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  #2  
Old Aug 27, 2009 9:07am
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Default Don't read this thread its all total nonsense!!!

Geeeeeezus, you've let the cat out of the bag now. I was hoping not to see a thread like this. If it reduces my trading salary I'll come knocking....
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  #7  
Old Aug 27, 2009 9:31am
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Quote:
Originally Posted by skfx View Post
don't worry porkpie,some just won't get it.even if you fed it to them lol
there is someone out there making WAAAAY to much and it needs to be shared around.greedy bastards,no need for that.
i read somewhere,i think bemac maybe,20% of the worlds population posses 80% of the capital.should we not even things out,no?

here's another:
calling me a bastard !!

Its true, it takes an iron set of balls to pull the triggger against a tanking market at those magic order flow levels.

Nice thread, just don't make it too popular!
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  #26  
Old Aug 28, 2009 4:25am
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I think you are right. No amount of retail traders could match the weight of the banks when it comes to order flow to actually prevent the way orders are stacked up waiting to be triggered. And most retail traders will be following text book 'Trading for Dummies' strategies (the title says it all). But I think order flow can be very visual if you know what you are looking for. Some use volume as a guage others use areas of congestion and trend to find obvious turning points (my preference).

There is no hanging around for that confirmation candle and a confirmation of the confirmation. I agree that entry is vital and is the key to eliminating risk. The longer it takes to enter the trade at the predefined area, the greater your exposure to risk. Yet traders using order flow need the herd to pay them as the herd typically enters after the fact pushing the price in the original direction of the order flow. For the herd, they typically trade off momentum, using that as a confirmation of the move, realising little that they are themselves the momentum. Many enter too late to benefit from a low risk high probability trade that can only be achieved by entering at the origin of the move. That's why most indicators will not give you very good odds of success in the markets as they all lag and cause people to sell into areas of demand and buy into areas of supply. The herd will always react after the fact buying when the market has already hiked up and selling when the market has already rallied down. It's safety in numbers where those at the back of the herd are the most vulnerable.

Long live the herd.
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Old Aug 28, 2009 6:47am
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All you need to know is in the first post. Especially this para:

"... when you begin to grasp what orders traders use,why and where,then you may find yourself mixing shoulders with the big boys".

Its not about 5 orders in an order book its about a stack of them. Where are they stacked and why. You are never going to know true order flow even if you had data from your broker as the forex market is not centralised. The information is in the charts which is half the information. The other half (the actual order flows from perhaps hundreds of banks) really doesn't matter. Its knowing why they would place them and where that matters.

I am sure charts aren't needed to do this if you can read the tape.
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Old Aug 28, 2009 9:10am
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"We need to trade on where the orders HAVE proven themselves to be"

Exactly. This is not something that is not already out in the public domain but there isn't much of it. Look at Sam Seiden's stuff. He worked with order flow at the CME. Its nice to get other's opinion on these issues. To think this will change the dynamics of the market is ridiculous. I am sure there is more than one interpretation of how to use order flow and I am sure there are many nuances and tricks people use. Lets get on with it and have good discussion.

Fibonacci: This guy spent his whole life trying to create gold out of lead..literally!

Last edited Aug 28, 2009 9:22am
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  #54  
Old Aug 28, 2009 10:20am
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Quote:
Originally Posted by Scotty B View Post
"@Scotty

So if you don't mind sharing, knowing what you know, what is a reasonable yearly net return? I think your answer will help put this particular edge in the right perspective.
Sorry Scotty but I think this is totally irrelevant and unhelpful.

What will be next? If anyone asks for an EA
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  #56  
Old Aug 28, 2009 10:45am
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Quote:
Originally Posted by Bleek View Post
I think that's a fair assessment and reasonable to expect or at least ask for quantifiable evidence of the OP accuracy and success.

My week-on-week gains averaging 21% would seem rather large but then, I operate with a modest capital which I draw from every week.

I don't need to retain capital (my net gain) to further leverage my positions because as it stands my process is delivering more than acceptable returns.

