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Behind Price-Orderflow
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Aug 28, 2009 8:42am
|  | Member | | | | Wow, amazing someone came out with this thread. Skfx, I salute you Sir. I know the feeling you have inside you... you want to share because you realise how far people are from the Truth, and how desperately people need it. You think that sharing it will detract from you trading. That would explain the emails you got, other people have this quality inside them aswell. I have it too, I think its just a human tendancy to be self centered. (We analyise our inward conditions highly as traders). But, my dear friend, people can only ulitmately help themselves, if at all.
I read the whole thread and what I can say is this, even though you shared somewhat, people didn't get it. We need to take the reins and take responsibility for our ownselves. At the end of the day, I do not believe the market is out to get us. The real enemy of the trader is his own self. The problem lies in part with the complete lack of proper education in this business, or you could say the knowledge of the reality of the market is lacking.
We need to trade on where the orders have proven themselves to be, not where we think they might be, i.e. using fibonacci retracements, pivot points, candlestick formations, trendlines, news, market sentiment (this one pisses me off the most), moving averages, indicators, oscillators, other people opinions, economist outlooks (put your money where you mouth is), bank reports, msnbc etc etc etc. Its a simple shift of focus. You could spend the rest of your life looking for the holy grail when the market is simply refecting the ongoing supply and demand equation, its economics 101.
So Skfx, please don't shy away from sharing your knowledge, sharing opens the doors of abundance.
Last edited Aug 28, 2009 11:12am
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Aug 29, 2009 7:00am
|  | Member | | | | Quote:
Originally Posted by AstonDan I respectfully disagree.
There is nothing to crack. There is no 'hidden secret'. It's traders trading, businesses transferring, multinationals hedging etc etc. It's not space invaders, it's a function of international business and aproaching it with a view or perspective that there's a super secret cabal of super traders will ultimatley frustrate you as it doesn't exist.
If you're making a consistant 5% a week you're doing great, why overcomplicate it?  | 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? | 
Aug 30, 2009 7:38am
|  | Member | | | | Quote:
Originally Posted by skfx 99% of retail traders stop at price.If you stop at price you just haven't gone far enough.
Price has it's place,don't get me wrong,but she lags I'm afraid.
With every tick made,it is H-I-S-T-O-R-I-C-A-L data.
You need to trade out in front. | I think I know what your getting at here... can I ask what resources you use to trade then? It must be some sort of level 2 orderbook data yes? Where do you source this information from? | 
Aug 30, 2009 7:56am
|  | Member | | | | Quote:
Originally Posted by LasVahGoose Well, he did say:
So we are looking outside the box to find out who is trading and why. I guess once the 'Hand has been tipped' then price only moves in one direction because it has no choice. | Yeh I think you missunderstood, we can never know who is trading and why they are trading with any certainty and can never know, we are not Gods, we are not omnipresent or omnipotent. We only need to know where the orders have proven themselves to be. Its not a secret, theres nothing wrong with asking what resources he uses. I used metatrader4. Big deal, its a price chart that shows me where the imbalances of buyers and sellers have been, so I can deduce with a high probability that area will continue to provide support or resistance in the future, until those orders have been worked through. If you truly seek the exact whys and whos then you truly seek the holy grail.
Man I just asked what products he uses, if hes not using a chart hes using something else, this isnt rocket science. I didnt even ask how hes uses the product. And I didnt ask you. | 
Aug 30, 2009 8:10am
|  | Member | | | | Yeh its cool guys, essentially what the point of this all is trading from an order book, reading the tape etc. Just been doing some research into that, not too much out there but somethings caught my eye.
Iceberging: a way for large orders to be shirted into the market, orders are broken into pieces and shifted into the market in stages, so as not to attract any unwanted attention.
