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Behind Price-Orderflow
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Sep 4, 2009 2:59pm
| What noise? I don't hear any noise. | | | | Hello All,
I've been following this thread for awhile...here is my input.
I have gone from a complete novice to a profitable trader on this very site in the last 4 years. It took about 3 of those years to really understand some of the things that have already been posted in this thread.
Now, I'm not saying I know everything, or even a lot, I try to continue to learn each and everyday, but some of you are making it harder than it truly is.
Everything you need to understand has already made an appearance in this thread.
Sit and meditate, think really hard about the who, why, and when part...That 'aha' moment is an inherent result to truly understanding who you are buying from and why they are selling to you at this time.
Throw in a quality understanding of supply and demand and you should be able to trade your account into the green.
Does strong buying make price increase or is it a lack of selling?
Does strong selling make price decrease or is it a lack of buying?
Of course, its easier to understand how to trade than it is to actually do it, because placing that sell order when it seems everyone and there dog is buying goes against every human instinct...but you must realize, when the last buyer is in, where must price go?
Some of you will see this post as a regurgitation of this thread, but like I said, basically everything you need to know has already been mentioned in this thread somewhere, in many cases, multiple times...
Who, Why, When, a basic understanding of support/resistance (demand,supply), and some brain power...
Good luck to all, may your journey be easier than mine has been...and it should be b/c of this thread.....don't get caught up in the indicator non-sense, professionals only use them to know where the amateurs will buy/sell to them...
I've probably said too much...
guten tag!
(I live in Germany now) | 
Sep 4, 2009 7:59pm
| What noise? I don't hear any noise. | | | | Quote:
Originally Posted by Cellar Door Professionals do not use charts at all. | Some do, some don't...usually depends on the type of trading they do...many that started on our side of the street (without access to an orderbook) find it helpful to pull up a chart sometimes......Had you added a modifier such as "some" or "many" to the beginning of your sentence it would be much more correct.
It also depends on how you define "professional". I define it as someone who trades for a living, access to an orderbook is not a requirement to be deemed a "professional"...Your definition may deviate from mine...Either way, having or not having this information does not affect our trading, so why fill the heads of novices with anymore mysticism than is already associated with these markets?
(your answer should be b/c we need them to sell to us when we want to buy and buy from us when we want to sell, but c'mon, how 'bout a little compassion lol)
wow, I typed way to much...sorry for any clutter this may add to the thread. | 
Sep 4, 2009 8:13pm
| What noise? I don't hear any noise. | | | | Quote:
Originally Posted by Cellar Door I am talking about the people who knock out your stoplosses, trade with large amounts of money and do not need to see a chart to make a profit. | Ok then, your position is noted.
But just for the record, I don't use stoplosses anymore, well not in the conventional sense (same as op), not b/c I'm never wrong, just because I know why stoplosses are the first thing preached to newbs (its already been discussed in this thread)...I've already been down that road, then I pulled a u-turn...so they aren't knocking out my stoplosses...
edit: you added to your quote, and my simple answer is an orderbook would be freakin' great, but not a necessity... | 
Sep 4, 2009 8:21pm
| What noise? I don't hear any noise. | | | | Quote:
Originally Posted by Cellar Door You are correct that is why they teach people to use tight stops, any large firm who offers training will always tell you to use tight stops, the thing is you can use tight stops you just need to know where to put them. | I agree, but if you really understand what your doing you should be able to place a trade, monitor it during its infancy, and then watch as liquidity on one side of the book or the other dries up and price moves in the anticipated direction....and if that's the case, why put your stoploss order on the books?
That's simply telling the guy on the other side of the screen exactly where you'll break...of course, we don't move 100's of lots, so it doesn't matter, but I still say screw that...I'm not showing my hand. | 
Sep 4, 2009 9:09pm
| What noise? I don't hear any noise. | | | | Quote:
Originally Posted by LasVahGoose sounds a bit cryptic.
What isn't true? The current price? | The market is always right.
But market participants may push price one way or another in order to get in at a better price. This has already been discussed in this thread, but I'll give a real world example that you can then apply to the market.
