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  • #981
  • Mar 22, 2011 2:19pm Mar 22, 2011 2:19pm
Quoting redbaron1981
Monroe,

As Darkstar says hes looking for extremes in sentiment. What I would say is take a look at the Euro at the moment. Ok its been bullish on rumors of a rate change but I'm still thinking that the Portuguese issue is quite major.

Another quote from WSJ

[color=red]The political crisis comes at a delicate time. Portugal faces repayments of €4.23 billion ($6.02 billion) in debt next month. Uncertainty about the future course of economic policy ahead of an election would likely increase Portugal's already high borrowing costs, and...

Well I wouldn't go by EU "looking" over extended" because of some report from WSJ of the possibility of portugal needing a bailout, you're going to have to pay more attention to how that developes along with the bailout funds and others things going on right now.

Anyway, what level are we at, how were things last time we were at these levels, etc etc tons of questions to think about. Money seems to be flowing into the euro right now apparently. I also think you have to weigh out what that money is paying attention to or thinking about.
  • #982
  • Mar 22, 2011 2:23pm Mar 22, 2011 2:23pm
Quoting redbaron1981
After reading through lots of Darkstars posts several times this week I think this might help you guys with obtaining the order flow mindset.

Its well worth going through all Darkstars posts and lots of times. There so much information there for the taking. Thanks Grkfx for getting me on the right track.
Yes Darkstar's posts are all good. But I would spend a little bit more time on his posts before the year 2008. Back when I learned, thats all I had. So I think there is a lot of value in those. But it is just my opinion.
Private message me for a link to my order flow website.
  • #983
  • Mar 22, 2011 2:28pm Mar 22, 2011 2:28pm
Quoting redbaron1981
Monroe,

As Darkstar says hes looking for extremes in sentiment. What I would say is take a look at the Euro at the moment. Ok its been bullish on rumors of a rate change but I'm still thinking that the Portuguese issue is quite major.

Another quote from WSJ

[color=red]The political crisis comes at a delicate time. Portugal faces repayments of €4.23 billion ($6.02 billion) in debt next month. Uncertainty about the future course of economic policy ahead of an election would likely increase Portugal's already high borrowing costs, and make...
Lets take this as an hipotetical example,if we consider this a important market moving information,but not complete information. That is the condition we enter all of our trades in(I presume this because I know I don't have complete info...maybe someone has...I don't know).

How are we going to enter a trade on that piece of information...I mean,I am not going to just short the euro with 100 pip SL,just on that info!
This would be great info if I would have already been in a short trade,this could make me decide to manage the trade differently than I normaly would.

But when entering a trade I would want to be as precise as possible minimizing my drawdawn,thus looking for intraday misspricings,stophunts, option barrier plays... so I can have a BE as soon as possible.

IMO...
Am I going the right way here?

Orderflow entries....now there is a puzzle...so many possibilites....pfffffffff
  • #984
  • Mar 22, 2011 2:38pm Mar 22, 2011 2:38pm
Quoting Monroe
Well I wouldn't go by EU "looking" over extended" because of some report from WSJ of the possibility of Portugal needing a bailout, you're going to have to pay more attention to how that developes along with the bailout funds and others things going on right now.

Anyway, what level are we at, how were things last time we were at these levels, etc etc tons of questions to think about. Money seems to be flowing into the euro right now apparently. I also think you have to weigh out what that money is paying attention to or thinking about.
Guys,

I would say that what we are looking at is an event that will definitely move the market. I hate repeating quotes but.

"The market as a whole calculates fair value as a discount of the possible future outcomes for given events."

So I would say that the market does not have this event factored into its price, that is not until its released.

LasVahGoose: If there dumping Euros there dumping Euros. Its the same Euros in the Eurusd as the Eurchf so I'm thinking it will be across the board. I'm more looking at which pair has diverged the most away from sentiment and the Eurusd looks like a good one. But you made a very valid point and well worth looking into.

We'll all have to see what happens tomorow. Does anyone know what time the vote is?

