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What is order flow trading?

  • #21
  • May 21, 2013 6:09am May 21, 2013 6:09am
Ah...I get it now,what some of you guys call "order flow" i call reading the market,
i guess that doesn't sound so clever though,
Splitting hairs i guess but for me "order flow trading" is actually reading the orders
as they flow through ect,something that we all know can't be done with an OTC instrument
like spot fx.
Spot fx is not just about men in red braces with a phone glued to both ears shouting buy and sell you know.
You can remain irrational longer than you can remain solvent.
  • #22
  • May 21, 2013 6:31am May 21, 2013 6:31am
Quoting jezek5
Ah...I get it now,what some of you guys call "order flow" i call reading the market, i guess that doesn't sound so clever though, Splitting hairs i guess but for me "order flow trading" is actually reading the orders as they flow through ect,something that we all know can't be done with an OTC instrument like spot fx. Spot fx is not just about men in red braces with a phone glued to both ears shouting buy and sell you know.
I need to be clearer,
what i ment to say is the movements in fx are not just down to the men in red braces.
You can remain irrational longer than you can remain solvent.
  • #23
  • May 21, 2013 6:42am May 21, 2013 6:42am
Agreed, sometimes it's men with blue braces.
  • #24
  • May 21, 2013 7:04am May 21, 2013 7:04am
still didn't got answer for my query where I can read more about this any websites or any e books please kindly suggest me something. I didn't found any info about this searched over and over on net and library no clear definition Please help me where to begin
  • #25
  • May 21, 2013 7:14am May 21, 2013 7:14am
Quoting Eagleprice
still didn't got answer for my query where I can read more about this any websites or any e books please kindly suggest me something. I didn't found any info about this searched over and over on net and library no clear definition Please help me where to begin
Well, I started with the two threads on FF I already mentioned. It may seem a bit complex on the first look, but with some effort it'll be become more understandable. I then googled the terms that were frequently mentioned in the threads and read several academic papers on market microstructure. Regarding books, "Trading & Exchanges" by Larry Harris and "Order Flow Trading for Fun and Profit" are the two I've found useful.

I would generally stay away from any software that promises you some kind of advanced order book or order insights, especially for the FX market.
  • #26
  • May 21, 2013 9:27am May 21, 2013 9:27am
I saw a dude use luxvol for hidden volume and DOM from futures market. he traded when 300 lots or more hit the market ( so much for a trillion dollar market -85%+ is hedging ) betting on trend reversal on M1.he made tons of cash even in this era of HFTs.I could not even grasp what he was doing and returned to my hit and miss system.

This market contains some participants who are so ahead of the curve you have to ask yourself what are your chances of success playing with such skilled opponents.
wo-yoy! wo-yoy! wo-yoy! wo-yoi! wo-yoy-yoy-yoy!
  • #27
  • May 21, 2013 9:54am May 21, 2013 9:54am
Quoting pemully
I saw a dude use luxvol for hidden volume and DOM from futures market. he traded when 300 lots or more hit the market ( so much for a trillion dollar market -85%+ is hedging ) betting on trend reversal on M1.he made tons of cash even in this era of HFTs.I could not even grasp what he was doing and returned to my hit and miss system. This market contains some participants who are so ahead of the curve you have to ask yourself what are your chances of success playing with such skilled opponents.

Yep hedging is a big one,
also equity/fixed income flow transactions.
Corporates= import/exports and hedging to name but a few.
Central Banks=you name it they do it.
You can remain irrational longer than you can remain solvent.
  • #28
  • May 21, 2013 10:21am May 21, 2013 10:21am
If you want to see order flow in action go check out orderflowanalytics on youtube.
  • #29
  • May 21, 2013 12:22pm May 21, 2013 12:22pm
there is someone at babypips ,his name is dali ,he has a good thread there about OFT .
  • #30
  • May 21, 2013 12:26pm May 21, 2013 12:26pm
OP.. I think by now your question must have been answered, besides the fact that there are two distinct groups, the ones who believe OF works and the ones who don't. End of the day, it comes down to you and your psyche of trading. Maybe you are made for trading OF... maybe you are not (think, traders who like to trade with rainbow MA's and naked PA traders).

My 2 cents:

OF traders think the rest of the forex trading methods are crap and that they don't work... which is true only to a certain extent. If you google for the term, you might come across a nice website which offers a free PDF download (and later links to a book/course that offers intro to OF) that completely trashes everything.. from the methods of Gann to Larry Williams. The irony though is that the PDF subtly upsells order flow and entices you to buying a copy from another (I guess its his friend's site) on OF.

Those who think OF is crap... it could be for many reasons.. from the dislike of trading the M1 charts (which most traders think is VERY noisy, while OF believers think otherwise) to as someone pointed out, no true DOM in a decentralized market such as Forex.

