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  #962  
Old Jun 7, 2011 2:52pm
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Originally Posted by Marv View Post
I can confirm that (though was never privileged to received any direct tutoring or anything like that) it was by reading Darkstar's posts that I started thinking about this, tried to connect the dots, and started looking at the market from that new perspective. He also indeed gets all credit for the cool term "orderflow". I don't remember anyone using it before.
As retail advances, it's bound to re-discover decades old research of the pros.

Order-flow articles from 10 years before FF was born: http://scholar.google.com/scholar?q=orderflow&as_ylo=1992&as_ yhi=1994

Ten years from now this forum maybe will talk about colocation, dispersion, volatility surfaces or quantitative news analysis.
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  #965  
Old Jun 7, 2011 3:33pm
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Originally Posted by Marv View Post
Yes but I don't think the term had ever been used as a trading methodology before Darkstar, had it? It simply meant the flow of orders in the orderbook, not a way to actually trade.
What do you think this research was done for? Fun? Unfortunately all of those articles are still not free.

From one except:
Quote:
Yet, they also argue that this post-weekend order flow will be biased toward sell transactions. As a result, market-makers on Monday may not only face a more one-sided order flow from individuals, but decreased liquidity from institutional investors as well.
That sound very much like tradable stuff.

Another one:
Quote:
However, unlike competitive market makers who are able to share the inventory risk, the exchange specialist is often obliged to absorb a large part of the imbalance in order flow. This leads us to predict higher inventory holding costs for the exchanges.
Orderflow imbalance? That sounds like Darkstar

Don't forget that a market maker is basically an order flow trader by definition.
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  #967  
Old Jun 7, 2011 7:25pm
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Originally Posted by Darkstar View Post
All of those examples exploit order flow (a sequence of orders), but that does not mean they are engaged in "Order Flow Trading."
I think a better analogy would be that Deutsche Bank is doing "DB Order Flow Trading (TM)", while you are doing "Darkstar Order Flow Trading (TM)". Both use most of the same building blocks (knowing or guessing current positions, future flows, stop locations, sentiment, liquidity gaps, ....) but arranged in a different and proprietary way.

Quote:
Order Flow Trading is a metagame analysis technique for predicting future trader behavior. It short it relies on the premise that by knowing what traders are going to do, you can construct an approximated order book and THEN exploit the sequence of orders for profits. And as far as I can tell, prior to its development, by me, in 2006, the concept did not exist.

Strictly by this definition fading a bubble is order-flow trading - you see that everybody is buying, is getting long and then you anticipate their hasty exit. Some of the trades in "Reminiscence of a ..." also fit this description. I'll venture saying that what most people here assume is order-flow trading existed before 2006, but not under this umbrella name.

However your own realization of these concepts under the "Orderflow Trading" brand together with everything surrounding it is indeed your creation. Also the fact that you (and others) shifted FF attention from losing 100% chart based TA to more complex forms of trading.
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