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Order Flow - Finding cluster of stops on chart
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Jan 5, 2011 8:58pm
|  | Member | | | | Lou Well here goes first post. Been in the background a long time learning. I have been interested in Darkstars orderflow/stop hunting bits of information. I know he talks about option buyers being exploited for the hunt, thus part of order flow. My example is the EUR/USD options maturity calander. The calander posts 1.3125 DIG 20M expires on 1/6/2011. If you look at the EUR/USD chart today 1/5/2011 you see something amazing at around 16:15. Maybe I am incorrect but it looks like it may be in play. My question is what does DIG or TC stand for and could it be a clue as to the flow of the market. Appears that the calls stand to benefit but we shall see how it plays out tonight and into this morning. Carnegie thanks for starting this thread. I never thought of orderflow this way and yes I have had my girlfriend stolen a few times. | 
Jan 6, 2011 2:18am
|  | Member | | | | Louie Quote:
Originally Posted by sumi Hello Louie,
to which calendar are you referring? where have you seen that?
thanks for the info! | It is the options maturity calandar. As Darkstar points out some of the information is useful. I find that lots of it is not. On needs to get a IFR news feed to see it or if you play with options your broker should have this information for you. Hopefully you have read through Darkstars posts. I have found some useful nuggets there with my style of trading. Hope this helps. | 
Jan 6, 2011 3:47am
|  | Member | | | | Louie Quote:
Originally Posted by xXTrizzleXx DIG is an abbreviation for Digital Option I believe, which would mean that as long as the strike price conditions are satisfied, then the option will be paid out. TC on the other hand I'm not quite sure.
And yes IFR News Feed can be chock-full of information, which can lead to the unfortunate dose of analysis paralysis.
Regards,
xXTrizzleXx | Thanks for the info. I have never heard of this type of option. I will have to do a little research on the FX exotic options. Hopefully someone knows what TC stands for. | 
Jan 14, 2011 12:51pm
|  | Member | | | | Louie Quote:
Originally Posted by dragan53 but isnt vsa liquidity,as we are analysing volume with comparison,to price,we can see where the the aka smart money is(sprecialists,proffessional trading syndicates...)and with candlestick readings their intentions in the market
have a great weekend too,im looking forward to learn more from experienced traders posting here
hm i think i found my answer for monday,sell orders,shorts and low liqidity ,so high volatility is the result,just like trading in december when evryones on holiday | I think what Carnegie is saying is VSA is not of any value to a trader in the spot Fx market. Not all of the trades are going through a central location such as the stock market or futures market where VSA can be of some value if that is your way. What I am trying to wrap my head around is who is the major player at around the EUR/USD 1.34222 area? It has been pinging this area since November. I wonder if this is the the level that is needed to try and stabilize the debt crisis going on there? I may and probably am way out of the park. Why this level? | 
Jan 19, 2011 12:46pm
|  | Member | | | | Louie Quote:
Originally Posted by Carnegie Hmm.. in reality, wouldn't we need some kind of news service or something to complement it with our new understanding of how this imbalance looks like?
What I mean is that now that we know what it is, we have to know what OTHERS think about it, and therefore we have to understand MARKET SENTIMENT.
As I recall, darkstar used IFR right? Because it would be impossible to see this just on a chart, it would only be possible AFTER the fact? | Or, if one pays attention to the price action via the longer wicks in the cluster one can form an analysis as to what the intent of the move is going to be such as the many various options or senerios as GRKFX stated. Or if you happen to be sitting at the computer and see price move 30 or so pips in a matter of a couple of minutes that would be in my mind the disequilibrium in the market at that time. Or the gaps that show up in the charts during news time. Dark has only painted the participants and the mechanics of the move. It is only actual experience and trading that will get us there. Only my two cents on the original question by Carnegie of how you see it on the chart. | 
Jan 20, 2011 2:13pm
|  | Member | | | | Louie Quote:
Originally Posted by scott89 I feel stupid to ask this, but can you explain me the difference between "making a transaction" and "building inventory"?
I apologize for this  | He is talking about the big block orders at that level. Building there inventory. How do you do this. Say you want to buy. Create a false short senerio in market, false breakout. unimformed jump in. Inventory builder buys and pushes up through the vacuum when the inventory is built and thanks to the short stop loss orders. game over. | 
Jan 20, 2011 2:50pm
|  | Member | | | | Louie Quote:
Originally Posted by scott89 Thanks for the explanation =)
Now, again, what's the best way to trade it?
Let me quote myself: | That can be the tuff part. You have to figure out if the big players percieve that the current level is a wholesale level and are buying or do they percieve that the current level is a retail level and they are off loading there inventory. That I believe is where the many hours of chart time and learning new things comes into play. Do you short the top of the channel and buy back at the bottom? How do know how long the channel will last. To you put your order above the action and stops waiting to be picked up by the real break out when it happens. Then where do you get out. Can you identify the next logical level that the orders will be off loaded. What I am trying to say is that there are many ways to play it and only you can create it to gel with your trading temperment. I know this probably doesn't help much. | 
Jan 21, 2011 3:32am
|  | Member | | | | Louie [quote=EmeraldEyes;4332305]You're close dude! The underlined section: Why do you think dealers must provide sufficient liquidity at all times?