Over time, I will steadily increase contract size and thus my capital, but for me there's no rush and without tempting fate...
With all due respect and I appreciate you wanting to count your pennies. But, the discussion here is not about a system. It is about understanding the underlying dynamics of the market. It is fundamentally wrong to this discussion to start talking about potential earnings. The information discussed can be used with any system you want as so far as the underlying dynamics of market structure which is supply and demand and the order flow that creates this movement becomes a priority in your decision making process. This discussion is not about how much you can make in a week, a month or year, its not about money management. It is about gaining an understanding of how you can achieve an edge in your trading if you fully understand how the market works. Again, it is not a system.
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Old Aug 28, 2009 1:59pm
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Yes point taken but wasn't news trading a fad (blown out of all proportion by the marketers) that had its bubble burst. Only certain traders would trade the news but most of the banks and technical traders stayed out leaving just the Hedge funds and macro traders either already positioned or on the sidelines waiting until after the news hit. This left the market with very little liquidity and thus spreads widened greatly forcing many of the retail brokers to do the same thus forcing many of the retail traders to quit with their news strategy.

So, good enough reason not to share an edge because the more people that use it the less profits there will be and the more likelihood brokers will start increasing spreads around certain areas preventing traders from using the strategy. This will increase the potential for more people to be profitable in there trading in theory. Those no longer using the 'edge' will no longer be taking away other's trading accounts in the long term.


Quote:
Originally Posted by triphop View Post
Porkpie: "To think this will change the dynamics of the market is ridiculous."
Famous last words of the slew of news traders in Oanda a few years back Porkpie. Retailers acting in concert can and do affect the market you're trading in.

I didn't PM the OP, but I can see why some people might depending on where he goes with it.

Last edited Aug 29, 2009 3:59am
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Old Aug 29, 2009 7:33am
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Originally Posted by Ferrari View Post
I'm going to have to agree with you here, people are turning this into a holy grail... the market is not out to get us... unless you buy into demand or sell into support, but who would choose to do that right?
It really is that simple. Supply and demand. Watch out for the bluffers and understand market inefficiencies eg. bank traders HAVE to trade so many transactions per day/week, they have no choice (hence one way trading between supply and demand). Yesterday GBPUSD was a good example of sellers buying the market up at an SD triggering buy orders before slamming it down to a lower SD level then taking it back up again then back down...
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  #108  
Old Aug 29, 2009 7:57am
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Quote:
Originally Posted by Jimmy Jones View Post
Where did the loser get into the market and when is he going to cover.
Two words: Fear and Greed (ok that's 3, doh!). Think about it.

Ok who put up the thread 'Trading Without Charts' using their spare computer with a different FF user name??? Nice try
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  #169  
Old Aug 30, 2009 8:23am
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Here is Larry's book which is not the full version but will give you some insight I am sure. And a book review which summarises a few things.
Attached Files
File Type: pdf Trading and Exchanges - Larry Harris.pdf (650.2 KB, 869 views)
File Type: pdf q2304bookreview[1].pdf (259.0 KB, 567 views)
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  #174  
Old Aug 30, 2009 10:16am
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Default Order Types

From my partial reading of the material in my previous post, if I understand it correctly (if not please tell me):

Limit orders encourage liquidity. These can be seen.
Market orders dry up liquidity. These cannot be seen.

Limit orders create the structure of the market. Its boundaries causing market orders to come in creating liquidity but also drying the liquidity up. Market order create a demand for liquidity whilst reducing its supply. Limit orders are a source of liquidity. Without limit orders the market has greater volatility as it is left to market orders to push price around until a limit order gives the market some sort of direction and structure. When there are no limit orders and the market is left to market orders reducing the supply of liquidity then the market is considered inefficient.

When this happens specialists enter the market with limit orders to encourage liquidity -market orders come in to try and take advantage of the size and position of the limit orders. Therefore, the value of a limit order is dependent upon knowing the order exists and its size. Limit orders are on the whole visible (Level 2), but their size can be disguised.

Informed traders can take advantage of limit orders by getting in before the limit order and taking advantage of the thrust that the limit order will produce. However, the momentum this causes creates the opportunity for those traders with equal size to trade in the opposite direction causing the price to reverse. ('front running'). This gives another dimension of how prices might shoot in one direction to then tank in the opposite direction and allows the informed traders to use limit orders to push price higher to sell at cheaper levels where there are plenty of buyers.

Old Larry says: Limit orders execute quickly if they are on the wrong side of the market but they do not execute if they are on the right side of the market. This is opposite to the concept of front running and therefore, it makes you wonder how often front running ocurrs but is most likely to ocurr when the limit order is on the wrong side of the market. How do you know if the limit order is on the wrong side (larger trend possibly?).

So informed traders will get in before the market reaches a limit order on the right side of the market. This makes sense because if the right side is bearish for example, the more sellers there are the quicker the move will be exhausted as there will be less buyers to sell from and therefore less profits for those shorting.

