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Order flow trading thread

  • #1
  • First Post: Edited 2:57pm May 13, 2014 2:46pm | Edited 2:57pm
is there anyone here who trades order flow, I want to start a thread but not to teach anyone because I am still learning, but rather to bounce around ideas. I realize most traders on here are mostly technical in the classic sense or fundy or a mixture of both. But I would like to start an order flow thread to discuss some ideas and different ways of seeing the market, and maybe talk to some flow traders about how they decide on attacking the flow of money from one currency to the next. If there is enough people I might add more information about the subject and how i use it to trade, if not i'll just go back to discussing technical.
Being a trader is lonely, but being a great trader is lonelier still
  • #2
  • May 13, 2014 3:07pm May 13, 2014 3:07pm
Quoting saneblane
is there anyone here who trades order flow, I want to start a thread but not to teach anyone because I am still learning, but rather to bounce around ideas. I realize most traders on here are mostly technical in the classic sense or fundy or a mixture of both. But I would like to start an order flow thread to discuss some ideas and different ways of seeing the market, and maybe talk to some flow traders about how they decide on attacking the flow of money from one currency to the next. If there is enough people I might add more information about...
i am still learning order flow,price action, how to catch big boys etc.. Do you also use cot sentiment and stop clusters on chart?
  • #3
  • May 13, 2014 3:13pm May 13, 2014 3:13pm
Quoting Naokia980
{quote} i am still learning order flow,price action, how to catch big boys etc.. Do you also use cot sentiment and stop clusters on chart?
No I don't. I use a custom made indicator to show when money is flowing and in out of currencies live. I always trade currencies that are doing the opposite of the USD to get a double edge. That's the basic info of it. How do you use the COT in your trading? and have you gotten good result so far using it?

Edit: Note to anyone that might post, this is just a thread I started on a whim, I don't expect any flow masters to be interested in this thread, so if you're learning it or just started to practice add something to the thread. My philosophy is you can learn something from anyone. Just be respectful and leave your biases at the door.
Being a trader is lonely, but being a great trader is lonelier still
  • #4
  • May 13, 2014 3:31pm May 13, 2014 3:31pm
I traded different techniques and style but flow is without a doubt the best way to trade forex for me at least. Technical analysis, and fundamentals, and support, resistance, and all good for sure, but when it's all said and done, the market is going to fill orders whether agreeing or disagreeing with your analysis, it could care less about your analysis. The thing about flow also is that unless the market is moving you're not in a trade so it takes some of the guess work out. Some people trade flow based on advanced information like where the big orders are waiting to be filled on a chart, but I don't have that information so my trades are normally lagging a little.

It would be good to hear how other flow traders get there information and what the thought process is for them to decide which currencies to bet on. As you know in flow, sometimes you have a choice of at least 3 pairs at anytime that can make you pips. But since this is FF it might be too much to ask.
Being a trader is lonely, but being a great trader is lonelier still
  • #5
  • May 13, 2014 3:40pm May 13, 2014 3:40pm
Quoting saneblane
I traded different techniques and style but flow is without a doubt the best way to trade forex for me at least. Technical analysis, and fundamentals, and support, resistance, and all good for sure, but when it's all said and done, the market is going to fill orders whether agreeing or disagreeing with your analysis, it could care less about your analysis. The thing about flow also is that unless the market is moving you're not in a trade so it takes some of the guess work out. Some people trade flow based on advanced information like where the...
This is first questions who strarted to trade order flow trading. There are good and capable of order flow information sites. You can find answers via useful articles on http://www.orderflowtrading.com/ForexNews/Articles.aspx
  • #6
  • Edited 4:17pm May 13, 2014 3:45pm | Edited 4:17pm
Quoting Naokia980
{quote} This is first questions who strarted to trade order flow trading. There are good and capable of order flow information sites. You can find answers via useful articles on http://www.orderflowtrading.com/ForexNews/Articles.aspx
I honestly don't know who first started flow trading. It was just a natural progression of my trading styles, after using many different techniques and noticing that some are ok in other markets, but in Forex, the movement of money trumps everything. A lot of the things I know I am still researching and trying to develop on my own. There isn't really much useful material on the subject when it comes to forex. And thanks for your COT idea, I will look out for it and see how it affect the market, and if it affects it enough time to be counted on for some profits.