Let's pretend car dealers have an order book just as banks have an order book. You are going to buy a car that is currently at $1000 dollars, would you put in at order at $1100 or $900? Say you were severely drunk and you put in an order for $1100, do you think the car dealer will push the price up so that they can sell at a price that is higher than currently available? Of course.
Now apply that logic to the market.
If Banks want to get short, but they can see buy orders slightly above the next resistance, why wouldn't they push price higher? Someone has already offered to buy from them at a price that is higher then they can currently get......just as the car dealer would sell to the highest bidder, a bank would sell the the highest bidder.
Like I said, you guys are trying to make it too complicated...Out of self respect, I can't lay it out any easier, I had to do a lot of hard work to figure these things out...
If you get stuck somewhere in your trading journey, just apply some logic... | 
Sep 4, 2009 9:30pm
| What noise? I don't hear any noise. | | | | Quote:
Originally Posted by Cellar Door Now goose have think about when it would be easiest for them to move the market to a better price ... | lol goose? If that's a Top Gun reference I'm definitely not goose...
And yes, there are easier times for this to happen, but it doesn't mean they can't do it other times as well...All they have to do is push price a little and let the herd mentality take over, soak up all the amateur orders and then watch as their own stoplosses help to push the market against them...lol Eur/Usd was perfect example today............I really do love this market. | 
Sep 4, 2009 9:48pm
| What noise? I don't hear any noise. | | | | 2 things Cellar...
1. you should have left your post as it was, for no particular reason...
2. I wish I wouldn't have watched that clip.
Now I can no longer be a fan of a classic America 80's movie.....that's freakin' hilarious...Quinton sold me lol
Damnit, all b/c of my ignorance...I don't know why I didn't realize that was directed at goose lol | 
Sep 4, 2009 10:09pm
| What noise? I don't hear any noise. | | | | Quote:
Originally Posted by Cellar Door I was just quoting the terms that were used to open this thread, i would look at it as what is behind price action. | I don't know Cellar...I don't remember seeing it in this thread, although I could be wrong, I didn't read it all.....I think you should have gone with 'typo' lol. | 
Sep 4, 2009 10:20pm
| What noise? I don't hear any noise. | | | | Quote:
Originally Posted by Cellar Door yes a typo it was or possibly a freudian slip. | haha wow, freudian slip is even better...let's go with that...
Ok, back on topic, orderflow! | 
Sep 4, 2009 10:45pm
| What noise? I don't hear any noise. | | | | "Losing an illusion makes you wiser than finding a truth" - Ludwig Borne
This applies directly to a statement I made earlier...anyone care to guess what that statement is?
edit: Cellar, gotta love The Matrix.....if someone doesn't, then they simply don't understand it. | 
Sep 4, 2009 10:50pm
| What noise? I don't hear any noise. | | | | Quote:
Originally Posted by Cellar Door |
Same here....its waaaay late here in Germany, like 5am......luckily I have nothing to do 'till noon tomorrow.
guten nacht! | 
Sep 5, 2009 7:54am
| What noise? I don't hear any noise. | | | | Quote:
Originally Posted by LasVahGoose I appreciate you taking the time to post this, but I was being facetious with my questions. Good post none the less. | hmm...I didn't catch any facetiousness...I even re-read that part of the thread...either way, if it didn't help you, it will help someone...I know at a time it would have helped me.
btw, any idea what happened to Cellar Door's posts? Now it looks like I was talking to myself, lol. At least you can still see that I quoted him... | 
Sep 5, 2009 1:12pm
| What noise? I don't hear any noise. | | | | Quote:
Originally Posted by pipmutt Plenty of people talking up a good game here and trying to make it all sound extremely complicated and something only they could possibly understand or know the 'secret' about, complete with cryptic nonsense, but at the end of the day there's absolutely nothing of any substance! | Hmm...I'm not sure if you and I are reading the same thread...I think plenty has been said......but your the one with 10 vouches and 702 posts, so what do I know... | 
Sep 5, 2009 1:21pm
| What noise? I don't hear any noise. | | | | Quote:
Originally Posted by Leonlorenzo Maby or maby not, I havent read the whole thread to follow these guys chain of thought yet. Ill try and make the time to do so tomorrow.
