Order Flow - Achieving the mindset

Trizzle,

You just summed up my theory of the mis price/inefficiency conundrum and the past few days I've made some massive gains in my knowledge.

There are tons of ways to exploit these.

One thing that has helped my theory is that price is lagging but only to sentiment, and when price is really lagging there stands a large opportunity to capitalize.

If any of you guys on here are struggling I would highly recommend reading Reminiscences of a Stock Operator by Edwin Lefèvre I've never had so many light bulb moments and I'm not even half way through.

I'm really feeling like I'm getting somewhere with all this now and it all starts to seem worth all the work I put into it. I hope everyone else who's has been on the same path within this thread will be there soon.

Good luck guys.

James.

I don't see it as price is lagging to sentiment actually. It's lagging to future sentiment I think, or mispriced to the general conditions.


I second this, highly....

But guys, there is clearly a difference between a mispricing and an inefficiency, I'm not sure what you're talking about here.

Monroe,

Thats a better way of saying it. The market will eventually price an event in but its this spread where you can seek to capitalize.

Regards,

James.

Yea I see it like... the market is constantly anticipating the future, pricing in the probabilities, but it's when a shitload of traders with size are wrong and need to get out, want to unload (liquidate), or want to get in cheaper or demand more liquidity then is availible at current price, or uninformed traders are trading after the fact where the mispricings come in... that kind of thing

Just wanted to clear my thinking here. What xxTrizzlexx is mentioning can be termed as very short term inefficiency. And what Redbaron is saying is more towards longer term mispricing. Am I thinking correctly here?

well the mispricings I think are caused by the inefficiencies... there seems to be all kinds of inefficiencies to find.

imo a mispricing is an inefficiency in itself - if the market were efficient it couldn't be mispriced. Price discovery itself is an inefficiency [or, is inefficient] because both informed and uninformed order flow are used to discover price, which can lead to mispricings.

right exactly what I am trying to say.

But with the example of the ECN platform software... it's not only the market that's inefficient... so in effect it's the inefficiencies that cause the mispricing that can be exploited. Thats why I define them as seperate things.

With Darkstars Ecn example I think you could call this a mechanical inefficiency.

What I am talking about is a price/sentiment inefficiency.

Price always discounts future events. Thats why and I'm to lazy to find a good example, but when an event results in a an outcome that has been priced into the market incorrectly there is massive price movement.

The reason behind that is that the new outcome is being priced in, and it is also done very quickly. Now what we were discussing a couple of pages back is that there are 2 ways to trade it.

1. We can enter before the outcome and are risk is of the outcome(Are we right or wrong).

2. We can enter very quickly after the event when sentiment is being priced in and risk execution(Slippage etc).

There are several ways to skin a cat but this is my line of thinking at the moment.

Hope this helps,

Hi, thank you to all whom have contributed to this thread. I've been learning a lot. You guys are very generous to put in all this time reading/researching and then sharing your thoughts.

One example could be this week's cable's price action? Cable made a new 3 weeks high after the higher than expected cpi data on Tuesday. Then it kept falling and fast. Higher cpi increases the chances of rate hikes, and cable was being bought on those expections until wait, 4.4 cpi? And they haven't even committed to a hike yet? Something is wrong. This is stagflation. Growth is weak, was negative in Q4 of last year, the Gvt is slashing spending, etc. Maybe I'm not sure I want to have my money in cable anymore... Then on Wednesday came the deception of the minutes (no extra member have voted for a hike) and the fall really accelerated.
So could it be that the UK inflation is now being seen more as a disease than a good thing? We all agree I believe, that currency pairs with a positive IRD will generally be bought. But the market must be confident that inflation will be kept under control right? I'm looking forward to seeing whether cable will fall in the weeks or months ahead....

good one

if u look whos money he manages,ull ind out that in 1960s rothchilsd gave him 3m ,look at the fund now worth 60billion or more,so rothchilds prob own about 40billion

and they say that they only have 1b ,
and u cant get more corrupt than rothchilds and their banking systems
they got their money when they started their banking syndicates by robbing people and taking their jewerly later melting selling the gold

that happened to me once too

i got filled 1 point below the price,i didnt even see the price move
i think the price actually moved,but it was faster than my eye,like in half a milisecond or someething the price moved back,

a good old post and example by grkfx about the stuff that we should be looking for longer term.

