After studying different approaches to day trading, the one that convinced me more of it's efficiency is ''orderflow'' trading, as you are watching the market participants' actions closely so you can decide the most likely direction of price in the day. But i'm having some problems watching the price/order book on key price levels and really ''deciding'' wheter it will break or just run stops and then reverse, so it's difficult for me to initiate a trade with confidence. Could you point to me some things you watch for in these spots to decide the probable direction of the market? I understand there's no concrete approach in orderflow trading, no ''system'' as people like to call it, and it's more of a discretionary method and getting a feeling of the flow, but as a more experienced trader, i would really appreciate if you could try and describe some characteristics of price that you look for in these situations. Thank you very much. JC
I am with you on this one. Bids- Ask, Times and sales, level 11 etc. have not looked at them in years. I trade CL, TF, GC etc and take trades based off order flow. Have not traded Forex but have started looking into Forex after reading your posts. I use Mark Fisher method for context and execution and something like following as you mentioned in one of your previous post " Fed lowing rates would be good for bonds, bad for stocks, good for gold. If you see stocks and bonds down, with gold up, you can conclude that the eastern tensions are more important to the markets at that moment in time. and thats useful info because it allow syou to focus on the same things as other market participants (geopolitical healdines) and avoid things they dont care about (nfp), allowing you to stay potentially in line with the markets. Reading the market's mind, and getting in line with it. That's probably the best practical application of the old adage "trade what you see". Thx
Hey JC, i don't have an answer to the question "which zones will hold"...because in trading we're dealing with odds (like in poker) and not certainties. So there will always be exceptions to any partcular rule you might attempt to create. So you don't need to "decide" anything before hand! Just let the market react and tell you where the higher odds are. The way I work around this is twofold: 1. I try to make sure I'm looking to enter in line with the dominant flows (evidenced via higher highs/higher lows or lower highs/lower lows on my primary chart reference, which is usually the 4H chart. 2. I use the price action areas that are formed in line with the dominant trend to compound the position; i use price action areas formed against the dominant trend to manage the position (take some off the table, close everything, watch & wait, etc.). 3. Day-to-day I use headline news + chatter doing the rounds in the twitterverse (which has become a good substitute imo to some of the more professional news services if you know who to follow) to get a feel for what's doing the rounds. I'll also use the orderflow information (bids/offers/stops) as you've seen in the past posts, to help me. Here's an example: my primary template on Crude, showing how las week we broke the lower high/lower low cycle on renewed Russian/Ukraine tensions (bad for Crude) and this week looking for pullback longs still makes sense as long as there are no new negative developments on the horizon. So a good place to look was the consolidation step from last week, which "should" be stronger than the conolidation step on the way down from friday (in yellow). And the consolidation area on the way up this week (yellow) held a little even though price had reached last week's rally-base-drop formation (which comes from a higher time frame and hence carries more weight). Price has reacted today off the current week's lows as expected...but it's becomming a little boring now...so more range-bound than trendy...and I like my odds more when there's a clear trending move. Regarding confidence: you need to specialize. The most successful traders I've met are the ones that have developed a tight set of rules with which to engage the market. They know their angle, their edge. They know if they'll have a trade or if they won't. They are extremely disciplined and keep their stuff simple. The process goes more or less like this: 1. Rules for bias identification 2. Rules for sentiment identification 3. Rules for reactive level/zone identification 4. Rules for timing 5. Rules for trade management And yes...even the best laid out plans fail...sometimes more than others. But as long as you are following a structure time & time again, you'll develop an expertise that noone can take away from you. At least, that's my experience!
Hello MFBreakout, I'm not too familiar with his method...i see it has to do something with the opening range...in FX you could use the Tokyo session in a similar fashion but then again, if it ain't broke, don't fix it! If you're doing well in Futures, then stay with them FX is more difficult to deal with because you're essentially dealing with spreads all day long. Would you play the FTSE/DAX? Does it sound absurd? Well the EurUsd is sort of the same thing...plus the sheer lack of volatility has many players side-lined for the moment. Many funds/ctas have suffered this year due to the lack of drivers/vol. Just to say, don't get too eager to jump into FX before mid-september.
Some thoughts on Kiwi, which has the clearest sentiment this morning. and you can match that up with the orderboard for Kiwi created by the guys at OrderFlowTrading.com Never chase the market...when you chase, you end up selling into a zone of prior demand (where new orders are probably still latent) or prior supply. It's usually better to wait for the pullback.
Was it worth attempting to step into EurUsd or GbpUsd this morning? Not before the key data releases due... slightly negative expectations for the Eur data, and solid numbers expected from UK...sentiment is negative on both even if more so on Eur...so let's see what happens.
Looking to buy eurusd and sell usdchf on dips to add to my position and also now I am buliding NzdUsd longs, started at 0.8570s. Expecting US dollar to get hit hard soon, real hard... dollar bulls are just counting on better economic data which in fact is present but the thing is that US yields are low and wont rise nearly as fast as some expect based on econ data and Yellen will make sure that US recovers well by letting inflation get out of hand just to achieve its dual mandate aka full employment since she thinks of current inf. as benign. Although I will try EurUsd short around 1.352 for a few Rs.
Svejed1... You are actually adding to your position on dips? I really cannot justify this stance unfortunately. This is not orderflowtrading as I interpret it. In my opinion (fwiw) you're trying to fade everything. That's not a wise proposal at all. Fighting the tide (sentiment) carries more risk than going with the tide. We're no longer range trading in the Euro. We have broken to new lows for 2014 so the "yearly candle" is now showing red. Longer term sentiment is clearly bearish on this and the market is waiting to see what further steps Draghi will take. Your only hope, today in particular, is the short term sentiment shift on the back of an upward surprize relative to the market's expectations. PMIs were better than expected + we've had a decent drop and any reversal structure carries a little more weight...but I'd really rather use this strength (rally) to find a better position to short into rather than kick it back up the ladder, at least the way things are going right now. If we close back above the yearly lows again today, the short term situation may offer some counter-trend moves but that's the minimum confirmation I'd need in this particular instance. I've commented on NZD today showing how I'm looking south on the back of the negative sentiment shift. No reason to buy this right now imo. Then you say "Expecting US dollar to get hit hard soon, real hard... dollar bulls are just counting on better economic data which in fact is present but the thing is that US yields are low and wont rise nearly as fast as some expect based on econ data and Yellen will make sure that US recovers well by letting inflation get out of hand just to achieve its dual mandate aka full employment since she thinks of current inf. as benign. ". What the future holds, I don't know. Maybe the USD will get hit hard, or maybe it will continue to show strength like it is right now. What you wrote there tells me that you're trading based on what you believe...and not on what you see/what is happening right now.
I will short euro also but only at 1.3520, although if US data today disappoints you can bet your house that 1.3520 wont be able to hold euro from squeezeing shorts above 1.35 and nzdusd yield chasers wont stop before 08650 (Where I am looking to exit some longs and start shorts). edit: Eurgbp will be the squeeze of the century once it happens, just need some econ data divergence and that pair will go up like a rocket, positioning is the most extreme in that pair. Thats why I am buying 0.7909 today for a long above 0.7940s
This is a rare ET thread in that it actually contains some information that is correct. Predicting the markets is all about predicting where and when liquidity will (and will not) be available. If the big players can identify areas that are likely to offer sufficient liquidity to allow them to enter and then exit a significant position, you can bet your life their orders will be resting in the book ready to soak it up. ...and what is a more predictable source of liquidity than stop loss orders? Remember, the market always moves to liquidity. Nobody in this industry has any interest in a quiet market where no business gets done.