I think the bottom line is that well informed traders do not use limit orders (unless they are encouraging a bluff), but instead use Market Orders (which you cannot see). Like Skfx says, its what you cannot see that is important. What you cannot see are the market orders that have the potential of drying up liquidity in one direction until a limit order is placed in front of it. The informed traders use that limit order to temporarily take the market in the opposite direction which encourages the herd to jump in, creating enough liquidity for the original direction to then resume. In a trend this causes the wave like action.

Could it be therefore, that what we should be concentrating on is order types? How are informed traders who use market orders, using limit orders, highly visible in the market, to their advantage. What are the signs that we can use to our advantage.

Scotty, just read your post. Looks like we are thinking on the same lines with regards order types and liquidity..

Last edited Aug 30, 2009 10:49am
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Old Aug 30, 2009 11:16am
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Quote:
Originally Posted by Ferrari View Post
I believe that our market belief system is our trading methodology. I just don't believe that money that can move the market in such a way as described in that euro chart can be continuously targeted and used to fund the accounts of the big boys. Sorry. The amount of capital required to move the market is phenomenal, if the capital was moving the market it would soon dry up when their accounts were run dry. It just doesnt make sense that this would happen. So as holy grail and secretive as some are making this out to be, I say you need to check...
But those charts and those levels do show price reaching back to areas of previous origins of supply possibly and most likely triggering limit orders to the sell side or market orders entering before limit orders getting triggered.

Last edited Aug 30, 2009 5:11pm
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Old Aug 30, 2009 11:30am
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Quote:
Originally Posted by Ferrari View Post
Sorry, I wasn't refering to you at all about the holy grail part... You're spot on. I am saying that some people believe that this is a result of the market makers, big banks, etc out to get us... Which I believe is not accurate. Our beliefs about the market have to reflect reality. If a trader wants to buy into a level of supply in the market, then they are going to lose over time.

Theres no use fighting over this topic anymore tbh, because you either believe in the reality of supply and demand, or you believe in illuision in one form...
I don't think anyone is fighting over the subject. I think most here understand demand and supply but delving deeper to understand what is happening behind those charts can only enhance ones trading.
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Old Aug 30, 2009 11:55am
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Originally Posted by Scotty B View Post
Almost there...No, limit orders supply liquidity while market orders demand it.
The point I was making that Limit Orders are the origins of liquidity as it encourages market orders that both create liquidity and demand it. So agree, if there were no Limit Orders there would be no liquidity.


Quote:
Originally Posted by Scotty B View Post
I don't think limit orders produce any thrust. It would be the market orders eating up open interst that causes price to move. I am still looking into this, but I don't think stop orders are treated like limits. I'll get back to you all on this.
Surely, if you have a large or stack of limit order that get triggered thats as good as stack of market orders entering at the same time. Both may enable price to move. The difference is the limit order would have provided the incentive for market orders being placed in the first place. Informed traders will use Limit orders to their advantage by jumping in the same direction at the very same time as they are triggered thus taking advantage of the thrust due to the size of the limit order. The informed trader, knowing that this has now created a stampede of buying will then take advantage of the amount of buyers to sell to its called Front Running.

Quote:
Originally Posted by Scotty B View Post
"Old Larry says: Limit orders execute quickly if they are on the wrong side of the market but they do not execute if they are on the right side of the market."
Quote:
Originally Posted by Scotty B View Post

I think the opposite might hold true on this one

You best tell Larry he's got it all wrong then LOL .

Last edited Aug 30, 2009 5:07pm
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Old Aug 30, 2009 12:13pm
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Originally Posted by Ferrari View Post
I think the point is you wouldn't see them in the order book, this is why they arent guaranteed like using a limit order is guaranteed. Price cannot move past a limit order without filling it, the market just doesnt work that way, this is the crux of orderflow.
Yes exactly, but Limit Orders are also not guaranteed as the market may turn before price reaches it.

Guru Larry says " Well informed traders tend to submit market orders rather than limit orders...as they subject the limit order traders to adverse selection".

Its all about Fast Trader's (Skfx). The fast traders will get in before the limit orders if these limit orders are on the right side of the market. Therefore the limit orders may never get filled. Its the fast informed traders competing with the slower informed traders.

Trading at SD equilibrium levels. When price returns back to those levels I have often seen the market tank a few pips before the actual level. These areas are often where limit orders are stacked up waiting to be triggered. Is it the fast informed traders getting in before the slower limit order traders? Quite possibly. If you are a large buyer, the more sellers you can buy from the better hence the need for speed before your competition gets in before you. As you typically won't be a large buyer you can only expect this typical price action to ocurr and be prepared to enter before those limit orders.

