The term order book is becoming more and more popular among individual traders, some would say it’s a new passing fad and shouldn’t be bothered with…
I sincerely believe that these people are simply misinformed about what the order books is.
For whom is the order book intended then?
It’s the indispensable tool of the scalper! Why is it so important? Well, simply because scalpers need 3 essential pieces of information to work professionally.
It should be noted that scalpers cannot find the same information on the charts as in the order book.
The market is a huge battlefield where buyers and sellers are constantly competing. The order book allows you to see this battle in real time. Your role is to analyse who is about to win and join their ranks.
1 – The BID displays traders’ buying intentions. With this information we are able to see if the buyers are in control and the level of aggressiveness. The more buyers are present and the more they attack the sellers, the greater the probability that the market will rise.
The ASK displays traders’ selling intentions. The more traders intend to sell and attack the buyers, the more the market will be inclined to go down.
2 – The PRINT INSIDE shows you how many trades are being executed and at what price. It should not be confused with the BID and the ASK which are only intentions to buy or to sell. It is the transactions that are executed that move the market. It’s a bit like in life, the intention to do something doesn’t mean you’re going to do it, thus nothing has happen yet. It’s when you do the action that things move. In trading it’s exactly the same principle.
3 – The VOLUME PROFILE keeps a record of all the trades actually executed. It’s like a history of what happened in the last few battles. As a result you will be able to see which price level was most attacked and defended.
In addition to this valuable information, you will be able to identify the big players. It’s the big boys that move the market and therefore the market only goes up or down. The market moves due to the volume, the number of transactions made.
Imagine for a moment a meeting of the biggest banks or investment funds…these people don’t make trading decisions based on one minute or five minute charts including, all the miracle indicators that you will find all over the Internet! Professionals use professional tools. So if you want to get the same results as the pros, you have to do the same thing as the pros.
Using professional trading software as an individual.
The substantial difference between individuals and big traders is simply the capital available. Remember, the one with the most money is the one that makes the market move. Therefore, an individual at home will never be able to open multi-million dollar positions and attack the big banks. But you can very well, thanks to the order book, identify the intentions of these big players and follow their movements! In short, you benefit from the money of the big traders who make the markets move. You simply imitate them.
First of all you will need a powerful computer, don’t neglect this aspect. Also, a fast and stable Internet connection is essential!
There are two great software programs that will allow you to have professional level order books. The first is Xtrader from Trading Technologies, the company that invented the order book. Their reputation is well established. However, the access to this software for an individual is very expensive, approximately $400 per month (monthly fees, access to real-time quotes, plus additional commissions).
Although Xtrader is an excellent software, its price remains excessive for an individual.
The solution is the JigSaw Trading Tool software. In addition to being as efficient as Xtrader, JigSaw offers more options and features than its competition, besides being much cheaper! The license is priced at only $600 for life! Thereafter, you will ad a $50 monthly fee in order to be able to place trades with a live account. The $50 fee is a royalty that all companies that offer the order book software must pay to Trading Technology as they own the patent for this technology.
It is therefore quite possible to have the same equipment as the professionals.
After 10 years of trading I can assure you that investing in the right tools will make all the difference in becoming a successful trader.
To get professional results, you have to act like a professional, using first and foremost the same tools as traders who live completely off their trading.
I’m not telling you that just with good software you will succeed overnight. Nevertheless, you will be at the same level as the professionals! All you will have to do is train well and work hard.