I will take a stab at this to help another trader on there journey. When the vacuum happens the dealer has to take the other side of the trade by offering the liquidity which puts them on the wrong side. They are constantly trying to keep their order book even making money only on the spread. So if you were in this situation what would you do to even up the order book? Hopefully i didn't screw up the explaination. I would agree with magic trader in that certain news releases cause high probabilities of episodic volatility. But the real question is how to trade it do to the spread increases or can you use it another way. Hmmmmmmmm. | 
Jan 21, 2011 3:56am
|  | Member | | | | Louie Quote:
Originally Posted by EmeraldEyes Hmm.. are you saying when a dealer realizes this shift in which they're losing to informed traders then they flip their game plan and start trading with them? | Not exactly, they don't like to be on the wrong side of the market so they are trying to quickly find orders to take the opposite side to cut there loss as fast as possible to restore the balance to there order book. | 
Jan 21, 2011 4:35am
|  | Member | | | | Louie For those interested. The vacuum just did the suck job on cable. 3:30 AM central. Hard to see after the fact. May have to go to the minute chart to get a clear picture. | 
Jan 21, 2011 11:58am
|  | Member | | | | Louie Quote:
Originally Posted by Darkstar For my one quick post today...
The vacuum as I presented it does exist but it's on very short timescales. 1-3 seconds usually... never more then a few minutes. The market isn't THAT inefficient.
The vacuum on its own isn't an exploitable opportunity; it is merely a piece of the price change sequence. Its value is that it can be combined with other phenomena. The combination is what can become exploitable.
Luck be with you | As pointed out, the vacuum happened in cable at 3:30 AM central 1/21. you won't see it in the larger time frame. just the shift in market direction after the fact. If you have access to a trade simulator download this time and watch what happens. You can see it better in the minute time frame after the fact. By the way dark, thank you for all your past posts. Good nuggets in there if a person spends the lots of extra time mining. | 
Jan 21, 2011 12:40pm
|  | Member | | | | Louie I hope this chart loads ok. If not I will try again. As a note. If you do not have a trading sim you can download one on Indicator Free Trading thread post 21. Vhands sim. If you don't know how to run it Blue Ray explains this. I would not spend any more time on this thread other than to get the sim. That is just my opinion. I would read Darkstars The Structure of Forex Brokers paying attention to post 1 and 2 and then ponder on the why it was opened up to retail and how it is exploited every week in this market. Of course in my opinion this is only a small part of order flow. | 
Jan 21, 2011 1:09pm
|  | Member | | | | Louie Quote:
Originally Posted by Carnegie Louie send me a PM.. I got some questions about this + vHandstrade? | Hope you got the PM if not I will put the file up of the other free trade sim that is easier to use.Have to be patient with me I work on weekends starting tonight and I have to sift through various threads to find it. Or if someone has seen the LFH Trading simulator 3 in forex factory and can post the files here. | 
Jan 21, 2011 1:37pm
|  | Member | | | | Louie Still looking and I am looking at the Ronald Raygun files. Haven't found it yet. As a side note. Blue Ray has a thread called VHands Trading Simulator. It goes through how to load it and how to operate it. But for this purpose you just want to download the data and see the vacuum. Also if your data doesn't work well in MT 4 Open demo with Alpari. There data loads pretty well. | 
Jan 22, 2011 7:15am
|  | Member | | | | Louie Quote:
Originally Posted by CindyXXXX | That is the the other sim I was looking for. Thanks for posting it CindyXXXX. Also if you haven't, you may want to go to DareXau post#46 and spend some time at the link listed. It may spark your brain in looking at this buiness in a new way.  | 
Jan 22, 2011 5:45pm
|  | Member | | | | Louie Quote:
Originally Posted by CindyXXXX I think a good addition to this thread would be a diagram of the Forex Market Structure (3 tier) - combined with a diagram about open market operations.
Anyone wanna have a crack?
BTW: Scotty I've been thinking about a similar idea to what you described... Inevitably id like to create a "market map" which also constitutes the order process.
Thanks Louie I've seen a bit of Sam Sideons stuff and actually I just watched his video on how prices move but I have always had my suspicions about this guy... He talks a good game... | Just my real world observation of the vacuum. Now this doesn't happen everytime so don't bet the farm on it but the way I see it is this is one way to play the vacuum. Many times after it happens price jumps away from it and then briefly comes back to it before shooting out. Like the false break out first but kind of showing the intended direction. Many times you can put a limit order in the vacuum area and get a low risk high reward trade. Sam shows this in his training. I know he could put his lessons down to 5 minutes and one could get the point. Anyway I point out this doesn't happen everytime but if you observe it you will see the weird simularities. So in my mind this area does act as a true Support and Resistance. | 
Jan 24, 2011 12:24pm
|  | Member | | | | Louie Well here goes a theory of mine and only a theory on areas where large orders are which was triggered by Darkstars (The structure of forex brokers) thread.
This portion really got me thinking. Darkstars writing,"As a byproduct of transacting all this business, bank traders developed the ability to speculate on the future of currency rates. Utilizing a better understanding of the market, a bank could quote a business a spread on the current rate but hold off hedging until a better one came along. This process allowed the banks to expand their net income dramatically. The unfortunate concequence was that liquidity was redistributed in a way that made certain transactions impossible to complete.
It was for this reason and this reason alone that the market was eventually opened up to non-bank participants. The banks wanted more orders in the market so that a) they could profit from the less experienced participants, and b) the less experienced participants could provide a better liquidity distribution for execution of international business hedge orders...." Written by Darkstar.
Any how when figuring out the vacuum I started thinking how could i create the extra liquidity when needed to execute these big orders and I thought maybe the news. So playing around with this I looked at the news that tends to move the market the most, Example Euro/Usd, the non farm employment change and the German ZEW economic sentiment. On the five minute chart I drew a line at the close of these news announcement for the last year and noticed that throughout the year the price action seems to respect these lines in many cases. I don't know if this could be areas that these orders are flowing in and out or most likely I am only seeing what I want to see but anyhow since we are discussing where the large orders are it is a thought. I recon Darkstar could rip this thought to pieces. |  | |
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