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just a few thoughts...


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 Monika 
Frankfurt Germany
 
Posts: 14 since Apr 2020

Hello everybody.
I have the following request and maybe someone can help. It's about volume trading. The S&P 500 MINI is the same as the MICRO, the chart is identical, each bar is the same. The only difference is the tick size and the volume traded. An example: If the volume on the MINI Chart is on BUY because large quantities are bought, it does not necessarily have to be at MICRO. But MICRO rises too! The same thing happens of course upside down. So volume-based trading in the markets would be absurd, wouldn't it?

Something else.
An example:
DAX, S & P500, NASDAQ100 all are stock indexes so they mirror each other. I tested the following in the demo account. Take the Nasdaq100 chart, but trade the DAX. And it works. But that also means that if there is resistance at one price in the Nasdaq, this also exists in the DAX chart. Now I wonder which game is being played here?
Have a nice day.
Monika


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 matthew28 
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Monika View Post
If the volume on the MINI Chart is on BUY because large quantities are bought, it does not necessarily have to be at MICRO. But MICRO rises too!

They are kept in line by arbitrage traders. The Micro can't rise if it isn't being aggressively bought. The only way price can go up, whatever the product, is if somebody buys at the Offer price and clears out all the resting orders and any hidden iceberg orders at that price. Even if all of the inside Offer was pulled from the order book while traders were hitting the Bid, the price wouldn't go up until somebody bought at least one contract at the new higher Offer price (the spread would have widened slightly).

Quoting 
DAX, S & P500, NASDAQ100 all are stock indexes so they mirror each other. I tested the following in the demo account. Take the Nasdaq100 chart, but trade the DAX. And it works.

Depends on your timeframe. At the end of the day all US indexes will often be up or down together, especially during major news events when people find their uncorrelated basket of markets suddenly all go to a correlation of 1.
But I have three DOMs up for the main US indexes and frequently I will see divergence at the open with one product being sold and another bought, the NQ say being sold below its VWAP while the ES has buyers supporting it above its VWAP. After all the US indexes all relate to different aspects of the economy. If Amazon is getting hammered that will effect the relative index more than the others, same for Tesla say or banking stocks, airline stocks etc. And if trading the Dax during the European session before the US open the US indexes will probably drift along with it and the foreigh indexes, but in the US session US sentiment and news will matter, not whether the Dax happens to be ticking up or down.


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Last Updated on May 5, 2020


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