But if I was them I would refrain from getting too excited untill they have some results to back up their theories. Too many time's when your trying to build a profitable system/method/outlook you jump the gun, think your there (for no good reason) and then fall flat on your face.
I dont see how anyone in this thread could have done enough testing to be sure yet. | Wow, seriously? Your looking for posted 'results'? Nobody is talking about a 'profitable system/method'. The op of this thread's obvious intention was to help people actually understand how the market works......On page one of this thread someone said "I hoped I would never see a thread like this", he responded "It doesn't matter, you could spoon feed it to some people and they still wouldn't get it"......damn, he was spot on... | 
Sep 5, 2009 2:26pm
| What noise? I don't hear any noise. | | | | Quote:
Originally Posted by pipmutt I have no idea what you know, posts should be judged on content not on volume or vouch's. | I agree...and looking back, my post may have been a little asshole-ish, sorry if it seemed so...
Let me ask you a question:
If price moves into an obvious area of demand(support to the left), and quickly rebounds and heads north, what does that say about the orders that were sitting in that area waiting to be filled?
Can small orders quickly soak up supply and reverse price?
Of course, we can't know exact price and exact quantity, but this isn't needed...I'm telling you guys, its on the charts, you just have to think logically about what you are looking at. | 
Sep 5, 2009 2:46pm
| What noise? I don't hear any noise. | | | | Quote:
Originally Posted by bluefish Just to make one thing clear: watching charts won?t give you any QUANTIFIABLE INFORMATION about orders placed at different levels (type of orders, their size, exact position, etc.). | I would definitely disagree.
See above. Quote:
Originally Posted by bluefish but DID YOU TRADE IT based on the information about orders or orderflow derived from the chart itself live? | Yes.
Friday, Eur/Usd...if I have time later (and decide I want to) I'll go through my entire thought process...I went long at 1.4206 (with a limit order even) as price quickly left the obvious area of demand...where do you think I exited? | 
Sep 5, 2009 3:24pm
| What noise? I don't hear any noise. | | | | Quote:
Originally Posted by slimcat As orderflow is obviously the reason for all price action in the market ie pinbar formation bouncing off support etc etc it is easy to say that that is the reason why the pinbar formed, of course it is ..orderflow leads to price action.
What I'm trying to say here is that I think the way the OP is using the word orderflow is misleading as there is no evidence in any of his posts to suggest that he is reading it.
If I wanted to teach people about orderflow why would I post charts?
If I wanted to teach people about PA which results from orderflow... | Jesus Christ...Can you not look at a chart and think in terms of order flow?
Candles are simply arbitrary points in time where we designate an 'open' and a 'close'...If the up thrust of the 'pinbar' was at the end of the candle and closed, then the next candle opened and went directly down. Are those two bars any different than a pin bar?
This thread is getting frustrating...I can't wait till Monday. (lol, won't hear that too often) | 
Sep 5, 2009 3:30pm
| What noise? I don't hear any noise. | | | | Quote:
Originally Posted by pipmutt It doesn't hurt to repeat it but I think what you're saying has been covered in the thread somewhere, in fact the idea is in the charts the OP posted right at the start. | lol, yes, some of these things have been posted multiple times in this thread, some by the op, some by me, some by others...I have prefaced some of my posts with this fact, but it seems its not being digested...and then someone will come in here and try to make things extremely complicated.
