Bookmap Education Course Part 1 | Trading Order Flow | DOM | Market Depth Trading

all right well welcome to the uh bookmap educational course uh this is going to be a a series here uh Parts uh one through four uh we're going to go through part one today uh tomorrow part two and then on Friday Part three uh and then next week we'll uh do it again and then get to part four as well uh which will be uh about more advanced features uh today's uh uh course is going to be uh intro to basic Market mechanics and uh I hesitate to put the word basic in there uh this is actually um uh it's essential to understand this information uh but it is uh as well uh uh actually gets quite complex uh uh pretty pretty quickly but uh this these are the mechanics that move the market okay so uh we're going to go over this in uh in some detail uh and then um uh you know show some some examples in bookmap uh and um uh how you can uh identify these all right risk disclaimer uh trading equities and Futures involve substantial risk of loss is not suitable for all investors uh past performance is not indicative of future results uh for more information you go to book map.com become a member there uh and you'll have access to a lot of the free resources uh and then um uh you can reach out to us uh at support at vpr.org uh and um I want to show a few more resources here uh so uh here is our website uh we also have Twitter you can follow us on Twitter uh and then um uh we also have a YouTube page uh and uh I'll reference this a little bit later because there's a few videos I want to show you okay and um all right let's move on okay uh a little bit about me uh my name is Bruce Pringle I've been a Trader for 10 years in a variety of markets I'm a product specialist at bookmap I lead the uh education uh trading uh here at bookmap uh and an expert uh in order flow and Market micr structure okay I just showed the Twitter uh and the uh YouTube as well so um uh and support at bookmap dcom right okay so overall uh this series the goals here uh what we're going to go through uh in this educational course okay we're going to provide you a structure uh uh structured understanding of today's markets we're going to cover uh theories uh and practical uses uh and we're going to give you something to take away and use all right so we're going to give some strategies and some setups some training exercises uh and this is all uh hopefully going to allow you to uh um with the high potential here uh to enhance your trading execution right uh this is going to be a reference guide for you to return to uh if needed uh you will always have it uh and then during the the daily webinars we are going to uh uh cover this uh in the live markets okay so you'll always have the course to come back to but in the uh live webinars uh will'll go over Uh current uh uh condition of the uh the live markets uh using the same techniques used or learned from these courses okay and we're also going to uh introduce you to Advanced hft or high frequency uh trading Concepts and applications and this is both for futures and equities Traders okay all right today's course uh what we're going to go through we're going to start off with basic terminology it's important to understand that that we're all on the same page here uh and then we're going to get into the uh Market mechanics and and these mechanics visualized uh why price moves price sweeps why price trend stops and price Behavior Uh how it moves and then we're going to get into some of the training exercises later okay who is this course for right so uh this is for uh retail and professional Traders alike uh prop Traders uh Dome or or Price ladder Traders uh and uh because we can show the historical limit order book and Order flow uh this is also uh applicable to swing Traders uh and spread Traders right so for the hft environment um a lot of the Quant and hft algo Traders uh are especially going to um understand this uh today's lesson uh but there is still a lot of good information in here uh for uh for the quants uh Financial engineers and students uh and this can also apply to uh compliance officers right so terminology we're going to start off with liquidity okay and uh we're talking about liquidity here uh obviously in the marketplaces uh we're talking about the uh the limit orders okay the uh the depth of the market uh where Traders are lining up to be buyers or sellers they're bidding and offering uh in a market and they're providing liquidity they are making the market uh without them uh price would be uh uh very very hard to Define okay the bbo okay this is the best bid and offer okay that's uh uh the inside Market exactly where price is currently trading uh hitting the bid okay that's where uh we're going to talk about um uh aggressive uh volume uh that uh takes liquidity uh off of the uh the best bid okay someone hits the market sell button and they'll take liquidity lifting the offer offer is the opposite uh they'll hit the market buy button uh and they will take liquidity off of the best offer okay the Lo the the cob and the Dome okay limit order book centralized limit order book and uh depth of Market okay they're all basically the same thing uh the the clob is uh kind of important to understand though because um uh the centralized limit order book uh is the um uh really what we're talking about here uh and and and taking the data from there uh and then uh transposing that onto the chart historically all right we're going to talk about uh aggressor volume classification uh that's the market buys and the market sells uh the intent of trade uh that is the the Traders lined up on the bid or the offer uh in the depth of Market okay the current order book uh is the current state of that order book right now what's going on in the order book the depth on the offer the depth on the bid uh the um um best bidden offer the last traded volume uh and uh and the spread okay and then we're going to get in the historical limit order book uh and uh order flow uh which uh I'll I'll Define it we'll we'll see as we go on because we record all this data uh in that current order book and then uh extrapolate that uh and transpose it onto the historical chart okay all right uh let's see uh how how can the order book and orderflow data help you right well uh as I was just explaining uh the current state of the market any Dome will do this all right uh there's no lag to it uh it's showing you the liquidity at Price levels uh is giving you the uh the best bidden offer in spread uh the current price and the last traded volume it is the current state of the market okay and then uh it gives you an understanding of where price might go uh looking at high liquidity uh that you can Target that's going to be on the be on the U depth of