Welcome to NexusFi: the best trading community on the planet, with over 150,000 members Sign Up Now for Free
Genuine reviews from real traders, not fake reviews from stealth vendors
Quality education from leading professional traders
We are a friendly, helpful, and positive community
We do not tolerate rude behavior, trolling, or vendors advertising in posts
We are here to help, just let us know what you need
You'll need to register in order to view the content of the threads and start contributing to our community. It's free for basic access, or support us by becoming an Elite Member -- see if you qualify for a discount below.
-- Big Mike, Site Administrator
(If you already have an account, login at the top of the page)
what are some things to look for when looking to go with a break of a level or fade it, using order flow? Also if there are other things that can tip you off if a market wants to keep running away after a level or if its weak
For me, it depends on the momentum that got price to the edge and the behavior of volume at the edge. If the volume profile shows a ton of trades going off at the edge I take it as the end of momentum, or, perhaps, a pause that can be faded. At this point, I also look for the weaker side to start peeling off resting orders and, thus, giving way for the break. If the side momentum starts peeling then fade since it is a sign of the momentum getting weaker at the edge.
I also look at correlated markets and their momentum and/or pausing.
Overall, it is about anticipation and not so much a set up. Getting to know the behavior of price allows one to see a likelihood what will pan out. It takes a lot of time in front of the ladder. Keep in mind, fades are a lot easier to get and the risk is easier to control as well.
I think the problem is more how you are structuring your market cognition. Ask yourself why should a level break or not break? If you cannot determine any factors that help you with that then there is no reason for it do one or the other meaning basically there is no edge one way or the other. It means you need to change the way you perceive markets.
As for order flow, I treat it as "agnostic" meaning simply I do not impose what it should or should not do but seek to derive the value that I can from it. I find this a good operational orientation. I like the concept of using out of bounds areas. For example, if a market is traded beyond a certain level then I should not fade it. There are many other possible factors.
I think what will help you most is to start to perceive more and consider also other participants.
OK - the way to think about this is the market can be leaning in one direction or the other.
Typically a 'lean' in the market means more buyers than sellers, decent upside momentum, strong inside bid.
So - maybe the question shouldn't be so much "how do I know it'll breakout" but "how do I participate in a potential breakout with low risk and a clear get-out if wrong".
So if your market has the above, correlated markets are participating upside, you can take a long position towards the range high and be fairly confident it wont whip against you. The moment you see the buyers step off the gas, you bail.
If you can do that - you can trade breakouts. To me - it's all about seeing the market lean one way and then getting out when it doesn't. The actual breakout will take care of itself.
With this - you just need to experience a number of breakouts to really get a feel for how it plays out.
If you have any questions about the products or services provided, please send me a Private Message or use the futures.io " Ask Me Anything" thread
I've spent a lot of time on this. Note that my experience in treasuries so we are very much talking about hard order flow walls. Large icebergs or big bids/offers on the DOM that the market is having a hard time getting through.
The overall historical probability for such a spot to continue vs reverse is 50/50.
You will often see significant absorption one tick above/below the key level. This is part of a setup where they'll get people to fade the level, and the stop them out all at once. I generally view this signal as a sign of strength in the trend, but in normal context my forward testing still has this setup as a 50/50 thing unless it's a trend day.
If a key level was already broken they tend to keep breaking them until we reach a single print.
When a big price is taken out you want to see lots of orders stack up behind the move when it ticks. You want to see orders trickling into the next price, and you want to see pulling on the level 2 from the next price.
The market tends to go through cycles with this. There will periods where they break through literally every day, and there are periods where it stops every time. There may be some seasonality to it as well, but I am still trying to prove that statistically. I theorize that larger players might even condition the market for several days to setup a trade they want later.
The key that I have found to navigating this trade is all about risk management. For instance you can stop into it as she goes, or get in one tick below the level on absorption. If it doesn't immediately tick up you get out. In many cases you aren't even risking a tick. We'll often range near the level for an extended period so you can wait for the pullback and get a safe spot to go long.
But if you just click into it every time it looks like it might go you're ending up with terrible risk reward. If you're taking it as she goes the advantage here is that you are clicking in basically as the level is broken. You lose that advantage if it doesn't go right away. If it's ranging at the top and you buy the top of that range you're risking more on that trade. So you can only take these when the risk reward makes sense
it all depends on what you call a breakout?....if its a few pts or ticks....yup you can do that by just understanding Limits executed in the market.....and were they passive/aggressive or stops.
Cream comes when you can correlate Volume....or have a good way to understand Volume participation....thats what a breakout is....a 68.39 CL buy or perhaps a par below NQ 7440 buy...... very few show or ever will you find a webinar on these....as people doing Order Flow....may not know how to do these or have any way to determine them.
But if one can understand Volume...& what Volume will do NEXT..... then correlate with what was executed at Big Levels(Aggressive/Passive Limits & Limits at Stops).....one is golden.
i know this may sound vague.....but if you ever try to understand Volume....& then correlate to OF....u may get an inkling into what is being said here.