By no means am I saying its easy, and I definitely don't have all the answers, far from it, and I've said this multiple times as well, but its not as complicated as some people try to make it... | 
Sep 5, 2009 7:43pm
| What noise? I don't hear any noise. | | | | Ok guys/gals, I've had a night out on the town, so I will address all things directed at me tomorrow (not to say I have all the answers, just that I will continue discussion)...my writing will be much clearer after I sleep off the alcohol...German beer is great, but hard on the thinking skills lol......just wanted to let you know, as I always hated when posters would just dissappear without any notification or anything in the past.
guten nacht! | 
Sep 6, 2009 8:28am
| What noise? I don't hear any noise. | | | | Quote:
Originally Posted by PeterFM My Limit was a bit before yours (1.4217) and my exit was 1.4320. Close? | Nice. Your exit was even better than mine, I got out at 1.4305, no need to tempt the market trying to make perfect trades...although yours was pretty damn close. My risk appetite is usually rather small by the end of the week.
Many posts have been made since yesterday...I'll reply again when I catch up  | 
Sep 6, 2009 12:42pm
| What noise? I don't hear any noise. | | | | Quote:
Originally Posted by capitalist88 I know this question wasn't directed to me, so I'll butt out if requested, but I want to see if I can add some clarity here. Keep in mind also that I'm kind of thinking this through as I type it...
The fact that price "quickly rebounds" from the demand area doesn't tell us anything about the orders that were waiting there. Here's why. There can only be two types of orders that were waiting down below the market; buy limits and sell stops.
The demand down at that level comes from the buy limit orders. (These may have originated from a bank... | No butting out needed, all intelligent discussion is welcome. Your assumption that ?the only thing that could have made price bounce sharply is newly entered market orders to buy? is only half true, because in reality, we need buyers, but more importantly, a lack of sellers for these buyers to buy from. What pushed price down to this level in the first place? Conventional answer is selling, right? A more correct answer would be a lack of buyers, as I have posted seemingly numerous times now. Price is looking to match buyers and sellers constantly, so if we have both, price consolidates until an imbalance is realized and price reacts, if we have no buyers price drops, if we have no sellers price increases?I know this may seem obvious, but most people don?t have this market view. Due to the innate human quality of herd behavior, the more selling that occurs the more one wants to sell. But if you think about it logically, each successive seller is less knowledgeable than the previous. The smartest money gets in first, followed by the less and less informed. So the last seller to get in is usually the least informed as well?this seller doesn?t think about Who he is selling to nor Why they are buying from him at this time, he is simply following the herd. Knowing this also gives us insight to the size of orders on each side of the book at certain prices. Who?s moving all the money? The most informed or the least? So the last seller is also the smallest, which also makes his order the easiest for buyers to absorb? You said that the fact that price quickly rebounds from the demand area doesn?t tell us anything about the orders that were waiting there. But when you realize that it is not necessarily buying that moves prices up, it is a lack of selling, then you realize why this quick rebound tells us a lot. Small orders could not soak up the ignorant supply left in the market after a large drop as quickly and efficiently as large orders (or even able to soak up the supply at all); and who places large orders? That?s right, banks. And who do we want to time our entries with, that?s right, banks. We know that these buy orders/buyers were large enough to soak up the selling that made price reach this level in the first place, so we do know something about these orders from the way price reacted once this level was reached. We also know something about the sell orders going through at these levels?they must be smaller then the buy orders to be absorbed so quickly, right? So again, who is selling here? Thus, the large orders did cause the stop, but also caused the bounce by absorbing the last seller and giving price no choice but to increase to entice sellers back into the market?b/c no smart money wants to sell here?they already sold, of course, at a better price? In reality, the buyers we are referring to were the original sellers that got this downward movement started in the first place?if smart money is selling, we have a lack of buying, which is ultimately why price moved down (we have to entice buyers with a cheaper price, just as anything in the 'real economy'). Once it did, these original sellers are now buyers, where they take profit and position themselves for the next movement with buy orders? And just to clear up some confusion I probably helped cause, demand doesn?t necessarily have to be limit orders waiting; demand is simply a price buyers find attractive. So maybe there were no limit orders waiting, which of course is probably not true, but either way, enough buyers have entered the market (with limit orders on the books for weeks, or newly booked limit orders, or market orders) to absorb the selling?when all the sellers are in, no one is left to sell to these new buyers that find this price level attractive. The resulting price movement goes back to simple supply and demand dynamics. I know someone will chime in, ?well how do I know where buyers find price attractive and where sellers find price attractive?? Well, look at the chart?Who can place large enough orders to move price quickly up? So after seeing this on a chart, who has open interest in the market? Where are they positioned? Where did they unload their position? So where is selling attractive? You won?t know exactly, you can?t unless you have access to an order book, but you can have a pretty good idea and you can use this to your advantage? I feel like this post is sort of jumbled, if its hard to follow I apologize, ask for clarity if need be?but like Scotty said, its somewhat difficult to do much more than open the door over a medium like this? Don?t ever think you have past through the last door, there will always be another?as I have found out the hard way time after time? "If we knew everything, what would be the point of tomorrow?"
