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Charting VS orderflow

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wmueller View Post
For me, I see order flow as: the exchange of shares/contracts at the BID or ASK results in price movement. Inventory, available shares/contracts, is transferred from the trader with the resting BID or ASK order (supplier) to the trader with the market buy or market sell order (consumer). Each trader’s goal is to detect shifts in bullish and bearish forces as soon as possible so as to be able to enter and exit a trade with as much profitability and little risk as possible. The trader, by reading price action, bid volume and ask volume, and (perhaps) resting bids and asks (offers), can infer what the four "trader types" (bids, asks, market sellers, market buyers) in “the market” are doing and who has the upper hand, so as to become more profitable.

Therefore, I need to be able to see the following:
Price action (PA) and volume action at the same time. Developing bid and ask volume. Volume at price. When and where Bids are preventing price from declining; and when and where asks are preventing price from increasing. When and where bids or asks are being pulled (difficult).

I deal with crude oil (CL) and I have seen times when resting bids and asks do give clues; but I also see LOTS of times when the changes in the ladder is noise or, even worse, misdirection.

I don't know if this makes sense to anybody.


Yeah, your explanation makes sense. Are you making money with that knowledge?
How do you identify and deal with all the ladder noise and misdirection?

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