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Order Flow - Finding cluster of stops on chart

  • #81
  • Jan 14, 2011 10:27am Jan 14, 2011 10:27am
heres my vsa take on this
im just finishing reading mtm
Attached Image (click to enlarge)
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  • #82
  • Jan 14, 2011 10:35am Jan 14, 2011 10:35am
Quoting dragan53
heres my vsa take on this
im just finishing reading mtm
Hehe dragan my man, I can see you like Master the Markets and it's really good that you have found your way of trading (being VSA) but this thread really isn't about VSA it is what is happening BEHIND what we see.

I'm 100% certain you can contribute but put that VSA thinking on the side and think about what's happening with liquidity etc. as that is what we need to understand in this case! But thanks for your post, there was a time where I really was into VSA, I read like three books and several pages in a really short amount of time, but couldn't get my head around what was happening, so I moved on, but maybe you understand more about it than I do (or, I'm sure you do!).

Take care and have a great weekend.
  • #83
  • Jan 14, 2011 10:35am Jan 14, 2011 10:35am
can anyoen explain to me why on monday it fell so much,could have they been dumping it to asian central banks,at sydney-tokyo open,i understand that some buyers of their sell orders were found,im guessing they unloaded the goods to quickly,
  • #84
  • Jan 14, 2011 10:42am Jan 14, 2011 10:42am
but isnt vsa liquidity,as we are analysing volume with comparison,to price,we can see where the the aka smart money is(sprecialists,proffessional trading syndicates...)and with candlestick readings their intentions in the market


have a great weekend too,im looking forward to learn more from experienced traders posting here

hm i think i found my answer for monday,sell orders,shorts and low liqidity ,so high volatility is the result,just like trading in december when evryones on holiday
  • #85
  • Jan 14, 2011 11:02am Jan 14, 2011 11:02am
I would liken successful trading to playing 'Rock, Paper, Scissors' and winning. The aim is to get to know others better than they know themselves, so I guess we're social scientists now.
Living the adventure in my head.
  • #86
  • Jan 14, 2011 11:18am Jan 14, 2011 11:18am
Quoting Leonlorenzo
I would liken successful trading to playing 'Rock, Paper, Scissors' and winning. The aim is to get to know others better than they know themselves, so I guess we're social scientists now.
LasVahGoose suggested the same thing in another thread. He even pasted an article about it here.
  • #87
  • Jan 14, 2011 11:24am Jan 14, 2011 11:24am
Great thread, thanks for bringing this up. And I especially like your second chart. I am studying this topic ( although with less ambition than you ) for quite some time and then always thinking : how can I trade this effectively ?

As a basic reference I too found Darkstar very good, more even so Domino`s posts. But all of that is already on a very high and sophisticated level.

In the " Swimming with the current " thread you will find a discussion of how to trade " the move of the day " and its W and M pattern formations.

In the " Price is everything " thread you will find extremely helpful posts from redsword11, who shows how to trade inside these orderflow / demand and supply patterns. Most notably he teaches you to see how certain candles show rejection of levels, his best and valid teaching is how he trades " compression into supply ", followed by an engulfing candle. See also DroppedOnion`s posts there.

I basically am quite happy to wait for shift candles taking out stops signalling a turn is coming, and then watching out for classic Wyckoff patterns showing low volume up bars, upthrusts without follow through etc.

Also notice the 3 drive up pattern before your circled consolidation. For me this is how market players " test " how much supply/distribution is left before their final strong up move. Remember once this strong trend gets going, they want to have as little obstruction from sellers as possible. So they absorb supply even to extremes below your support line. But yet again, we have the W pattern, the shift candles luring sellers in and taking out stops, before then the fast and strong move up occurs.

But I am only an amateur studying this, see how Domino, Darkstar, redsword11 are trading this. Also, the success from J16 price formations will surely come from " being on the right side of order flow ".

Last not least, traderathome shows in the Sonic thread, how broker tick volume CAN in fact be used to gauge the pump and dump activity going on, and although top notch Futures traders will scoff at this, more than 2000 pips since November and demonstrations of trades every single day are speaking " volumes " ( pun intended ).

But I prefer and recommend nothing below 1 h....you can see everything clearly on your 2 charts. Since I trade 1h, 4h and above mainly, I additionally study the $VIX, which in fact is a sentiment and " fear " barometer having direct influence on the major US indices, and then in turn correlates with major moves in the USD majors and also Yen pairs.

If you study raczekfx`posts, you will see how he applies this.

Best of luck, I`m subscribed !


