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Domino's Price and order flow trading

  • #1
  • First Post: Edited Oct 9, 2012 5:23pm Apr 2, 2010 6:52pm | Edited Oct 9, 2012 5:23pm
im gonna take a minute to reorganize this thread make things easier
Attached File(s)
File Type: pdf market_mechanics.pdf   1.2 MB | 360,893 downloads | Uploaded Apr 3, 2010 8:33pm
  • #2
  • Apr 2, 2010 7:05pm Apr 2, 2010 7:05pm
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
  • #3
  • Apr 2, 2010 7:15pm Apr 2, 2010 7:15pm
Quoting domino
well guys I will be trading and talking about price action and order flow trading in here with an emphasis on understanding market microstructure..
good domino.
i will pop in some time and will share some idea.
happy trading
sho
  • #4
  • Apr 3, 2010 1:55am Apr 3, 2010 1:55am
Quoting domino
well guys I will be trading and talking about price action and order flow trading in here with an emphasis on understanding market microstructure..
Thanks D! Appreciate your taking the time.
  • #5
  • Apr 3, 2010 2:15am Apr 3, 2010 2:15am
Bonjour Domino,

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

Cheers

Angel
  • #6
  • Apr 3, 2010 4:06am Apr 3, 2010 4:06am
Bonjour Domino,

Let's back to questions now :


Quote
bid- offer price to buy
ask- offer price to sell
Does it mean that your broker allows you to buy at the bid and sell at the ask ?


Quote
best bid - the highest price to buy in the limit order book
best sell - the lowest price to sell in the limit order book
Don't you change the word "sell" in bold by the word "ask" ?


Thanks

  • #7
  • Apr 3, 2010 5:28am Apr 3, 2010 5:28am
Thank you for opening a new thread. Much easier when it's for this topic only!
I'm all in

Flo
  • #8
  • Apr 3, 2010 5:45am Apr 3, 2010 5:45am
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.
  • #9
  • Apr 3, 2010 5:51am Apr 3, 2010 5:51am
Quoting Angel65
Bonjour Domino,

Let's back to questions now :


Does it mean that your broker allows you to buy at the bid and sell at the ask ?


Don't you change the word "sell" in bold by the word "ask" ?


Thanks

on the limit order book.
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
sho
  • #10
  • Edited 6:03am Apr 3, 2010 5:52am | Edited 6:03am
Quoting Angel65
Bonjour Domino,

Let's back to questions now :

Does it mean that your broker allows you to buy at the bid and sell at the ask ?

Don't you change the word "sell" in bold by the word "ask" ?


Thanks


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.
  • #11
  • Apr 3, 2010 8:42am Apr 3, 2010 8:42am
Sutts and trade price,

Merci beaucoup for your claer explanations

A very good thread with smart people there.

Happy weekened

Cheers

  • #12
  • Apr 3, 2010 9:06am Apr 3, 2010 9:06am
i just cant stop thinking of dominoe's pizza now

thanks for opening the thread!
  • #13
  • Apr 3, 2010 12:18pm Apr 3, 2010 12:18pm
Quoting Sutts
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...
heh you guys got it..
  • #14
  • Apr 3, 2010 12:41pm Apr 3, 2010 12:41pm
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
  • #15
  • Apr 3, 2010 12:47pm Apr 3, 2010 12:47pm
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..
  • #16
  • Apr 3, 2010 12:49pm Apr 3, 2010 12:49pm
Quoting domino
Price Impact - the jump of price caused by orders of a certain size.
Just wondered if this is why you chose your name?

http://www.marketoracle.co.uk/images...ng_dominos.jpg
  • #17
  • Apr 3, 2010 12:52pm Apr 3, 2010 12:52pm
Quoting domino
illegalized parallels- exhist to make there own prices and avoid government manipulation of exchanges rates through regulation.
Yes, we are probably looking at 10:1 here in the US where I am. I'll probably be dealing with this very issue soon!
  • #18
  • Apr 3, 2010 1:13pm Apr 3, 2010 1:13pm
Dealer markets

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.

Market Order
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
  • #19
  • Apr 3, 2010 1:14pm Apr 3, 2010 1:14pm
Quoting FXSurfer
Just wondered if this is why you chose your name?

http://www.marketoracle.co.uk/images...ng_dominos.jpg
haha looks like I found a new avatar lol.. yeah it is .. I like to hunt for places orders will cascade.
  • #20
  • Apr 3, 2010 1:16pm Apr 3, 2010 1:16pm
http://www.forexfactory.com/showthread.php?t=7484 Id read this to guys if you havent already
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