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  #615  
Old Sep 25, 2009 9:40am
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Quote:
Originally Posted by Porkpie View Post
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...
I have not read the whole thread but, on post 193 you posted a paper about informed traders and types of orders. The data they use is old from 1990-1991. IMHO this article is somewhat irrelevant. Since then there has been a lot of changes, from decimal pricing, internet trading , retail trading, globalized markets, faster exchanges, huge volume expansion, options, HFT, etc. Even though the paper was preliminarily drafted in March 2009 and still has to be written, nearly a 20 year time difference is huge.

The other thing is their definition of informed traders. Essentially they describe an informed trader as one who trades in the correct direction. An uninformed trader is one who trades in the wrong direction. Essentially according to their definition, I can be an informed trader if I flip a coin it tells me to buy, and then after the news event I am considered an "informed trader"

An informed trader must be identified ex ante to the event and results compared ex post. They obviously don't have a method to do that.
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  #616  
Old Sep 25, 2009 1:03pm
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I have a feeling, posters on this thread are trying to create their own 'order flow religion' or trying to find a 'new age philosophy' to guide their life /sarcasm.

I can assure you it is much simpler than that.

http://en.wikipedia.org/wiki/Supply_and_demand

http://en.wikipedia.org/wiki/Price_mechanism

That is exactly the point espoused by slimcat and pipmutt in the quote below. Order flow is the buy and sell, the demand and supply of the market. Where demand and supply reach equilibrium is PRICE. Repeat that to yourself and try to understand the Supply and Demand wikipedia article. On the chart in the article order flow is the Q or quantity, and how much quantity of Supply or Demand is in the Market influences the P or price until the Demand and Supply curves reach equilibrium.

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At that point in TIME you have price. Then what do we as humans do to understand price better. We plot it on a graph with price on the Y axis and time on the X axis. Those are the graphs we create. All the while time goes forward and quantities of supply and demand change, and we see that corresponding change in the graphs. We can even interpret this change with pinbars, support and resistance, etc.

Quote:
Originally Posted by slimcat View Post
As orderflow is obviously the reason for all price action in the market ie pinbar formation bouncing off support etc etc it is easy to say that that is the reason why the pinbar formed, of course it is ..orderflow leads to price action.
What I'm trying to say here is that I think the way the OP is using the word orderflow is misleading as there is no evidence in any of his posts to suggest that he is reading it.

If I wanted to teach people about orderflow why would I post charts?
If I wanted to teach people about PA which results from orderflow...
Quote:
Originally Posted by pipmutt View Post
I think that's where the confusion started, people took 'read order flow' in the literal sense, a kind of viewable book with all the orders in, people are downloading fx futs demo platforms and forex spot demo platforms with broker's Level 2 data for crissakes

I agree that the probable places for orders are on the charts but it still leaves a question mark over the statement the OP made, "you don't need the charts believe me", and I think that's where all this...
You may not literally be able to read orderflow (in forex), but you can interpret it through charts.


My rant on level 2:

Most people don't have access to 'level 2' in forex. Its much more prevalent in centralized exchanges. I don't and I'm pretty sure most of you don't either, most are just BSing. Even if you did, the market is $3.21-$3.98 Trilliion(http://en.wikipedia.org/wiki/Foreign_exchange_market) in a 24 hour period on 6 continents. Even if I have the orderflow for the CME, there are hundreds, maybe thousands of banks, brokers, institutions, mom and pop shops all over the world on 5 other continents, with an order book I can't see.

Its not like the level 2 on a centralized exchange (i.e. NYSE, NASDAQ) where all the limit orders are in one place, and can be seen by all. Contrast that with the forex market, for example the CME book may show limit sells on EU at 1.40 of the value of $20 billion, but on some other continent some other bank who is not showing their cards on any exchange is ready to buy $80 billion at 1.40. That MIGHT blow right threw your 1.40 limit sell, depending in other quantity factors.

-snacker
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  #618  
Old Sep 25, 2009 2:12pm
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Quote:
Originally Posted by pipmutt View Post
I dunno how much value it would be though, it's just a discretionary guess and couldn't be traded on, there's absolutely no complete data for an OTC market like forex. I suppose tick volume might help if you knew how to interpret it, but where is a reliable source?

Way too many variables here, what rates are you seeing? Indicative rates / price changes? Deals? What???

....and way too much mystery and intrigue...."I know but I ain't telling"....yeah, right!
When I said interpret through charts I meant, support/resistance, pinbars, patterns and such.
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  #632  
Old Sep 25, 2009 8:01pm
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Originally Posted by Scotty B View Post
The only problem with thinking with your feelings is that they won't lead you anywhere worth being. Orderflow is not simple supply and demand. The spot market daily volume is actually around 1.5T, thanks for trying wikipedia. If you don't have a correct understanding of orderflow, then why are you trying to explain it? If you are gonna pull the 'orderflow is on the charts' card, while not knowing what orderflow is anyways, why do you waste your time typing up such long monologues? I'm not trying to be a jerk here, but I take issue with posts like...

1) I wasn't expecting anyone to get upset over a comment I made, with a /sarcasm. It's an internet forum, lighten up, its not like its war.


2) Wikipedia tends to be fairly accurate. The majority of the writers are educated in the fields they write about, with the validity of the the articles discussed on the discussion pages. They even have an article on reliability
http://en.wikipedia.org/wiki/Reliability_of_Wikipedia
Obviously some articles such as those in the history and politics section will have discrepancies, but so do main stream and paper encyclopedias. The work on math, sciences, and specialty subjects tends to be of high quality.


3) Here is the latest report on the Forex market from the BIS the Bank of International Statements, The last major report was 2007 (every 2-3 years they issue it, keeping a heads up on the next one) and the spot market was $1,004,889,000,000. http://www.bis.org/publ/rpfxf07a.pdf

Other markets such as the options, forwards, and swaps, may not be traded directly such as spot, but have direct influence on a currency. example: Before the financial crisis alot of companies in eastern europe had options, swaps, and forwards to hedge their strong currencies.

http://news.alibaba.com/article/deta...g-eastern.html - where it talks about Poland
http://bloomberg.com/apps/news?pid=2...BJQ&refer=home

After the crash and currency depreciation they owed alot on the currency options, forcing many companies to bankruptcy, pull up a USD/PLN, EUR/PLN chart look how steep price moved. Spot isn't the only important aspect of the market, options, forwards, and swaps are too.


4) I provided a small concise summary of my knowledge of the Orderflow>Price>Time aspects of trading. Obviously order flow is not on a chart and I never said that, you did. I summarized price as the direct result of order flow EQUILIBRIUM at a certain point in time.


5) You may consider my posts as a 'long monologue' but I have provided facts with sources and in the case of demand and supply a logical deduction to what it means on a chart. In fact I will even thank you scottyb, I have never been to the BIS website, but after your claim of $1.5T spot market size, I went to check it out, and managed to find a ton of great articles and data on the markets at the BIS, I urge everyone to check it out, lots of good stuff.

-snacker
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