Capitalist, I'm sure you know a lot of this, don't take this post as directed only at you, although I did try to answer your response....and the breakout theory you mentioned (I think it was you), spot on my friend. | 
Sep 6, 2009 4:15pm
| What noise? I don't hear any noise. | | | | Quote:
Originally Posted by pipmutt I wouldn't want to disappoint you so I'll chime!
This is all after the event though, so we've seen price break out and rally and we're what, assuming banks are responsible? So what's to say where they intend to unwind their positions, there could be orders anywhere, in fact they might be quite happy adding to their position. Thinking about it, how do we know the move up wasn't them unwinding a short position, they might be flat for all we know.
[font=Verdana][size=2]So where is selling attractive? Fade the move up on the... | By 'banks' I'm simply referring to large movers of speculative capital, this could actually be a number of entities, that's why I changed to 'smart money' midway through my post. Speculative because these positions must unwind at some point in order to realize profit.
Ok, so how do they unwind a position without pushing price against them? Well, that's what the herd is for  ...that's why every 'indicator' ever get's you into the market after the smart money is already in...I'm not sure if this is just coincidence, but its almost as if they were designed that way, then disseminated to the public.
Why do you think markets crash, rather than trend downwards? Smart money has been adding to there position all the way up, and when they finally convince the rest of the world its time to buy, "this thing is only going up", they will unwind their position onto them, then once the last ignorant buyer is in, what must price do to entice more buying? That's right, tank! Markets tend to find a bottom much faster than they will find a top.
A great example is the crash of '29 (and what we just went through)...if you research it you will find out (or maybe you already know) it happened at a time of the largest percentage of public stock ownership up to that point. You think this is just a coincidence? lol. Who do you think was selling all that stock to the public? That's right, the smart money was basically closing out decade old long positions, and in most cases going short, knowing joe public can only buy for so long...but I digress...
But back to the forex market, where the dynamics are slightly different. Trying to decipher when the smart money will unload goes into a complete other discussion about what type of market we are currently in.
As of right now, Eur/Usd has been ranging...so these supply/demand areas are rather simple to spot.
And your right, sometimes they are happy to add to their position rather than dump it...what do you think causes a trend? oohh.  Sure, it also has to do with more buyers coming in, but more do to with a lack of sellers...and why is there a lack of sellers? Because the smart money isn't buying and dumping, they are buying and adding...which is why you hear people put emphasis on market conditions and market type, but most don't look behind the curtain.
Many times a move up is the unwinding of a short position...but lets think about this...Why would a professional unwind his short position? Because he feels price has reached an area of demand, and if this is his sentiment, why wouldn't he turn around and go long? He usually does.
You're separating closing a short and going long, but they are essentially the same...Sure, in one instance he is no longer exposed to the market, and in the other he is...but the market sees it as the same thing, its still a buy order. But how would a professional view this? In a sense, a trader is always exposed, by closing his short he did go long, because he is losing money by not being short if the market continues downward. If his account is denominated in dollars, and he bought euro's, then closed the position by selling them back for dollars, he is now long dollars, right?
If you hold currency, your exposed to the fx market.
I know I didn't answer your question, specifically. But there isn't exactly a specific answer...I can't tell you, if you see A then B....I can only try to get you to think in terms of how the market actually works.
