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Order Flow - Achieving the mindset

  • #281
  • Feb 10, 2011 6:22pm Feb 10, 2011 6:22pm
Quoting Monroe
Yea... I hear you... try the oanda orderbook and set the open orders to 'net' positions, and play with that for awhile...

london is easily the best to trade, but NY reversals can be quite nice with the news.
tokyo open too,its biased u can get like 5-10 pips of tokyo open,just reverse the trend before tokyo,
5-10 minutes into tokyo
forgot to tell this
  • #282
  • Feb 10, 2011 6:25pm Feb 10, 2011 6:25pm
Quoting dragan53
tokyo open too,its biased u can get like 5-10 pips of tokyo open,just reverse the trend before tokyo
they mess around in tokyo....
  • #283
  • Feb 10, 2011 6:29pm Feb 10, 2011 6:29pm
Quoting Monroe
they mess around in tokyo....
what do u mean?
  • #284
  • Feb 10, 2011 6:29pm Feb 10, 2011 6:29pm
Quoting Monroe
Yea... I hear you... try the oanda orderbook and set the open orders to 'net' positions, and play with that for awhile...
I just did that, and if I read it right, it appears there are a lot of traders short just under 3600, which would mean lots of stops up above. Perhaps we see a run up tomorrow? Just a guess, not going to trade it.
  • #285
  • Feb 10, 2011 6:36pm Feb 10, 2011 6:36pm
Quoting Jimmy Jones
I just did that, and if I read it right, it appears there are a lot of traders short just under 3600, which would mean lots of stops up above. Perhaps we see a run up tomorrow? Just a guess, not going to trade it.
do you see where there stops probably are?

you can see this on the chart if you know how people are trading and there strategies they use but, this can help confirm it.

I have been doing this as part of my trading... watching how it all plays out. probly fake to the downside again, hit the stops on traders going long for a bounce then head up?? we'll see. I'd wait until around london for this.

also.. fti offers some great info about the workings of dealers so you may want to read that stuff if you haven't...
  • #286
  • Feb 10, 2011 6:45pm Feb 10, 2011 6:45pm
About Tokyo, London and NY flows: http://ftalphaville.ft.com/blog/2011...ight-in-tokyo/

http://av.r.ftdata.co.uk/files/2011/02/Nomura_yen1.png
  • #287
  • Feb 10, 2011 6:49pm Feb 10, 2011 6:49pm
nice Adal.

yen and swissy were sold heavy last night apparently... just lookin' at the charts.
  • #288
  • Feb 10, 2011 6:51pm Feb 10, 2011 6:51pm
Yep the only thing I dislike with this IFr service is that it doesnt quote orders and flows regularly. Not from what I have seen the last days atleast.. Its more about TA and other stuff.


Quoting Monroe
well I hear you, just keep in mind the sessions, whats going on in the market, the bias, the theme at the time, what will be happening that can cause movements, the positioning, what these guys do for liquidity, etc etc...

and sometimes they will in fact say that exact thing... option at 1.35, bids here, offers there, stops below/above and you have to work it all out. But it's not going to be so straight forward as ok, go long here and go short there you know?

forexlive does the same crap with there bank contacts... and keep in mind this is...
  • #289
  • Feb 10, 2011 6:54pm Feb 10, 2011 6:54pm
Quoting Carnegie
Yep the only thing I dislike with this IFr service is that it doesnt quote orders and flows regularly. Not from what I have seen the last days atleast.. Its more about TA and other stuff.
it's not like you can't put the TA info to use also.. think about it.
  • #290
  • Feb 10, 2011 9:04pm Feb 10, 2011 9:04pm
Quoting Monroe
it's not like you can't put the TA info to use also.. think about it.
I was just about to say that. Helps in getting a read on market sentiment.
  • #291
  • Feb 11, 2011 6:48am Feb 11, 2011 6:48am
Hey Guys,

Nice thread you have going on here! I also have an interest in ordeflow trading and have made it to the point where I know a lot about the market and its structure but could never make it beyond there.

Please don't think that I am trying to put this thread off track but something that has helped me gain further insight is by reading "Mind over Markets" by James Dalton. Within this book they refer Shorter time frame being Dealers etc and Longer timeframe participants being speculators etc. He then breaks there activity down into Responsive and Initiative.

For example when price breaks out of a range this is caused by Iniative activity they will force price to a high then take profit causing price to pull back then responsive participants will enter as price has fallen below value causing price to rise again. Ok I know it doesn't always happen like this but hope you get the jist!

Secondly Dalton says that Price+time=value. So if price has been hanging around in the same area for longer than normal the market has accepted that price as fair value. Think about it if price has been hanging around in the same place it probably means that supply is nealy at equlibrium to demand. Also another way to look at these areas is from the point of view that if I were a trader using big positions I would like these areas as there a plenty of people around to do business with and so keeping my operating costs down.

Hope this helps.

James.
  • #292
  • Feb 11, 2011 10:59am Feb 11, 2011 10:59am
Just as some people fall into the trap of analysis paralysis, some people can fall into the trap of just if I order this next book, just if I study this next course, just if I read this next article then I can figure out this order flow stuff... Now everyone needs good information to work with, and that is what I have tried to provide in my posts. And the learning never ends, even after you become an orderflow trader the learning never ends.

