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Order Flow - Achieving the mindset

  • #641
  • Mar 12, 2011 4:02pm Mar 12, 2011 4:02pm
Quoting Rockshore
1st to Darkstar's comment, he's correct as closed end systems are not true orderbooks, they are visible, but not true to the sense as they are only what the broker wants you to see. If your using any sort of retail firm that calls themselves an ECN chances are your being told a bunch of bull sheet! MBT is notorious for BS.

As far as a true OrderBook for FX it must aggregate the institutional ECN's that your broker connects to. Currenex, Hotspot, Lava, EBS, Reuters etc etc etc and provide a low latency feed of a 'scrubbed' but raw data feed. This...
Ok, I have signed up for the 7 day trial and had it running friday. Please spell out exactly what feeds you are using to make up the DOM on my screen. The website is vague.
  • #642
  • Mar 13, 2011 3:45am Mar 13, 2011 3:45am
Ok guys, I needed to refresh my mind, so I went through DS's posts again and this time i tried to save some pearls. May I share them with you?
They are really refreshing. Some of them are old and outdated, others are really "dateless", they won't "expire" or lose value in the future.
Here's the list:

Darkstar's profile
The structure of FX brokers
How he trated news Mar2006
What news he traded Jul2006
Non-randomness of markets Sep2006 (scroll up to miscon777 post)
About technical analysis Sep2006
Brokers for news trading Jan2007
About Oanda Jan2007
Length of trades Feb2007
DS's past Feb2007
Truth about living off of FX Feb2007 (scroll up to TheRealThing post)
Risk Return calculations Feb2007
Risk adjusting Feb2007
Drawdown calculations Feb2007
Price direction and building a system Feb2007
Developing concepts Mar2007
System rules Mar2007
No charts? Mar2007
Trading and Exchanges: Market Microstructures Sep2007
Datafeed Sep2009
Orderflow Trading in a nutshell Sep2009
Sharpe Ratio Mar2007 a post by don perry
Example chart Mar2010
What to look for Mar2010
Stophunt example Mar2010
Reminescences of a stock operator Mar2010
Option barriers Mar2010
Wrong mindset Mar2010
Orderflow vs TechAnalysis vs FoundAnalysis Jun2007


I know some are useless and some are missing, so why don't you guys suggest something to add to this list?
I know I went a little OT, but I'm sure this will help someone, included myself.
Add yours guys, add yours.

P.S. Oh, I didn't save anything from the last 2 threads, this one and the other orderflow thread, because I think these threads need to be read in their "wholeness". =)
  • #643
  • Mar 13, 2011 4:03am Mar 13, 2011 4:03am
Thanks Scott

You've saved me some time man I had going through DS posts on my list of shit to do today lol

I just made a doc of Carnagies threads with DS and GRK's and a few posts from Eurotrash. I could of included many more pepes but to keep things focused I chose these 3 dudes. Its a great read.
Time hides Nothing
  • #644
  • Mar 13, 2011 4:14am Mar 13, 2011 4:14am
Quoting CindyXXXX
Thanks Scott

You've saved me some time man I had going through DS posts on my list of shit to do today lol

I just made a doc of Carnagies threads with DS and GRK's and a few posts from Eurotrash. I could of included many more pepes but to keep things focused I chose these 3 dudes. Its a great read.
No probs dude, we're all on the same boat.

As I said, it might not be the most complete list, but there are definitely some nice posts in there.
I would also consider reading Gaston's posts.
These guys are like the light at the end of the tunnel.

I invite everyone to add or even delete something from that list, so that we can have a costantly updated list of pearls on orderflow and trading in general. I know it's a little OT, but I feel that this is the best place where to put it. It really belongs here.
  • #645
  • Mar 13, 2011 4:44am Mar 13, 2011 4:44am
I've been trying to understand the difference between 'order-flow' trading and normal TA and must say I've been having a hard time as it seems to me, semantically speaking at least, OFT appears to be a sub-set of TA.

In one of DS's posts he says this:

"Instead of trading because there is a trend line, you examine what happens to price when the trend line is reached. You figure out that 9 times in 10 price penetrates the fib level before reversing. And that price often reverses right at the point where people "should" place their stops. And that no matter what the fundamental story, if the COT is breaking records, a cataclysmic reversal is inevitable.

At the end of the day, an experienced order flow trader doesn't need to see the actual orders to know what’s about to happen. If you know why a majority of people will want to trade in the future then you can get in ahead of them and profit. It's really that simple..."

