Order Flow - Achieving the mindset | Page 114 | Forex Factory

Options

Go to
Permalinks
Print Thread

Similar Threads

Mindset Mindset Mindset!!! 19 replies

How to flow with the order flow? 26 replies

Maintain Your Mindset, by Linda Bradford Raschke 3 replies

Order Flow - Achieving the mindset - Part 2 37 replies

A new mindset 0 replies

Attachments: Order Flow - Achieving the mindset
Exit Attachments

Order Flow - Achieving the mindset

  • #2,261
  • Jul 1, 2011 9:49am Jul 1, 2011 9:49am
Quoting xXTrizzleXx
LOL We might even get a gap-up this weekend..depending on how nice my lunch tastes I may just decide to let it run until Thursday..now I have no more margin so it's sit back and relax...

Regards,
xXTrizzleXx
nice I hope so... we shall see what happens.... next thursday-friday should be good too...
  • #2,262
  • Jul 1, 2011 9:52am Jul 1, 2011 9:52am
Quoting seagreen
I'd say yes, there should be some decent liquidity at 4560 and it's just asking the price to go there.

Good luck with it! I'm on the sideline...
http://img405.imageshack.us/img405/137/eu15min.png
damn.... nice chart though... it's old school terminal looking
  • #2,263
  • Jul 1, 2011 10:01am Jul 1, 2011 10:01am
Quoting seagreen
I'd say yes, there should be some decent liquidity at 4560 and it's just asking the price to go there.

Good luck with it! I'm on the sideline...
That would have been amazing...still deserves props imo

Quoting Monroe
nice I hope so... we shall see what happens.... next thursday-friday should be good too...
Definitely..would love to see this month's NFP.

Good weekend,
xXTrizzleXx
  • #2,264
  • Jul 1, 2011 10:06am Jul 1, 2011 10:06am
Quoting xXTrizzleXx
That would have been amazing...still deserves props imo
yes definite props.. but if the stops are at 40, put the limit at 40 or maybe a little ahead of it... you just missed that by a ball hair...
  • #2,265
  • Jul 1, 2011 10:26am Jul 1, 2011 10:26am
Quoting Monroe
yes definite props.. but if the stops are at 40, put the limit at 40 or maybe a little ahead of it... you just missed that by a ball hair...
Yeah, my order was at 35 and I wasn't able to watch it. Anyway, the money doesn't matter, I'm still glad I was right about it.
  • #2,266
  • Jul 1, 2011 10:38am Jul 1, 2011 10:38am
Quoting seagreen
Yeah, my order was at 35 and I wasn't able to watch it. Anyway, the money doesn't matter, I'm still glad I was right about it.
yea man, I hear you on that. I didn't set a limit, I waited for the reaction on this one, as soon as it passed back over the 50 I was in. but you almost nailed it.
  • #2,267
  • Jul 1, 2011 1:01pm Jul 1, 2011 1:01pm
NEW YORK, July 1 (IFR) - EURUSD - Day trader offers 1.4540/50, talk of sov sellers up there also. Option barriers at 1.4600 looking to be popped, stops above there, sellers in front of them. Pretty thin above that, more barriers 1.4650 and tech sellers 1.4690 (+2.0 21-day Bollingers) Barrier defence ahead of 1.4700 (heavy sovereign offers there) Stops above. Day trader bids 1.4430/50, more buyers 1.4395/10. Sell stops way down at 1.4330, 1.4100, 1.4070 with buyers just in front of them and SARs below.
.
.
.
NEW YORK, July 1 (IFR) - USD/CAD Corporate bids are pretty thick 0.9600/10 even as we chew through them they seem to get replenished. There's a small gap to 0.9570 but don't bank on it not filling up as long term hedgers are unwinding USD hedges around here. 0.9550 thru 70 is building up "decent bids" according to traders. Thins out below there but 0.9500 is building in good size also. Topside nothing offered from Corporates until 0.9735/50 in "reasonable amounts". Above that there's a big gap, 0.9875 the first level that shows in decent size. Leveraged accounts are likely to be sellers 0.9790/10.
.
  • #2,268
  • Jul 1, 2011 1:21pm Jul 1, 2011 1:21pm
You guys are doing a fantastic job from what i have been reading up until now. The market is not random after all.lol
.
  • #2,269
  • Jul 1, 2011 1:37pm Jul 1, 2011 1:37pm
Quoting Louie
Read the FX Live Q&A section they give a great explaination on barriers.