Let me think on it and I'll try to get you a more precise answer....but like I said, I feel a ton of information has already been dumped onto this thread... | 
Sep 6, 2009 4:17pm
| What noise? I don't hear any noise. | | | | Quote:
Originally Posted by Porkpie This is a great post. Good old common sense approach, supply and demand in plain english. | Thank you, I really do appreciate it...I had to go through multiple account busts before I understood the things I do now...albeit they were small ones, its still not any fun. | 
Sep 6, 2009 4:38pm
| What noise? I don't hear any noise. | | | | Quote:
Originally Posted by Porkpie Previous price action demand/sell levels will give you clues as to the strength of an area when price returns. If there was a strong down move from a supply area then when price returns it is likely to be... | This too, is a nice post.
Like I said before, we can't know for certain, but we can have a pretty damn good idea...
Ok guys, enough for tonight, its getting late here (Germany, for those that haven't seen it posted) and I need some sleep before the week starts.
guten nacht! | 
Sep 6, 2009 5:48pm
| What noise? I don't hear any noise. | | | | Quote:
Originally Posted by capitalist88 In other words, suppose we could magically remove all resting demand from the market, i.e. remove all buy-limit orders on the "book." This action by itself would cause exactly NOTHING to happen. It wouldn't be until someone actually placed a market order to sell (in this case even for just one unit) that price would plummet down to zero. | Damnit Capitalist, I need to sleep, but I can't pass up a good discussion.
Ok, you sort of proved my point about lack of buyers. Was it the market sell order that pushed price down or was it the fact that there were no buyers to buy from the lone seller?
In your own example its the fact that all buyers have been eliminated that allow price to reach zero.
Of course, both are needed, but what actually moves price?
If your selling a car and nobody wants to buy it, what do you do to the price? You lower it until you can find a buyer, right? So what moved price? The fact that you're selling your car or the fact that there were no buyers at the current price?
The act of selling doesn't move price itself, price moved b/c there were no buyers. | 
Sep 6, 2009 6:31pm
| What noise? I don't hear any noise. | | | | Quote:
Originally Posted by pipmutt You're separating closing a short and going long, but they are essentially the same... - in practical trading terms sure, but there's a significant difference, money not in the market is on the sidelines. | Yes, but fx is special. If you're holding dollars on the sidelines, you're long dollars, no way around it... | 
Sep 6, 2009 6:41pm
| What noise? I don't hear any noise. | | | | Quote:
Originally Posted by pipmutt Hi Porkpie
Sure, support becomes resistance, visa versa, double/treble tops/bottoms, confluence etc etc etc.....not being funny but this is all stuff we've known about and traded for decades, what's any different this time round? | I guess this time around you know why these things act the way they do...maybe you knew all along...most don't...but don't forget the Who, Why, and When.
Ok, I really have to hit the sack now...I'll try to make an appearance tomorrow, but the markets are open, so I'll have more to do than sit on forexfactory  | 
Sep 6, 2009 6:42pm
| What noise? I don't hear any noise. | | | | Quote:
Originally Posted by pipmutt Well you've got to hold something, dollars, yen, gold, oil, debt.... | lol exactly...that was sort of my point... | 
Sep 6, 2009 6:57pm
| What noise? I don't hear any noise. | | | | Ok, real quick before I really do leave.
Pull up a Eur/Usd H1 chart.
We can all agree that smart money moved price from 1.42 to 1.43 right?
Now, does it look like they unloaded that position at the end of the day Friday?
If not, do we think they will today? If they do, when will this happen? If they don't, what will price do?
None of this is trading advice, just some questions you might want to ask yourself...these are the questions I'm asking myself...I'm not going to pretend I know the answers, but I may have some idea based on previous price levels. | 
Sep 6, 2009 9:02pm
| What noise? I don't hear any noise. | | | | Quote:
Originally Posted by Leonlorenzo Sorry, but this is all mumbo guess-work. Who's to say there wasnt jus average size bids sitting sub 1.42 and lack of sellers caused price to rally, you dont know if there was 'smart money' there. And even so, they could have unloaded the whole position if there was a random buyer big enough sitting around on the way past 1.43. | Why is there a lack of sellers? Meaning, why are the large sell orders that could stop price from increasing absent from the market? Is it b/c these traders are on the other side of the market?
