Short Term Trading Strategies Using Market Depth - Page 7

Gregory McLeod · #91 (**permalink**) 07-23-2009, 12:02 AM

Use 4 levels of Market Depth.
Look for an Imbalance between the Bids and offers of at least a 2 to 1 ratio that appears for at least 1-2 minutes.

The columns are switched so when Offers outnumber Bids enter long with a 10 pip limit and a 30 pip stop.

If Bids outnumber Offers by at least a 2 to 1 margin, then enter short with a 10 pip limit and a 30 pip stop.

Use EUR/JPY, EUR/USD or other currency pair with small spreads.

That is it!

ebravo · #92 (**permalink**) 07-27-2009, 06:47 PM

Hello, I have several questions, but first I want to congratulate you, it doesn't matter if it's demo, I'm sure you have similar results with your live account.

Here are my questions:

1) Assuming there is no chart or indicator being used, what is the average accuraccy using only the Market Depth?

2) I won't ask if it is 100 % sure, but is it almost sure that before the overlap (London and US market) and after, 7:00 to 12:00 Eastern time, there will be several imbalances considerables for trading, I mean, not just flashes of imbalance.

3) With Active Trader Platform, is it possible to trade off the charts?

4) What exactly represents the Market Depth, the amount of what clients of FXCM are trading or what?

5) I see that in some examples you trade 3M, 1M, in others 100K, what takes you to trade in those different amount, probability of the trade, or is it just for example?

Gregory McLeod · #93 (**permalink**) 07-30-2009, 08:06 AM

Quote:

Originally Posted by ebravo

Hello, I have several questions, but first I want to congratulate you, it doesn't matter if it's demo, I'm sure you have similar results with your live account.

Here are my questions:

1) Assuming there is no chart or indicator being used, what is the average accuraccy using only the Market Depth?

2) I won't ask if it is 100 % sure, but is it almost sure that before the overlap (London and US market) and after, 7:00 to 12:00 Eastern time, there will be several imbalances considerables for trading, I mean, not just flashes of imbalance.

3) With Active Trader Platform, is it possible to trade off the charts?

4) What exactly represents the Market Depth, the amount of what clients of FXCM are trading or what?

5) I see that in some examples you trade 3M, 1M, in others 100K, what takes you to trade in those different amount, probability of the trade, or is it just for example?

Thank you for your questions. I would say you can find at least 2 to 3 good imbalances a day. These are ones that will hold for several minutes and price action will continue to confirm the imbalance. Like any indicator or method nothing is 100% this is why stops and limits are important. This is why I scalp for no more than 10 to 20 pips as I am only looking for a 'hiccup' in the market to trade.
Within a few weeks, traders will have charts similar to those found in the FXCM trading station for placing trades. I use Pro Real time currently which is free to Active Trader live account holders.

Market Depth represents the liquidity that is offered or bid by various banks
I trade different amounts randomly to show traders a variety of position sizes as examples and how that profit would look.

Elle · #94 (**permalink**) 09-11-2009, 04:06 PM

I just want to add I like these strategies a lot. Particularly the one on the US Opening Session. I've been trying 4 of them since a week now on my Demo and I will be scalping the EUR/NZD next week. The Active Trader platform is really good. I love to practice my skills and challenge myself with it. I think it's another good tool.
The toolbox is really heavy by now...:-)
Makes me think how much addicted to Forex can I be? but it's all pleasure...

chucknorris25 · #95 (**permalink**) 09-16-2009, 04:07 PM

how long do imbalances in the liquidity for bid/ask typically last, and how quick do you have to be in spotting them to really take advantage of the short term market moves that result because of the imbalances?

Gregory McLeod · #96 (**permalink**) 09-21-2009, 07:20 AM

Quote:

Originally Posted by chucknorris25

how long do imbalances in the liquidity for bid/ask typically last, and how quick do you have to be in spotting them to really take advantage of the short term market moves that result because of the imbalances?

The imbalances can last 1 to 2 minutes for a short move or can last 10 to 15 minutes if the market gets directional and trending.

Gregory McLeod · #97 (**permalink**) 09-21-2009, 07:22 AM

Quote:

Originally Posted by Elle

I just want to add I like these strategies a lot. Particularly the one on the US Opening Session. I've been trying 4 of them since a week now on my Demo and I will be scalping the EUR/NZD next week. The Active Trader platform is really good. I love to practice my skills and challenge myself with it. I think it's another good tool.
The toolbox is really heavy by now...:-)
Makes me think how much addicted to Forex can I be? but it's all pleasure...