Surely, the OF trader here is using simple stats to make his call which, to me, is nothing more than normal TA. Also, if you don't need to see the orders, how can it be called order-flow ?

I'm confused and need someone to point me in the right direction. I'm sure the penny will drop eventually but at the moment I'm still waiting.....
He was looking for the card so high and wild hed never need to deal another
  • #646
  • Edited 5:28am Mar 13, 2011 5:13am | Edited 5:28am
Quoting dr_who
I've been trying to understand the difference between 'order-flow' trading and normal TA and must say I've been having a hard time as it seems to me, semantically speaking at least, OFT appears to be a sub-set of TA.

Surely, the OF trader here is using simple stats to make his call which, to me, is nothing more than normal TA. Also, if you don't need to see the orders, how can it be called order-flow ?

I'm confused and need someone to point me in the right direction. I'm sure the penny will drop eventually but at the moment I'm still waiting.....


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I think it's because you're trying to get to the heart of the matter in deciphering what will cause buy/sell orders to come into the market. DS is saying, Fib's/Trendlines/etc don't cause price to do anything on there own, it's the institutions/traders placing orders. This is different then TA because you're not analyzing past data to predict future prices, it's obviously a more thought out process using other information not contained in a chart. If that's the case, then you wouldn't really need a chart then right?

Not to say that TA doesn't have it's place, but if you trace back to the roots of it, as explained by qualified old school traders such as FTI, you will see it's value, and it's not to predict future prices.

Since when was "order flow" the need to see orders? The point is to get in before the orders hit isn't it?

edit: I use a price chart and I see it's value, I use PA too, and I think with a good understanding market structure, micro-structure, what's effecting the market, what is not, and how this can change... you can be long term profitable. But I have a ways to go yet to prove this...
  • #647
  • Mar 13, 2011 5:24am Mar 13, 2011 5:24am
Quoting dr_who
I've been trying to understand the difference between 'order-flow' trading and normal TA and must say I've been having a hard time as it seems to me, semantically speaking at least, OFT appears to be a sub-set of TA.
An order flow trader doesn't even need charts and hence TA

Yeah like the USD/JPY on Friday.

Classic example. On a chart it was a simple drop in price on the USD/JPY chart. Maybe a break of the uptrend line might got a TA trader in. Or maybe the Outside bearish bar or whatever.

But behind the scenes the move is explained by the players involved.

For example. Earth Quake hits Japan... What are the effects? Who is affected? What are the implications? What players are involved?

In the end the down move was explained by the actions of Insurers and perhaps the Government also who suddenly needed to call on Yen which was invested internationally prior to the quake.

This is just an example which highlights the core principles:

What market participants are big enough to affect price?
What would cause them to participate/act?
What are the ramifications of their actions?

Its just the who, the when, the why. This natural disaster example is probably as simple as it gets but I think its a great example all the same.

Order flow: The flow of orders!
Time hides Nothing
  • #648
  • Mar 13, 2011 5:39am Mar 13, 2011 5:39am
Quoting CindyXXXX
An order flow trader doesn't even need charts and hence TA

Yeah like the USD/JPY on Friday.

Classic example. On a chart it was a simple drop in price on the USD/JPY chart. Maybe a break of the uptrend line might got a TA trader in. Or maybe the Outside bearish bar or whatever.

But behind the scenes the move is explained by the players involved.

For example. Earth Quake hits Japan... What are the effects? Who is affected? What are the implications? What players are involved?

In the end the down move was explained by the actions of Insurers and...
But I dont want to be able to explain the move after its happened, I want to explain it beforehand. And in this case I can think of plenty of reasons why it should have gone in the opposite direction !! Perhaps I'm dumb !!

I trade news successfully and use my own intuition (and sometimes straddles) based on my experience of the likely effects, so I suppose this is a type of order flow trading.
He was looking for the card so high and wild hed never need to deal another
  • #649
  • Mar 13, 2011 5:40am Mar 13, 2011 5:40am
Quoting CindyXXXX
An order flow trader doesn't even need charts and hence TA

Yeah like the USD/JPY on Friday.

Classic example. On a chart it was a simple drop in price on the USD/JPY chart. Maybe a break of the uptrend line might got a TA trader in. Or maybe the Outside bearish bar or whatever.

But behind the scenes the move is explained by the players involved.

For example. Earth Quake hits Japan... What are the effects? Who is affected? What are the implications? What players are involved?

In the end the down move was explained by the actions of...
also to add.....

