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Order Flow - Achieving the mindset

  • #421
  • Feb 26, 2011 8:53pm Feb 26, 2011 8:53pm
Hey CindyXXXX,

Yeah I'm thinking of beginning to employ market orders instead. It's really sad when you have a semblance of what's moving the market, attempt to position yourself with a limit order, but then price misses it by 1-2 pips, and then conforms to your original anticipations!

Quoting CindyXXXX
Hey GRKFX I've been really enjoying your insights on this thread and thanks for getting it back on topic there (oops)

May I ask a question? What is the trade frequency like for the way you trade? Do you trade everyday? once a month? Once a week? And how long do you hold your positions for on average?

I have just always wondered this about you order flow guys, do they trade often or rarely or just "whenever the shoe fits"

Thanks
If you would be so kind as to guide me, would using market orders in trading the news be wise, provided you spot what appears to be a mispricing? Or should limit orders be used instead, due to slippage and fill concerns? I'm thinking as one begins to pull obscene amounts of money from this form of trading, lot size would increase, and would this have any change on the nature of how you enter positions; ie. limit entry or market order entry?

Also, would my thinking be correct if I were to posit that not all order flow generators of a particular type, are made equal -> depending on the entity behind it, some are more equal than others; some will provide a harder degree of 'impossibility to lose' than others, based on who is behind it.

Regards,
xXTrizzleXx
  • #422
  • Feb 27, 2011 6:46am Feb 27, 2011 6:46am
Quoting xXTrizzleXx
If you would be so kind as to guide me, would using market orders in trading the news be wise, provided you spot what appears to be a mispricing? Or should limit orders be used instead, due to slippage and fill concerns? I'm thinking as one begins to pull obscene amounts of money from this form of trading, lot size would increase, and would this have any change on the nature of how you enter positions; ie. limit entry or market order entry?

Also, would my thinking be correct if I were to posit that not all order flow generators of a particular...
HI Trizzle, I don't trade the news so can't really comment on that but I would think that if you saw a mispricing due to a news spike would you have time to place a limit order? I agree that if you were trading really big lots it would change your strategy a bit, like using limit orders may make you a target? But as a small trader I'm not so sure this is such a big worry unless you were positioned with a whole bunch of others at the same level, and the level in general was a target...

The last paragraph sounds very logical to me!

Regards
Time hides Nothing
  • #423
  • Feb 27, 2011 8:39am Feb 27, 2011 8:39am
Hey guys,

Sorry I haven't been very active lately, but I had an uni exam that went straight to hell because I have had other things to think about (ya'll know what it IZ )

I'm having a new dilemma now. As I'm viewing the world with new glasses, I'm having difficulties interpreting stuff happening in this world and I would really like to take the time to discuss it.
You might know what I'm talking about.. News and fundamentals!

The order flow mindset isn't (as I understand) about being a technical trader or a fundamental. It's about being someting in between and/or being a technical when it's time to be technical and being fundamental when it's time to be fundamental.

Times like these are fundamental times. Let's talk news. I want you to point out every single flaw you find in my logic.

We look at EURUSD. It's moving up, non stop.. Just moving up, up and up.
Why is that?

In my mind (as I have been taught) I reason like this:
If there is uncertainty in the world, there is risk aversion toward USD,JPY and CHF. These are "safe-haven" currencies. Allright, we all know that right?

So what's the deal? The arab world is in a phase of revolution and there is uncertainty, so.. People should dump every risk asset and buy let's say USD (in the example of EURUSD).
But how come the EURUSD is climbing UP? What's wrong with my logic? Shouldn't the bias be towards BEAR in the Euro?

So I would like to have some ideas about this i.e. how to (haha) interpret news and what one should focus on?

Take care and hope you all had a great weekend.
  • #424
  • Feb 27, 2011 9:00am Feb 27, 2011 9:00am
Quoting Carnegie
Hey guys,

We look at EURUSD. It's moving up, non stop.. Just moving up, up and up.
Why is that?

