Orderflow Trading

[DayTraderProfesional]

The explanation made above, give us a simple way to see balanced actions:

 

The best you can define a highs or lows the more you can expect about risk/reward

[zoheb]

In a balanced action what we need to do first is define the highs and lows, for to know clear where we can work with the UH/UF. It's easy to understand that if there exist a unfair situation to one participant of the market at those zones, we need to be on the fair side ;).

 

This can seems a very simple task but not really, because the market is changing constantly. Vpoc for the day is changing and this means value, also. Someone need to be very adaptative looking at it. Like i said, somentimes will be more easy, somentimes more harder.

 

Let's look to an example about what is a microbalanced action using the volumeladder chart:

 

http://content.screencast.com/users/daytraderprofesional/folders/Jing/media/8a41771f-f2f4-4a4b-b7f6-62c3422bfa39/2016-07-30_1154.png

 

With the image we can see that to define a Highs we need to see a decreasing activity on the ask side, 3515 vs 895. To define a Lows we need to se a decreasing activity on the bid side, 1265 vs 502. This is important and you need to know, how many contracts are available on demand and supply. Yes, i'm speaking about the level 2 data. If you know that the average is more and less 500 contracts, you can see clearly the highs and lows. In the image showed the market was trading 20 minuts at this area, and look the lows, no more than 502 contracts traded. if the average was that quantity we know clearly the no interest to trade at this price in 20 minuts.

 

Knowing the highs and lows we will know very precisely were we can trade fairly or not. It's probably that we begin to understand if i'm a buyer in this lows where need to be my stop, and things like that, but maybe i'm going to fast ;)

 

Let's talk more about it, balanced actions

 

Sorry for my ignorance, but why do we compare 3515 vs 895 and not 2000 vs 707 on the ask side? Similarly on the bid side why 1265 vs 502 and not 1265 vs 1265 ? Thanks for the efforts being put in by you to educate us on Order Flow

[sinox]

HI DayTraderProfesional,

 

please can you post some screenshot of DAX on important reversal swing in order to see the behaviour of BAR value area.

please some with 8R and some with 10r.

Thanks

[DayTraderProfesional]

Sorry for my ignorance, but why do we compare 3515 vs 895 and not 2000 vs 707 on the ask side? Similarly on the bid side why 1265 vs 502 and not 1265 vs 1265 ? Thanks for the efforts being put in by you to educate us on Order Flow

 

Hi @zoheb

 

It's about the bar. The bar is a 10 range. The time to trade at this zone/area was 20 minutes. The 2 values on the ask side 707/2000 seems to be the close of the bar. Market were in balance between 3515 and 1265 and then, define the direction, closing in the highs. Look the values at the extrem. 138 vs 2000 and 22 vs 707. Buying momentum to the upside, and my opinion is that some stops were out at those prices. Like i said previously, for sure some traders were selling the lows of this action expecting the break and probably the market runs some stops of this sellers, who knows. It's an opinion, nothing more.

 

Think that we are talking with no realtime actions, this bar was close. In realtime it's possible that will be more easy understand why we compare 3515/895 and 1265/502. Let me know if it's clear or not ;)

Edited July 31, 2016 by DayTraderProfesional

[DayTraderProfesional]

HI DayTraderProfesional,

 

please can you post some screenshot of DAX on important reversal swing in order to see the behaviour of BAR value area.

please some with 8R and some with 10r.

Thanks

 

Hi @sinox,

 

I don't have data to post the charts you request :(. Like i said in my first post, all that i will post will be mini sp charts ;) .

[rodamas]

Dear DTP,

 

Just to let you know, I found that on my screen, the charts you posted have been truncated to fit into the browser so the right side of the chart is hidden from normal view. I can only see them if I zoom out but that would make the text and prints too small to read @-).

 

Maybe someone have a way to go around it so we can see the whole chart at one go. :)

[DayTraderProfesional]

Hi @rodamas,

At my side i need to do the same:-?

[rhv]

Rodamas...

 

In firefox right-click image. Click "view image". Or im sure other browsers should have a similar option.

[DayTraderProfesional]

Hi,

 

Let's look an example about highs and lows:

 

http://content.screencast.com/users/daytraderprofesional/folders/Jing/media/f68e76b2-e8de-4e44-a29a-eaac7e1aad4a/2016-08-01_1115.png

[DayTraderProfesional]

All expained above, it's pure theory. But we live in a real world where theory can be a little tricky. Let's look at this image:

 

http://content.screencast.com/users/daytraderprofesional/folders/Jing/media/3b6cd2a1-7426-4eb4-b8b4-dda418043674/2016-08-01_1122.png

 

It's clear that the market is working on this area, but has zones where the volume is thinner. For define a better balanced zone the market need to spend more time working on it. Knowing this potential action, we can be focused where is the best place to be, the lows or highs and see what happens at those extrems.

[DayTraderProfesional]

Let's look at the context:

 

http://content.screencast.com/users/daytraderprofesional/folders/Jing/media/eb780417-0501-4843-a61d-c4cea3649fd0/2016-08-01_1135.png

[DayTraderProfesional]

More actions at the same zone:

 

http://content.screencast.com/users/daytraderprofesional/folders/Jing/media/fef2442a-cb8d-4375-86bc-d71c57d9711f/2016-08-01_1205.png

[DayTraderProfesional]

Some interesting actions are appearing in the key Bar:

 

Delta decreasing, sellers being absorbed, some agressive buyers....