This goes back to my previous posts. Who can place buy orders large enough to stop and reverse price? So who is long at the moment?
So maybe we can tell that there is smart money long at this point.
Tell me goose, what has price done for the first 3 hours of the open for this week? Is price looking for sellers? Why is price looking for sellers? When do you think price will find sellers?
I see a couple of places on my chart, some are riskier than others as far as placing a sell order to be in with the smart money, so I simply haven't done so...I don't know enough yet.
note:
Not to say all smart money, the market is still a battle field, with certain entities having vested interest in keeping exchange rates at certain places, and big money trading many time frames as well, etc etc...all this must be taken into account...
Damnit, now its 3am...so much for a goodnight's rest...oh well, at least I tried... | 
Sep 8, 2009 5:03pm
| What noise? I don't hear any noise. | | | | Quote:
Originally Posted by PeterFM In trying to pick up on all the info posted here by the OP and other 'proper' traders, I'd like to ask a question from a bog-standard retail trader's point of view, if I may. Having read stuff from other sources and trying to come to terms with the OP's cryptic clues about getting in ahead of the herd the question I have is this.
As I understand it, a major order may have to be filled in stages due to the need to keep a level of secrecy or simply due to the available orders resting in the market. I have understood this to imply that major players... | Many traders use different methods to get into the market. Some just put the entire position on the books and let it fill over weeks, days, minutes, pending on how big the order is...this is why you will see price hit the same price over and over, they have effectively placed a barrier in the market, assuming its a large order.
As this thread has already discussed, price cannot pass this price until the order is filled. Others with large capital will average down(when going long) as they are more experienced than you and I and see an imminent reversal coming (of course, its given they like the price they are getting) and want to be sure they play a role in that reversal.
I, on the other hand, like to average up when going long, and average down when going short, for the simple reason that I would like to already have an idea that I'm right before I add a position. So instead of placing a sell order as price enters a supply/demand battle zone and averaging up as price pushes into the zone, I like to wait and observe how far price pushes into the zone before I see clear selling absorbing the late buyers.
Today I missed the strong move up b/c I wasn't in front of my computer due to prior engagements. No, I was not very happy about this, but instead of being a late buyer, I decided to just sit out and wait, and maybe find a good place to go short.
(btw, I'm hoping some of you caught that move after seeing no sellers when price pushed through the short term battle zone at 1.4380/1.44)
So today in Eur/Usd (15min/5min to follow along) we got our first hint of strong selling at 1.45, as expected. But I didn't place a sell order for two reasons: That move up today was strong as hell, and everyone likes to buy a pullback, specially in a market like that. Could I have sold and taken a quick 20 pips off the market on the first touch, sure (of course, only in hindsight I know this would have worked out), but that would have been risky as hell, so I just sat out.
That first pierce of 1.45 was pretty weak, so after seeing a bounce and a weak break I figured price could push up to 1.4520 and then run out of steam. I've found that the 0,20,50,80 rule is relatively reliable. So I placed a limit sell (that's what my broker calls it, I personally think it should be called a sell stop, but that's another debate) at 1.45197, to be exact.
I got filled about 2 hours later. As soon as I got filled price retreated and things were looking good. A half hour later price continued up and put me slightly in the red, but notice how small the break was. Price then retreated again and then came back and put me in the red, but the break was even weaker this time. At this point I can start to assume enough selling is going on at this price that I can be somewhat confident in my trade. You can look at the chart to see that bulls and bears battled for awhile between 1.45 and 1.4520, the way price reacted, and the fact that sellers were able to push price slightly lower each time gave me a hint that buyers were running thin, sellers have started to gain control.
After price was pushed to 1.4480 and bulls were only able to push back to 1.4508, I figured the last buyers were in and sellers could now take over, so I placed a another small sell order at 1.4495, b/c I knew if price was able to push back below 1.45, it would most likely fall off a bit.
