For me it is looking at areas of potential failure and looking for price not to be able to do something. For example price comes up to an area and I think it might breakout, am I seeing a lot of aggressive buying but it is being absorbed at a couple of levels and price can't get through, and when the buyers realise they can't push price through then they need to sell out so price falls back in to range again. Or the orderflow might show that people are buying aggressively and the orders are pulling out of the way so price is likely to break out. Also it can allow one to be much more precise about stops. If I sell and price goes back in to range then it shouldn't come up through that absorption high volume node again. I can save a few ticks risk by not just sticking the stop above the bar high. Order flow can be useful for confirmation whether to place the trade or not at a location you have already decided is somewhere you want to trade. People get into trouble when they stare at the orderflow and see potential trades everywhere and end up scalping all over the place and overtrading.
Make sure you turn the brightness down so that the large levels of liquidity stand out and you can easily see how those influence price. Otherwise it is just different shades of grey.
I suggest starting with:
White Cutoff 95%
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Order Flow is way to Go
@jonc, the theory of order flow is that all indicators are lagging, i.e... history, even if just minutes ago. Order Flow is trying to see as clpse to possible the real time of orders being placed. This can give insight into that there is a level at this point in time that someone is selling and will sell to all who want to buy. When large players do this, they are able to do it without having their orders actually showing on the DOM. When they hide the orders - this is called an iceburg because there is more depth to the market than being shown.
Seeing current order flow gives a clue to this and other trading patterns.
Hope that gives a layman's comment on it.
As far as applications for this information, GOMI just came out with a new vendor supported version of his indicators at GomCators.com. He is offering a 20 day trial for NT7, NT8 and Sierra Charts. It is well worth taking a look. The fact it runs on 3 systems is important for easy migration if you determine one of the platforms is not up to snuff.
For a bit of an education on using order flow I would recommend TradingFuturesInAction.com one week trial. They focus heavily on Order Flow. They also have an order flow system. The great thing about them is they have no large up front charges or long term commitment. It is a monthly charge that can be cancelled at any time.
Another room for the market profile (based on volue not time) more than order flow is FuturesFx.ca that has open trials every Tuesday morning.
@Forexoil, Not trying to sell these organization to anyone, BUT HAVE AND WILL act as a reference for both. I have been with both organizations and have full confidence in both. I only use the GOMI free Metro Editions at this point, but am reviewing GOMI's imminent releases to see if I go with that since it works on NT8 and Sierra Charts:
BTW, since this is Jigsaws' thread I should state, I have not used or tried it, but have heard nothing but great compliments on it. It has a great webinar about it. And Futures.IO members get a discount for it. It also has a trial I believe.
Let's not get into a back and forth on this. The primary subject of the post was "Is Order Flow worthwhile." Please express your opinion on that topic.
Last edited by jmont1; April 1st, 2016 at 01:27 PM.
I rely a lot on what is happening in the volume when I'm trading futures - that's why I would want as much information as possible. I think it might be a matter of perspectives that I can't really see how these tools can add on to providing additional implied information which is not available from looking at the DOM and charts.
I do understand the idea of iceberg and accumulation. What I cannot see is how these tools let you glean into the information that someone is accumulation/absorbing the orders or defending a level more accurately than just looking at the DOM, T/S and a volume chart.
For example if the price had been stuck for the past hour in a small range with active volume, I would suspect that orders are being accumulated - can these tools tell you which side is stronger and whether which side its most likely to breakout?
I have this impression the main idea of these tools is providing buy/sell volume information at each price level.
For myself, the overall structure of the price from a chart would help to decide which side I think the price most likely would breakout, I'm trying to see if these tools would help to give more clues to where the prices would go but having spent time looking at the videos on these products, I still don't get what is the extra information they can give.
How does these order flow tools do this better than looking at the DOM/TS , volume bar chart and volume profile?
Can't all these also be deduced from a volume bar chart and observing the DOM/TS - if many bars are printed and the prices just stay in a congested level?
As you had mentioned, when one look these order flow tools, they might start reading too much into what they are seeing and might even end up thinking something is happening when it is not so.
The tool is only a very small part of the complete picture.
1. you need to be able to use the tool and be able to read..
for clarity : yes any system needs an order flow component
2. my personal view on vendors :
a) they update the versions and force you into an update without proper release management
with the risk of breaking your system, it is funny how none of the vendors take liability for
any mistakes... (very easy business, too easy) i remember vivid the zenfire situation like it was
b) almost all of the tools have limitations and bugs. some vendors are more wiling to fix things
than others. most if not all of the vendors are interested in selling a license and don't care about
your results. If they had the perfect system, they would not sell it to you.
3. most of the tools are geared towards display. when it comes to exposing an interface, the
limitations come quickly into play. the tools are the basic foundation on which you need to
build a bit of additional things to 'see' what you need.
Conclusion : none of the tools is perfect. you need more than the tool. and you need a lot of
patience. if you think one of those tools will give you a silver bullet and the money is going to
roll in next week : you need to re-adjust your expectations. (a lot of vendors will promise you that,
simply forget that and become realistic). that said some of the vendors are doing a good and a
better job than others..
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