"Its read by deconstructing the logic processes of participants within the context of the execution limitations imposed by market microstructure."

it's right there....
  • #650
  • Mar 13, 2011 5:47am Mar 13, 2011 5:47am
Quoting dr_who
But I dont want to be able to explain the move after its happened, I want to explain it beforehand. And in this case I can think of plenty of reasons why it should have gone in the opposite direction !! Perhaps I'm dumb !!

I trade news successfully and use my own intuition (and sometimes straddles) based on my experience of the likely effects, so I suppose this is a type of order flow trading.
Yes this is of course the goal. What if you worked in the Japanese insurance industry. How informed do you think you would have been in the event of the biggest earthquake in 140 years? Having intensive knowledge of how this "player" operates it would be a no brainier trade. So the knowledge is out there and you didn't have to be a Japanese insurer to of known this.

Maybe its a bad example I don't know but as Monroe said its all in there, how informed you choose to become up to you. There's a hell of a lot to learn
Time hides Nothing
  • #651
  • Mar 13, 2011 5:51am Mar 13, 2011 5:51am
random post by me

There is a lot of great information within darkstar's posts. There is also a lot of great information in my posts, as well as in others posts as well. There are all sort of like different pieces to a treasure map. Now each person's treasure map looks a little bit different as everyone is unique, but the good news is a lot of the information is flexible and can be applied to many people and many situations, the only rigidity and barriers lie in your own mind.

So every persons order flow treasure map looks a bit different. Meaning that when some people figure out and become order flow traders it can accomplish different things for different people. Some people use it to cut down on losing trades. Other people use it to confirm trades. Other people use it as a stand alone system. Others use it to finally make money as they were losing before. Other people use it to generate 100% per year. Other people use it to generate 50% a year. Everyones treasure map and chest looks different. Now obviously not everyone finds the order flow treasure chest.

Why does not everyone find the treasure chest, when many of the pieces to the treasure map are right here for them?


1. Some people do not believe in the treasure as they believe it is a fantasy to begin with.

2. Some people believe in the treasure, but are not willing to put in the work to find the pieces.

3. Some people believe in the treasure, and are willing to find the pieces, but not organize them properly.

4. Some people find the pieces, try to organize them properly, but fail to avoid some of the common pitfalls laid to them by the market.

5. Some people believe in the treasure, and organize the pieces, but they don't like to get their hands dirty and do not want to start digging a little bit at the potential spots where the treasure chest can be at.

6. Other people believe in the treasure, organize pieces, start digging and search possible locations, but the heat during the day is too much for them, and they quit.

7. Other people may dig, and continue searching for a long time, they may get really close, but there are just a few last pieces missing that are killing them, and they ultimately quit.

8. Some people finally discover the order flow treasure chest, but shockingly discover that it has one final unexpected lock on it, they can't crack the code and quit trying.


So if you haven't found the order flow treasure chest yet, which part do you think you are stuck on?

Now once you find the order flow treasure chest, then within it, it contains pieces for another treasure map, a more profitable treasure map. It is up to you if you want to stop your search there, or go even further and find and unlock the even more profitable higher level order flow treasure chest.

Sorry I gotta run, I think I just spotted another order flow treasure chest!

/end of random post
Private message me for a link to my order flow website.
  • #652
  • Mar 13, 2011 5:54am Mar 13, 2011 5:54am
Quoting CindyXXXX
Yes this is of course the goal. What if you worked in the Japanese insurance industry. How informed do you think you would have been in the event of the biggest earthquake in 140 years? Having intensive knowledge of how this "player" operates it would be a no brainier trade. So the knowledge is out there and you didn't have to be a Japanese insurer to of known this.

Maybe its a bad example I don't know but as Monroe said its all in there, how informed you choose to become up to you. There's a hell of a lot to learn
Yes, you're probably right. The trick is I suppose to filter out those events where you simply don't have the breadth and depth of knowledge to take a position.
He was looking for the card so high and wild hed never need to deal another
  • #653
  • Mar 13, 2011 6:25am Mar 13, 2011 6:25am
What is the psychological profile of an order flow trader? OR What is an order flow traders personality type? What are the traits of an order flow trader?

Order Flow like anything in trading my not be suited or the right way to trade for some people (or most people). Everyone has their personal way of trading, so maybe if the above questions were answered we'd know if order flow trading is actually a good fit from a psychological perspective before even starting the journey to find out what it is and how to use it.

