Order Flow - Finding cluster of stops on chart

guys,do you remember J. Livermore how he use to operate in market

no chart, no nothing, just the quote board

all the best!

Regarding the no charts thing, this is what I think you could do.

Watching IFR it reports a large DNT option barrier on Yen at 98.00, you look at price now and set a price alert when it get within 50 pips of 98.00.

A few hours later a dollar news event comes out and you watch a ticker of yen to see what happens following it for around 15 mins. This might give you information or not.

Later your alert goes off, you look at the ticker and watch it then make your play.

No charts needed.

Here's a little table I made up.
http://img695.imageshack.us/img695/3945/marketpart.png

What would you edit/delete/add?

This is the only thing I can think of that I didn't mention earlier. So if that is the case, then you would be completely reliant on IFR or some other news service to tell you where these areas of liquidity are, right? I could be missing something.

Yeah you would, but you are also reliant on your broker or internet company, while people are paying for IFR they will continue to offer a service IMHO.

Hi Vidas - Can you help understand of how you decided that the Order Clusters are above Congestion and not below?. Thanks for your help.

http://www.forexfactory.com/showthre...06#post4336106

Hey guys, I just wanted to add my input to these above quotes.

I believe that what Darkstar was alluding to is that you don`t necessarily need all of the information provided by a chart to trade in this manner, but that does not impact it`s ability to present information in a visually easy-to-glance-and-comprehend manner.

The chart is essentially a plot of price vs. time. If we can spot areas on the chart where price spends very little time, then these are possibly clues which can lead us to make informed guesses as to what the liquidity situation was at that point in time.

All we have to do is note the price region which exhibited this behaviour, and as price moves back into this area, we can observe the ticker. Let`s assume price is headed down to an area we identified as being demand-rich; price was only able to test the region momentarily. Looking back at Darkstar`s illustration of liquidity distribution, we can see that fundamentally, with all things being equal, the further price goes down, the more liquidity interest it generates, as it becomes more attractive to buy. The distribution of the liquidity barrier should make it increasingly harder to drive prices further down as it descents. We would observe the rate of change of price progressively declining, perhaps even stalling momentarily, and then moving into the other direction as demand overpowers supply.

The created liquidity vacuum behind the move will slowly become populated with an increasing amount of liquidity if price happens to spend a considerable amount of time at the identified demand region. These would serve to hinder the subsequent reversal move, making it increasingly expensive to orchestrate. Thus in order to avoid this, it is necessary to traverse this region as quickly as possible, and this can be identified by a precipitous reversal. This is why he also stresses that the speed at which one processes `orderflow` being of tantamount importance.

Think of how this would look on a candlestick chart - we would see price moving down to the region, and reverse quickly going back up, which should look like a pinbar. Perhaps this is the reason why the individuals at the J16 Price Action thread may have a slight edge, because it would appear as if they are indirectly trading `orderflow` through chart patterns.

There`s no way to predict at what point demand will trump supply and traverse the allegedly created `liquidity vacuum`. We can however watch the ticker and the relative rates of change of price to give likely indications of these events. On a chart, we may be tempted to draw support and resistance lines, and erroneously regarding these as priority points for price reversal, it may even end up leading us to see what we want, and not what we are observing.

So in essence, I am of the opinion that while you CAN perform this kind of analysis with a chart, it is not a NEED, for it can be done by simply watching the ticker, just as someone previously quoted - the floor traders of the older days used to.

It brings me to the fact of why I was so interested in the order-flow mindset in the first place. Using candlesticks will unfortunately package price action into conveniently sized chunks - it will be difficult to see where price stalled, where it began to precipitiously reverse, etc. by just examining the candle sticks. Of course one can move to smaller and smaller time-frames, but the best is the second-by-second one provided by the ticker.

When a pin-bar is formed on the traders`charts over at the J16 thread, they will enter on their platforms as just another mechanical trade. They will then look down the pin-bar, to the part furthest away from the price action - the tip. It is there that they will find Darkstar, Kim , grkfx, ScottyB, and all of us aspiring order flow traders waving at them, our positions already profitable, while they, their parents, neighbours, and domesticated animals enter at the bottom of the pin-bar, where the battle is already half-done.

