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Behind Price-Orderflow
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Aug 28, 2009 7:12am
|  | Vivere! | | | | Some Reading Order Flow is what moves the market.
A couple of things to read - start with googling 'Carol Osler', or 'C.L. Osler'. She has written on order flow extensively. Her cited sources are also excellent. Carol writes in a very approachable manner.
Here on FF, look up joelcf's posts. He works for a bank and explains a few things. Pay close attention.
Order flow move price (not our orders), hence price movement will give you a lot of information on what the market participants are doing with their money, and its future direction. Over at the J16 thread it is described as Price Action.
There is a lot of good potential in this thread. Once Order Flow is understood, you can exploit it.
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Aug 28, 2009 7:27am
|  | Vivere! | | | | Quote:
Originally Posted by pipmutt I think you slightly miss the essence of the thread, it's about what's behind order flow as opposed to order flow itself, and how the reasoning behind the order flow of the masses can be exploitable predictability for the few.
All it takes is a bit of lateral thinking. | Hi Pip -
Read that stuff I pointed the thread at. It addresses this precisely.
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Aug 28, 2009 7:59am
|  | Vivere! | | | | Quote:
Originally Posted by pipmutt Hey SP
Yep you're right, I should have read it first, I just assumed it was the same old same old, my bad I'll take a look, thanks. | No Problemo. Cheers.
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Aug 28, 2009 4:53pm
|  | Vivere! | | | | Quote:
Originally Posted by pipmutt It's simple, don't believe a word he says if you don't want to.
Sheeesh, what's next, " post your live trades", geez  | No - we are gonna graduate to "show me your statements!"
LOL
Pip - you are an abrasive MF'r sometimes - I like that!
Seriously - Order Flow is what makes things go - and WHY orders ome in and what kind is pretty important stuff.
Going chartless - I have not figured that out yet.
Speaking of charts - I had a little fun with order flow and S/R levels on the USDCAD and bank some wine money.
See the yellow line - that is an approximation of a Resistance line. These are not sharp lines, but are areas. Orders tend to pile up in a ~ten pip range either side of these. See the White dashed line? It is ten pips from the yellow line. My sense of things was that if price hit that line, we'd see a drop to the round number 1.0800. If it hit that line and reversed ~5 pips, order flow was not there and I would exit.
It hit that line and went right down perfectly to the round number.
Why?
I surmise, because I do not *know* from viewing an order book, we hit some conditional orders - stops and limits (genius)...
Likely some weak buy limits and some stop losses. It had no great punch to it - if it had, it would have rocketed down, and I might be too looped to type this... ;-). It happens. On occasion you'll catch a ride and big enormous R on a breakout or a bounce. And it can happen in minutes.
The round number is a place where order tend to pile up. This round number is not a biggie, so it merely gently bounced up.
Now scale back and look at an hourly and 4 hour chart. The Support is pretty strong. Thinking you'd get more out of this is dangerous thinking and you'd never allow a win turn into a loss here.
Daily chart shows us in the area of a daily Price flip. What was resistance, now turns into strong support.
Later on - the price rocketed up on the merits of 2 Pin Bars. Trading this pair today on multiple time frames was easy if you paid attention to these areas.
Cheers peeps.
Again - look for JOELCF's stuff in the J16 forum. He explains a few things very well.
Again - DEMO only.
And - finding these areas that are *well defined* first are key. Have some fun.
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Aug 28, 2009 6:10pm
|  | Vivere! | | | | Quote:
Originally Posted by Porky Okay skfx, I am trying, I really am.
After 2 years of trading I am just about to throw in the towel (for the 15th time). If you can help me just a little more...
I can see on how the price sits in one area for a while and then jumps to another. I am seeing what your notes show on your charts (first post). But it is easy for me to see it after the fact. The second chart shows a false break at the s/r line and then price dives down. BUT how can you know if it is a false break or if price is taking off until it is already too late? | Now is not the time to quit. Go to demo mode.
AND
GO to the first 100 pages of the James16 thread.
They discuss PA which is a perfect reflection of what order flow is doing.
There are no secrets.
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Aug 28, 2009 7:02pm
|  | Vivere! | | | | Quote:
Originally Posted by pipmutt Hey great, I love this part
Your $/Cad trade, break below support around 1.0830 and it falls as traders sell and longs bail, yep. Where's the benefit of any potential order flow knowledge in that trade though? Don't get me wrong it was a useful little trade, very nice but no specialist knowledge or analysis required.
How about a long at 1.0800 for ~30 pips, then back long again at 1.0821 for ~50 pips, all in hindsight and I didn't take any of them but there are some obvious trades on that chart.
This is what gets me, simple... | Fair question - and rather than rewriting the book, read those Osler papers on order flow. You'll see exactly why tht trade worked - and more importantly, why. It is cool and simple.