James.
  • #985
  • Mar 22, 2011 2:50pm Mar 22, 2011 2:50pm
Quoting Tilt
Lets take this as an hipotetical example,if we consider this a important market moving information,but not complete information. That is the condition we enter all of our trades in(I presume this because I know I don't have complete info...maybe someone has...I don't know).

How are we going to enter a trade on that piece of information...I mean,I am not going to just short the euro with 100 pip SL,just on that info!
This would be great info if I would have already been in a short trade,this could make me decide to manage the trade differently...
I think you just answered your own question. entering pre news you have outcome risk and entering after the news you have execution risk. Its your choice.

scott89: You always seem so critical and skeptical about whats being posted here. I would love to hear your "views" instead of your "criticism".

Right I'm off to read DS posts pre 08 cheers Grkfx.

Cheers.
  • #986
  • Mar 22, 2011 2:51pm Mar 22, 2011 2:51pm
Quoting grkfx
Yes Darkstar's posts are all good. But I would spend a little bit more time on his posts before the year 2008. Back when I learned, thats all I had. So I think there is a lot of value in those. But it is just my opinion.
Did you have the chance to read and, perhaps, save something about the "Ooh sweet liquidity" thread?
  • #987
  • Mar 22, 2011 3:01pm Mar 22, 2011 3:01pm
Quoting redbaron1981
LasVahGoose: If there dumping Euros there dumping Euros. Its the same Euros in the Eurusd as the Eurchf so I'm thinking it will be across the board. I'm more looking at which pair has diverged the most away from sentiment and the Eurusd looks like a good one. But you made a very valid point and well worth looking into.
True, but you want to figure out if they are going to dump Euro's based on the vote in Portugal. What if that news really isn't as bad as to what is happening with the other side of the pair? Maybe the USD data is so bad that the austerity in Portugal doesn't look as bad, making it positive for the Euro. Just an example, I have no idea personally.

Austerity is going to happen in Portugal and then Italy. Neither of these countries will have the fortitude that Iceland had and tell the bankers to go F' themselves. My opinion and I think that is already baked in the cake.

The time to sell the Euro will be when EVERYONE is bullish and the market becomes lopsided, it will have to go down in order to regain balance.

I don't know, this stuff is over my head...
Don't wish it were easier, wish you were better. ~ Jim Rohn
  • #988
  • Mar 22, 2011 3:10pm Mar 22, 2011 3:10pm
Quoting LasVahGoose
I don't know, this stuff is over my head...
I hear you man... it's over mine too.

thinking back to some posts about concentrations of liquidity and there effect on price. It's been stated that price always reacts the same way, therefor I am assuming we can build a simple methodology around this fact somehow.
  • #989
  • Mar 22, 2011 4:03pm Mar 22, 2011 4:03pm
Quoting Monroe
I hear you man... it's over mine too.

thinking back to some posts about concentrations of liquidity and there effect on price. It's been stated that price always reacts the same way, therefor I am assuming we can build a simple methodology around this fact somehow.
Concentrations of Liquidity sounds like 'code' for area of consolidation. Buyers and Sellers are getting their orders filled with no problem (liquidity) and it is all concentrated in a range. A breakout play would be the simple method.

Now, if with the Order Flow mindset I can be 'reasonable certain' that price is going to move upward, then any break downward I could 'reasonable assume' is fake. I would buy into it (then when the sellers are trapped they have to cover their shorts and that propels price in my direction), I'll have a great entry at this point. Now I just sit back and wait for the break upward and let it trend to where ever....

Ahhh, if were that easy. Maybe for order flow traders it is...
Don't wish it were easier, wish you were better. ~ Jim Rohn
  • #990
  • Mar 22, 2011 4:09pm Mar 22, 2011 4:09pm
By the way, what I am working on is basically trying to figure out what the market might be pricing in, and then waiting for events or news that traps them which then causes them to want to get out asap, using market orders that will drive the move causing imbalances in demand/supply.

