Order Flow - Achieving the mindset | Page 46 | Forex Factory

Options

Go to
Permalinks
Print Thread

Similar Threads

Mindset Mindset Mindset!!! 19 replies

How to flow with the order flow? 26 replies

Maintain Your Mindset, by Linda Bradford Raschke 3 replies

Order Flow - Achieving the mindset - Part 2 37 replies

A new mindset 0 replies

Attachments: Order Flow - Achieving the mindset
Exit Attachments

Order Flow - Achieving the mindset

  • #901
  • Mar 20, 2011 4:28am Mar 20, 2011 4:28am
A precept of this thread is that price changes are not random, but we are not trying to foresee price changes here, we forecast people behaviours dictated by market microstructure limitations. Price itself comes with the latter.

I feel like you're trolling people here lol
  • #902
  • Mar 20, 2011 4:37am Mar 20, 2011 4:37am
the crowd behaviour can already be seen in this thread

i remember reading the domino orderflow thread,when ds and scottyb taught that domino was an idiot,evryone else starting rambling on about him being some lier deceiver,then they started thinking that hes good,then evryone else starting praising domino,

hahah lol
no wonder guys at the pits who never went to college were the best traders out,they read human behaviour
  • #903
  • Mar 20, 2011 5:11am Mar 20, 2011 5:11am
Quoting scott89
A precept of this thread is that price changes are not random, but we are not trying to foresee price changes here, we forecast people behaviours dictated by market microstructure limitations. Price itself comes with the latter.

I feel like you're trolling people here lol
Sure, I can come across as a troll but I don't mean to be. We all approach theory in different ways and mine has always been to be a sceptic and to be disruptive because in the course of dialogue I'm questioning myself as well as other people. Historically I've found that I learn better myself this way, although it can come across as being antagonistic.

But thanks for your succinct answer as its helped focus a number of things (as well as the troll thing lol).
He was looking for the card so high and wild hed never need to deal another
  • #904
  • Mar 20, 2011 5:58am Mar 20, 2011 5:58am
Right guys back on subject. I have put this list together to show what I think are the 3 stages of a stop hunt.


The 3 Stages of a Stop Hunt.


1. Identify an area where there is a collection of buying or selling interest. This could be below an upward trend line 50/61.8% Fibs etc etc. Remember to buy we need to consume selling interest and to sell we need to consume buying interest and the market is not as liquid as we are led to believe.
2. We wait until there is less liquidity so price is easier to move around and we move the market to where the selling or buying interest is. When we hit the area where the Buying/Selling interest is, we consume it until price moves in our desired direction.
3. Once we have our position established and moving in our desired direction we are now looking for another concentration of Buying/selling interest to unload our position into. The easiest place would be to look at where all the stop losses are placed and use the orders to offload our position.

Let me know what you think hints and suggestions are more than welcome I'm just writing this out to try an get it more in my head.

Good Luck

James.
  • #905
  • Edited Mar 21, 2011 2:18am Mar 20, 2011 6:15am | Edited Mar 21, 2011 2:18am
Quoting redbaron1981
Right guys back on subject. I have put this list together to show what I think are the 3 stages of a stop hunt.


The 3 Stages of a Stop Hunt.


1. [font=Calibri][size=3]Identify an area where there is a collection of buying or selling interest. This could be below an upward trend line 50/61.8% Fibs etc etc. Remember to buy we need to consume selling interest and to sell we need to consume buying interest and the market is not as...
wouldnt it be nice if we had all the stoploss info

the thing about stophunting,is that to become good at the game, u need practical experience
forget about ,fib levels all this crap,they target the highest level of the last up move (or trend i dont like calling it that name as its just current majority)

the lowest of the up last aka trend is to be hunted,what the noobs calls support and resistance
"isnt it interesting how the price bounces off the same level
i wonder why ",then theories go into realities,but no one knows the reason
until ds showed us,

to me i see stop hunting,like an elimination round where they eliminate evry obstacle that they can,until a big one comes by then he becomes too big,price stops,
until they suck that supply up,the price aint going anywhere,it might bounce a bit
eventually price will bounce in stop hunts,as stops and limits get triggered

one example is gbpusd,londonopen eurusd london open

look at that and the economic expectations,and think what u would do if u were a big bad dealer

btw,iwant to thanks evryone in this thread,was releasing ur knowledge into the wild,so all of us small timers can benefit

ds,trizzle,unnamed,jack,sisse,monroe,relyt,scottyb,grk,luie,eurotrash,cindy,adal,emerald,redbaron,nasir,triphop,.......cant remembr anymore sorry
i thank u ,u know who ur
and carnegie for starting this
  • #906
  • Mar 20, 2011 6:50am Mar 20, 2011 6:50am
Sorry, with all the random talk I can't help but think of this cartoon....



