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Order flow trading thread

  • #41
  • May 14, 2014 4:26am May 14, 2014 4:26am
Great thread - so this is more or less how I trade intraday (I also swing trade).

Looking for the releative strengths / weaknesses of currencies at the start of the day. I look for when a currency is cheap (if it is long on the day) or expensive (it is short on the day). When I say currency I mean the currency as a whole ie. the us major and all the currenies minor pairs.

There is a youtube video called Billion DOllar Day (1985 on BBC2 originally) about 3 fx dealers, ok the market was a lot different there but after many viewings you start to pick out some gems...."the whole world is short sterling" for example...so why would you long sterling against all that Big money ?

I use charts but would eventually like to just trade prices no charts....through my bloomberg feed.
  • #42
  • May 14, 2014 4:34am May 14, 2014 4:34am
Quoting longshort101
Great thread - so this is more or less how I trade intraday (I also swing trade). Looking for the releative strengths / weaknesses of currencies at the start of the day. I look for when a currency is cheap (if it is long on the day) or expensive (it is short on the day). When I say currency I mean the currency as a whole ie. the us major and all the currenies minor pairs. There is a youtube video called Billion DOllar Day (1985 on BBC2 originally) about 3 fx dealers, ok the market was a lot different there but after many viewings you start to pick...

Hahah. I watched that video before man, I watch a lot of them to get ideas of how different traders dabble in forex, and some of them do not use charts at all. I almost turned it off though because it looked so different from today, but it essentially the same way it works today. I think ama give it a watch some time in the week.

Edit: the quality of the video is so poor my eyes bleed Lol.
Being a trader is lonely, but being a great trader is lonelier still
  • #43
  • May 14, 2014 4:38am May 14, 2014 4:38am
Its my favourite trading video - another gem is where the HK broker wants to put a big order in but disguises it though other currencies on other trading desks, again totally relevent and important to watch the minor pairs for clues to the major movement.

There are a number of versions on youtube you can find a better quality one.

The only thing depressing in the video is the guy who at the age of 39 feels hes past it !
  • #44
  • May 14, 2014 5:07am May 14, 2014 5:07am
Interesting, booking myself a place in this thread for later.
  • #45
  • May 14, 2014 5:24am May 14, 2014 5:24am
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.
I agree with you. Order flow = Trading

But it's commercial appeal has been very impressive.
like totally failure brah
  • #46
  • May 14, 2014 5:28am May 14, 2014 5:28am
For me FX is a game wholesale vs retail, like nearly every other business out there. The big players want to get some thing cheap mark it up and sell to retail.

I have worked in many industries where there is a wholesale price and retail price, a wholesaler would not dream of buying something at retail price, they want it cheap so can then mark it up. Then for a number of reasons (ignorance, no access to wholesale markets, lack of time) , Mr and Mrs Retail buy it higher its just the way it works.

In FX the commodity is money and lots of it. Its buying and selling money thats it.

So if Sterling started the day at 1.6 and is now 1.7, if the wholesalers want to buy more sterling they damn well dont want to buy it at 1.7 - in their thoughts the mug punters will buy at that price ! (Ok this is simplfied....but in my opinion thats the crux). So ask yourself if you were a wholesaler would you want to buy at the current price ?
  • #47
  • May 14, 2014 5:47am May 14, 2014 5:47am
Quoting longshort101
For me FX is a game wholesale vs retail, like nearly every other business out there. The big players want to get some thing cheap mark it up and sell to retail. I have worked in many industries where there is a wholesale price and retail price, a wholesaler would not dream of buying something at retail price, they want it cheap so can then mark it up. Then for a number of reasons (ignorance, no access to wholesale markets, lack of time) , Mr and Mrs Retail buy it higher its just the way it works. In FX the commodity is money and lots of it. Its...
Wholesale/retail is relative to range, but i see where you are coming from and i totally agree in fading highs/lows (nothing wrong with that at all).
But again, if the volume hitting the market is showing intentions of rallying then providing volume holds s expected i will buy with them, even if its a breakout of highs because in the end it is the size of money that dictates.
  • #48
  • May 14, 2014 6:01am May 14, 2014 6:01am
aha sooo

What are the rules to buy a strong currency when its weak? Why?
Which currency you sell? Why?
What is the level you are buying it? Why?
Where are potential targets of your trade? Why?
What changes next seconds when you enter? Why?
How do you monitor those changes? Why?
What are steps towards Optimizing PL? Why?
  • #49
  • May 14, 2014 6:12am May 14, 2014 6:12am
Quoting 21vs7
aha sooo What are the rules to buy a strong currency when its weak? Why? Which currency you sell? Why? What is the level you are buying it? Why? Where are potential targets of your trade? Why? What changes next seconds when you enter? Why? How do you monitor those changes? Why? What are steps towards Optimizing PL? Why?
The main appeal of the "order flow" concept is the meta gaming aspect which revolves mainly around a type of game theory. The other part of it is just the mechanics of liquidity. I think any seasoned trader whether they be fundamental, technical or both slowly develops this understanding as second nature. Whether it be at a conscious or unconscious level. To say you're not a technical or fundamental trader but an "order flow" trader I think is taking the piss. But whatever works for you is usually best for you.
like totally failure brah
  • #50
  • May 14, 2014 6:17am May 14, 2014 6:17am
Quoting longshort101
For me FX is a game wholesale vs retail, like nearly every other business out there. The big players want to get some thing cheap mark it up and sell to retail. I have worked in many industries where there is a wholesale price and retail price, a wholesaler would not dream of buying something at retail price, they want it cheap so can then mark it up. Then for a number of reasons (ignorance, no access to wholesale markets, lack of time) , Mr and Mrs Retail buy it higher its just the way it works. In FX the commodity is money and lots of it. Its...