Ok Thanks for the link you provided also, but like I said not much information (at least to me anyway). For example, the more currencies that are stonger than the USD, the easier it is to make profits from it. I don't take a trade unless at least 3 currencies are significantly stronger or weaker than the USD (money flowing in or out of them). If the JPY is one of the stronger currencies against the USD then you know the dollar is under serious pressure. These are the kinds of information that are important but you won't find them on other sites, at least not that I have seen, but are important in knowing where money is coming from or going to. Of coarse someone can make a trade when at least 4 currencies are stronger than the USD, but that's just a preference if you understand where I am coming from. That's what I also like about Flow, the patterns you are looking for are not on a chart but on currency behavior itself. Of coarse you can use the info at support/resistance or with any pattern trading style you have. but i prefer to do without, because the more you trade flow the more you realize that the market doesn't care the reason why currencies are being bought and sold, just that they are being bought and sold. Hope that helps
Being a trader is lonely, but being a great trader is lonelier still
  • #7
  • May 13, 2014 4:17pm May 13, 2014 4:17pm
very interesting thread, thank you saneblane, will be following
  • #8
  • May 13, 2014 4:52pm May 13, 2014 4:52pm
Quoting Owaisfahad
very interesting thread, thank you saneblane, will be following
Lol I try my best. I know FF has had discussions about this, but the flow traders always leave, because not a lot of people here trade this way, so I am trying to get some more ideas and point of view on the subject before I make my exit also.
Being a trader is lonely, but being a great trader is lonelier still
  • #9
  • May 13, 2014 9:08pm May 13, 2014 9:08pm
(I'm just dropping by, so I won't be following the thread much.)

Here are some ideas for y'all to chew on:

1. If you employ horizontal S/R lines (manually-drawn, fibonacci, whatever etc etc) in your trading decisions, then you're trading order flow, whether you know it or not, or even whether you like it or not.

2. Not all order flow information is based on horizontal S/R lines, but ALL horizontal S/R lines are based on order flow.
I'm not trying to convince anyone. I'm not in the "convincing" business.
  • #10
  • Edited 9:30pm May 13, 2014 9:14pm | Edited 9:30pm
Quoting skenobi
(I'm just dropping by, so I won't be following the thread much.) Here are some ideas for y'all to chew on: 1. If you employ horizontal S/R lines (manually-drawn, fibonacci, whatever etc etc) in your trading decisions, then you're trading order flow, whether you know it or not, or even whether you like it or not. 2. Not all order flow information is based on horizontal S/R lines, but ALL horizontal S/R lines are based on order flow.
You're right. I might add the different ways that flow comes in but I am so lazy, don't know when i'll do it. But Whatever name you want to assign to a place on the chart whether S/R, high or low,it isn't any different than any where else on the chart, the same rules apply, whenever more supply than demand is there price is going to plummet, no matter where on the chart it happen to be, support is only support when it has the strength to withstand the selling. I am going to discuss this in more detail tomorrow if I have time.
Being a trader is lonely, but being a great trader is lonelier still
  • #11
  • May 13, 2014 9:28pm May 13, 2014 9:28pm
Here's my mental image/model of the market - let me know how it fits into the order flow perspective:

Price is just moving around trying to fill as many orders as possible. Sometimes it will move to a point where there'll be a shortage of liquidity, in which case a reversal in price will occur.

At the micro/local level, this may be a single price or a small range of prices within 5-10 pips.

At the macro/global level, this is likely to be a much wider price zone.

If you are operating in a intra-day environment, then you want to capture the large intra-day moves with minimal risk and this involves doing some sort of analysis to guess where these price turns might occur and then positioning yourself to buy/sell at those prices. This method complements a small SL, high TP (high RR) trading method.

Alternatively, you can wait for the price turn to occur and get in when the price move speeds up. This complements a low RR trading method.

I am inclined to think that the latter does not really work in markets these days because intra-day moves are getting more and more stifled - only those who can correctly guess the zones of reversal can win out in the long term.

How do you guess these areas you may ask? That in my opinion is a skill that's developed after years of experience with the markets and relies heavily upon judgment and intuition of the trader. One thing you can be sure of is that the market comprises of human beings, and we are creatures of habit and most of us face the same psychological challenges - this provides a behavioural starting point for choosing possible zones. Another starting point could be based on expectations. How do expectations form? Suppose they are formed based on a conditioning set of information that includes past prices, expected equilibrium price, and all news information - how do we determine the weights each piece of information has on the expected future price, or more importantly on where and how traders will place their orders to capture profits based on these expectations? This is largely a matter of judgment that can only be sharpened over time.

