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Order Flow - Achieving the mindset

  • #141
  • Feb 4, 2011 8:32am Feb 4, 2011 8:32am
Quoting Carnegie
BTW I forgot to tell you guys that I recorded my screen with camstudio so I'm playing up the chart + DOM in super slow motion, this is so I can see in "normal" pace what is happening with the DOM when price is moving (I want to see this "liquidity consumption). I have the video on my computer so if you want it just tell me!
Thats a great idea Carnegie.
  • #142
  • Feb 4, 2011 9:30am Feb 4, 2011 9:30am
Quoting Darkstar
Yeah, that wasn't the important part. You mentioned that you saw some divergence between them and acted on it for 80 or so pips profit.

What I wanted to say was that you shouldnt get discouraged by the inability to convert what you did into a repeatable system. The fact is you saw something that was interesting and you acted on it for a profit.

You'll find that many of your best trades are going to be one off events where some little voice in your head says you should take it. You heard that voice when you took the trade above but then you...

was a nice reading, you sound like J. Livermore, a big character

I'm in the same opinion that trading it's an art, and you need a STRONG mind to master it, but achiving that level you speak about you need countless hours to just stare at price and to begin to feel her dance.

what you says remembers me the story of J.L. when he was in vacation in Atlanta City and was short selling Union Pacific stock based on an instinct.

Livermore was confronted with this kind of feelings on many occasions but he did not know if it was the unconscious mind making choices based on past experience of having trade millions of shares or whether it was some kind of a psychic urge. He did not know what it was but it was a clear impulse to make a move, but they have always made him money, lots of MONEY

Darkstar why don't you open your own thread, where to speak more about your own thought process and mindset, I'm sure that many will love and appreciate your efforts, it will be more organized that way

looking forward for your posts tomorrow

all the best!
  • #143
  • Feb 4, 2011 9:50am Feb 4, 2011 9:50am
Quoting CindyXXXX
BTW GRKFX is living proof that the vouch system is flawed.

Seriously
yeah he does not deserve those 4 vouchers.
.
  • #144
  • Feb 4, 2011 12:03pm Feb 4, 2011 12:03pm
Hmmm you know reading the L2 isn't quite as hard, you only need to spend some time on it to get a "feel" of it.
Some of you guys mentioned that you cannot respond to how fast the L2 moves because it's based on super fast algo's but I have found something interesting.
I do not believe I have cracked some kind of code here or anything but there is some degree of predictability in the order book.

The interesting thing is that when someone want's to load up on a side (let's say short) the stack up the bid as if the imbalance was on the bidders side (obviously, this means that it should move up). But the interesting thing is that when you notice a large order on bid and small on ask it tends to move down more often and the orders bid orders below decrease and price moves down.

You actually get a kind of a "feel" after a while with the order book. It's just that sometimes it spikes and then moves down sharply, but I want to know why at just that area?

And I have noticed another thing while looking at NFP, maybe some of you have noticed it or even know about this but let's say NFP news hit the market and price moves up. 100% of the time it hits an old area of spike or something (round number) and then moves the other way. Is this a way of fading the first move? Does this have something to do with inefficiencies and FADING?

Take care guys, sorry for bombarding the thread with my L2/order book bullshit, but I thought it would be a good place to learn a order flow traders perspective and get a "feel" for the market.

Have a great weekend btw.
  • #145
  • Feb 4, 2011 12:27pm Feb 4, 2011 12:27pm
i love NFP.

first move is usually the fake but it really depends on what's going on. i don't usually act on the first move as i trade with oanda, but sometimes i do.

today i took a nice eur/jpy trade. it's pretty obvious what is going on here in terms of orderflow, as I said, you don't need level 2 or futures.


Attached Image (click to enlarge)
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  • #146
  • Feb 4, 2011 12:30pm Feb 4, 2011 12:30pm
Nice catch mate
Time hides Nothing
  • #147
  • Feb 4, 2011 12:32pm Feb 4, 2011 12:32pm
Quoting CindyXXXX
Nice catch mate
thanks dude.
  • #148
  • Feb 4, 2011 1:18pm Feb 4, 2011 1:18pm
Quoting Monroe
i love NFP.

first move is usually the fake but it really depends on what's going on. i don't usually act on the first move as i trade with oanda, but sometimes i do.

today i took a nice eur/jpy trade. it's pretty obvious what is going on here in terms of orderflow, as I said, you don't need level 2 or futures.


Attachment
Nice trade there monroe. Not asking for the whole shit now because I want to figure it out for myself.. But what made you take it right there? And btw.. why is the first move usually fake? If people understand that, how come they even trade and not wait until they see the first "wrong" move and then fade it?

