I’ve been studying an approach to trading called ‘Order Flow Analysis’, which you are able to map out bids/offers, buy & sell stops on both swing trading and intraday trading. Knowing these levels really helped me to devise a system not based on a fib retrace, macd, fixed TP, but instead based on the current structure of the market I’m trying.
This forex feed gives free order flow news from a variety of sources in a very easy to use format.
Give it a look and feel free to discuss here! --> Order Flow Trading Forex News
I help contribute to the order flow feed. Trying to separate all the useless info from the good stuff we need, ya know. For sources, they use IFR, Thompson-Reuters, a few market contacts that trade on the Interbank, hedge fund managers, a few UK FX dealers. I actually prefer to reverse-engineer the order board via a price chart so I’m not left in the dark if all news sources go away.
(Large) Options play a big part in gravitating price since there are large bank traders buying under the strike level to hedge if it ends up going over, and large traders selling above to hedge expose in case price ends up under.
I kinda stopped paying attention to them unless they are very large (worth combined over $1billion or so) What I prefer now is tracking exotic No-Touch options, commonly referred to as DNTs or ‘Barriers’ as these options have active bids/offers to protect a level from being hit, then if they are hit, those defender’s stops are just on the other side. They’re much better forecasters of specific orders/stops than plain vanilla options are.
Most common and largest barriers the last month have been on Usd/Jpy, pretty much every 50 pips. I’ll post charts later, but the idea is that if price breaks above the defender’s offers, buy it to push in to the barrier so that when it breaks, the buy stops above will throw you in to profit fast. That is, if sentiment is bullish… With Fed actually Tapering and Bank of Japan trying to get as much inflation as possible, its an easy trade.
So how do you go about reverse engineering the order board on a price chart? I’ve taken a few “demo” trades based on that news feed and they’ve all worked out, however like you said, what if that went away. Would it be as straight forward as marking the supply and demand zones and then just assume there might be barriers at the big numbers?
For sure. I’d post a chart for ya but you need to do it all yourself For most traders, stops are beyond swing highs/lows. The more a resistance level is hit, the more stops are placed beyond it. In that example, look at Nzd/Usd’s chart to see why 0.8125 would be a stop level.
A great tool you have now, that I didn’t, is that orderflow feed. Follow it and mark the levels on your chart as well. After a while you’ll be able to know where the herd place their stops.
For barriers, new levels that price hasn’t gone to. Usually pretty obvious, you can notice a trend on where they’re place as well. Most the time they’re round numbers. So if you see price run near a round number and reverse hard w/o breaking, could be offers to defend. Or there’s market contacts that talk KO barriers between banks (large interbank orders as well) that you make friends with along the way.
Saw you were talking about UsdJpy on here…after all of Putins’ muscle flexing, the market calmed down and risk-on continued into this morning. Using some of the touted orderflow info that Emerald Eyes spoke about, i took this trade this morning early in the London session:
The feed had touted “stops at 102.30s and more at 102.50”…so i took a pullback in line with the short term trend and since we broke aggressively and closed above the stop level, i held the trade and am looking for 102.50.
You mirrored this post over here 301 Moved Permanently & appear as though you’re familiar with trading through possible stop clusters, so what kind of feedback are you looking for exactly?
it’s true, i used the same chart to save time Regarding feedback? it’s always welcome, because trading is a never ending journey and i like to get different views of the same situation!
Ah ok, so you were actually asking for reinforcement rather than feedback about a particular aspect of your analysis.
I thought it was strange having stated the obvious in your presentation.
As it turned out that pair is/was the only one of the higher volume instruments currently playing ball around the spotlight stop levels this week.
Regarding feedback? it’s always welcome, because trading is a never ending journey and i like to get different views of the same situation!