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Aug 28, 2009 7:15pm
|  | Vivere! | | | | Quote:
Originally Posted by LasVahGoose This is like trying to solve a puzzle with a 1000 pieces all scattered across FF without a picture to go off of...
There was a post awhile back that has bothered me for a long time. Someone said, LITERALLY, price HAS to go to certain level. It has no choice. The roulette wheel that always lands on black sound like the same thing.
If you knew where price had to go eventually because it has no choice but to go there, then I guess trading would get really boring really fast. At least you'd be rich to do other stuff.  | Exactly correct - and what levels are those? Support and Resistance.
No secret knowledge. None.
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Aug 29, 2009 11:18am
|  | Vivere! | | | | Quote:
Originally Posted by Scotty B Keep studying man..I'm doing the same thing. The one common link that connects these orderflow guys is a strong understanding for market microstructure. They know all the little intricacies that a lot of us dismiss as un-important. Obviously we have some learning to do. Gaston said once, that all the information we need is out there, we just need to dig for it a little. I ordered a book that both Gaston and Darkstar both mention, it's called "market microstructure for practitioners" by a guy named Larry Harris. It was a cool 50 bucks, but totally... | This is a nice post Scotty. I have not read Gaston's stuff, but I will. Darkstar is a witch! I'd heartily recommend MBQB11 too. joelcf works in a bank - and has posted a number of gems on this subject in the James16 thread. Quote:
One other thing that unites these guys is the notion of taking out peoples stops. I don't know if Gaston mentions this, but both darkstar and skfx obviously do. Also, Darkstar revels a little bit about how he trades that leads me to beleive he only trades setups where he can take stops out. I say this because in one of his posts he mentions that he only trades 3-5 times per month while risking 12.5%. Also, in many of his essays on microstructure, he plays the stop hunting example a lot. I cannot say at this point with clarity what events he is watching,...
| Yes - think of why this is important. It is NOT the few pips gained from a stop hunt. That chart I posted yesterday is about as pure a stop hunt you'll ever see. Look at what it fueled. And more importantly - where. And notice the white space... Quote:
The main question I am running into right now is the source these guys are using for their infomation about existing open orderflow. Again to pull from darkstar, in one of his posts he mentions IFR Forex, a service that publishes this kind of information, he even quotes peices of the info a couple times. The info is obviously out there, these guys are getting it somewhere. We'll find it.
| There is no single pure order book in Forex that I am aware of. One bank will not share theirs with others. I have not looked into the IFR service, but perhaps a free eval might tell me what it provides. I can tell you this - you do not need it to be very successful. Quote:
I stated above that darkstar trades a few times a month. I was glad to find that information because it answers my question that I was asking skfx about reasonable returns. With this style of trading, there is more certainty of outcome, which allows one to risk more, but you trade less often. This is important for us all to understand at this point. I'd be surprised if these guys could open a chart (or whatever) and tell you 100% of the time where price is going. Don't get me wrong, I am not bashing the system, just calling it what it is.
| What I know they are doing is looking for as close to a sure thing as they can get. It is possible to do this, but it takes a lot of self control to wait for price to reach those areas where orders are likely piling up. You can front run these areas with a touch trade and a fairly short SL, but you'd better practice that for a good long time first. Quote:
One more thing. If you look the charts skfx posted, and the direction price goes in the areas he points out, what does it make you think of? Simple S/R right? Go through his examples and you'll see it. If you go through and look, you would have been going the right way if you were trading the S/R correctly. I used to be a fib maniac, still am in ways, but I threw them all in the trash after i commited myself to learning simple S/R trading. I've been making a consistant 5% weekely for some time now doing this.
| I'll have to survey skfx's stuff. Always ready to learn from a good trader. No one has the corner... James16 traders are all about S/R as well. Those are very high probability areas. It works on all time frames. Quote:
I am working on some of my own essays about order types and what they do lately. I'll post them when they are done. Some great insights to come guys. We can crack this thing. | I'll read it! Quote:
Have a fantastic weekend everyone,
Scotty B
| You too! It is nice to see people willing to dig into a matter. Most come to trading thinking that a system will get it done.
I call them liquidity.
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Aug 31, 2009 2:43pm
|  | Vivere! | | | | What is most important regarding this lengthening thread?
Where price stops and reverses.
That is the foot print of order flow. That is about all you have to know.
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Sep 28, 2009 8:54pm
|  | Vivere! | | | | Quote:
Originally Posted by Marsh ...
Two of my biggest role models flat out contradicting each other. That says a lot about trading to me... | Different strokes - and one does it for a living. But like DS said, not many will ever be able to use a shred of what he said. I cannot and likely will never. I think you need someone to point you in the correct direction.
Moving on to what works for me.
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