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Order Flow - Achieving the mindset

  • #1,881
  • Jun 15, 2011 4:10pm Jun 15, 2011 4:10pm
Quoting redbaron1981
Monroe,

To be honest with you I was away offshore for 2 months and couldn't trade. I read Reminiscence of a stock operator quite a few times and this helped a few things sink in.

Now I've managed to find out what information from IFR etc is important and I'm plotting it an seeing how price responds to it. The problem I'm struggling with is to find out who's in the market and what plans they have on how to use the liquidity. i.e Are they going to stop hunt it and use it as a way to shift a big size in an out of the market or will the liquidity...
I don't think you can ever know for certain, but you have to make educated guesses with the info you gather on the current drivers/themes playing out in context of positioning, sentiment and expectations. You could wait for the reactions in those area's also.
  • #1,882
  • Jun 15, 2011 4:12pm Jun 15, 2011 4:12pm
Quoting xXTrizzleXx
Heya buddy, are you planning to maybe play 4150 with me tonight? Weather looks just about right!
haha hey buddy...... it's a storm today on the euro... lightening and thunder... raining dead cats...
  • #1,883
  • Jun 15, 2011 4:45pm Jun 15, 2011 4:45pm
NEW YORK, June 15 (IFR) - It's been a while since we explored where the downside buy orders are but today's collapse has suddenly rekindled thoughts of the May 1.3969 low. Sell stops sub- 1.4150 which is also an option barrier level in play. Bids at 1.4120/25 more barriers and stops sub- 1.4100; more buyers 1.4050/65 more stops and barriers below 1.4000. Last of the bids 1.3970/75 with big sell stops below. System sellers sub- 1.4145, more sub 1.4110 (daily and weekly close) the last of the "close" system sellers 1.3865. Stop and reverse buyers above 1.4350/60, 1.4410, 1.4430, 1.4465, 1.4510. Offers at 1.4260/65, 1.4300/10, 1.4370. [email protected]
Copyright (c) 2011 Thomson Reuters - IFRMarkets
  • #1,884
  • Jun 15, 2011 4:52pm Jun 15, 2011 4:52pm
Quoting redbaron1981
NEW YORK, June 15 (IFR) - It's been a while since we explored where the downside buy orders are but today's collapse has suddenly rekindled thoughts of the May 1.3969 low. Sell stops sub- 1.4150 which is also an option barrier level in play. Bids at 1.4120/25 more barriers and stops sub- 1.4100; more buyers 1.4050/65 more stops and barriers below 1.4000. Last of the bids 1.3970/75 with big sell stops below. System sellers sub- 1.4145, more sub 1.4110 (daily and weekly close) the last of the "close" system sellers 1.3865. Stop and reverse buyers...
Heya redbaron1981,

Good, so you have the tactical liquidity information here. Now you just need to intertwine it with the following underlined:

Quoting Monroe
I don't think you can ever know for certain, but you have to make educated guesses with the info you gather on the current drivers/themes playing out in context of positioning, sentiment and expectations. You could wait for the reactions in those area's also.
and you can have a great leg-up over most participants oblivious to this kind of analysis. Of course you can play the levels straight up if your system dictates you to, but I'm more partial to incorporating a 'feel' factor. Sometimes you'd have your outlook and patiently wait for price to reach a point of interest, and when it gets there, your order gets filled and price takes off straight away! That's when you know you're playing at some very relevant levels - gives you a warm feeling inside.

Regards,
xXTrizzleXx
  • #1,885
  • Jun 15, 2011 5:16pm Jun 15, 2011 5:16pm
this is such a great thread.. much thanks to all of you guys!
  • #1,886
  • Jun 15, 2011 5:22pm Jun 15, 2011 5:22pm
Quoting Monroe
this is what I was talking about with the options and risk reversals
Niccceee! Since you last bought this up I've been thinking about this stuff.

Nothing I can add at the moment unfortunately, thanks though!
Cautiously optimistic. . .
  • #1,887
  • Jun 15, 2011 5:27pm Jun 15, 2011 5:27pm
no prob, actually you brought it up when you mentioned implied vols, I just wanted to share what I've noticed with it, I am still in my younger OF days at this point, but I've noticed a few things that might be worth paying attention to with that stuff.
  • #1,888
  • Jun 15, 2011 7:03pm Jun 15, 2011 7:03pm
Trizz and Monroe, how high are you guys aiming to fade that barrier at 4150? is 4260/5 a good estimate? just enough to knock in the reverse buys and then fall (assuming your overall perspective is bearish like mine)

you are trying to.. fade.. the barrier.. right?
  • #1,889
  • Jun 15, 2011 11:26pm Jun 15, 2011 11:26pm
Heya RichFWebb,

I do have an overall bearish perspective, so I'm trying to initiate a short-term bearish position to express it. I initiated a position at 1.4200 hoping to make the trade a breakeven one as the market pushes into it and the other ones beneath.

Fading the barrier may be a short-term play, and it may work out, but I have difficulty seeing myself going long the Euro for any period of time, because downside sentiment feels too overwhelming. Maybe things will change next week when hopefully we have a bit of clarity on the situation.

