Short Term Trading Strategies Using Market Depth - Page 4

Gregory McLeod · #46 (**permalink**) 05-13-2009, 11:52 AM

10 pips in 7 minutes trading with only Active Trader's Market Depth. After closing out a Market Depth Imbalance trade on the Euro, I saw another setting up on the cable. 14 Million was offered while only 5 Million was Bid showed me that I could scalp 10 pips out of the GBP/USD going short. The better than 2:1 Offers to Bids clearly illustrates short term resistance. This trade was executed without the aid of any charts.

Gregory McLeod · #47 (**permalink**) 05-13-2009, 12:43 PM

Another 10 pips using on the GBP/USD. Recently the Imbalance opportunities have been in abundance.

Gregory McLeod · #48 (**permalink**) 05-15-2009, 12:09 PM

Another Winner-With a full docket of economic announcements, I avoided placing a trade using Market Depth as I could see no noticeable imbalances in BID or Offer volume. The wild swings of the currencies was not conducive to my strategy. However, going into the London/European close, I was able to identify a number of reversal opportunities as traders have to sell to lock in profit. A large layer of offers, would probably be met with few bids and price would fall accordingly. I noticed 14M offered and only 5M Bid which is all I needed to get short. 7 minutes later, I limited out for a 10 pip profit. See the results.

imported_Bigpips · #49 (**permalink**) 05-15-2009, 12:49 PM

Quote:

Originally Posted by Gregory McLeod

Another Winner-With a full docket of economic announcements, I avoided placing a trade using Market Depth as I could see no noticeable imbalances in BID or Offer volume. The wild swings of the currencies was not conducive to my strategy. However, going into the London/European close, I was able to identify a number of reversal opportunities as traders have to sell to lock in profit. A large layer of offers, would probably be met with few bids and price would fall accordingly. I noticed 14M offered and only 5M Bid which is all I needed to get short. 7 minutes later, I limited out for a 10 pip profit. See the results.

Mr. McLeod, do you always look for a 10 pip profit and a 30 pip stop loss when you use the Market Depth strategy? Any loss (or series of losses) so far?

Very informative thread, keep up the good work.

Gregory McLeod · #50 (**permalink**) 05-15-2009, 01:00 PM

Quote:

Originally Posted by imported_Bigpips

Mr. McLeod, do you always look for a 10 pip profit and a 30 pip stop loss when you use the Market Depth strategy? Any loss (or series of losses) so far?

Very informative thread, keep up the good work.

Hello Bigpips. Thanks for your questions and the compliment! I set the limit at 10 pips as I have found that I don't have to stay in the trade very long, usually only a few minutes. The 30 pip stop gives my trade an upside down risk to reward but it gives the trade time to "breath" as there is usually some sort of minor retracement before moving to my target. The tight spreads on the Active Trader platform makes it easier to reach profitability. I have a few losses early on which are further up on the thread. None today though. I think a few people have posted their trades and they are having similar results. Let me know if you have any other questions.

Gregory McLeod · #51 (**permalink**) 05-20-2009, 08:18 AM

10 pip EUR/USD scalp - Active Trader Market Depth showed a nice imbalance this morning that was good for 10 pips. Liquidity providers were advertising they needed supply to fill all of the demand which created this temporary imbalance. Price went up to attract that flow and I was more than happy to go for the ride.

sed34 · #52 (**permalink**) 05-21-2009, 12:45 AM

Quote:

Originally Posted by Gregory McLeod

10 pip EUR/USD scalp - Active Trader Market Depth showed a nice imbalance this morning that was good for 10 pips. Liquidity providers were advertising they needed supply to fill all of the demand which created this temporary imbalance. Price went up to attract that flow and I was more than happy to go for the ride.

i like your examples. just a couple of question. do you set the order according to how much the imbalance is? here is what i mean. on the eur/usd the imbalance was 16:6 so a difference of 10 is what you shoot for. on the same chart the eur/jpy is 19:9.7. so 9.3 pips is what you shoot for. do you see what i mean? or is 10 just your personal selection? could you do 15 or 20?

also when the imbalance occurs, is it just a blip or do you have sufficient time to take advantage of it? or do you have to have your eyes plastered to the screen without blinking in order to see it?

does the platform have an alert to tell you when an imbalance comes up?

thanks

Gregory McLeod · #53 (**permalink**) 05-21-2009, 06:33 AM

Quote:

Originally Posted by sed34

i like your examples. just a couple of question. do you set the order according to how much the imbalance is? here is what i mean. on the eur/usd the imbalance was 16:6 so a difference of 10 is what you shoot for. on the same chart the eur/jpy is 19:9.7. so 9.3 pips is what you shoot for. do you see what i mean? or is 10 just your personal selection? could you do 15 or 20?

also when the imbalance occurs, is it just a blip or do you have sufficient time to take advantage of it? or do you have to have your eyes plastered to the screen without blinking in order to see it?

does the platform have an alert to tell you when an imbalance comes up?

