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Order Flow - Achieving the mindset

  • #1,821
  • Jun 10, 2011 4:21pm Jun 10, 2011 4:21pm
Heya RichFWebb,

Quoting RichFWebb
Thanks for the explanation T,

So you're saying the market started pricing in the expectation of the EU meeting and the rate hike for July, on June 7th..?
Actually I can't pinpoint the exact point in time where it began pricing it in, but June 7th was around the region of time in which it was occurring, as viewed from my perspective.

Quote
So if a favorable Greek situation and a rate hike are confirmed, eur is now available at a cheaper price.
If Greek turns out to be resolved favourably, it will be a situation where bargain hunters would be incentivized to execute market orders to get the Euro at those prices, for they may not be available for long. Coupled with covering shorts, this scenario would be quite bullish for the Euro. It would also be a fantastic position to get a feeder stake in if you're playing the rate hike.

Quote
If no rate hike, they still hold their shorts from early June, and can gain liquidity for a continued short move, from false market expectations..
If Greece happens to be resolved favourably, I believe the shorts would be very quick to cover. They may even cover some positions just ahead of the meeting to mitigate the event risk it poses. Although the ECB says they don't pre-commit, based on their last statement, it would take something quite unusual to dimmer the prospects of the ECB hiking next month. But yes, if the ECB does not hike then the pairing should drop like a rock. I just don't see the June shorts maintaining their shorts for that long though. (shorts for that long lol)

Remember this is just my point of view, and I play things from a generally longer time perspective.

Hope I helped?
xXTrizzleXx
  • #1,822
  • Jun 11, 2011 4:46am Jun 11, 2011 4:46am
Quoting RichFWebb
isn't H&S exactly what OF looks to trade against at least in theory? I'm confused
The pattern can mean different things to different people.

A chartist may see it and decide to play it in it's chart way.

A stop hunting order flow trader may view it as a potential location to look for stops.

But just because a H&S pattern occurs, doesn't mean that OF traders look to trade against it. Sometimes it may be a great idea to trade against it. Other times it may be a good idea to trade with the chart pattern.

The chart pattern isn't going to 'cause' the market move, if the market does move, and there happens to be a chart pattern, then that is just it, it just happened to be there. Nothing more, nothing less. It just happened to form. The chart pattern by itself won't give you more information.

Now if you went and looked up 'why' the chart pattern formed and figured out what the market was thinking, why it is was moving, which market participants are moving the market, etc, that that would be advantageous.

I can surely find you, and I am sure you can find yourself, 50 Head and shoulders pattern that were wildly successful, and another 50 Head and shoulders pattern that were colossal failures. The reason 'why' they succeeded or failed had nothing to do with the chart pattern, they had to do with the information that was not revealed on the chart.
Private message me for a link to my order flow website.
  • #1,823
  • Jun 11, 2011 8:02am Jun 11, 2011 8:02am
Lets just say that order flow trading is more than just failed pattern trading.

Guys, do you think yesterdays announcement of banks stress tests had any affect on the markets? In order for banks to keep solvent and pass those tests annually they'll have to be less risk hungry and close some risk-on positions.
  • #1,824
  • Jun 11, 2011 9:23am Jun 11, 2011 9:23am
I never really pay attention about H&S shape before eur/usd drop, I just made some scenarios before, and with market behavior & eur inflation escalation which I think "too fast" I see some miss-expectation of the consensus. They think ECB will hike rate soon, but with inflation going this "fast" & ending of QE2 in US, investor & some speculator thinking about "risk aversion". So,would ECB still going "reckless" like that?

Well, may be it's just the right time to stab "the herd" from behind. When all people looking forward, nobody care to watch their back. This would likely one kind of "shocking" scenario, and it was.
  • #1,825
  • Jun 12, 2011 10:45pm Jun 12, 2011 10:45pm
something fishy about this asian session if you ask me..
  • #1,826
  • Jun 13, 2011 2:54am Jun 13, 2011 2:54am
Nice run against the Tech traders on the NZD/USD. The push overnight in illiquid market showing the longs wanting to liquidate some positions.

Am I right in saying this?

Not too sure about the fundemental value of the NZD currency?

Could anyone help in determining the fundemental value of a currency?

You could PM me if you want.

Thanks
  • #1,827
  • Jun 13, 2011 4:04am Jun 13, 2011 4:04am
Quoting Kamikaze456
Nice run against the Tech traders on the NZD/USD. The push overnight in illiquid market showing the longs wanting to liquidate some positions.

Am I right in saying this?

Not too sure about the fundemental value of the NZD currency?

Could anyone help in determining the fundemental value of a currency?

You could PM me if you want.