Regards,
xXTrizzleXx
  • #1,890
  • Jun 15, 2011 11:47pm Jun 15, 2011 11:47pm
Oh my goodness gracious me. What a play!
  • #1,891
  • Jun 15, 2011 11:50pm Jun 15, 2011 11:50pm
yeah i agree, i was just trying to understand what you and monroe were talking about playing 4150..

well.. there's my answer anyway lol
  • #1,892
  • Jun 16, 2011 12:11am Jun 16, 2011 12:11am
nice play Trizzle, they came out a bit early today for you, they must be excited to push this thing right to hell....
  • #1,893
  • Jun 16, 2011 12:16am Jun 16, 2011 12:16am
Quoting RichFWebb
yeah i agree, i was just trying to understand what you and monroe were talking about playing 4150..

well.. there's my answer anyway lol
Ah I get you now..usually when I think of playing a barrier I absent-mindly think of pushing into it..sorry for the mix-up!

Quoting Monroe
nice play Trizzle, they came out a bit early today for you, they must be excited to push this thing right to hell....
Thanks man! Yeah I felt a bit uncomfortable ringing them up at this hour of the night but..money has to be made lol. Did you play this one too?

Regards,
xXTrizzleXx
  • #1,894
  • Jun 16, 2011 12:23am Jun 16, 2011 12:23am
Quoting xXTrizzleXx
Ah I get you now..usually when I think of playing a barrier I absent-mindly think of pushing into it..sorry for the mix-up!



Thanks man! Yeah I felt a bit uncomfortable ringing them up at this hour of the night but..money has to be made lol. Did you play this one too?

Regards,
xXTrizzleXx
yes I am already short, but did not add a position there. to be honest though, I thought we might get a pullback to just ahead of the 4250 first on more profit taking and weak stops.

at around 12:20 EST I would have definitely thought about going short on that push though...
  • #1,895
  • Jun 16, 2011 12:32am Jun 16, 2011 12:32am
ahhh seems they finally popped that eur/chf barrier at 1.2.... it was only a matter of time
  • #1,896
  • Jun 16, 2011 12:45am Jun 16, 2011 12:45am
Quoting Monroe
yes I am already short, but did not add a position there. to be honest though, I thought we might get a pullback to just ahead of the 4250 first on more profit taking and weak stops.

at around 12:20 EST I would have definitely thought about going short on that push though...
Actually I was actually contemplating putting a limit in that little nook as well, but didn't feel Asia had enough firepower to overcome the bearish sentiment. Let's hope we can milk our shorts for all they're worth.

Quoting Monroe
ahhh seems they finally popped that eur/chf barrier at 1.2.... it was only a matter of time
And I actually wanted to push into that one but was too busy with the newsfeed >_>...I'll try to play the 1.4000 DNT in EUR/USD to get my second leg on.

Regards,
xXTrizzleXx
  • #1,897
  • Jun 16, 2011 12:56am Jun 16, 2011 12:56am
Quoting xXTrizzleXx
And I actually wanted to push into that one but was too busy with the newsfeed >_>...I'll try to play the 1.4000 DNT in EUR/USD to get my second leg on.

Regards,
xXTrizzleXx
damn newsfeeds...

from yesterday...

Today in London a 1mth 1.4000/1.4750 DNT traded at 20.5% (TV 16.06%, Vol 11.95) and a 2mth 1.4100/1.4800 DNT traded 4.0% (TV 0.718, Vol 12.1). Further out and 5mth 1.3700/1.5100 DNT traded yesterday at 10.5% (TV 4.137, vol 12.5, spot 1.4435)

1.4 level is obviously going to be targeted and there's not much to stop it... they cleaned out the 4150 and 4100...
  • #1,898
  • Jun 16, 2011 1:13am Jun 16, 2011 1:13am
Quoting Monroe
1.4 level is obviously going to be targeted and there's not much to stop it... they cleaned out the 4150 and 4100...
Just have to wait for some positionning info and we're good to target the May Lows methinks. I just hope nothing weird happens..like Wellink comes along and detracts the EFSF statement made..

Regards,
xXTrizzleXx
  • #1,899
  • Jun 16, 2011 1:21am Jun 16, 2011 1:21am
Quoting xXTrizzleXx
Just have to wait for some positionning info and we're good to target the May Lows methinks. I just hope nothing weird happens..like Wellink comes along and detracts the EFSF statement made..

Regards,
xXTrizzleXx
right on Trizzle... I think we might get a pullback here unless they keep firing off bad news today... we have some ECB speakers today, Euro and US data, and Trichet and FOMC speakers later...
  • #1,900
  • Jun 16, 2011 6:04am Jun 16, 2011 6:04am
Quoting Monroe
this is what I was talking about with the options and risk reversals

The euro's suffering may continue: A key gauge in the options market called a "risk reversal," which measures how much traders fear euro declines, hit its highest level of the year, 2.25, according to Barclays Capital. The last time traders were so worried about euro plunges was November 2010.

LONDON, June 15 (IFR) - EUR/USD vols and risk reversals lifted as spot extended its setback from 1.4498 late Tuesday to breach Mondays' 1.4285 low (hit 1.4264). 1mth atm up 0.8 in 24...
From Investopedia:

Risk reversal refers to the manner in which similar out-of-the-money call and put options, usually FX options, are quoted by dealers. Instead of quoting these options' prices, dealers quote their volatility. The greater the demand for an options contract, the greater its volatility and its price. A positive risk reversal means the volatility of calls is greater than the volatility of similar puts, which implies that more market participants are betting on a rise in the currency than on a drop, and vice versa if the risk reversal is negative. Thus, risk reversals can be used to gauge positions in the FX market and can convey information to make trading decisions.

So, it can be used as a live version of COT report.
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