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Order Flow - Achieving the mindset

  • #1,261
  • Apr 6, 2011 11:49pm Apr 6, 2011 11:49pm
Quoting Carnegie
Can you place a stop outside of the chart?
I really have thought about where to place the stops, or as grk says "a place where the market has to go thru several mispricings".. but then the problem lies in.. what is a mispricing?
I dont know about off the chart, but off the screen is a start. Adjust your position size while maintaining the same risk % so that if your stop is hit, you won't care and it'll have a couple days to move.

Volatility is a mistress as much as she is a bitch. Sometimes you'll enter a trade to have it go profit off the bat, then do the exact same thing and you'll be stopped out before you know it. This is what messes with your psyche.. Being rewarded & punished for the same action with no explanation.
  • #1,262
  • Apr 7, 2011 12:07am Apr 7, 2011 12:07am
Quoting EmeraldEyes

Volatility is a mistress as much as she is a bitch.
Well that's a new one...
Time hides Nothing
  • #1,263
  • Apr 7, 2011 3:10am Apr 7, 2011 3:10am
Quoting grkfx
The whole place a trade, close your computer, and come back at a later point is a bit overrated at times....
You are right grkfx, I just suggested him to do that at the beginning to get used to the fact that you cannot touch a trade already open for a psychological fear.
This is what helped me.
Ok, I never traded more than 100 euros, because that's what my first account is, I guess I may have more problems handling 10.000 or even 100.000 positions (not leaveraged), but as for now I'm good with it.

I have to develope the "close the trade because the sentiment has changed" mindset yet. There's a little edge between closing a trade for the fear of loss and closing a trade because you think the sentiment changed, and it's our duty to difference them.
  • #1,264
  • Apr 7, 2011 3:56am Apr 7, 2011 3:56am
Quoting scott89
You are right grkfx, I just suggested him to do that at the beginning to get used to the fact that you cannot touch a trade already open for a psychological fear.
This is what helped me.
Ok, I never traded more than 100 euros, because that's what my first account is, I guess I may have more problems handling 10.000 or even 100.000 positions (not leaveraged), but as for now I'm good with it.

I have to develope the "close the trade because the sentiment has changed" mindset yet. There's a little edge between closing a trade for the fear of...
Yes I know what you are talking about. It is standard trader psychology and money management strategy to make sure you follow your trading rules and let the trade play out.

I am just saying that for true order flow traders then they operate at a slightly different level, or completely different level, depending on how you look at it. You won't be able to get there at the beginning, but you should be able to grow into it.

So for example you have a trade on, and it has a 100 pip stop loss on, and the trade is bobbing in and out of profit. All of sudden you decide to exit the trade at -10 pips loss because you notice the fundamental value has changed. Since you know the fundamental/sentiment has changed that means it threatens your stop loss 100 pips away. So the prudent measure would be to exit the trade at the 10 pip loss instead of the 100 pip loss. In an ideal situation you would reverse and take the opposite side of the trade as well.

This is holds especially true when you are daytrading and trying to be nimble with leveraged pips. You need to figure out when the fundamental/sentiment value changes and when your stop is going to get smoked. You won't always be able to do it, but a few occasions here and there can save you pips.

Now I usually don't use it that much for exiting trades at small losses. But I usually use it a lot when knowing when to take profits. You could be sitting on a few hundred pips profit, but your trailing stop has not gotten hit yet. Your order flow knowledge shows you something and tells you its time to take profit, or else a lot of your paper profit can evaporate.

I operate under the principle that the market can change fundamental/sentiment value in an instant if the right order flow conditions/scenario presents itself. The market at any moment can decide to make a 30 pip move, 50 pip move, 100 pip move, or begin the trend for a 1,000 pip run, etc in both directions. It is all about order flow and liquidity.

You won't be able to do it in the beginning, but you should be aware of the ideal situation, ideal order flow trades, ideal order flow mindset so you can eventually grow into that new 'you'.
Private message me for a link to my order flow website.
  • #1,265
  • Apr 7, 2011 4:27am Apr 7, 2011 4:27am
Quoting grkfx
So for example you have a trade on, and it has a 100 pip stop loss on, and the trade is bobbing in and out of profit. All of sudden you decide to exit the trade at -10 pips loss because you notice the fundamental value has changed. Since you know the fundamental/sentiment has changed that means it threatens your stop loss 100 pips away. So the prudent measure would be to exit the trade at the 10 pip loss instead of the 100 pip loss. In an ideal situation you would reverse and take the opposite side of the trade as well.
Great example.

I'd take a .1R loss any day when market has changed against me.
  • #1,266
  • Apr 7, 2011 5:01am Apr 7, 2011 5:01am
There are allot of replies I want look at and think deeply about and reply, will do that later!

