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Order Flow - Achieving the mindset

  • #581
  • Mar 10, 2011 4:27am Mar 10, 2011 4:27am
Quoting Monroe
The one thing I can think of that could help us here is the fact of using the flow info we can get, which tells us where bids/offers/options are or rumored to be (and who is behind them) and watching the price action there or anticipate a reaction to that liquidity.

Regarding what nasir is saying... I think what you're talking about is longer timeframe sentiment arbitrage type of thing. It's the same mechanics behind it all from intraday to longer term, just different levels of play.

If sentiment always lines up with current price, you have...
well yeah i' know that markets are forward looking and every things it being priced in. But like DS said in his EU example that market keeps on discounting all the probabilities. What i' have came up here is that while the market is on its way to pricing in an event there are events that would take market off its course for a while such as Eu on its way up to discount the rate but several rating downgrades took it off its course.

Now that could be an opportunity to make some profit in anticipation on that certain event and that is my point.

As far as entring the trade is concerned,..... hell when l'd be able to get my sentiment thingie right i' can enter long on an MA crossover dont' need an order book for that.
  • #582
  • Mar 10, 2011 4:31am Mar 10, 2011 4:31am
Quoting nasir.khan
Now i thought is all in the bathroom without a chart so u can call it a piece of shit.
.
Thanks for the visual but nice post!
Time hides Nothing
  • #583
  • Mar 10, 2011 4:37am Mar 10, 2011 4:37am
Quoting nasir.khan
well yeah i' know that markets are forward looking and every things it being priced in. But like DS said in his EU example...
yea... it def. could be an opportunity, I get what you're saying.

throw up key MA's or BB's on a daily and 4hr... are you gonna go against it? not me.... not unless I have a damn good reason. I just wait for the extremes.... try to have a good handle on whats going on, and do my intraday thing. But I do try and keep it as simple as possible.

What I got from Darkstar and other respected OrderFlow traders around here is to think behind it, learn the market I am dealing in, learn about how/why price moves, the mechanics behind the trades. After that, it's trust my gut and trade.

peace....
  • #584
  • Mar 10, 2011 4:52am Mar 10, 2011 4:52am
Quoting Monroe
throw up key MA's or BB's on a daily and 4hr... are you gonna go against it? not me.... not unless I have a damn good reason. I just wait for the extremes.... try to have a good handle on whats going on, and do my intraday thing. But I do try and keep it as simple as possible.
No no u got it wrong.

What i meant was that when i have my sentiment analysis (dont know what else should i call it) right next can just open a chart and take a trade based on an MA crossover (not against it), or TL touch or a Pin bar as it could be the case now with gu 4h. Cause at core i am still a technical trader and i want some reference points (entry, sl) on my charts to trade the scenario that i think is happening behind the charts.

I have been following your post Monroe and i feel we are on the same road the way interpret this stuff. Cause we both give amount of importance to charts that they deserve and also are keen to find out story behind them.

But i seem to be far behind you as i have less knowledge.
.
  • #585
  • Mar 10, 2011 4:55am Mar 10, 2011 4:55am
Fractional pricing is market driven. Using our proprietary rate engine, we aggregate prices from some of the world's leading FX banks, in real-time. Because quotes are derived directly from bank prices, dealing spreads will fluctuate to reflect available forex market liquidity.


http://www.openecry.com/software/fx_pricing.cfm
  • #586
  • Mar 10, 2011 4:59am Mar 10, 2011 4:59am
Quoting nasir.khan
No no u got it wrong.

What i meant was that when i have my sentiment analysis right next can just open a chart and take a trade based on an MA crossover (not against it), or TL touch or a Pin bar as it could be the case now with gu 4h. Cause at core i am still a technical trader and i want some reference points (entry, sl) on my charts to trade the scenario that i think is happening behind the charts.

Now i think we are pretty much on an agreement.
.
haha no I understood you perfectly. No arguments from me bro!
  • #587
  • Mar 10, 2011 5:41am Mar 10, 2011 5:41am
Quoting CindyXXXX
Thanks for the visual but nice post!
Smoking a cigarette and thinking about stuff. What could wrong with that as i my parents dont know that smoke so i do it in the bathroom.

ahhh oh that's gross........
.
  • #588
  • Mar 10, 2011 8:53am Mar 10, 2011 8:53am
Does order flow based trading have to be done on real time basis or can one do it using daily charts?
  • #589
  • Mar 10, 2011 10:01am Mar 10, 2011 10:01am
I could be way off on this one, but looks like there might be a defense going on in EUR/USD. I think there is a low barrier of 3775 on a DNT option.

