Order Flow - Achieving the mindset

hey nice work, that smells like dollar dollar bills ya'll!

Actually I haven't spent much time with AU, but i do remember hearing about the M&A deal, and posted a link the other day from forexlive where he was talking about that.

I'm going to go over all this stuff over the weekend.

Forgot to add,

We will have keep an eye on Data in US, actions of Fed, Eurozone situation and what happens in China.

Cuase any unexpected event could change the sentiment for short or mid term.
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Yup, Indeed... a lot to think about. But I'm done for now, it's friday... see you guys next week.

Yeah would have missed the news about M&A deal so thanks for posting it.

Have great weekend every one.
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Ah shit, one more thing, you have to be careful when FOMC speakers come on, especially with net dollar shorts right? that happened at exactly 12:15 and this guy is known for hawkish talk.

it doesnt annoy us,keep on talking brother
pour ur heart out
lol


@nasir khan
all my conspiracies are based on fact
i dont believe in crap,

i dont believe rba will hike rates yet,too many people will default
evryones complaining already that its to0o high

sorry but I'm clueless. What is fact? and What is crap?
thanks

ok
Leaked FEMA Training Video calling founding fathers terrorrists


heres a couple of good documentaries in there the government lies and later admits to training terrorists,did u know that the USA governmetn sends 100m dollars to pakistan,which they give to alkaida,al kaida was made by the usa to fight the russians,usa knows that the money to pakistan is being sent to terrorists but they still give it to them,thn they later say we need to fight the terrorist,and go invade pakistan beuild military bases,which is close to russia and china,its a strategically placed there on purpose

here the docos,in the here u have all the video footage of cia admitting to training terrorist to attack the twin towers,news reports,government documents,nsa cisa unclassified ,evrything,plus many architests and engineers for 911 truth,even the guy that designed the building ,say it was an inside job,the guy who owned it,say he was told its gonna come down,

looose change docu

Fema Camps

( in this movie they are acting,but the facts are real)

here about teh bohemian grove,a secret club for elite,where they do rituals
alex jones sneaked in 2001,and filmed the whole thing,heres a bit of it
bh video


heres a bohemian member,admitting the stuff they do in the bohemian grove




larry silverstein admits,that he was told that the building 7 was going to collapse


an fbi flyer calling consitution defenders terrorists
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The Cremation of Care - Enhanced Footage

Seems like the thread is getting off track a bit. Perhaps a new thread for the cloak and dagger stuff, so we can focus on order flow mindset in this one?

I have been reading the Stating the Obvious thread, one thing that stood out to me was darkstars comment about most people ignoring the 6 letters on top of the chart. So that got me thinking, what did he mean by that? Gaining a better understanding of the macroeconomic events that drive the two currency pairs in question? That was my take, so I will be spending some more time on that subject over the coming months.

I for one, never really thought much about those 6 letters until that comment jumped out at me. Duh!

Is there any way to apply Gutenberg-Richter law http://en.wikipedia.org/wiki/Gutenbe...%93Richter_law to order book ,so the orde book magnitude(frequency of orders and size of order) is mesurable by power laws: http://www.babypips.com/blogs/espipi...sen_scale.html

Stuff like that always reminds me of the roulette wheel at the casino. They have that board displaying all the previous numbers on it as if knowing that will help you pick better.

yep,if the price lasts for long,accompanied by high volume,that means the direction was supported by big money

i think thats as far u can get with magnitude calculation
if the price falls,on low volume,next volume up bar, that means low magnitude earthquake,next up bar,high volume,high magnitude

Hi All,I have been reading this thread and a bunch of others with regards to order flow trading. All awesome stuff. Thanks to everyone that has contributed.

I am working on understanding order flow and then to design a methodology to profit from it. Here are some thoughts...just thinking off the top of my head...(this may be right, wrong, partially right, etc.).....

To me, there are three main steps to understanding...1) obtaining a basic (and then more advanced) knowledge of the market microstructure,2) understanding more about the large players and their orders that hit the market (the who, the why, the when) and move price,3) figuring out what tools (orderflow info., etc)....that you will need to get this into a workable methodology for trading. This is a hard one because: a) I don't even know if it's possible to get the "inside info." that I am after (the who's doing what, or potentially doing what and when and why), and b) I don't like charts...except maybe looking at the dailies to see what techies might consider support/resistance/important levels, and how possibly the large players might utilize this info to their benefit (to either go with the herd mentality until finding a large liquidity pool to unload their positions and/or accumulate for a reversal). I really like the "numbers" when it comes to trading. Maybe I'm just not a visual kind of guy, but I hardly ever look at charts...partly because I don't have much faith in them, but also, I just like the flashing numbers of price quotes. So I'm thinking I am more geared towards the order book and time and sales than charts.

I am reminded of a video I have of a floor trader at the Merc who said, when asked if they used charts to trade off of...he said, "we ARE the charts/action. We transact and that interprets into what you see on your charts." To me, getting to the essence of order flow is doing what this guy alludes to....and has been mentioned on threads many times here at FF...it's the action going on BEYOND the charts.