As of right now, price is at 1.4488. I still don't know if I'm right, but I do know that enough buyers have been absorbed to stop price's upward continuation, I know what happens when buyers are scarce, and I know who is buying after a run like that, and it isn't smart money  I also know that I have statistical averages and whatnot on my side considering price has run 300 pips without a legit pull back. The overall trend may be up, but we are hitting some heavy supply on the long term charts that must be soaked up before price can continue. I'm only looking to be right for a few minutes, to a few hours, to at most a day or two...my personality doesn't allow me to be in a trade for too long, so that's how I trade.
(edit: price is now at 1.4478  )
Again, that post feels jumbled, but that was my thought process today, hopefully someone can follow it, lol. And no, I don't usually like to place trades in the second half of the US session, but I found prices attractive
This will be my final long post, I'll try to check in and see where this conversation leads, as you know I'm always looking to learn as well.
trader disclaimer: Buyers did put up a pretty good fight, we can tell by the amount of time price stayed in the zone, so this might not have been the best trade to broadcast to the world, we'll see how it goes...but you get the idea...Will I be surprised if price challenges my position? Nope. Will I be surprised if I have to close out with a small gain/loss? Yea, a little, lol. I'll be perfectly fine if I have to close it and re-observe, there is always another...
Good trading to all!
Last edited Sep 8, 2009 7:00pm
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Sep 9, 2009 8:38am
| What noise? I don't hear any noise. | | | | Oh Well For those wondering:
Well it seems buyers still find this price attractive, and sellers don't. I could have taken 60 pips at one point, but I didn't. After price broke 1.4480 and couldn't even get close to 1.4450 I lost confidence in my trade and put in an order to buy it all back at 1.4510. As you can see, I unfortunately got filled for a measly minus 5 pips overall. I still wouldn't mind getting short again, but I'll have to wait and see hows thing develop...
Oh well, there will be more trades.
Happy Trading!
edited for accuracy...
Last edited Sep 9, 2009 8:57am
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Sep 22, 2009 11:50am
| What noise? I don't hear any noise. | | | | Quote:
Originally Posted by Darkstar Not to be a stickler for accuracy, but this isn't orderflow trading. All your doing is commenting on market mechanics. There is no predictive value. IE- It's great that you understand the mechanics, but it isn't going to put any money in your pocket.
To trade order flow you need data from outside the chart. Level 2, a brokers orderbook, a service that gives you info about brokers orderbooks, etc. There is a fuckton of money to be made from orderflow trading if you know what your doing, but you need the datafeed.
And no, I won't tell you where... | Yes, Darkstar, "orderflow trading", in the strict interpretation, can only be done if you have the orderflow data. I thought we (as a thread) had gotten past this many pages ago, but many times people do not like to read the entire thread.
I believe the original poster's intent, as was mine, was to get people to 'think' in terms of order flow when looking at a chart.
It's no holy grail, its simply a market perception that may help you, it may not. If thinking about this gets in the way of your trading then of course, forget you ever read this thread. If thinking this way helps you identify areas of interest on your chart, then by all means, try to develop this skill further.
Knowing where the large orders, big players, smart money, banks, entities that affect the market, whatever the hell you want to call them, are positioned will help your trading...do you want to trade with them or against them?
edit: darkstar, don't take this as all directed at you, more directed at the thread in general... | 
Sep 22, 2009 2:26pm
| What noise? I don't hear any noise. | | | | Quote:
Originally Posted by FXSurfer It's very helpful. Of course, to see the order placement in advance would be great. But, to be looking at the chart with the intention of letting the orders reveal themselves as the market runs into them and then draws others on the sidelines in (or not) is still good. Yes, you're chasing the price a bit I suppose but, it's working a hell of a lot better than what I was previously trying to work with - indicators and Grails.
Thanks to all posters! | Thank you fxsurfer...its nice to see someone get the point.
I too would like to thank many of the posters in this thread.
Happy Trading! |  | |
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