I guess, figuring out why price is moving and waiting for opportunities to capitalize on the mispricing or for a reason and location to hop in on it, (which would also be a mispricing).

It seems the most inefficient thing about markets is that humans trade them and the rules and inefficiencies of trade in the specific market. So why not try and capitalize on bad decisions of traders. So instead of making a bad trade, I will wait for others to do that...

So in essence, whatever will cause orders is what an orderflow trader is looking for....
  • #991
  • Mar 22, 2011 4:16pm Mar 22, 2011 4:16pm
Quoting LasVahGoose
Concentrations of Liquidity sounds like 'code' for area of consolidation....
Makes sense to me.
  • #992
  • Mar 22, 2011 4:19pm Mar 22, 2011 4:19pm
Quoting grkfx
The difference with the order flow trader is that the order flow trader knows the real reason why price moved. Since he knows the real reason why price moved, if they can break down those reasons into a system and figure out the next time that system will generate a signal, then that trader has a huge edge.
This is where i am stuck atm. All of my OF thinking is done on Fundies and News front. So i am trading one time events that will never happen again.

Its not like an MA crossover that happens every day in the same manner over and over again, which could be quantifiable and structured as a trading method with rules and could be backtested in the end.

On the other hand Fundamental events and scenarios are occurred only once in our lifetime. Take your "Merger deal between Prudential and AIA" it was one time event that wont happen again ever now.

I can understand how can we profit from such events with our own different tools to execute our profitable trades around them. But i cant see how we can build trading strategies around such non-recurring events.

After finding some useful peace of information by reading/filtering your way out of pile of news/articles/rumors etc,... u have finally came up with a trading scenario around that information that u think could be traded profitably. But u will also know that u will have to start again from zero next morning cause what u have found out does not happen every day. (well yeah a trader with OF mindset will find his way everyday though point of having a trading method does not seem to get solved here)

I also think that this where a lot of people are giving up on thinking further and turning their attention towards Option Barriers and Stop hunts. Because Options have more information tagged on them about price and offcourse they are everywhere on charts to offer some practice to learn trading them successfully, it gives people that hope that they are having somewhere in there subconscious to finally come up with a method to trade this OF information they have. (though they may not entertain the idea of creating methods and systems consciously because of the nature of discussions in this thread.) But thats my own opinion and could be very wrong about it.
.
  • #993
  • Mar 22, 2011 5:02pm Mar 22, 2011 5:02pm
Quoting nasir.khan
This is where i am stuck atm. All of my OF thinking is done on Fundies...
Well I think it might not be the event itself that is what you're looking for. You're looking for a system build around orderflow, so although the event might not be the same event happening over and over, the reactions to things are never changing because it's human nature. You're looking to find inefficiencies in the market which gives you a true edge.

Is an MA cross or a RSI signal a real edge? no definetly not, if so, I would not be here... I would be on the beach in some crazy paradise. You can be fooled into thinking it is and find all the historical data you need to curve fit a system around it, but in the end, if you're taking your trades based on that only, I can't see your account lasting long. Not to say those indicators have no use at all...
  • #994
  • Mar 22, 2011 5:37pm Mar 22, 2011 5:37pm
Quoting nasir.khan
I also think that this where a lot of people are giving up on thinking further and turning their attention towards Option Barriers and Stop hunts. ...
I agree

Now i'm looking at current sentiment. Maybe this is what is not on the chart but not really fundamental either.

I'm trying to look back at whatever pair moved the previous day and work out what moved it and then look at what i think the sentiment is for the current day and which pair will move. So basically the current daily focus

This week AUD/USD was the early mover, the possible reasons from the news sources seemed to be:

- market caught short stops triggered (don't buy this one, i thing stops were triggered by the sentiment)
- Sharemarkets up (need to do some further work on this)
- G7 agreed intervention increased appetite (this i think may be the most likely)
- Focus on Japan crisis lessens (think this may be a factor too)

Using this info i see today's focus as:
Sentiment should remain the same, AUD should drift up as appetite increases unless:
middle east crisis worsens reducing risk appetite and increasing oil prices or Japan nuclear situation worsens, again reducing risk appetite

But then i read this morning that one big bank is doing nearly all the AUD/USD buying and causing the move and all the above info is out the window!
  • #995
  • Mar 22, 2011 6:12pm Mar 22, 2011 6:12pm
Why would news move a market? Is it some moral duty of traders worldwide to trade in such a way that causes a market to reflect current value? Is that why people trade?