I'm beginning to believe from my own trading that we as a group have missed the point of trading and what a market is from the day one. | 
Aug 30, 2009 8:32am
|  | Member | | | | Quote:
Originally Posted by Porkpie 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. | Cheers mate | 
Aug 30, 2009 10:39am
|  | Member | | | | This is not my understanding of price action, order books are driven from limit orders resting in the market. The iceberg effect discribes the way in which large orders are shifted into the market at the same price level, ie. the order is being broken into chunks. This is where most of us lack the proper knowledge of the market, the real money doesnt chase price around, they have their price levels where the have to execute their orders. I read in a study that two thirds of orders executed in the FX market are limit orders. Noice traders have missed the point of the game from the start. I think the common misconception is that the real market moving flows chase price around all day. Sure there may be a few few stops tripped here and there, but that is far from the bulk of the movement in the market. | 
Aug 30, 2009 11:00am
|  | Member | | | | 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 your market belief systems, and align them with the reality of the market, the reality of all markets and the simple equation of the law of supply and demand that makes markets. | 
Aug 30, 2009 11:11am
|  | Member | | | | Quote:
Originally Posted by bronxterp | Thanks Indic-hater! I personally dislike market sentiment the most, how can we know how every other trader is feeling toward the market? If we think we know we are claiming to be all knowing and if we read someones opionion about the sentiment then thats all we are getting, subjective opinion.
Any and all influences on price is reflected in price. | 
Aug 30, 2009 11:21am
|  | Member | | | | Quote:
Originally Posted by spekitox I agree 100% with your first sentence, it's funny and also tragic what some people "see" behind price movements.
Honestly I didn't quite understand the rest of your post, I'm not stating anything other than the EU chart on the 1st page is an example the "bucket" scheme described by BRV on the NB thread and here. No holy grail, just a pattern. | 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 or another. We have to take responcibility as traders as to what we believe and how we trade. | 
Aug 30, 2009 11:36am
|  | Member | | | | HAI UNCLE LARRY!!!  | 
Aug 30, 2009 11:43am
|  | Member | | | | Stops Yeh I think stops are market if touched type of orders, hence why stops aren't guaranteed by brokers generally and can be ineffective around news time; thin liquidity. When really important events are coming out, liquidity dries up; orders are resinded from the market causing high volitility. | 
Aug 30, 2009 11:55am
|  | Member | | | | Quote:
Originally Posted by Scotty B Yes, ferrari...This is my current understanding. This makes me wonder about what stops would look like in the order book. My example I gave earlier is probably incorrect. Thats okay, I'm learning as I go.. Although I think a limit order for the same amount as your open position that is in the red, could work as a stop loss. Can someone verify this? | 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.
Oh, there is also an order type called market if touched, a hybrid of a limit and a market order.
Look at it like this: when price is at a level where there is an excess of supply, when the demand dries up price will have to move to a level of demand for price to stop moving. | 
Aug 30, 2009 12:19pm
|  | Member | | | | Funny I had this moment recently too! I agree its about probabilities. I would also say that mearsuring the probability has an objective methodology, based on supply and demand imbalances seen on a price chart. And I mean really recognising real oppurtunity. Man, I totally agree, I too have been looking in the wrong place. I missunderstood the game from the beginning. I can't believe how simple trading is. It can't be this simple, can it? I don't know where I got the misconceptions about trading from.
I don't believe we're gambling in the real sense, if we're trading the reality of the market then we are really more of a casino. Why do the institutions make consistant money and retail consistanly lose? Its about knowing where the orders are.
Oh, and Scotty, your the boss! | 
Aug 30, 2009 12:55pm
|  | Member | | | | Quote:
Originally Posted by Scotty B 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... | Yes, well I think we have to differentiate reading the tape from reading the charts. Look I don't believe in what your looking for, ie. certainty. Its really just the holy grail concept again. We cannot know what the market is going to do with any certainty -this its a fact. We aren't all knowing, we can never know what might come into the market at any moment. Its a search that will never yield any answers. | 
Aug 30, 2009 1:24pm
|  | Member | | | | Quote:
Originally Posted by Scotty B The orderflow predetermines where price can go. Why do you think SK uses terms like "a one way market." You say we "cannot know with certainty." but at the same time are certain that you cannot know and appeal to "fact." If we are not all knowing, then how do you know we can't ever know? If we can never yeild any answers then why are you putting answers fourth?
