Is Orderflow An Outdated Concept? - futures io
futures io futures trading



Is Orderflow An Outdated Concept?


Discussion in Traders Hideout

Updated by Schnook
      Top Posters
    1. looks_one Jigsaw Trading with 8 posts (55 thanks)
    2. looks_two TradeTheTrade with 7 posts (50 thanks)
    3. looks_3 Hulk with 6 posts (92 thanks)
    4. looks_4 Meklon with 6 posts (35 thanks)
      Best Posters
    1. looks_one Hulk with 15.3 thanks per post
    2. looks_two Schnook with 13.7 thanks per post
    3. looks_3 TradeTheTrade with 7.1 thanks per post
    4. looks_4 Jigsaw Trading with 6.9 thanks per post
    1. trending_up 17,887 views
    2. thumb_up 590 thanks given
    3. group 564 followers
    1. forum 114 replies
    2. attach_file 2 attachments




Welcome to futures io: the largest futures trading community on the planet, with well over 100,000 members
  • 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 and simple.

-- Big Mike, Site Administrator

(If you already have an account, login at the top of the page)

 
Search this Thread
 

Is Orderflow An Outdated Concept?

(login for full post details)
  #21 (permalink)
Market Wizard
Columbus, OH
 
Experience: None
Platform: NT 8, TOS
Trading: ES
 
Silvester17's Avatar
 
Posts: 3,540 since Aug 2009
Thanks: 5,000 given, 11,232 received


Schnook View Post
One other point that hasn't been mentioned yet is that visible orderflow may have vastly differing informational value depending upon the product traded.

The author of that reddit post is a short term interest rates trader. This means that he's most likely trading eurodollar futures, where most of the biggest players are spreaders, arbs, hedgers, and basis traders. One guy might be buying the redpack against the blues. Another guy might be selling the greens versus cash two-year notes while the next guy is just hedging convexity risk in his mortgage book.

The point is that in the rates market is vast and deep, and the majority of traded volumes occur in OTC products - cash treasuries, swaps, forwards, term repos, and so forth. Whatever orderflow you might be seeing in, say, EDZ1 is going to be completely dwarfed by the volumes going through in the surrounding contracts, cash treasuries, and other related interest rates products. So I agree that trying to develop strategies based on orderflow concepts in interest rate futures is probably a fool's errand.

HOWEVER

The same market structure does not necessarily apply to other products.

The equity indices, for example, may still contain a lot of arb and spreading flows (cash vs. index, individual basis hedges, cross index spread trades etc) but also have much higher levels of retail participation, where certain small biases can still reveal themselves in the order flow.

And what about, say, the sugar market? Or cocoa? How actively are people trading the cash / futures basis in these markets? How much orderflow "noise" is being created by cross-asset spreaders, hedgers, or basis traders? I don't know the answer to this question because I don't actively trade these products. I'm only pointing out that just because one idea or concept may not work in rates, it does not necessarily mean that it won't have some value elsewhere.

The point is you need to know your market. Regardless of what you're trading, there's always a lot more going on than what you're seeing on your DOM and footprint charts. How much and how relevant that might be - and whether or not you can gleen any valuable information from it - will depend on the product you're trading and your knowledge of that product's overall market structure.


yes, indeed. thank you for this great post!!

mia san mia

Reply With Quote
The following 6 users say Thank You to Silvester17 for this post:

 
 
(login for full post details)
  #22 (permalink)
Legendary Market Wizard
Penetanguishene, Ontario, Canada
 
Experience: None
Platform: NinjaTrader-8
Broker: NinjaTrader Brokerage, Continuum
Trading: ZB, MES, NQ, YM
 
TopGunNote's Avatar
 
Posts: 740 since Jun 2011
Thanks: 2,404 given, 2,745 received


Silvester17 View Post
mia san mia

So true!

Follow me on Twitter Visit my futures io Trade Journal Reply With Quote
The following 5 users say Thank You to TopGunNote for this post:
 
(login for full post details)
  #23 (permalink)
Legendary Market Chamois
Chicago, IL
 
Experience: None
Platform: NT8,NT7,TWS
Broker: InteractiveBrokers, S5T, IQFeed
Trading: The one I'm creating in the present....Index Futures mini/micro, ZF
 
Blash's Avatar
 
Posts: 2,221 since Nov 2011
Thanks: 7,010 given, 4,242 received



dextrade View Post
I am sorry but anyone writing things like this works, that doesn't work because of their possible own experience with the markets, does a disservice to anyone aspiring to make consistent profits.



