Simple Uncomplicated (obvious) trading

WOW...many questions...I will try to answer the best I can.
No. the term "order flow" refers literally to the flow of orders that come into the market. While it is not possible to actually see this, especially in a decentralized market-as is the forex market-you can "see" its affect on prices. Support/Resistance is a technical analysis term that I no longer employ and feel is useless.

a balanced order flow refers to a state in the market where all the orders (buy orders and sell orders) have been matched with each other. At this point (assuming each new order can be matched again with an opposing order) price will not move any higher or lower because both the buyer and seller have "agreed" on value...thus prices become stable. This condition can be evidenced by the size and/or shape of a given candle and can also occur inside the candle and thus be masked. It can also take several candles grouped together to "see" the balance in the order flow. A very good example of a currently balanced order flow can be seen on the GBP/USD daily chart over the past 6 days.

A daily candle does have a cycle of highs and lows...however this is NOT the cycle I am referring to when I mention a cycle of "balance-->unbalance-->balance". Again I refer to order flow and how that affects price...in fact most often the "swing points" that most refer to in technical analysis occur while the market is trying to balance the order flow.

I utilize the daily chart here on this thread so that those following along can see the post no matter where they are in the world and still have time to follow along in real time...it would not be so with an hourly chart or even a 4 hr chart. However, I do use ALL time frames in making decisions. You must understand that in looking at different time frames...you are still looking at the same thing...the only difference is how much history to the left you are looking at...and how that history is organized...the the price you see on your chart whether it is a tick chart or a monthly chart is still the same price.

I am not willing to "forfeit" anything...however I must also be realistic. I do not have the gift of "fore-sight", thus I cannot say what will happen on the next tick, much less the next hour, or day, or week. I can only try to read what is happening NOW. If I see the market is balancing after an imbalance, I will try to tighten my stop while still keeping that stop out of range of the price action. This is what I do when I am trying to "ride" the price action...because a larger or a shorter time frame may yet still be unbalanced. If I saw that the entire market was balanced at the same time (a very rare occurrence) I would simply exit at the best price I could...but I cannot say when that will be...No one can...anyone who says they know the future is a liar or a fool.

Thus I try to keep as much profit as possible while still retaining the ability to participate if the next imbalance occurs in my favor...I don't think of it as "forfeiting" as much as I think of it as "preserving" profit...Every winning trade whether 1 pip or 1,000 adds to my account balance...and ultimately, THAT is the real reason we are all here.

Hi Gspajon,

That's really amazing - you explain it so much better than I can ask the question. It took me a while to formulate the questions because it feels like I'm feeling around in a dark room.
Can I ask a few more questions.....

.

So a balanced order flow and the cycles can be seen on any time frame - so do decisions made based on those candles require one to stay on that timeframe?
and it sometimes takes days for the balance to take place, when looking at the big picture

So how does one learn to get the feel for the order flows and the balance/imbalance- by practise? - months/years of looking at charts


I was really confused yesterday when USD inflation was better than expected, but EU went higher and today, USD durable goods came out worse and EU went lower - there's a lot more going on behind the scenes than I am able to interpret by reading news releases.

Your thread has a completely different approach to trading FX than anything I've ever come across. It makes complete sense. My friend who trades futures talks a lot about auction theory and order flows, but it's difficult for me to understand it.

You're right "forfeit" was the wrong term. I meant to say lock in a certain amount of profits....

Thank you so much for taking the time to respond, Gspajon.

Sclip...you sound like I did not too many years ago...your description of fumbling around in a dark room seems right on the mark. It has taken me the better part of a decade to work out what seems the easiest for me to understand, then design a method of trading based around that. I understand completely the confusion you must feel.

To answer your questions:
The use of multiple time frames...like anything else in this business...is always a balancing act. My friend and mentor, Jason Alan Jankowski, puts it this way...(I paraphrase)...the use of multiple time frames is like listening to a symphony orchestra. While it is possible to isolate only one instrument and hear its music, you are only experiencing a small piece of the entire work. And you are missing out the interweaving of all the different "voices" intended for your to experience.

In the same way, the markets are like an intricate piece of music. To isolate only one time frame is cutting yourself off from the majority of the market. At the risk of sounding haughty, I utilize all the time frames to try and determine which one is currently driving the market...like following a musical theme (or melody) as it is expressed first by the strings...then the horns...then the bass...only to be taken up by the woodwinds again...

It is complex and difficult to explain in just a few paragraphs, but to answer your question...NO I do not confine myself to just one time frame...I try to watch at least three at the same time whenever I watch the markets, so as to find the controlling theme and then follow it as it is expressed in different time frames. I know this concept sounds vague and perhaps too "cerebral" but I assure you it is not...but it does take practice and requires you to literally change how you think about price action and market behavior.

This is quite accurate. Balance in the order flow (as with anything, I believe) is a very precarious and imprecise thing. Balance can and does occur intraday but does not last very long. As well balance on a larger time frame can take days...even years to form...take a look at a gold monthly chart and you will see a balance that is still struggling to maintain and you will see it has taken two and a half years. It is never precise...that is why the concept of a single line that represents "support" or "resistance" is just foolish if not down right stupid.

