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Trading Institutional Order Flow

  • #9,761
  • Jun 13, 2022 3:30pm Jun 13, 2022 3:30pm
Quoting Akt
Hello everyone. A little exercise and deep dive for interested parties to consider.... best wishes{image}
Thank you Akt for this question
For me I would not take that zone because of the fundamental condition of stock sell-off due to inflation and recession fear
  • #9,762
  • Jun 13, 2022 3:32pm Jun 13, 2022 3:32pm
Quoting Akt
Hello everyone. A little exercise and deep dive for interested parties to consider.... best wishes{image}
I take zones which are in line with the fundamental perspective
  • #9,763
  • Jun 14, 2022 12:43am Jun 14, 2022 12:43am
Quoting Akt
Hello everyone. A little exercise and deep dive for interested parties to consider.... best wishes{image}
1. It's in a downtrend, 2. so the trade needs some confirmation. 3. It would be better to switch to a lower time-frame and trade with a lower entry and a tighter stop loss.
  • #9,764
  • Jun 14, 2022 2:28am Jun 14, 2022 2:28am
Quoting Akt
Hello everyone. A little exercise and deep dive for interested parties to consider.... best wishes{image}
Looking 1 TF higher:

Trend is down
Momentum is down
Now in WK DZ (no sell)

For counter trend trades

Wait for confirmation on smaller (4H) TF
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It's like Pelagic fishing, try try try
  • #9,765
  • Jun 14, 2022 12:04pm Jun 14, 2022 12:04pm
USDCHF

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It's like Pelagic fishing, try try try
  • #9,766
  • Jun 14, 2022 6:17pm Jun 14, 2022 6:17pm
Quoting Akt
Hello everyone. A little exercise and deep dive for interested parties to consider.... best wishes{image}
Hey AKT, i'll take a stab at it.

Why did the demand zone fail despite meeting the set criteria for quality? The demand zone failed because at the time of price entering the price range of the zone, there were many more sellers than buyers - so many more sellers that they were able to set up their supply lines hundreds of points back, and still managed to decimate the buyers and blow them into oblivion!

How could it have been, if at all, anticipated that this demand zone had a low probability of succeeding? This one i'm not sure of if we're only talking into consideration our assessment of zone quality, trend, and location that we practice in this thread. Sometimes zones don't work out - and thats fine as long as we're able to control our risk and make sure that when they do work out we make more than we lose when they don't.

How could a trader have protected himself/herself from a loss, trading this demand zone? One way, assuming this is the higher time frame, is to wait for price to turn on smaller timeframes so we can see what we're anticipating starting to play out before we jump into the trade. If one is trading from the Monthly/Weekly/Daily perspective then i'm not so sure this loss could've been avoided as we were starting to see exactly what we want to see from a quality zone.
  • #9,767
  • Jun 15, 2022 12:24am Jun 15, 2022 12:24am
Quoting Masterquis
{quote} Hey AKT, i'll take a stab at it. Why did the demand zone fail despite meeting the set criteria for quality? The demand zone failed because at the time of price entering the price range of the zone, there were many more sellers than buyers - so many more sellers that they were able to set up their supply lines hundreds of points back, and still managed to decimate the buyers and blow them into oblivion! How could it have been, if at all, anticipated that this demand zone had a low probability of succeeding? This one i'm not sure of if we're...
Hello everyone

Many thanks to all of you who gave the question a go. I hope it was interesting for you all, as it was for me.

I don't see much wrong with your responses.
Everyone had their own filters which when applied to this zone could have prevented them from entering.

As you have probably noted, the questions were premised on the methodology specifically, rather than any outside factors affecting the markets.

The reason I did the case presentation for the zone was to illustrate that no matter how good a zone looks, it could still fail. Money management - stops and position sizing should therefore be in any answer to the questions posed.

I also wanted to show that supply and demand is not an infallible method as I see (much to my concern) that so many traders have become almost like disciples of the methodology, insisting that it is the "best" methodology, the "only way" to trade the markets, etc.
That is a dangerous and frankly inaccurate message to give to anyone new coming into the methodology or even more experienced traders looking for more success trading the markets. It just isn't true.

Zones fail everyday. That will never change.

In this market, the Nasdaq, the methodology clearly suggested an uptrend had started. However a simple eyeball test of the chart would clearly show prices were still in a downtrend or at best ended a downtrend and entered a side ways range. For traders using moving averages, they would have seen that with the averages still pointing down and likely waited or indeed gone short.