In my mind (as I have been taught) I reason like this:
If there is uncertainty in the world, there is risk aversion toward...
The first reason I think that is happening is that fundamental shift has begun regarding ''usd as the safe heaven/world reserve currency''.
People just don't belive in usd anymore(by people I mean investors around the world). This is more long term I think...
The other thing,more of a short term is that the big money is trying to get as many people in long as possible,while selling for themselves.We have seen 2 fast falls and then recovery already.Could this be the third,I don't know. I hope not,since I am short from 1.38xx. I think eur needs only a small trigger bad news for a big run down,and I think the market is ready for it in the next week or two. Or we may se another push long by the big money to around 1.4000.
But this is just my theory,from reading around the site and trying to do get the peaces together,I am by all means no expert,so don't take my word for it.
And looking forward to hear others to...
  • #425
  • Feb 27, 2011 9:07am Feb 27, 2011 9:07am
That's why we have a market - because I find no reason to buy USD right now or in the future. The world is saturated with US dollars and the FED's solution to a financial crisis is to print more money.
A safe-haven currency for me would be CAD and, if I'd be a long term speculator, I'd buy CADJPY.

There's no discernible long uptrend in EURUSD, anything could happen. I'm wondering why AUD is still growing after the NZ' earthquake.
  • #426
  • Feb 27, 2011 9:18am Feb 27, 2011 9:18am
Quoting Tilt
The first reason I think that is happening is that fundamental shift has begun regarding ''usd as the safe heaven/world reserve currency''.
People just don't belive in usd anymore(by people I mean investors around the world). This is more long term I think...
no wonder

http://www.zerohedge.com/article/fed...reasurys-china
Invincibility lies in the defence, the possibility of victory in the attack
  • #427
  • Feb 27, 2011 9:23am Feb 27, 2011 9:23am
I'm under the impression that because of the nature of the world stage right now investors in general have shifted tactics to a much shorter term view of things. No one knows wha the next few years will bring or can't be sure as they once were and so long term investors have had to shift tactics to shorter term strategies and views of things.

Just a thought.
Time hides Nothing
  • #428
  • Edited 9:50am Feb 27, 2011 9:30am | Edited 9:50am
Quoting Carnegie
Hey guys,

Sorry I haven't been very active lately, but I had an uni exam that went straight to hell because I have had other things to think about (ya'll know what it IZ )

I'm having a new dilemma now. As I'm viewing the world with new glasses, I'm having difficulties interpreting stuff happening in this world and I would really like to take the time to discuss it.
You might know what I'm talking about.. News and fundamentals!

The order flow mindset isn't (as I understand) about being a technical trader or a fundamental. It's about being...
Very interesting post Carnegie. First, I agree 100% with "...someting in between and/or being a technical when it's time to be technical and being fundamental when it's time to be fundamental".

Interpreting news, reports, numbers and fundamentals is not simple and thats why Economics and Trading is so interesting and challenging even if it doesnt' necessarily mean that you need to understand a thing about it to be a good trader.

IMO, you don't have a flaw in your logic but in context of currency trading you maybe overseeing some factors and interrelation that may explain a little bit better what is going on.

You talk about risk aversion on the political climate in the word (M.East therefore oil, gold, etc) and that has been a definitively clear factor in the last few weeks and the undeniable proof is CHF breaking to all time lows, oil breaking 100 and gold back to the highs.

However on the eur/usd and all usd pairs, is not that the Dollar has lost the "safe heaven/world reserve currency"status but that other current macroeconomic factors are in play the last couple of months, and they shouldn't be dismissed .

That why the eur/usd is climbing the panic selloffs on debt crisis last year went too far too fast (typical fear move) so the pair has come back to a more rational and technical levels (it doesn't mean that the problem is gone and surely it will hit back soon). This year rally was made strictly on expectation of interest rate hike on the ECB so when German numbers starting to boom the pressures on inflation and therefore the obvious interest rate hike has made the pair go up up up (don't forget that among the main factors for any currency move are interest rates and inflation expectations).

If you add oil breaking 100, the inflationary pressures on the EZ and in the US are huge. The problem is that the US will hike interest rates no later than this summer too so is obvious that first you bet on the EZ hike and after on the FED hike. The key explanation in all this is timing not if the dollar has gone to trash. Obviously, most of the EZ rate hike is already digested in our charts and in 2 weeks there are key EZ meeting on Portugal (default/bailout more probably than not) which will coincide with the +/-1.40xx or below TA cap level on the pair (when the debt fears entered in the equation) so in simple words, the ECB hike can put a dangerous end trigger on debt problems and that why all rallies on the last 2 weeks were triggered by "slips" on the ECB on interest rates. They need to push this as far as possible up to avoid collapse when the bad thing hit the fan very soon.

