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Depth of the market and Tradestation


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Depth of the market and Tradestation

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  #1 (permalink)
vluskr
Perth, WA
 
 
Posts: 3 since Aug 2021
Thanks: 1 given, 1 received

Hello All,

I hit the wall again and this time I realised I need help indeed :-)

Some background - unfortunately, a bit long - hope someone will manage to read to the end :-)

Currently, I have accounts with both Tradestation and IBKR so, access to both platforms and data. Additionally, I got a subscription to TradingView.

Until recently, I was trying to trade price action somewhat mimicking what I learnt from Brooks's trading course (though I am still to finish it). My success rate was something like 20/80 (obviously, not in my favour). Typically, I am loosing money during electronic hours (cutting it out now), first 15 mins of intraday and when the market is choppy (I am only looking at micro E-minis). I'd say my success rate during trending days is a bit better with some caveats. Obviously, I can not predict whether the day will be trending or choppy.

Recently, I stumbled upon John Grady's interviews and videos where he was strongly advocating against trading price action and promoting order flow trading instead. Now I am a bit cautious converting to new ideas but I decided to try to augment my charts with Level 2 on a side. I tried doing it in TradingView first - really sucked and finally decided that doing it in TradeStation is a reasonable compromise between chart quality and market depth app. And here came that wall: I am really struggling to see any correlation between Level 2 and key price level actions. I even recorded my screen yesterday and watched some key moments and still have now clue what's going on. During 1st 2 market hours when the market was trending up I could only see reasonably consistent order numbers in positions 2-10 away from the current price on both bid and ask (range 50-100 orders each price). There were normally 7-30 orders next to the current price changing erratically. At one stage when one local resistance was hit I could see higher orders popping up on the sell side (100-200 quantity) and no increase on buy side but the price was going up finally taking over those higher order numbers. To my understanding, seeing larger sell offerings and no increase on buy side means that I had to go short but the price action was all contrary to that. Later on I could not see any correlation between Level 2 order quantity and price action. So, my questions are:

- Level 2 quotes provided by TradeStation (10 levels with some aggregation I suppose), are they useful at all? Or unless I invest into a separate data feed I can forget about order flow?
- If they are any useful, what should I be looking at? Should my eyes be more fixated on the numbers next to the current price or more look at the bigger numbers popping up higher up (lower down) the price ladder?
- Is there a better way to learn order flow than the screen time?
- This question is probably more generic and may bring up some controversy: is trading "naked" price action is indeed unsubstantiated? Every video I see of professional trader I see L2 and not necessarily charts - is this indeed the answer to my question? I wonder is there any successful trader on this forum who trades price action only and able to sustain a living out of it?

Thanks to those who managed to read it to this point :-)

Cheers,
V

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  #2 (permalink)
 elitecamper 
McAllen, TX
 
Experience: Advanced
Platform: Multicharts, Sierracharts
Broker: Ironbeam
Trading: ES, NQ, ZB, ZN
 
Posts: 66 since May 2013
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I recommend purchasing Jigsaw Daytradr and opening an account at a broker that supports Rithmic or CQG.
Then practice practice practice on sim. You should go from losing to then breakeven, and eventually to profitable.
Orderflow is for scalping.

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  #3 (permalink)
 bobwest 
Site Moderator
Sarasota FL
 
Experience: Advanced
Platform: Sierra Chart
Trading: ES, YM
 
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vluskr View Post
Hello All,

I hit the wall again and this time I realised I need help indeed :-)

Some background - unfortunately, a bit long - hope someone will manage to read to the end :-)

Currently, I have accounts with both Tradestation and IBKR so, access to both platforms and data. Additionally, I got a subscription to TradingView.

...

Recently, I stumbled upon John Grady's interviews and videos where he was strongly advocating against trading price action and promoting order flow trading instead. Now I am a bit cautious converting to new ideas but I decided to try to augment my charts with Level 2 on a side. I tried doing it in TradingView first - really sucked and finally decided that doing it in TradeStation is a reasonable compromise between chart quality and market depth app.

...

- Level 2 quotes provided by TradeStation (10 levels with some aggregation I suppose), are they useful at all? Or unless I invest into a separate data feed I can forget about order flow?
- If they are any useful, what should I be looking at? Should my eyes be more fixated on the numbers next to the current price or more look at the bigger numbers popping up higher up (lower down) the price ladder?
- Is there a better way to learn order flow than the screen time?
- This question is probably more generic and may bring up some controversy: is trading "naked" price action is indeed unsubstantiated? Every video I see of professional trader I see L2 and not necessarily charts - is this indeed the answer to my question? I wonder is there any successful trader on this forum who trades price action only and able to sustain a living out of it?

Sorry I am taking so long to get back to you.

I can't really address order flow as a method, as I have never used it... there are so many things, and many will work, but it takes the trader to make them work. One method may be good in one person's hands, and the exact same thing may be a failure in another's.

John Grady is sometimes mentioned as a source for information on order flow by people who have used him. You should understand that when someone is championing one method, it is not unusual for them to say the others are "unsubstantiated" -- this is both due to the fact that anyone naturally likes what they use, plus they naturally like something they sell material for.

As to successful traders using one method or another, the fact is that most traders are still in the "development" stage, trying to work out what they can put to good use. There are, however, profitable traders on the forum using a number of methodologies, some essentially just what they have put together from different sources and much experience, which includes experience in trying things out and taking losses and learning from it. As you know, it is not a short process.

Someone who knows more about order flow may be able to give you more pointers about where to look for more about it. The same goes for using TradeStation as an order flow platform. There are enough traders on the forum who are familiar with both, and some others may have other suggestions both for a platform and a method.

I suggest browsing the forum, including using Search, to see if there are posts that address your issues, or threads you would like to participate in to look into further.

Good luck.

Bob.

When one door closes, another opens.
-- Cervantes, Don Quixote
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