A possible way the supply and demand trader could have avoided a loss was if he practiced multiple timeframe analysis and was trading intraday, waiting for decent intraday demand to be formed at the level in order to try longs. However, even that approach would have resulted in lost trades depending on the size of the intraday timeframe used. Any timeframe less than say a 5min could have caused issues for the intraday supply and demand trader. On 15min, 30min zones at that level, the selling pressure was so much that there were no strong rallies when prices were at the level to create a demand zone that one could have bought pullbacks to.

Marquis, your third point there about the difficulty faced by the position trader using the MWD set up is such a great point. Unless the supply and demand trader using those timeframes had other filters of price, it would have been near impossible not to try to go long at the proximal line of the daily demand zone.

So, again, thank you all for participating. It was a lot of fun doing the deep dive with you all.

I think such exercises are useful for practitioners of the methodology for so many reasons. More reasons than I have the fingers to type here
I have done these type of exercises for years in my own practice and I am the better for it.
I hope you all find it useful as well

Best wishes
Be careful what you think because your thoughts run your life..Solomon
  • #9,768
  • Jun 16, 2022 1:00pm Jun 16, 2022 1:00pm
Quoting CarlosNL
USDCHF {image}
Now looking if we can do it one more time
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It's like Pelagic fishing, try try try
  • #9,769
  • Jun 16, 2022 2:25pm Jun 16, 2022 2:25pm
CHFJPY
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It's like Pelagic fishing, try try try
  • #9,770
  • Jun 16, 2022 9:06pm Jun 16, 2022 9:06pm
There is one thing confuse me when trading supply and demand. Sam says unfilled orders located at base drives the market. In fact, unfilled orders are limit orders. They are passive buyers/sellers, so they can't drive the market. Only market orders could do that. Maybe it's more correct to say a base is an area which market orders are more active, right? Please correct me if I'm wrong.
  • #9,771
  • Jun 16, 2022 11:47pm Jun 16, 2022 11:47pm
USDCAD

Hello everyone, would really appreciate some feed back on my analysis, thanx

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  • #9,772
  • Jun 16, 2022 11:58pm Jun 16, 2022 11:58pm
Quoting CarlosNL
{quote} Now looking if we can do it one more time{image}
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would this be a valid entry?
  • #9,773
  • Edited Jun 18, 2022 2:18am Jun 17, 2022 3:44am | Edited Jun 18, 2022 2:18am
Quoting Akt
{quote} Hello TradingSD Good to meet you. If i may, on the ethereum chart, one needs to be much more specific when drawing in the Supply area. Unfortunately I can't add a chart because I can't see the dates of the data on the chart you cropped. I have attached the one on bitcoin similar to yours in order to show some sort of example though. Hope it helps With regards to momentum lines, only two rules apply really - first the second pivot should make a new low (when drawing a downward momentum line) or a new high (when drawing an upward momentum...
Understood clearly, Thanks for the reply.
Apologies was away, been practicing with the videos that you put out! Grateful for it!
How do you verify an authenticity of a zone in entry timeframe? When i look at a zone, it's usually a reaction to the zone to the left. Seems like DBD/RBR is usually the authentic one.
  • #9,774
  • Jun 17, 2022 9:20am Jun 17, 2022 9:20am
Quoting zkchyo
There is one thing confuse me when trading supply and demand. Sam says unfilled orders located at base drives the market. In fact, unfilled orders are limit orders. They are passive buyers/sellers, so they can't drive the market. Only market orders could do that. Maybe it's more correct to say a base is an area which market orders are more active, right? Please correct me if I'm wrong.
Hello zkchyo
Good to meet you

What a great question.

If i may, if you consider that supply and demand zones can be minutes, hours, days, week, months or even years old, it is not that institutions leave orders at those levels for that length of time, especially on the longer timeframes.

Note what a supply or demand zone actually is, it is a sideways trading range ie a period of trading where there seemed to be a balance between buyers and selling, until the imbalance showed itself.

What tends to happen is that these price levels we call supply and demand zones are nothing more than areas of interest for institutions are likely to look to become involved in the market. By and large, they (institutions in the markets) are involved in creating these zones in the first place so they remember these price levels(it isn't our orders that are creating this levels, we don't have that kind of pocket).

The assumption within the methodology is that there will be orders entering the market at these levels. Those could be new market order, in the case of say a new level created on a smaller timeframe, or market orders. It has to be said that for an institution to use market orders with the size they trade, they must be really interested in getting into that market because for their size, paying the spread could be substantial in dollar amounts).

hope it helps

best wishes
Be careful what you think because your thoughts run your life..Solomon
  • #9,775
  • Jun 17, 2022 10:37am Jun 17, 2022 10:37am
Quoting TradingSD
{quote} Understood clearly, Thanks for the reply. Apologies was away, been practicing everyday with the videos that you put out! Grateful for it! How do you verify an authenticity of a zone in entry timeframe? When i look at a zone, it's usually a reaction to the zone to the left. Seems like DBD/RBR is usually the authentic one.
Hello TradingSD

No worries.