_____________
michael
Be like water.
  • #88
  • Jan 14, 2011 11:51am Jan 14, 2011 11:51am
Quoting dragan53
but isnt vsa liquidity,as we are analysing volume with comparison,to price,we can see where the the aka smart money is(sprecialists,proffessional trading syndicates...)and with candlestick readings their intentions in the market


have a great weekend too,im looking forward to learn more from experienced traders posting here

hm i think i found my answer for monday,sell orders,shorts and low liqidity ,so high volatility is the result,just like trading in december when evryones on holiday
I think what Carnegie is saying is VSA is not of any value to a trader in the spot Fx market. Not all of the trades are going through a central location such as the stock market or futures market where VSA can be of some value if that is your way. What I am trying to wrap my head around is who is the major player at around the EUR/USD 1.34222 area? It has been pinging this area since November. I wonder if this is the the level that is needed to try and stabilize the debt crisis going on there? I may and probably am way out of the park. Why this level?
  • #89
  • Edited 1:40pm Jan 14, 2011 1:16pm | Edited 1:40pm
IMO the more you try and turn what's being discussed (loosely) here into a pattern search - you start drifting off course.

Let's look at what IMO drifting completely off course would be:
(Static, hopeful, lazy mindset)
Identify a particular pattern.
Predict the future, place your trade and cross your fingers.

In contrast to:
(Actively engaged, aware of change, working mindset)
Working toward developing a market generated feed-back oriented view of the market.
Placing your trades within a discerned condition and holding, adding, exiting based on unfolding market activity. Knowing only that present conditions will change.

That's trading IMO.

Sorry, that it has absolutely nothing to do with knowing, in advance, where clusters of stops are or knowing, in advance where stops are resting or knowing, in advance when/where market orders will come pouring in.

Edit: Fuck, I hope that no one reads into my post that I'm saying they're being lazy. Being misunderstood is a lot easier than being understood when you post. That's for sure. LOL! Oh well.
  • #90
  • Jan 14, 2011 1:46pm Jan 14, 2011 1:46pm
Quoting FXSurfer
IMO the more you try and turn what's being discussed (loosely) here into a pattern search - you start drifting off course.

Let's look at what IMO drifting completely off course would be:
(Static, hopeful, lazy mindset)
Identify a particular pattern.
Predict the future, place your trade and cross your fingers.

In contrast to:
(Actively engaged, aware of change, working mindset)
Working toward developing a market generated feed-back oriented view of the market.
Placing your trades within a discerned condition and holding, adding, exiting based...
It's easier to predict the future and cross your fingers

Unnamedplayr: I think I know what you're talking about now, about global money/liquidity shifting. But I need to think about it a little bit more, but I think I'm on the right track.
  • #91
  • Jan 14, 2011 7:11pm Jan 14, 2011 7:11pm
I feel like we still haven't dug into Darkstar's post enough, especially the parts I quoted below.

Like DS said, he already knows what the finished puzzle looks like, and he gave us a hint, so let's try to understand his post. I've been racking my brain and feel like I'm at a brick wall. If anyone has additional thoughts, please chime in. Here are my thoughts:

Quoting Darkstar
Think about how price change and the distribution of liquidity interact. Your looking for a disequilibrium in that distribution which should give you a highly predictable outcome.
The disequilibrium in distribution of liquidity means that there are traders out there who demand liquidity and traders who are willing to supply liquidity, but they haven't found each other, yet. The "highly predictable outcome" is a price movement to an area of high liquidity (the people who are demanding liquidity push price to an area where liquidity is being supplied).

Quoting Darkstar
Trade with the anticipation of that outcome and you have the makings of a high probability system.
In order to "trade with anticipation of that outcome" we have to be able to identify the disequilibrium before the "highly predictable outcome" occurs.

This is where I'm stuck. How do we identify the disequilibrium before the "highly predictable outcome" occurs?

If any of you guys/girls have thoughts, please post them. And those of you who already know what the finished puzzle looks like, if you would be so kind to let me know if I'm wrong in any of my thinking, I would greatly appreciate it.

Darkstar says we're close to figuring out the stop hunting part, so let's keep thinking and we'll get there!
  • #92
  • Edited 8:36pm Jan 14, 2011 7:57pm | Edited 8:36pm
Quoting Carnegie
I think I have an idea here.. Darkstar says we're soon there on the stop hunting patterns, and MAYBE, that has to do with all the intelligent explanations form all you guys + my chart about where stops are located

But this made me think.. Aren't there two (atleast what I know of) different stop hunting patterns?
Think about it, or maybe I'm wrong here but let me explain:

Stop-hunting pattern #1:

This kind of stop-hunting pattern is what happen to all the noobies. Let's say they want to short, so they get into a position...
Just an Idea, why not consider "areas of orders" placement. This would include both stop and limit orders, and those entering the market manually at the time of occurrence.

Sweeping logical areas of clusters provides necessary liquidity at times. When you see a failed breakout from a range for example, you're possibly triggering orders from both sides, those going with the break, who's stops will be fed off of when the market moves against them (squeeze) and those who were opposite the original break and have stops placed in that area.