What's China doing? What's Russia and the Middle Eastern sovereign wealth funds thinking and possibly looking to transact? Where's the liquidity pools for large players/orders to consume liquidity? When's Toyota looking to repatriate flows from overseas? When's a large M and A deal going down and wll it involve a cash transaction only or stocks? When are the large hedge funds coming in like Soros, Tudor, etc.? What large customer orders is Deutsche Bank holding and looking to process? Where are the large payoff option barriers at?

This would be the kind of info. and trading I would like to be doing. Unfortunately, I have my doubts that it's possible. But I do find it fascinating learning and possibly assembling at least a PART of this sort of way of thinking into my method.


Anthony

There's some quotes and insight from Paul Tudor Jones from the book More Money Than God about how he used to exploit the herd mentality several ways....one way was by sending an order down to the pit to "spook" the market to get it to do something...to start the avalanche and send price off in a particular direction. I'll post some quotes of it tomorrow. Pretty interesting how order flow on a short term basis is manipulated by large players taking advantage of herd mentality and retail strategies.

Charts are a valuable tool for me, I wouldn't not use them because someone says you don't need them. Forex is obviously a heavily technical market so they can be of great value. I think maybe they are just implying that the most important thing is understanding why and how price moves along with who and what moves it.

Floor traders and trading in the pits were different, they had the order flow in the pits. I am not saying you CAN'T trade without a chart of course.

The only orderflow info we can get is rumors and what the money center banks give us through news services like IFR, FXlive and the big news services like reuters/bloomberg, etc. I don't think you need the bank rumors at all.

Yes you should study market structure and micro-structure indeed. I'm no expert, but a good understanding of it sure helps.

I'm pretty much looking to fade concentrations of liquidity, looking for liquidity gaps, barriers, common obvious longer term TA that everyone see's along with trying to find what the market's main focus is, what's being priced in, trying to find the positioning... this type of stuff. None of it to me is any secret or new concept.

Has anyone thought about orderflow concepts in relation to news time? I haven't read through this entire thread, so if this has been addressed forgive me, but as far as I understand things traders often take positions before a news release. It seems like this policy could "trap" traders with a bad position, as others have hinted at, thereby providing an opportunity to capitalize upon their desire to get out of an undesirable position. any thoughts?

Hey Guys,

Well I am still in the Eurusd short by the skin of my teeth had to move my stop from b/e back to its original position, but I was fairly certain that the dominating sentiment in Europe was bearish due to the Portugal situation and that the orders would come in on the short side of the Eurusd, hence why I didn't want to give up my position.

Apart from the major European issues the Usd has got a few market moving releases this week but non seem to be negative to usd strength. If order flow is still being priced against the estimates of these releases then we can look at having a negative week for the Euro.

I may not put any trades on this week unless I see an extreme in sentiment against the current bearish outlook in the Euro zone.

So thats my Order Flow analysis for this week all the best and back to studying.

James.

Hi Monroe,

What I was saying about charts was I am more numbers-oriented. I can appreciate a math equation more so than a Picasso on the wall. I tend to get a better "feel" for the markets by watching price quotes and gauging momentum this way as opposed to charts. I think charts are good for looking at historical data to give some perspective...and for seeing what the technical traders are looking at and what they might consider improtant levels....but, for me, I just don't like charts for much else.

Everything you mentioned on what you are looking for is pretty much what I had in mind as well....fading liquidity (although I am sure there is a time when it might be best to go with it), how the market is positioned, etc.

Good stuff. Thanks for the input.

Here's some interesting quotes from More Money Than God on Paul Tudor Jones.....


On market positioning...."he assesses human reaction. There's a body of information and he assesses human reaction with respect to this information."

"it's a skill set, which is to have a feel for the market. By looking at prices and by talking to people, he would know how prices would behave, how many people are in the same position. He would know, for example, if a lot of people own the same position, in which case if things reverse they could suddenly get very ugly very quickly."

Here's the part on spooking the market...

a former floor trader speaking of a Jones technique......"So if you have a big order, you wait for a quiet time in the pit, then you go in the middle of it and start screaming as loud as you can that you are ready to sell a huge quantity. It is like yelling fire in a movie theater. You start a panic. You get the market going down, everyone is starting to sell, and then when this crescendos, you buy back whatever you sold at the start and more, thereby completing your order."

That was just a good example of what I was thinking on large orders creating a stir, taking advantage of herd mentality, then liquidating and then accumulating in the oppsite direction...how markets for a short period of time can be manipulated by a large trader/order.

One more quote...

"These maneuvers did not mean that Jones had boundless power over the markets. 'I can go into any market at just the right moment, by giving it a little gas on the upside, I can create the ILLUSION of a bull market.'"

"Jones was like a boy atop a mountain after a fresh snowfall; if a great mass of powder was ready to tumble down the slope, he could throw a well-aimed stone and set off an avalanche of money. If he could judge a market's potential for a move, Jones could set off a chain reaction at a time of his choosing - and be the first to win from it."


So I am definitely thinking that manipulation, if that is what you want to call it, can be another thing to consider and perhaps implement into a methodology....if possible. At least something to consider.