thread: Order Flow - Achieving the mindset

66950

random post by me again.

To turn into an order flow trader you want to quit spending time on the things that won't or almost never will generate sufficient order flow to transfer price and begin spending time on the things that can generate order flow and transfer price and give you an edge.

You need to get a good reason, rooted in sufficient order flow for your trade to be successful....

Your rants always help to put the focus back on the primary methodology of order flow trading... that which will generate order flow... future orders that push you into profit, and finding the reasons behind them.

This takes a lot of hard work and that I completely understand why DS has stated a long time ago that you have to begin from the base and build the base... comprehension market structure and micro-structure along with the basics behind the price change, and build from there.

Happy searching gamers...

66950

There are several possibilities:

1. The choice will expire before price gets back near that level
2. Price gets back near that level along with the option author (with assistance from stop hunters) successfully chooses the level
2a. The stops over the level are larger than the ranks of the hunters liquidating into them, which causes price to raise even higher
2b. The stops over the level are smaller than the positions of the hunters liquidating into them, which causes price to drop back down
2c. The stops over the level are pretty much equivalent...

Relyt, I wrestled with the exact same for many years before this came with a whole lot of other stuff in a rather monumental way. Right before DS's publication comes out, effin typical . Why wrestle? Because the likelihood of a barrier breaking is roughly... 50 percent. But if you understand the why, it gets obvious. Try:
a) Recognising the attack and piggybacking into barriers is probably the easiest. You recognise it since you are seeing unnaturally strong buying/selling in regions that jar with play.
B) Playing with the broader picture is another. Barriers are there as liquidity magnets - a sponge if you like to draw people to go long.... As you, the larger player is going brief. Knowing this, you look outside for broader reversals (believe days/weeks).

Like every single play, inside the context of orders that which makes a hell of a difference. For eg - no more are you currently considering the breakout beneath support and resistance. You are looking at breakouts at places which are simply not obvious unless you are thinking in the context of orders. For limits, you are recognising the larger money flows and positioning yourself in the ceases (liquidity) in the proper direction.

Re your choices over, what I'd change is controller. The choices you presented are passive: you state if Xgt;Y, then that will take place. Whereas in reality the outcome is most likely known beforehand. There are players with pockets deep enough that should they decide the market is currently going down it IS currently going down. It may take a hundred pip barriers to unwind and reverse, but this really is what is really happening. So you are looking for demand/supply that's manipulated rather that ebb and wane of daily perform.

And do they get it wrong? Of course - but knowing that X is brief and hurting will affect PA: support turned resistance? It's probably an entrance stage gone sour, and looking for an opportune moment to escape. In many respects, these players act exactly like we do - once you know you are in a position is in break even.

And what's been mind boggling for me personally, this is not just FX. This is how every market works since the dawn of time. Every time you zoom out a timescale, you see different illustrations. Sure FX has intricacies and motorists and events but it's the exact same shit played out. You have to unwind and if you are large, you have to draw on people in. If you are lucky, that's going to take place naturally with a thousand and one retail punters all deciding to buy the runaway stock (gold anybody?) - and your work is completed. Sell into the audience. If you are not, you need to make that demand yourself with any means necessary.

Zoom out again - investment funds. What's the difference between an investment and a trade? An investment is out the money, and a trade's in the money. Liquidity. Shit, timescales that are larger theres all.

And zoom out again? Boom and bust cycles.

And again? China US.

I realise a number of this is old as the hills, but for me - while I've known a lot of this for decades - I just really knew a lot of the actual appliions recently. Hat tip - this is the best thread on FF.

Back to challenges anyhow... .

66950

RelytI wrestled with exactly the exact same for many years before this came together with a whole lot of other things at a rather monumental way. Right before DS's book comes out, effin average . Why wrestle? Since the likelihood of a barrier breaking is approximately... 50 percent. But if you understand the why, it gets obvious. Attempt:
a) Recognising the attack and piggybacking into obstacles is just about the easiest. You recognise it since you're seeing unnaturally powerful buying/selling in areas that jar with regular play.
B) Playing the wider picture is...

Totally agree. BUT let's not run away that players always know what's going on themselves and they also are subject to the erratic. Its the erratic (Japan earthquake such as!) That always must be factored in. Nevertheless, I'm sure with the right insights and experience a border can be found with order flow. But it ain't a matter of'triumph and click'.

66950Yes that there are more and are the two most common.
Institutions also develop their particular algos and tweak parameters.
All of them have one in common: searching for liquidity depending on the urgency (time or quantity limitation ).

The issue with footprints and I think you are pointing to the futures is, that it is still a derivatives market.
There are phases where it is very divergent one of them so I would not necessarily take everything for real (from the stocks ).
On the opposite side there are times when it is strictly inventory driven and algos don't play a major part.
The levels are dynamic because if you are hiding a buy goal it would not be sensible to execute a 800M order at the same piece and getting chucked on expensive prices with large market effect.

The t and vwap could be calculated differently: here kicks from the parameter: urgency

Your chart may be an explanation for the inst. Drive and it can seem like.