In any case, my point is that FA analysis is a lot more complex and interrelated. I maybe wrong in my FA analysis but the point is the same, try to see the main interrelated variables and make your analysis .... but always with TA for the final trigger...

sisse
Pending conversations? PM for a chat...I am mainly in OTM now
  • #429
  • Feb 27, 2011 9:32am Feb 27, 2011 9:32am
Quoting CindyXXXX
I'm under the impression that because of the nature of the world stage right now investors in general have shifted tactics to a much shorter term view of things. No one knows wha the next few years will bring or can't be sure as they once were and so long term investors have had to shift tactics to shorter term strategies and views of things.

Just a thought.
That's a pretty good idea cindy. But then I have to ask; this stuff about USD not being regarded as safe haven anymore etc. IS in essence a long-term strategy. I don't think China will overpower the U.S in the coming 6 months but that's irrelevant and who the fuck am I to say that?

But if that is long-term, and that it won't be regarded as safe haven IN THE FUTURE.. why are people dumping it now - short term?

That's a pretty bad explanation but I hope you guys understand.

Take care
  • #430
  • Feb 27, 2011 9:41am Feb 27, 2011 9:41am
Quoting Carnegie
That's a pretty good idea cindy. But then I have to ask; this stuff about USD not being regarded as safe haven anymore etc.

Take care
Hey Carnegie good to see you back

Forever though? Is this just an accepted given? Or just the current view of things? Will the US just lye down and cop that? I highly doubt it..

All these uncertain things is whats sparking IMO non long term commitment from the big money. But this is the point where I start speaking beyond my comprehension and none of what I said is backed up by any solid research so I guess I was just thinking out loud.
Time hides Nothing
  • #431
  • Feb 27, 2011 11:00am Feb 27, 2011 11:00am
Hey cindy, it's good to be back and really good to see you have been taking care of the thread while I was gone! I see you have been around and answering etc.

That's true! I agree 100% about that, and what will happen when the US tries to change things? and more importantly.. HOW will they change things?

Yeah I see what you're saying but I can't see the big picture as of yet.. I'm not there yet you know.
And btw it really doesn't matter if you speak beyond your comprehension or not as we are trying to sparkle a debate here, so let's discuss!
PS. I have been thinking out loud in two thread now hahah

Take care bud

Quoting CindyXXXX
Hey Carnegie good to see you back

Forever though? Is this just an accepted given? Or just the current view of things? Will the US just lye down and cop that? I highly doubt it..

All these uncertain things is whats sparking IMO non long term commitment from the big money. But this is the point where I start speaking beyond my comprehension and none of what I said is backed up by any solid research so I guess I was just thinking out loud.
  • #432
  • Feb 27, 2011 12:23pm Feb 27, 2011 12:23pm
Ohh man.. where do I begin?

Thinking about long term fundamentals is useless unless you you plan on placing a few trades a year and holding through 500-1500 pip drawdowns.

As for USD losing its status as safe heaven/world reserve currency. Currently that is baloney. If people really thought that the USD would be down 1,000 - 2,000 pips and EUR would be pushing 1.50 ++. Cable would be breaking higher as well instead of pulling back.

That doesn't mean the EUR can't push higher, it just may push higher for other reasons, or eventually the market may start to temporarily believe in the whole losing the world currency reserve status and cause a shift in sentiment.

I would focus on identifying the intraday, swing trading, and mispricings and place trades with less than a few months months in duration. Once you master intraday, you can move on to swing trade, then you can move on to longer term trades. That is the way I did it.

Why is that a good way? Well I do not know what will work for you but my thinking is as follows. Predicting intraday moves is easier because the inefficiencies occur more often. If they occur more often you can make faster breakthroughs and more progress, at least that is how I did it. Once you master intraday moves you can adjust the order flow and liquidity entry parameters for swing trading. Once you master that you can adjust the criteria again for longer term trading.

You generally start off with a smaller timeframe because the trades happen more often. As you go to higher and higher timeframes there are less number of trades (but larger moves).

The way I thought of it is, in the beginning you want maximum experience and placing trades as often as possible, that still conformed to your order flow rules, so you go intraday. You want the most experience as fast as possible.

If you try doing long term trades that last a few months you may place a few trades a year, but since you placed fewer trades you may gain less experience. You may still be profitable or insanely profitable, but in the beginning I wanted clarity and most experience possible.

Once you learn how to understand the shorter term mispricings, which are easier in my opinion, you can then move on to the longer term mispricings and figure out how to trade those.

Although what will work for you, I have no idea.
Private message me for a link to my order flow website.
  • #433
  • Feb 27, 2011 12:44pm Feb 27, 2011 12:44pm
Quoting grkfx
Ohh man.. where do I begin?

