this is right out of the steidlmayer/dalton handbook

David: I made this picture for u guys on the pullback data on Monday but for some reason i never got to post it. The second picture is from my journal on a entry i made that shows what i mean. The pullbackdata is the COT in OFA terms. But instead of a just the delta it shows a bar on the side of the developing bar. This is good because it gives u a glue on how the period will close. I trade from a 5tick rangebar chart and my trigger is usually the close of the bar. I define a momentumshift as a 5 tick reversal. By looking at the pullback i can hopefully get better trade location since i´m early.

First I´m no expert but I´ve watched a lot of stuff concerning orderflow and I’ve been very actively trading it for a while now starting with pure DOM-trading and now with the breakdown indicator/ladder. Many are very sure of their technique - at least in their material. I have a different opinion. I think there´s a lot of noise in the orderflow. Large trades are executed through algorithms and other size is based on calendar or inter-product spreads and so on. The markets purpose it to facilitate trade but the buyers/sellers are in the market for many different reasons, not just profiting from speculation. So for me value is the most important part of my trades. At least the successful ones. Intrabar orderflow comes second to me. I use the orderflow to help me handicap the odds in my trades.

Now concerning the bid/ask side. I think both ways u described are correct. If I go long I like to se a lot of trading at the ask because this evidence for buyers initiating trade. But there are 2 types of reversals: 1) sellers stops initiating/selling drys up. You se this in weak prints. Only a few contracts are traded at the bid at the pricelevel you are watching or if it is a retest less then on the previous test. 2)buyers start to respond (climax). This is the most common. Buyers start to accumulate and sellers over commit. You se this as a large volume node in the bar. If I se “big” volume at the bid after a rotation down and price reverses the sellers probably entered late and are wrong. So as long as price is over I view this as bullish. Many times the next bar makes a retest but its hard to get a fill at the vpoc since there is a lot of competition for contracts. A lot of short sellers will try to get out breakeven or with 1-2 tick loss. But if price goes under the node it the opposite. The knifecatchers, buyers, picked the wrong bottom and odds are it´s a continuation pattern. Now if your looking for long and price is over you don’t want to se a lot of volume at the levels above, especially at the bid because this shows that sellers are responding and initiating. U want to see just low volume and green flow when it clears the node. So it 2 different patterns: responsive and initiating.

Concerning the “bad” entry: it bad from a orderflow perspective. I got “lucky”. Now I would argue I made a good valuation and that’s why I made profit. Its bad out of orderflow perspective since price went under the high volume node and large traders wanted it to go down since they initiated large trades at the bid. So at the time of my fill I was opposite to the large orders. If I just went with the flow I should of sold. But probably other traders using algos made the same call as I since all that selling was absorbed in 2 ticks. The really bad call was entering on a limit at the vpoc. When u enter with a limit more often then not price will go through your order. The principle is most traders are wrong. So if you se a big number at the bid I DOM, they will be wrong either by not getting the fill and missing a great trade or by getting a fill and having price go against them. So if I believed I would get a fill at the vpoc using a limit order then logic dictates that I would get a print under vpoc witch would be bearish. Then it would be better to wait for the next bar to see what happens. Or if I belive this was the reversal I should have entered market 1 tick above the vpoc.

Don’t know if this clarifies it a bit. The thing is, it´s never easy or a sure bet. Like Steidlmayer expressed it : try to make the hardest trade rather than the easiest trade; if it's easier to sell, it's usually the wrong way to go, and vice versa.

This post was edited something like 5 times. Don´t know whats worong with me but i confused the words ask and bid all over. Sorry for this. Hopefully nobody read it yet.

david.
y, i was a responsive buyer since i identified that other responsive buyers were active and i there for put a limit order at that level waiting for it to get hit. in the example seconds before it went against me orderflow was actually confirming the trade since the were som buers trying to initiate. this is why i write that orderflow is important but not crutial if youre not a scalper. recognizing value is more important. orderflow is a way of "looking inte the future" a few seconds but 1 big lot can change the direction. just don´t get caght up in it to much so y miss the big picture (like i did for a while).

i reconize responsive action: 1. it is at a level where i expect it (a area i expect to act as support/resistance) 2. i get relative big volume at the bid (looking for responsive buyers). it´s bigger than the other levels AND its bigger then the average size in the DOM.