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  • #961
  • Jun 7, 2011 10:00am Jun 7, 2011 10:00am
I can confirm that (though was never privileged to received any direct tutoring or anything like that) it was by reading Darkstar's posts that I started thinking about this, tried to connect the dots, and started looking at the market from that new perspective. He also indeed gets all credit for the cool term "orderflow". I don't remember anyone using it before.
  • #962
  • Jun 7, 2011 1:52pm Jun 7, 2011 1:52pm
Quoting Marv
I can confirm that (though was never privileged to received any direct tutoring or anything like that) it was by reading Darkstar's posts that I started thinking about this, tried to connect the dots, and started looking at the market from that new perspective. He also indeed gets all credit for the cool term "orderflow". I don't remember anyone using it before.
As retail advances, it's bound to re-discover decades old research of the pros.

Order-flow articles from 10 years before FF was born: http://scholar.google.com/scholar?q=orderflow&as_ylo=1992&as_yhi=1994 (http://scholar.google.com/scholar?hl=en&q=orderflow&btnG=Search&as_sdt=0%2C5&as_ylo=1992&as_yhi=1994&as_vis=0)

Ten years from now this forum maybe will talk about colocation, dispersion, volatility surfaces or quantitative news analysis.
  • #963
  • Jun 7, 2011 2:23pm Jun 7, 2011 2:23pm
Quoting Adal
Order-flow articles from 10 years before FF was born: http://scholar.google.com/scholar?q=orderflow&as_ylo=1992&as_yhi=1994 (http://scholar.google.com/scholar?hl=en&q=orderflow&btnG=Search&as_sdt=0%2C5&as_ylo=1992&as_yhi=1994&as_vis=0)
Yes but I don't think the term had ever been used as a trading methodology before Darkstar, had it? It simply meant the flow of orders in the orderbook, not a way to actually trade.

Quoting Adal
As retail advances, it's bound to re-discover decades old research of the pros.

...

Ten years from now this forum maybe will talk about colocation, dispersion, volatility surfaces or quantitative news analysis.
Ten years from now I'd be 33 years old, so I'll definitely be looking forward to that.
  • #964
  • Jun 7, 2011 2:31pm Jun 7, 2011 2:31pm
Quoting Marv
Yes but I don't think the term had ever been used as a trading methodology before Darkstar, had it? It simply meant the flow of orders in the orderbook, not a way to actually trade.



Ten years from now I'd be 33 years old, so I'll definitely be looking forward to that.
what about paul rotter? He trades the order book since years. I think that trading methodology is well known among the pros.
  • #965
  • Jun 7, 2011 2:33pm Jun 7, 2011 2:33pm
Quoting Marv
Yes but I don't think the term had ever been used as a trading methodology before Darkstar, had it? It simply meant the flow of orders in the orderbook, not a way to actually trade.
What do you think this research was done for? Fun? Unfortunately all of those articles are still not free.

From one except:
Quote
Yet, they also argue that this post-weekend order flow will be biased toward sell transactions. As a result, market-makers on Monday may not only face a more one-sided order flow from individuals, but decreased liquidity from institutional investors as well.
That sound very much like tradable stuff.

Another one:
Quote
However, unlike competitive market makers who are able to share the inventory risk, the exchange specialist is often obliged to absorb a large part of the imbalance in order flow. This leads us to predict higher inventory holding costs for the exchanges.
Orderflow imbalance? That sounds like Darkstar

Don't forget that a market maker is basically an order flow trader by definition.
  • #966
  • Jun 7, 2011 5:38pm Jun 7, 2011 5:38pm
Quoting Adal
What do you think this research was done for? Fun? Unfortunately all of those articles are still not free.

From one except:
That sound very much like tradable stuff.

Another one:
Orderflow imbalance? That sounds like Darkstar

Don't forget that a market maker is basically an order flow trader by definition.
There is a big difference between order flow and Order Flow Trading.

Order flow is a common Market Microstructure term used to describe a sequence of orders. It is neither a method nor a science... it is simply a description of a process.

There is plenty of academic literature that utilizes the term "order flow" because there are plenty of articles that discuss market microstructure and you can't get very far in microstructure without acknowledging that orders occur in a sequence.