When patterns fail, that should speak just as loud.

Although it's impossible to know in advance (unless you're the one who's forcing the action) when you see the markets anticipation fail, it should say market manipulation, and big money is entering......

from that point to the next nearest logical area of order cluster where equilibrium can establish should be a safe bet. You'll want to check your r:r for potential distance to the backside of your event.

Question, for price to move as in the false break scenario above, does there need to be actual money entering the market to move price for the actual false break, or when big money orders hit, does the proximity of the orders and the way they are stacked is that being used by the Broker to fill. If I control the candle and it's my market, can I move the candle at my will, regardless of actual market activity?

fwiw.
  • #93
  • Jan 14, 2011 10:52pm Jan 14, 2011 10:52pm
Quoting Carnegie
What this boils down to is really my question, is there any way of localizing where the orders MOST LIKELY will be ON A CHART?
Carnegie, I like your question. Developing the ability to visualise stops in 'clusters' in a measurable and consistent way is a very useful goal.

One thing I look for is an accumulation of stops above retraces in a downtrend.

For example when price action is making lower lows and lower highs then it is safe to assume that traders who are in profit are motivated to protect their profits by moving stops down with each lower high.

When the distance between the 'lower highs' is more significant (say 150-200 pips) then the profitable short traders are more motivated and more likely to move their stops down to one of these significantly lower levels.

This leads me to the idea of popular stop levels.

A popular stop level is protecting significant profits. Trailing stops placed above recent highs after a significant price drop - or the opposite - trailing stops placed below recent lows following a significant price increase.

My chart below shows how I visualise popular stop cluster levels.
Attached Image (click to enlarge)
Click to Enlarge Name: eurusd-h1-popularstoplevels.jpg Size: 96 KB
  • #94
  • Jan 15, 2011 5:46am Jan 15, 2011 5:46am
If you can crack that code you will be able - with some practice - to "read" the intentions of the big players before price will move in that direction.
Triggering some stops is then just a byproduct.

Identifying the imbalance before the outcome occurs puts you in the first best seat.
It's also a kind of front running.
  • #95
  • Jan 15, 2011 7:13am Jan 15, 2011 7:13am
Quoting UnnamedPlayr
If you can crack that code you will be able - with some practice - to "read" the intentions of the big players before price will move in that direction.
Triggering some stops is then just a byproduct.

Identifying the imbalance before the outcome occurs puts you in the first best seat.
It's also a kind of front running.
i would like your point of view..i use similar tacticals,i have sent you a pm,did you receive it?thanks
  • #96
  • Jan 15, 2011 7:25am Jan 15, 2011 7:25am
Quoting UnnamedPlayr
If you can crack that code you will be able - with some practice - to "read" the intentions of the big players before price will move in that direction.
Triggering some stops is then just a byproduct.

Identifying the imbalance before the outcome occurs puts you in the first best seat.
It's also a kind of front running.
I see what you're saying but I have no single idea how to get there. Darkstars hint + your hint gave me some ideas about the stop hunting thing, but I think I need to study a little bit more before I present them.. but I am actually quite sure about them.

It is the identifying of the imbalance I am on the quest for, I really want to understand what it is. But I really don't know what to start with and what to look for.



Quoting robdee
Carnegie, I like your question. Developing the ability to visualise stops in 'clusters' in a measurable and consistent way is a very useful goal.

One thing I look for is an accumulation of stops above retraces in a downtrend.

For example when price action is making lower lows and lower highs then it is safe to assume that traders who are in profit are motivated to protect their profits by moving stops down with each lower high.

When the distance between the 'lower highs' is more significant (say 150-200 pips) then the profitable short traders...
Hey robdee glad you could join.

I see what you're saying here and it makes sense 100%. But still I have a feeling that it cannot be just this?
You see domino (as I see it) uses the exact same approach, and to me, it feels like it is more or less a breakout trading pattern.

I like the chart you posted, and it demonstrates what I mean by breakout pattern. See what we do here is place orders just above/below recent high/low, and if there are several dips to that area then the market has accumulated much more stops below it. BUT STILL, it makes me feel like it is an incomplete (or even IS NOT) stop-hunting/order flow pattern.
Maybe someone could explain where my thinking gone wrong here..

Thank you.
  • #97
  • Jan 15, 2011 7:42am Jan 15, 2011 7:42am
Quoting Carnegie
I see what you're saying but I have no single idea how to get there. Darkstars hint + your hint gave me some ideas about the stop hunting thing, but I think I need to study a little bit more before I present them.. but I am actually quite sure about them.

It is the identifying of the imbalance I am on the quest for, I really want to understand what it is. But I really don't know what to start with and what to look for.





Hey robdee glad you could join.