.
http://dilbert.com/dyn/str_strip/000...2318.strip.gif
Don't wish it were easier, wish you were better. ~ Jim Rohn
  • #907
  • Mar 20, 2011 9:19am Mar 20, 2011 9:19am
Quoting redbaron1981
Right guys back on subject. I have put this list together to show what I think are the 3 stages of a stop hunt.


The 3 Stages of a Stop Hunt.


1. [font=Calibri][size=3]Identify an area where there is a collection of buying or selling interest. This could be below an upward trend line 50/61.8% Fibs etc etc. Remember to buy we need to consume selling interest and to sell we need to consume buying interest and the market is not as liquid...

I would add that we are not actually stophunting, we don't need it. A stop hunt is done to provide liquidity to those who have big amounts of money to trade. What we do is actually detect a stophunt and exploit the situation to our good, which doesn't strictly mean to trade with the hunters.

Another thing to add is that exploiting a stop hunt is not the only orderflow strategy
  • #908
  • Mar 20, 2011 12:51pm Mar 20, 2011 12:51pm
Quoting dragan53
the lowest of the up last aka trend is to be hunted,what the noobs calls support and resistance
People do make money trading S/R even without having a clue why does it works and are doing it for years successfully and also have taught others how to do it. U cant really call them noobs.

Quote
ds,trizzle,unnamed,jack,sisse,monroe,relyt,scottyb,grk,luie,eurotrash,cindy,adal,emerald,redbaron,,.......cant remembr anymore sorry
i thank u ,u know who ur
and carnegie for starting this

well u covered everyone.
.
  • #909
  • Mar 20, 2011 2:35pm Mar 20, 2011 2:35pm
I figured I might try to provide a live example of what I'm struggling with most right now. EUR/USD is within about 15 pips of the 4200 barrier right now (part of a 1.3500/1.4200 DNT that expires in mid-May).

I'm certainly not going to enter anytime soon under the expectation that the level will be taken out. Why? I don't know what I'm even looking for to determine that hunters are making their run at the barrier (another reason is the fact that the spread is 10 pips right now and we're only 15 pips away, which doesn't leave much room, but that's beside the main point).

So let's say that the level is taken out, I'm still trying to decide what happens once the stops are hit. Will price continue its up move, like it did when it broke 4100 and 4150 barriers on Friday? Will the hunters dump their long position into the stops, causing price to drop back below 4200?

I don't see any objective way of deciding which will happen. It seems like a 50/50 guess. My guess would be to fade the stops in this instance, but I have no clue why. And going short in the middle of this pretty consistent up-move seems like stepping out in front of a bus.

I know I've pretty much posted this same thing over and over again. If I have an epiphany, I'll share it, but for now I'm just going to sit back and watch like I have been and hope that something comes to me.
  • #910
  • Mar 20, 2011 3:07pm Mar 20, 2011 3:07pm
Quoting scott89
I would add that we are not actually stop hunting, we don't need it. A stop hunt is done to provide liquidity to those who have big amounts of money to trade. What we do is actually detect a stop hunt and exploit the situation to our good, which doesn't strictly mean to trade with the hunters.

Another thing to add is that exploiting a stop hunt is not the only order flow strategy
Hey Scott,

I don't really agree with your last post for the following reasons. First of all I rephrased this from a post that Darkstar had written. Here is the original.

"Brokers don't hunt "your" stops. Contrary to popular belief, your just not that important. What they hunt are "concentrations" of stops.

Say you have a nice clean up trend line. Technical trader lore says that if that trend line gets pierced, the trend is reversing so you should put your stop just the other side of it. Well guess what. Everyone has their stops in the same place. Stop hunters look for opportunities like this.

Being a broker with deep pockets (actually it's VERY rarely a broker that hunts your stops but whatever) I can move prices around by buying and selling a huge volume. What I'll do is start shorting like a madman, driving price lower. If my pockets are deep enough (or the market is thin enough) I can push the price through the trend line and trigger your stops. Knowing where your stops are I can set my TP at your SL level so in effect your selling me your position which I'm using to cover my shorts. Make sense?"

The reason why I rephrased it was to make it a little easier for me to view an I also think this kind of information is useful to help get into the mindset of an order flow trader. The Hunt is just the finishing part of the trade, as for a round trip we'll have to use both pools of buying and selling interest to enter and exit the market. The reason why we have to use that interest is to move our big position in and out of the market with as little impact as possible.

