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Order Flow - Finding cluster of stops on chart
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Jan 14, 2011 8:57pm
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Originally Posted by Carnegie I think I have an idea here.. Darkstar says we're soon there on the stop hunting patterns, and MAYBE, that has to do with all the intelligent explanations form all you guys + my chart about where stops are located
But this made me think.. Aren't there two (atleast what I know of) different stop hunting patterns?
Think about it, or maybe I'm wrong here but let me explain: Stop-hunting pattern #1:
This kind of stop-hunting pattern is what happen to all the noobies. Let's say they want to short, so they get into a position... | Just an Idea, why not consider "areas of orders" placement. This would include both stop and limit orders, and those entering the market manually at the time of occurrence.
Sweeping logical areas of clusters provides necessary liquidity at times. When you see a failed breakout from a range for example, you're possibly triggering orders from both sides, those going with the break, who's stops will be fed off of when the market moves against them (squeeze) and those who were opposite the original break and have stops placed in that area.
When patterns fail, that should speak just as loud.
Although it's impossible to know in advance (unless you're the one who's forcing the action) when you see the markets anticipation fail, it should say market manipulation, and big money is entering......
from that point to the next nearest logical area of order cluster where equilibrium can establish should be a safe bet. You'll want to check your r:r for potential distance to the backside of your event.
Question, for price to move as in the false break scenario above, does there need to be actual money entering the market to move price for the actual false break, or when big money orders hit, does the proximity of the orders and the way they are stacked is that being used by the Broker to fill. If I control the candle and it's my market, can I move the candle at my will, regardless of actual market activity?
fwiw.
Last edited Jan 14, 2011 9:36pm
| Reason: typo
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Jan 18, 2011 7:33pm
| | In the first pic price was at a state of equilibrium, as price shorts, latent interest becomes market orders, (either by short pending order increase or manipulation of price as to attract interest) price is then attracted to the new order buildup in that direction until it finds a new equilibrium point.
As price moves away it leaves a vacuum, latent interest is already building behind the move.
??????????????? | 
Jan 19, 2011 7:21am
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Originally Posted by seagreen You can't imagine how many people here wish they were your girlfriend.  | I hope people take this in context, having read Darkstar's earlier post. | 
Jan 19, 2011 9:08am
| | Just spinning the wheels in my dimly lit noggin'
In the example (modifying DS's first pic) sitting just below current price is a block of short market orders. I'm called to fill a very large "long" order, the customer wants a "specific price". What price do I quote, knowing as soon as I star to fill price will rise. What can I do to give myself a better fill? What happens to the marketfield? what's it going to look like?
Can I spot this activity in real time to take advantage? What information do I need to know beforehand?
fwiw | 
Jan 20, 2011 10:09am
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Originally Posted by PiptheRipper There is a lot of things that has been posted in this thread that I don't understand so I want to ask a few questions and clarify a couple of things for myself.
The best way to do this is by an example:
Trader X is watching the USD/CAD pair and from his analysis he decides it's time to buy USD. So he buys 1000$ @ 1.0000 (The figure is irrelevant and is just used for the example.)
If there is enough liquidity available, his order will get filled without the price moving up.
If there is not enough liquidity, the broker will fill his order at a... | Make the distinction between you trading as an individual and you making market (broker). If you hit the buy button, you expect your order to be filled at the price quoted, in this case Long Loonie @ X.XXXX. If you’re long, then there has to be a counterparty to offset the trade, if there’s not you put your MM, market maker, short until he can find a seller. When a rush of orders comes in the market has to find the counter-side to fill or else the MM assumes all the risk, at times they will as most traders are usually on the wrong side of the market, but there has to be some type of retrace eventually for the broker to square. Brokers usually bundle and offset level up with their liquidity providers.
As the order rush comes in, all available liquidity in that area gets eaten up, if there’s more order volume than liquidity to fill, price has to move to find equilibrium, if orders keep coming in price keeps moving until it’s reached. The price generated by your MM is a shaded average spread of what’s available to him intra-bank from his liquidity providers combined with his in-house liquidity available, there may be several brokers dealing up with the same providers. Your broker has big time algo’s running that handle average price, spread, ect…. to help him control his book. He’s not going to quote you something he can’t fill and make a profit doing it..
The main concept I think DS wanted to hammer down is the makeup of the market (order volume, placement or the lack there of (vacuum) , when price moves, what happens not necessarily the nuts and bolts of the transaction.
fwiw
Last edited Jan 20, 2011 10:24am
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Jan 21, 2011 9:49am
| | I wonder how long the vacuum stays empty? | 
Jan 23, 2011 7:20pm
| | Darkstar,
Curious, are you watching price behavior at certain levels, action inside the candle, for your clues to order flow.
regards, |  | |
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