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Order Flow - Achieving the mindset

  • #781
  • Mar 17, 2011 6:19am Mar 17, 2011 6:19am
Quoting EmeraldEyes
Osler has some cool research papers about S/R and stop placement that pertain to us. I just started on "Trading Your Way to Financial Freedom".

Yeah - I have to admit, I'd read a few of her papers a while ago, without really putting any mental effort into them.

It was only recently though that I started reading them thoroughly and putting them into context with the order flow threads that Carnegie et al has started.

Now I can't stop reading them, feeding the OF monster
Drink Coffee. Do stupid things faster with more energy.
  • #782
  • Mar 17, 2011 7:15am Mar 17, 2011 7:15am
Quoting dragan53
billions versus millions moving the market,
hmm i wonder whos gonna get hunted

dont worry mate,they can see ur stops if u put em there,and anyway we aint so big,but if we do become so big,theyll start changing the tactics

but as if we are gonna become big,lols
Hunters are there to hunt the weak traders or, to be more exact, those who are in a weak position at the moment. They don't hunt retailers as a group or commercials as a group. They are in the market to make money with minimum risk and this is achieved by making the weak position lose. So your goal is not to take a weak position or, if your position becomes weak after you take it - to get out with minimal damage.

So, for example, if many traders start using the same strategy and take what seems to them a strong position, and not having enough funds to defend their position - that position automatically becomes weak and they become prey to the hunters. The smart ones will learn and adjust their strategy, some will continue to lose, some will teach the strategy to the new traders and new will become prey.

The good thing about orderflow trading is that it's not a strategy but a mindset like DS said. Markets will evolve and if you see changes you'll always be on the winning side.
  • #783
  • Mar 17, 2011 7:32am Mar 17, 2011 7:32am
I recall Darkstar saying something along the lines of (and this is paraphrased to the best of my memory) If you can't figure it out with what he has already said on this forum, then it would be a waste of time to train you.

Which implies, it's all there... the rest you have to figure out for yourself and find what works for you using this methodology.

I have seen a post by mbqb11, who was mentored by DS, and someone asked about the MM he had for a rare inefficiency DS found, which he later dumped due to not enough trades of it or maybe the inefficiency was gone? Maybe this was the CNX inefficiency he spoke about, I don't know... Mike then commented that his main method was standard 2% risk with a high expectancy.

I see a lot of contradiction here and there, another post saying that "the standard 2% is for neophyte traders to keep them alive long enough to figure out the game" ... and another post saying that some of the stuff he was saying was complete BS to throw you off the easy track... I think I know what he was referring to but, who knows. What I do know is he definitely dropped some seriously good shit here.

Still the book is a must have for the fans, but I doubt it will be that crazy in price. He is probably just getting a feel for how many copies he should print, that would be my guess.
  • #784
  • Mar 17, 2011 7:40am Mar 17, 2011 7:40am
About "hunting" is obviously all for the liquidity to get in and out of positions, of course they are not after your little retail stop, but concentrations of liquidity to fill orders, clear books, liquidate positions, etc. I don't think they care about what we are doing at all, but it's obvious what most are doing.

But as the markets flow with new information, things change and they have to adjust there positions, so I think you need to be on top of that, always be one step ahead of the game.

DS talks about you having to have the knowledge of how traders trade, and what will cause them to trade so you can get in ahead of them, or at the correct time.

You know how these standard patterns are traded by TA traders with no clue and where the concentrations of stops will be. You get the rumors on options traders and their stops which can be can be exploited.
  • #785
  • Mar 17, 2011 8:01am Mar 17, 2011 8:01am
Quoting Monroe
About "hunting" is obviously all for the liquidity to get in and out of positions, of course they are not after your little retail stop, but concentrations of liquidity to fill orders, clear books, liquidate positions, etc. I don't think they care about what we are doing at all, but it's obvious what most are doing.

But as the markets flow with new information, things change and they have to adjust there positions, so I think you need to be on top of that, always be one step ahead of the game.
my thinking is vsa candlebars+timing london open+other timezones that has regular repeats+fundies+good look of lowest highest range to see where they will hunt for ,and mainly accumulation/distribution at the open or other points interesting ,that have a weakness in them

for instance when i trade with no major news or major expectations(same thing) i see markets to be more limited to movements nd to bounce off trendlines as trendlines show apprecitian depreciation of price through time,
but with major news,like today,we saw some accumulation on london open,higher volume ,yao ming bar i think it was that one,the vsa guys like to call,then supply hit price fell,absorbed,good expectations of shitty us results as always,euro up,then asia close,high volume uptrust ,middle eastern sellers
plus some acb sellers i think in gbp and eur
plus it made a nice pattern,going up in weakness,upthurst,transfer of stock,no more demand after,and in ny we go,i dont know which way,
btw im talking about eurusd