The truth is everything works and nothing works.


Order flow, Volume profiles, support resistance, patterns all are great tools of any tool box of a seasoned trader.

Trading is a very personal journey and different things work for different people. Just because something works/doesnt work for me, it doesn't mean it will work or not for someone else.



The journey of a trader is a pretty simple one. As an example if you are an intraday trader,,,have the right setup with live data so you can see the flow of orders (yes it works obviously). Pay attention to volume distribution, support resistance on multi-time frames, price rotations, correlation of the market youre trading with other instruments ...


After 10s of 1000's of hours of screen time and skill of preserving your capital while you learn, proper risk management you will just finally get "IT". You can then start to increase your size as you succeed.


No shortcuts, no algo programming miracles, holly grail indicators, gurus, chatrooms, simply time and effort.

There are some great educational sources out there that will shorten the learning curve, most are free.



Cheers and Good luck, Trading is the best most easy and difficult job in the World.



Bro..... you have gotta post more..... lol.... I couldnít agree more...lol....I love it!

Screen time is sooooooo important. And like Peter Davis from Jigsaw says ď you only get one day a dayĒ (Iím paraphrasing, but very close) meaning it takes MANY days and a long time to understand the way Mr Market moves, reacts, behaves, responds or doesnít. And it goes without saying you canít understand all of it.

I use orderflow. But itís only a tiny piece. Some trades it might help .... others it wonít. Of the small amount of time it gets utilized a sizable chunk of that is for after entry. For trade management. I need other traders to enter in my direction to make me a winner (I dislike using the words winner or loser just doing it here. I see things from a, doing business, point of view.)

Everything works and nothing works is SO true. Itís all dependent on the practitioner.

The only thing I can say is universal in trading, that works all the time, all successful traders admit and gets referenced all the time, if you listen...... are virtues. I have a thread devoted to this.

Trading takes Patience it takes determination it takes self-discipline it takes decisiveness it takes commitment it takes tact it takes assertiveness it takes humility it takes courage it takes creativity it takes honesty it takes acceptance it takes contentment it takes detachment it takes devotion it takes endurance it takes diligence it takes flexibility it takes fortitude it takes gratitude it takes perseverance it takes resilience it takes discernment it takes fidelity it takes forgiveness it takes moderation it takes openness it takes perceptiveness it takes steadfastness it takes trustworthiness it takes confidence...... (not complete)

These are ubiquitous, widespread, rampant and inescapable if you want to be a trader (or anything).

Ron


Sent from my iPhone using futures.io

...My calamity is My providence, outwardly it is fire and vengeance, but inwardly it is light and mercy...
The steed of this Valley is pain; and if there be no pain this journey will never end.
Buy Low And Sell High (read left to right or right to left....lol)
Follow me on Twitter Visit my futures io Trade Journal Reply With Quote
The following 13 users say Thank You to Blash for this post:
 
(login for full post details)
  #24 (permalink)
Site Moderator
Sarasota FL
 
Experience: Intermediate
Platform: Sierra Chart
Trading: ES, YM
 
bobwest's Avatar
 
Posts: 5,724 since Jan 2013
Thanks: 44,697 given, 19,345 received


TradeTheTrade View Post
Hello guys, I am an aspiring trader and just recently learned about order flow and all these concepts. I was thinking about getting into NoBsDaytrading and learning about DOM scalping then I came across a reddit comment from someone who claims to be a STIR trader and claims that orderflow is the modern day technical analysis.

...

after reading this I became skeptical of everything for some reason

Of course.

Here's why:


dextrade View Post
I am sorry but anyone writing things like this works, that doesn't work because of their possible own experience with the markets, does a disservice to anyone aspiring to make consistent profits.
The truth is everything works and nothing works.
...
Trading is a very personal journey and different things work for different people. Just because something works/doesnt work for me, it doesn't mean it will work or not for someone else.