thanks

Thanks for the compliment. Great questions. What I look for is at least a 2:1 ratio of Bids to Offers. So if the BID shows 7M I want to see at least 14M or greater on the offer before I consider going short. On the other hand if I see 10 M Bid then I am looking for 5M or less offered before going long. Usually, that ratio will hold for a minute or flash around and then move back to that imbalance ratio. In some instances, the imbalance holds for several minutes while prices are moving.
10 pips is my personal selection as it gets me out of the market quickly as the liquidity returns back into balance. Sometimes, the imbalance marks a significant move and prices may go 50 or 100 pips after my exit. I try not to concern myself with the "missed" pips because, as you can see in my posts, that these trading opportunities seem to be an everyday occurrence.

lancehibner · #54 (**permalink**) 05-29-2009, 08:02 AM

If you are trading exchange with out market makers then i tell you what does the market depth tell you ? I'm no expert in it, but it seems to me that the queue of orders on an electronic exchange is a queue of Limit Orders at places where people are prepared to buy or sell if the price ever gets there.
There cannot be a queue of orders at the market price because these will get filled straight away most of the time.So what use is the market depth ?

I trade futures successfully without market depth.
______________________________________________

Gregory McLeod · #55 (**permalink**) 05-29-2009, 08:08 AM

Quote:

Originally Posted by lancehibner

If you are trading exchange with out market makers then i tell you what does the market depth tell you ? I'm no expert in it, but it seems to me that the queue of orders on an electronic exchange is a queue of Limit Orders at places where people are prepared to buy or sell if the price ever gets there.
There cannot be a queue of orders at the market price because these will get filled straight away most of the time.So what use is the market depth ?

I trade futures successfully without market depth.
______________________________________________

Multiple banks compete to provide liquidity to FXCM's Active Trader platform. The platform displays the total available liquidity at the 5 best available price levels.
Transparent Execution: Before trading, you should know the price at which a market order can be filled based on available liquidity.
Short-Term Market Direction Indicator: If the amount of liquidity is heavily tilted towards either the bid or ask side, this indicates that short-term prices may be moving towards the side with less liquidity.
Short-Term Trading Strategy: Learn how to use market-depth information for short-term trading. View Video

Bignatx · #56 (**permalink**) 05-31-2009, 01:46 PM

Quote:

Originally Posted by Gregory McLeod

Multiple banks compete to provide liquidity to FXCM's Active Trader platform. The platform displays the total available liquidity at the 5 best available price levels.
Transparent Execution: Before trading, you should know the price at which a market order can be filled based on available liquidity.
Short-Term Market Direction Indicator: If the amount of liquidity is heavily tilted towards either the bid or ask side, this indicates that short-term prices may be moving towards the side with less liquidity.
Short-Term Trading Strategy: Learn how to use market-depth information for short-term trading. View Video

Hey Greg, I looked into the Active trader a lot, I really liked the way it looked. Im a scalper so would enjoy it even more so. Is this ever going to be offered with a regular account? I think I saw the limit was 10k...

Gregory McLeod · #57 (**permalink**) 05-31-2009, 08:19 PM

Quote:

Originally Posted by Bignatx

Hey Greg, I looked into the Active trader a lot, I really liked the way it looked. Im a scalper so would enjoy it even more so. Is this ever going to be offered with a regular account? I think I saw the limit was 10k...

Hi Bignatx! Market Depth is only available with the Active Trader account and platform. The minimum is either $25,000 deposit OR trade more than 10M per month in notional volume. You could open for less if you could demonstrate that you did 10M/month volume in your account. You can find out more by clicking this link and contacting an Active Trader representative.

Gregory McLeod · #58 (**permalink**) 06-01-2009, 11:47 AM

16 pips with Market Depth-This Market Depth Imbalance occurred while AUD/USD Daily trend was up. However, going to a smaller time frame, I was able to recognize an entry near point 'B' of an Elliott Wave A-B-C corrective pattern. The Imbalance identified resistance. I used a 1-hour chart to count 5 impulsive waves in the direction of the trend and looked for a lower high after the peak

sed34 · #59 (**permalink**) 06-01-2009, 07:15 PM

how many losers in a row have you had using this method? do you have a good day and a completely bad day the next? Are the returns consistent?

one more thing, what do you exactly mean by 10M in notational volume. What would that equate to using 1 standard lot? how many trades?

thanks

Gregory McLeod · #60 (**permalink**) 06-02-2009, 05:51 AM

Quote:

Originally Posted by sed34

how many losers in a row have you had using this method? do you have a good day and a completely bad day the next? Are the returns consistent?

one more thing, what do you exactly mean by 10M in notational volume. What would that equate to using 1 standard lot? how many trades?

thanks

If you comb through my previous posts in this thread and other Active trader threads you can see losses with explanations and total them up as well. Like any strategy there are strings of wins as well as losses. Since my losses are typically 30 pips and my wins are only 10 pips then I have to be right 75% to break even and I have been more or less in the 85-90% area. I recommend that traders use a proven technical strategy and use Market Depth as an additional confirmation for that strategy.

One standard lot is 10k 0r $10,0000 of currency. 10M is 10,000,000 (10 million) . One thousand 10k lots have to be traded per month to equal 10M. 250 10k lots per week/ 50 10k lots per day.

When I place 1000k trades in the examples above, those ares 1M (1 million) trades, so with just 10 trades and I would have made the minimum. Each trade was 100 standard (10k) lots.

Active Trader is a high volume trading platform.