(binned per thread starter's request) Behind Price-Orderflow | Page 24 | Forex Factory

Options

Go to
Permalinks
Print Thread

Similar Threads

How to Use Orderflow in Forex - Any Ideas? 9 replies

Question about OrderFlow or OrderPosting via Broker or LiqProv 1 reply

Collection of posts/threads from orderflow traders 0 replies

Using future orderflow, to predict spot prices 16 replies

Vidas - Orderflow 1 reply

Attachments: (binned per thread starter's request) Behind Price-Orderflow
Exit Attachments

(binned per thread starter's request) Behind Price-Orderflow

  • #461
  • Sep 5, 2009 3:00pm Sep 5, 2009 3:00pm
Quoting jpat1023
I would definitely disagree.
See above.

Yes.
Friday, Eur/Usd...if I have time later (and decide I want to) I'll go through my entire thought process...I went long at 1.4206 (with a limit order even) as price quickly left the obvious area of demand...where do you think I exited?
My Limit was a bit before yours (1.4217) and my exit was 1.4320. Close?
  • #462
  • Sep 5, 2009 3:09pm Sep 5, 2009 3:09pm
Hi Jpat,

I think you have identified the confusion in the direction of the thread.
The direction was heading towards 'reading' orderflow using the orderbook but you are right, judging from the OP's first post we should just be 'thinking' in terms of the orderflow.

I can't wait 'till Monday either because then you can post some examples for us and say:

'look there it is, why can't you see it you fools.. ' ha ha
might help with your frustration

Cheers J
  • #463
  • Sep 5, 2009 3:10pm Sep 5, 2009 3:10pm
Quoting jpat1023
hmm...I didn't catch any facetiousness...I even re-read that part of the thread...either way, if it didn't help you, it will help someone...I know at a time it would have helped me.

btw, any idea what happened to Cellar Door's posts? Now it looks like I was talking to myself, lol. At least you can still see that I quoted him...

Someone must have caught him unloading an illegal truckload of BS in the thread. "Price overflow" my green Irish ass....

FF is getting overrun with self-proclaimed gurus.
  • #464
  • Sep 5, 2009 3:17pm Sep 5, 2009 3:17pm
Quoting slimcat

judging from the OP's first post we should just be 'thinking' in terms of the orderflow.
But the OP went further than that, "Scotty,you don't need the charts believe me." (http://www.forexfactory.com/showthread.php?p=3001996#post3001996)

That's what has got some people on a data-finding mission and downloading fx futs demo platforms and forex spot demo platforms with broker's Level 2 data!
  • #465
  • Sep 5, 2009 3:20pm Sep 5, 2009 3:20pm
Quoting pipmutt
This is almost painful!

Where exactly are you planning on getting this 'order flow' data which you're going to 'actually watch'? EBS? Reuters? Don't tell me, CME currency futures!

Plenty of people talking up a good game here and trying to make it all sound extremely complicated and something only they could possibly understand or know the 'secret' about, complete with cryptic nonsense, but at the end of the day there's absolutely nothing of any substance!

You sound surprised. This thread looked like a skunny clone from the first page.

That being said however, the majority of posters who are honestly trying to learn have placed an enormous amount of helpful resources on here. There's no "big secret" of course, but Scotty and others have done enough research into market mechanics and structure to provide a solid background for any serious trader's education. Kudos to the people who have done stuff like that here.

As far as the cryptic mystics go... ...they provide just enough entertainment to break up all the serious reading.
  • #466
  • Sep 5, 2009 3:28pm Sep 5, 2009 3:28pm
Quoting capitalist88
That being said however, the majority of posters who are honestly trying to learn have placed an enormous amount of helpful resources on here.

