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Discussions on Order Flow/Volume

Quoting DonPato
{quote} As I have mentioned in earlier posts, I am waiting for questions...do you have one? I believe I also mentioned that due to family issues my time for posting (just to post) is very limited. I am happy to answer questions, but will not be able to just hang out on the forum.
Hello Don, I have a question.
I read your old threads "Hey...what about Volume?" , "Price-Structure-Order flow".
I saw that your screenshots are always on higher TF, like 4H, 1D (the TFs that I prefer), but on this thread I see a lot of people only working on lower TF, like 5, 15 minutes.
My question is: "can we analyze the order flow (delta, cum. delta, number bars, volume) on the bigger TF or it's just a mess? I mean if we can notice if something is moving on higher TF instead of "micro-analyze" the charts".
I'm asking this because at the moment I'm working on Higher TF but I love the market mechanics and the study of the order flow, but I can't understand if the two things can coexist in the same moment (for example IDK if watching charts on the 4H TF can hide lower TF signs/clues).

Thank you!! And Thanks for your work here on FF!!
"In ancient times they had no statistics so they had to fall back on lies."
Quoting Naustromo
...but on this thread I see a lot of people only working on lower TF, like 5, 15 minutes. My question is: "can we analyze the order flow (delta, cum. delta, number bars, volume) on the bigger TF ...
Yes of course. Order flow is what makes prices move on any market period. It is only we (us) that divide the market into convenient time frames. All that really does is give us a historical perspective that can help us find areas where we might anticipate a change in the order flow...nothing more. The Order flow will always work no matter which time frame you chose to view with.

Quoting Naustromo
... I'm asking this because at the moment I'm working on Higher TF but I love the market mechanics and the study of the order flow, but I can't understand if the two things can coexist in the same moment...
Absolutely they can exist at the same moment...and here is a simple exercise to illustrate this point. I use it with all my students when I introduce the concept of multiple time frame analysis:
(1) open any two charts on the same market. Set one chart to the daily chart and set the other to the 1 min chart. (2) Now look at the current price. The price that is being quoted live as you look at the chart. (3) Compare this price between the two time frames. What do you see?

That's right its the same price!! The open quote on ANY chart is the same (assuming you have the same market). It doesn't matter whether you are trading a 3 tick chart, a 1 min chart or a monthly chart that open quote is the same on all of them...

The same thing order flow that is causing the price to tick up and down on the daily chart is the same order that is causing the price to tick up and down an EVERY chart. The difference is your VISUAL perspective. a 10 tick rise on a 3 tick chart will look like 3 bullish candles. That same 10 tick rise doesn't even register on a daily chart...what's the difference? It is still a 10 tick rise. It is simply the visual perspective you see it with.

So which time frame is "best"? I always tell people the "best" time frame is one in which you can commit to analyzing at each close...that means if you chose to trade the 1 hr time frame you will need to commit to analyzing it every hour...not very practical for anyone who wants to sleep (IMO). This is why I use and advise other's to use the daily time frame...because it is a simple matter to look at this time frame on the NY close every day, then go about the rest of your life.

For those of you who imagine that they would like to day trade...then I say pick a "session" during the day. Asian, London, NY, EUR...which ever one you chose and be "available" at your desk to analyze EVERY closed candle in your desired time frame...5 min, 1 min, tick charts...whatever. Commit to looking and and analyzing each and every close until you're done...believe me it is harder than that sounds, and can be mentally exhausting. Personally I can only go about 3 hrs before my mind is fried.

Keep in mind that this is watching the order flow...tick by tick...watching the numbers (or colors, or histograms) change with every tick and analyzing that to make decisions about your interactions.

For people new to this kind of analysis, I always recommend higher time frames...daily and higher...because you can look at each market as you chose, analyze it with calm thoughtfulness and no rush. Draw your conclusions and then make your decisions. Sooner or later you will start to see the patterns in the order flow and it will become obvious to you what to do. No one will need to tell you, buy here...sell there...you will see it for yourself. As with all things trading, the key here is patience, to let the order flow develop and try not to fit it into YOUR view of price action.

