the 200 SMA, my trade was closed in a matter of 3 minutes for 8.5 pips or $2,550 on 3M traded.

Gregory McLeod · #38 (**permalink**) 05-06-2009, 01:08 PM

8.5 pips in 3 minutes.

David Joseph · #39 (**permalink**) 05-07-2009, 12:56 AM

Greg,

Great Post.

Would you mind shedding some light on your approach of using order imbalance to trade news events?

Also, what strategies do you utilize to enhance the probability of success on short term scalping trades?

I generally trade with a long term horizon, so some light on this subject would certainly be appreciated.

Best,

David

Gregory McLeod · #40 (**permalink**) 05-07-2009, 11:25 AM

Quote:

Originally Posted by David Joseph

Greg,

Great Post.

Would you mind shedding some light on your approach of using order imbalance to trade news events?

Also, what strategies do you utilize to enhance the probability of success on short term scalping trades?

I generally trade with a long term horizon, so some light on this subject would certainly be appreciated.

Best,

David

Hello David. As of yet, I have not seen many imbalances before or during the news. However, Non-Farm Payroll coming up this Friday will provide an excellent opportunity to observe and or trade this very important news event. Most of my trades seem to cluster around the European/London market close.

If I am trading on a 5 minute or 1-minute chart, I want to look at the next higher time frame to identify trend and support and resistance. In this case, I would refer to the 15 minute or 30 minute for trend direction and support and resistance. Next, I would look at Market Depth to see if there are any imbalances that could indicate short-term resistance or support. Then I would look to pull the trigger on the 5 minute or 1-minute chart in the direction of the 15-minute or 30-minute trend.

Generally, I am looking for orderly markets that are relatively news or announcement free.

Thanks for the questions. Other questions or suggestions are welcome.

Gregory McLeod · #41 (**permalink**) 05-07-2009, 11:32 AM

10 pips in 6 minutes today on the EUR/JPY using Market Depth only. Market Depth showed a 2:1 imbalance favoring Offers. I went short at 132.84 and limited out at 132.74. The whole trade lasted 6 minutes. I would not recommend that traders use Market Depth only to enter trades. However, these trading examples show that Market Depth is a powerful tool that may give you an edge in your trading when combined with other Technical Analysis tools.

Gregory McLeod · #42 (**permalink**) 05-11-2009, 01:28 PM

The Active Trader Market Depth indicator showed an Imbalance of 14M Bid while only 7M was offered. This 2:1 Imbalance is what we usually look for when we use Market Depth. I went long at 1.35972 with a 10 pip limit. The Euro only got up to 8.8 pips before falling to as much as 20 pips against me. The tide against the Euro seems to be negative and I manually closed the trade for a $1,360 loss.

Gregory McLeod · #43 (**permalink**) 05-11-2009, 01:32 PM

Stopped out on Market Depth Imbalance trade. This just shows that no indicator is 100%. Other Technical Analysis tools can be helpful in determining trade selection

Gregory McLeod · #44 (**permalink**) 05-12-2009, 08:55 AM

10 pips in 22 minutes. The combination of choosing a strong DailyTrend and using Market Depth Imbalance produced a strong technical set-up on a 1-minute GBP/USD chart that proved profitable.

CLICK HERE to see more of what you can do with Active Trader.

Gregory McLeod · #45 (**permalink**) 05-12-2009, 08:56 AM

10 pips in 22 minutes. The combination of choosing a strong DailyTrend and using Market Depth Imbalance produced a strong technical set-up on a 1-minute GBP/USD chart that proved profitable.

CLICK HERE to see more of what you can do with Active Trader.