thread: Order Flow - Achieving the mindset

98038

Why buy at 0.9850, when you are able to wait for the amount to be busted and buy at 0.9840 / 0.9830?

What makes you believe there are aggressive buyers to take the price up 100 pips? Sure price could have left a false breakout to 0.9820 and bounced, but does that necessarily mean the the fundamental value is at 0.9950?

Also take note there's probably another alternative barrier in 0.9800. The people hunting most likely do not want price to spike 100 pips.

How do you know that the inefficiency you're describing has not already taken place and some other market moves...

That's the shit I am considering. . How low does this hoe go?
No but seriously, I think about stop hunting occuring at around number but sometimes it goes as low as 60 if the obstacle was at around number 00. . That's 40 pips. How much down/up can the price move?
This might have to do with all the price , although I've read allot the alst hour out of darkstar that is giving me a few more thoughts...

You're 100% correct on the trade, where would be the order flow generators and also what's taking the moment? Obviously it was a trade don't know how I should change my thinking. . In my head that actually was an inefficiency

tyler: it obvioulsy is the manner. .

66950Option barriers are just 1 part to clean the books and also to cash in.

Again, the stop huntings only happen at the near same levels (and there are many more not only round numbers)
when there was before an imbalance between prices and particular participants.
The other choice is as soon as the market movers had attained a balanced inventory and have the nerve to shift the price to a new worth are.

66950Hey men,

Once more you are giving me an excuse to do something apart from my assignments, and for that I humbly thank you !

If I might, I'd love to share some ideas on the thoughts transpiring:

I constantly looked at options from a speculative standpoint, as a means to possibly get a deal of market action during an identifiable space of time.

Typically, if I had an option at imaginary level A, and needed price to stay below it in order for me to be in the cash, as price gets nearer to my option, I would initiate short positions, for in so doing I would be consuming bids, and might consequently be shifting price down, given I had sufficient clout. However, I wouldn't be leaving these places open - they'd have attached stop-loss orders over the imaginary level A, that it makes no more sense to perform with this options defense match, and where I believe I've had too much. If price were to proceed to these amounts, then the implementation of my stops should cascade price movement up from level, until the value traders step in, and take advantage of the mispricing it'd create.

By positionning myself adequately, I would hope to take advantage of this inefficiency.

Grkfx gives lots of insightful commentary - if you are aware when an options barrier is broken, and stops are triggered, causing a level of movement past it, entering the choices level would bring us into unnecessary draw-down. I agree here entering safely after the dust begins to settle. . .how you go about discovering when the dust has settled is down to your own personal taste.

How do you know that the inefficiency you are describing has not yet taken any market moves have already happened?

That is also a very important factor in my view that was raised. What if the movement that we were expecting triumphed? Is there some action before the event which may hint that the participants who'd have wanted to shield the option might have been squeezed out? You noticed there was notable bouncing off the level early in the day, on Feb. 15th, but the action on Feb. 16th would suggest to me the curiosity to shield would have been exhausted by then.

Why has not the price moved up yet? What's the market waiting for? Where are the order flow generators to move price up? What's taking them so long?

When our expectancy is correct I would posit that the order flow generators could enter shortly after the transfer transpires - the simple fact they are taking so long might indie their priorities/motives may have changed.

The longer you hold such transactions into the couple of hours to couple of days, you become susceptible to this order flow from market sentiment. If the opinion stays bearish or accelerates to the drawback your trade is smoked.

Time is of the essence. Perhaps a trade management egy that gets risk off the desk in a timely manner can be used.

Just my humble opinions. Beautiful discussion guys!

Regards,

66950

Are you suggesting using alternative barrier information isn't a legitmate way to trade, or that we will need to rethink the manner in which we use that information in our trading?

It's possible to use alternative information to trade.

You may or may not have to rethink the manner in which you use the info.

Option action isn't the one thing which is happening. It's not the only thing that's generating order flow. The market is highly sensitive to alternative activity on a single day, yet on other times the order flow generated with alternative activity is quite minimal.

I don't know if the transaction Carnegie is in is likely to be successful or not, but when price isn't moving yet for your preferred loion, into the loion which you think price should proceed, it is possible to ask the question why isn't the market moving nonetheless? The transaction isn't moving up by now, and When his trade entry was because of some inefficiency of the alternative action , maybe there is something else generated order flow? Perhaps something is impacting price?

66950GRKFX: You are 110% correct in the fact that it was a trade, atleast regarding MY definition of inefficiency, if it wasn't. . Where are all the orders?

Thank you very much.

66950

In that sense, the only question for me is when I need to fade it or play the cascade.

For a trader you have three choices, it is possible to fade it, play with the cascade, or even....

Staying out?

Remaining out before a much better, clearer inefficiency gifts itself is a really workable, affordable choice.

66950

Sorry UP, I really don't understand what you mean.

However, I believe I have solved (for me) something about the stop-hunting.
The intriguing thing is when someone is defending a option. . Then should they LOSE, most likely their stops are above or below the strike price. Because it wouldn't make any sense - lose - and have stops far from the strike price right?

Especially since the farther off their cease, the more money they're putting at stake - these large participants do not have the luxury of elastic posture sizing a-la Oanda that people lucky retailers have.

So in that sense, the sole question for me is when I should fade it or play the cascade. Inside my head, let's say someone wants to dump allot to the alternative being thus hunted by the defenders stop.
Now let's say the defender doesn't put allot of money on the defending therefore that the stops are not large, so if the hunters liquidation is bigger than the outstanding stops, price will instantly snap back creating this fake breakout and maybe is the vacuum darkstar is talking about.

But, IF, the hunter is liquidating a pool bigger than the stops, price should...

So many different ways to perform it..this is the reason why there's no one set methodology when X crosses with Y then enter here TP here and SL here. . I believe this is the idea of an order flow mindset was what Darkstar and others tried to emphasize. I belive a interpretation of what is going on is quintessential.

Now the next question of mine is that there are different kinds of options; some where you have to simply poke price thru and some where you need to have price staying above/below the area right? There is another dilemma: knowing which kind of option it is. .

Yes there are different kinds of options, such as the ones you have explained, barrier options, DNT options, vanilla options, etc.. The type is actually indied.

66950A lot of talk . Time for something more tangible - real order flow trading and front-running: http://tr8dr.wordpress.com/2011/02/1...you-dont-know/

66950

So in that sense, the only question for me is if I need to fade it or play with the cascade.

That's the major question I have, too. And the best answer I've come up with is how it depends

66950Now? Does anybody know what TC stands for on the choices maturity calander? I have never been able to find what this means.

On the reverse side, anyone viewing the Euro today. 1.3600 is a pretty powerful level. Rumor of central bank activity there. Wonder if it has to do with the Portugal news of a coming bailout in April. Anyhow tighter than a drum is winding up. Can't wait to take place.

Cheers