# Learning to trade DOM - Beginning of the journey



## tr8de (11 March 2014)

Hi, 

I’m another novice to this form. I’ve been reading this forum for many years now. I’m now trying to join the DOM club and this is my baby steps.

I truly hope that I will be able to find some help in here. For a last couple of weeks I’ve been recording DOM and watching it after work. I think I should mention that I don’t use any charts I just use this recording.

Here is what I noticed today. By the way this is emini - 10th Monday.
Market moved down to 1872.25 level, at 1872.50 someone started to load up as we can see some buying is happening at this price.

After that market moved up to 1873.50, we can see there is more buying is happening at this price. Market moved 1 tick up to 1873.75 did some trades and dropped down to 1873.50

At this point I started to think someone is loading up and market should bounce down back to 1872.50 one more time just to test it. 

So it did it went back to 1872.50 and I’ve made my notes to buy at 1872.25 as you can see it is appeared in the DOM. The expected exit price would be around 1874.75

[video=youtube_share;h1HHBmh3b8E]http://youtu.be/h1HHBmh3b8E[/video]

Here are my questions:
1.)Where would be right place to put a stop loss order? I’ve noticed when this kind of scenario is happening. Market can move 3-4 ticks down and bounced back. Would be fair to say to have a stop loss at around 6 ticks from the entry price?​. How would we know, how far would it go until we actually see the move. If i'm going to use the R/R logic it is a little bit confusing, because market can move only 7 tick from the entry price and if i see there potential go down I will need to close position any my R/R is going to be only 1:1. It is quite tricky and I am trying to get my head around it. 

2.)Was my reading correct?​
3.)What would be your feedback for this trade ?​
Thanks


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## CanOz (12 March 2014)

What time of day was it? There are allot of arb bots in the globex just keeping the indices in line with Asia and Europe....my advice is to watch what leads....


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## tr8de (12 March 2014)

CanOz said:


> What time of day was it? There are allot of arb bots in the globex just keeping the indices in line with Asia and Europe....my advice is to watch what leads....




It is a US session. Around 1am AUS time.


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## havaiana (12 March 2014)

I think what happens in the Dom is pretty specific to each product and even what time of day it is.

I trade currencies so my comments are related to them. I only watch the Dom in specific areas where I'm already thinking about trading. This is what I generally look at

-A lot larger than usual volume at 1 or 2 prices

-Bid or offer absorbing amount that was previously lifting offers or dropping bids but this time just sticks

-Opposite of above, volume that wasn't previously lifting bids or dropping offers now does

(example of above 2. Looking to sell into an up move. 20 contracts have been lifting the offers and they go bid, 15 contracts hitting the bid and they stay bid. This keeps happening so we are moving up. Then 30 contracts hits the offer and it stays offer, 5 contracts hit the bid and it pulls. Obviously it's rarely that simple but that is the general idea.)

-Other than that I just use it the same way I would use a chart, to track momentum and higher/lower highs/lows. If contracts are hitting the same bid and offer for a bit then move up one price, hit them both for a bit, then move up again, does this a few times then it moves down one price instead of moving up one.... (we have gone from higher highs and higher lows to a lower low and lower high) pretty basic but works for me


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## CanOz (27 May 2014)

Guy Bower of Propex has a new Free eBook out on the DOM....

Check it out.....here


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## BundBandit (27 May 2014)

tr8de said:


> Hi,
> 
> I’m another novice to this form. I’ve been reading this forum for many years now. I’m now trying to join the DOM club and this is my baby steps.
> 
> ...




- For your 1st Q, you need a chart to tell you where you put your sl. In your case, 1872.25 looks like a swing low so your sl should not be far below it. Your sl must be at a point where the market tells you the trade is not valid anymore. Your 1st TP should be at least equal to your sl if you are scalping. It also depends on the market structure and again you need a chart to tell you where the resistance is. If it is a strong intraday bull trend and you are buying the pullback, you may want to give your 2nd target more room. If the market is trending down aggressively intraday and you are fading the sp, you may want to take your profit quick.

*My little advice: *
1. Try not to scalp ES like crazy or too active, you will get burnt in no time. The market is dominated by bot and all kinds of professionals from different timeframes. It can be very choppy and hard to trade.

2. Have a chart next to your dom so that you know the context and the length of each swing/legs. You will also find levels you can't find on DOM unless you can remember every tiny little swing... Yes, there are levels based on the volume profile but they are just no as good as real levels on the chart. 

3. Don't believe that the market gurus like John Grady(the no bs guy) can still make consistent profit by scalping the dom alone in today's market. You will know the guy is pathetic in live trading if you subscribe his live webinar. Why would you think he is charging people 1,200 to watch him trade if he can live off his scalping. Dom is only a tool to help you time your trade and get a feel of the market. A good understanding of market context and structure trumps short-term momentum.

4. Short-term momentum scalping is a tough business. You're not alone if you find it difficult to be profitable in the long run. Have an open mind and learn other style of trading while you can still use DOM for your entry and market feel.


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