It is important to always add, in some form, the words "for me" after any statement of what works or does not, even if you are certain in your own mind that it works or doesn't work as a matter of undeniable Truth For All Time, embedded by Natural Law in the structure of the Universe.... because somebody else is going to come along with a different experience that will blow your certainty out of the water. (I have learned this from a long experience of being both right and wrong, and not knowing the difference until after I was proved wrong.)

I don't use order flow. Never figured it out, and it never appealed to me anyway. But that's just me. There have been people in this thread who I know from their posts over the years, and who do use it and use it well. They are telling you the truth, for them. The person who wrote the statement on reddit that bothered you was telling the truth for him. Now, opinions aside, was he making money? I don't know, of course. Are the people who have written pro-orderflow posts here making money? I don't know that either, also of course, but I would bet that they are, some of them anyway (I won't mention names out of respect for the others. )

So, what do you believe? Sadly enough, you have to try stuff out, making and losing money on the way, and you have to find what works for you, and just let all the other things be something that may work for others. The only way to know is to try it out and see if it makes enough sense to you that you want to pursue it further.... and then be willing to spend whatever time you need to see if it is going to work out for you in the long run.

I hope I've been clear about this. If not, here's my bottom line: order flow works well for some of the traders who try it, and it fails for some others. So does every other thing that anyone tries, until they hit on something that works for them.

Simple, if maddening.

I don't know if order flow will be it for you, and for that matter if trading will be for you either. If trading is something that clicks for you, I hope you find some variation that lets you succeed at it, whatever it is.

Good luck, and I mean this -- and you also will need it. Stay connected here, and people will try to help.

Bob.

When one door closes, another opens.
-- Cervantes, Don Quixote
Visit my futures io Trade Journal Reply With Quote
The following 12 users say Thank You to bobwest for this post:
 
(login for full post details)
  #25 (permalink)
Skokie
 
Experience: Intermediate
Platform: SierraCharts,
Trading: ES, CL, NQ
 
Posts: 11 since Apr 2019
Thanks: 6 given, 62 received

Bob, Ron, and others, great thread..thanks for the kind words and great info without BS.
As I mentioned order flow or anything out there works and doesn't work.
Finding your nitch takes years and when successful will align with your personality and overall approach to life.

I trade Intraday instruments like ES, NQ, CL.
I have a setup i customized (including a color theme of charts) over the years with SierraCharts. I pay attention to monthly, daily, 30 min as a guidance while trading on small time frames using Order flow, price rotations and volume profiles. At the same time I am watching world markets, currencies and Bonds. It all correlates together. Of course i also want to know whats going on with the news, upcoming reports, events etc.
As an example, If I am Long ES, i better have UltraBonds and JapYen dropping at the same time or My longs maybe in trouble. The example works, for now, until it doesnt.

My peace rests not in my setups and winning trades but rather in confidence that when I am wrong I know I will not get myself in trouble, and will easily close my losing positions without any resentment. That comes from deep scars from the past

All of this works for me and only for me, my personality, approach. I can give my setups and instructions to 99 other traders and the possibility is it would not work for them. It has nothing to do with ..if I am a better or worse trader then them. There are few great teachers out there who really know their "stuff" such as FuturesTrader71. Their value is immense and will shorten the learning curve.. and yet.. at the end one must still find their own path.

I do believe that if someone does it just for the money, the next Ferrari, it will be a tough journey. There needs to be a passion for working with the markets that is not connected directly to Money. Money then becomes a bi-product.

Have fun and good luck.

Reply With Quote
The following 14 users say Thank You to dextrade for this post:
 
(login for full post details)
  #26 (permalink)
Legendary Embracer of Uncertainty
Indianoplace, IN
 
Experience: Intermediate
Platform: SierraChart
Broker: CQG
Trading: All Micros, especially the ones that move
 
Rrrracer's Avatar
 
Posts: 2,181 since Feb 2017
Thanks: 14,590 given, 8,111 received


Blash View Post
Trading takes Patience it takes determination it takes self-discipline it takes decisiveness it takes commitment it takes tact it takes assertiveness it takes humility it takes courage it takes creativity it takes honesty it takes acceptance it takes contentment it takes detachment it takes devotion it takes endurance it takes diligence it takes flexibility it takes fortitude it takes gratitude it takes perseverance it takes resilience it takes discernment it takes fidelity it takes forgiveness it takes moderation it takes openness it takes perceptiveness it takes steadfastness it takes trustworthiness it takes confidence...... (not complete)

These are ubiquitous, widespread, rampant and inescapable if you want to be a trader (or anything).