As to your observation, that's correct and it is due to the interaction of traders at these price levels.

Authenticity is a bit of an "old school" part of the methodology and was not in the original concept. It has since been removed because it caused too much confusion.

In my experience it is better to consider the three intrinsic assessments of a zone i.e. Strength of move away(composed of how much prices travelled away from the zone and whether or not it removed an opposing zone, or made it to new price, whether up (for demand zones) or down(for supply zones), the time spent at the level and whether the zone is fresh or not.

Those three are critical assessments and much more important.

Hope it helps

best wishes
Be careful what you think because your thoughts run your life..Solomon
  • #9,776
  • Jun 17, 2022 10:58am Jun 17, 2022 10:58am
Quoting Akt
{quote} Hello zkchyo Good to meet you What a great question. If i may, if you consider that supply and demand zones can be minutes, hours, days, week, months or even years old, it is not that institutions leave orders at those levels for that length of time, especially on the longer timeframes. Note what a supply or demand zone actually is, it is a sideways trading range ie a period of trading where there seemed to be a balance between buyers and selling, until the imbalance showed itself. What tends to happen is that these price levels we call...
Hi Akt,

Thanks for your reply. I find it interesting when you mention balance and imbalance. It reminds me volume profile. When price is within a volume distribution, it's balanced. If it's moving from one distribution to another, it's imbalanced and a leg could be spotted.

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This is my ES chart. The circles are the imbalance moves from one volume distribution to another. Hope you find it interesting.
  • #9,777
  • Edited 2:55pm Jun 19, 2022 2:42pm | Edited 2:55pm
EURUSD DAILY SD Levels. First Post as New Member.
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  • #9,778
  • Jun 20, 2022 7:13am Jun 20, 2022 7:13am
Quoting Akt
{quote} Hello TradingSD No worries. As to your observation, that's correct and it is due to the interaction of traders at these price levels. Authenticity is a bit of an "old school" part of the methodology and was not in the original concept. It has since been removed because it caused too much confusion. In my experience it is better to consider the three intrinsic assessments of a zone i.e. Strength of move away(composed of how much prices travelled away from the zone and whether or not it removed an opposing zone, or made it to new price, whether...
Is there a time or situation where authenticity holds more value than the three that you mentioned? For example, I see that you mentioned in ur videos. That when a particular zone which has a long wick, pulling liquidity over from previous zone and therefore you would prefer not to use this zone due to it’s poor structure. Why is this not a good DZ/SZ even if it seems to fulfil the three that u mentioned? Is this related to authenticity or it shows tht it doesn’t rlly hv unfilled orders thr?
  • #9,779
  • Jun 25, 2022 10:41am Jun 25, 2022 10:41am
Quoting TradingSD
{quote} Is there a time or situation where authenticity holds more value than the three that you mentioned? For example, I see that you mentioned in ur videos. That when a particular zone which has a long wick, pulling liquidity over from previous zone and therefore you would prefer not to use this zone due to it’s poor structure. Why is this not a good DZ/SZ even if it seems to fulfil the three that u mentioned? Is this related to authenticity or it shows tht it doesn’t rlly hv unfilled orders thr?
Hello TradingSD
Thank you for the question and apologies for the slight delay in getting back to you, been a busy week.

The reason it would not be an advisable zone to trade in the scenario you describe is because of the volatility in the base that a zone such as the one you described, would represent.
If we keep in mind that these bases represent institutional activity, which basically means big sums of money changing hands, it is not in their best interest to have high volatility with prices whipping back and forth in wide ranges as they try to fill orders. The preference and really the goal is to keep prices in a tight range while they do their transactions so that their average prices are within reason.

So for a zone that has large wicks either to the upside or downside, it would not be desirable to use that to represent the type of institutional activity supply and demand traders are concerned with. It would be advisable to look beyond the wicks, at where they went to or tried to get to, before falling (in the case of supply) or rising(in the case of demand).

hope that helps

best wishes
Be careful what you think because your thoughts run your life..Solomon
  • #9,780
  • Jun 25, 2022 10:54am Jun 25, 2022 10:54am
Quoting Forexsetup
EURUSD DAILY SD Levels. First Post as New Member. {image}
Hello Forexsetup.
Good to meet you and welcome to Trading institutional order flow.
Thank you for sharing your chart on the EURUSD.

If I may, here are some of mine.
The next few weeks should be an interesting one, if we get some resolution in prices from where we are at present.

best wishes
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Be careful what you think because your thoughts run your life..Solomon
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