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Pressure on the order flow - What's that?


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Pressure on the order flow - What's that?

  #1 (permalink)
 bipi 
Milain Italia
 
Posts: 9 since Oct 2020

Hello traders! I have a very noobish question to ask.

Futures and order flow trading in general is new to me, i'm using an indicator that shows the big orders on the chart, when the indicator shows me big sell/buy orders.

It says that some big sell orders give a buy pressure on the order-flow, and that some buy orders give sell pressure to the order-flow...shouldn't be the other way around?

Thank you very much!

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  #2 (permalink)
 Cutloss 
Midway florida
 
Posts: 243 since May 2021

NO. there is always a counter party

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  #3 (permalink)
 bipi 
Milain Italia
 
Posts: 9 since Oct 2020


What does it mean? If the market get a big sell order, why it has a buying pressure on the order flow? How can someone know that w/o using an indicator for example? Thanks.

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  #4 (permalink)
 Cutloss 
Midway florida
 
Posts: 243 since May 2021

it means 75 % of the time the counter party has way more money than you or way more knowledge than you and they took the other side of your trade and THEY WILL not lose even if it means throwing more money and contracts against you to make the mkt move enough for them to exit.

lets say you buy 1 contract ok. and lets say I am an HFT large company with unlimited margin.


I basically like a fish on a coral reef just wait until all the retail traders make a trade off of a candle stick and i fill all those orders by selling to you and all of them.. like
a feeding frenzy.. now.. i know the only way to make money for myself is to scare you into selling where i can buy back my short.. see when you buy i am selling but when you
buy it is usually at the high end of the spread. the slippage you pay to be in the mkt. now i had an order there months ago and now you matched me so i wont let this opportunity turn into a loss.. i will sell hundreds more contracts to short term move the mkt, as i keep couniting my money as more and more of yuo buyers sell and i buy low.. since i sold high..

that is the negative pressure just understand that you never will be top dog ever. if you throw out a 100 lot they will eat your lunch on that too.. same as they do 1 5s and 10s.

thats all i got for this post. good luck

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  #5 (permalink)
 bipi 
Milain Italia
 
Posts: 9 since Oct 2020


Cutloss View Post
it means 75 % of the time the counter party has way more money than you or way more knowledge than you and they took the other side of your trade and THEY WILL not lose even if it means throwing more money and contracts against you to make the mkt move enough for them to exit.

lets say you buy 1 contract ok. and lets say I am an HFT large company with unlimited margin.


I basically like a fish on a coral reef just wait until all the retail traders make a trade off of a candle stick and i fill all those orders by selling to you and all of them.. like
a feeding frenzy.. now.. i know the only way to make money for myself is to scare you into selling where i can buy back my short.. see when you buy i am selling but when you
buy it is usually at the high end of the spread. the slippage you pay to be in the mkt. now i had an order there months ago and now you matched me so i wont let this opportunity turn into a loss.. i will sell hundreds more contracts to short term move the mkt, as i keep couniting my money as more and more of yuo buyers sell and i buy low.. since i sold high..

that is the negative pressure just understand that you never will be top dog ever. if you throw out a 100 lot they will eat your lunch on that too.. same as they do 1 5s and 10s.

thats all i got for this post. good luck

Thanks for taking the time to explain that, greatly appreciated!

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  #6 (permalink)
 
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 matthew28 
United Kingdom
 
Experience: Beginner
Platform: Bookmap
Broker: Stage 5, Rithmic
Trading: US Equity Index Futures
Posts: 1,250 since Sep 2013
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Sometimes you can have large orders sitting in the order book, a large sell order above the market, and price quite often goes up to test that order and see if it is really somebody wanting to sell (as opposed for example to somebody holding the market down to get long before moving their order away and slamming price higher to run out stops and exit their position through that price flush.

Or if your indicator is showing transacted volume and you have for instance unusually large selling volume at a price then that shows buyers were absorbing the aggressive selling at that level and if price then pauses and starts to move back up the sellers will often cover by buying as they can see that price has stopped moving down at that point.
First the shortest term traders cover, then as price moves further away more people find themselves trapped short and cover and price moves up until it can find more people prepared to sell aggressively again.

You do not win as a trader, you just get to play again the next day. If that game doesn’t appeal to you then you should not trade. Gary Norden
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  #7 (permalink)
 shokunin 
Manchester, United Kingdom
 
Experience: Advanced
Platform: Sierra Chart
Broker: Optimus Futures, Rithmic, Denali
Trading: ES
Posts: 85 since Jul 2020
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bipi View Post
Hello traders! I have a very noobish question to ask.

Futures and order flow trading in general is new to me, i'm using an indicator that shows the big orders on the chart, when the indicator shows me big sell/buy orders.

It says that some big sell orders give a buy pressure on the order-flow, and that some buy orders give sell pressure to the order-flow...shouldn't be the other way around?

Thank you very much!

Let's say all markets are uptrending - tech, healthcare, financials, crypto, whatever. There are many algorithms that are watching interrelated markets and buying those that are lagging and selling those that are advancing the others.

For example, consider QQQ, SPY, NQ are increasing in price but there is a big sell order on ES and only ES. This means ES is going to be held up, so that is going to create buying pressure on the ES as it tries to remain in step with the others.

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  #8 (permalink)
FuturesDayTrading
Columbia, MO
 
Posts: 14 since May 2021
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I've noticed that, too. My advice would be to go back over historical data and look at what the price does with those big sell/buy orders. Often times price will explode to a support/resistance area before reversing.

I use NT8 and it has an Order Flow Trade Detector. I used to use it, but it was too much noise on the chart. But, as I recall, whenever I saw a large order come through it often meant price was going to reverse. Again, just look back and see what the pattern is.

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  #9 (permalink)
 SpeculatorSeth   is a Vendor
 
Posts: 780 since Apr 2016
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There's multiple options for the trade detector in NinjaTrader. The default mode is consistent bid/ask. That means that it took a lot of volume for the bid ask to change. This is an indication of iceberg / refreshing orders. This is a large limit order that only shows a portion of the order on the order book, and then adds more after what is shown is filled. So basically price can't move because limit orders are holding it.

Such orders have the potential to hold price and cause reversals. They tend to show up after long moves when people take profits. If price moves through the iceberg there is often a spurt of momentum after they cross the threshold. Overall though I would be cautious about making huge conclusions from iceberg trades. These are often spread or hedge trades against the trend that have no predictive power.

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  #10 (permalink)
 bipi 
Milain Italia
 
Posts: 9 since Oct 2020


Thanks to all for the insights

I missed to include in the post that the indicator tracks executed orders.

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Last Updated on June 4, 2021


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