Use of Market Depth in trade. Forex Bid/Ask Volumes.
Posted by Boris F at 11/8/2009 11:14 PM 
Categories: forex trading strategies
Tags: forex volumes market depth metatrader volumes order book
Categories: forex trading strategies
Tags: forex volumes market depth metatrader volumes order book
BJF Trading Group Inc. has developed a tool, which allows to look through volumes from more than 60 largest global banks and investment funds, such as ABN Amro, Barclays Capital, Bank of America, Merrill Lynch etc. We have received many letters with the request to give more detailed information about use of the given tool in trade. Learn more...
Many banks offer or bid the liquidity, and Market Depth represents this liquidity.
Market data, available in a Live trading environment, is also known as level 2 market data, the orders book, where the depth of market is needed to trade using trading systems that follow the order flow, such as scalping trading systems and advanced volume based trading systems and includes the following information:
Highest Bid prices: The best 5 prices that traders are willing to accept to sell.
Bid Volumes (in millions USD): Available at each of the price levels.
Lowest Ask prices: The best 5 prices that traders are willing to accept to buy.
Ask Volumes (in millions USD): Available at each of the lowest ask price levels.
Orders, which are currently present in the market, can be displayed by means of market depth. If there is match of orders, i.e. price of buy and sell orders is the same, these orders are filled. This means you won’t see them in the market depth, because they disappear from it. Such orders are registered in the trade history.
Using fix protocol, we receive real-time data from currenex on our server and then transfer them through dll on metatraders of all our subscribers.
You can use all basic currencies and timeframes for trading. Information about Bid/Ask pricing is drawn on the chart in the form of graphic objects (arrows). At hovering the mouse cursor over any arrow, you can see numerical value of a quote.
Bid/Ask volumes are displayed on the indicator (million dollars). Yellow line shows Imbalance between the Bids and offers. Imbalance = Bid Volume - Ask Volume
White line shows accumulation of Imbalance. From our point of view, this indicator shows if the market is overbought or oversold.
Overbought/Oversold (i) = Overbought/Oversold (i-1)+VOLUMEBid(i)-VolumeAsk(i)
It is very important to find such Imbalance, existing between Bids and offers, which has at least two to one ratio and appears for one-two minutes and more.
If the number of Bids exceeds the number of Offers by at least a two to one margin, you should open short position. The limit of such position should be at least 5 -10 pips, and stop about 30 pips - 100 pips
It would be better to use currency pairs with small spreads, for example, EUR/CHF, EUR/USD etc.
It is quite possible to find two-three good imbalances during one day, maybe more. I mean such imbalances, which will exist more than one minute, and the imbalance will be confirmed by price action. But you can’t fully trust to any method or indicator, so the use of stops and limits is necessary and obligatory. That’s why ten-twenty pips are quite enough for scalping, as you only need to find a “loophole” to start trading.
If you have any questions, please post your questions on our Forex Forum
Best regards,
BJF Trading Group inc.
Market Depth Explanation
Many banks offer or bid the liquidity, and Market Depth represents this liquidity.
Market data, available in a Live trading environment, is also known as level 2 market data, the orders book, where the depth of market is needed to trade using trading systems that follow the order flow, such as scalping trading systems and advanced volume based trading systems and includes the following information:
Highest Bid prices: The best 5 prices that traders are willing to accept to sell.
Bid Volumes (in millions USD): Available at each of the price levels.
Lowest Ask prices: The best 5 prices that traders are willing to accept to buy.
Ask Volumes (in millions USD): Available at each of the lowest ask price levels.
Orders, which are currently present in the market, can be displayed by means of market depth. If there is match of orders, i.e. price of buy and sell orders is the same, these orders are filled. This means you won’t see them in the market depth, because they disappear from it. Such orders are registered in the trade history.
ECN Volumes Tool Explanation
Using fix protocol, we receive real-time data from currenex on our server and then transfer them through dll on metatraders of all our subscribers.
You can use all basic currencies and timeframes for trading. Information about Bid/Ask pricing is drawn on the chart in the form of graphic objects (arrows). At hovering the mouse cursor over any arrow, you can see numerical value of a quote.
Bid/Ask volumes are displayed on the indicator (million dollars). Yellow line shows Imbalance between the Bids and offers. Imbalance = Bid Volume - Ask Volume
White line shows accumulation of Imbalance. From our point of view, this indicator shows if the market is overbought or oversold.
Overbought/Oversold (i) = Overbought/Oversold (i-1)+VOLUMEBid(i)-VolumeAsk(i)
Scalping strategy with use of MetaTrader ECN Volume Forex Software
Learn more about ECN Forex Volumes Tool
It is very important to find such Imbalance, existing between Bids and offers, which has at least two to one ratio and appears for one-two minutes and more.
If the number of Bids exceeds the number of Offers by at least a two to one margin, you should open short position. The limit of such position should be at least 5 -10 pips, and stop about 30 pips - 100 pips
It would be better to use currency pairs with small spreads, for example, EUR/CHF, EUR/USD etc.
It is quite possible to find two-three good imbalances during one day, maybe more. I mean such imbalances, which will exist more than one minute, and the imbalance will be confirmed by price action. But you can’t fully trust to any method or indicator, so the use of stops and limits is necessary and obligatory. That’s why ten-twenty pips are quite enough for scalping, as you only need to find a “loophole” to start trading.
Learn more about ECN Forex Volumes Tool
If you have any questions, please post your questions on our Forex Forum
Best regards,
BJF Trading Group inc.
I've tested your ECN tool for manual trading 2 month and received excellent results.
eurusd +347 pips
usdjpy + 178 pips
EURUSD StopLoss 70 pips TakeProfit 5 pips
USDJPY StopLoss 80 pips TakeProfit 7 pips
Can you recommend me other profitable pairs for trading. What do you think about audusd?
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I think, you can try audcad and eurcad.
Do you use any additional indicators form trading or only ECN Volume forex software?
regards,
Boris
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