btw ive noticed the price goes much easier through the ranges of lower volume traded,stops on high volume ranges,as they need more demand to go up,break the barrier(im talking about the side volume bar on the eurofutures)

it truly is a mindset,we cant call it system or wateva,things change ,evolve as ds said.man ds is really a star here,we talk about him,we learn from him,faken legend,soon we will have ds figurines to worship sold in the streets by poor people

theres the limitness and unlimitness both exist,to a certain extent
our experience can tell us that,in the market
  • #786
  • Mar 17, 2011 8:17am Mar 17, 2011 8:17am
Quoting dragan53
my thinking is vsa candlebars+timing london open+other timezones that has regular repeats+fundies+good look of lowest highest range to see where they will hunt for ,and mainly accumulation/distribution at the open or other points interesting ,that have a weakness in them
Yes, except for the vsa stuff, as I don't feel the need to study it or look much into it. I have checked it out briefly, but I don't use it at all... but if you like it that's cool... whatever you're comfortable with. I like to get in ahead...

But the rest you speak of, I feel is just your basic understanding of "Market Structure" which everyone here should have a good understanding of. The main money centers and their times of operation, who the players are, there behavior, etc etc...
  • #787
  • Mar 17, 2011 8:56am Mar 17, 2011 8:56am
I find the idea of pricing the book quite interesting...

 

  1. If you have a system that means the more people follow it, the more its self fullfilling, then you want to sell it cheaply
  2. If you have a system that means the more people follow it, the more the inefficiencies disappear, then you want it to be expensive
  3. If you have a system which either doesn't work or isnt explained too well or isnt fully worked out, then you want it to be expensive
  4. If you have a system that works really, really well, you dont want to sell it at all

Any other possibilities I've missed (surely there are), and which do you think is the real one in this case ?

He was looking for the card so high and wild hed never need to deal another
  • #788
  • Mar 17, 2011 8:58am Mar 17, 2011 8:58am
Quoting dragan53
btw ive noticed the price goes much easier through the ranges of lower volume traded,stops on high volume ranges,as they need more demand to go up,break the barrier(im talking about the side volume bar on the eurofutures)
Yep the market is always seeking liquidity. Since studying this my personal success in trading has increased considerably. There's an active thread on here that trades along with this knowledge if that interests you.
  • #789
  • Mar 17, 2011 8:59am Mar 17, 2011 8:59am
Quoting dr_who
I find the idea of pricing the book quite interesting...

[list=1][*]If you have a system that means the more people follow it, the more its self fullfilling, then you want to sell it cheaply[*]If you have a system that means the more people follow it, the more the inefficiencies disappear, then you want it to be expensive[*]If you have a system which either doesn't work or isnt explained too well or isnt fully worked out, then you want it to be expensive[*]If you have a system that works really, really well, you dont want to sell it...
yes, the idea that it's not a system, but a methodology....
  • #790
  • Edited 11:53am Mar 17, 2011 9:05am | Edited 11:53am
I'm pretty convinced the final product will not disappoint.
  • #791
  • Edited 11:21am Mar 17, 2011 11:07am | Edited 11:21am
I was reading on the wire EUR/USD 1.42 and 1.43 are big pay out Barrier options. Has anyone had any success in finding when these expire or do we just wait for more bits of info off the news wire. I suspect these to be in play in the next week or two. The only other thing I see is the DNT 1.35/1.42 traded yesterday but expire not mentioned.
  • #792
  • Mar 17, 2011 11:37am Mar 17, 2011 11:37am
My sympathies with you Cindy, you can overcome this debilitating handicap, work at it! Even Madoff has a facebook page

Quoting CindyXXXX
Hey DG!

I don't have face book so I will just say "I like it" here!

Nice Start
  • #793
  • Mar 17, 2011 11:46am Mar 17, 2011 11:46am
To trade order flow, I think we really need to figure out is who is moving the market and why (as been said a million times)... stuff like the barrier plays are an example... you know people that can and do move the market a good deal have incentive to do so... in the future.

That's why concentrating on what retail traders are doing is pointless because they are just all over the place, using all kinds of different systems and strategies which mostly fail in the long run anyway... they don't move as one. Concentrations of stops will be used liquidity and this definitely involves TA specs, but you need to find the motives for whatever direction it will go, whatever that reason is by the players that move it, then you can start looking for the mispricings, stop hunts, or certain behaviors that occur at certain times which you can capitalize on.

This can change, but with that mindset you can find new ones as that happens.

This why charts become just a tool after that.