http://www.forexfactory.com/showpost...5&postcount=11

Forex is very different beast comparted to spread markets. Especially at times of rollovers when the markets are almost not moving but it doesnt mean they are not trading. Big institutions are moving money between contracts without care for the price and you are there to scalp them with very low risk. Liquidity stand around 50000 - 150000 lots a level sometimes, depends of product. You put your orders on the bid/ask and wait for your que (it can take 2-3 days sometimes but its worth it). It is not a tech inefficiency but gives very good opportunity nevertheless. Another good thing is:
Market opens - When the instability on outright products cause some really good fills on spreads, even 30 points from the market. My friend was filled on 30 lots at the market open with price 20 levels below. It is 600 lots profit straight at the market.

Hi OGW.

I'm very glad you brought this up. I've been observing cable closely the last 2 weeks. This is a very good orderflow example.

First of all have a look at the British economy very briefly. Things are not great, growth is very slow and they have their debt issues, although this seems to be the norm, but generally things are stable. Cable has been appreciating against the Dollar the last couple of months. Main reason probably since investors are expecting a rate increase.

Looking back at last week, cable was dropping on risk aversion due the nuclear reactor meltdown. This at the time was the current sentiment and it was diverging from the "fundamental trend" as I like to call it. Then just below 1.60 on GBPUSD, which was the lower end of the range, there was a reaction due to large sell orders being liquidated. (Price Action) Then price started moving up quite rapidly as it was being bought at "bargain prices".

With CPI data due a few days later, which was forecast to be more than the previous month and inflation and expectations of a rate increase taking center stage as the market drivers, it was a high probability that prices were going to continue up.

By Monday prices were continuing to move up and it was clear that large buy orders that was accumulated along the way haven't been liquidated. (There was no major reaction or retrace.)

On Tuesday when the CPI data came out higher than expected, cable continued moving up, but at this stage it was already priced in and there was a clear reaction as buyers started liquidating their positions.

Minutes being more dovish and eurozone debt issues are probably what's driving Cable down at the moment.

The purpose of this post goes along with the title of the thread. We need to achieve the mindset of order flow traders. What I have posted above first of all is just my opinion and yeah I know it's in hindsight. Also it's a simple example, but it's tying a couple of things together. Divergence in sentiment from the "fundamental trend," expectations of a near future event, price action (Trying to follow when the orders come into the market and getting liquidated on new information.)

We need to be aware of whats happening now, (Current sentiment) what factors and events could generate order flow in the near term, remember and follow the main market movers over a longer period of time (ex. inflation data and GDP in this case) and then obviously plan for the unexpected and keeping in mind things can change completely in a matter of seconds.

Have a great weekend all!
Cool Runnings...

thats a bit what algos do,only in miliseconds

i read sometimes they create 1milliom orders in a second,if it doesnt hit the price they want,it cancels
but that 1m ,that was about shares,not futures,but similar stuff occurs


i find u can find it if u go about 10 pages back i posted a good article about algos


more about soros
http://www.questionsquestions.net/do...ahl-soros.html

interesting that some people here think that soros has nothing to do with this thread,i was just reading this article and i hear that all the guys that he associates with are crooks ,they trade gold and many commodities,for major funds,which are tied to him and the elites,,they prob manipulate it ,and other commodities
cheat with getting the annoucement report before the release,and who creates orderflow,they do,and many others in the ring

about cable, before the CPI release, there was strong buy interest on a rumor going around the markets that CPI was much better then expected... it was priced in before the release.

something else to think about, HSBC also recommended to sell cable at 6380...