Market in the on the on the bid or the offer okay and this gives you an advantage over the competitors you can start to understand their activity uh recall that this is a zero sum game uh structure uh within the marketplace okay and we're going to integrate this uh information within the historical uh limit order book shortly okay so Market mechanics uh the um we're going to go through some basic examples uh and um uh now this this uh course uh is about uh education okay but we're going to show bookmap uh and uh and why uh that's because it visualizes uh this uh Behavior Uh very very uh nicely in fact the story of bookmap uh we uh uh came from the hft environment developing alos uh trading in the high frequency U um environment and uh needed some sort of visualization of where those trades were getting filled uh and um software was developed uh to understand that um comprehend it uh and then uh I thought that was a pretty good idea and that uh led into uh bookmap becoming a product okay so that's why we're going to be showing bookmap here is to visualize these mechanics and you'll see exactly what I mean in just a minute okay so I need to show book map I need to go over it here uh what are you looking at uh in uh in the uh user interface uh this whole area here uh is historical data okay uh here is your current data here okay this is uh your uh best bidden offer here uh your last traded volume here uh and you'll see that this is the depth of Market uh I'm going to show you bookmap in just a moment here but this is the live market is a graphical representation of the depth of Market okay the current state uh of that market all right so here's your your best bidden offer here uh your depth on the U uh offer and your depth here on the bid okay all right so let's uh let me show you bookmap uh and we'll get it up here okay all right okay so here's bookmap we're looking at the S&P mini uh and um uh let's see uh I'll start off here and we'll just work uh backwards very very simply okay I'm going to take off all of the uh the data here uh so that we have something very very simple and straightforward to look at okay and indicators all right okay so most of us are uh very in tune to un understanding a u a Candlestick chart okay so here it is in bookmap all right uh and um uh no no further explanation is needed you can see that uh between each vertical dotted line here I have 15 minutes worth of data okay I'm going to start layering information on top of this okay first I'm going to add the best bidden offer okay now what we're looking at is the historic best bidden offer okay uh we can let me zoom in a little bit here uh and um so uh you can see this move to the upside here well this was the best bidden offer uh within this Candlestick period okay so this is a a one minute chart uh and um uh you can see the um uh the the closer of that Candlestick but here's where the best bidden offer was during that time okay the red line is the best offer the the green is the best bid okay now let's add on some volume dots okay so now what we're looking at here uh is the volume traded uh within uh that best bidden offer okay so this Candlestick that you see here this one minute Candlestick chart uh well you can see the um uh where that volume took place uh you can see the type of volume it was I it was a lot of buying uh that took place uh and um you can see that we're giving you the overall Delta of this information uh as well so there was some selling in here but uh not as much uh there was more buying in fact uh I'm going to zoom in here to this area I'm going to take a quick closer look here so as I start to zoom in um we can really Zoom down and and show exactly uh what unfolded in these markets okay and we can see the algorithmic activity here at very subsecond levels and we're down at the microsc level here okay all of this data is recorded but you can see as I zoom out this just becomes a bigger Green Dot okay and then you can see as I I continue to zoom out uh we give you the overall Delta because there's so many so many trades that took place here uh that um uh we need to uh uh give you we only have so much screen space uh to give you something that is uh useful so this this data is aggregated only visually or graphically okay and you can see now uh what comprise this Candlestick okay from the previous one here so this is very much like a footprint chart you can start to understand where the volume took place how much what type uh and um uh within U how much of a time period here okay so that's the uh the traded volume uh now we have that on the chart and um uh now we're going to uh add the uh heat map here okay so let's uh add that okay so now uh what are we looking at here okay well all of this this heat map uh is um uh the historical limit order book it's all derived here from the Dome okay so uh as I was explaining earlier let's just go right back to this current market um this window here uh we're we're giving a graphical representation of the liquidity in that limit order book okay so like right here we can see 1347 contracts well that that area is painted bright white in the current order book uh window here so we know right right away uh there's a reference here uh very high liquidity on the offer okay so that's what the uh it's just a graphical representation of that limit order book now where this really gets interesting is that's the current market this window here uh but we we take this data and we transpose it onto the historical chart okay let me zoom in just a little bit and you can start to understand the behavior of these Traders here on the bid okay look how they're adding and pulling liquidity in this area okay so we can start to understand their intent to trade at some of these levels do they really want to be buyers or not okay so that's the bookmap um uh interface in general uh and um uh we'll uh we'll look more at it a bit later uh but um I do want to compare this to a dome uh just so you guys uh really get this down all right so uh here's uh here's our Dome we have our our best uh price here well let's go through the price ladder here as you can see in the dome and here it is in bookmap okay the depth of offer okay here it is in the dome these numeric values here and you can see that those numeric values match up here uh in uh in bookmap now I also included the graphical representation of these numeric values here okay that is the offer here on the in book map okay here's the depth of bid okay so this is the liquidity here uh in the limit order book uh in a dome and then in bookmap okay and then here's our inside Market all right our level one data our best bidden offer our bbo okay so we just have our best bidden offer and you can see they match here uh within the Dome okay and