Scott89,

To your chart I would add that retail traders have access to:
-Great leverage, which can exponentially increase profits if risk is managed, using a system which has an edge.
-No need to report to and satisfy investors.
-Stemming from number one, can take on more risk (%-wise) than a conventional institutional participant.
-Flexible position sizing, and the ability to obtain good executions with little market impact, allowing us to weave in and out of positions as we please.

A limitation about insitutional speculators also, is that they may be vulnerable to having their positions divulged a-la-options-defense style, since large quantities of money are at stake. Also positions need to be closed by these individuals from time-to-time, for example accounting purposes, or end-of-week,quarter or year squaring.

Not too sure about the central banks needing liquidity though.

Just my views,

Regards,
xXTrizzleXx

hmm, for you maybe.

I know pros who use candle sticks, and I know pros who don't use charts at all (a ticker is still a chart by the way). If you master market microstructure/orderflow and fundamentals (finding the true value), you can do without any graphical representation of past prices.

I was working for a trading company and our task was to provide additional liquidity to the market and in the meantime profit as much as we can. We were trading calendar spreads - euribor , short sterling , gas oil , cocoa , coffee , sugar and some of the less volatile outrights like schats or 2 year tnote. We had charts but our decissions were made up looking at the order flow so in the end charts were pretty obsolete. This was the case in slow moving market but i cant imagine trading fast moving markets looking at the order flow only.

Quote:
Hi Vidas - Can you help understand of how you decided that the Order Clusters are above Congestion and not below?. Thanks for your help.

http://www.forexfactory.com/showthre...06#post4336106


Hope that helps.

Take care.

Vidas

- - - - - - - -
“Do not sell morning weakness in the strong uptrend” – old Sumer proverb.

Excellent Post,

This is where my thinking is at, I actually placed a demo trade just looking at a empty chart with some round numbers plotted and traded based on thinking only about thee order flow, I went to bed and price missed my TP by 1 pip then reversed, not to bothered about that, but the fact I made the decision on thinking about order flow and price did as I thought. (this time, need a LOT more demoing before I come to any conclusions)

I have the problem of working full time during the London session so watching the ticker all day is not going to happen. I have forex tester and might try and backtest this stuff, if that's a viable option? Anyone?

Regarding charts ther are useful to get a quick picture of how price has recently moved and therefore saves staring at the ticker.

There are a few 'magic numbers' in the market where you don't need a chart to trade them. I can only assume these are psychological numbers for many, many traders - a bit like Fibs but stronger (and arguably simpler).

Hence in my journal I eluded to the fact I didn't always trade with a chart; today's EURUSD being a perfect example of a +80 pip trade without a chart.

And thay are?

Thanks a lot.

Please visit my journal if you have some time - Thanks
http://www.forexfactory.com/showthre...77#post4343277

Thanks for posting Vidas, I also noticed price kept hounding round number Resistance at 1.5500 in the congestion zone giving a clue that someone was buying and the fact price was not allowed to reach yesterdays low like you pointed out gave another good clues someone was buying and they didn't want to give others a chance to buy out of there shorts at the low. I'm sure many people have no use for pivots/fibs/Hi/Low/Closes etc but what I find interesting is how price reacts before/at these levels.

.

Hello, please see attached and tell me if I was right in my interpretation? I took the long bull wick. The price has moved much higher since then. The trade turned out ok, but was my interpretation correct?

@ all the charts

Stop posting your charts noobs, nobody cares.

Well u can call me whatever u want to.

I am not an order flow trader and i am not much interested in it but i do like this thread and visit time to time to pick some nuggets.

So i was looking at my charts back and forth and noticed Uchf so looking at chart below could this move be a stop hunt?

cause we were sitting at weekly and monthly low and FOMC is about in some hours and suddenly we get this move (shaded in blue rect).

anyways,... was just curious.
.

I think this may help you.