My suggestion, read up on it (there are some great threads here on FF), try it and if you think it isn't suited to your style, move on.
  • #31
  • May 21, 2013 2:38pm May 21, 2013 2:38pm
Quoting jw1981
OP.. I think by now your question must have been answered, besides the fact that there are two distinct groups, the ones who believe OF works and the ones who don't. End of the day, it comes down to you and your psyche of trading. Maybe you are made for trading OF... maybe you are not (think, traders who like to trade with rainbow MA's and naked PA traders). My 2 cents: OF traders think the rest of the forex trading methods are crap and that they don't work... which is true only to a certain extent. If you google for the term, you might come across...
I know a few traders that apply a mix of OFT concepts and technical analysis on the higher timeframe charts, so it is not necessarily only a method tradeable on the minutes charts.

In the end, I see the OFT concepts as something universal and I know again several traders that apply it in combination with other, "more common" concepts. OFT is not a religion, no need to dislike every other method. If someone feels comfortable using more technical analysis in mix with OF concepts than fundamental and sentiment analysis, he should do it.

There are always a few overexcited traders and they make it sound like a cult. What's more important is that you have a method that you fully understand, you understand its strengths and weaknesses and you feel confident applying it.

I believe that the OFT concepts I apply give me an edge in the markets and help me reading the markets much better, but I do not critize other methods or look at them as stupid or blind people. If someone who uses purely technical analysis is achieving consistent profits, he shall have my respect. As we know trading is large part psychology.
  • #32
  • May 21, 2013 3:38pm May 21, 2013 3:38pm
Order Flow trading is trading directly from the charts without using any indicators , only using support/resistance or supply/demand to make ur trading decisions.
  • #33
  • May 21, 2013 3:41pm May 21, 2013 3:41pm
I have to call this something. Order Flow fits this price action.

Example

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  • #34
  • May 22, 2013 12:45am May 22, 2013 12:45am
I digged deeper again for another day and found out some important things that some people believe in OFT and some people believe it's a crap some say it is a part of sentiment analysis I gone through some threads in FF, babypips etc and learned a bit about OFT ,I think it's not about Smaller or larger time frames or any systems it's a mindset that we need in order mechanics to look inside the market ,Thinking about what big boys are doing,why they need liquidity ,what's the reason they are hunting our stops,the logic behind OFT is that orders moves the market not any news and also it provide information on our technical pattern rationalization means technical patterns should be traded in different way because once the big guys see the patterns they try to hunt the stops for liquidity, its ok and seems to be understandable why they do this,And my question here is will they hunt the stops on bigger time frames like H4,D1,Weekly etc
  • #35
  • May 22, 2013 1:35am May 22, 2013 1:35am
Quoting Eagleprice
still didn't got answer for my query where I can read more about this any websites or any e books please kindly suggest me something. I didn't found any info about this searched over and over on net and library no clear definition Please help me where to begin
have you checked 2nd Skies Forex. They have a cool video on order flow there
http://2ndskiesforex.com/forex-video...d-transitions/

Check out some Georgetrio videos too.

I think these should answer your question
  • #36
  • May 22, 2013 2:17am May 22, 2013 2:17am
Quoting Eagleprice
I digged deeper again for another day and found out some important things that some people believe in OFT and some people believe it's a crap some say it is a part of sentiment analysis I gone through some threads in FF, babypips etc and learned a bit about OFT ,I think it's not about Smaller or larger time frames or any systems it's a mindset that we need in order mechanics to look inside the market ,Thinking about what big boys are doing,why they need liquidity ,what's the reason they are hunting our stops,the logic behind OFT is that orders moves...
You are already making good progress, keep it up!

Stop hunts occur frequently and yes, you can target the stops on the higher timeframes. In fact, the longer a certain pattern is in play, the larger the stops which have accumulated above/below.

As example, USD/JPY failed to break above the 100.00 level several times during the past month and buy stops above were growing larger and larger. That sudden spike after it broke above was caused by stops getting triggered and momentum players buying in thin liquidity.

Now, you can either wait for momentum to build, i.e. you could have entered once it rallied above 99.50 with a tight stop and see if it breaks above 100 or you could have swing traded, trying to accumulate long positions on pullbacks, anticipating a break of 100.
  • #37
  • May 22, 2013 4:24am May 22, 2013 4:24am
If only George Soros is my father
then I will clearly see the order flow,,ha,ha,,
S.C.
Attached Image
if there is something you should keep secret,simply just save it,, so, just
  • #38
  • May 22, 2013 5:45am May 22, 2013 5:45am
Price goes up..price goes down . It's magic... just dont ever trade a sulk.
All systems of divination, like music itself,work through patterns.
  • #39
  • May 23, 2013 1:48am May 23, 2013 1:48am
Quoting sandycarrot
If only George Soros is my father then I will clearly see the order flow,,ha,ha,, S.C. {image}

A great analogy is also a good quotes :
If only George Soros is my father
then I will clearly see the order flow,,

salaam
  • #40
  • Edited 5:44am May 27, 2013 4:54am | Edited 5:44am
As already said many times in this forum, orderflow trading is a mindset. It is not a trading system, it not a trading method, it is not reading the DOM, it is a way of seeing and conceptualizing the market place.


From the knowledge that orders are moving price, the goal of an orderflow trader is to identify reasons that are causing them to get triggered.


The answer lie in understanding what market participants are basing their trading decisions on, understanding the market inefficiencies that it creates, and profiting from those inefficiencies.
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