Quoting grkfx
You need to figure out when the fundamental/sentiment value changes and when your stop is going to get smoked. You won't always be able to do it, but a few occasions here and there can save you pips.
This was exactly what I was thinking about, but I think you guys kinda misunderstand me.. What I was saying is that my psychology is so fucked, I'm finding reasons for the trade to blow up instead of trying to be calm and rational.

As you guys said a 5 pip move is more or less a sneeze in the market. But then why is it happening?
Why is the market moving against me when there is no reason to (no news no bullshit - nothing).

Take this example:
Done my research, decided to go long.
Enter long and market moves 5-7 pips in my favour, then start to move down SHARPLY putting me in a DD of let's say 5 pips..
Now I look around like a maniac to see if shit has changed; news, fundamentals, sentiment, all of it.
Nothing has changed.
So why is it moving against me? THAT'S the way I think. Obviously it is wrong, but the problem with me is that I always have to know deeply what stuff is before I do it, so I am just trying to find explanations to this behavior.

real world example:
lets say I stop hunted and bought right at the bottom where market reverses.. and then moves up in my favour like 5 pips, then it turns around sharply to move down, now are they huntng me?

Take care
  • #1,267
  • Apr 7, 2011 5:23am Apr 7, 2011 5:23am
Anyone just see that option at 85.0 on the $yen get nailed!
  • #1,268
  • Apr 7, 2011 5:26am Apr 7, 2011 5:26am
This was from IFR a few mins before:

LONDON, Apr 7 (IFR) - USD/JPY has been sold down to 85.05 by a Far Eastern name with alot of USDs to get rid of. Japanese importers are awaiting dips to buy with a large bid said to be at 85.00, there is also a large strike set to expire at 85.00 (in the region of 300/400mn USDs) at the NY cut
  • #1,269
  • Apr 7, 2011 6:40am Apr 7, 2011 6:40am
Quoting redbaron1981
This was from IFR a few mins before:

LONDON, Apr 7 (IFR) - USD/JPY has been sold down to 85.05 by a Far Eastern name with alot of USDs to get rid of. Japanese importers are awaiting dips to buy with a large bid said to be at 85.00, there is also a large strike set to expire at 85.00 (in the region of 300/400mn USDs) at the NY cut
This is plain vanilla option, there's no hunt/defence game here, just hedging.
  • #1,270
  • Apr 7, 2011 6:45am Apr 7, 2011 6:45am
Quoting CindyXXXX
Good luck dude/ knock em the fk out!

I gotta get off the mic here but it's the most boring Saturday night I've had in a while and I'm home alone on the forum so what can I say...

Just wondering, I know from reading a few of DS's posts that he personally specialized in the USD/JPY (still? I'm not sure)

GRK do you specialize in some specific pair?

When I start to think of specializing in AUD/USD (being an Aussie n all) to learn, this seems to make the mountain that bit smaller and seems like an obvious way to go... But just wondering if...
Sorry too late to reply but was busy this week and wanted to have go at this one.

I think specializing a pair is not a good thing to do when u talking about Fundy and Sentiment driven OF trading mentality.

I mean if your a technical trader and When looking at 1 pair for all day u may end up with some crappy SR and Trendlines and take a trade that is not there,. really. But looking at 4-5 more pairs give you more freedom and u can be more picky.

Similarly as an OF trader, if u have only one pair and you are digging up every piece of little info that u can and than put your head in it about it all day, it could do good to your trading but it also have a chance of you pushing things and while wanting to trade desperately it may start to influence your analysis in order get in the market.

On the other hand if you are just diggin up stuff about anything u can get, you could end up with a very piece of info and plan that could surly make you some pips and also it give u more opportunities and u can be more picky.

Fundamentally speaking if u research about just one economy i.e specializing it again it could be a little disappointing at times as it will take longer for opportunities to appear and again a fear of pushing things hard.

but if you can come up with analyzing 6-7 or even 3-4 major economies u can come up with most stronger one's and weaker one's more frequently thus more trading opportunities and better one's.

Also i dont understand what's with the thing pair, U analyse a currency actually right? and than match it with another one to come up with a pair and a direction (weaker one vs stronger one). So if u analyse 4 economies or say currencies you would have more than 4 pairs to trade actually.

Just my thoughts not sure if i really did put things as i wanted too.
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  • #1,271
  • Apr 7, 2011 6:52am Apr 7, 2011 6:52am
EmeraldEyes,

Alittle crude for some maybe, but spot on.

________________________
  • #1,272
  • Apr 7, 2011 7:32am Apr 7, 2011 7:32am
grkfx, could you make me 2 o 3 examples of events that could cause a change in foundamental? If it's not too specific to tell.