Scotty, I think you are missing a trick with regards to chart reading as I am sure Ferrari (aka: Sam)will concur. Understanding Order flow can only enhance what we already know to be the realities of the market (as seen on the charts ).
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File Type: pdf Order Types by informed traders.pdf (184.9 KB, 759 views)

Last edited Aug 30, 2009 1:45pm
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  #196  
Old Aug 30, 2009 12:45pm
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Quote:
Originally Posted by Scotty B View Post
Okay bud, we are square on this.

Alright not so square on this one... I don't think limit orders would move price at all because the market orders that took liquidity from the limits would cause equilibrium. The market and limit order for the same amount would cancel each other out at a given price. You would then have more open orders in the market though. When a limit order executes, the holder of that limit order is now locked into a position and exposed to the possibility of risk or profit. At some point those traders will exit those trades...
Ok I think we got our wires crossed. I was basically describing front running and hw large limit orders can be used by the informed large traders. Large traders competing between large traders (they don't all trade the same way and they do get it wrong). The result is informed traders taking advantage of a stack of large limit orders that were on the wrong side of the market, and whipping up the momentum in the direction of those limit orders, only to then whip the market back into the direction of the original direction. The informed traders have piggy backed on those limit orders to go long at a cheaper price. We thus need to understand limit orders in this context, as being exposed and vulnerable.

Last edited Aug 30, 2009 1:49pm
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Old Aug 31, 2009 5:54am
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Quote:
Originally Posted by Scotty B View Post
I am saying that TA and FA are reduced to their probabilities. I cannot say yet what I believe about orderflow and it also being reduced to simple probabilites. I think these guys who know how to trade using orderflow trade with certainty, at least that's the way they make it sound. Meaning that, if you trade a break of support for example and go short, you don't know for sure if the orderflow is on your side, so all you can do is say "well, this trade might work out and it might not, so I better get my stop all ready." But if you are someone...
Interesting answers from the worlds greatest scalper Paul Rotter (nice name) who uses indicators and the order book:

Q: what timeframes are you using on your charts?
A: usually 5 - 30 min charts for trendlines and indicators. i prefer p&f charts because they give me a clearer view on patterns (triple tops). for indicators i like the CCI because it also shows the volatility of the markets.

Q: what has one to do if he wants to become a scalper?
A: he has to watch the orderbook for a very long time.

Full interview here
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Old Aug 31, 2009 12:26pm
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[quote=Scotty B;3008527]
Quote:
Originally Posted by Teiresias View Post

I am enjoying it. It's been an enlightening last few days for old Scotty. No word from SK for a while. I hope he's feeling alright. Anybody out there with ideas on this, please by all means, chime in. I don't think it's rocket science type stuff, but like SK has said, UNDERSTANDING is one of the keys. Hard work and and a little brain power pays off.
The usefulness of level 2 data remains inconclusive it seems after a quick web scan.

I'd say you don't really need it. I don't. Hard work is only necessary if you are looking at the right stuff. Nice discussion though.

Other Forum discussion

Last edited Aug 31, 2009 12:38pm
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Old Aug 31, 2009 1:21pm
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Some info

http://www.forexfactory.com/showthread.php?p=23354

http://www.forexfactory.com/showthre...t=10078&page=1

http://www.forexfactory.com/showthread.php?t=73047

London Stock Exchange info attached

I think essentially, if you can identify true areas of supply demand (SR) - no brainer, and use level 2 data to identify the strength of those levels then you are pretty much sorted. Currently I just enter trades at true SD levels (using a strength determination assessment), and then look at volume on lower time frame for entry. But most of the time I set and forget. Level II data will stack the odds in your favour at these levels with greater certainty. (shit I just revealed the Holy Grail!! DOH! )

Reading support and resistance
On many Level 2 screens, certain price levels
attract large numbers of orders. These clusters
can be identified on a Level 2 screen and will often
act as support and resistance points depending on
whether they are above or below the current price.
Matching these with key technical levels can be an
effective trading strategy.
Advanced Level 2 strategies
Here are some advanced strategies that, with
more experience, you can benefit from:
? Trading by using ?Times and Sales? data (historic
trades executed) in conjunction with a Level 2
screen. This enables you to look at the
relationship between large executed orders
and the subsequent move in a share price
and depth of market.
? Reading a Level 2 screen to validate breaks of
key technical analysis levels. Breakout trades
is a very common strategy for trading markets.
Level 2 data can help you assess if the breakout

is real or false.
? Recognising and trading off ?iceberg orders?
that can be identified on a Level 2 screen.
An iceberg order is a large single order managed
by an exchange that has been divided into equal
quantities by the use of an automated program,
for the purpose of hiding the actual order
quantity. This can hold back the share price at
a specific level as the full extent of the order
gets executed.
? By understanding supply and demand
characteristics on a Level 2 screen you can
identify intraday shifts in momentum from strong
buying to strong selling. This is seen by rapid shifts

from the left to the right side of the order book.


