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Information on how to trade Order Flow
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Information on how to trade Order Flow

  #11 (permalink)
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Both of your statements are true. It all depends on what you are comfy with. Just OF...or OF+charts....or OF+charts+FP....etc etc.
destination can be reached using planes...trains or automobiles..or a combination

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  #12 (permalink)
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paps View Post
Both of your statements are true. It all depends on what you are comfy with. Just OF...or OF+charts....or OF+charts+FP....etc etc.
destination can be reached using planes...trains or automobiles..or a combination

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Not sure I'm ready for no charts yet. lol.

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  #13 (permalink)
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emini2000 View Post
The way I'm understanding order flow is not a trading tool in and of itself, but something along with technical analysis that is the 'when' where technical analysis is the 'why'. In other words order flow confirms or refutes where your other analysis it telling you to take a trade.

Having said that, I see some such as John Grady of nobsdaytrading.com that all they do is trade off the DOM like Peter Davies sells. No charts, just order flow off the DOM. So i guess it can be a trading tool in and of itself.

I think you have a point here. I once asked a guy named Darkstar who wrote a book about order flow what was his thoughts about all these toys that have become so popular these days. Here is what i asked:

Me:
I have a question regarding your methodology. Do you use tools like the Footprint as proposed by MarketDelta to read the bid/ask or cumulative delta to read order flow? I ask this as in your book you did not mention a word about these tools. Are you simply trading from a chart ?

Him:
Nope, I don’t use delta, footprints, and any of those other tools. Don’t need them as everything is right there in a basic OHLC chart if you know how to see it. I didn’t mention it in the book because in my humble opinion, those things are mostly a waste of time and effort. Focus on anticipating the orderflow and you’ll crush all the guys using those tools.

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  #14 (permalink)
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trendisyourfriend View Post

Him:
Focus on anticipating the orderflow and you’ll crush all the guys using those tools.

Well isn't it easier to focus on order flow if you can actually see it?

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  #15 (permalink)
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trendisyourfriend View Post
I think you have a point here. I once asked a guy named Darkstar who wrote a book about order flow what was his thoughts about all these toys that have become so popular these days. Here is what i asked:

Me:
I have a question regarding your methodology. Do you use tools like the Footprint as proposed by MarketDelta to read the bid/ask or cumulative delta to read order flow? I ask this as in your book you did not mention a word about these tools. Are you simply trading from a chart ?

Him:
Nope, I don’t use delta, footprints, and any of those other tools. Don’t need them as everything is right there in a basic OHLC chart if you know how to see it. I didn’t mention it in the book because in my humble opinion, those things are mostly a waste of time and effort. Focus on anticipating the orderflow and you’ll crush all the guys using those tools.

Did you read the book?

Most of the book is discussing the mechanics of inter-bank order flow for forex, which isn't quite the same topic as people watching order flow on a centralized exchange.

The only part of the book that discusses using order flow to make a trading decision is one part that mentions looking at where lots of people would enter and fading that area, this is something he says doesn't work any more because now everyone is doing it.

In another part he has something very important to say, can't put it into words but tells you to watch a stock for 30 days and you will see it.

The book is excellent in terms of explaining how the Forex market is structured though but after reading it, I was somewhat at a loss as to how the information within would help in making a trading decision. Still the book focuses on anticipating inter-bank order flow and not order flow in the context most often used on futures.io (formerly BMT).

I met a futures.io (formerly BMT) member for lunch recently and gave him the book. I wont mention names but his opinion would be interested as mine is HEAVILY biased.

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  #16 (permalink)
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emini2000 View Post
yafed,

I don't quite understand the question. Could you clarify?

Hi!
If we talk about order flow, it could be read by tape flow, DOM or footprint.. traders could use different platforms etc and possible you already have stick to some of that instruments like tape or DOM… and where are different coachers which as usual use one of the instruments… for example John Grady which you mentioned trade by DOM and will not teach you how to trade by footprint.. so my question was perhaps you have stuck to some of that instruments…

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  #17 (permalink)
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yafed68 View Post
Hi!
If we talk about order flow, it could be read by tape flow, DOM or footprint.. traders could use different platforms etc and possible you already have stick to some of that instruments like tape or DOM… and where are different coachers which as usual use one of the instruments… for example John Grady which you mentioned trade by DOM and will not teach you how to trade by footprint.. so my question was perhaps you have stuck to some of that instruments…

There's 2 things to consider here, so maybe we need 2 terms:

Order Flew (yes, past tense) - Where people got positioned. You can see that on charts to an extent - if you see a range for instance, you know people will be positioned in this range and that there will be acceleration when you leave the range as people get stopped out. Order Flew has implications for Order Flow. Order Flew can be seen on charts but some people (e.g. me) think volume profiles, footprints are better because that shows you volume @ price not just price. It more accurately shows the concentration of positions.

Order Flew is usually used to define a location to trade in the future, should price return to that point.

Order Flow (present tense) - What people are actually doing right now.

Order Flow is usually used to confirm that the market is doing what you suspected when price gets to a specific trade location.

Seeing as no-one really calls past Order Flow "Order Flew", this could cause some confusion and disagreement.

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  #18 (permalink)
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DionysusToast View Post
There's 2 things to consider here, so maybe we need 2 terms:

Order Flew (yes, past tense) - Where people got positioned. You can see that on charts to an extent - if you see a range for instance, you know people will be positioned in this range and that there will be acceleration when you leave the range as people get stopped out. Order Flew has implications for Order Flow. Order Flew can be seen on charts but some people (e.g. me) think volume profiles, footprints are better because that shows you volume @ price not just price. It more accurately shows the concentration of positions.

Order Flew is usually used to define a location to trade in the future, should price return to that point.

Order Flow (present tense) - What people are actually doing right now.

Order Flow is usually used to confirm that the market is doing what you suspected when price gets to a specific trade location.

Seeing as no-one really calls past Order Flow "Order Flew", this could cause some confusion and disagreement.

Peter,

What is the difference in what a footprint chart shows and what your DOM shows? Does one need both, or is there a use for both? I realize some like John Grady don't use a chart at all. So that seems to be indicating that a footprint chart is not needed.

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  #19 (permalink)
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emini2000 View Post
Peter,

What is the difference in what a footprint chart shows and what your DOM shows? Does one need both, or is there a use for both? I realize some like John Grady don't use a chart at all. So that seems to be indicating that a footprint chart is not needed.

There is some overlap but they are 2 different tools.

It all comes down to how you trade and what fits your personality more than anything.

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  #20 (permalink)
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DOM + Market Footprint


I find market footprint really practical during the slower sessions (for eg. US products during European sessions) and to just spot setups for larger moves.

If you stare at the DOM for more than a couple of hours it feels like your brain is about to melt. MF allows you to settle back a bit and trade more comfortably I feel.

So- MF for history/ context and DOM to perfect timing/ entry. Thats what seems to work for me. Always good to see the DOM as well to watch the games that they play (pulling/ stacking orders etc.)

On the MF make sure you watch for divergences. Eg. More people selling at market than buying yet the bid not going offer (price moving down.) It is easier to spot this for thinner markets, but the MF makes it quite easy in general. Eventually you will see someone throw a few thousand contracts (to the upside in this example) -in order to make this line break and it will sometimes run.

Best to just set up your footprint and let it run for a couple of days. Then get the data and understand how to use it and it will all come together. One of the other guys said it is just about setups, statistics, and good risk management which I think is pretty spot on.

For me its MF (via Gomi add on), Jigsaw DOM, and chart... All the best!

My two cents..

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