On a related, but substantially different note, there are many institutions that utilize the principles of market microstructure to exploit their internal order book for profits. Some examples of this are front-running, intermarket arbitrage, and high frequency trading.
All of those examples exploit order flow (a sequence of orders), but that does not mean they are engaged in "Order Flow Trading."

Order Flow Trading is a metagame analysis technique for predicting future trader behavior. It short it relies on the premise that by knowing what traders are going to do, you can construct an approximated order book and THEN exploit the sequence of orders for profits. And as far as I can tell, prior to its development, by me, in 2006, the concept did not exist.

Does that mean I am the only person in the 3000 year history of financial markets to exploit the market in this way? Probably not. However, I am the first person to turn it into a unified trading methodology, which can be taught to aspiring traders (that I know of anyway).

So unless or until a document can be found that describes that concept outline above (under any name), I'm going to continue to believe that I created it, from scratch, on my own, and taught it (directly or indirectly) to everyone who is currently engaged in the discipline.

Hopefully that clears things up a bit.
  • #967
  • Jun 7, 2011 6:25pm Jun 7, 2011 6:25pm
Quoting Darkstar
All of those examples exploit order flow (a sequence of orders), but that does not mean they are engaged in "Order Flow Trading."
I think a better analogy would be that Deutsche Bank is doing "DB Order Flow Trading (TM)", while you are doing "Darkstar Order Flow Trading (TM)". Both use most of the same building blocks (knowing or guessing current positions, future flows, stop locations, sentiment, liquidity gaps, ....) but arranged in a different and proprietary way.

Quote
Order Flow Trading is a metagame analysis technique for predicting future trader behavior. It short it relies on the premise that by knowing what traders are going to do, you can construct an approximated order book and THEN exploit the sequence of orders for profits. And as far as I can tell, prior to its development, by me, in 2006, the concept did not exist.

Strictly by this definition fading a bubble is order-flow trading - you see that everybody is buying, is getting long and then you anticipate their hasty exit. Some of the trades in "Reminiscence of a ..." also fit this description. I'll venture saying that what most people here assume is order-flow trading existed before 2006, but not under this umbrella name.

However your own realization of these concepts under the "Orderflow Trading" brand together with everything surrounding it is indeed your creation. Also the fact that you (and others) shifted FF attention from losing 100% chart based TA to more complex forms of trading.
  • #968
  • Jun 7, 2011 6:28pm Jun 7, 2011 6:28pm
I can agree with that.
  • #969
  • Jun 7, 2011 6:48pm Jun 7, 2011 6:48pm
Quoting Adal

Also the fact that you (and others) shifted FF attention from losing 100% chart based TA to more complex forms of trading.
Amen!
  • #970
  • Edited 1:23am Jun 8, 2011 1:04am | Edited 1:23am
Quoting Marv
I can confirm that (though was never privileged to received any direct tutoring or anything like that) it was by reading Darkstar's posts that I started thinking about this, tried to connect the dots, and started looking at the market from that new perspective. He also indeed gets all credit for the cool term "orderflow". I don't remember anyone using it before.
Amen to that mate.

To me from current understanding "order flow trading" is, as SKFX has said, "thinking about the white spaces on the charts" and who might be motivated to take action there... and why.
One Mind, Any Market
  • #971
  • Jun 8, 2011 1:12am Jun 8, 2011 1:12am
I read the book 'beat the dealer' awhile ago and then thought... hey I gotta go back and read that Darkstar guy... so yea, props to the DS on "Order Flow Trading".

By that time there was this thread and Scotty B's thread and all his old posts on news trading, liquidity, etc... and there was someone on his vouch list that also inspired. Also reading some material on market microstructure and structure of the forex market.

It never really seemed that "vague" and "cryptic" to me, but to many it was/is for some reason. Maybe cause they always have their mind set on decrypting a holy grail...
  • #972
  • Jun 8, 2011 1:15am Jun 8, 2011 1:15am
Quoting Darkstar
I didn't learn it so much as create it from nothing. After I read Reminesences of a Stock Operator I was struck with some ideas about how and why prices change. That led me into studying microstructure and thinking deeply about the people who participate in the market. Roughly 2 years later, I started making assloads of money and felt the need to share some of what I had discovered.