Another thing, as an Orderflow Trader, could you notice a shift in sentiment by just looking at the chart? Or you need external info to know? Or maybe both, external info to know the cause, and the chart to check out the reaction in real time.

Am I wrong when I say that the sentiment is just "guessable", and not determinable for sure?

Sorry, a lot of questios hehehe

Edit: talking about Daytrading as for now As far as I know, Daytrading sentiment is influenced a lot by stophunts and option barriers, but I don't know what else.
  • #1,273
  • Apr 7, 2011 8:44am Apr 7, 2011 8:44am
Does anyone know if there's any use of the options delta info? I know Darkstar dug into the stuff some time ago but he hasn't commented on it since.
  • #1,274
  • Apr 7, 2011 9:21am Apr 7, 2011 9:21am
Quoting seagreen
Does anyone know if there's any use of the options delta info? I know Darkstar dug into the stuff some time ago but he hasn't commented on it since.
It has implications on vanillas..

BTW I was wondering.. does anyone know how to "test" a system? No backtesting MT4 bullshit but real testing if a concept works or not. Never really dug into that and truth is, I don't know shit about it.
The more I think about it, the concept of Risk:Reward doesnt mean anything to a trade because I can place a stop that will be hit 110% and a reward making me to the new Buffet but that still doesnt help the trade.
Maybe this is more of MM, should I start a new thread maybe?

Take care
  • #1,275
  • Apr 7, 2011 9:33am Apr 7, 2011 9:33am
Quoting Carnegie
It has implications on vanillas..

BTW I was wondering.. does anyone know how to "test" a system? No backtesting MT4 bullshit but real testing if a concept works or not. Never really dug into that and truth is, I don't know shit about it.
The more I think about it, the concept of Risk:Reward doesnt mean anything to a trade because I can place a stop that will be hit 110% and a reward making me to the new Buffet but that still doesnt help the trade.
Maybe this is more of MM, should I start a new thread maybe?

Take care
i remember back then i used to test ideas with 100-1000 units trade size. Small enough that if i lose it wouldn't kill me but just big enough to enjoy a meal or two if it is profitable. The idea is to not only test the tehcnical aspect of the method but the psych required to execute that method flawlessly. So i think you need real money to do that.
  • #1,276
  • Apr 7, 2011 10:50am Apr 7, 2011 10:50am
Quoting Carnegie
Allright you know the deal. Live and all.

The only thing I have to say is that my psychology is fucked. I know there are a million threads about psychology but people dont trade like we do so I need some OF thoughts..

Today I placed an awesome trade seriously, 0,5 pips from bottom. Then it moved up 5-7 pips and then moved down quite fast so it closed it immediately. The fucked up shit is that it turned around in a jiffy and continued and never looked back.

Why did I do this? Why did I feel this? How can I tackle this problem?
Need some...
Its not even a week since u went live, Psychology is all about self discovery, it takes time to get to know your strengths and weaknesses and than takes more time to work on both of them after that. So be patient keep note of your behavior to see what king of a trader you are.

Also one thing about psychology, yeah people will tell that u need to work on weaknesses i.e greed, fear,.... but dont get sucked into it,.... put more effort in maximizing your strengths and using them. Build your methods on the foundations of your strengths not on protecting your weaknesses.

You know i read somewhere that Tiger woods spend more time on perfecting his best shots rather than getting better at his not so good ones.
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  • #1,277
  • Apr 7, 2011 10:58am Apr 7, 2011 10:58am
Quoting nasir.khan
Its not even a week since u went live, Psychology is all about self discovery, it takes time to get to know your strengths and weaknesses and than takes more time to work on both of them after that. So be patient keep note of your behavior to see what king of a trader you are.

Also one thing about psychology, yeah people will tell that u need to work on weaknesses i.e greed, fear,.... but dont get sucked into it,.... put more effort in maximizing your strengths and using them. Build your methods on the foundations of your strengths not on protecting...
Nasir that's very interesting point of view that I have never heard of before.
Thank you for expanding my horizon
But now I have a problem...trying to think what my strengths are,and I don't think of any
Could you give an example of that....to se what actualy are strengts in trading. Cuz weaknesses,i know what they are.

Regards
  • #1,278
  • Apr 7, 2011 11:11am Apr 7, 2011 11:11am
I like the idea of working on your strengths, but I think it would be a mistake to ignore your weaknesses. Strengthening our weaknesses is where the greatest opportunity for personal improvement comes from. If I am a great three point shooter but I suck at dribbling, I can keep shooting a thousand threes for a month and get a little bit better at shooting threes, but I would still suck at dribbling, and my overall game would not improve much.