Yep sounds like a recipe for a good life. The trading just falls into its place.

Follow me on Twitter Visit my futures io Trade Journal Reply With Quote
The following 5 users say Thank You to Rrrracer for this post:
 
(login for full post details)
  #27 (permalink)
Lexington
 
 
Posts: 1 since Dec 2018
Thanks: 1 given, 1 received

I have used order flow for a few years now. My humble opinion it is not a magic bullet that a lot of folks are looking for. By the way there are no magic bullets or fool proof methods. Every trader has bad days. To me the order flow traders are momentum traders and the footprint numbers can confirm that momentum. Again just my humble opinion.

Reply With Quote
The following user says Thank You to cpg3333 for this post:
 
(login for full post details)
  #28 (permalink)
miami,florida
 
 
Posts: 28 since Feb 2019
Thanks: 4 given, 31 received

I went into the jungle and pirates of OF softwares out there. Spent K's of $$$$, no success . Now went back into the old as dirt crossing MAvg. with standard free indicators like RSI ,MAcd . ,123 tops ,double tops etc. You get the pic. As long as you stick to rules and have a low risk entry, you will make more than you lose.

Good luck and stay safe.

Reply With Quote
The following 2 users say Thank You to ELche for this post:
 
(login for full post details)
  #29 (permalink)
Legendary Market Wizard
Houston, TX
 
Experience: Advanced
Platform: XTrader and Cloud TT
Broker: Advantage Futures
Trading: Energy
 
Posts: 3,483 since Dec 2013
Thanks: 2,781 given, 6,552 received

@Hulk I think everything you said was spot on.


Hulk View Post
I havent found an electronic way to get this data. I dont know if there is one but if I had the OTC order book electronically, I would be very very happy.

There are chat/IM applications that parse messages into an orderbook style format but it's heavily options focused. You'd also need to be talking connected to good brokers in several good shops otherwise it would be an extremely limited view.

Reply With Quote
The following 5 users say Thank You to SMCJB for this post:
 
(login for full post details)
  #30 (permalink)
Reno, Nevada
 
Experience: Advanced
Platform: NinjaTrader
Trading: ZN, ZB, CL
 
phantomtrader's Avatar
 
Posts: 313 since May 2011
Thanks: 69 given, 507 received


There's no doubt that the patterns on the DOM have changed and are changing rapidly. I've stopped looking for the patterns I used to trade because it simply doesn't work. A lot of it is the context of the market. I prefer to trade the bonds, but right now it's impossible - every time the FED inserts capital, the futures will jump ticks, the numbers are all fake, etc.

That said, there are still benefits to the DOM. I'm using it to confirm my trades - sometimes I use my coded strategy, sometimes support/resistance depending on what the market is doing. So if you're looking for a short, you want to see some drive down with sellers generally above. The number in the upper right (see jpg) is very helpful. It's the easiest way to see the net effect of buying/selling. If big buyers/sellers come in, you'll see that number jump. If you're in the wrong direction, get out. If you're in the right direction, hold on for your target. Of course, there's always the problem of volatility, but in general, I find that watching that number gives you a very nice perspective of what's happening. I analyze my trades at the end of the week in replay. If you get the hang of watching that number, it will give you an edge.

Attached Thumbnails
Click image for larger version

Name:	cl.JPG
Views:	265
Size:	291.6 KB
ID:	293801  
Reply With Quote
The following 6 users say Thank You to phantomtrader for this post:


futures io Trading Community Traders Hideout > Is Orderflow An Outdated Concept?


June 21, 2020


Upcoming Webinars and Events
 

Introducing Edge Pools: Prop Pricing Model w/Edge Clear

Jul 9
 

Every journal equals ten meals for the hungry

Now
     



Copyright © 2020 by futures io, s.a., Av Ricardo J. Alfaro, Century Tower, Panama, +507 833-9432, info@futures.io
All information is for educational use only and is not investment advice.
There is a substantial risk of loss in trading commodity futures, stocks, options and foreign exchange products. Past performance is not indicative of future results.
no new posts