How am I doing?
  • #794
  • Mar 17, 2011 12:11pm Mar 17, 2011 12:11pm
+1 Monroe. Good points to think abt. I'd like to ask what happens when the 'players that move the market', in your example, get caught on the wrong side of the market?
  • #795
  • Mar 17, 2011 12:16pm Mar 17, 2011 12:16pm
Hey guys, I just wanted to share some things which have been on my mind recently. But first, I would like to address redbaron's post, as I quite like his analysis on USD/JPY.

Quoting redbaron1981
I think what happened to yen is similar to what I posted a while ago where the further out from the Bid Offer the more denser the liquidity.
Don't mean to pick straws here, but I'm thinking you meant to say the further out from the bid the offer is the thinner the liquidity.

It's exactly what happened yesterday, and if I were not asleep I would have joined eurotrash in milking some good pips out of that move. A heavy build-up of stops, at an all-time low, targeted at an illiquid session time, coupled with risk aversion due to the Earthquake as the dominant market theme in play were a recipe for an excellent order flow short-term play.

Quote
Maybe there was a short term lack of immediacy in the book but the further away from its average price the more stronger the density of limit orders causing it to snap back. Its so tempted to straddle a pair with an off market limit order for events like this.

In the shorter term Japan is looming on an intervention the question is which way will it go? Strong yen good for imports weak yen good for exports. I'm thinking a weaker yen would help maintain exports and help the economy but the question is how much is going to have to be imported to...

I like your thinking, and as I'm trying to move away from the short-term inefficiencies, all sorts of possible scenarios have been popping up in my mind.

The primary players I can map out are the BoJ, export-dependent companies and utilitarian traders afflicted by the crisis. Knowing who is affected currently, can help us come up with reasons for why currency trades should be made.

We know that intervention by the BoJ has happened as recently as September last year, and so it is definitely in the cards as a possible scenario. Fundamentally, Japan has a Debt:GDP ratio of 2:1, which, since it is an export economy, it must finance internally.

The appreciation of it's currency, would make this debt increasingly harder and harder to pay off for two reasons:

1) As the currency appreciates, the value of the debt itself appreciates in value, making it increasingly harder to pay off.

2) As the currency appreciates, exports become less competitive, leading to lower revenues for corporations. Lower revenues will amount to lower government revenues from taxes, which will slow down the prospects of crunching through the debt.

When we couple in the fact that these export-dependent corporations account for a significant employment of the Japanese economy, letting them fail would result further exacerbate economic problems, as unemployment would have to be dealt with in addition to the host of other issues, such as a movement back into deflation, due to reduced economic growth.

With these factors at stake, I am positing that BoJ will be motivated to reduce the effects of the currency appreciating for the economic well-being of it's nation.

The problem is when?

Intervening in the markets now, would result in a depreciation of the Japanese currency, making imports increasingly more expensive, which I am assuming would be counter-intuitive to a re-building nation. Furthermore, it would be a blow to individuals who are claiming insurance and repatriating funds to know that what they have received is worth less in a time when they need it most.

Over the long term, I'm thus anticipating a move from the BoJ, but only after some headway has been made in the recovery effort. It will be a delicate act to see which of the two presents the more pressing priority, the need for appreciation, or the need for depreciation, and by paying attention to further updates about the situation, we should be able to get a grasp of which is the more probable outcome.

When this happens, you position yourself appropriately and..boom..easy money can be siphoned from the coffers of the BoJ...

The beauty of this is that it's only one possible scenario that's affecting the currency. There are many others, ranging over the long, medium and short term, which superimpose on each other to provide a dynamic environment ripe with opportunities, which can be accessed through logic and deduction - in my opinion - the foundations of a successful order flow mindset.

But alas, I've got lots of assignments to do and a few more exams coming up, so I will be pressed for time to making contributions, but will still try to pop in as often as I can to see how everything's progressing. Good luck to everyone!

Regards,
xXTrizzleXx
  • #796
  • Mar 17, 2011 12:17pm Mar 17, 2011 12:17pm
Quoting EmeraldEyes
+1 Monroe. Good points to think abt. I'd like to ask what happens when the 'players that move the market', in your example, get caught on the wrong side of the market?
I think that depends on who the players is, and where they got caught wrong, and their position. I would think you would see hot money spikes into the stops in the direction of there intended move to liquidate after it has turned against them, most likely during illiquid times, or just very fast covering if it was a dealer, i don't know...
  • #797
  • Mar 17, 2011 12:19pm Mar 17, 2011 12:19pm
Quoting EmeraldEyes
+1 Monroe. Good points to think abt. I'd like to ask what happens when the 'players that move the market', in your example, get caught on the wrong side of the market?