The only problem is: how do you get in front of them.
That is the most difficult part but it's potential.

66950

Totally agree. BUT let's not run away they too are subject to the unpredictable and that large players always know what is going on themselves. Its the unpredictable (Japan earthquake for example!) That has to be factored in. That said, I am sure with the ideal insights and experience a border can be found using order flow. However, it ain't an issue of'win and click'.

SureI agree with that and that's the whole point - they are not clicking and winning. They are clicking and receiving into/out of place. Winning happens when they unwind their own position. Intraday, you hitching a ride on this process of the specs ebb and flow. And if you go TFs that are smaller, you are able to do exactly the same on the ride of this dealer flow.

That is actually the true beauty of retail trading. The advantage that you lose by not being large enough to swing the market is compensated by the fact that you jump in and out of place without anybody so much as blinking.

66950So.... Japan rocked by the biggest earthquake in 140 year however the USD TANKS from the Yen now

Thoughts?

Maybe someone took the chance to SELL a dimension they could now acquire at perceived high prices. Does this demone whats likely to happen long term on the JPY? Clearly some large buyers in the neighborhood.

66950

The only issue is: how can you get in front of them.
That is the toughest part but it's potential.

Unnamedplayr,

I was actually making the references to see fx not futures. I would say that with these order flow theories thats the part that is challenging. I know that the market acts as a liquidity munching monster also I guess that the objective of an order flow trader is identifying these areas so we can have our order in ready.

Moving slightly off subject to Market Profile I understand that the areas where price hangs about for longer than normal can be regarded as high volume places. Dalton describes them as an area in which the cost of doing business is cheaper than any place as theres a lot of people willing to do business there. I practically look at such areas as accumulation/distribution. When comparing amounts these areas have a lot of trades. So I'm starting to look at such almost as Bus stops for liquidity, in which the major players can do business. They generally get a magnetism for price which could also explain the hunt for bandwidth. I hate referring to charts but from what I can observe markets always move from countries of balance/imbalance and these are certainly visible.

Whats strange is that most conventional TA does not cover any respect to such areas rather its more swing highs and lows, but when I am right in my interpretation they are highly applicable.

What do you think guys?

66950

how can u see the fx order publication
when the market is not centralised

im considering euro stocks orderbooks,theres buyers then sellers,and the market still tanked 20p,on german equilibrium 11b
theres too many things affecting the price of currency,
and we cant see the big guys orders,just retail ones,and as darkastar said retail orderbook is not accurate orderbook


as stated,u should have somebody in big dealers and hedge funds to inform u wats goin on,but sometimes u cant even trust them

I'd say if anybody would like to trade with complete...

1st into Darkstar's remark, he is right as closed end systems are not accurate orderbooks, they're visible, but not true to the sense since they're just what the broker wants you to view. If your employing any sort of retail firm that calls themselves an ECN chances are your being told a bunch of bull sheet! MBT is notorious for BS.

So far as a true OrderBook for FX it has to aggregate the institutional ECN's that your broker connects to. Currenex, Hotspot EBS etc etc and provide a low latency feed of a'scrubbed' but raw data feed. This is how liquidity can be examined and a OrderBook be presented.

I contributed to an article in Jan 2010 issue of E-Forex on Direct Market Access. I spoke of our arbitrage software and also the need for market transparency to evolve. Technology has now developed sufficiently to present true market transparency irrespective of their trading account size. So the task was to use DMA and aggregate liquidity flows into a centralized view as our multi currency arbitrage and market making applications did. We have done that, and now seeing the benefits of market transparency are somewhat fruitful.

So Far as liquidity imbalances. . First of all futures lag to cash market, just because the majority of the bounce of the ECN around the trading activity in EURUSD/EBS. Market Makers task would be to take their incoming orders and equilibrium inentories. You will do better on price runs trading more contrarian, and on cycle reversals trading on sentiment. See activity in publication for new order clusters and placement for pockets of liquidity on price conducts that are all set to reverse.

66950Hey guys,

How are you ? I see you've been busy and so have I. Hope everything is working out for you all.

I don't wish to be disrepsectful as you know I respect all of you really but after 40 or so pages that the discussion about the order book ought to be closed. Think of what is going on behind the chart and how you think it will affect this FX order book that not one of us will get on our hands.
Not that I'm trying to sounds as if I know everything. . It is just that I think that way also it helped me come to my conclusion about why order flow is ORDER flow.

Nice to see you guys working on it, hope it's going well for you all!
Anyway, just wanted to say hi to you guys since I have nowhere to move in between studying eating and trading shit in school. .
Take care guys and have a Excellent weekend

66950

So.... Japan rocked by the largest earthquake in 140 year yet the USD TANKS against the Yen today

Thoughts?

Perhaps someone took the opportunity to SELL a dimension they could now obtain at perceived high prices. Can this demone whats going to happen long term? Clearly some big buyers in the area.

Whats interesting is that the flow pattern USD/JPY made the first 2 hours after the quake hit.