<reading DOM #es_f $spy $spx $qqq>

my DOM setup - price discovery in action

breaking it down in small pieces

1) in blue col, people’s bids are lined up (limit orders)

in red col, offers are lined up

these numbers always change as people add / pull limit orders

2) inside grey columns are market orders

‘inside ask’ + ‘inside bid’

these arrive in real time

3) in the img, 19 orders are on the bid @ 3225.75

meanwhile, 3 market offers hit the bid (grey col)

19 on bid, minus 3 offers, takes orders on the bid down to 16

cont..

4) when 16 more inside offers arrive, all 19 contracts on the bid are taken out

price then goes to 3225.50

to fill 45 orders there

...and yes you guessed it

same thing happens on the other side / all in real time

THIS is #orderflow

what are the implications tho?

+ we know what moves price

+ liquid markets move quickly

+ if watching DOM + analyst sees irregular volume pattern at a ‘level’, it could indicate a breakout / breakdown

helps to understand this + watch DOM to get idea of rhythm

we already discussed profile +

in the future, will explore specific setups!

but want to get a feel first

why may #es_f be particularly hard using DOM?

also! Please retweet my first tweet of this thread if you liked it!

also also! if you have feedback / think tweet form is too short, lemme know!