Yep you're right, some very useful research and references, a buffet of educational material, from Scotty especially (I did in fact thank him for his efforts)

I guess the thread has actually served a very good purpose and got people to look past their indicators and s/r levels, mind you everyone's an expert now because that's what they were all doing anyway, right?
  • #467
  • Sep 5, 2009 3:43pm Sep 5, 2009 3:43pm
Quoting LasVahGoose
Thank StoragePro from J16 for mentioning them and ScottyB for posting links.
A big thanks to StoragePro, ScottyB, and LasVahGoose.
  • #468
  • Sep 5, 2009 3:44pm Sep 5, 2009 3:44pm
Quoting jpat1023
Let me ask you a question:
If price moves into an obvious area of demand(support to the left), and quickly rebounds and heads north, what does that say about the orders that were sitting in that area waiting to be filled?
Can small orders quickly soak up supply and reverse price?
I know this question wasn't directed to me, so I'll butt out if requested, but I want to see if I can add some clarity here. Keep in mind also that I'm kind of thinking this through as I type it...

The fact that price "quickly rebounds" from the demand area doesn't tell us anything about the orders that were waiting there. Here's why. There can only be two types of orders that were waiting down below the market; buy limits and sell stops.

The demand down at that level comes from the buy limit orders. (These may have originated from a bank trying to flatten its inventory levels at a good price or from commercial customers out in the real economy who are looking to hedge exposure from international transactions, or whatever). But limit orders don't move price. They stop price movement. Only market orders can move price.

So the buy limit orders only made the price stop. They didn't make it bounce. So what did? Was it the stops sitting down there? No, because those would have been sell stops, and would have just been added to the flow of downward market orders hitting the limits. So the sell stops weren't responsible either.

The only thing that could have made price bounce sharply is newly entered market orders to buy. These could have just been placed as market orders from traders watching in this time frame. They also could have originated from buy stop orders being placed down in some lower time frames. In other words, if you look inside a bouncing daily bar, you'll see 96 15-minute bars, and shorter term swing traders are placing their stops beyond the peaks and troughs of that frame. Inside each of those 15-minute bars are 90 10-second bars where scalpers are placing stops for large positions on both sides of the action.

But the point is, the fact that price bounces off a level tells us nothing about prices that were already sitting at that level before price reached it. The only thing that tells you anything about the resting orders at a level is the fact that price stops there, or the fact that price breaks through the level. If the breakthrough is whimpy, there weren't many stops there. If the breakthrough is like the koolaid guy coming through a brick wall, there were a lot of stops there.
  • #469
  • Edited 5:11pm Sep 5, 2009 5:00pm | Edited 5:11pm
Quoting jpat1023
I would definitely disagree.
See above.

Yes.
Friday, Eur/Usd...if I have time later (and decide I want to) I'll go through my entire thought process...I went long at 1.4206 (with a limit order even) as price quickly left the obvious area of demand...where do you think I exited?
@jpat1023

Since You definitely disagree with me, maybe we could exchange views on this topic to move on. Im here to learn. Correct me, if I´m wrong.

I assume you refer to the PAST major swing highs/lows as a POTENTIAL area of supply/demand. Is that right?
If that is so, what makes You think, that there have been orders sitting NOW? (history repeats itself, right?)

Im sorry, if this seems a bit too strict, but placing buy limit order somewhere 200-300 pips below current price with maybe 50 pips SL is a bit ... predictive. You expect price to fall few hundred pips and REVERSE approximately in your PREDICTED area and then go back for You to exit with cool profit.

Is this how You traded EURUSD on Friday?
Don´t get me wrong. Im not saying it´s not possible. Just trying to understand the rationale behind the trade as I learned the hard way, that in order to measure some edge (assuming You have one) you need to be able to quantify it somehow.
Bluefish

P.S. To answer Your question: I think and I wish You exited somewhere around 1.4315
  • #470
  • Sep 5, 2009 5:24pm Sep 5, 2009 5:24pm
Quoting capitalist88
I know this question wasn't directed to me, so I'll butt out if requested, but I want to see if I can add some clarity here. Keep in mind also that I'm kind of thinking this through as I type it...

The fact that price "quickly rebounds" from the demand area doesn't tell us anything about the orders that were waiting there. Here's why. There can only be two types of orders that were waiting down below the market; buy limits and sell stops.

The demand down at that level comes from the buy limit orders. (These may have originated from a bank...
Just my humble thoughts,

The market is always trying to reach a state of equilibrium. matching buyers and sellers. If an overload of orders comes in on either side, price has to move to an area where these can be matched, in doing so it has to cross the all levels in between as those are also used to balance or add to the imbalance.

