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Order Flow Trading

  • #41
  • Apr 21, 2013 10:27am Apr 21, 2013 10:27am
Quoting nasir.khan
Stop hunting with keeping macroeconomics and market sentiment is a part of OFT, Stop hunting solely based on a price chart is just breakout trading or whatever you want to name it. Because if you dont know 1)whats the current market sentiment is in terms of RoRo and fundamentals 2)where/why the orderflow will be generated that will push market towards the stops, then it becomes a guessing game like most other trading methods. You still could make money no doubt especially if have looked at enough stop hunt plays in action but it still will be a...
What is any ocean but a multitude of drops?
  • #42
  • Apr 21, 2013 11:20am Apr 21, 2013 11:20am
Holy shit a good thread on FF?
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  • #43
  • Apr 21, 2013 1:23pm Apr 21, 2013 1:23pm
Quoting CaymanTrader
Hi, I've been using the DOM mostly for entering trades/placing orders, but have not found much value in watching it. However, in futures we can see the price areas that traded with the highest volume. This can often be a good indicator where price will head in the short-term and during the trading day we often see the high-volume price area getting re-tested (especially in ES & YM). It's a better way to see "true S/R" than just noting the recent highs and lows. I assume this is what you meant with "true inventory"? Would you like to explain...
The DOM + Tape show the volume / liquidity relationship within price. Think of it like this, say we're reaching intermediate highs, and we see a bunch of offers being hit on the DOM (market buy orders coming in), however, the offers are able to with-stand the demand on the liquidity side, and price discovery doesn't advance. This is a sign of previous short traders bailing and their liquidating being consumed, and you now have context for a trade. Or let's say the bids are thick, and traders are trying to lean on them, however, the offers right above are absorbing all the buying that comes in, even though they 'seem' thin on the book. The ones who are leaning on the large bids now have the potentiality to fuel the move south when they liquidate. It's all game theory really, and it's not as hard as people make it out to be. As far as sentiment goes.... I'm living proof you don't need to follow sentiment to make money in the markets. I pay attention to news, but a bit different than most. I'm mainly on the sidelines when news comes out...
  • #44
  • Apr 21, 2013 1:50pm Apr 21, 2013 1:50pm
Quoting Benevolent
The DOM + Tape show the volume / liquidity relationship within price. Think of it like this, say we're reaching intermediate highs, and we see a bunch of offers being hit on the DOM (market buy orders coming in), however, the offers are able to with-stand the demand on the liquidity side, and price discovery doesn't advance. This is a sign of previous short traders bailing and their liquidating being consumed, and you now have context for a trade. Or let's say the bids are thick, and traders are trying to lean on them, however, the offers right...
Thanks for sharing this. It is another form of metagaming (thinking about the actions of your opponents), but I never thought about it in this way, reading it via the DOM.

So you are focusing exclusively on DOM/Volumes, without any sentiment analysis? With this I mean analyzing global macro news & intermarket flows.

Another question: Reading the DOM the way you described above requires a lot of screen time, do you focus trading only a few hours per day?
  • #45
  • Apr 21, 2013 1:52pm Apr 21, 2013 1:52pm
Quoting CaymanTrader
Thanks for sharing this. It is another form of metagaming (thinking about the actions of your opponents), but I never thought about it in this way, reading it via the DOM. So you are focusing exclusively on DOM/Volumes, without any sentiment analysis? With this I mean analyzing global macro news & intermarket flows. Another question: Reading the DOM the way you described above requires a lot of screen time, do you focus trading only a few hours per day?
I don't pay attention to sentiment, other than standing on the sidelines when impactful news comes out. As far as screen time, yes it does take a lot of screen time, it's no different feeling than a job to me. I usually trade from NY open to 15 minutes before NY close.
  • #46
  • Apr 22, 2013 8:57am Apr 22, 2013 8:57am
I am finding OFT to be great. I learned a lot from DS and the crew on his website and in the chat room. Highly recommend checking it out if you want to advance your trading career.
  • #47
  • Apr 22, 2013 8:59am Apr 22, 2013 8:59am
DS's chat room is always pretty interesting. My alias in there is 'icehac'.
  • #48
  • Apr 24, 2013 7:23am Apr 24, 2013 7:23am
Oh, those stops below 1.2950 are screwed.
  • #49
  • Apr 24, 2013 2:22pm Apr 24, 2013 2:22pm
Quoting Benevolent
DS's chat room is always pretty interesting. My alias in there is 'icehac'.
Ah - you're good dude.
  • #50
  • Apr 24, 2013 2:48pm Apr 24, 2013 2:48pm
Not sure what to call that but I believe it's Order Flow Trading?