However, spending two weeks doing nothing but dribbling drills will make a marked improvement on my game, much larger than just focusing on my strength in 3 point shooting.

The point I was trying to make with my earlier post perhaps got lost on a few, and that's ok, but I hope you did not discount it Carnegie. I see myself in some of your posts, the anger and frustration is showing through in them, and I would bet it has nothing to do with your trading results. There are deeper issues (nothing to be ashamed of, we all have them) that need to be addressed.

Three links I will share, because reading your "my psychology is phucked' post yesterday reminded me of one of my post from a few years ago. The first is my post, the second was FTI's response to me. I ignored him, and the result was a lot of pain and lost money (no regrets though)

my post
http://www.forexfactory.com/showpost...postcount=1362

FTI first response
http://www.forexfactory.com/showpost...postcount=1370

FTI second response
http://www.forexfactory.com/showpost...postcount=1372

I think this is a very important crossroads for you, one where if you take the hard road it might save you some heartache and money. The easy road IMO is ignoring the root causes of your day yesterday. But it will catch up to you. Because you can't hide from yourself in the financial markets.
  • #1,279
  • Apr 7, 2011 12:11pm Apr 7, 2011 12:11pm
Quoting Tilt
Nasir that's very interesting point of view
But now I have a problem...trying to think what my strengths are,and I don't think of any
Could you give an example of that....to se what actualy are strengts in trading. Cuz weaknesses,i know what they are.
....
u dont think of any... or u think u dont have any?

strength - anything positive
weakness - anything negative.

maybe u arent thinking hard enough. generally, each one of us has strengths & weaknesses.
assuming u really dont have any strength/strong attributes... identify all your weaknesses & find ways to convert them into strength/s.
  • #1,280
  • Edited 12:41pm Apr 7, 2011 12:29pm | Edited 12:41pm
Quoting Tilt
Nasir that's very interesting point of view that I have never heard of before.
Thank you for expanding my horizon
But now I have a problem...trying to think what my strengths are,and I don't think of any
Could you give an example of that....to se what actualy are strengts in trading. Cuz weaknesses,i know what they are.

Regards
Well keep a track of what are your emotion during different stages of the day or say trades. like,

How do u feel before opening a trade? Are u driven by fear or greed? Greed will make you over-leverage and overtrade and fear will make you not to take the trade in the first place or cut it early.

What u want to do when you have a trade in drawdown (but reasons are still there to stay in it and it dint reached ur SL)? u wait for it to come to BE to cut, add more to it or cut small portions of it while it keeps moving against you? Similarly how do your feel when u have a trade in profit.

So keep notes about your behavior in different stages of a trade and after some months u will know about most of your weaks and strengths.

Now to give u an example,

Lets say there is a trader who is basically driven by greed. He overtrades, takes more risk at times bigger than what his rules say.

Now obviously his weakness is his greed. If he did not started to work on to eliminate his greed it will cause him to loose everything eventually.

But on the other hand he can develop a strength based on his greedy nature. That could be staying longer in a trade. Cause of his nature he may be comfortable with a trade in drawdown for longer than usual traders and wait for it to turn profitable and when it does so he would further wait to get his profit bigger and bigger. On the other hand more normal and fear driven traders wont be able to do comfortably the same thing so we can attribute it as his strength.

Now he has his weakness in face of Overtrading, Overleveraging and strength in holding onto profitable trades longer. So 2-3 winning trades can pay for many loosing trades. Also staying longer in trade will automatically eliminate his overtrading problem and with less chances to trade there will be less times he will overlevereag.

So what he should do is to structure his trading method that compensates his strength.His entries and MM should allow him to stay longer in profitable trades and also should add to his positions as they run in his direction to payoff for his looses. There are people who just have one-two winning trades a year but when they happen they payoff big.

So a pretty much flawed example but i hope u get what i mean, If u still dont get it send me a PM so we dont derail the thread.

"The speculator's chief enemies are always boring from
within. It is inseparable from human nature to hope and to fear.
In speculation when the market goes against you -- you hope that
every day will be the last day and you lose more than you should
had you not listened to hope -- to the same ally that is so
potent a success-bringer to empire builders and pioneers, big
and little. And when the market goes your way you become fearful
that the next day will take away your profit, and you get out
too soon. Fear keeps you from making as much money as you ought
to. The successful trader has to fight these two deep-seated
instincts. He has to reverse what you might call his natural
impulses. Instead of hoping he must fear; instead of fearing he
must hope. He must fear that his loss may develop into a much
bigger loss, and hope that his profit may become a big profit.
It is absolutely wrong to gamble in stocks the way the average
man does."

ROASO
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