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Charting VS orderflow

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Grantx View Post
Advantages and disadvantages of the DOM

Advantages order flow:
1. You get to see the action as it is happening. With practice, you can identify right now who is in control.
2. You get to see absorption and when orders are pulling or stacking.
3. Precision placing of orders at speed on the DOM and easy managent of orders, moving stops and targets.
5. Volume histogram alongside price makes it very convenient and easy to see levels
6. You learn and understand a lot more about the movement of price and get an appreciation for the rawness of this game.

Disadvantages of orderflow:
1. You can’t watch it for long periods. Fries your brain.
2. You have to be watching to see things like absorption, iceberg orders. See point 1.
3. A lot of information at all times. Dom is constantly flashing and jumping around as price twitches up and down between bid and ask.
4. You start seeing too much. Are you being lured, herded, is the big scalp flip imminent?

Advantages and disadvantages of the chart:

Advantages of the chart:
1. Levels and reversals signals are very easy to see. Easy to setup alerts. You can set an alert for a level and go have a coffee.
2. A lot less noise. Do you really have to see the constant jittery price flickering and assaulting your eyeballs?

Disadvantages of the chart:
1. You cannot see the battle that is going on at a level.

Scenario 1:
In the chart below you can see an indication that price has respected resistance and being rejected down at point A. You could have got at least 3 ticks out of that without any hassle. At point B, another basic reversal indication with an easy target at my old level. Pretty simple.
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Scenario 2:
In the DOM image below when price gets down to the low of the day, there is a lot more effort to translate what is going on:
Step in the volume profile at A and B creating a value area. The trades I encircled in black is a great indication of buyer strength but where is the signal prior to that move? If you wait for price to get to POC then its too late because that the middle of the value area. But if you simply pull the trigger at the bottom, and take the view that you are ‘leaning’ on the profile step, well what kind of analysis is that? I may as well just do that off the chart.
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In scenario 1, I can sit calm as a hindu cow waiting for that candle to give me a signal of intention.
In scenario 2, I am being mentally abused with possibilities and game play. Sure, you gotta pull the trigger sometime and jump in, but I can do that on a chart, do I really need to be looking at every fidgety price movement?

Im still new to the order flow concept and I will give it time. These are questions I am starting to ask myself though. If anyone here has any comments or experience on this I’d appreciate your insight.

I use both.

I view these all as tools of the trade.....pun

So let's take a look at another profession that uses tools.... Cabinet Maker. They work with wood. Different tools do different things. Some tools might get used more than others. But still these tools have great importance even though they are not used a whole lot as far as minutes in the day. The Cabinet Maker might use the plainer for a few minutes for a project but use clamps for hours and hours.

Same with the DOM, I feel, or more importantly Jigsaw's Depth and Sales (D&S, the combining of the DOM and the tape...genius!)

I don't stare at it. I did for a few years to learn what it was telling me. But not anymore.

Do I need to use a market order to get Long or Short or can I get away with a Limit order and keep a tick? I can learn this from the D&S.

I can also learn from the D&S the aggressive tone of the market on a particular day. Which goes hand in hand with which order types I need to use relating to the above point. Together with market internals, the charts over many time frames and different asset classes (Index Futures, Interest Rate Futures, Energy (CL) and FOREX) I can make my decisions using all my tools...just not all of them all the time.


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