Some of these things don't change; some change over time as society grows smarter and evolves as a whole. Trading today while similar in some aspects (due to the behavioural constants) will be very different from trading in 10 years' time. The markets are always evolving and are a function of society - traders have to stay relevant and change is the only constant. And in my humble opinion, the only way we can adapt to these changes is to learn how to use our right brain and that means dropping the idea that a simple set of 3-5 strict rules can possibly be an effective starting point to predict zones of reversal in the market.
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  • #12
  • Edited 10:40pm May 13, 2014 9:45pm | Edited 10:40pm
Quoting shellsnail
how do we determine the weights each piece of information has on the expected future price, or more importantly on where and how traders will place their orders to capture profits based on these expectations? This is largely a matter of judgment that can only be sharpened over time. Some of these things don't change; some change over time as society grows smarter and evolves as a whole. Trading today while similar in some aspects (due to the behavioural constants) will be very different from trading in 10 years' time. The markets are always evolving...

A lot of it might be through experience you are right. And also some of it has to do with the way that prices moves when it's judge over the entire market. Price acts differently than you might think when compared against more than one currency at a time.
Being a trader is lonely, but being a great trader is lonelier still
  • #13
  • Edited 10:51pm May 13, 2014 9:48pm | Edited 10:51pm
Quoting saneblane
{quote} A lot of it might be through experience you are right. And also some of it has to do with the way that prices moves when it's judge over the entire market. Price acts differently than you might think when compared against more than one currency at a time. For example, when EURUSD is being heavily bought in a downtrend, the USD sinks against other currencies and the EUR rises against others. It might not appear on the EURUSD chart, but based on the tick activity that came in the market at the time, you can assign a number to the amount of...
Basically if I am understanding you right, you're saying that there might be arbitrage opportunities between the different pairs not taken advantage of?

Don't you think such an edge will disappear over time as more HFTs enter the forex market?
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  • #14
  • May 13, 2014 9:58pm May 13, 2014 9:58pm
Quoting shellsnail
{quote} Basically if I am understanding you right, you're saying that there might be arbitrage opportunities between the different pairs not taken advantage of? Don't you think such an edge will disappear over time as more HFTs enter the forex market? Or are you saying that you can forerun the buying on some pairs by observing buying on others? This is possible actually, if banks sell some currencies before others - it might be a reliable estimator/indicator that allow you to forerun the banks.

Lol you turn this into a Q and A? You are not forerunning the banks at all, it's more like moving closely with them. The minor gaps that present themselves in the market are a result of their activity. I don't know if HFT algos might affect it, I can't see the future, for all I know they are skimming on the behavior too. There are more than one bank in forex and you might be right, I might be following one and leading another, but in a sense I am always lagging the movements of a someone, and don't know if I am out running anyone. It's just something I noticed while looking at price from a larger standpoint as oppose to a single pair.


That's the reason why I said it's on going research, because there are still things I don't know. But I am happy for now I guess. Just wanted to start this thread to hear other people's perspective on the subject. i am sure there are a few people here that know more about me on this subject, just want to wake a few of them up and hear some thoughts.
Being a trader is lonely, but being a great trader is lonelier still
  • #15
  • May 13, 2014 10:06pm May 13, 2014 10:06pm
Quoting saneblane
{quote} Lol you turn this into a Q and A? You are not forerunning the banks at all, it's more like moving closely with them. The minor gaps that present themselves in the market are a result of their activity. I don't know if HFT algos might affect it, I can't see the future, for all I know they are skimming on the behavior too. There are more than one bank in forex and you might be right, I might be following one and leading another, but in a sense I am always lagging the movements of a someone, and don't know if I am out running anyone. It's just...
Sounds great If an indicator is made from this, depending on how responsive/reliable the indicator is, it could very well double any existing entry edge/double reward-risk by allowing a tighter stop-loss/ reduce drawdown.

If it works out in practice, a strong profit multiplier for any system no doubt.
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  • #16
  • May 13, 2014 10:12pm May 13, 2014 10:12pm
Quoting shellsnail
{quote} Sounds great If an indicator is made from this, depending on how responsive/reliable the indicator is, it could very well double any existing entry edge/double reward-risk by allowing a tighter stop-loss/ reduce drawdown. If it works out in practice, a strong profit multiplier for any system no doubt.

