I've noticed since the beginning of the year that the ES DOM bids and offers have gotten much thicker. Where before there used to be between 500-1000 for the best bid and offers, now there are 1000-2500. Now, it is common to see bids and offers of 3000 to 4000 a couple ticks away from the last price. That was rare just a few months ago. Part of this can be attributed to the lower volatility, which makes firms more willing to make large bids and offers around the market price. The Depth of Market book has much more size now.
In 2008 and first half of 2009, the best bid and offer sizes were much smaller. They were usually between 100 to 1000. Market makers were fearful of getting hit by a big adverse move. The book was much thinner despite the higher volumes. Now, the volumes traded are much lower but the book is much thicker. The market makers are no longer fearful.
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What is the upshot for your strategy Owl?
Better liquidity helps, but this change tells me volatility really is dead. Rarely will you see such thick DOM books with a volatile market. I thrive on volatility.
It truly seems like a changed market, a market that has stabilized and is boring. I may need to expand to other markets, ES is a horrible market to trade right now.
Hoiw does 6e sound like to you...i think you will be good in the forex market with your skilld...
of course i want to learn more from you.
I have always avoided FX because a lot of the moves seemed random to me. But I admit that I've never really tried daytrading it. I only made forays into that market when I viewed moves as being too extreme, like 2 weeks ago in the euro/dollar. And I would trade countertrend. It has worked well, but its a small sample size.
There are other reasons for not trading FX that'll probably go into on a later post. But the fact that FX markets are symmetrical makes it harder to predict IMO.
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