This is why I tell people watch how price REACTS to the order flow.

Quoting Naustromo
... Thanks for your work here on FF!!
You are welcome...I hope this helps...Happy New Year
Do more of that which succeeds and less of that which does not - Dennis Gar
hello, how is the volume for buy and sell determined on horizontal chart, if time is 5 min, or 30 min. Thanks
Quoting Emma1
hello, how is the volume for buy and sell determined on horizontal chart, if time is 5 min, or 30 min. Thanks
It is simply the sum of all market order transactions at each price this is for total order flow or volume. For Delta it is @bid - @ask. The difference between these two, results in net selling or net buying. Time is irrelevant. Your charting divides these into intervals you are familiar with...but the order flow / volume is the same. This is why I prefer an entire 24 hr period for the purpose of evaluation.
Do more of that which succeeds and less of that which does not - Dennis Gar
Quoting DonPato
{quote} Yes of course. Order flow is what makes prices move on any market period. It is only we (us) that divide the market into convenient time frames. All that really does is give us a historical perspective that can help us find areas where we might anticipate a change in the order flow...nothing more. The Order flow will always work no matter which time frame you chose to view with. {quote} Absolutely they can exist at the same moment...and here is a simple exercise to illustrate this point. I use it with all my students when I introduce the...
Thanks for your reply!!
Well now that I got this point, my main idea about order flow trading is to merge that with technical analysis.
If the majority of traders lose money, I want to analyze the market like everyone else: Obvious trendline, obvious S/R.
But THEN using the orderflow to see how the big players want to play their game in that zone;
IDK if it's stupid or not, but I'm that kind of person that want always to study/know more and try everything
"In ancient times they had no statistics so they had to fall back on lies."
Quoting Naustromo
{quote} Thanks for your reply!! Well now that I got this point, my main idea about order flow trading is to merge that with technical analysis. If the majority of traders lose money, I want to analyze the market like everyone else: Obvious trendline, obvious S/R. But THEN using the orderflow to see how the big players want to play their game in that zone; IDK if it's stupid or not, but I'm that kind of person that want always to study/know more and try everything
Not stupid in the least...in fact that is how most winners trade. They use their tech skills to see where the losers are taking their positions then do the opposite. With the added benefit of understanding and reading the order flow, you can make more informed decisions about how to interact. My mentor Jason Alan Jankowsky, always told me, "The losers watch the charts, the winners watch the losers..."

To this I would only add a small caution. For those of us who are accustomed to technical analysis, it is easy to fall back into that trap. To think that order flow/volume, is simply another analysis tool that can be applied in the same way. This thought process, while it may render some improved results, is faulty for this one reason. MINDSET. When you are evaluating order flow/volume you are not "analyzing" the market as much as you are analyzing yourself. It is extremely important to keep the mind frame that you are literally watching other traders and their corresponding emotions enter, and exit the markets. So it is in your best interest NOT to get caught up on the mind set of "signals", or "analysis techniques". Watch, wait, and observe what the traders are doing...and as I mentioned before...become intimately familiar with the "normal" of your market. That is how you will see changes coming. These changes will come LONG before the analysis techniques you mention will ever "signal" anything. By that time it should become obvious to you what to do.

Review the "signs and symptoms" of exhaustion that I mentioned in my thread on volume. These are most helpful to see when what ever move is occurring you are prepared for changes. Other than that...best of luck!! You have a viable plan once you get it just right for your way of interaction you will be unstoppable!! Congratulations again!
Do more of that which succeeds and less of that which does not - Dennis Gar
For anyone trying to understand what "absorption looks like" on a delta profile chart. I found this example today on the USD/CAD. Today is the first trading day of 2020 and this market has been sold all day long. Yes with all this selling, why isn't price plummeting through the floor?
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I have entered a long position and in anticipation of the FU flush, I have a pending buy order below the market waiting to be filled. For those of you who still think in terms of technical analysis...pull up your daily charts and take a look. Put on your MAC-D or moving averages, or even your stochastic...I'll bet they are all VERY bearish.