then finally our last traded volume this number here uh matches with the uh uh last price uh and uh here's your last traded volume uh with your last last price here okay all right so now uh let's get into the um uh integration uh of that current data okay the uh uh going through the uh or orderflow uh data integration here the current data the real time uh in the dome uh is fleeting uh you know it's uh you'll see those numbers uh display very quickly uh and then they'll be redisplayed with uh and refreshed with new data so you'll have to remember uh those areas uh that may have been High liquidity or low liquidity uh and um and that can be little challenging to do because you have to remember specific areas and then when price comes back to those areas are they still bidding or offering do they still show interest that's where the historical limit order book uh and and data comes in very very um uh handy okay so we record all that data uh and then you can see and understand how we're looking at at bookmap uh we can understand how it unfolded in detail in specific areas okay uh and uh it's it's very easy to see it uh and that gives us context uh to those those areas as well okay so like I like I mentioned that let's say we have a double top pattern well they were bidding there before or or offering there before uh with high liquidity and if we return back to that area are they still interested we'll get context from understanding the auction in those areas okay this gives you a nice advantage over your competition all right so now let's jump in here uh and uh and uh yeah here's our historical Dome uh our current dome in the book uh and then um uh here's our our current dome in book map okay and jump in here and that why does price move okay we're going to cover aggressor volume okay Market transactions and the intent of trade okay the um centralized limit order book auction okay so why does price move okay aggressor volume explained here uh we're talking about the uh the limit orders are they're passive uh they sit or they rest uh within the uh depth of Market okay they provide liquidity they want to be buyers or sellers within those specific areas uh on the price ladder okay Market orders this is the aggressor they cross the spread and they consume the liquidity on on the uh in the depth of Market okay they'll consume the limit orders okay so uh most of us uh are are familiar with this but this is the the uh classification of the volume that we'll be looking at here is the aggressor classification the market orders okay the transaction all right uh uh uh price trades uh where this aggressor is matched with the liquidity in the best bidder offer right and then now let's start to jump in here and uh we we'll go through some examples okay uh here's current price uh trading on the best bidder offer okay here uh the last trade that just took place here was it was a market buy with a volume of one right here okay now this is just illustration uh we we can see the spread here uh we have the uh the liquidity uh within the um uh best bidden offer here we have 12 contracts on the offer and uh on the best bid we have 16 contracts okay this is where last traded here so that is the current price okay now a very very simple um uh Market uh uh sell order okay the aggressor hits the hits the bid uh with a market sell order okay they consume the liquidity here so we we did have uh 16 contracts well they consumed one and now we have 15 contracts and price has now changed price has moved okay one tick okay this is how the market uh uh moves uh the aggressor is the one that uh that can move the market okay now here's an example of what that looks like in bookmap right you can see the U the aggressor here these little green dots here are Market buys okay and price was trading here uh at at 5289 we're looking at oil okay uh and then you see the aggressor here uh the market cells with the red dots on the best bid okay so um it's just going back and forth here now you can see uh something pretty interesting already uh and you can see the complexity we're going to get into with just this very very simple binary example we're recording here algorithmic activity okay I mean very very clearly you can see you can see the time uh and the orders and the size of the orders are all equivalent here so these these two Algos are battling back and forth okay uh and you can start to understand uh that uh this this is really how these markets trade today okay there's all these algorithms that are are trading uh uh back and forth and we can understand their behavior here uh within uh the historical limit order book okay all of that record uh which would be rather difficult to see in the dome okay uh here's another example uh as well uh and we're going to see a lot of this kind of information uh and data displayed uh in book mmap this is a a an algo here uh that is uh uh lifting the offer but it's not really lifting price here okay it's trading uh on the best offer okay and you can see it's very very clearly uh with the the mechanical movement here or of the buying and selling uh that they are consuming liquidity here but they're not lifting price against them okay so this is they're uh accumulating a position here over time uh without moving price against them okay so uh now let's get into uh next why does price move the imbalance uh in the intent of trade okay so what we're going to talk about here large imbalances uh in the order book uh that skews the auction right uh now the size of these limit orders is going to affect the best bid offer right so uh they may pull liquidity uh they may add liquidity uh you know there might be a big spread uh now when the uh mechanic mechanics here uh operate uh and you get our market sell order to move price uh it hits the bid well we might see a big uh move in that price uh without um uh much volume uh it's because they pulled their uh liquidity there was an imbalance uh and U they they pulled their liquidity on the uh on the bid and um and the transaction occurs at a at a new lower price okay let's go through the example right here's our our volume of one okay uh we and uh and then they hit the bid here with another volume of one right so uh 12 contracts 16 here on the bid one is consumed that becomes the current price now we have an imbalance here in the uh depth of Market on the uh on the offer okay you can see previously we had uh uh you know pretty equal uh uh book here all right uh rather equal I think there was a bit of a skew uh in the uh on the bid side but um uh we can see this is rather balanced right now we have an inbalance okay 120 contracts versus it was 16 okay 24 contracts and 32 they turned into 85 and 7 to so we have a very heavy imbalance here uh in in the limit order book