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  • #51
  • Apr 24, 2013 7:34pm Apr 24, 2013 7:34pm
Quoting eurotrash
{quote} Ah - you're good dude.
Appreciate it
  • #52
  • Apr 24, 2013 11:48pm Apr 24, 2013 11:48pm
Quoting Mingary
Not sure what to call that but I believe it's Order Flow Trading? {image}
So you went short with the bias for Euro bearish and targeted the stops below the swing low? I'd say that qualifies as an OFT trade. Anyway, nice trade!
  • #53
  • Apr 25, 2013 12:50am Apr 25, 2013 12:50am
Quoting CaymanTrader
{quote} So you went short with the bias for Euro bearish and targeted the stops below the swing low? I'd say that qualifies as an OFT trade. Anyway, nice trade!
Something like that yes. I think there is something valid here. All those wiggles on the chart mean nothing without it.
  • #54
  • Apr 25, 2013 2:38am Apr 25, 2013 2:38am
Yes, order flow trading is great in that it lets you know what the institutions are doing right now. Most institutions are lining up to buy at great supply and demand levels and that's what rookies ought to be doing. Demand and supply levels are great, even with some volatile and strongly trending pairs like JPY pairs.
  • #55
  • Apr 25, 2013 5:47am Apr 25, 2013 5:47am
Quoting Mingary
Not sure what to call that but I believe it's Order Flow Trading? {image}
Clearly this is EUR/JPY on the French Manufacturing PMI (Spike up) and German Manufacturing PMI (Spike down) 5 Min Chart news. The difficulty to understand here perhaps from and OFT trading perspective and possibly on an even deeper level of understanding is: 1: Are such news spikes generated by large orders in the markets by big players such as banks, large financial institutions ets. normally two minutes before the release of news as majority of these would have subscription accounts with "Reuters" who receive the news figures two minutes before public. Or 2: Do we actually have governing bodies, for example, Federal/Central reserve banks who actually are responsible for such big price movements to adjust currencies as to where they are supposedly supposed to be in relation to these news figures. Or 3: Maybe a combination of both. Anyone have an opinion on this?
  • #56
  • Apr 25, 2013 3:35pm Apr 25, 2013 3:35pm
Quoting lopatica
{quote} Clearly this is EUR/JPY on the French Manufacturing PMI (Spike up) and German Manufacturing PMI (Spike down) 5 Min Chart news. The difficulty to understand here perhaps from and OFT trading perspective and possibly on an even deeper level of understanding is: 1: Are such news spikes generated by large orders in the markets by big players such as banks, large financial institutions ets. normally two minutes before the release of news as majority of these would have subscription accounts with "Reuters" who receive the news figures two minutes...
No need for an opinion - here's fact. These spikes are caused by (a) lots of order hitting the market by people trying to urgently enter positions to trade the news or exit positions taken on different expectations, in a (b) low liquidity market, where no one is going to offer you all you want at a nice price, you're going to pay up and pay up for it. Combination of the two results in a fast move. Lots of urgent buying/selling (hitting market) in low liquidity situation.

I don't have the chart in front of me and I was watching a different market but I remember this, I assume it's the one from this week, French PMI beat expectations so I think the idea was that German PMI might beat as well, put a bid tone in until German PMI missed expectations so those who bought hoping Germany would beat as well had to dump etc.
  • #57
  • Apr 26, 2013 1:38am Apr 26, 2013 1:38am
http://www.forexfactory.com/showthre...29#post6638629

Example on Post 44.
There is something very interesting about this. Especially when I see it unfold real time.
  • #58
  • Apr 26, 2013 5:27am Apr 26, 2013 5:27am
I know the diehard order flow ladies and gents would find this a pretty backwards question ... but

Has anyone here developed a purely chart based order flow method? Just a question
Time hides Nothing
  • #59
  • Apr 26, 2013 8:49am Apr 26, 2013 8:49am
Yes. I guess I have. Just realized Order Flow is what I am looking at and I did not know it. Did not know it until I found some info about Order Flow and it matches what I see on the chart given my ever so limited understanding of anything.
I guess us humans like to give names to things...
  • #60
  • Apr 26, 2013 8:55am Apr 26, 2013 8:55am
Quoting Mingary
Yes. I guess I have. Just realized Order Flow is what I am looking at and I did not know it. Did not know it until I found some info about Order Flow and it matches what I see on the chart given my ever so limited understanding of anything. I guess us humans like to give names to things...
Commercial darkstar would be spinning in his non commercial grave. Lmao
I was expecting an answer like that. Just made a quick 20 ego pips cheers... Haha just kidding...

Would you mind elaborating mingary?
Time hides Nothing
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