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August 29, 2018, 12:05:31 AM |
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I'm genuinely interested in the answer to the question posed in the title, "Why don't more people trade from the depth chart?"
I found a group of traders that do just that, and the success I'm having is pretty crazy. (The group isn't the point of the post, but I'll leave a link in the comment section if you are curious.)
The way I see it, the depth chart represents two things. One directly, which is the cost of what it would take to force the price one way or another. Obviously people pull their orders, or trade with themselves, and all sorts of other things, but in practice generally a good portion of the order-book is legitimate and intends to go through with that order.
The second is the sentiment surrounding the current price. Are people placing buys but changing their minds? Replacing them higher or lower? Are the sells starting to pile up?
It seems to me that the depth charts are ripe for "If you understand how humans operate, you can make a ton of money off it."
So far, it seems to be working.
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