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

Calm down.. LOL.

Now, ask yourself these:

Knowing fully well that trading is zero-sum, would I spend thousands of hours of hard work trying to figure something and let it out for free in one single public post? Do you even think in the J16 thread they give you everything for free? Do you even know the sole reason for that thread? I do not want to pick on anyone and please don't get me wrong about J16. It's indeed a good beginning, a good place to learn and James is a nice person. I know because I have been there. But I tell you, there's a reason for everything in life and sometimes you have to look beyond, and think outside the box to really see..

But just remember that anytime you see a "new system" thread anywhere blatantly dishing out everything and a set of rules +++, simply understand that it's because they've found another one better..


I'm glad that at least someone understood what I meant in my post.

Ok....I'm calm now.

Couldn't agree more.




I understood what you meant but didn't agree.....I appreciate though, that there's an element of truth to what you meant.
There's a huge amount of learning and interpretation when it comes to order flow. To get an edge in this area is not as simple as DS makes it out to be......sometimes I think he likes toying with the rest of us with comments like "have ye managed to get this yet". It's simple to see and understand the process when you are sitting on the other side of the fence.
On saying all that however, to have an edge is one thig, to maintain your edge is another. The market dynamics change, as do the participants and their behaviour. Therefore, to be able to discuss how to maintain and improve on your current edge with other participants is essential. You've just got to choose who you want to to talk to.

Very very very much so sir. =)
You and Stevie have hinted plenty... and I'm using it to the best I can... profitably... orderflow is the "ace full of kings" of speculation.

Not a PRO at it, but the book is unraveling...

http://www.youtube.com/watch?v=4fLR3FRaFsQ

When you want to know what is going on behind the chart you have to understand how institutions trade big sizes over time.

I won't show how i spot institutional orderflow but here is a cause for thought:

http://corp.bankofamerica.com/public/public.portal?_pd_page_label=equities/ets/agencyalgo

this must be a joke. Plenty of people figured it out, though they are not writing, and finding it amusing how some members looking crazy for it. Lol i do this strategy without knowng it, but that explains my awesome results. I cant fathom that someone cant figure it out. the thread states it obvious. I didnt know it was the holy grail, so i will shut my mouth as well hehe.

Actually, Anyone who is willing to pay me 9000 usd, i will tell you what this thread is about in private and the so called strategy and how you profit from it.

However, if its going to be worth explaining it, post me a picture screen from http://mensa.dk/testiq.xml where you get more than 115 in iq, with the lowest standard deviation. Because im being honest here, you need to be a smart trader to profit this.

That will just be me filtering. You at least need and iq of 115, which is rather low. WHat is more important is your lateral thinking capabilities,creativity, and understand how things are.

Prefarably, if you are already posting here on forexfactory, i can judge your lateral thinking capacity. For example, pork pie exhibibit, according to the post here, quite a high lateral thinking capacity, as well as well as capitalist88.


What is lateral thinking. well its understanding something like this:

Say that price either goes up incrementally to 100 or down to 0, without ever retracing back. Say that the current price is 50. Chances that it goes up or down is 50%

How could could you harness this market charactheristic to your favour?


Answer is, set take tp to 50, and stop loss to 1. This would have a positve expectancy after 100 trades, produce 50 wins with 50 pips in profit, and 50 losses where the loss is only 1 pip.

The profit is 50 times 50=250 pips
losses are 50 times 1=50
net profit is 200

If you posses this elusive insightfull skill to a bigger extent, and this curious mind, (one who is thinking a lot,analyzes=traits that einsteined possesed to reach immensely insightful thoughts) you would start thinking how you could use this profitably in the market.


You would realize that it would be situations in the market where it is very volatile.

Say, that if it breaks the resistance line 50, you know it will plunge into 80 at least. CUrrent price is 45. So you enter on 45, tp is 35 pips, whereas, sl, is set on most recent support at 35. SO your sl is 10.


This would create a similiar situation, for how you could use this idea on the market. You would understand what situation is needed, with your reflective mind.


A really reflective mind, would hower, start to think about the chacnes of the price going up to 80. Say that your analzes tell you it is only 10%, when this trade according to your analysis would not be profitable. As the positive expectancy would be in 100 trades


winning trades:,35profit, times 10= 350 pip profit
losers, 10 times 90=900 pip losers
net: 550 pip loss


However, the chance for breaking the support, would be increased,if you for instance think the price is oversold.


