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Behind Price-Orderflow
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Sep 27, 2009 2:41am
| | Thanks for the honorable mention, but........ Quote:
Originally Posted by skfx Hanover,to be honest bud,there was a thread you were involved in that really set my upstairs room into overdrive lol(don't know the thread) and it was only a sentence or two that got me going,so i will have to give you some credit. | Glad that I helped you somehow, Steve, but I haven't a clue how, LOL. The vast majority of the info in this thread goes right over my head. Thank goodness for TA! | 
Jun 22, 2010 4:45am
| | While we're on the topic of lateral thinking........... To quote the mathematician and philosopher Bertrand Russell (1872-1970): " In the modern world the stupid are cocksure, while the intelligent are full of doubt."
There's a great post by mrgreen here, about the Dunning-Kruger effect. Very thought provoking.
Whenever I read a post about yet another 'holy grail' idea or trading system; or somebody whose recent ROI% is several hundred times that attained by the world's wealthiest traders (Tudor Jones, Arnold, Cohen, Simons, etc); or folk boasting about their infallible ability to 'read' a market where any sufficiently large order can potentially upset even the most 'perfect' strategy; ....... it always brings me back to the idea expressed in mrgreen's post.
I've gotten off the original thread topic, sorry, but hopefully it's in keeping with the discussion in the last 20-30 posts.
Last edited Jun 22, 2010 6:38am
| Reason: fixed careless grammar - "whose" not "who's"
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Jun 22, 2010 8:15am
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Originally Posted by Scotty B Good post Han. .......
My replies in blue typeface | I appreciated the MrGreen reference as well. It's as the old saying goes, "The more you know, the more you realize the very little that you don't know." I think arrogance creeps in after a cursory read, and the humility after a couple pieces have been studied vigorously and you get a sense for the depth of that which you are working to understand. It's kind of like 'syllabus shock.' Exactly. Well said, IMO. I remember my father always telling me the "the more you know....." quote, and how he (at age 70+) was coming to the same realization (but about life in general, of course; investing in a few shares was the closest he ever got to trading forex, LOL).
Order flow analysis is all about seeing trader intentionality in the details the market gives. Yes, agreed. But some of the posts here create the false impression that it's all about some secret way of reading price charts, that provides near-perfect forecasting.
There are further pitfalls once you have good data as well. You can't just watch one market and assume you have have enough info. This is why those who are truly serious about it are those who run everything on full automation. To do it 'right,' takes a holistic view of the market at any one time. I may be heading off on a slightly different tack, but I definitely see value in finding possible confluences in correlated markets --- especially in forex, because of its inherent need to maintain triangular equilibrium. For example, if closely correlated pairs (e.g. AUDUSD and NZDUSD) are both about to hit strong support areas simultaneously, does that increase the probability of a bounce? My research suggests that it does....... but the people who believe in a KISS approach are going to say that such an idea is waaaaaay too complex.
Having a solid grasp on microstructure is helpful, but there is really no power in that part of it. The microstructure is just the simple framework--the field upon which we all play. Focus on the game being played and not the field. I recall Darkstar saying somewhere that while knowledge of microstructure was useful, that in itself it doesn't deliver an edge. Makes sense when you think about it. 
This wasn't all directed at you Han, I just took the opportunity with this post to say everything I want to say regarding the latest developments in this thread. No problem, Scotty, I always enjoy reading your thoughts. Honesty and common sense are rare commodities on trading forums.  | 
Jun 23, 2010 4:54am
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Originally Posted by Cyrus Markets are by default pretty complex. | That's for sure!
Agreed, there are many possible ways to approach analysis, both KISS and otherwise. Sorry if I gave the impression that correlated markets was the only one. It's just that for me currently, it's becoming another piece of the puzzle that's gaining in significance.
I also agree that complex methods can become difficult to implement, in the sense that one can easily see several reasons to buy, and several reasons to sell, at the same time. I've been there many times, LOL. That's why, at least for me, it's important to have a fairly definitive plan/framework around which to make my (otherwise discretionary) entries.
Last edited Jun 23, 2010 5:40pm
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Jun 24, 2010 6:11pm
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Originally Posted by Darkstar .......it's the trades you skip which lead to bankable profits. | DS, great post, as always, but (even though I believe I know what you mean) I couldn't help seeing the amusing side of the way you phrased the above quote.
Even though I regard myself as a strictly 'technical' trader, I think it's possible that I use some orderflow concepts without realizing it. For example, S/R in the way that it can reflect areas of potential supply and demand; heavyweight pros manipulating amateur money; probable actions of 'trapped' traders; etc.
I believe it's possible to gain some kind of edge from 'pure' TA for the simple reason that the minimum requirement of an edge is to overcome '50/50 + spread'. In other words, and assuming that my br0ker isn't cheating me, if there was no spread, I should - at least mathematically - be able to break even by making random entries and exits. If I hold trades for a few days, any positive carry interest will overcome the spread. Now if I add some 'robust' concepts (e.g. like trading in the direction of the trend; trading the strongest currency against the weakest; confluences of different S/R types; etc) to all of this, it should be possible to come out ahead, on balance, in the long term. Rightly or wrongly, that's my current way of thinking.
Anyway, many thanks for your post - hopefully it's clarified the orderflow concept for those who are following this thread. It's helped me to validate aspects in the way that I trade, for which I'm grateful. |  | |
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