Attached Files
File Type: pdf GuidetoLevel2[1].pdf (619.2 KB, 739 views)

Last edited Aug 31, 2009 1:45pm
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  #237  
Old Aug 31, 2009 1:49pm
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Quote:
Originally Posted by shreem View Post
EDIT: this made me think, spot forex been decentralizded as compare to future market, stock or commodities market. There is certainely a reason why this market is still decentralized and that we dont have access, as retail traders, to the whole reported daily volume. If we could get a way to get the majority of the daily volume of the true interbank fx market, we would be on something.
"to cope with the lack of order depth insight, you can look at the CME currency futures level 2. they track well with the forex market. i dont scalp, but if i did this is the setup i would use.

btw, anyone used "the matrix" in TradeStation? awesome level 2 setup..." Merlin

"yeah for sure...the first thing you have to learn when trading the level2 info (in any market) is that the executed orders are much more important than the resting orders. 90% of these resting orders come from gamers and automated systems." Merlin

"executed orders = order that were filled = "the tape" = "time and sales"
pending orders = order that are resting = "the book" = "market depth"

"the tape" and "the book" is what makes up level2. obviously there is no level2 in forex because it is decentralized, all of this is related to currency futures (or any other centralized market).

now...the tape is a record of the orders that were executed. basically its a list of orders filled, the price executed at, the time they executed, and the size of the order. is this is the most important part of level2 because it shows you what is driving the price.

for instance...if i am long and the market is going up, and i see a boatload of sell orders come in (on the book), i might think that the orders are just a ploy by the shorts to muffle the move. in this case i wouldnt exit my long position. HOWEVER, if the price reaches the sell orders, and they actually execute, i might be a little worried that there really are sellers at that level.

now, what would make me decide if i am to exit or hold my long is determined by how the price reacts to this selling. if the sell orders get fiilled, and the price continues north, i would know that the bulls are in control and i would hold my long position. HOWEVER, if the price bounces off the sell orders, i know the shorts have taken over and its time to exit.

so you can see how the book and the tape really work together to give you the complete picture. the book is important, but without the tape to show you what actually happens the book is almost useless. the tape, however, is useful all by itself". Merlin (again).

"the thing about "large" orders is that they are usually broken down into several small orders. so you really have to pay attention to figure out when a smaller order is part of a larger order. for instance, if the market is going down, but keeps bouncing off of buy orders at a specific level, you might conclude that there is a big buyer at that level. the orders might be small, but if they keep appearing at the same level (and for the same lot size) thats a good sign there is a broker sitting there executing a large order all day for one of his clients. large orders can sometimes take WEEKS to execute! the name of the game when scalping on level2 is to figure out where the buyers and sellers are, and determining how big the orders are." (Guess who?)

"...there ARE a lot of automated systems that trade the level2. as i said earlier, the book is filled with orders from automated systems. the main strategy ive seen employed is to automatically keep a bid and ask a few points away from the market. this is done to catch people sending market orders when there is no liquidity. if a sell market order is entered, and there are no bids for a split second, the market order will get slipped to the level where the auto system will fill it. this is common practice, and thats why i find it so funny when forex traders complain about getting slippage on their market orders...they dont realize thats how trading works!" (M...)
"
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  #242  
Old Sep 1, 2009 3:05am
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Quote:
Originally Posted by Fudomyo View Post
Yes, price reversal is why it's important, but that's not all you need to know.
A foot print is something left behind after a step has been taken.

The trigger for taking the trade is what's important.

That's what people are searching for and why this thread is so long.

All signals operate on 2 variables lining up. MACD on a moving average cross, VSA on volume spread comparison.

One without the other is not a strong enough signal to enter a trade. So, once you understand what the variables are that...
I hope you were talking metaphorically in your MacD example. But I do notice you like your 55 ema, so maybe not. This discussion goes way beyond indicators and even price action itself although pa should be included as an important element imo. But essentially we are looking for clues before the foot print has even been created. Getting in with the making of the foot print (the invitation) is what's important here, not after the fact. Why? Because this minimises our risk and boosts the probability of the trade working out.
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Old Sep 1, 2009 6:40am
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Quote:
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hahaha thanks!