okay uh they're they're uh offering here with uh a lot of uh uh with high contracts okay big contract size how that affects price okay well we can see here these 15 and 18 contracts here on the bid uh these guys they they get scared uh they don't want to uh to trade any longer at these levels and they'll pull their liquidity okay so our last trade still occurred here with that volume of one okay but the best bid has now uh shifted down uh a couple of ticks okay so now uh we're down here uh uh two ticks um lower uh at at 22 contracts okay right so with a volume of one okay sell Market volume of one they've moved price now uh uh one two and three three ticks here okay we consume one um contract here and that becomes the current price and this is how the intent of trade uh can uh affect uh and move price okay uh when in periods of high liquidity you're going to see this all the time okay uh and uh uh I'm sorry of High Vol volatility um so uh uh fundamental uh releases or economic data releases uh as well as just a skittish Market uh there's a lot of volatility because there is a lack of liquidity uh and then any imbalance uh with high liquidity uh you you'll see pushes and pulls of markets very quickly okay that's this is what this looks like in book map okay we have high liquidity here uh that stays in the book but we come up into this area here uh and they get very very aggressive we get an inbalance in that book okay okay and you can see that how how it how price is affected here okay uh that uh is is it's pushing price down uh into uh an area and uh you can see we're going to get very Advanced about this uh uh with talking about potential spoofing here uh into uh liquidity here on the bid okay but uh the imbalance in that book okay so uh advanced concepts uh the potential spoofing here uh imbalance to uh Drive price lower uh and maybe get uh uh off uh bids filled uh in uh at lower price levels okay uh there's also U uh you know strategies that uh you can uh and we're going to go over later uh with momentum uh looking for momentum uh or spoofing uh you can start to look for that or layering uh icebergs uh and ignition ignition alos all right so let me cover uh the ignition algo here you can see the example uh with the imbalance here uh in the uh in the limit order book on the offer we see it once they come in again that algo is still working here and then finally you can see this one here and it finally does Drive price lower okay so now we're going to start to understand and comprehend this data uh within uh the historical chart okay because it's all recorded here and you can see the um you know the you know we're not we're not talking about just uh this is not just uh uh milliseconds of data uh you know this is uh 10 seconds between each vertical dotted line here uh you know so we're looking at um uh you know like a minute here uh of uh of price activity a little bit more okay but you're going to be able to utilize and consume that data uh and look for uh uh you know a potential uh uh order uh execution here uh that's going to be enhanced right here's another example uh we have very high liquidity here on the um best offer jumps into the book very quickly uh and I'm going to show you a sequence here okay so we can also see them down here on the uh on the bid uh at this uh 2420 level uh and um uh let's uh how did this unfold okay so here here that same action is here again and we can start to see uh how it affect price okay it affected price it drove it lower uh into uh some of these lower areas here okay we're g to we're going to talk about this concept um uh a bit later but I'm going to introduce it uh between shortterm High liquidity uh skewing the auction okay and then longer term liquidity here that remains in the book okay so this longer term liquidity is already already understood by the auction right but this new information that jumps into these areas and then pulls uh needs to be digested by the market okay and and you can see that imbalance that heavy imbalance has an effect on price here's another example you can see this is the uh the open uh and um uh uh 9 9:30 open here uh we see an imbalance here driving up into high liquidity here longer term High liquidity okay was uh basically in the market uh from the get-go of the 930 open uh and then here's our imbalances with shorter term High liquidity driving price up into some of these areas okay so next concept let's go over sweeping of the order book so what we're talking about here is just not moving price back and forth we're trading through one or more price levels uh this is an important concept to understand uh this is typically how price trades into a new Range all right and we're going to witness this with a combination of uh imbalance in the order book uh and very sizable aggressive Market orders okay so here's an example uh we'll start off again here here's our Market uh uh buy with volume of one but now uh you can see here we have a market uh sell with a volume of 50 okay so what a occurs they're hitting the bid with 50 contracts here we have 15 15 contracts uh on the uh on the best bid at this at this point okay well it sweeps through that 15 so uh 15 trade uh that is the um uh last uh last trade that took place here uh is still the current price uh now what what remains of that 50 lot order well it it's still still a market sell um but it already swept this price level but it traded 15 so there are 35 contracts remaining in that big uh market sell order okay so what what occurs uh next price level still hitting the bid uh it it sweeps through uh this price level here with the 18 contracts right and uh and you can see we swept it uh and now there's 17 left still remaining in that 50 lot order uh and um and and it's still hitting the bid here but we have 22 contracts here okay so what unfolds right okay it takes 17 of them but there's still five five remaining okay and that is our sweep of the book okay this this 50 lot now uh is filled okay and and you can see we swept down uh you know a few few ticks here into lower levels right uh important concept too uh a lot of times and it depends on the market um uh thinner markets you'll see this a lot more often the es you will rely see this but you can see the spread has widened out here right because uh they swept through all these levels here but where's the best offer okay it's still up here at at this at this level with these 12 contracts okay uh so um there's a vacuum here uh within the there's a bigger spread the spread widens out between these two okay A lot of times the es though very very quickly will fill in right what does that look like in bookmap all right well this is a fundamental release uh and um uh we can see the uh uh just a massive U uh red dots here uh