Experienced Orderflow traders: What's a good cut & reverse drill performance? | Traders Hideout


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Experienced Orderflow traders: What's a good cut & reverse drill performance?

  #4 (permalink)

North Carolina
 
Trading Experience: Beginner
Platform: NinjaTrader, Tradestation
Favorite Futures: es
 
Posts: 644 since Nov 2011

I think these sorts of drills will only be useful for expert level traders or for learning how to place trades. While I'm not familiar with this specific drill, I have practiced a drill where I force myself to take trades like every minute. I found that the real benefit of this sort of drill is to help you understand your own error rate and to become more selective. However, if you do not have a lot of experience then this sort of drill is somewhat likely to hurt any confidence you have. I think you will be negative for sure. I think the value therefore would be to recognize: hey these trades are working but these other trades are not.

As for mastering order flow, I do not think the lesson is to come from drills like these. Tape reading or order flow trading is one form of market cognition. I believe that expert level trading is the confluence of two things working together: implicit learning and market cognition. Implicit learning allows for the possibility of learning difficult to detect patterns in the market. Before machine learning, these sorts of patterns might would have been virtually impossible for software to detect. The second aspect that expert traders have is high levels of market cognition. Tape reading can lead to higher levels of market cognition because it keeps the trader highly engaged in the market. Traditional algo systems, turing machines, can only embody or encapsulate specific forms of market cognition. As for tape reading, based on my experience I do not think just anyone can learn it. I suspect (but don't know) that you probably have to be a strong implicit learner.

As for developing master tape reading, it must be encapsulated within a structure or structures of market cognition. Market cognition is either an encapsulated logic or an ever unfolding and developing logic that can is focused on deriving the factors that drive markets and/or the other participants positions and intentions.

Tape reading or expert trading is an active cognition process. It is not something taking place in the "external world" but the "internal mind". Practically, what this means is that one can accelerate then process of learning to tape read by engaging with the market at higher levels which means placing actual trades whether simulator or real.

Discretionary traders can generally profit from a higher percentage of days then systems but their profit factor is lower.
The other factor that is very difficult to overcome though is the cost of slippage, fees, and mistakes. Selectivity is the hall mark of most systems because you have no control once you are in the market: your stop loss may or not fill.

That's the last part and it is difficult, very difficult to get right. I am leaning in my own trading to move toward graybox systems to help me with selectivity.

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