MACD was a metaphor for the trigger. I don't use MACD, but I am learning VSA.

And I do like the 55ema at times. It's what floor traders look at, so I want to see what they're seeing because it's an imortant psych level. I make my living trading so I use the tools that make me money. No shame in that.

I understand that this discussion goes beyond indicators.

I figured out how it works, so I posted to thank skfx, that's all.

Anyway, I took my first live trade today based off of price orderflow on the GY in the London session...
Well thanks for your really great input. I am sure you are profitable using your methods, as is Dan, and so are many of us doing the digging here. I don't need to know more than I know because I am profitable. It does not mean we cannot explore the issues in greater depth.

Knowing something is one thing. Explaining it is another. So please lets not have more people coming on saying how wonderful and profitable they are and that THEY 'KNOW'! We all fOOking know.Trading is a NO Brainer most of the time. Which makes trading a brainless pursuit.

The purpose of this thread is to explain and explore what we know and that is taking our understanding to another level. If you cannot contribute to this greater understanding then go and join the knobs on the interactive threads where you will be welcomed like a hero for making 'no brainer' trading decisions.
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Old Sep 1, 2009 7:42am
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Quote:
Originally Posted by Limstylz View Post
Porkpie, The more I read your posts, the more I see myself becoming you in a few years time... (hope that didn't sound gay... not that there's anything wrong with that... no angry voices of homophobic nature either inverted or extroverted please... I mean no offence).

Just for clarification then... Scotty B looks like he will be joining the ranks of the stop hunters in the fact that he is looking for orderflow to dry up and then take price further (higher or lower of the opposing intermediate trend).

Where do you stand in this? Would you be...
Lol, thanks Lim. I thought we were both on the same level. Always learning.

The way I see it is that order flow is reflected in price. An imbalance of order flow shows buyers dominating sellers or vice versa. This shows up on a chart as true support/resistance. What usually happens is that some big traders get left behind at these levels and when price returns they are waiting at these levels to jump in where they missed out before. Also, as already discussed, sometimes large orders are broken down into smaller orders and triggered repeatedly every time price returns to the same level ( until exhausted and then usually the support/resistance area is too weak). So that is a simplistic view of why these true areas of supply/demand are often good entry levels.

These SD levels are turning points. Sometimes the market will tank up through these levels because it entices buyers into the market creating liquidity for shorts, perhaps triggering buy stops in areas of supply. The buyers will be buying from the more powerful sellers at these areas that previously showed supply exceding demand.

So to answer your question, because I do not work with exact levels to buy or sell I work with supply and demand zones which allow for flexibility in stop hunting tactics. The zones I use also allow me to know my risk before hand against the likely profit level (the next SD level), as I will know where my entry will be in relation to my stop loss and the potential profit target for each trade.

So depending on how strong the short term trend is for a particular currency pair I would either wait to see what price/volume will do within those zones of Supply/demand or I would set my trades up with a limit order at these levels. It all depends on what the market is doing at the time and how the market reacted at the origin of the move that created the SD level in the first place, that now creates the zone for entry.

If I had order flow data, that would be useful in telling me the strength of that zone from simply looking at the levels of buyers and sellers and the size of their orders. I wouldn't look at order flow in any other areas of the chart other than at these SD zones. But I might keep an eye on it to ensure my trade was going to make it to the next SD zone target level. Sometimes (rarely), price would gallop through my SD zone and stop me out and then reverse in my direction. When this happens I just wait for price to get me in again at the lower part of the SD zone. Order flow data would probably be very helpful in stopping these rare occurences taking place.

Sometimes it is important for me to just set and forget as often price will reach a SD zone, and take off in my direction in a split second. Hence the need to be quick on entry at these levels (usually with a limit order).

So in sum, I place great importance on these SD zones as areas of price reversal. From the discussion I can summise that order flow data might trick me into thinking price would go straight through these areas due to stop hunting and limit order triggering on the other side of these zones which are used to supply liquidity for entries in the opposite direction. But when price lingers in these areas, using order flow information would give me greater certainty of the strength of these SD levels. My entry levels are pre-defined by SD zones based on previous price action. Order flow will simply give me certainty at the levels but will not be giving me an entry signal in itself.