Keep in mind here too...time is just another in the many variables in the market place. There is no predetermined "time" that the market uses to balance or imbalance...it can be quick and fleeting...or as mentioned above, take years...thus to say that one time frame or another is best...or even has "control" is an undesirable concept to have. Rather, to be patient and watch the price do what its going to do and wait for the right moment to enter, exit, trail stops...etc. Yes, this take LOTS of practice, patience, and time. And YES your social life WILL suffer. My wife recently ask me if her husband still lived in our house

While I am not by any means an expert on fundamental or technical analysis, I can say this. Most people I know who focus on this are trying to "divine" WHY participants do what they do, so they can anticipate it and join with them. As you've seen this approach leaves much to be desired....just like predicting the future, you cannot know what each participant in a 1.5 Trillion Dollar/day industry is thinking, or plan in advance how he/she/they will react to any given news announcement.

In my opinion (and I am often alone with it), the ONLY way to understand what it happening with the price action is to understand and "see" order flow...and forget about everything else. As you've seen, it doesn't matter how good or bad the news release is if everyone is trading against it. Follow the order flow and follow the market...forget about the concepts proliferated by those who have a proprietary interest in "selling" us something. It takes more time and dedication...and out-n-out, banging your head against the wall, frustration...but it is the ONLY thing (IMHO) that works for me.

With that said...I am happy to help and do offer classes in my unique way of looking at the market...I have not really spoken too much of them here, but am happy talk about it if you or anyone is interested...send me a PM and I will be happy to reply...

Hows that for commercialism??

Great post! :-)

I would love to take your classes. I will PM you.

However, I like use Elliott Waves in several TFs to see my way through the darkness. As written by Bill Williams and Jeffrey Kennedy (EWI), there is divergence in momentum in waves C and 5. (Wave C has 5 waves, and the 5th wave of wave 5 also has 5 waves, so I often am mistaken about which wave 5 I'm on)

Would I be able to incorporate EW to help guide me with the entries along with your course?

You are a more intelligent person than I if you can make heads or tails of Elliot Wave theory. It was one of those theories I feel I wasted my time on for several years. You mention of not knowing what wave your in is very common and even self proclaimed experts in its use disagree about it.

When learning to read and utilize order flow, I usually ask my students to leave behind any and all theories they are currently using to trade with. I honestly do not know enough about "EW" to say whether or not you can use it...but I can say this...you will most likely not need it and may just simply abandon it if you learn how to follow the market and its price action.

Again my way of looking at the market (while unique here) is NOT new nor did I "invent" it. (As much as I would love to claim the fame). It is literally the original way that most pit traders used "back in the day". The only thing I bring is I have developed a way to "see" it in graphical price action...(your charts).

I will not presume to disparage any method of trading especially if it works for you, but my personal belief about the markets is that there is NO math formula that can consistently predict human behavior...and price action is simply a graphical representation of human behavior. As Elliot Wave is almost pure math and not much about the human element, I have my doubts that it will interface well with the concepts I teach.

Thank you very much EZ...coming from you, this means a great deal and I appreciate it.

I just read your post.

sorry,
yes I'm interested
I will Pm you

[quote=gspajon;8164366]{quote} You are a more intelligent person than I if you can make heads or tails of Elliot Wave theoryquote]

I highly doubt that...

I am only able to use EW on current price action, not historical data
I am usually able to identify wave 3 (the big momentum one)
it's the wave 5 that usually throws me off and I enter too early as there are up to 9 internal waves in that wave 5
but as EW is not a consistent strategy for me I am ok to put it aside....

Those are really great trades. Unflinching...
I see you moved your stops up. Would you be scaling out 1 out of 2 positions. If yes, what would be your reason (criteria) to do so? or is it just feeling the balance /imbalance

trying to watch Tom alexander in preparation, but it's over my head

also....it's just an after thought but, if I'm not mistaken RN Elliott believed these waves were purely resulting from human emotion/action and these waves repeated over and over again, and they were fractal by nature

I have moved my stops...I was just checking things before I go to bed and found that AUD/USD, after balancing near the top of a large range, has now unbalanced against my positions, so I was stopped out with about 180 pips on the aggregate. As well I am seeing some balancing going on on the EUR/USD and have moved my stop in tighter. USD/JPY as well as USD/CAD are both stabilizing but my stops there are unchanged...for now. Clearly the entire USD complex appears to be balancing and as I am counter trend on most of these trades I am tightening stops to preserve profit..

There is no mistaking the fractal nature of price action and the human element that drives it...I sincerely think it is part of our genetic make up and that we unconsciously exhibit this in all things we do. That being said, the "fractal pattern" is another of those things that we can see AFTER the fact and are rarely visible in real time. In fact the very definition of a fractal point requires at least two candles AFTER the point has formed to define it as such...not much help when you are wanting to make a decision at the moment that fractal is (or is not) forming.

I digress...again I stress that seeing the areas where buyers and sellers are transacting and observing that effect on price action is what allows you (or anyone) to "know" when to act on the right hand edge of the chart.

I hope this explanation helps somewhat...I'm rambling now so I'll say good night.

Great thread gspajon! I am just beginning to apply a similar approach in my trading.

Thank you RuAc...I am pleased you have found something of value here.

Every time you look at a chart ask yourself one question: How can the market screw the most amount of people in the very near future? The news trading theory of good news makes the currency stronger is prime "let's screw them hard and fast" territory.

Hey Dopey, that maybe one of the most important factors for traders while assessing a possible trade...and rarely written about..

nice to see you around..


Hey gspajon...cool thread..




.

 Hi gspajon!
 
I love this thread.
Could you please explain how you look at the wicks, in terms of balance/imbalance. Would you be able to trade the same way if you switched to hi/lo bars?
How would that affect youre desicions?
 
/with regards