Domino's Price and order flow trading
im gonna take a minute to reorganize this thread make things easier
Some of this stuff my seem simple at first but Id rather explain everything fully so lets get down to some terms..
Supply - The total amount of an object available for purchase at any given moment.
Demand - The total amount desired to be purchased at any given moment.
Limit order - is a order to buy or sell at no worse than the specified price.
Market order - is an order to fill a buy or a sell at current market value.
Order book - a list of all the pending limit orders around the current price.
Price Impact - the jump of price caused by orders of a certain size.
bid- offer price to buy
ask- offer price to sell
best bid - the highest price to buy in the limit order book
best sell - the lowest price to sell in the limit order book
i will pop in some time and will share some idea.
What a wonderful news, I'm fully with you with some live trades if I may.
Long life to this thread
HAPPY EASTER and god bless you all
Let's back to questions now :
Thank you for opening a new thread. Much easier when it's for this topic only!
I'm all in
Great news Domino, thanks for taking the trouble. Really looking forward to discussing this facinating area of trading. There's so much mumbo jumbo thrown about when the subject of order flow comes up. Just being able to look at a chart and see fear and greed and knowing where the main clusters of orders are likely to be has got to be a primary factor on the road to success. Your posts in that last thread really turned my thinking around and I'm very grateful for that.
bid=someone is bidding to buy at that price.
ask=someone is willing to sell at that price.
when we buy from broker we
buy at the ask and sell at the bid.
this is the reason spread comes.
all the best
The bid price is the price your broker (or someone else) is willing to buy from you. You sell to them at the bid.
The ask price is the price your broker (or someone else) is willing to sell to you. You buy at the ask.
The bid and ask prices that you see quoted are the inside prices from the order book. i.e. the current best (lowest) price that you can buy and the current best (highest) price that you can sell.
>>bid- offer price to buy
>> ask- offer price to sell
>> best bid - the highest price to buy in the limit order book
>> best sell - the lowest price to sell in the limit order book
When domino wrote these lines he was speaking purely from the broker perspective.
Edit: You beat me to it Sho!
Thank you for directing me to Domino's posts by the way.
Sutts and trade price,
Merci beaucoup for your claer explanations
A very good thread with smart people there.
i just cant stop thinking of dominoe's pizza now
thanks for opening the thread!
So lets talk about structure...
Since FX trading is global do we discuss only one type of market structure that in america? or madagascar? or what country or do we understand how they each work individually to figure out how the interact with price?
there are different ways each countries handles market structure..
The structure of the Fx market in most of the countries that are not quite as far along as the U.S. is an unified structure.. -> you wont find this anywhere really but here I was gonna make a link to wikipedia but they dont even have it lol.. anyways unified structure in developing countries means they have only one market in which to exchange currency. The market makers if any are brought to the single market to quote prices. most of these are like trading pits like madagascar or can be electronic like china. In these markets the order flow is derived from the customers of the market makers or direct clients because the clients are pushing the orders.. the problem with this is in some countries they are not quoted the same prices we are.
someone who's indian.. india has an unified structure right? not sure about india
madagascar has a fx trading pit only I believe
illegalized parallels- exhist to make there own prices and avoid government manipulation of exchanges rates through regulation. The are illegal but are still around. If countries do not allow exchange trading to people with less than X those clients can find a parallel market to trade but is subjected to the pricing in that market and the market will not be bound by regulation these are becoming more prevelant in countries with this structure because a larger institution can set up an out of the country account and make there own prices and hold an internal book and exchange currencies..
in dealer markets traders use there inventories to buy or sell and absorb the order flow with there inventories to make balance as well as shifting the actual exchange rate. So lets talk about if an order is placed in a dealer market.
so in a simple dealer market where they are not trying to also make the market
You say hey I want to execute 14standard lots at X price thats alot of money first off and dealer will have to fill that size.. usually it will take a bit longer.. and the dealer will need to adjust price and absorb with personal inventory/float an open position to fill with sells.. so since its a market order it gets filled at best market price. lets say the dealer notices that there is no sells coming in and sells located just above.. well the order flow will have an imbalance buyside flow will be bigger than sellside orderflow so the dealer will slide price to fill the buy orders with the sell orders above.. there was only 10M they could fill above and they absorb 4Mill of the order and fill the buy order complete our order and transfer our open buy order to their open sell order on there books and that price is switched in the orderflow from 4M buy order to pending 4M sell order flow and if sells com into the market it will be filled directly or become part of the orderflow to push price down and fill the lower buys They will also slide price to adjust for there open orders and clear them
http://www.forexfactory.com/showthread.php?t=7484 Id read this to guys if you havent already
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