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  #675  
Old Sep 28, 2009 8:12pm
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Quote:
Originally Posted by Darkstar View Post
There is a fuckton of money to be made from orderflow trading ...

...

Quote:
Originally Posted by daytrading View Post
This may sound discouraging but there is no edge in orderflow...

Two of my biggest role models flat out contradicting each other. That says a lot about trading to me...
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  #769  
Old Jan 18, 2010 5:33pm
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Guys, there are two types of trading being talked about here. Trading order flow from a dealers perspective is entirely different than trading it from a retailers perspective, and the two should not be confused. A successful dealer is by no means a successful trader.

A dealer does trade information, and does so quite effectively. It is not enough for them to simply pocket spread or transaction costs, but they are expected to outperform even that by using techniques such as front running and price shading. They do this from the info they get from the orders they hold: order flow trading at its purest. Information is vital to them.

A retailer cannot trade like that, however when a dealer shades price for example, he is putting himself at risk for arbitrage. Now I know most dealer-arb traders work with lagging dealers instead of leading ones, but the concept is really the same. The dealer quotes a price outside the norm (as defined by interbank prices) to, say, trip stops that he see's his customers have placed. A nimble retail customer might see this happening and play alongside the dealer for a quick profit. If done successfully you will have pocketed money the dealer was trying to snatch, but they were the ones taking on the risk of quoting that price to begin with. That is the concept anyway.

Moves like this happen on larger scales in the real market where the prices are not artificial like your dealers. These larger scale moves take place if liquidity is thin and the market is more malleable, if the target is obvious, or if there is some coordinated attack at a certain level (a rare event I'm sure). If you can identify where these targets are then you might have a chance. This would be order flow trading in the sense that you are using the idea of one-way order build up to make decisions off of, but you are not really trading pure OF.

PS. A potential setup is brewing on the Euro right now...
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  #771  
Old Jan 18, 2010 6:22pm
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LOL, and then it happens. Low liquidity, slow market, 25pip run up to take out the stops behind 1.44 on Euro. Happened sooner than I thought...but still. What next? Nothing. The move is done, and Tokyo open is about to start, different ball game.
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  #777  
Old Jan 19, 2010 8:49am
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Quote:
Originally Posted by FXTradeX6 View Post
Is anybody still on this wild goose chase? I have to say im pretty disappointed. I thought i'd find some solid info on order flow here, but this thread looks like witchcraft to me.
While I cannot decide for you what makes sense and what doesn't, order flow trading is anything but witchcraft. If you think about for half a second you realize that you are trading based on real life market mechanics. Orders are what moves markets, there is nothing magical about it. This is often opposed to TA or FA, which claim that patterns move the markets or news moves the markets. Between taking a trade because of an understanding of liquidity, or taking a trade because a candle looks like the middle finger, I would sooner say the latter to be closer to "witchcraft" as it is generally not based on something as concrete as orders.

But again that is for the individual to decide. I know several traders who make a handsome living trading from chart patterns, but I also know some (ok 2, lol) who trade using order flow based strategies and are successful.

Personally I am open to learning whatever is needed to succeed.

Edit: For another example watch Euro again. Strong move down, with a bounce off of a tested level. That bottom that just formed is getting watched you can count on. Think about who is in the market and what kind of orders will be building around that level. Even with the conviction that the market will test the level again can give you a direction, at least in the short term.
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