A really reflective mind would think deeper about this factor, does this oversoldness in the example, maybe point to the fact that the price is trending. Not starting to think about this, would indicate lacking skill of understanding how things are(which in my point require at least a rudimentary iq of 115, plus reflective mind.

An iq of 180, without reflective mind, would only be good at calculating, doing maths, but not explore thoughts deeper, understand how things are. I cant quite put my finger on what this other skil is, but its not iq, but this skill is the most important for a trader, in order to READ SITUATIONS.


I posses around 130 iq, however, my insightfullness, is quite extraordinary. FOr me to even illustrate this concept with and understand this way, and even understanding what kind of inntelligence a trader need show that i posses a very thinking mind that understands things

I have this creative,insighful mind like einstein. NOt to the same extent as him, but to a much higher extent than average.

Ive come up exactly on how human beings work, what defines love, and other thing, and i would probably revolutionize this area if i made my findings publicily available. Though, i prefer to exert my power into understanding trading better

Ive aspergers. Exactly like einstein had. I lack empathy skills(for instance, i write about how good i am, and the general impression this very special post creates on the reader, would turn many people irritated on me, however, i cant feel it in heart that i do, thus i dismiss it and still keep bloating, putting my self on chair close to god". I promise you, many aspergers would never admit it, and never being able to do the mistake(bloating), while at the same time know how other would feel about it. Im way above the average aspergers in understanding myself, the environment. You would never think ive aspergers in real life, as i act perfect if i want to. Ive been able to map almost every single social norms, rules, and can mask myself perfect. Im rather interpreted as someone with great empathy in real life lol. Ive to live with people, and have thus put amazing amounts into analyzing human behavious,attraction,love,respect. Ive think my powers go to waste, i much rather put it into understanding trading instead. Its sad that many aspergers have to wast it into human behavious, in order to adapt to the society tthey live in so they can fit.. fucking sad.


Not all aspergers are like me or einstein, but genererally, since you lack empathy you become more analytical and creative. This coupled with high iq, can create wonders. Im a fucking born trader.

I'd put you out of your misery for a lot less.

haha

I've got 152 IQ, and have asparagus too, I like it with salt and pepper.

From reading the thread, ive thought about it, and want to share my thoughts, regarding the debate porkpie and scotty be had.

We have different orders. These are the main:


Market orders
Limit orders

Where stop losses and take profits are market orders.

Limit orders provide liquidity, whereas market orders eat up liquidity.

However, volume is the aggregate of market orders and limit orders.

For the price to move one pip, it has to eat up the open interest.

Lets say

Market buy order= MB
Market sell= MS
Limit buy= LB
Limit sell= LS


So for the price to move up, this has to be true:MB>(LS-LB)+MS

In this case, if price moves up,all LS get filled. We, say, that the LS is in the wrong direction of the market. However, not all LB wont get filled.

The amount of LB that wont get filled when price reach higher in the direction of the buy limit is, LB= MB-MS

The reverse is true if MS>(LB-LS)+ MB

However, i dont think this is anything new. Im sure there are articles and books regarding this.

Continuing:

Since volume is the aggregate of limit orders and market orders, and since market orders eat up liquidity through consuming limit orders(that provide liquidity).

SO if the price don't move(lets say it is on 60(not consuming open interest), And volume is high, because limit and market orders are triggered, that would result in lower liquidity, at price level 60. More liquidity may be at 61 there more lingering limit orders hang. But market orders eat up liquidity through consuming limit orders, as price hangs on price level 60. One can assume that, since forex in genera l is so liquid, one can assume new MS entering the market all the time. This also means, that if there are many buy limit orders at a price level, resulting in the price bouncing off that level, the more times it touches that level, the more of these limit buy orders are consumed, resulting in a higher chance of the price clearing all the bying limit next time.

Anyway:

So if prices dont move, this will create high volume on 60. And if prices stay on that, not moving down to 59, liquidity dries up. Meaning, that less market by orders are required for the price to move up to 61, the longer the price stays on 60.

This is only true if no Market sell orders enter the market. However if it enters, if there are lots of MS, chances are it will drop down to 59, as these MS consumes the open interest,but if price anyway hangs AROUND 60, in the viscinity, in times during high volume, it indicates liquidity dries, up, and chances are higher that it will go to 61.


This is good knowlededge if one is scalping.

Conclusion is:

if price hangs around 60, volume is high, it means liquidty dries up, and chances are higher it will go to 61, deping on situation in general.





Just some interesting thoughts.

These are examples on how you can come to greater insight by having a generally high iq, but foremost, an exploring analytic mind. you can reach great insight and understand how things work

Happy trading guys.