Last edited Sep 1, 2009 7:53am
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  #254  
Old Sep 1, 2009 7:45am
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yes, you do have access. you just need to know what you're looking for.
sorry. I don't mean to sound cryptic, or just show up and say, wow, look how great I'm doing. I was responding to a rather condescending post about my inability to grasp what this discussion is about. Initially, someone said, the orderflow footprint was all you needed to know, and I was clarifying a point.

Stop hunting can operate on a spike or a fast move up. Granted the hair doesn't support a classic spike on the trade I took, but the price move was very rapid and the...
Ok, thanks. Peace

But I am sure those getting it would have interpretations in how they get it and how order flow info is used.

Last edited Sep 1, 2009 7:55am
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  #259  
Old Sep 1, 2009 8:06am
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Hello Fudomyo and thanks for posting. Just let me say big Kudo to you to have found the key of how using order flow. That great i am truly happy that you found it.

I agree with you, that in order to respect the direction of the OP thread intention, if we solve the puzzle, we should not really reveal it here but only give some hints to help others dig deeper until they found it. ( I am still in that category but seeing it more and more clearly though).

I also do use VSA in my trading methodology which is, for me, near as it can get to see intentions...
As Merlin has already stated in another thread. Order flow is useless without the 'tape'. Reading orderflow without charts is possible if you can read the tape. Tape reflects orders being executed and charts show the history of the tape action. So you can use order flow without the charts but why use the tape if you can use a chart?
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  #297  
Old Sep 1, 2009 2:58pm
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Something else, skfx, has given us the white space hint several times.

What I gather is that he's referring to accumulation/distribution areas where you can clearly see price retained in a range.
...and areas of least resistance
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  #298  
Old Sep 1, 2009 3:57pm
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It makes perfect sense to unload in this place. Why? Well lets assume that liquidity is lacking in the buy side of the book. Why would it under normal market conditions be stupid for me to sell off my position at that point? Because I would work against myself when I sold and get a lower net profit on my long. There are many possibilites and exit stratagies I could use, but no matter what, given normal market conditions, it would be my goal to exit when I found a large liquidity pool on the buy side of the book.
I like what you are thinking here Scotty.

Would it also allow those buyers to HIDE their liquidation of buys within those liquidity pools to then reverse their position. Interesting thought. (Beam me up scotty!! )
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Old Sep 4, 2009 4:17pm
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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...

Nicely said, keep it simple. It doesn't take too much brain power though. Don't think too much. And I agree with bleek's comment, indicators can work for you if you have the basics and know how to use those indi's in line with true supply/demand. But keep it simple. You have enough to deal with (RE: your psychology), so why complicate matters. Keep it RULE based. Easy to follow.

I've probably given too much away (doh! I love that 'catchphrase' - how many times has that been said in one way or other in this thread..by those that know 'IT'......).
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Old Sep 6, 2009 3:49pm
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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.
[font=Verdana][size=2]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,...

This is a great post. Good old common sense approach, supply and demand in plain english.

Last edited Sep 6, 2009 4:14pm
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  #507  
Old Sep 6, 2009 4:14pm
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Originally Posted by pipmutt View Post
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...
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 a high probability trade for a sell. If the price stepped down the strength is not as strong so it might best be to avoid selling at this level or at least wait for price to enter the zone and sell on a pull back out of the zone. It is very difficult to pinpoint the actual sell area and its best to use zones based on previous price action. Sometimes price will take off without you and will come back and take off from the zone with a lot more strength as it picks up large orders waiting to be triggered at a better price.

Its also best to consider the time frame. If you have a number of supply/demand zones in the area based upon a number of time frames that will increase the probability of the trade working out.

If the area has been tested before there will be fewer sellers at that area. I have a 50% rule. If the market has entered into an area before more than 50% into the SD zone then I avoid the trade as this tells me that the sellers were weakening against the buyers.
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Old Jan 16, 2010 9:13am
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Order flow is easy to see on the charts. What this thread has saught to do is to find ways of trading it and in the process has made it so complicated that the concept of what order flow looks like has been lost in the process.

Lack of knowledge causes fear. Fear causes complexity. Complexity causes losses.

I also think people have a different understanding of order flow. I am surprised at daytraders response. I know a bank trader who has the opposite view. Order flow is the key to his success but its nothing like how Darkstar describes it.



Quote:
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Hi Fugly,

Not many on this forum ever posts their statements and I too have questioned that in the past, but I have read most of Darkstar's posts and have come to the conclusion that he really knows his stuff.

Of course, it all comes down to what you believe but as you have said without statements there still remains doubt for some.