Take care
  • #149
  • Feb 4, 2011 1:39pm Feb 4, 2011 1:39pm
Quoting Carnegie
Nice trade there monroe. Not asking for the whole shit now because I want to figure it out for myself.. But what made you take it right there? And btw.. why is the first move usually fake? If people understand that, how come they even trade and not wait until they see the first "wrong" move and then fade it?

Take care

there are reasons as to why i picked that trade and that pair, but to be honest I do not want to tell everything about it, i'm sure you can understand. I suggest if you find anything that works (and it would seem like you have pretty strong determination to do it as far as I can tell) you should keep it on the down low and don't tell the world about it.

anyway, in my mind, everyone knows not to take a trade before the release NFP, therefor liquidity is thin... shit can be worked by dealers.

you can't always just fade it.... depends on the situation and conditions. there are certain things to feel out and understand.
  • #150
  • Feb 4, 2011 10:58pm Feb 4, 2011 10:58pm
Its a blindfold kick back type of a game called the Kansas City Shuffle,
Whereas you look left and they fall right.
  • #151
  • Edited 3:04am Feb 5, 2011 1:39am | Edited 3:04am
Quoting Carnegie

sorry for bombarding the thread with my L2/order book bullshit, but I thought it would be a good place to learn a order flow traders perspective and get a "feel" for the market.
I don't think its bullshit at all and this whole order flow concept is extremely interesting, however I'd certainly encourage all those interested in it to keep the current COT environment in perspective. COT provides very informative data as to the medium term outlook and which side the big players are leaning towards.

As an aside, I was wondering if FX Futures order flow would be easier to read, particularly as its easier to get the complete, rather than partial data. In fact why aren't we trading FX Futures rather than spot ?
He was looking for the card so high and wild hed never need to deal another
  • #152
  • Feb 5, 2011 4:00am Feb 5, 2011 4:00am
Quoting Scotty B
BTW, icebergs are not allowed in the interbank.
Hi Scotty,

i guess you got that wrong.
Iceberg are common orders in the interbank.

http://www.fxall.com/solutions--capa...order-book-ecn
  • #153
  • Feb 5, 2011 5:41am Feb 5, 2011 5:41am
LIGHT BULB! LIGHT BULB!!!!!!

Yesterday while sleeping with my girlfriend.. it fucking hit me! (twice )

order flow mentality is an art you know why? because no mechanical system will "discover" where orders will come in. The order flow mentality is about the art of knowing WHEN something will hit the market that will cause ORDERS. And you are an artist if you are correct in "knowing" when and why it will happen.

I have so much in my mind, I cannot tell or write everything that is going on up in my brain right now but I sincerely think I got what you guys mean by "mentality".
It's about understanding WHAT will cause order flows (like anticipating news, or interest rates). That's why it's an art!!!!!
Obviously there are more things behind this that I am thinking about and maybe I'm a bit slow but when I look at a USDJPY chart now and see a 100 pip move from nowhere I understand it's not because of the chart.

You will "know" that it is a stop hunt if prices move UP towards a place where there most likely is a liquidity pool (consolidations, round numbers etc) and the news are BAD or the anticipated cause of order flow is bad.. if so then a particular participant is dumping his inventory to reverse his positions to DOWN.. is this the right thinking?

So if we know what will cause order flow we can anticipate the orders in that direction. that's what you guys mean with "deconstructing the logic processes of participants".. it's about understanding HOW THE OTHER PARTICIPANTS WILL REACT.

If this is true, and I am correct, then it has solved a big deal for me. But it isn't over yet.. now we have to know how to find that info and understand how other participants react the way they do towards the new info..
  • #154
  • Feb 5, 2011 6:26am Feb 5, 2011 6:26am
Quoting Carnegie
LIGHT BULB! LIGHT BULB!!!!!!

Yesterday while sleeping with my girlfriend.. it fucking hit me! (twice )

order flow mentality is an art you know why? because no mechanical system will "discover" where orders will come in. The order flow mentality is about the art of knowing WHEN something will hit the market that will cause ORDERS. And you are an artist if you are correct in "knowing" when and why it will happen.

I have so much in my mind, I cannot tell or write everything that is going on up in my brain right now but I sincerely...
Yes you are making progress for sure. Although it will still require a huge effort.

It is an art because the market can do anything it wants. It is not a rigid thing that must conform to a specific mechanical system. The market can stall out at a level one time and blow past it another. The market can make a 1,000 pip move and reverse one time, but another time it will put it a 1,000 pip move + more to squeeze out even more people. Yet another time the market may move 900 pips, reverse 300 pips, then move another 600 pips. It can do whatever it wants.

Mechanical systems cannot pick up the subtleness of the information that doesn't appear on the chart. Only an astute trader with a true order flow mentality can pick up the things that really move price.

Although are you sure that that move in USD/JPY wasn't caused by something on a chart? I am sure I can find a trendline support, or the market bouncing off a fib level, or the market must of hit some moving average on some time frame, and there must of been divergence on at least one of the gazillion time frames.