Lol, you sound like a right wanker... but I don't actually mind reading what you write. Personally, I think 'IQ' is overvalued by many... If you gave an IQ test to a tribe living in the Amazon, they would probably score terribly... but do you expect me to believe that they're all extremely stupid?

Someone said "IQ is what is what is tested by IQ tests" and I'm inclined to agree with the quotes underlying meaning.

Regards, Leon

EDIT: PS. Ideally, cultural upbringing and such wouldn't effect intelligence, yet IQ tests would lead us to believe that it does. If culture effects IQ, then IQ isn't innate, and the whole idea of intelligence as measured by IQ tests is void.

Well, people who take math at university, generally score 130 on iq test. From this we can conclude, that strong abilitiy with math and logical reasoning has "some correlation". Because if the correlation was 0, the math students good at math, would get the average iq by the population.


So from this we can conclude that high iq, have correlation and therefore indicates ability to think logically, and solve math problems to some extent.

I agree with you that different cultural upbringing stimulates IQ.

The brain get used to thinking in abstract way. SOmething the brain can learn to do, and not something we are born with.

For someone who has never been exposed to solving problems, conducting a test would be alien to them. This would hamper the result.

However, every human is born with a max iq, where even if you study and expose yourself to problems, you wont gain much more iq.


Its the max potential that is interesting.


So cultures with low iq, obviously, dont reach their maxes to the same extent as western countries.

The "every human born with a max IQ" hypothesis is a reasonable one... but as far as I'm aware there is no research to back it up. Couldn't it just be that those who cannot perform better on an IQ test are, at the time of taking the test, restricted by some self-limiting beliefs or not had the 'enlightening' experience which allows them to perform better.

I find this all interesting, because I thought I was stupid as a child, and my teachers thought the same about me. Now, my tutors think I'm in the top 5%, and I can see I am too. Had the changes in my life and aspirations not taken place in between, I'd still be the same: working crappy jobs, drinking 5 nights a week, and snorting cocaine on the weekends.

The area of 'intelligence' is too complicated for us to understand IMO. If one see's the need to be intelligent, then one becomes it, if not, then they don't.

Obviously they are those with obvious mental conditions who can't function to the level of most people... but I believe the majority of people never reach close to what they are capable of.

Question: I've never had a proper IQ test, but I'm rubbish at chess... In your opinion does this mean I will have a Average/Low IQ?

Well there is nothing that backs it up. But i think, boundaries for speculation and debate get too tight if you are only allowed to draw conclusion on what is already "scientifically proved" . Im 100% sure about my hypothesis, its sounds so common sense and sensible to me. But then, i claim i posses more than average common sense abilities, and like einstein dont need sciencie to prove things, to realize how things are.


Its not about self limiting beliefs. Its about being exposed to problem solving tasks, to stimulate the brain to think in a "problem solving way.

What i believe could hamper iq performance is:

attention deficit. children may experience higher level of this. Attention deficit will be negative for your wokring memory(working memory is scientifically strogly correlated to iq) and to think deeper.


What i believe will increase iq: being exposed to problem solving tasks)



In your case, your history is very similiar to mine. Though ive never been bad at school, but then i was a child, i could stare at a math question, without understanding what i was reading. I think i developed abstract thinking abit late.


How fast people develop abstract thinking differ from person to person, which is biologically determined. Abstract thinking is improved the more you think abstract, which you do as you study.


Some are late developers like myself...


About chess. Well chess is about memorizing positions. SO it is very memory reliant.

On the other hand, there is a strong relationship between memory and iq, so one who posses high iq, may also have good memory.

Secondly it is about thinking abstractly. Being able to think how the game develop in the future. This undoubtedly require high iq, and brain power to be able to see more moves ahead.

but here is the catch.. If you memorize positions, you also memorize different possible moves ahead. This memory of moves ahead,substitute the need of abstract thinking.

High abstract thinking require high iq. But as you can substitute abstract thinking in chess by memoryizing positions and position development you can get good at chess just by playing a lot and memorizing.

So drawing upon that it could mean any of the following:

lets assume you played average amounts of time:

1your iq is high,but your memory sucks
2your iq is not high, your memory is mediocre/bad


Number one is unlikely as higher iq usually correspond to better memory.

So given that you played lots of chess, but still suck, this likely tell that your iq is below the average of the average chess player.

But then again, i assume people attracted to a thinking man game like chess, may posses higher iq on average.

So I think your iq is lower than the average chess player, but not necessarily lower than the average iq of the populatoin.