Thanks

NZD central bank was giving clues about the future rate hike on last week anouncement. Todays selloff is caused by the earthquake hence the hike expectations has been brushed off for now.
  • #1,828
  • Jun 13, 2011 4:24am Jun 13, 2011 4:24am
Quoting Greenhaze
NZD central bank was giving clues about the future rate hike on last week anouncement. Todays selloff is caused by the earthquake hence the hike expectations has been brushed off for now.

Yeah, I read about the RBNZ talking maybe about future rate hikes in december. But under this information the NZD Rose on the much more Hawkish statement than expected. My question is is that under this rise, did price deviate from it's percived value. Thus this fall including the last couple of days was return to it which could signify current sentiment within the NZD....? Or is this just non related to today's selloff due to the aftershocks?


I appreciate your reply.

Cheers Mate
  • #1,829
  • Jun 13, 2011 4:27am Jun 13, 2011 4:27am
holy swissy
  • #1,830
  • Jun 13, 2011 4:30am Jun 13, 2011 4:30am
Quoting EmeraldEyes
holy swissy
Bet you loved that?
  • #1,831
  • Jun 13, 2011 4:34am Jun 13, 2011 4:34am
Nice surprise while drawing a gameplan for SNB intervention. lol
  • #1,832
  • Jun 13, 2011 4:44am Jun 13, 2011 4:44am
Very nice I was also on that cascade.

IFR: Sell stops reportedly reside below 1.2050

I wonder when the SNB will look at doing something.
  • #1,833
  • Jun 13, 2011 4:47am Jun 13, 2011 4:47am
I'm sure its around the corner, but until then..

Quote
0946 GMT [Dow Jones] CHF rockets in thin trading conditions against the euro, which sinks to a fresh record low of CHF1.2004. With much of Europe out of the office for the Whit Monday holiday, low liquidity is exacerbating any moves. EUR/USD is trading slightly up at 1.4345 but EUR/CHF is sharply lower at 1.2023. USD/CHF is also down at 0.8379.
  • #1,834
  • Jun 13, 2011 4:51am Jun 13, 2011 4:51am
Barrier interest now well-touted at 1.2000. We’ve been as low as 1.2005, presently at 1.2025, so defence of said interest now well underway.

Low liquidity markets and barrier option interest? I wonder what lies beyond them?
Let's see how this pan's out will be interesting for sure.
  • #1,835
  • Edited 5:13am Jun 13, 2011 4:55am | Edited 5:13am
Eur/Chf 1.20 defense stopped Usd&Gbp/Chf too. There hasn't been any move back up.. I expect another drop once eur/chf breaks through.
  • #1,836
  • Jun 13, 2011 7:49am Jun 13, 2011 7:49am
Quoting grkfx
The pattern can mean different things to different people.

A chartist may see it and decide to play it in it's chart way.

A stop hunting order flow trader may view it as a potential location to look for stops.

But just because a H&S pattern occurs, doesn't mean that OF traders look to trade against it. Sometimes it may be a great idea to trade against it. Other times it may be a good idea to trade with the chart pattern.
Very well said, the hardest part from order flow trading for me is to eliminate my ego based bias about market & being as objective as possible, just like below illustration, the popular neurogical "spinning dancer" animation.

http://i181.photobucket.com/albums/x...ing_Dancer.gif

Once my brain capture one side information, for example I see the dancer spinning clockwise, it is very hard to change my view that there is other possibility the dancer spinning anti-clockwise. Most people even said it is impossible to see different spin direction so they "defending" their ego so hard. The first time I try to catch both spinning direction possibility and got succeed, I was shockingly surprised, I even don't believe my brain. Started with that I try familiarize myself with objectivity, to always think about different kind of scenarios even the most likely an impossible one, because market participant mostly take the information subjectively (i.e some thinking clockwise, others thinking anti-clockwise), and they can immediately fold their decision instantly if something surprise them.
  • #1,837
  • Jun 13, 2011 8:10am Jun 13, 2011 8:10am
Quoting CindyXXXX
Ya know what's really Fkn weird

When I look at it just normally it spins anticlock but then as soon as I start reading your post like the writing below it it immediately switches to clock wise

Trippy
yes look at the bottom left corner and make the foot in the middle spin the other way with mind power!
  • #1,838
  • Jun 13, 2011 8:24am Jun 13, 2011 8:24am
Its which eye is dominant. Choose the direction by using left or right peripheral vision.
  • #1,839
  • Jun 13, 2011 8:26am Jun 13, 2011 8:26am
Quoting CindyXXXX
Ya know what's really Fkn weird

When I look at it just normally it spins anticlock but then as soon as I start reading your post like the writing below it it immediately switches to clock wise

Trippy
Some says if the first time you saw it spinning anticlock it means you use more of the left side of the brain, and vice versa, but the hell with that psychological thingy, I just wanna put some illustration about objectivity
  • #1,840
  • Jun 13, 2011 8:28am Jun 13, 2011 8:28am
no it's looking at the bottom left corner and spinning it with mind power... I do the same thing with the market...
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