sweeping each price level as it goes lower okay you can see the vacuum effect that we're talking about uh as um we return almost back to where we uh dropped from here okay here's another example uh and this is a uh a market um Market buy okay sweeping uh sweeping up to new levels okay we see the uh this is the initial release uh you can see that's uh uh here's a at 10:30 this is oil uh it's the um oil inventories actually nothing really occurred for a few seconds and then all of a sudden they they really uh lifted the offer here okay okay let's look at some of the advanced concepts and some of the sweeping here here all right uh like for example uh looking for pullbacks uh start to enter if you're if you believe that uh The Sweep here uh was um we're going to start to accept down to lower levels well then you can start to enter some of your limit orders in some of these areas here okay we're looking for that pullback uh into some of those areas because there's been a vacuum right guys I see your your questions here I'm going to go through all the questions um later uh but um uh I want to I want to continue on and get through the presentation okay so uh you could also play momentum uh looking for that sweep and then joining in uh or uh maybe you're looking for rejection and I'm going to show an example of that you're also going to see uh book flipping uh you might see sweeps into icebergs uh and then uh those ignition alos as well okay all right so uh here here we are um with an example uh in uh uh oil again and and you can see uh we swept down through uh to a lower level here and it looks like price is uh starting to accept down below this lower level here here's our pull back to it and we get another continuation all right we actually see another sweep uh to the upside okay and it and um this one uh it sweeps up into uh basically where it dropped from up here uh but um this one this is a little different here and I'll I'll explain in just a second all right uh we see yet again uh another sweep okay price starts to accept Above This level and we sweep through it we get our pullback here and we sweep on down yet again and we can see very nicely and cleanly we get our pullback right to where we Dro from so this concept of sweeping although the mechanics look very simple is very profound uh you can start to see we're going to lead to a very nice setups uh to understand uh looking for those vacuums or maybe you want to join the um uh uh momentum on the way up uh anyway uh we can start to uh uh look at some of these levels here and then also how they start to affect the volume profile we're going to cover volume profile tomorrow uh but you can see as I drew a line across here we're going to have our point of control up here uh basically for this range whoops sorry uh and uh and we that's where we come up and T test okay now the sweep down through this area here is going to be your low volume node okay and you can see it here and yet again here's uh where we swept down and broke from again here and that is your low volume node here so now you're going to start to understand the sweeping action and moving to lower levels or higher levels uh within the volume profile okay now here's an example of um a rejection okay and um we can see that this is again oil uh that uh we have a range uh situation uh developing here we sweep down uh into a lower level uh but we we turn right back into the range okay so um uh you can uh you can also play it that way if uh uh this is a lot of the times what you'll see in this kind of behavior are stop runs uh getting Traders um uh you know stopped out running the wrong way maybe buying or or I'm sorry selling the breakdown here and then trading back into the range and then you can see they actually traded to the opposite side here and grab all the stops on the other side all right so there's uh the potential here for understanding this and trading it uh as rejection okay here's a concept here uh of a flip of the book so here's our sweep as you can see uh and then uh here's the the limit orders on the on on the bid here okay we swept through it uh and um uh yet uh now what do we return back to okay we you know actually I would start to anticipate returning back to this level here uh but now we're starting to understand a flip of the book because High liquidity here on the uh on the bid has now flipped to the offer and that's where we come back and test right not only once but twice and three times here okay so you're going to start to extrapolate and understand this data Within the historical limit order book chart all right so that's uh sweeping let's get into uh why price trend stops we're going to go through absorption and exhaustion okay absorption uh is the limit orders that uh that take up and absorb all the aggressive buying or selling okay it could also be Iceberg orders but we're going to cover that in the advanced um uh session okay let's go through an example okay start off again with our our Market buy volume here of one uh and um uh that's where current price is trading but there's a distinction here okay we have longer term High liquidity uh down here in the depth on the bid okay so 125 contracts and um uh compared to very very high compared to all the rest of the book okay now let's just uh speed things up here we sweep the book lower into some of these lower levels here uh that 50 lot is U uh you know there were 22 contracts here it takes a 17 now there are just five left and that is the current price okay so we still have now we're down at the one tick away from our 125 uh contracts okay so they sweep it again here sell Market order volume of 50 okay what happens okay they hit the bid those five trade uh and now we have a volume of 45 uh trading into these 125 contracts okay the 45 trade now that becomes uh 80 contracts here on the uh on the best bid they absorbed all of those contracts uh or those 45 okay from that uh that 50 lot okay they hit it again here okay market sell with a volume of 50 what unfolds okay so hitting the bid we have 80 contracts here okay 50 of them trade and now there are 30 left they absorbed all of that um uh order at one price level okay uh and um uh so now they this this one Trader or let's say it's one actor one Trader uh they um they came into the market very aggressively with 150 contracts one swept the book lower uh one uh swept the book just one price level and then was absorbed and and then that last uh 50 lot was completely absorbed uh at that price level okay and uh there are 30 contracts still remaining at that price level okay so let's say someone jumps in now uh and uh with a market buy volume of just one okay well uh if there if the spread is still uh had widened out after that sweep uh and remains that condition