I see what you're saying here and it makes sense 100%. But still I have...
you need to study the volume clues to understand order flow...begin in this direction
  • #98
  • Jan 15, 2011 9:39am Jan 15, 2011 9:39am
I think that the term "stop hunting" is somewhat of a misnomer. I seriously doubt that the "big guys" go around thinking "Hey, look over there, stops! Let's go take money from those foolish traders." Instead, I think the scenario is that big guys have made a decision to get long or short in a big way and need the orders of us uninformed little guys to fill their own, often in the opposite direction. So while the big guys do "hunt" our stops to fill their own orders, the "hunt" is not their primary motivation. This is not something new that I've discovered, but read it here on FF and other places.

I believe the big players use Fundamental Analysis, possibly in addition to TA, to make their determination that now is the time to get long or short in a particular currency. So they use TA, order books and an awareness of trader psychology to determine where the majority of us small fry have placed our protective stops, entry stops and limit orders and then they push price in that direction. They use smaller orders, probably losing a little on those small positions just to get the Bid/Ask to move over to where our orders are sitting. Then the process of filling their larger positions takes some time, doing so in smaller chunks, so price has to mill around a bit until they are filled. They are now ready for the move in their intended direction, so they use similar tactics to get it going.

This kind of "stop hunting" would explain why key patterns that we all look for often work AND often fail. It all depends on if the pattern is in the direction that the big guys are looking to go. So a range-bound breakout to the south fails because the big guys want price to head north. They fool around with price to get to the sell orders on the south side of the range because those shorts are needed to fill their much larger long orders. A fake-out ensues, trapping all of us who were looking for that breakout to the south and entered too soon. The final move back north is then empowered by our protective stops that are set inside or to the top of the range. The question is, who is selling into our protective stops at the top of the range? Not the big guys - they want price to go higher and they are holding onto their longs. It must be other uninformed small fry who think price is going to bounce back south and so have limit/stop sell orders at the top of the range - they got run over by the north-bound train and never even knew what hit them.

One other point - I suspect the big guys are not always aware of what other big guys are thinking. So they have to push price around to test areas to see if other big guys are thinking opposite to them. If the tests succeed, then they have learned that most of the big guys are in agreement. Those tests can look very much like stop-hunts.

Once price is moving in the intended direction, liquidity pools and voids determine how long price hangs around a particular area. I suspect testing resumes in the liquidity pools - the big guy has to know that the other biggies are still onboard.

Note: All of this is conjecture on my part based upon what I have read here and other places and also on my own thinking through of the causes of price movement.
  • #99
  • Jan 15, 2011 2:11pm Jan 15, 2011 2:11pm
Quoting Louie
I think what Carnegie is saying is VSA is not of any value to a trader in the spot Fx market. Not all of the trades are going through a central location such as the stock market or futures market where VSA can be of some value if that is your way....
thanks for reply,i got a bit confused here,because im a big sleepyhead and dont pay attention too much,

i think its around that level because of the last supply level ,if u notice before it rose it up,when it was down,it hit a supply level on 1.3018then down a bit,and retraced ,to analyse supply i look at daily chart and mark supply levels from previous trend,to see todays reaction to it,

2 pictures,one from uptrend supply ,and the other from downtrend supply
the resistance is quite clear,this could mean
but if we look at the h1 chart we can see the bars closing in mid range ,and rising trend accompanied by high volume,buyers are in,supply absorbed,

but why does it keep stopping in on the supply line?,could the euro rally be supported by its debt auction this week,and spain italy nd euro countries getting help
Attached Image(s) (click to enlarge)
Click to Enlarge Name: trendline on up chart.gif Size: 23 KB
Click to Enlarge Name: trendline on downchart.gif Size: 23 KB
  • #100
  • Jan 15, 2011 2:21pm Jan 15, 2011 2:21pm
Quoting FXSurfer
IMO the more you try and turn what's being discussed (loosely) here into a pattern search - you start drifting off course.

Let's look at what IMO drifting completely off course would be:
(Static, hopeful, lazy mindset)
Identify a particular pattern.
Predict the future, place your trade and cross your fingers.

In contrast to:
(Actively engaged, aware of change, working mindset)
Working toward developing a market generated feed-back oriented view of the market.
Placing your trades within a discerned condition and holding, adding, exiting...
well said surfer,
heres a quote from jessie livermore
"THE game of speculation is the most uniformly
fascinating game in the world. But it is not a game
for the stupid, the mentally lazy, the man of
inferior emotional balance, nor for the get-rich-quick
adventurer. They will die poor."

"Actively engaged, aware of change"
this takes someone to teach u the importance of this,and also experience to activate the brain ,(theres a threat about this on ff,about our brain and subconcious mind),adopting to the market,as its a big jungle,where only the toughest survive,even the small bugs camouflage themselves to stay unseen,(absortion)lol
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