Tools Required

Most if not everyone reading this will be aware of my dislike of technical analysis
and charting. From my experience and research the unreliability of charting methods
shouldn’t even be a topic of discussion. The evidence is overwhelming that the vast
majority of traders who use that approach fail. Further, if you understand how
markets and their participants actually operate you will see that the assumptions that
underpin a technical analysis or charting approach are clearly flawed.
So hopefully, you won’t be surprised to learn that I don’t use charts for scalping. I
simply can’t see their value or how they provide edge. In fact, using charts will only
increase the chances that you look at markets subjectively whereas in fact we need to
view markets as objectively as possible. Further, knowing the failings of charts,
means that I can specifically target small technical traders at specific times.
I also do not use market profile, volume profile or any methods that include using
accumulated volume. For the purpose of this manual it isn’t necessary for me to
explain my views on these indicators in any depth suffice to say I think they flawed
and, as explained earlier, I must trade in the moment, in the ‘now’.
So, what should use?
Our main tool is the DOM. We only trade on (good) DOMs and we must set them of
course to one-click trading. Do not clutter your trading DOM with too much
information or columns. The main information for us on the DOM are the bids/offers
and if possible the last trade (price and if possible, volume).
I am aware that many order flow traders add various other pieces of information to
the DOM including pulled orders, accumulated volume etc. In my opinion these
pieces of information do not help my style of scalping and again. However, if you
find that some of this other information really does add edge to your trading then by
all means use it. I would never suggest that I know everything or every method of
edge, it’s just that with these other pieces of information I have never found that they
add edge for me.
All trades should be executed via the DOM.
The next tool for us is Time and Sales (or Reconstructed Tape). We want to see trade
by trade data both size and price. While we can usually see the last trade on the
DOM, sometimes the markets move too fast for the DOM to show every trade and so
we should refer to the T+S to see anything that we may not have seen on the DOM.the quant who then has to verify them mathematically (with his math PhD) and
invariably Gary has figured out the plays in his head. He’s a clever guy – you don’t
make markets for options without having a good head for math. I wouldn’t call him a
nerd as such – but only because he plays soccer and nerds don’t play sports.
There’s a lot to learn from this book – it isn’t long, which is good because it gives you
areas to focus on – just not 100 of them. It is full of knowledge you will not find
anywhere else. It is the result of years of Gary being a market maker and advising to
both hedge funds and HFTs (who, as Gary explains, aren’t really making markets).
This is a gem that we are all lucky to have access to. With this information and your
hard work, this information will pay for itself many times over.

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