Guys,now you have a couple of useful things and posts to think about and to work with.
Do your homework.
This thread was interesting.
Good Luck!
Do your homework.
This thread was interesting.
Good Luck!
How to flow with the order flow? 26 replies
Cluster Average doesn't update on chart 0 replies
Mental stops vs hard stops 1 reply
365 Trade: Finding the Flow 11 replies
I am looking for EA to put Buy Stops, Buy limits, Sell limits, and Sell Stops. I will 0 replies
DislikedI feel stupid to ask this, but can you explain me the difference between "making a transaction" and "building inventory"?
I apologize for thisIgnored
DislikedHe is talking about the big block orders at that level. Building there inventory. How do you do this. Say you want to buy. Create a false short senerio in market, false breakout. unimformed jump in. Inventory builder buys and pushes up through the vacuum when the inventory is built and thanks to the short stop loss orders. game over.Ignored
Quoting scott89DislikedSo let's become practical here:
Price is now at 1.2275, Bank A wants to short, and to do that it needs liquidity.
Right behing 1.2300 there's a bounch of limit orders and stop losses.
Bank A buys a relatively small amount, but enough big to move the price in the 2300/2320 are, where the liquidity is (liquidity is provided to the bank by buy limit orders from breakout traders, but the bank is actually providing liquidity for stop losses; in both ways, the bank is entering its big short order).
Price immediatly drops down, and a cascade of other orders are triggered, helping the price to drop further.
Now here's what is happening. What would be the best strategy to profit from this event?Ignored
DislikedThanks for the explanation =)
Now, again, what's the best way to trade it?
Let me quote myself:Ignored
DislikedSo let's become practical here:
Price is now at 1.2275, Bank A wants to short, and to do that it needs liquidity.
Right behing 1.2300 there's a bounch of limit orders and stop losses.
Bank A buys a relatively small amount, but enough big to move the price in the 2300/2320 are, where the liquidity is (liquidity is provided to the bank by buy limit orders from breakout traders, but the bank is actually providing liquidity for stop losses; in both ways, the bank is entering its big short order).
Price immediatly drops down, and a cascade of other...Ignored
DislikedI am by no means an expert here, but since nobody is throwing the towel, here's my take on a possible play in your scenario:
- set 1 sell limit on 1.2305-1.2310
- set 1 sell limit on 1.2320
once filled:
- cover 1 at 1.2280
- trail the other one
depending on the size of the stop losses, one or both orders will be filled.
As I understand it, this process is called fading.
Any other suggestions?
Great thread, btw.Ignored
DislikedAlright, that's what I thought and what I'm actually trying to do.
I'll add a little rule:
-cancel the trade if prices get close (like 5-10 pips) and then reverses without triggering your orders.
Of course everyone has to adjust his risk and MM, for example I would take something like 1.5:1 or 2:1 reward:risk, but that would be a calculation made AFTER you already have the edge proven to be succesful x% of the time.
Do we all agree on this way of trading it?
Any suggestion?Ignored
DislikedThe way I see it, the most interesting part of Darkstar's picture is the area I've highlighted with the blue rectangle. That is the liquidity vacuum created by the shift lower in price - there are no (or few) remaining orders there. If large buy orders start coming in, price should pass through that area very quickly searching for liquidity higher up. I would want to be in a position to capture that move should it happen.
Which I suppose is visualized in your third picture, Scott.Ignored
DislikedYeah, you guys probably shouldn't spend too much time looking at my trades. It's very impressive how far this thread has progresed, but it's important to realize that what your talking about are only the most basic aspects of Order Flow. I've been doing this stuff for over 5 years and what I do now is so far down the chain of understanding that it's probably counterproductive to look at.
I can tell you that your close to figuring out the stop hunting thing though.
As a side note, I find this thread extremly ironic. For the last couple weeks...Ignored
DislikedWow!
So if I understand you correctly, it all keys on the ability to get the barrier info the quickest. If this is so, it all leads back to the fastest and MOST complete news AND rumor feed....
In other words, trading the rumor to the barrier seems to be the best strategy from my experience.Ignored
DislikedDarkstar said "produce ideas about exploitable situations" ... "set about looking for situations where the phenomena you noticed within the model occur"
well I'm not that smart, so I do it the other way around, I see what I see and try and explain it, so here it is.Ignored
DislikedJust my opinion that VSA is worthless -- or in the very least, not needed. You're searching in the wrong direction.Ignored
DislikedThis liquidity vacuum stuff is KILLING ME. So what if there is a liquidity vacuum there, in theory it might be, but it is impossible in practice because the dealers MUST have liquidity there, so there is no vacuum in reality?Ignored
DislikedAlso, I'm more than 100% that more orders will start pouring in and "block" that liquidity vacuum that was there (with sell orders) resulting in that price could never move back to that price area again. What is it that I am not understanding here?Ignored
DislikedThanks for the explanation =)
Now, again, what's the best way to trade it?Ignored
DislikedAt times of high market liquidity, the various classes of market participants are correctly proportioned and a more accurate value given. When lower liquidity is present because of liquidity suppliers guarding against risk during various events the market has a high probability of episodic volatility occuring.Ignored
DislikedSo the question is, when does liquidity drop and volatility jump? (Or: Does liquidity have to drop in order for volatility to increase?) Certainly during news which can also relate to a change in fundamentals. It can also happen during off-peak market hours. Anyone else want to chime in and keep this thread moving?Ignored