If we can see orderflow, then we can see the man behind the curtain pulling all the strings and get out of the mindless audience. | Well, simply you've missunderstood the game. The certainty is the law of supply and demand which governs any market, and Newtons laws of motion. These are facts.
We have a mental belief system that allows us to recognise a set of variables in the markets behaviour that indicates when an opportunity to buy or sell is present (imbalances in the supply and demand equation). This is our edge and something we can know. However, what we don't know is exactly how the pattern our variables identify will unfold. We can know that the edge places the probability of success in our favour, but we also have to completely accept the fact that we don't know the outcome of any particular trade.
To quote Mark Douglas on the beliefs about the market we need to share:
"1. Anything can happen.
2. You don't need to know what is going to happen next in order to make money.
3. There is a random distribution between wins and losses for any given set of variables that define an
edge.
4. An edge is nothing more than an indication of a higher probability of one thing happening over
another.
5. Every moment in the market is unique." | 
Sep 5, 2009 5:39am
|  | Member | | | | Quote:
Originally Posted by FOREXflash I want to add a few things cos this is going in wrong direction for some of folks here....Skfx has made a great job here......he made a bunch of guys here to think realy hard, and I think that was his main intention.
Do not take a statement about one way market seriously,
he was refering to breaking of buys & sells equilibrium, and when that happens, you could say that market is bound to go in one direction,
based on prevailing orders volume.
Skfx charts were nice explanation of possible order placing and mechanics of them, but if you are just... | What is the program? Can you tell me more? Thx | 
Sep 5, 2009 5:50am
|  | Member | | | | Sweet, by the way level 2 data is very useful as fx futures is a place where the real heavy weights can be found hedging fx risk.
So is the program a level 2 sim? Live orderbook? Using CME futures data? Brokerage data? "Futures will fluctuate above or below the cash price, but the cash price sets the limits of any move in the futures market, because large dealing houses with low dealing costs will have an established arbitrage channel and their actions will bring the future back in line with the cash. This process keeps the price movements between the cash and futures markets largely similar. Sudden movements away from the cash price are usually caused by the activities of the specialists or market-makers. These professionals are trading their own accounts and can see both sides of the market (i.e. the buy and sell orders). If syndicates are in the process of selling or buying large blocks of shares, they know these large transactions will have an immediate effect on the market, so they will also trade the futures and option contracts in order to offset or lower risk. This is why the future often seems to move before the cash." - Master the Markets | 
Sep 5, 2009 5:58am
|  | Member | | | | Does anyone know where I could obtain interest rate futures historical data, say daily close price for these contracts? | 
Sep 5, 2009 6:23am
|  | Member | | | | I'm having trouble opening the zip files, anyone know where else I could grab the program from? | 
Sep 5, 2009 6:30am
|  | Member | | | | Quote:
Originally Posted by FOREXflash | Thanks | 
Sep 5, 2009 10:34pm
|  | Member | | | | It is vital we align our market beliefs with the reality of the market. Our belief system is our trading method after all.
In my view, skfx demonstraights a lack of understanding of the forces of supply and demand which govern any market. As per usual, the market is "out to get" the retail trader in his view. The chart and his interpritations he offered simply do not stand up to simple logic and the law of supply and demand.
Please see my red writing for notes. If you still persist in the view that the market is out to get you, please read a economics 101 text and get up to speed.
Its about time the simple, logical answers are bought to the forefront, and the super secret bs is exposed for what it is, missunderstanding and illusion. The market will always and has always operated under the governing dynamics of supply and demand. Its no secret, the problem is most people have missunderstood the game from the start.  | 
Sep 21, 2009 2:37am
|  | Member | | | | All your stop are belong to us | 
Sep 27, 2009 8:36am
|  | Member | | | | Quote:
Originally Posted by Scotty B common sense tells me that Darkstar has every reason in the world to mislead. | haha
dude you really are on the holy grail search.
i'm not calling you out in particular, but this point really needs to be driven home now. darkstar himself said that it is largely discretionary and a very intuitive aproach requiring money management. clearly, from your post you cannot accept this. |  | |
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