It's on going research man, i probably won't be finished for another year or so to the level that I am satisfied (I like to do things in totality). I am trying to get an indicator modified right now so I can get hard data to better know when things are going to happen. I might be able to profile the behavior of the market before a big move. It's a lot of work and a lot of it might be over my head. I am not a mathematician, I am a network technician, so some things might be beyond me. But that's why I started this thread to hear some ideas. Even if I can't improve it anymore, i would be satisfied with that too, I just like to keep pushing and learning.
Being a trader is lonely, but being a great trader is lonelier still
  • #17
  • May 13, 2014 10:19pm May 13, 2014 10:19pm
Quoting saneblane
{quote} It's on going research man, i probably won't be finished for another year or so to the level that I am satisfied (I like to do things in totality). I am trying to get an indicator modified right now so I can get hard data to better know when things are going to happen. I might be able to profile the behavior of the market before a big move. It's a lot of work and a lot of it might be over my head. I am not a mathematician, I am a network technician, so some things might be beyond me. But that's why I started this thread to hear some ideas....
Ok I see.. But given that most retail traders don't have the most direct connections to the markets, and that there are often lags and delays in real time especially around big news announcements, even if it shows to work in theory it might not be possible to put into practice because of latency, requotes and slippage - might want to consider that.
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  • #18
  • Edited 10:45pm May 13, 2014 10:25pm | Edited 10:45pm
Quoting shellsnail
{quote} Ok I see.. But given that most retail traders don't have the most direct connections to the markets, and that there are often lags and delays in real time especially around big news announcements, even if it shows to work in theory it might not be possible to put into practice because of latency, requotes and slippage - might want to consider that.

It's not just for lower timeframes man. Ok look at it this way, you ever throw a rock in a the water, the bigger the rock the bigger the ripples right? Well when volume hits the market, it's doesn't hit the market the same way, the more money that comes in the market, it behaves very differently than a little amount of volume. There are gaps that are created based on the share size of the different orders in the market, the bigger the order the more it ripples through the market. If yo really think about it, the market is like a wheel, since all currencies are connected. If one is falling one is rising, so when volume comes into the market and you know the currency that brings it in, you could imagine that would give an edge right?

I edited out some stuff, don't really want all my info out there yet.
Being a trader is lonely, but being a great trader is lonelier still
  • #19
  • May 13, 2014 10:56pm May 13, 2014 10:56pm
Quoting saneblane
{quote} It's not just for lower timeframes man. Ok look at it this way, you ever throw a rock in a the water, the bigger the rock the bigger the ripples right? Well when volume hits the market, it's doesn't hit the market the same way, the more money that comes in the market, it behaves very differently than a little amount of volume. There are gaps that are created based on the share size of the different orders in the market, the bigger the order the more it ripples through the market. If yo really think about it, the market is like a wheel, since...
Yes I get where you are coming from but I haven't really figured out a good method to trade higher time frames (H4 and above) yet though - still learning and experimenting - so I can't really comment on whether this will work...
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  • #20
  • Edited 11:19pm May 13, 2014 11:05pm | Edited 11:19pm
Quoting shellsnail
{quote} Yes I get where you are coming from but I haven't really figured out a good method to trade higher time frames yet though - still learning and experimenting - so I can't really comment on whether this will work...

It works, but it's not perfect, nothing is perfect, it has been the best result though, good trades with tight stops. There are still things I haven't learn yet but it does make it easier when you know know which currencies are in demand. I don't have direct info from the banks, so this is the only way I can find out where money is flowing from and where it is going too. There is one time frame that it works the best on, and there are other things I have to figure out. But it might be it works because it's a rare side of the market that a lot of people don't get to see. If more people used it I am sure that the banks would do something about it. Moving average and the likes use to work until the big guys used it against us. So for now ama try to keep most of it under raps.

I have learned VSA and the likes but when it comes to this I am in uncharted territory. A mathematician and a programmer would really help with something like this, but trading is hard work, so I never expected to find the answers easily. Lol I am better off trading metal, time for me to invest in other things, other than Forex.
Being a trader is lonely, but being a great trader is lonelier still
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