The fox and the market

[dietcoke]

The fox is using momentum like the LQ gap momentum to scary retail traders when price is reaching a zone of interest. They want the retail trader thinking that price is to strong to turn arround and it's better to enter in the direction of the momentum. They trap retail traders in the wrong direction. But in trading it's like in physic. Remember the law of physic: the stronger you hit a ball against a wall the stronger it will bounce back. But if the wall is not strong enough then the ball will go through. A strong wall is a zone where liquidity is located. So don't get frighten when price is arriving with momentum.

What a fantastic analogy. Thanks, makes things much clearer

[Forexfux]

Yes that's what the thread is for. Making market movement clearer. I recently have read a discussion between OF trader and they summerized some things nicely:

T1: "Stop hunting is a small part of order flow trading, far from being the most important component of it. "

T2: "I don't disagree. I think it is far more important to me to have a pretty good idea where large blocks of orders are going to be sitting and also have a pretty good idea which direction to expect those orders to send price. I want to know where traders will take action."

T3: "I agree - it's one of many methods that can be applied within OFT, but I found specializing in one method more efficient for my trading style. Sentiment reading/thinking about other players' actions is for me the most important component. "

T1: "Bingo. Ultimately that is the determining factor in what generates orderflow. It's info you won't find on a chart."


When you are learning orderflow trading you don't need to give up your actual trading method or forget everything you have learned before about trading and the markets. Orderflow will improve your trading in the way of a better market understanding. I will never give up my with hard work acquired S&D+PA rule set. The best thing is I don't need to because they fit together perfectly.

[tex]

Thanks for your insights Mr Forexfux, your thread should be read by every trader here in Steve's forum.

May i ask what is your method to find the locations of large blocks of orders in the markets ?

I think it is all coming down to this question

Looking forward to read more from you.

All the best,
tex

[Forexfux]

Thanks for your insights Mr Forexfux, your thread should be read by every trader here in Steve's forum.

May i ask what is your method to find the locations of large blocks of orders in the markets ?

I think it is all coming down to this question

Looking forward to read more from you.

All the best,
tex

Hello and thank you. I will try to discuss this topic a bit later. First there are some other things I want to present.

Btw Trader 1 in the above mentioned discussion is a futures trader who uses DOM /tape reading. He has a bit different approach.

[frac7als]

amazing piece of information. really nice. thanks forexfux. really insightfull.

[Forexfux]

amazing piece of information. really nice. thanks forexfux. really insightfull.

Nice to hear that some people find that the thread contains useful informations.

I don't know if I have time to post today but here is something to think about:

"Stop hunting is more intricate than just fading highs and lows, that's where most retail traders seem to fail. When you start to understand that 80-90% of market swings are traders losing, on any time-frame, that's when it becomes a different ball-game. "Stop-hunting" is always going on, whether it's to initiate positions or to liquidate positions. "

[frac7als]

i'm really interested in the subject. would like to know more . please keep it coming. thx..

[Forexfux]

i'm really interested in the subject. would like to know more . please keep it coming. thx..

Hi Frac7als,
I'll do what I can but trading comes first or I have something else to do like yesterday when Dortmund was playing

[tex]

Oje, ein Dortmund Fan Glückwunsch zum Finaleinzug....

Aber im Finale gibts dann von den Bayern aufn Arsch

[Forexfux]

Here are two trades from two different order flow traders. Do you see the similarities to what CJ is doing? (The volume of the second chart is futures volume)

order flow..gif

"Today was an excellent example of banks shading price to fill orders. In the EU chart below the blue line is the previous week high. Note (the shaded area) that when the retail sales and PPI came out they were dollar negative. Price initially shot up to collect breakout traders. The price then reversed back down far enough to fill buy orders at the weekly level and trigger the stops of the breakout traders. This was another example of masterful bank manipulation of price to trigger stops and fill the orders of their clients. Price is now hitting the Rollover price from last night and profits are being taken. Simple and effective. Locate the places on a chart where orders are likely to be stacked and take action at those locations. Often you will be stepping in front of a speeding train but the probabilities are with you."

1.png

"White box shows liquidity takers who get trapped, wanting to break the highs. (liquidity on the supply side is too much to consume)
Red box shows those longs liquidating.
Trade the cause, liquidate the effect. "

"So you determine that they longs got trapped based on watching PA on the DOM? Seeing that there is too much supply and longs are unable to move price higher even on decent volume?"

"Correct. And that's the mindset you need to have to trade those swings that are 'impossible' to trade"