What is interesting to note is that even though Darkstar has given what he thinks is vital information to people on this thread, no one has followed it through. Which leads to me to think that without proper teaching...
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Old Jan 16, 2010 9:41am
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Hmmm interesting..So what does it look like?
That would be telling...

Like I said, trading order flow is knowing where orders are likely to be and understanding why they would be there. I think trying to figure out where you would get order flow information has clouded the issue. I think skfx has provided some very useful info.

At the end of the day there are other ways of trading profitably and if you don't use order flow in your trading its no big deal. Just another method or tool thats all.

Last edited Jan 16, 2010 9:52am
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  #756  
Old Jan 16, 2010 9:56am
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Originally Posted by scooby-doo View Post
I trade full-time for a bank. So I see more than just price on my screens.

Retail traders using MT4 or alike are blind to the bigger picture including pending orders at interbank level.

Impressibe CV scooby-doo! Not sure why you want to spend so many hours on FF after working at a bank trading 9-5 or whatever. Nutter.

Last edited Jan 16, 2010 11:58am
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  #758  
Old Jan 16, 2010 9:57am
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I'm watching an online trading seminar by a guy named electronic local. He was supposedly going to teach some orderflow stuff..Haha..The poor guy has no idea what he's talking about. He's brought out keltner channels and MA's..The truth is that you cannot see orderflow on a chart, hence my hysterical laughter at porkpies response.

But I have heard of X ray vision. I bet thats what he's doing.
Like I say scotty, its down to your interpretation and definition of order flow. If you had experience of dealing with order flow, knowing where all the orders were stacked at particular times and you looked at a price chart, you would know what order flow looked like on a price chart.
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Old Jan 16, 2010 2:50pm
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Time and time again price will snap away from these areas in the direction of these orders as they are triggered cashing in on the uninformed going in the opposite direction. There is a good reason why price will move and thats both the sheer amount of limit orders and profit taking at these places. You have to pick the right place/zone thats the key. It's wrong to think that trading with a stack of limit orders is contrarian. Getting into a move before the herd is far from boring. You become part of the invitation and the herd pays you well for it with very limited risk. The bigger picture is important.



Quote:
Originally Posted by Scotty B View Post
If those stacks of tickets were all stop orders then I'd be pretty excited, but it sounds to me like good old limit orders. The problem is that limit orders don't move price, but they do allow it to move. I've become a full blooded momentum trader, but if I was more contrarian I might care about limits more. If for example I knew that there was some level full of limit sells, I might take that as a place of value and maybe I should consider selling off of it..Thats just boring to me though, because the only way price is going to move down off of...

Last edited Jan 16, 2010 3:18pm
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Old Jan 18, 2010 5:10pm
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Originally Posted by Fx chartist View Post
The most valuable commodity I know of is information, wouldn't you agree???

Gordon Gekko

..yes but errrr....most of it is bloody useless (in trading at least)! So what is more useful than 'information' and that is knowing that most of it is bloody useless..which you could say is err, information..ok, ok you win!

No actually you don't win.

Experience is more useful than information and experience as the owner experiences 'it', isn't something you can package and transfer and sell to someone else. Therefore, compared to information as a 'commodity' (which is where some of the uselessness comes in), 'experience', although considered information, can not be commodified. Yet when compared to knowledge as a commodity, experience is priceless. Experience will change how we use information and sort the useless information from the valuable information.'Valuable' being subjective of course. There are not many universal truths in trading. If there were there wouldn't be much of a market would there.

Yes I know, I am bored and pedantic.

Last edited Jan 18, 2010 5:21pm
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  #1015  
Old Jul 19, 2011 11:44am
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DS used Coesfx for his strategy in knowing where the stops are stacked. This broker now seems to not exist so just wondering if anyone can point out an alternative other than IFR on Oanda etc?
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  #1017  
Old Jul 19, 2011 1:01pm
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Originally Posted by RichFWebb View Post
you can see it on a chart
eeerrrmm, yes. You can see lots of places where there might be stops but it doesn't automatically mean they are hot spots of liquidity unless you have that information from another source. DS used Coesfx news source for that information.
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  #1019  
Old Jul 20, 2011 1:54am
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Ok thanks. It was an IFR service with Coesfx, thought it might have been a different news service. Cheers.
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  #1050  
Old Jun 21, 2012 6:21am
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Originally Posted by taomql4 View Post

OMG! LOL!! Basically sums up consumer 'driven' society. How sad and ridiculous and a waste of money that could be better spent where people really need it.
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