IFR was reporting these stop levels yesterday with the only one in the way which was the 1.4540 light stops. If you recall Dark Star talks about the play for the barriers starts roughly 50 pips out roughly, somewhere in the thread he goes over this. I didn't see any news of large stops on the other side of the barrier so did not expect spike much past the 4550. I admit not the best setup but entered at 1.4470 and into the barrier. I expect if there is a sell off that the...
Thanks for the comment.
  • #2,270
  • Jul 1, 2011 2:56pm Jul 1, 2011 2:56pm
Quoting xXTrizzleXx
Lol! Yep, timing is everything. Funnily enough I had a dream that the ECB rate hike may turn out like the last ECB press conference.
Lol, you know you trade too much when...
  • #2,271
  • Jul 1, 2011 10:42pm Jul 1, 2011 10:42pm
Hey guys,

Just wanted to find out your opinion on this. Fxlive reported 'Fairly decent buy stops now seen through 1.4555'. Barrier at 1.4550 was taken out as price hit a high of 1.4552.

Any opinions on why the lack of interest in the stops just 3 pips away? I understand that there were also stops reported at 1.4440. But surely a 3 pip move upwards would be 'more justified' than a 100 pip downmove to take out the downside stops? Unless the disparity in the size of these stops are huge. Couldn't really see a news-related reason for the EURUSD to move down yesterday too.
  • #2,272
  • Jul 2, 2011 12:58am Jul 2, 2011 12:58am
Quote
melvin87

Hey guys,

Just wanted to find out your opinion on this. Fxlive reported 'Fairly decent buy stops now seen through 1.4555'. Barrier at 1.4550 was taken out as price hit a high of 1.4552.

Any opinions on why the lack of interest in the stops just 3 pips away? I understand that there were also stops reported at 1.4440. But surely a 3 pip move upwards would be 'more justified' than a 100 pip downmove to take out the downside stops? Unless the disparity in the size of these stops are huge. Couldn't really...
Hey melvin,

You bring up a very good question. Now I'm sure there are others who can better explain this than me, but let me take a stab at it.

If you think about the liquidity structure of the market, you know that there could be a higher volume of limit orders at certain price levels than at others. What does that mean? It means that it would take a larger amount of market orders to "eat through" those limit orders before the next market order can reach a limit order at the next price level.

If we take your example, watch the price action of the last two days (thurs and fri). You'll notice that there were three tops formed below 1.4550. That means there were three times where sustained buying interest either "hit a wall" of sell orders near those levels and there wasn't enough buying interest to eat through all the limit orders near that price level, or the buying interest was exhausted near those levels and reversed to net selling interest. Now of course there are orderflow reasons for WHY particpants changed from net buying to net selling behavior, etc, but this is just to give you an idea from a microstructure perspective. While there may have been stiff resistance up top, there may have been little support for price on the way down, making it much easier to take price down all the way to those stops at 1.4440.

Now here are a few orderflow scenarios that could explain:

 

  1. participants weren't willing to take price up higher because it would have required a larger commitment of capital to eat through the sell orders before reaching the stops, and the stops weren't large enough to liquidate into. In other words, the move wouldn't have been cost effective, and they could have profited just about as much by simply liquidating there previously held positions right then and there (just look at the resistance near that level, it was merely a single 5 min pinbar that managed to break the barrier, either buying interest was really weak or there was some stiff resistance there)
  2. participants had a hard time taking price up into the upper stops because of selling in anticipation of the ISM (source of resistance). So they decided to liquidate into those sellers instead of trying to fight them for just a few more pips.
  3. continuing from the second point, participants not only decided to liquidate into those sellers, but decided to also take up selling positions as well. So instead of fighting to take price up a few more pips, they flipped there positions and "went with the flow" and ended up profiting from that big downmove into the stops, which was made possible with the help of the initial sellers.


Bottom line, just because price is a few pips away from one price level, doesn't mean its easier for price to go up there than to reverse and hit a level much farther downward. It all depends on the market conditions, participants motives, and whether the majority are thinking buy or sell, and how the liquidity structure looks like.

Hope this helps

  • #2,273
  • Jul 2, 2011 3:22am Jul 2, 2011 3:22am
Hey Colonel,

Thanks for the thoughtful reply.

I beg to differ with some of your suggestions though. Price couldn't get through the 1.4550 area in the past few attempts because there was a barrier there. Just like many other barriers observed in the past, there have been multiple examples where price got rejected many times before the barrier gave way. Furthermore, I may counter-argue that for each 'touch' on the resistance you mentioned, it could also very well mean that there were less limit orders remaining to defend the barrier level. On top of that, if there was such strong resistance there, then it could also mean that the stops above it were significant resulting in such strong defence.

With regard to the ISM data, if i'm not wrong, ISM data never really had a significant impact on EURUSD. However, I have continually observed that participants often use such data to justify large moves in the markets sometimes which could also explain the down-move.

However, while I do not have exact numbers for this, surely a 3 pip move up would require less capital than a 100 pip move down?
  • #2,274
  • Jul 2, 2011 5:15am Jul 2, 2011 5:15am
Quoting melvin87
On top of that, if there was such strong resistance there, then it could also mean that the stops above it were significant resulting in such strong defence.
I'm very much a beginner at studying this stuff, but this would be my guess too.