 

http://content.screencast.com/users/daytraderprofesional/folders/Jing/media/74baedc0-05db-4290-8a69-78e646eafdfb/2016-08-01_1223.png

[DayTraderProfesional]

Time to take action:

 

Entry at absorption, risk below market action and target, this is the hard part :-/ We have few Unfinished Auctions in the way up, let's see how it develops

 

http://content.screencast.com/users/daytraderprofesional/folders/Jing/media/392f75e9-9ffb-4e8a-90f9-5b5dabef7cc0/2016-08-01_1319.png

 

Nice microbalanced action in the key Bar. The extension of the balanced action on key Bar can give a potential covering for the long trade. Risk 4 tics, covering trade at 4 tics, highs of microbalanced action. Why cover? The market is trading very slowly and i'm taking the trade againts current direction with no agressive buyers jumping on the move. This means caution and in any situation you have options, take the way that can be less risky for your most appreciatte tool, your money

[DayTraderProfesional]

http://content.screencast.com/users/daytraderprofesional/folders/Jing/media/a3af0ed6-7956-4719-859a-41fd89d11082/2016-08-01_1340.png

[DayTraderProfesional]

Like you see, take actions on balanced zones can ve very hard, most if the market is moving slowly. Why? We can extend the balanced action without moving too much, and your lows or highs can change with out directional moves , or breaks.

This is why i wait to see microbalanced actions on range bar, or in the bar i "think" is key to the potential reversal. Microbalanced actions gives me position (entry point/risk)

 

If you become bored with the movement or tired to wait a directional action, with the position that you have, always can go out with a little profit and expect a new chance. But patience somentimes pay, who knows? This is trading. Enter and position risk is not to much hard, where going out? the harder question to answer

Edited August 1, 2016 by DayTraderProfesional

[zoheb]

Hi @zoheb

 

It's about the bar. The bar is a 10 range. The time to trade at this zone/area was 20 minutes. The 2 values on the ask side 707/2000 seems to be the close of the bar. Market were in balance between 3515 and 1265 and then, define the direction, closing in the highs. Look the values at the extrem. 138 vs 2000 and 22 vs 707. Buying momentum to the upside, and my opinion is that some stops were out at those prices. Like i said previously, for sure some traders were selling the lows of this action expecting the break and probably the market runs some stops of this sellers, who knows. It's an opinion, nothing more.

 

Think that we are talking with no realtime actions, this bar was close. In realtime it's possible that will be more easy understand why we compare 3515/895 and 1265/502. Let me know if it's clear or not ;)

 

Thanx for taking the pains to explain @DayTraderProfesional. Really appreciate ur effort :)

[zoheb]

@DayTraderProfesional: Editing all these images with comments for our understanding is awesome =D>

 

I have 3 queries:

1. How important is the period type we use for order flow - I see you have used Range. Can minute (or renko) be used instead ? How will that affect effective usage?

2. How do you determine the right value to use for the period type (you have used Range=10). Is there some thumb rule you can share/advise that can be used to calculate the Range values for different instruments?

3. Also for instruments that create huge ladders, is there a best practice you can share (not requiring manipulation of the tick value in the NT instrument settings) to make it more manageable and easier to visually see & read the order-flow

 

Thanx

Edited August 2, 2016 by zoheb

[DayTraderProfesional]

Hi @zoheb

 

1-3. it's not important. I know successful traders working in a 4 range chart. i use 10 range because on ES i can see how the markets works in a specific area,not related by time or volume, or tics. Area is key for me, but it's a personal choice, based only in the time that i have been working with ES. No magical numbers.

 

Let me show you an example about it:

 

http://content.screencast.com/users/daytraderprofesional/folders/Jing/media/5ab42db2-fdcb-4cdd-8929-0312afb118cc/2016-08-03_1243.png

 

The range used gives me some clue about what are doing buyers and sellers, and this is what you need to find. Doesn't matter, range, volume. It's to find the sense of the action in the way that you are looking at the market.

 

About volatile instruments with huge ladders, i work only on Es and i don't know how to guide you on this. What you said, manipulating tick value can be a choice, but no experience on that.

Edited August 3, 2016 by DayTraderProfesional

[kenny123]

Thanks for your input. Agree that specific charts do not matter as long as you are trading in the direction of the trend. Use hh or LL as a guide, see how price reacts at certain levels, etc.

[zoheb]

@DayTraderProfesional, I did use range for the first time with Order-flow today and did see what you mean. Will keep looking out for more on Order-flow from you here, thanx for the guidance.

[zoheb]

@kenny123, using HH/LL makes a lot of sense. thanx for pointing me in that direction.

[traderJi]

DayTraderProfesional - Thank you for the very educational Orderflow coverage you have initiated with the images. Have a question related to the image you have posted in post#44. What are the "circled" areas represent on the chart? On the "delta" portion - one specific bar's Delta is highlighted in Red(as circled) - what's the condition it gets highlighted?

 

 

 

[kenny123]

You are welcome, I use a couple tools and try to trade in the trend. Counter trend trading is tough imo.

[Guest jorma41]

Can you reup please Thank