When I started sharing, people asked what kind of trading I was engaged in. The answer I came up with was "Order Flow Trading" and that was the origin of the...
Darkstar, since you're active on this thread now, I'd just like to take this opportunity to say thank you for helping to shed light on this perspective of the markets.

Learning to think in terms of the market and it's participants has been a tremendous additional tool. So yes, THANKS.

Quick question:
You once mentioned that there are times when stops are staggered in clusters and if you get in in size (which I assume you've done several times) you can pay off your kid's college tuition in that one trade.

I do understand the mechanics to a certain extent.. ie: multiple stops + barriers triggered leading to a massive offer/no-bid kinda of market which cascades.

How would you anticipate something like that happening?
My experience in this has been limited to being pre-positioned, then seeing an event drive the market insanely bid/no-offer. Abit stuck on how to _anticipate_ these mechanics happening though.

If you don't want to answer on the forum, PM is fine too.
One Mind, Any Market
  • #973
  • Jun 8, 2011 2:12am Jun 8, 2011 2:12am
Quoting Darkstar

However, I am the first person to turn it into a unified trading methodology, which can be taught to aspiring traders (that I know of anyway).

So unless or until a document can be found that describes that concept outline above (under any name), I'm going to continue to believe that I created it, from scratch, on my own, and taught it (directly or indirectly) to everyone who is currently engaged in the discipline.



really?



wish you all the best to you!
  • #974
  • Jun 8, 2011 5:09am Jun 8, 2011 5:09am
Quoting triger88990


really?



wish you all the best to you!
Says the guy who showed up in 2009...

Care to elaborate?
  • #975
  • Jun 8, 2011 7:41am Jun 8, 2011 7:41am
Well, I am still in therapy using puppets after Al Gore said he invented the internet.

Just a little kidding!

Thank you to Dark Star and many others for opening my eyes to how I view the market now.

http://www.youtube.com/watch?v=RZGnUTN11Jo
  • #976
  • Jun 8, 2011 2:51pm Jun 8, 2011 2:51pm
Yesterday there was some rough commentary about the dollar. Perfect place to buy EUR/USD? Maybe if you are impulsive and like losing money. Is it a coincidence that it fell 120 pips today, or perhaps the perfect opportunity for a large entry into a long position, 120 pips cheaper, for someone smarter than you.

Am I thinking about this the right way? It sounds like it is all about option barriers and fundies, for you, DS.
  • #977
  • Jun 8, 2011 3:51pm Jun 8, 2011 3:51pm
Quoting RichFWebb
Yesterday there was some rough commentary about the dollar. Perfect place to buy EUR/USD? Maybe if you are impulsive and like losing money. Is it a coincidence that it fell 120 pips today, or perhaps the perfect opportunity for a large entry into a long position, 120 pips cheaper, for someone smarter than you.

Am I thinking about this the right way? It sounds like it is all about option barriers and fundies, for you, DS.
exactly. You never know WHO is behind a price move, but the current market enviroment suggests that buyers will pick the market right back up. I don't think we'll see much below 1.45 if at all. I'm personally watching 1.4550. I'm targeting 1.5 and beyond.
  • #978
  • Edited 5:33pm Jun 8, 2011 5:08pm | Edited 5:33pm
Quoting Scotty B
exactly. You never know WHO is behind a price move, but the current market enviroment suggests that buyers will pick the market right back up. I don't think we'll see much below 1.45 if at all. I'm personally watching 1.4550. I'm targeting 1.5 and beyond.
I agree, perhaps a pop under 1.4550 then a hard squeeze.... shouldn't go down much before tomorrow at least.

although 1.4650 and a drop would be a nice H&S...
  • #979
  • Jun 9, 2011 2:05am Jun 9, 2011 2:05am
Anyone watching the EUR?

Textbook.
  • #980
  • Jun 10, 2011 1:09pm Jun 10, 2011 1:09pm
"Unexpected" drop in the Eur/USD
Perfect bearish trendline on the daily.
Upcoming rate hike and greek aid package..
Retail short to long 5:1 - the kicker!

Hello vacuum. Perfect time to BUY around 4450

What went wrong?

Am I looking at the OF / fundamentals wrong or was it just a Bad Entry, good outlook, try again monday?

The funny thing is I was short at 4550... 2 pip SL, If only I would have held on past 4450 instead of switching!
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