Wednesday, June 9, 2010

Wednesday PM Notes - Liar Liar

This post and attached pic (click to enlarge) will hopefully be ridiculously obvious and/or redundant for anyone who has traded futures or equities -- or tiddly winks for that matter -- yet I couldn't pass up the opportunity to capture a shot of the ES DOM as a few traders were up to their usual games by flashing sizes on the bid as they were trying like hell to get short on the offer during the bull trap that was in the process of triggering.

At the time, I mentioned in the tank that I didn't believe any of them, and actually added to my short by hitting them ... just as I used to do with the ARCA and ISLD ECNs in the days when I traded CIEN, BRCM, and all of the other 1990s stock flavors of the day where traders were trying to get an edge via bluffing via the ECNs.

And while I missed snapping the pic when the inside bid was flashing 3000-4000 contracts (um, I was trading at the time ... so this took a back seat), I did manage to quickly capture the essence of the "gamesmanship" (I'm being nice), just before the bottom fell out.

In the NHL, that trader would get two minutes for diving.

In the NBA, he'd be laughed off the court and lose future close calls as the result of such "flopping".

Yet my guess is the refs in the futures industry (no fouls) are even worse than those calling the NBA Finals (if you breathe on your defender, that's a foul).

At this end, it's one of the best confirming contrarian indicators in the biz ...

... while providing more than enough instant supply.

P.S. In this case, many of the bids did get absorbed, thus exacerbating the move.


Desmo said...

Just curious, what is the indicator below your TICK chart?

Don Miller said...


Desmo said...

Oh ok, I guess it just looked kind of squashed plus I never saw one with a zero line.

RoachApproach said...

Here we go: You read the tape - even you have often denied it. I just wonder how long they will play those cheap games which almost every pro knows about. How can it even work?


Don Miller said...

Roach -

I don't read the DOM tape in terms of strategy ... charts rule ... but when you're using the DOM for order entry, you just happen to see these funny aspects every now and then.

And such was the case in this instance.