What would happen if the final balance trips into a level where there's more counter orders than needed to fill the original move? You also need to take into consideration the fact that your b roker's book ( if he is filling you and unable to offset internally) is absorbing all the individual orders coming in as a move is underway, making them very long or short on the counter, they need to off load these without taking a hit.

Something else that needs to be taken into consideration, a MMakers ability to off quote prices, just because they offer a bid/ask at any price doesn't mean that the market has necessarily moved to that price.

The volatility of price's movement (angle or slope) should give you a clue to the amount of energy, size of orderflow (if you want to call it that)

regards
  • #471
  • Edited 6:00pm Sep 5, 2009 5:39pm | Edited 6:00pm
Quoting auxesis
Just my humble thoughts,


What would happen if the final balance trips into a level where there's more counter orders than needed to fill the original move?
It depends on whether the "counter orders" are market orders or limit orders. Remember, every transaction consists of a market order colliding with a limit order. Market orders don't just "cross" and fill each other.

If the market order is smaller than the limit order it hits, then the market order is completely filled at that price and the limit order is partially filled at that price. Some large limit orders sit on the books for weeks or more before being completely filled.

If the market order is larger than the limit order it hits, then the market order is partially filled at that price and the limit order is completely filled. The rest of the market order then moves to the next available limit order and continues to fill at that price, and so on.
  • #472
  • Sep 5, 2009 5:52pm Sep 5, 2009 5:52pm
Quoting jpat1023
Wow, seriously? Your looking for posted 'results'? Nobody is talking about a 'profitable system/method'. The op of this thread's obvious intention was to help people actually understand how the market works......On page one of this thread someone said "I hoped I would never see a thread like this", he responded "It doesn't matter, you could spoon feed it to some people and they still wouldn't get it"......damn, he was spot on...
Listen,

Im not sure what the hell ive said your responding to, but let me try to make it clear to you.

I was saying that this thread has only been online for a week, and some of the members that have joined in on it are running round like they have 100% 'found something' ground breaking & market shaking. I was mearly pointing out that they should properly test their idea's within the frame of a system before they get so excited.

Clear?
Living the adventure in my head.
  • #473
  • Sep 5, 2009 5:54pm Sep 5, 2009 5:54pm
Quoting capitalist88
It depends on whether the "counter orders" are market orders or limit orders....
Just using this as an example, if pair ABC/DEF moves to 1.0000 wouldn't all orders, limit stops & profit, market buy and sells sitting at that price be activated, not necessarily filled as price may have to move to find a match if not able to offset all at that level? Guess it would be better to say filled, as the b roker may be counterparty until it can be off loaded.
  • #474
  • Sep 5, 2009 6:00pm Sep 5, 2009 6:00pm
Quoting auxesis
Just using this as an example, if pair ABC/DEF moves to 1.0000 wouldn't all orders, stops, profit, market buy and sells sitting at that price be activated, not necessarily filled as price may have to move to find a match if not able to offset all at that level? Guess it would be better to say filled, as the b roker may be counterparty until it can be off loaded.
How does a broker offload the position? If Br_ker A is net short, does he look for a another Br_ker that is net long and they swap positions at set price?
Don't wish it were easier, wish you were better. ~ Jim Rohn
  • #475
  • Sep 5, 2009 6:12pm Sep 5, 2009 6:12pm
Quoting auxesis
Just using this as an example, if pair ABC/DEF moves to 1.0000 wouldn't all orders, limit stops & profit, market buy and sells sitting at that price be activated, not necessarily filled as price may have to move to find a match if not able to offset all at that level? Guess it would be better to say filled, as the b roker may be counterparty until it can be off loaded.

No. You're thinking about how bucketshop retail FX brokers work where they fill every customer's order instantaneously. They do this out of their own capital because retail FX traders are so tiny in relation to the overall market.

In the actual interbank market, limit orders can be partially filled and may take a long time to get completely filled. They don't just get "activated" and turned into market orders. That would cause them to fill at prices away from the stated limit, which would cause the customer to sue the bank for financial malpractice or something.