I am glad you like the strategies. This section is the place I wear my other "hat" as a short term trader as opposed to my daily trends. I know about the heavy 'toolbox' I am trying to make it less heavy.

fivezal87 · #98 (**permalink**) 09-23-2009, 11:29 AM

helow greg...

i have few question to ask...

1. which [fx pair] do u think its more accurate and consistent to use market depth
or is it equal?

2.market depth level 1 to 10? level 10 give more signal? which is the safest? [more depth? or less depth...?] based from ur observation...

3.liquid vs less liquid fx pair, what's the different? can we add more signal when we pick this pair?
i saw gbp/usd not really liquid compare to otha...

thanks

timbo82884 · #99 (**permalink**) 09-25-2009, 03:47 PM

It seems that the level 2 quotes move extremely quick. What kind of imbalance should I be looking for in order to place a trade based of differences in liquidity on the bid vs. ask?

Gregory McLeod · #**100** (**permalink**) 09-28-2009, 07:49 AM

Quote:

Originally Posted by timbo82884

It seems that the level 2 quotes move extremely quick. What kind of imbalance should I be looking for in order to place a trade based of differences in liquidity on the bid vs. ask?

I start with just 4 levels of Market Depth and I look for a steady (30 seconds to a 60 seconds) of a 2 to 1 ratio. I set a 10 pip limit and a 40 pip stop with 1-click in the trading mode as these moves are quick. Depending on market conditions, I can be out as quick as a few minutes to an hour. Sometimes the imbalance flips while I am in a trade but I do not do anything to my position until the limit is hit or the stop is hit. I stick to pairs with small spreads and deep liquidity like the EUR/USD and the EUR/JPY

Gregory McLeod · #**101** (**permalink**) 09-28-2009, 08:09 AM

Quote:

Originally Posted by fivezal87

helow greg...

i have few question to ask...

1. which [fx pair] do u think its more accurate and consistent to use market depth
or is it equal?

2.market depth level 1 to 10? level 10 give more signal? which is the safest? [more depth? or less depth...?] based from ur observation...

3.liquid vs less liquid fx pair, what's the different? can we add more signal when we pick this pair?
i saw gbp/usd not really liquid compare to otha...

thanks

1. I like trading EUR/USD and EUR/JPY. These are very liquid pairs with small spreads.

2. I look at Market Detp either 3 or 4 tiers of liquidity displayed.

3. GBP/USD is not very liquid, this leads to the very strong and sharp moves.

Gregory McLeod · #**102** (**permalink**) 09-28-2009, 08:22 AM

Quote:

Originally Posted by Gregory McLeod

1. I like trading EUR/USD and EUR/JPY. These are very liquid pairs with small spreads.

2. I look at Market Detp either 3 or 4 tiers of liquidity displayed.

3. GBP/USD is not very liquid, this leads to the very strong and sharp moves.

Here is a trade I did this morning on EUR/USD that I recorded. There is no sound. It was good for 18 pips.
gregs trading II 9.28.09

Sofia.forex · #**103** (**permalink**) 10-01-2009, 07:37 AM

The USD still looks neutral against a basket of currencies as compared to the rest of the G10 countries, even if the EUR/USD still appears to be in correction mode due to a broadly weak Euro - strong support comes in not much lower in the key 1.4450 area, which must be taken out to start any credible downside technical arguments.

ludo · #**104** (**permalink**) 10-11-2009, 09:03 AM

Quote:

Originally Posted by Gregory McLeod

Here is a trade I did this morning on EUR/USD that I recorded. There is no sound. It was good for 18 pips.
gregs trading II 9.28.09

Hi Greg, good thread you have here. Though the video was not that obvious to catch.

I was wondering if we can do some kind of automation to detect the imbalance situation. I mean to get a signal when the imbalance has been observed for at least 30 sec. for example.

Can we have access to market depth from a MT4 platform?

Thanks in advance.
Ludo

Gregory McLeod · #**105** (**permalink**) 10-15-2009, 08:41 AM

Quote:

Originally Posted by ludo

Hi Greg, good thread you have here. Though the video was not that obvious to catch.

I was wondering if we can do some kind of automation to detect the imbalance situation. I mean to get a signal when the imbalance has been observed for at least 30 sec. for example.

Can we have access to market depth from a MT4 platform?

Thanks in advance.
Ludo

Thank you for your interest. The Imbalance appeared before I could press the record button. Unfortunately, Market Depth information can not be automated it would be helpful. Market Depth is only available through the Active Trader Platform