Of course I could be wrong...but we'll find out about that in the next few days.
Do more of that which succeeds and less of that which does not - Dennis Gar
@ DonPato

I started my forex process 9 months ago and I am improving and getting better understanding of the Forex world. I've sometimes struggled interpreting Volume.
So firstly thank you! this thread has answered a lot of my queries.

What books/literature would you recommend to study?

thanks
Quoting warrenk1
...What books/literature would you recommend to study? thanks
Without sounding like a commercial...I highly recommend the book: Time Compression Trading. By my mentor Jason Alan Jankowsky. I highly respect his opinions and skills.

The next book I would recommend would be: Secrets of a Pivot Boss. While this book does not deal with volume in the same way I have laid it out, it is very extensive and practical about HOW to use volume profiles and volume (real volume) to your advantage.

Just a short word. Although I know Jason Alan Jankowsky personally, I am not being paid nor am I a promoter for either of these books. However since I DO know JAJ personally and have had many productive hours with him speaking about trading and my personal psychology about trading, I feel his material is the most well thought out and best applied when one fully understands his message.

Since JAJ is extremely intelligent (MENSA qualified), at times what he says has implications far beyond what appears on the surface. I am still truly understanding some of the lessons he taught me about order flow. So at times reading and re-reading his material (even now) brings a new dimension of understanding...and his book is a gift that keeps on giving...even to this day.

If he were reading this now, I'm sure he'd say this: "please actually BUY the book. Don't "steal" it from some PDF producer for free..." And I agree with this. I'm sure you can find these books out there for free, but as a matter of respect for the knowledge he shares, I think it reasonable to lawfully purchase the material from a legitimate source....OK my commercial is over.

Thanks for bringing this up and best of luck. I am happy to answer any questions I can.
Do more of that which succeeds and less of that which does not - Dennis Gar
Quoting DonPato
Hello Friends I am starting a new thread to (hopefully) generate some productive discussions on the above subject Order flow/Volume. I have long wanted to have a thread dedicated to this subject but whenever I start it I am sidetracked by other issues or just rude insulting people that want to come in an "nay say" everything brought up. I hope if you are one such person you will kindly move along. I have addressed this issue (Order flow/Volume) in several different threads each relating to either how to recognize and anticipate price movements or...
You come across as a trading wizard. I am familiar with this approach you speak of, but I doubt I know as much about it as you. But I am almost certain you are a consistently profitable trader as a result of your depth of knowledge on this subject and implementation of it. Ignore those who disrupt your comments with their ignorant remarks. They are likely losing in this game most of the time. There are a few among the many who want the education you offer for trading and are eager to listen.
You don't know because you don't ask.
Quoting here2there
You come across as a trading wizard...
I assure you I am NOT...Just a simple minded person like most anyone out there that simply got tired of banging my head against the wall trying to learn this stuff on my own. I was unable to pay for "formal" classes, and as I look back on it now, I'm glad I didn't. Nothing is as well learned as when you seek things out yourself and understand from the very basis of the investigation.

Quoting here2there
...Ignore those who disrupt your comments with their ignorant remarks. They are likely losing in this game most of the time. There are a few among the many who want the education you offer for trading and are eager to listen.
Thank you!! this small message as made a very trying day (for personal reasons) into a wonderful message at the end. I am very grateful you have found something of value and hope you will contribute more when you can. I always like to see positive messages and people striving toward understanding. I am very gratified that for a few (as you mentioned) I can be a small part of that.
Do more of that which succeeds and less of that which does not - Dennis Gar
G'day all,

Just back from vacation, let these running....