Thinking about long term fundamentals is useless unless you you plan on placing a few trades a year and holding through 500-1500 pip drawdowns.

As for USD losing its status as safe heaven/world reserve currency....
Although I disagree with your view on FA trading and short term trading, what it struck me is the "miss-pricing" comment.

It is maybe semantics and I am not doubting your trading skills, but I wouldn't dare to say that you or any small trader is exploiting price inefficiencies. You maybe trading something else but leave the few misspricings (if any recognizable and tradable by a manual trader) for the algos and quants. Check some of oldquant and paythelimit posts on real examples on how exploiting price inefficiencies worked one or two times in very specific markets (corn and soft futures) by very big players once or maybe twice moving millions of contract for JUST ONE TICK so I seriously doubt any of us can do that ever.

In any case, best of luck with your trading.

sisse
Pending conversations? PM for a chat...I am mainly in OTM now
  • #434
  • Feb 27, 2011 12:50pm Feb 27, 2011 12:50pm
It... Is... Done...
  • #435
  • Feb 27, 2011 12:53pm Feb 27, 2011 12:53pm
Quoting Darkstar
It... Is... Done...
funny I was juuuust about to post saying wheres DS!
Time hides Nothing
  • #436
  • Feb 27, 2011 12:54pm Feb 27, 2011 12:54pm
Quoting sisse
Although I disagree with your view on FA trading and short term trading, what it struck me is the "miss-pricing" comment.

It is maybe semantics and I am not doubting your trading skills, but I wouldn't dare to say that you or any small trader is exploiting price inefficiencies. You maybe trading something else but leave the few misspricings (if any recognizable and tradable by a manual trader) for the algos and quants....
Oh man, you're so wrong there, don't judge a dude by one post is all I can say. Maybe you're idea of mispricing is in a mathamatical sense... And yes this is a game for the computers This is the quant style, I think mispricings in terms of orderflows are more misallocations of liquididity
Time hides Nothing
  • #437
  • Feb 27, 2011 1:00pm Feb 27, 2011 1:00pm
Quoting CindyXXXX
Oh man, you're so wrong there, don't judge a dude by one post is all I can say. Maybe you're idea of mispricing is in a mathamatical sense... This is the quant style, I think mispricings in terms of orderflows are more misallocations of liquididity
Sure Cindy I am not here to fight, neither I am judging him, thats why I said is probably about semantics. Sometimes concepts and technical terms get a little bit mess up in FF. In simple words, they are not the actual terms you will hear in trading but I guess is just the words that are misused not the concepts.

Plus I don't have a clue what you mean with missalolocations of liquidity but I will be happy to hear your or his opinion on it.

sisse
Pending conversations? PM for a chat...I am mainly in OTM now
  • #438
  • Feb 27, 2011 1:03pm Feb 27, 2011 1:03pm
Quoting sisse

Plus I don't have a clue what you mean with missalolocations of liquidity but I will be happy to hear your or his opinion on it.

sisse
neither do I sounded good though didn't it
Time hides Nothing
  • #439
  • Feb 27, 2011 1:05pm Feb 27, 2011 1:05pm
Quoting CindyXXXX
neither do I sounded good though didn't it
lol...give you all credit for that.

sisse
Pending conversations? PM for a chat...I am mainly in OTM now
  • #440
  • Feb 27, 2011 1:07pm Feb 27, 2011 1:07pm
Quoting sisse
Sure Cindy I am not here to fight, neither I am judging him, thats why I said is probably about semantics. Sometimes concepts and technical terms get a little bit mess up in FF. In simple words, they are not the actual terms you will hear in trading but I guess is just the words that are misused not the concepts.

Plus I don't have a clue what you mean with missalolocations of liquidity but I will be happy to hear your or his opinion on it.

sisse
Yeah I am not talking algos or quants. I have no idea how they work, nor do I care.

When I talk about mis pricings, I mean order flow mispricings meaning that there will be people willing to move the price substantially, because the current market price does not reflect the true value, according to how some market participants view the market and can generate the order flow to move price.

There are mathematical quant and algo inefficiencies, but the average trader cannot exploit those (at least I don't think so).

Then there are order flow inefficiencies, which is foundation of every market according to my mindset.

Then within order flow inefficiencies there are different categories like mis allocations of liquidity inefficiencies, sentiment inefficiencies, fundamental inefficiencies, etc.
Private message me for a link to my order flow website.
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