Stop orders are the only order type that get triggered and turned into market orders. Unfortunately, the retail FOREX brokerage house haven't adopted any industry standards like the security markets have, so they use any old terminology they want. They call stop orders "limit orders" even though that's not what they are. That confuses everyone to no end.
  • #476
  • Sep 5, 2009 6:13pm Sep 5, 2009 6:13pm
Quoting LasVahGoose
How does a broker offload the position? If Br_ker A is net short, does he look for a another Br_ker that is net long and they swap positions at set price?
B roker A deals through their liquidity providers, banks. Most small traders are left to their own demise, as they know most will lose, they take the counter to the traders position and let them hang themselves. They try to offset internally, but will bundle and off set with the bank, risk can be hedged, the risk is the biggest concern, it's a juggleing act.
  • #477
  • Sep 5, 2009 6:21pm Sep 5, 2009 6:21pm
Quoting capitalist88
The only thing that tells you anything about the resting orders at a level is the fact that price stops there, or the fact that price breaks through the level. If the breakthrough is whimpy, there weren't many stops there. If the breakthrough is like the koolaid guy coming through a brick wall, there were a lot of stops there.
lol, great description, but how would knowing how many stops were hit help us?

It looks like the thread has gone from staring into 'white space' - to predicting price direction "because it has to go there, it doesn't have a choice" - to searching out accurate order flow data - and now to just having a stab at where orders might be. Aside from none of this being particularly scientific, how can we exploit our guesswork and is it any use to us in practical trading terms, and if so, how?

Knowing where stops might be could be helpful if they're in a place which would attract stop running, but apart from that I don't see how the other potential order areas helps us as we don't have the rest of the information.
  • #478
  • Sep 5, 2009 6:40pm Sep 5, 2009 6:40pm
Quoting pipmutt
lol, great description, but how would knowing how many stops were hit help us?
It doesn't, since it's old news by the time it's apparent LOL. I'm not disagreeing with your "emperor has no clothes" evaluation of the thread at all, as you'll note by your most recent vouch.

The only possible information we could get from past events on a chart is what I think of as "order consumption." We can see that certain order types have been eliminated or reduced in size.

For example, if price breaks up through a level like the koolaid guy, we can be pretty sure that the stop orders that were just above that level have been triggered, turned into market orders, and then eliminated all limit orders up to point at which price meets its next resistance.

Alternatively, if price keeps hitting the same level while failing to break through it, we can surmise that whatever limit orders are sitting at that level are getting partially filled, and therefore "consumed" each time this happens. At some point it's going to be totally filled, the next market order will be larger than the limits, and price will be able to advance to the next limit area. That's why multiple hits of the same level doesn't necessarily mean that the level is strong. It could very well mean that the level is almost broken.

But as you say, all of this is guesswork without being able to see all the bank's order books, knowing where all the stops are, tapping the phones of the banks, watching through a telescope to see how full Alan Greenspan's briefcase is on the way to the fed meeting (I don't know if Ben Bernanke carries a briefcase), hiring Bud Fox to follow all the big players around and break into their offices at night and so forth...
  • #479
  • Sep 5, 2009 6:43pm Sep 5, 2009 6:43pm
Ok guys/gals, I've had a night out on the town, so I will address all things directed at me tomorrow (not to say I have all the answers, just that I will continue discussion)...my writing will be much clearer after I sleep off the alcohol...German beer is great, but hard on the thinking skills lol......just wanted to let you know, as I always hated when posters would just dissappear without any notification or anything in the past.

guten nacht!
  • #480
  • Sep 5, 2009 6:59pm Sep 5, 2009 6:59pm
Quoting capitalist88
tapping the phones of the banks, watching through a telescope to see how full Alan Greenspan's briefcase is on the way to the fed meeting (I don't know if Ben Bernanke carries a briefcase), hiring Bud Fox to follow all the big players around and break into their offices at night and so forth...

haha, now there's a few ideas

Don't get me wrong, I think the thread is thought provoking plus the links have been really useful, it's just I always look for practical applications when something like this comes along and then look at the downside, I guess I'm playing devils advocate to a certain extent. Maybe the emperor has some new clothes which he'll store for future use!

Good point about a level being hit a few times, I hadn't thought of it like that, is this why they say triple tops are actually quite risky areas?

Thanks for the vouch, I returned the honour




@jpat1023 Süße Träume!
0 traders viewing now