just with a volume of one uh they've moved the price up three ticks all right so uh this can allude to a lot of different things we can start to understand trapped volume in some of these areas uh or you know maybe uh you're trading in down into an iceberg order uh here on the um on the best bid okay all right so uh as mentioned uh the aggressive buyer lifts uh lifts price or lifts the offer uh with just one contract and that becomes they take one liquidity one contract of liquidity off of the 12 year uh and that now becomes the current price okay uh and um uh let's go through the example here uh in bookmap what does this look like okay here's our high liquidity here uh on the offer okay uh we see the aggressive Market buys uh trading into that area and they remain in the book okay these guys up here at 4420 they want to to be Sellers and you can see they continue to the aggressive Market buys uh continue to trade into that area uh and the and the the um uh limit orders on the offer absorb all of that aggressive buy right it it finally dries up here and then you can see that they very aggressively uh then um hit the bid uh with a large market sell orders uh we trade below that level interestingly enough just like the sweep uh we we trade now below at at a new level here okay and you can see some uh same same concept here uh down on the bid uh they're they're starting to absorb it down here but they actually uh overpower the uh limit um uh buys here uh and they sweep through that level okay but this is the absorption part up here okay another example uh trading into high liquidity here uh you can see the uh aggressive um uh Market cells uh taking place here on the best bid uh and they just don't take it any lower okay so any of that aggressive selling has been absorbed and uh and then we can see the uh price uh they start to lift the offer with aggressive Market buying uh liquidity pulls here and we continue on up okay let's go through a few advanced concepts uh V bottoms uh vbottom reversals uh pullback strategy that we covered earlier uh you can look for stop runs trap volume and book flipping as well uh and um let's take a look right well here's sweep down to the bottom uh and then you can see look at how they uh very aggressively come in here this is uh this is gold uh and they come in here with 149 contracts uh at this price level here of uh um at 1244 a half uh and um and they remain in the book okay the uh you would maybe start to anticipate a move back to where it broke from but this information here understanding the depth of the uh of the market uh uh gives you that Insight uh that uh uh we're not going uh back up to here because these guys want to be uh sellers at a lower level right uh here's an example in apple uh you know we um uh book map is also available for uh for equities in the US uh and let's go through this a really nice example here uh of absorption okay uh you can see the aggressive selling uh into some of these areas here and uh finally down here uh we see um uh 25557 contracts trade uh on the um uh best bid you can see it's all selling here okay in our in our profile right and you can see all of the selling here look at the buying here there's very little right completely absorbed by the larger Traders uh with their limit orders okay and this is going to be our um uh example with the V bottom here but uh the um uh all absorbed here we do actually get that retest uh but we don't go all the way down to the to the bottom we get we can start to anticipate those retests uh to um uh maybe where we start to see some buying come back in all right uh and uh and this is what it looks like on the higher time frame okay so a real uh very quick sharp drop uh into an area here uh on the um uh on the bid completely absorbed and you can see the reaction that it had in the V bottom okay all right so uh that's it with the um absorption let's go over exhaustion okay what is it it's the lack of aggressive volume activity okay so um you can see here uh we're going to go through uh the market uh um the buy Market order here volume of 50 okay uh and had already occurred so we still have 12 contracts here and that is the current price okay on the best offer okay now they the they they come in and they sweep the book lower lower here uh 15 contracts uh and uh and then um uh and then 13 uh and then there's they're still hitting the U uh hitting the bid here uh now we have a a sell Market order volume of five occurs here into these 10 contracts I do need to um uh just uh mention here look at the uh lack of now it doesn't have to be lack of liquidity uh for it to be exhaustion okay it's a lack of aggressor uh of volume uh that makes it exhaustion uh but a lot of times you won't see very high liquidity right so uh we come down into uh and now we're hitting the bid with five contracts uh into 10 on the on the uh on the bid so it trades those five uh and and you can see that uh becomes now the current price okay next example they they uh continue to um uh hit the bid we have another um sell here of five what occurs well they sweep that level okay that's your last traded volume now we're trading down here on the best bid into these eight contracts all right uh but uh that's it uh there's uh there's no more um uh buying uh there's a lack of uh you can see that uh it started off as pretty big uh but um it started to dry up in some of these lower levels here and uh instead now uh they don't uh come down and test the uh the best bid here these eight contracts uh and instead uh they um Market bu with a volume of five um lifts the offer into these 10 contracts here and that becomes the current price okay all right this is what it looks like in bookmap and you're going to see this all over the place in bookmap right uh you're going to we can see we come down into an area and they're pulling liquidity uh in this area here but look at the uh the the aggressor okay there's no no trades that took place here here here uh we finally get a little bit of market sell uh here uh but we test a little bit lower and there's complete lack of trading uh one tick lower okay well we we rotate back up we come back down again and complete lack of trading no one's interested in trading at this level okay so the the mechanics here are that uh uh if no one wishes to trade at this level well price is going to trade higher right it's going to look for a liquidity now uh on the uh on the best offer okay now it's looking for uh uh for Sellers and where are the sellers well they're up in some of these areas but they're you can see them pulling their liquidity right all right uh as mentioned uh uh a lot of times what you get uh with this uh um absence of uh the aggressor uh is um uh in these trending markets uh you'll see the pullbacks