Like I said, I could be wrong, but it could be something interesting to watch if you're able to.
  • #590
  • Mar 10, 2011 1:12pm Mar 10, 2011 1:12pm
http://www.reuters.com/article/2011/...30109220110307

Gains accelerated on Monday as stop loss orders were triggered on the break of $1.4005 and $1.4025, though the rally stalled ahead of an options barrier at $1.4050. More option barriers are said to be placed at $1.41

Well.. Now what?
  • #591
  • Mar 10, 2011 1:46pm Mar 10, 2011 1:46pm
Yeah the FX is very algo driven.
Everybody who pays attention to market depth (micro view) will notice a lot of noise.
In the cash market happens quite the same.

http://img822.imageshack.us/img822/8440/noisydepth.png
  • #592
  • Mar 10, 2011 1:52pm Mar 10, 2011 1:52pm
This is a reuters article from February 25. In this article it mentions a barrier option at 1.3840-1.3850. Monday the 28th the high was 1.3856 followed by a steep fall.


http://www.reuters.com/article/2011/...71O1A520110225
  • #593
  • Mar 10, 2011 1:58pm Mar 10, 2011 1:58pm
Quoting Eklavya
Does order flow based trading have to be done on real time basis or can one do it using daily charts?
Just about all my trades these days are long term. It's a more advanced form of order flow trading though.
  • #594
  • Mar 10, 2011 2:06pm Mar 10, 2011 2:06pm
Quoting nasir.khan
What i meant was that when i have my sentiment analysis (dont know what else should i call it) right next can just open a chart and take a trade based on an MA crossover (not against it), or TL touch or a Pin bar as it could be the case now with gu 4h. Cause at core i am still a technical trader and i want some reference points (entry, sl) on my charts to trade the scenario that i think is happening behind the charts.
You make a valid point about using any signal once you understand the directional bias, but by using the signals you mention, your leaving a great deal of profit at the table. Would it not be better to exploit the short term order flow opportunities to get in early in the move?
  • #595
  • Mar 10, 2011 2:09pm Mar 10, 2011 2:09pm
Quoting grkfx
No, you are not dumb. Anyone can be an order flow trader starting from scratch. As for where to look, that is what I have been trying to do with my posts. I have tried to help people develop the mindset and to find the different types of order flow trades...
This is a REALLY effin good post. Much wisdom in you brother.
  • #596
  • Mar 10, 2011 2:12pm Mar 10, 2011 2:12pm
was current middle east circus created/fueled on purpose?
to unload crude at somewhat high price?

crude not flying in face of bullish news so someone's unloading

huge shorts under 107 & now 105

throughout recent rally from 86:
consumption hedgers curbed buying
production hedgers continued shorting
oi rose from noncommercials' spreads and some trend followers

ready for a dip? i could be very wrong.
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  • #597
  • Mar 10, 2011 2:18pm Mar 10, 2011 2:18pm
Alright, there were at least a dozen other posts I wanted to comment on, but I just don't have the time to dig them up. What I will say is that you guys all impress the hell out of me. The depth and specificty of the thoughts being expressed in this thread are truly wonderous to behold. I really wish I had the time to be apart of the conversation.

As a side note, I wanted to let you guys know that (hopefully ) on monday I will be posting the introduction chapter of the book to the blog. I plan on sending an email out to everyone when it's up, but just incase it winds up in your junkmail, I figured I'd post something here about it. Please feel free to gve me your feedback.

Keep up the awesome posts guys! Luck be with you.
  • #598
  • Mar 10, 2011 2:35pm Mar 10, 2011 2:35pm
A Darkstar posting spree, plus we might get to see the intro to the book on Monday? I feel like a kid in a candy store.
  • #599
  • Mar 10, 2011 3:40pm Mar 10, 2011 3:40pm
Quoting Nervousone
http://www.reuters.com/article/2011/...30109220110307

Gains accelerated on Monday as stop loss orders were triggered on the break of $1.4005 and $1.4025, though the rally stalled ahead of an options barrier at $1.4050. More option barriers are said to be placed at $1.41

Well.. Now what?
There are several possibilities:

1. The option will expire before price gets back near that level
2. Price gets back near that level and the option writer (with help from stop hunters) successfully takes out the level
2a. The stops above the level are larger than the positions of the hunters liquidating into them, which causes price to raise even higher
2b. The stops above the level are smaller than the positions of the hunters liquidating into them, which causes price to drop back down
2c. The stops above the level are pretty much equal in size to the positions of the hunters liquidating into them, which would cause prices to just bounce around sideways
3. Price gets back near that level and the option holder successfully defends the level, causing price to drop

As you can see, there are several different possibilities that you could trade, as Darkstar has mentioned in previous posts. Do you trade with the hunters and liquidate into the stops? Do you trade with the hunters and hope for the stops to get hit and cascade higher, waiting even longer to liquidate? Do you wait for the stops to get hit and fade them? Do you enter short just before the level gets hit and trade with the option defense?

The questions I just listed above are the hardest part for me right now. Depending on the situation, any one of those answers could be the right one. I think I need some more time observing to build the mindset to determine the right approach in each situation. I have some ideas that I might post later, just don't have the time to put them all in writing right now.

If any of the more experienced guys want to provide some additional advice, I would be grateful
  • #600
  • Mar 10, 2011 4:05pm Mar 10, 2011 4:05pm
Quoting Nervousone
http://www.reuters.com/article/2011/...30109220110307

Gains accelerated on Monday as stop loss orders were triggered on the break of $1.4005 and $1.4025, though the rally stalled ahead of an options barrier at $1.4050. More option barriers are said to be placed at $1.41

Well.. Now what?
What would be even more usefull,if we knew expiration dates of those options,right?
So the writers won't tell me,I would need my uncle to work for the bank http://www.forexfactory.com/images/icons/icon10.gif
My knowledge of options is seriusly lacking for now,but question for someone more knowledgable...
Is there any standard...I mean,do most options expire at the end of the week,month,quarter...? Or can it be any date whatsoever the writer decides?
Thanks
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