Ahh ok.. I was just kidding

I will give you another helpful exercise if you want to follow.

Create 3 columns.

First column is the currency pair you are trading. Second column is what your previous mentality about what caused price to move. You can fill up the second column with things like technical indicators like stochastics, macd, moving averages w/e. Now the third column is the interesting one. In the third column you right down what will actually cause price to move according to your newfound orderflow mentality, what will actually cause sufficient aggressive order flow to come in and move price. It could be a scenario, or a list of small things, or.. well the market is not a rigid thing so you need to figure it out on your own.


Dang it! Now I may have said too much, I better shut up before all my inefficiencies get taken away, but I will let this one slip by.
Private message me for a link to my order flow website.
  • #155
  • Feb 5, 2011 6:45am Feb 5, 2011 6:45am
Carnegie I can see your light bulb here in Kansas! Now the fun begins. I can honestly say that when you start to figure this out your creative side starts to flow. Currently I see around five different methods or ways of trading order flow and it isn't anything like if A and B happens do C. But like anything I am fairly new at this and am finding it hard to trust my gut so to speak. Example, news of Saudi bank selling pounds this week so it made sense to coat tail there trade but it took a couple of days for them to reverse the flow and as a junior trader took myself out. Then you guessed it Thursday and friday a good ride down. So I am finding the trust thy self is the most difficult part to master when it comes to this type of trading. I guess I can say that this education is starting to turn into a Hell of a ride. On the lighter side the article that Dark posted to read on the May 6 2010 Market Event Findings very interesting that one trader was able to cause that much havic on the market in one day. Talk about a power trip!!!!!! Don't fight the big players. Ok didn't know anyone was up at this hour. I was thinking sort of in the same line as grkfx as far as methods not mechanical but he can explain it in a hell of a better way than I can.
  • #156
  • Edited 9:05am Feb 5, 2011 8:29am | Edited 9:05am
Quoting grkfx
When you have seen one of those trades, it can light a bulb in your head to search in that direction. Some people forget about it and never search further, don't make that mistake.
Absolutely crucial this bit. Most traders don't bother. Document every bit of information that you are seeing (and not seeing) on the charts which caused you to enter a trade, on a daily basis. Label screen shots. Then review, review, review.
  • #157
  • Feb 5, 2011 8:40am Feb 5, 2011 8:40am
Quoting grkfx
I will give you another helpful exercise if you want to follow.

Create 3 columns.

First column is the currency pair you are trading. Second column is what your previous mentality about what caused price to move. You can fill up the second column with things like technical indicators like stochastics, macd, moving averages w/e. Now the third column is the interesting one. In the third column you right down what will actually cause price to move according to your newfound orderflow mentality, what will actually cause sufficient aggressive order...
Hey grkfx thanks for that one, I will try that right now.

But I have one thing I need to ask and that needs to be clarified.. It feels like news are the only thing that causes order flow (I know in reality it isn't) like interest rates or downgrades from grading-agencies etc.. you know what I mean.

But this would mean that we could only trade like once or twice per month (when big news hit the market) i.e. when it's NFP or the likes. But it's impossible that the order flow mentality is tradable only for news. My mind tells me that I should front run big banks orders and where they probably would trade.. but how the hell does one figure out the clues for that..

Take care
  • #158
  • Feb 5, 2011 8:57am Feb 5, 2011 8:57am
Quoting Carnegie
You will "know" that it is a stop hunt if prices move UP towards a place where there most likely is a liquidity pool (consolidations, round numbers etc) and the news are BAD or the anticipated cause of order flow is bad.. if so then a particular participant is dumping his inventory to reverse his positions to DOWN.. is this the right thinking?

.
or, they are 'encouraging' liquidity in a direction that will move price to a stack of their own orders which when triggered will cause price to move in the opposite direction. Liquidity is the necessary 'fuel' to achieve this.
  • #159
  • Feb 5, 2011 9:32am Feb 5, 2011 9:32am
Quoting UnnamedPlayr
Hi Scotty,

i guess you got that wrong.
Iceberg are common orders in the interbank.

http://www.fxall.com/solutions--capa...order-book-ecn
Nope, they're not. A large ECN would allow them though. I bet all the players get all amped up on iceburgs over there.

See page 6-7
Attached File(s)
File Type: pdf FXMicrostructure-Survey_07-15-08.pdf   662 KB | 656 downloads
  • #160
  • Feb 5, 2011 11:05am Feb 5, 2011 11:05am
Quoting Carnegie
It feels like news are the only thing that causes order flow (I know in reality it isn't) like interest rates or downgrades from grading-agencies etc.. you know what I mean.
And yet the markets move even when there's no news... how is a given "move" related to the average perceived value of a currency? Remember that trade (order flow) also occurs for reasons unrelated to fundamental value.
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