uh and you'll see very little um uh aggressor uh volume uh take place at at some of these areas okay so you can see complete lack of U uh we have one two three four basically tests here uh in uh into this uh this price level in Gold uh and uh and and no selling okay so we rotate back up and we actually sweep the book one Higher we get a minor pullback here uh and uh and you can see there's there's no one interested in selling okay there's the sellers are out of the market basically right we can also see look at the limit order book here we see an a skew in that auction so where do we come back up into okay we trade back up into the it's searching for that high liquidity on the uh on the best offer we start to trade into that area we get a pullback again and we can see lack of uh aggressive selling right another sweep uh and then uh and then you can see we get the nice pullback here but uh a lack of lack of selling right so um start to uh to piece these together into uh some strategies looking for exhaustion points after a sweep all right okay um Advanced uh Concepts here uh starting to understand that lack of activity uh well uh one concept I just wanted to uh to go over here uh was uh it it it doesn't necessarily mean the uh that there's a lack of high liquidity okay that may exist right and this in this example it does and it looks like they're starting to absorb it uh here but then there's just a lack of um uh aggressive buying right we get one two three tests here uh and uh no interest at all we start to rotate lower okay and I also want to integrate this into the bigger picture since we're looking at um you know micr structural stuff here uh in the bigger picture uh this is what occurred right uh we uh we can see the aggressive um uh Behavior with the uh limit order book uh wanting to uh offer at a lower price and then uh no one's willing to really take them on in these areas here all right okay and again that same concept of um uh you can see there's a little bit of trading uh that takes place here but look at the overall right as we sweep higher here uh into a new price level uh and uh there's just a very very little um uh aggressive selling compared to the aggressive buying okay a lot more Green Dots here right some sideways action here but now you start to see in the trending areas uh lot of green dots up in these areas very little tra here uh on the pullbacks okay and you can see the trending environment higher and where do we go searching for high liquidity that you find here on the um uh on the best offer okay all right so uh that's some of the basic uh Market mechanics uh but um and this is a essential stuff to understand uh but we also want to integrate into this how it uh not just why it's moving uh or stopping but how Okay so uh the volatility the depth of liquidity uh thinner markets versus thicker markets right thinner markets like gold for example you're going to see a lot of volatility you're going to see a lot of price movement backwards and forwards because there is a lack of liquidity right thicker markets like the S&P or the bonds are going to be slower moving uh and you're going to see a lot of pullbacks and re retracements back to areas where they broke from okay start to comprehend uh the behavior of the price movement uh and uh you're really G to gain a lot of insight uh with some of these basic mechanics okay looking for flurries of activity okay within the auction uh uh or the volume or within time Cycles like the S&P cache open okay or in the NASDAQ as well uh start to understand speed of the markets uh how quickly is that occurring uh or was it a slow movement that took place okay it's going to give a lot of insight to some of these basic mechanics all right uh yeah the uh fast slow retest liquidity shifts Etc each market uh has its own unique characteristics but these basic mechanics are all the same all right so let's end up here uh and um uh part one some of the training exercises okay so go back and start to identify these basic Market mechanics okay that we just covered uh and um uh start to mark up uh your charts uh the more the better okay uh look for the variations in how price moved Within These examples okay you can uh consider using the bookmap replay mode uh is an excellent way of uh of seeing this data you can replay it again and again within that replay file uh and then you can start to draw your own conclusions from these examples okay noting the different times the different markets the varying liquidity uh the speed that it moves Etc all right uh so um uh once you start to comprehend that uh you can start to anticipate these kinds of mechanics occurring in real time okay so understanding these basic Market mechanics are critical okay will lay the foundation for the next uh uh few uh few lessons that we're going to cover all right okay uh so um uh tomorrow what we're going to go through in part two is we're going toh take a step back and look into the bigger picture uh historically and start to understand order flow within structures okay micro structure uh and even uh uh maybe AIT a bit bigger okay and we're going to we're going to go over auction Theory and uh invol profile all right okay uh let me get to your questions uh and then we'll wrap it up and uh and call it a day okay yes it's being recorded uh recording will be up on the YouTube page all right let's see here uh algorithmic uh activity uh Michael no uh it's not all aggressive um uh Market orders uh but that example I showed that very basic example of uh accumulation uh is clearly an algo okay but uh most most the alos are um you see um shifts in liquidity in that limit order book uh but uh it can be a combination as well all right yes RR what this is recorded um is the sweep in the book a stop run it could be uh but not necessarily whatsoever uh and we're going to go go over that a bit more tomorrow within um some of the structures okay looking at micro structures okay ashon you're talking about uh looking for a pause um uh yeah well I mean you're going to start to you're going to notice uh that you know let's say you you get you see a very aggressive sweep uh down into an area uh well we're going to cover it uh more in the setups uh starting to understand uh that aggressive sweep uh did it auction correctly on the way down or way up uh and uh if that is the case it will lead to you know um you know higher probability of uh of you know looking for exhaustion on the way back up um and um uh yeah and then that that's where you can be you know starting to place your uh your limit orders uh Gunther U no um uh FX Futures uh bookmap will work with but not Forex okay not the spot Market the reason being is there's no centralized limit order book okay uh when exhaustion becomes uh induction