If the barrier was defended aggressively, the defenders may have a substantial position to protect. If they calculated that the buyers were exhausted and losing interest with the barrier fallen, could the recoup some of their money by targeting the attackers stops?

The flaw in my argument may be if they had the capital available, why weren't they able to protect the barrier in the first place?
  • #2,275
  • Edited 5:47am Jul 2, 2011 5:25am | Edited 5:47am
I do not think the barrier or the stops from defending it were significant enough at all (if it didn't already expire), there was rarely any defense right out of the gate in Asia. I think there were plenty of stops hit above thursdays highs to liquidate into pre week-end/qtr-end/half-end. Further more I think there were significant reserve manager offers at 4550 (this was even reported 2 weeks ago), and not enough interest to take it higher before the weekend Fin Min meetings. If the barrier was still there, then they just popped it early and they got it done with, this to me means a tiny barrier if it was still there.

why did it easily drop 100 pips? It was an illiquid market, especially in between the range of 4550-4450. After the offers soaked up the bids, the next decent order would drop it like a rock to the next level of bids, which was around 4480. They used the pre ISM event illiquidity to go for the stops below 4450 and take back positions, that signaled to me the ISM might not be a big deal.

However, sentiment is mildly bullish now that the Greek extravaganza is almost out of the way (for now), but we have the Fin Min meetings over the weekend and the ECB press conference + US data this week so I felt pretty confident about taking the trade at 4450. So here I think we were seeing position adjustment and profit taking ahead of these events and the week-end/month-end/half-end.

Happy Saturday everyone.
  • #2,276
  • Jul 2, 2011 11:46am Jul 2, 2011 11:46am
Excellent discussion today guys. I have a quick question to add.

I thought that barrier options meant that as soon as the 1.4550 level is touched, the option is then worthless. Isn't that the reason why there are so many sell orders lined up prior to 1.4550 to defend that price with stops on the adjacent side (1.4555 etc)? If this was the case, since 1.4550 was breached the barrier option is not in play, right?
  • #2,277
  • Jul 2, 2011 12:16pm Jul 2, 2011 12:16pm
Quote
scottymoll

Excellent discussion today guys. I have a quick question to add.

I thought that barrier options meant that as soon as the 1.4550 level is touched, the option is then worthless. Isn't that the reason why there are so many sell orders lined up prior to 1.4550 to defend that price with stops on the adjacent side (1.4555 etc)? If this was the case, since 1.4550 was breached the barrier option is not in play, right?
Hey scotty,

it depends on what type of barrier option it is. If it's a knock out option, then price piercing the price level means it becomes worthless, just like you said, and the option would not be in play anymore.

Now as for sell orders being lined up before it to defend it, it all depends. We could have sell orders being placed by option buyers in order to defend the area, or, as Monroe mentioned, the area before the option may have been an area of interest for other participants for other reasons. In this case, the price levels below the option happened to be the previous day's highs. Now this could be a significant level for participants who were looking to sell the market, and decided this would be a good area to place there sell orders.

I tend to side with Monroe on this, because if you watch the price action for friday, It didn't look like there was an effort to defend that area, which shouldn't have been too hard to do, considering it was a Friday at the end of the month with no big news to generate considerable orderflow that the defenders would have to fight.
  • #2,278
  • Jul 2, 2011 12:29pm Jul 2, 2011 12:29pm
Now, why would it be important to know why the selling occurred at those levels? I think that if you know the selling isn't coming simply from option defenders, than you can better get a sense for how the market is feeling at that point in time (in this case, that buying was exhausted and, taking into consideration market conditions, a reversal was likely.

theColonel
  • #2,279
  • Jul 2, 2011 3:25pm Jul 2, 2011 3:25pm
Quoting theColonel
Now, why would it be important to know why the selling occurred at those levels? I think that if you know the selling isn't coming simply from option defenders, than you can better get a sense for how the market is feeling at that point in time (in this case, that buying was exhausted and, taking into consideration market conditions, a reversal was likely.

theColonel
Apart from whats are already said, I can guarantee there were some TA orders too at this excellent resistance level coupled with a Weekly/Daily trend line.
.
Attached Image(s) (click to enlarge)
Click to Enlarge Name: 1.jpg Size: 84 KB
Click to Enlarge Name: 2.jpg Size: 104 KB
  • #2,280
  • Jul 4, 2011 7:57pm Jul 4, 2011 7:57pm
I read a quote in another thread a few days ago, and it keeps running through my mind now. My wall is covered with possible meanings.

"A lack of limit orders leads to a lack of liquidity."

I can't remember who said it or where it was (I want to say capitalist), but my mind is telling me this sentence is of great importance...
0 traders viewing now