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Charting VS orderflow

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wmueller View Post
It helps me understand things and certainly helps me to loose less! It is not a complete system - just a way of identifying what is going on. I think you use it as the basis of system. Honestly, I don't look at the noise in the ladder other than to see if there are changes in the average amount of orders in a range of prices. The problem today is that bids and asks can be pulled instantly by algorithms. Every once and a while I do see a big standing order at one price and it often happens that if price gets going in that direction it will almost certainly get to that price. It seems that one must integrate price action, bid and ask volume (delta volume) action, tape reading, ladder action (minimally), volume at price, and support and resistance to get a reasonably complete picture of what is going on. I wish the ladder could indicate intent; but when you think of it, how could it? If it did, traders would be giving away the store. A major goal for a big trader is to fool you into making a bad trade so that he can take your money. Thus, what is in the ladder must be, to a significant extent, deception. Anyway that is how I view it and it seems to help me loose less!

I totally agree with you, I also consult the DOM but mostly I consider it to be a lot of deception, smoke and mirrors. There is one thing that cannot be disguised easily and that is absorption. When one side is throwing orders into what looks like a weak level, and the price level is hardly moving anywhere, then you normally see a pause in the attack as the antagonists wait to see if a counter move is about to occur.

The problem though is that sometimes this absorption level does break which makes the whole clever analysis a little bit pointless IMO. That is why, like you, I try to see the bigger perspective by looking at volume, PA and S/R.

Ive also noticed that the auction process is inquisitive. Big standing orders oftentimes get probed and eaten. As for intent, I believe that only comes from the chart, if you watch from different timeframes and methods then sometimes it can be quite apparent what is happening and the trader simply needs to wait for a suitable entry to join in with the theme.

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