Now seeing as I'm trading those areas because of the type of orders that are there I would say that this is a style of order flow trading.

Dragan:

"forget about ,fib levels all this crap,they target the highest level of the last up move (or trend i didn't like calling it that name as its just current majority)"

I'm trying to hunt down a post from DS where he says that the majority do use TA to trade. Here is another similar one but not the one I was looking for.

"As a professional stop hunter I can assure you that your decision to enter a stop loss order doesn't make the slightest difference in determining whether you will be smoked out of your trade or not. If you are a technical trader people like myself know EXACTLY where your stop is, mental or otherwise."

Sorry and another one.

"When you see a common technical pattern form, you take your trades with the expectation that the probability is on your side for it to play out as described. Being the diligent and disciplined trader you place your stops at the exact point where the trade should fail. Unfortunately you just opened your wallet and handed me your money. Was it because you didn't’t know enough technical analysis? Was there some fundamental news that occurred to move price against you? No, you got smoked because you don’t understand that the pattern was built to trap you and take your money."

And I also had another one but couldn't locate it! Can you tell I've been reading Darkstars posts again.

Regards,

James.
  • #911
  • Mar 20, 2011 3:10pm Mar 20, 2011 3:10pm
I'd be careful with any short term fluffy trades. The market could be somewhat erratic through the start of the week as it digests and processes the new developments in the Middle East, Japan, ect.

My big question is now what 1.4 will mean to the markets. Late last week gave up obvious clues, but we'll see.
  • #912
  • Mar 20, 2011 3:29pm Mar 20, 2011 3:29pm
"I figured I might try to provide a live example of what I'm struggling with most right now. EUR/USD is within about 15 pips of the 4200 barrier right now (part of a 1.3500/1.4200 DNT that expires in mid-May).

I'm certainly not going to enter anytime soon under the expectation that the level will be taken out. Why? I don't know what I'm even looking for to determine that hunters are making their run at the barrier (another reason is the fact that the spread is 10 pips right now and we're only 15 pips away, which doesn't leave much room, but that's beside the main point"

If there out to take the Barrier first they have to absorb all the selling interest at the defense. I don't really want to go in to charts but if theres a big Limit order there for defense you should see price hit it a few times and be reflected away. If they have enough money to absorb all that selling interest they'll keep on pushing it through until the barriers gone. Then they will be looking for somewhere to dump there large positions. They will probably liquidate there open positions into the stop loss orders being used in conjunction with the Barrier defense orders.

Once they have dumped there positions in to the stop loss area(Selling) price may fall back again. This may produce what is commonly called a Pin bar.

Anyway thats only my opinion and the way I would anticipate it to happen and I could be wrong. Also why is your spead so big?

Good luck with it you can buy me a beer if it works.

James.
  • #913
  • Mar 20, 2011 4:10pm Mar 20, 2011 4:10pm
I don't think we need to be thinking about stop hunts, stop hunts, stop hunts and barriers the whole time to be honest.

If we are trying to anticipate traders and understand why they are trading, who they are, typical behavior patterns, where they are placing there orders, what types of orders they are using, etc etc... and how this effects the market and price movement that's a much larger general concept.
  • #914
  • Mar 20, 2011 4:24pm Mar 20, 2011 4:24pm
I mean, how do you know it's a stop hunt? Where does orderflow build up? Could they just be testing that orderflow other then reasons for collecting a quick buck or liquidating positions? who could be placing orders there? why would they place them THERE?

how does this all fit into the overall context and theme/story of what the markets are thinking/doing currently?

Should we be thinking this deep or just reacting to what we know about the market, liquidity, micro-structure and how it effects price movement?
  • #915
  • Mar 20, 2011 4:27pm Mar 20, 2011 4:27pm
Quoting Monroe
I don't think we need to be thinking about stop hunts, stop hunts, stop hunts and barriers the whole time to be honest.

If we are trying to anticipate traders and understand why they are trading, who they are, typical behavior patterns, where they are placing there orders, what types of orders they are using, etc etc... and how this effects the market and price movement that's a much larger general concept.
Monroe

I totally 150% agree with you however this surely has also got to do with the bigger picture. The amount of time that Liquidity has been mentioned on all these OF threads I starting to assume that it is a significant factor in OF trading.

DS has mentioned many times how the Fx market is not as liquid as everyone thinks. So what I make from this is that participants trading large positions can not do so all the time they are some what limited in there activities. Breaking the market down in to an illiquid context makes me presume that the order flow mindset must contain a knowledge of where liquidity either is or isn't.