Is that always the case though ? How do you define 'wrong side of the market' ? Surely many of 'the players that move the market' aren't traders at all, so there isn't really a 'wrong side'. They may not have bought/sold at what is necessarily the best price for them. But that's a long way from 'wrong'.
He was looking for the card so high and wild hed never need to deal another
  • #798
  • Mar 17, 2011 12:35pm Mar 17, 2011 12:35pm
Quoting shiva
My sympathies with you Cindy, you can overcome this debilitating handicap, work at it! Even Madoff has a facebook page
I think it would more debilitating being on there with the amount of time I already spend on the net I don't need more reasons to log on.

Yes everyone has a facebook that makes me not want one more. I don't see what the big deal is really. Everyone I know is on there but I don't need to be on there to know them lol and yes they think Im weird for not making a page as well... On the flip side everyone I don't want to know is also on there so the decision isn't a hard one.

Why I feel the need to explain myself to you I'm not sure but I think it was something to do with the fact that you seem to feel sorry for me and think I'm handicapped and need to work at something...
Time hides Nothing
  • #799
  • Mar 17, 2011 12:40pm Mar 17, 2011 12:40pm
Quoting CindyXXXX
I think it would more debilitating being on there with the amount of time I already spend on the net I don't need more reasons to log on.

Yes everyone has a facebook that makes me not want one more. I don't see what the big deal is really. Everyone I know is on there but I don't need to be on there to know them lol and yes they think Im weird for not making a page as well... On the flip side everyone I don't want to know is also on there so the decision isn't a hard one.

Why I feel the need to explain myself to you I'm not sure but I think...
yo CindyXXXX, I don't have a facebook either bro.

I had a myspace (out of peer pressure) when that stupid shit came out, but haven't logged on in forever, I forget the password even.

So count me on the list of no facebook and with no plans to anytime soon.
  • #800
  • Edited 1:03pm Mar 17, 2011 12:51pm | Edited 1:03pm
Quoting Monroe
To trade order flow, I think we really need to figure out is who is moving the market and why (as been said a million times)... stuff like the barrier plays are an example... you know people that can and do move the market a good deal have incentive to do so... in the future.

That's why concentrating on what retail traders are doing is pointless because they are just all over the place, using all kinds of different systems and strategies which mostly fail in the long run anyway... they don't move as one. Concentrations of stops will be used liquidity...
NP Monroe - Sometimes its necessary to reiterate the simple things we may forget or take for granted along the way. I'm currently reading this macro economics book and going off on so many tangents that every now and then I need to do the same and bring things back to the OF fundamentals of the Who, What, Why, When, How.

The more you read the more you realize what a massive world it is in terms of finance and cash and equity flows but the good news is the more detailed and complicated it is the more potential opportunities there will be everyday.

My latest inspirations stem from a world map. I have one saved as my desktop background and just ordered a MASSIVE one I'm going to stick on my wall off EBAY. I find I'm a very visual learner, I like to sit on the outside and try and look in instead of sit in the middle of it and try and piece things together from my head outwards.

I need to be able to piece things together like building blocks in order to commit the function to memory its hard to explain but for this reason I find T&E and most Textbooks the way their written sometimes quite a challenge. I think this is also the reason I spent sooo long on TA methods because the other means were just too abstract for me to process properly... I've only just realized this, not sure what the word for it is

Whenever I get muddled or baffled by information overload I just look at the world as if I'm staring at it from space and picture the money flows through world trade, Big companies of certain countries, Central Banks, Governments, etc etc and try and see how everything interacts and interlocks on a world scale.

Someone posted yesterday about GRK's exercise with the order flow generators or what not, I find my self up late at night in bed going through countless scenarios in my head and until I actually tried this I only realised what a great thing to do it was and how much was buried in my head that I just hadn't let out yet through any form of creative thinking.

The more I learn the more I realize how much more I have to learn but its been an inspiring journey so far. I mean just to understand the financial structures and macro theories and practices is one thing and quite a big thing at that. But its just the start and alone won't be enough to make you a trader. Add to that knowledge of Market Microstructure and this too is quite a big task in itself but again barely scratching the surface.

Taking that knowledge and trading with it is a whole nother step and where most would fail of course. I'm actually very thankful for this thread looking back now its given me a few key corner stones to finally begin a big journey I've always wanted to take.

I remember prob 3 months ago still being baffled by the idea that people trade without charts... I just could not imagine how. Now though its so obvious and I can imagine a million different ways in which people could do that. I guess doing it myself it what is what I'm going to commit the next few years of my life on and many more.

(Sorry for long post)
Time hides Nothing
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