From my own understanding, a market is fundamentally setup to produce a natural orderflow. Where there are incentives, there will be orderflow. If you know the incentives, you can place your trades and wait.

Don't focus on trading events, stop hunts, barriers ect.. Focus on trading a market, arbitrage the sentiment.
  • #996
  • Mar 22, 2011 6:19pm Mar 22, 2011 6:19pm
Quoting havaiana
I agree

Now i'm looking at current sentiment. Maybe this is what is not on the chart but not really fundamental either.

I'm trying to look back at whatever pair moved the previous day and work out what moved it and then look at what i think the sentiment is for the current day and which pair will move. So basically the current daily focus

This week AUD/USD was the early mover, the possible reasons from the news sources seemed to be:

- market caught short stops triggered (don't buy this one, i thing stops were triggered by the sentiment)
-...
AUDUSD is a good buy, but not right now. I wouldn't buy it anyways. At certain places, floating profits become heavier than yields and the market will flush and THEN re-accumulate. I'd certainly buy at .95 down to .9 and hold back to parity though.
  • #997
  • Mar 22, 2011 6:39pm Mar 22, 2011 6:39pm
If you look at a weekly chart of AUDUSD you can see how strong the bids are--as traders take profits you can see that the market is eager to take on that open interest. Everyone wants those leveraged yields. The only downside to buying up above 1.0000 is the risk of more open interest liquidating and pushing hard against your trade, thus limiting the amount of leverage you could otherwise use at a lower price. If yields remain the same, wait for more folks profit taking trades to push price lower so you can get in at better prices.

I could be wrong and AUDUSD could keep heading up and be at 1.1 in three months, If I entered I'd keep it manageable for a 500-1000 pip drawdown.
  • #998
  • Mar 22, 2011 6:46pm Mar 22, 2011 6:46pm
Scotty B how are you doing these days? After that thread "quest for wisdom..." you started just curious as to where you are now. I remember reading your later posts and it seemed like you were putting it together for yourself.

There are many ways to trade the markets, you don't have to just place a trade and wait, or just arb sentiment. This may be your way, but not the only way. Do you think it's the most efficient way, or most profitable?
  • #999
  • Mar 22, 2011 6:52pm Mar 22, 2011 6:52pm
Quoting Monroe
Scotty B how are you doing these days? After that thread "quest for wisdom..." you started just curious as to where you are now. I remember reading your later posts and it seemed like you were putting it together for yourself.

There are many ways to trade the markets, you don't have to just place a trade and wait, or just arb sentiment. This may be your way, but not the only way. Do you think it's the most efficient way, or most profitable?
I'm doing okay for now. I'm working my way into the EURO, and into USDTRY. I see a good possibility of both trades being very nice. Even if EU doesn't raise rates next month, the EURO will continue to climb, though not as quickly.
Attached Image(s) (click to enlarge)
Click to Enlarge Name: EUROLONG.JPG Size: 159 KB
Click to Enlarge Name: USDTRYSHORT.JPG Size: 166 KB
  • #1,000
  • Mar 22, 2011 6:57pm Mar 22, 2011 6:57pm
Quoting Scotty B
I'm doing okay for now. I'm working my way into the EURO, and into USDTRY. I see a good possibility of both trades being very nice. Even if EU doesn't raise rates next month, the EURO will continue to climb, though not as quickly.
Nice man. From all your posts you seem like you deeply studied this shit and it's obvious that you have plenty of knowledge on micro-structure and trading, good to see it pay off. That was a great thread btw.

Nice charts... USDTRY... interesting.
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