more: from ifr

The pullback from the Mar 22 1.6403 highs continued overnight with cable suffering following a bad retail sales result and Moodys comments that the risk of slower growth and weaker fiscal conditions could endanger the U.K. AAA rating. Cable opened at 1.6122 this morning and has traded sideways within a 1.6099/27 range in a subdued session, as is often the case following big moves offshore. EUR/GBP opened at 0.8792 and has traded a narrow 0.8787/03 range. EUR/GBP could get a boost tonight if talk of an agreement on the E.U. bailout fund proves to be correct. The FT carries a story saying that Angela Merkel has convinced the other members of the EU to restructure a new EUR500bln EU bail-out fund and given the uncertainty this removes from the market it should be positive for EUR and EUR crosses. GBP/JPY opened at 130.53 and has traded 130.35/60 so far. No data scheduled to end the week in the U.K. but the German Ifo data at 0900GMT is worth keeping an eye on. On a technical note, cable continues to look heavy and another test of the 1.5875/80 region possible while 1.6215 caps. (KS)

for those of u who read the article about soros,ull know what the guys on this site are talking about

http://www.globalresearch.ca/index.p...t=va&aid=23762

"Behind the Curtain

For many years the BIS kept a very low profile, operating behind the scenes in an abandoned hotel. It was here that decisions were reached to devalue or defend currencies, fix the price of gold, regulate offshore banking, and raise or lower short-term interest rates. In 1977, however, the BIS gave up its anonymity in exchange for more efficient headquarters. The new building has been described as “an eighteen story-high circular skyscraper that rises above the medieval city like some misplaced nuclear reactor.” It quickly became known as the “Tower of Basel.” Today the BIS has governmental immunity, pays no taxes, and has its own private police force.[5] It is, as Mayer Rothschild envisioned, above the law.

The BIS is now composed of 55 member nations, but the club that meets regularly in Basel is a much smaller group; and even within it, there is a hierarchy. In a 1983 article in Harper’s Magazine called “Ruling the World of Money,” Edward Jay Epstein wrote that where the real business gets done is in “a sort of inner club made up of the half dozen or so powerful central bankers who find themselves more or less in the same monetary boat” – those from Germany, the United States, Switzerland, Italy, Japan and England. Epstein said:

The prime value, which also seems to demarcate the inner club from the rest of the BIS members, is the firm belief that central banks should act independently of their home governments... A second and closely related belief of the inner club is that politicians should not be trusted to decide the fate of the international monetary system.

In 1974, the Basel Committee on Banking Supervision was created by the central bank Governors of the Group of 10 nations (now expanded to twenty). The BIS provides the twelve-member Secretariat for the Committee. The Committee, in turn, sets the rules for banking globally, including capital requirements and reserve controls. In a 2003 article titled “The Bank for International Settlements Calls for Global Currency,” Joan Veon wrote:

The BIS is where all of the world’s central banks meet to analyze the global economy and determine what course of action they will take next to put more money in their pockets, since they control the amount of money in circulation and how much interest they are going to charge governments and banks for borrowing from them...

When you understand that the BIS pulls the strings of the world’s monetary system, you then understand that they have the ability to create a financial boom or bust in a country. If that country is not doing what the money lenders want, then all they have to do is sell its currency.

The power of the BIS to make or break economies was demonstrated in 1988, when it issued a Basel Accord raising bank capital requirements from six percent to eight percent. By then, Japan had emerged as the world’s largest creditor; but Japan’s banks were less well capitalized than other major international banks. Raising the capital requirement forced them to cut back on lending, creating a recession in Japan like that suffered in the U.S. today. Property prices fell and loans went into default as the security for them shriveled up. A downward spiral followed, ending with the total bankruptcy of the banks. The banks had to be nationalized, although that word was not used in order to avoid criticism.

Among other “collateral damage” produced by the Basel Accords was a spate of suicides among Indian farmers unable to get loans. The BIS capital adequacy standards required loans to private borrowers to be “risk-weighted,” with the degree of risk determined by private rating agencies; farmers and small business owners could not afford the agencies’ fees. Banks therefore assigned one hundred percent risk to the loans, and then resisted extending credit to these “high-risk” borrowers because more capital was required to cover the loans. When the conscience of the nation was aroused by the Indian suicides, the government, lamenting the neglect of farmers by commercial banks, established a policy of ending the “financial exclusion” of the weak; but this step had little real effect on lending practices, due largely to the strictures imposed by the BIS from abroad.
"


Permit me to issue and control the money of a nation, and I care not who makes its laws.
Mayer Amschel Rothschild

rothchilds-soros-other organised monopolies owned by them-bis-world money control
=insider information or a big monopoly owned by these guys

I want in.... where's the application?

the application?