But markets do not need to be hard. You just need to follow the order flow, follow the money that will flow in and out after you establish your position. Markets can be simple.

So back to my 3 column exercise. Markets can be simple. Lets just give an example where you want to make a 150 pip profit in EUR/USD, and lets just say you want to use a 50 pip stop. Just giving an example.
Attached Image (click to enlarge)
Click to Enlarge Name: 3column-exercise.gif Size: 24 KB
Private message me for a link to my order flow website.
  • #293
  • Feb 11, 2011 6:22pm Feb 11, 2011 6:22pm
Quoting grkfx
Just as some people fall into the trap of analysis paralysis, some people can fall into the trap of just if I order this next book, just if I study this next course, just if I read this next article then I can figure out this order flow stuff......
Looks like the strategy explained, thanks a lot, grkfx. Can you give an example of the last paragraph about aggressive market orders? I just can't imagine such a situation. If you know in advance where others will execute their market orders why don't they just set their limit orders there now?
  • #294
  • Feb 11, 2011 8:31pm Feb 11, 2011 8:31pm
Quoting seagreen
Looks like the strategy explained, thanks a lot, grkfx. Can you give an example of the last paragraph about aggressive market orders? I just can't imagine such a situation. If you know in advance where others will execute their market orders why don't they just set their limit orders there now?
You never know for sure. You just try to put your stop in place, where it is just beyond the reach of the market. You try to put it in a place where by the time the market reaches there, it has gone through 2-3 different layers/phases of mispricings. If certain market participants think of it as a mispricing they may come and generate order flow, whether market orders or standing limit orders. You just place it at a place where certain market participants would be just salivated at the chance to get in through either market or limit orders.

So if your stop gets hit in the end it was a result of bad analysis/trade in the first place, or you got unlucky, or the market just barely came and touched your stop loss and then reversed.
I would not know if the stop placement should be 50 pips away, maybe you can get away with 25 pips depending on what the situation looks like and how the liquidity is distributed, and where the potential mispricings are, and where different market participants will come in to generate order flow.
Private message me for a link to my order flow website.
  • #295
  • Feb 12, 2011 5:54am Feb 12, 2011 5:54am
Quoting grkfx
You never know for sure....
Well, that I understand. I just couldn't find an example when I would know in advance where others will start executing market orders.
  • #296
  • Feb 12, 2011 6:56pm Feb 12, 2011 6:56pm
A quick word about otc options:

the more banks are involved in certain (barrier) levels the better they can protect their own interests.
That kind of information can be indeed useful for additional order flow behavior.
  • #297
  • Feb 12, 2011 10:42pm Feb 12, 2011 10:42pm
I have been following this thread for a few days now and have read all of the posts. Some familiar names here of people I respect and I enjoyed your thoughts and ideas. To be honest, I am not sure I get the whole concept of order flow as presented or as it is evolving here, but I will visit DS's material to supplement what I have learned in this thread.

My concept of "order flow" has been to observe price action and what it is offering: move and square (and note what goes unsquared); surge and retrace; reverse. Once things get started, they usually follow the same patterns.

I will follow along and participate again if I think of anything that might be helpful.
  • #298
  • Feb 13, 2011 4:20am Feb 13, 2011 4:20am
Quoting GEfx
My concept of "order flow" has been to observe price action and what it is offering: move and square (and note what goes unsquared); surge and retrace; reverse. Once things get started, they usually follow the same patterns.
It's not really about price patterns, price patterns are the consequence. It's more about "behaviour patterns".
And yes, read all DarkStar's posts, along with Gaston's.
  • #299
  • Feb 13, 2011 7:41am Feb 13, 2011 7:41am
Quoting UnnamedPlayr
A quick word about otc options:

the more banks are involved in certain (barrier) levels the better they can protect their own interests.
That kind of information can be indeed useful for additional order flow behavior.
A prime example of this is what happened in EUR/USD on Friday Feb. 11..
  • #300
  • Feb 13, 2011 9:44am Feb 13, 2011 9:44am
Quoting scott89
It's not really about price patterns, price patterns are the consequence. It's more about "behaviour patterns".
And yes, read all DarkStar's posts, along with Gaston's.

Hi Scott89, yep I get that price action is a result of order flow. But, PA and TA appear to be the only thing we have since order flow data is not available to any of us.

If I am not mistaken, order flow data is spread out over many systems (at least the actual orders that are entered into systems), with no centralized view of these orders existing anywhere. The quality of these orders is always a questions, since it is very difficult to tell why an order is sitting on a system and the intentions of the trader or organization that placed it.

In addition, many large institutions avoid entering these orders in to systems. Instead, there are a large number of intended orders that only exist in the minds of the institutional traders/organizations. And, the planned and actual actions by central banks is always kept as a national secret.

I am not trying to rain on anyone parade here, because I think an "order flow" mind set is very helpful in trading. IMHO, though, there are limits to what we can do with it. It definitely is something to add to your PA/TA tool kit. So as we dance with the market, and as PA/TA unfold in front of us, we are constantly asking ourselve what the big traders are doing and they are telling us about how the next candle might develop.

So to DS and others who are know much more about this than I do, is it possible to develop an order flow system even with out the order flow data, or is it necessary (required) to marry up TA/PA at some point?

If I have taken this thread off track, just let me know and I will go back to just reading the thread. Please believe me that I respect what you people are doing here. Thanks! And good trading!
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