I agree that this thread should not contain pages of hunts and barriers however to leave them aside as not being OF related doesn't make sense as they are but one of the many tools in an OF traders tool box.

All the best,

James
  • #916
  • Mar 20, 2011 4:39pm Mar 20, 2011 4:39pm
Quoting redbaron1981
Monroe

I totally 150% agree with you however this surely has also got to do with the bigger picture. The amount of time that Liquidity has been mentioned on all these OF threads I starting to assume that it is a significant factor in OF trading.

DS has mentioned many times how the Fx market is not as liquid as everyone thinks. So what I make from this is that participants trading large positions can not do so all the time they are some what limited in there activities. Breaking the market down in to an illiquid context makes me presume...
I agree James, the inefficiences of the market we are trading is what we are looking to find and exploit. Liquidity being one of those inefficiencies contrary to the misunderstanding of how deep the liquidity really is.

But orderflow is not just about that. Orderflow itself is traders placing orders.

btw, I'm not saying to leave it aside, but I'm just saying that seems to be one of the few things people are looking into and trying so hard to understand but that is only one thing DS showed on the forum of how to use the methodology. But when you look at his rants on other orderflow threads and read the intro of his book, there's a larger concept here. So many possibilities...
  • #917
  • Mar 20, 2011 4:47pm Mar 20, 2011 4:47pm
Quoting redbaron1981
Hey Scott,

I don't really agree with your last post for the following reasons. First of all I rephrased this from a post that Darkstar had written. Here is the original.

[color=black][font=Verdana]"Brokers don't hunt "your" stops. Contrary to popular belief, your just not that important. What they hunt are "concentrations" of stops.

Say you have a nice clean up trend line. Technical trader lore says that if that trend line gets pierced, the trend is reversing so you should put your stop just the other side of it. Well guess what. Everyone...
I'm not talking about brokers, I DO know that brokers do not hunt...
I am talking about central banks, commercial banks, institutions, hedge fund and any other player that needs liquidity to enter and ecit the market. A stop hunt is done for that reason, where could you find the needed quality if not in a cluster of stops?
And again, you do not stop hunt, or let's say you don't need it if you don't have billions to trade, you just exploit these situations where you KNOW what's happening and what's gonna happen in the near future 90% of times, so you can play the stop hunters side, or you can exploit the situation in different ways.
  • #918
  • Mar 20, 2011 4:48pm Mar 20, 2011 4:48pm
Hi All,

Here's a few interesting things I read with regards to options...

In Currency Trading for Dummies (by the way, a VERY good book...more in depth and detailed than most books I have read....well beyond a "for dummies" crowd/book)......

"when spot prices have been in a well worn range, option interest tends to accumulate around the recent range. If ranges are broken, sizeable option-related interest is frequently forced to come into the market and trade in the direction of the breakout, either to unwind hedges or to cover exposures created by the price break. The amounts can be staggering, propelling the directional move in an extreme way."

And from various articles on Forex Live.....option players can be "short gamma" or "long gamma". If they are "short gamma", this means they have to be buyers on strength and sellers on weakeness...again, propelling the move in the breakout direction. Whereas if "long gamma", it engenders range bound environments by option players buying on dips and selling on rallies.

Maybe this might explain why on some option barrier knockouts, rather than reversing, it keeps on going sharply in that breakout direction....because the option players are forced to cover because they're "short gamma"/covering their exposure/hedges.

Perhaps another piece of the order flow puzzle.
  • #919
  • Mar 20, 2011 4:53pm Mar 20, 2011 4:53pm
Monroe,

I've recently gone back to reading Darkstars post over again. They carry a lot of little nuggets and as Grkfx said this is how he learned.

One thing that I'm struggling with is finding other future events besides economic reports that can move the market. I have a few ideas as to why traders would enter the market but finding information that they would respond to and entering where you would presume they would is proving a little tricky.

Well back to Darkstars threads again maybe they'll shed some light!
  • #920
  • Mar 20, 2011 4:56pm Mar 20, 2011 4:56pm
more on options and spot fx.

http://www.investopedia.com/articles.../05/022305.asp

The range itself could be caused by hedging.. you can see the footprints on the chart.

they usually try and lock in prices at certain levels, usually round numbers and such, this usually happens against the trend if there is one. If there isn't one and it's ranging in a wider range, this is when breakouts are a horrible thing to trade.

In a trend, traders accumulate orders above these levels, and this is when breakouts work well. You'll see matching highs and tighter ranges until the corporate orders are filled, then it breaks.. but fast breakout move is caused by orderflow being built up above the H's/L's.
0 traders viewing now