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Avon, Ohio
Posts: 30 since Feb 2018
Thanks Given: 19
Thanks Received: 30
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Folks- I have been studying and learning and watching videos and such about order flow and volume based trading. It is continuing to show promise and curtain is gradually being drawn back.
I have been using NinjaTrader's new order flow suite with their volumetric bars - their version of foot print ( I think ) and am noticing some things. They seem to happen a lot like what happens in other markets - like the very popular Storage Wars reality show, and in real estate. As I watch the orders and volume tick away it is helping me understand and see the process by thinking of it in terms of these scenarios.
Storage wars - One unit doesn't get any bids or very few. Why? No one thinks it is a good value. Another unit starts out with hot and heavy bidding, and price keeps going higher. Why? People think they are getting a good value, and are willing to pay, and keep paying cus they think it is still worth it. Then, the bidding slows, going once, going twice, sold to the gentleman with the cowboy hat. Why did the bidding stop? Puke! No one was willing to pay anymore, the value is settled. Trading application- If the footprint is showing buying, perhaps even a lot of it, but price stalls, the move up is over. Take profits, or get short.
Real estate - You have a house for sale, and you want to sell it for as much profit as you can. You have an offer on a new house but is contingent on selling your existing one. A week goes by, not one offer. You lower the price and wait. Still nothing, three weeks go buy and you are getting desperate, as your time limit on your new purchase is close to expiring. You lower the price more. Your wife is bearing down on you - gotta be moved in before the holidays! So you lower the price even more, and finally BAM...you finally get a contract and close. Someone finally accepts your price and the bleeding is stopped. Trading application - I watch the orders come in and at each price level I see increased selling and the price keeps going down....as the selling continues but price doesn't move lower, the bleeding has stopped, take profits or get long.
I think this is the phenomonea of absorption and exhaustion, but I am not down with all the lingo yet being new to the whole volume trading thing. But I can see this happen with the volumetric bars/ footprint quite easily, and it is helping me improve my entry and exits dramatically.
Does this make any sense to anyone who has bee trading order flow and volume or am I loony tune?
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