Imagine spending years of your life trying to figure it out and then discovering you really don't want to trade that way. Haha!
Don't wish it were easier, wish you were better. ~ Jim Rohn
  • #654
  • Mar 13, 2011 6:40am Mar 13, 2011 6:40am
Quoting UnnamedPlayr
redbaron1981,

i wasn't referring to market profile.
HVN (liquidity concentration areas) can be "static" reference points but the algo traders don't pay necessarily much attention to them if they're shifting heavily money.
Unamedplayr,

Surely the only way to get in before these is by using the DMA Order book so we can see liquidity being demanded across all these venues?

I have really looked hard for any other ways of anticipating where these areas are but just can't seem to see anyway of doing it except may basing it on historical levels which I don't believe is correct. Now I may just be looking at the wrong of finding these levels. I'm not asking for the answer but is there anyway you can point me in the right direction of fine tuning my homing skills? At the moment there just seems to be to many variables you need know but don't have access to and its really confusing the hell out of me.

Best regards from a very confused

James
  • #655
  • Mar 13, 2011 9:10am Mar 13, 2011 9:10am
In terms of my personally observation, the mindset with forecast or speculation nature is still quite subjective and less reliable approach in fx trading.

In the capital market, Only few peoples can get or figure out reliable order flow skew information at the market place. Most of so-called "order flow" xxxx traders are speculators with less reliable information or conception.

In my opinion, most of technical traders or news traders are "order flow mindset" traders with different of tools and concept. They are all based on expectation of the effect of order flow skew toward their bet.

It is not always true that order flow mindset traders can enter the market early than other type of fx traders(eg. technical traders). I am often in fxstreet chat room. I found a pure Elliot wave guy from London can often enter/exit at exact level.

When I started learning fx trading, the guy showed me to make all entry order after NY 5 pm close. So, a lot of various type of traders can bid the market as early before price approach a turning point.

I know some big banks fx desk use MA as benchmark for trading. My experience, I wouldn't find out any advanced trading tool, mindset, concept, etc. can really, significantly beat out MA20 line in LONG RUN. I try in my best, but, I failed. You can try order flow mindset trading to beat MA20 line. Write a EA to do a test.

I am happy in listening, learning from you, and try any new skill.
  • #656
  • Mar 13, 2011 11:01am Mar 13, 2011 11:01am
Quoting seeit
Ok, I have signed up for the 7 day trial and had it running friday. Please spell out exactly what feeds you are using to make up the DOM on my screen. The website is vague.
Multiple, NON redundant currenex's, hotspot, integral... all the major institutional ecn's. are in the OrderBook aggregation.
---End Quote---


Does it have Reuters- EBS. Thanks.
---End Quote---
Reuters and EBS would increase the cost by 400 per month. We have the same banks quoting on the system that quote on EBS/Reut. Our liquidity is just as deep at 400 - 500 M in a few pips... 3x that of dukascopy.
***************

http://orderbookfx.com/
  • #657
  • Mar 13, 2011 11:07am Mar 13, 2011 11:07am
Quoting LasVahGoose
What is the psychological profile of an order flow trader? OR What is an order flow traders personality type?...
ask questions demand answers!

smooth post jack
always something good comes out of ya
  • #658
  • Mar 13, 2011 11:23am Mar 13, 2011 11:23am
heres a clue

9:55 AM The BoJ will pump 2 to 3 times the normal amount of liquidity into the banking system when markets reopen tonight. Any further moves could depend on how shares and the yen respond to events. Some analysts believe the crisis gives the bank cover to step in and fight the rise in the yen
  • #659
  • Mar 13, 2011 11:25am Mar 13, 2011 11:25am
heres a lie


8:06 AM An explosion (video) at the Fukushima nuclear plant has not increased radiation levels, says a government spokesman. Originally 3km, the evacuation area surrounding the facility has been widened to 20km, iodine is being stockpiled, and area residents are being told to stay indoors and not drink tap water "just in case." 15 Comments

edited
heres more,this ones truth

4:54 PM Kyodo news reports radiation levels 1K times higher than normal were detected in the control room of the Fukushima nuclear power plant on Saturday morning. The news agency also reports TEPCO as saying radiation may have already leaked from the facility. Comment!
  • #660
  • Mar 13, 2011 4:05pm Mar 13, 2011 4:05pm
An aggregated orderbook sometimes can be useful for observation reasons.
Price often snaps back while bid-ask depth still look random (no T&S). So it's very hard to get a clue alone from watching market depth.

To only way to get in before the institution is by calculating prices where they would jump in.
For that you already must have detected their execution diagram and algorithm.

To point in the right direction and a lot of work:
study the real beginnings & history of algo trading, ask how an algo and inst. execution would look like in the order window and then on the chart.

It's the most complicated part in order flow trading.
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