Don,

I have been keeping up with the thread thank you all I am learning lots!!!
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Stay green!!!
Quoting DonPato
{quote} Without sounding like a commercial...I highly recommend the book: Time Compression Trading. By my mentor Jason Alan Jankowsky. I highly respect his opinions and skills. The next book I would recommend would be: Secrets of a Pivot Boss. While this book does not deal with volume in the same way I have laid it out, it is very extensive and practical about...

once again, thank you. ill be sure to purchase these books! who enjoys reading PDF's on a screen anyway.
regarding, implementing Volume in my strategy where would you recommend I start focusing my attention and efforts In understanding?
Quoting warrenk1
... regarding, implementing Volume in my strategy where would you recommend I start focusing my attention and efforts In understanding?
My best advice is this. Learn what "normal" looks like on your chosen market. Normal balanced order flow...normal dominant...etc. when you know normal you will know when it is NOT normal... that's when the changes happen and often before or right as the price change occurs. I wrote a post on it here.
Do more of that which succeeds and less of that which does not - Dennis Gar
Orderflow is great and the explanations have been good here. BUT be aware orderflow needs to be used at certain times, at certain commercial levels, with market value and others OR its useless.

1 part of the pie.
Quoting Cools81
Orderflow is great and the explanations have been good here. BUT be aware orderflow needs to be used at certain times, at certain commercial levels, with market value and others OR its useless. 1 part of the pie.
Thank you...yes time is one of the fundamental structural elements of the market. I'd be interested to know what you refer to as "commercial levels". I would define "market value" as the quoted price. Indeed the entire auction process is specifically designed to determine market value. Is this what you refer to?
Do more of that which succeeds and less of that which does not - Dennis Gar
Quoting DonPato
{quote} My best advice is this. Learn what "normal" looks like on your chosen market. Normal balanced order flow...normal dominant...etc. when you know normal you will know when it is NOT normal... that's when the changes happen and often before or right as the price change occurs. I wrote a post on it here.
Happy new year my Master kk ... wish you happiness & green pips in 2020 & keep this thread busy!
thanks for the great knowledge for noobs like me ...
btw, im not familiar with the Volume Profile you put on your Ctrader charts , is it available on Mt4?
still struggle understanding how to interpret Orderfolow with your tools & method!
positive interest or negative interest?
Quoting aPhong
... btw, im not familiar with the Volume Profile you put on your Ctrader charts , is it available on Mt4? still struggle understanding how to interpret Orderfolow with your tools & method!
My understanding from the programmer is that he programs for cTrader only. I have not seriously looked for the same type of tools for MT4 but I'm sure someone out there has done it. I'm not a huge fan of Metatrader anyway but I'm sure if you search for a delta volume profile .mq4 or .ex4 you can find something. It doesn't have to be exactly the same. All you need for it to do is tell you which price levels are net buying or net selling.
Do more of that which succeeds and less of that which does not - Dennis Gar
Quoting Cools81
Orderflow is great and the explanations have been good here. BUT be aware orderflow needs to be used at certain times, at certain commercial levels, with market value and others OR its useless. 1 part of the pie.
Price does not move without OrderFlow.

I will grant you that there are times/situations where OrderFlow information is not actionable, but OrderFLow is always informative. Therefore, it can't truly ever be useless.

Additionally, if the OrderFlow is saying the Market should do 'X', but the Market is doing 'Y', that's telling too.
Wyckoff VSA: (1) Supply vs Demand (2) Effort vs Result (3) Cause vs Effect
Quoting DonPato
{quote} I would define "market value" as the quoted price. Indeed the entire auction process is specifically designed to determine market value. Is this what you refer to?
The Market is indeed an auction and exists for the sole purpose of facilitating trade. Price rises to find Sellers and Price falls to find buyers. Price is an advertising mechanism.

Value is that place where the majority (70%) of trades occur. It's not uncommon for the quoted price to be outside of value.
Wyckoff VSA: (1) Supply vs Demand (2) Effort vs Result (3) Cause vs Effect
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