the DOM Trading Constitution

Written August 20th, 2018

I make it a goal to document my trading journey. I also try to share my findings, to open them up to criticism. The following are some points I have concluded through three weeks of observing the price ladder on 10-year US Treasury Notes. "v" signifies market velocity, and <v> is magnitude of market velocity.

1. Cumulative bid/ask have little to no meaning, but they have emphasis during the cash sessions and high octane markets, due to majority of orders being composed of real traders as opposed to market traders and algorithms.

2. v picks up when price discovery is inbound.

3. <v> is determined by relative trading size of day.

4. When ask-side begins to stack, and is accompanied by a decrease is <v>

5. There is high volume and v at key levels, and a bounce is probable.

6. ZN sustains relative v throughout move/price extension

7. Do not guess market direction, and instead build conviction off DOM, and key levels on chart.

8. Reversals can be determined by v and bid/ask stacking action.

9. Shorting volume nodes on price distribution when there is low v is a good reversal play.

10. High v breakouts and moves have 6-10 tick moves.

11. Bids get drained on uptick.

12. Asks get drained on downtick.

13. v drop signals probable retracement.