to the opposite side um well not not really um you know I mean the exhaustion is just the lack lack of activity uh so uh uh the market needs liquidity and uh and the aggressor uh to trade uh to be matched uh for that to take place uh Maurice um uh yeah we um uh no no no think or swim platform at the moment H ason yeah I'm sorry the you you won't see the other this is goto webinar you don't see the other people's questions here uh let's see John um yeah the the dots uh in bookmap are the um that's the aggressor right they're taking liquidity okay yeah ation um uh well I mean you read that s you know uh understand that sweep and how it's auctioning uh and then uh and then start to anticipate and and like again like go go through the exercises here uh you know to uh see it again and again uh in uh in replay mode potentially here uh and then you'll start to get an understanding of what you're exactly what you're looking for you'll be an expert at it right absolutely Maurice this is uh uh something um Maurice is asking about swing Trading uh and uh finding volatility uh for option trades as well uh yeah absolutely this this is what uh is is distinct and and um uh unique here uh is that now with the historical limit order book uh let me take the candlesticks off here okay so let's look at the S&P right now okay well you can start to understand uh uh you know and because it's all recorded uh even for swing Traders uh very easily uh you can start to um incorporate this into your uh your trading I mean you look at how we came down into and the and we see the buying interest down here on the bid uh and then where did it come up to okay well you can start to Target these areas start to understand these areas of high liquidity here at uh at 2430 in the S&P right okay um let's see uh astion more about exhaustion okay uh uh I'm not I mean okay so uh exhaustion let's just take a look at the current market right uh and um uh here let's look at some of this trending action okay so um the uh uh look look at the this I mean it's not you know these these areas here uh I mean it's not complete exhaustion but look at the amount of trading compared uh to the higher highs okay these are higher lows okay sweeps up okay and this is you know we see it every day right uh we see a sweep up and a return back here and we see a lack of uh a selling activity uh look at look at uh the overall buying here uh in this area uh and we we can see that it's uptrending we see uh more volume and green uh aggressive buying uh at higher highs on the pullbacks we see very little volume uh aggressive cells okay uh it it might be complete exhaustion this is complete exhaustion here we see nothing that traded here but look at some of these other little areas here there's very little here it exhausted here we got a retest though uh and um uh we can see the uh there's just really a lack of uh of selling activity right okay all right a few more questions here and then let's wrap it up um uh Maurice if you're talking about um you know you're talking about the Greeks in um uh in options uh and um uh you know I I don't know I mean uh how those are going to be valued uh in your um uh you know looking at your your IV uh for example okay uh that that's that's that's something a little different right but uh you I mean you I think this is you're still going to see this the same type of behavior here uh and um I don't know if the um uh IV is going to go down on some of these pullbacks right uh potentially but uh maybe not right so it's a derivative and that's that's a little little more challenging uh there's another layer of information there okay all right and let me see here just a few more questions and we'll call it a day uh well um astion okay so here's an example of a sweep of of the book here uh to the uh you know in the S&P uh you're talking about this 1030 area um very aggressive it actually starts right here uh and there's a little bit of of selling in some of these areas but look at the majority right uh and um this was uh so aggressive uh and and such a a quick charge up uh well you know there's there's a complete lack of uh of Interest here we're starting to look at you can start to see a book flip here as well uh start to materialize uh there they're buying here on the uh they want to be buyers here on the bid uh but um this was aggressive enough that we don't even get a retest of the area okay so we just have a a a higher trading range up here right uh so that's that's how you're going to have to start to comprehend by looking at your examples and studying and understand like um uh you know know uh you you don't get that pullback right look at this look at this sweep here on to the higher side uh you can start to understand that well this wasn't as aggressive right it didn't take um uh as many ticks uh to the upside here we get a pull back to where we actually broke from here all right so uh that's uh that's how it's going to help uh but uh you're going to have to you know start to put those pieces together yourself uh you know we're covering the market Basics here uh and then uh we will uh go over more uh in um uh later in some of the other uh uh educational sessions oh SJ I mean uh on average what's the the approximate monthly return using bookmap I mean that's going to very uh you know tremendously uh different trades uh Traders different styles of trading um you know they might be trading once or twice a day or they might be trading like hundreds of times a day or thousands of times a day yeah astion that the stocks uh are um look a little different uh there's a lot less liquidity for the most part uh compared to the Futures all right guys well uh yeah thanks for coming uh and um tomorrow we're going to go through uh part two and um uh just uh that review again here uh part two is going to we're going to look at some of the micro structures uh and the same Market uh mechanics within the uh the structures right and we're going to start to get into auction Theory and volume profile within the order flow okay all right all right guys yeah thank you very much yeah all right I hope it was helpful uh and we'll see you tomorrow okay take care

Channel: Bookmap

Views: 257,881

Keywords: bookmap, bookmap tutorial, bookmap education course part 1, bookmap trading, Order flow, order flow trading, trading course, dom trading, Depth of Market, Market data, high frequency trading, trading order flow, order flow analysis, order flow trading strategy, how to read order flow, how to use order flow in trading, order book trading, how to read order book, heatmap trading, market microstructure, market depth trading strategy, depth of market, how to use bookmap, DOM

Id: 3m_Stn4hxCQ

Length: 67min 53sec (4073 seconds)

Published: Wed Jul 05 2017