Order Flow Journal

Welcome to my order flow journal. Let me start off by saying this is my second journal - previously I had a "no brainer trades" journal which was created many months ago when I was still getting into price action trading. I've since moved on to order flow trading and have found more success with this, although I'm far from perfect. Since we don't have level 2 data available in forex, I attempt to find areas where I believe there are orders waiting by analyzing the chart. Often time price retraces somewhat but then comes back to break it. I will hold through these and will likely lose more than I win, but my winners should make up for the losers.

I pick my zones based on areas of consolidation with intense breakouts. I interpret this as there having been a balance of buyers and sellers and once that balance plays out, price must move to the next area of willing buyers or sellers (liquidity). I anticipate that the next time price reaches that area, price will bounce as remaining supply or demand is filled; you can find information freely about this style of analysis through the threads by Kenneth Lee or Phanti or you can take a look at Sam Seiden's articles / webinars. There is never, ever a need to pay for information!

The first week of this new journal I did some trading without the explorer. The results are included in the attached text file and came out with a result of six roughly $1000 losses and two wins, but a profit of $1804.39. After that point I started to use the explorer.

Questions, comments, and critiquing is welcomed.

Charts for the week of February 24, 2013.

First trade executed, hit stop loss. Disappointing that it hit the stoploss but even if I'd targeted the broader 1H zone instead of narrowing it down it would have dipped to a pip below.

Pips: -10.6
Demo: -$1006.37

Attachment 1142228

Second trade stopped out as well. Yen has been aggravating recently with a great trade missed by a fraction of a pip last week. I think there's still a decent amount of demand at the second lower level though so if it reaches it I'm still game.

Pips: -21.1
Demo: -$1013.14

Attachment 1142297

Third and fourth trades also losers. Wondering if they break through the larger zones...if so next week I think I'll stick with just outlining the ones apparent on the hourly charts and not worry about refining them any further.

Pips: -20.0
Demo: -$987.42

Attachment 1142351

Pips: -21.0
Demo: -$1018.50

Attachment 1142352

Hi Kanzler,

What timeframe are those charts? Thank you.

Hourly. Having a bad week so far, another two losses today already. Even in my manual backtesting drawdown wasn't usually that bad. Oh well stick with the plan and I'll see how it ends the week. (Updates for the day will be in that same post above)

I'm a new convert to Sam Seidens supply/demand concepts... which I'm guessing you are to?

Would love to see some stats from your back tests. Even general conclusions if you don't have the hard data. I'm going to be doing a whole lot of back testing over the weekend and will share the results with you too if you like.

Also I've managed to track down a whole lot of info about Sams methods, all the odds enhancers, and even the XLT course. Can PM them to you if you like.

I've been searching for a clean and distilled approach like this for some time now. Somehow trading like this make so much sense to me. No more indicators! Now I just need to buckle down and master the art of it all...

I will be starting my own journal in a week or so once I get some more practice - would love for you to critique my levels! Hopefully bouncing ideas about this off each other will help us both.

Looking forward to more updates from this thread

Hey nomadic,

Glad to see some interest in my journal. I wasn't really happy with my results earlier this week and stopped watching it, electing to draw levels a little differently after seeing some of those fail. Same method but a little less picky and not doing as much "optimization". That said, the original account is still running with the levels I assigned it last weekend, and has a marginally positive income this week so far as seen in the trade log at the top. This weekend I'll start the tally over with a trade explorer as my current demo isn't compatible with it (apparently you have to register with the broker explicitly through their MT4 signup).

I'll be happy to critique your levels; I've been at this for a few months now so I'm far from an expert here, but it's always good to learn from one another. My really unscientific backtesting was done on a few different currency pairs just manually selecting zones I expected reactions from....the results were really good for 2012 on EUR/USD and GBP/USD, each netting upwards of 25-30 x Risk, but on USD/CAD, AUD/USD and NZD/USD I had (relatively) modest losses in the range of -5 to -9R. Net gain and enough to personally convince me that there's something to this method of analyzing the markets, but not enough for me to be convinced of my proficiency.

Trade explorer is now set up and you'll be able to track my progress at the top. Seven pending orders will start off the week.

What changes are you making to your levels? Do you have a set of rules when drawing them... or more of a 'feel' for where you think they should be?

Very few changes. For the most part I'll try to stick to the 30M chart and not "optimize" for a better entry. Sometimes I wonder if I get it right or not when I go down a level, and I'd rather just see if I'm doing things correctly in general first without throwing more complexity into the mix. Drawing the levels is covered in large part in Kenneth Lee's thread but there are a few things I'm going to try to do consistently. The first is that I will always try to incorporate the local high or low before the drop into my zone. The second is that it is my intent to consider a zone valid only if the original move (without retrace) made it to 2x the risk zone. This helps me filter out levels that might be less significant. Lastly, my targeting will be different this time. The first go around, I targeted the farthest point from the original move - where the drop or rally ran out of momentum. This time I will aim for significant opposing supply and demand zones, including those that may already have been partially consumed by a previous tap.

All that said....this is still a somewhat subjective process and you have to know when to break your own rules when it makes sense to do so.

First trade closed out at a loss of -1R in EUR/NZD. Price held off the rally for a bit but buyers managed to push through.

Two more losses to close out an unsuccessful night, EUR/NZD kicking my ass. First entry was at the top white zone where we did see a rejection before bears forced their way through it (see the embedded pinbar), while the second is a different story. Upon reaching the lower level, we saw a brief rise in price before returning to just around the entry. It hovered there for around half an hour and later in the period I decided to try to exit at break-even not liking the price action. A moment after that and price drops 6 and then another 15 points in the frame of literally a few seconds, quickly ending any hopes for a breakeven exit and eventually hits my stop loss for another -2%. This is a similar start to how last week's trading began, and we'll just have to see how it develops.

The first trade I think was a decent attempt with a narrow stop loss and I wouldn't do anything over again with it, as price did react in the expected zone, so there wasn't any fault with my analysis I think. The second on the other hand I feel that I should have been more aggressive with my exit, leaving after bull attempts on the second candle were wiped out by the end of the period. PA was definitely not bull friendly and I had a gut feeling that it was only a matter of time before whatever stack of orders I was being supported by gave way, which is exactly what happened.