Yes, it's true.


If you look at Market Profile chart you can see that Big players action occurs at extreme levels. (you can see on bar or candletsitck charts too)
  • #51
  • May 14, 2014 6:28am May 14, 2014 6:28am
Quoting Profile
{quote} Yes, it's true. If you look at Market Profile chart you can see that Big players action occurs at extreme levels.
Can you show me?
like totally failure brah
  • #52
  • May 14, 2014 6:33am May 14, 2014 6:33am
Quoting 21vs7
aha sooo What are the rules to buy a strong currency when its weak? Why? Which currency you sell? Why? What is the level you are buying it? Why? Where are potential targets of your trade? Why? What changes next seconds when you enter? Why? How do you monitor those changes? Why? What are steps towards Optimizing PL? Why?
Hello 21vs7 - All the answers are in many of the threads in FF combined with experince. Quite a few money flow threads on the site - some of them are 100s of pages long but contain golden nuggets of information.

So I am not brushing off your questions as such just that the answers you seek are probably better explained by others.
  • #53
  • Edited 7:58am May 14, 2014 7:11am | Edited 7:58am
I trade order flow -- (my own brand)
When an area of "high price activity" (price churning within a very narrow range ) can be identified on the chart.
Is there any way to determine if this is a bullish or bearish activity ?
  • #54
  • May 14, 2014 7:30am May 14, 2014 7:30am
Quoting simonb
{quote} I agree with you. Order flow = Trading But it's commercial appeal has been very impressive.
Every trader is trying to guess the direction of the order flow. The difference is that some of the traders know how the order flow is generated and base their strategies on these principles. The others just combine indicators, patterns, etc. First group of traders has some edge and can quickly update their strategies when the market changes and also can design strategies that give some edge.
  • #55
  • May 14, 2014 7:33am May 14, 2014 7:33am
Quoting srmfx
{quote} Every trader is trying to guess the direction of the order flow. The difference is that some of the traders know how the order flow is generated and base their strategies on these principles. The others just combine indicators, patterns, etc. First groups of traders has some edge and can quickly update their strategies when the market changes and also can design strategies that give some edge.
True, but at a retail level you are still taking second hand rates from those who actually deal you the prices. I traded "order flow' for a long while.. And I'm sorry but when price gaps 50 pips in 3 seconds it is simply irrelevant if I knew it was going to do that for reason "X" or not.

I trade technically and am in before it happens. Before the "informed" confirm their bias. I'm not at all knocking the principals of being in the "know" but somehow to me THAT is the "noise" these days. But for some years it was certainly a confidence booster.

Do I have an "edge"? OK.. maybe.. all I know is I make more money doing what I'm doing now rather than trying to be some clever dick "knowing the order flow".. and I was pretty good at that as well
like totally failure brah
  • #56
  • May 14, 2014 7:48am May 14, 2014 7:48am
Quoting simonb
{quote} True, but at a retail level you are still taking second hand rates from those who actually deal you the prices. I traded "order flow' for a long while.. And I'm sorry but when price gaps 50 pips in 3 seconds it is simply irrelevant if I knew it was going to do that for reason "X" or not. I trade technically and am in before it happens. Before the "informed" confirm their bias. I'm not at all knocking the principals of being in the "know" but somehow to me THAT is the "noise" these days. But for some years it was certainly a confidence booster....
You can still trade technically and use the order flow principles in your strategy design.
  • #57
  • May 14, 2014 7:49am May 14, 2014 7:49am
Quoting srmfx
{quote} You can still trade technically and use the order flow principles in your strategy design.
Yep. or you can just not!

Order flow is BS.. It sold some books, that's about it. Order flow is trading as it's always been. That is my only point.

Fundamental
"Sentiment": is just a fundamental feel (understanding of the current economic situation, perhaps the way certain "players" are positioned and the way news or events will affect it)

Technical Analysis
"Stops" "Limits" "Orders" "option Barriers": Usually just your run of the mill S/R Supply/Demand Round Number/ psych, levels

Hope I didn't ruin the ending for you
like totally failure brah
  • #58
  • May 14, 2014 7:57am May 14, 2014 7:57am
At the end of the day you are just waiting around for something you have specified to happen... Just like any other trade(r).

Disclaimer:
I have 7 years trading experience and these are my thoughts. I'm quite a happy and profitable trader and these are just my opinions.
like totally failure brah
  • #59
  • May 14, 2014 8:03am May 14, 2014 8:03am
Quoting simonb
{quote} Yep. or you can just not! Order flow is BS.. It sold some books, that's about it. Order flow is trading as it's always been. That is my only point. Fundamental "Sentiment": is just a fundamental feel (understanding of the current economic situation, perhaps the way certain "players" are positioned and the way news or events will affect it) Technical Analysis "Stops" "Limits" "Orders" "option Barriers": Usually just your run of the mill S/R Supply/Demand Round Number/ psych, levels Hope I didn't ruin the ending for you
If you are referring to some "Order Flow" methodolgy that is build around some "level II" info. I agree it's total BS.
I think I need to find a different name for the valid stuff...
It would be like "price flow" or price facilitation -- but it's already been used
  • #60
  • May 14, 2014 8:03am May 14, 2014 8:03am
Quoting simonb
{quote} Yep. or you can just not! Order flow is BS.. It sold some books, that's about it. Order flow is trading as it's always been. That is my only point. Fundamental "Sentiment": is just a fundamental feel (understanding of the current economic situation, perhaps the way certain "players" are positioned and the way news or events will affect it) Technical Analysis "Stops" "Limits" "Orders" "option Barriers": Usually just your run of the mill S/R Supply/Demand Round Number/ psych, levels Hope I didn't ruin the ending for you
You can't. I trade for more than 15 years and worked as risk manager and FX dealer also.
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