Hello dear traders!
Today I did not have a chance to seek your advice on a GU setup. Market moved pretty quick after UK CPI news. So I took that shorting trade by myself www_screencast_com/t/meKoVBFeXu
Now if somebody can explain it for me, please. I have my questions on the chart www_screencast_com/t/d3a6kGN3
Thank you
Nice trade Jim, however, taking profits at the stops (1.5145) would have been a better target. You already had market bias and the order flow in your advantage, so in such situations, liquididate your position into the stops not ahead of the bids or offers.
The sharp price move was caused by thin liquidity, which is common during news events. Most participants withdraw their near orders so price movements will be volatile until it hits a larger cluster of standing orders.
Thank you, Dali! Good point.
Please have a look how I shorted AU today (thanks to AUD still negative sentiment) www_screencast_com/t/0vXpovSdWZ0. I think I put my TP correct now.
Still struggling with my entries. I was a bit late to enter I think. If you look into this trade on 5min chart www_screencast_com/t/5acTKVJkmd you see that I was trying to enter at local breakout downside. Actually I was waiting for small upside retracement after breakout which did not happen. Also I am still amused how attackers of the stops are happy to chew all those bids (buy limit orders) in front of them?
Thank you
Itâs ok. If youâre doing well identifying sentiment and stops that are likely targets, youâll get better at picking entries with time.
There is a large barrier option reported at 104 and it seems its the 97/104 DNT that was so fiercely protected when we traded near 97, so there should be a decent amount of selling interest ahead of the 104 level. I shorted it earlier at 103.50 for a quick 50 pips retracement to 103, looking to sell again at 103.60-80.
Hello dear traders!
I am seeking your advice on EU setup.
Sorry for placing the chart here.
Is it worth to play? What SL and TP?
Thank you
"Order flow in forex trading " quite a analytical job and a bit tough,but you have focused very well about this topic with some very points.thanks for sharing all about the Order flow.
Very interesting approach, continue to focus on
[QUOTE=JimReddy;493266
âŚI am seeking your advice on EU setup.
âŚIs it worth to play?
[/QUOTE]
Hello dear traders!
Back to my last post. Would like to hear your opinion on the development in EU reflected in that chart. The main point which drew my attention was large sovereing offers at 1.2910/20. But when using Stop Fade Tactic we enter at weak stops which is not the case here. At the same time ââŚmarket as an organism to go both ways and to eat the accumulation of orders before it moves to another point of equilibrium (it is between the lines but market makers are not bear nor bulls they eat market orders to exist)â (Copyright John Last).
So, can we exploit large sovereign orders as target as well as obviously sovereigns want them to be filled and might help market makers to do this?
Please see my chart with the questions eu_24052013-5am-BP - JimReddyâs library
Thank you
Hi Jim,
Before I answer, please note that I did not trade EUR/USD the past few days, so I this is just my hindsight analysis. 
Sentiment was unclear after the Bernanke speech, a combination of both broad risk-off environment and USD long covering. In my opinion, we should always wait for a reaction to those reported, large orders before we take any action. Even if the info is correct most of the time, we can never be sure. If the buy flow is strong enough, those offers can be taken out easily.
Look at how PA reacted to the offers. We saw several small rejections off the 1.2920 level, but it remained still well bid as we hit 1.29 level. The breakout was the final confirmation that flows are EUR-positive and we proceeded to take out the stops.
So, my advice would be, always wait first for a reaction to the level before taking action, especially if sentiment is unclear.
But you are asking good questions my friend and you got the right mindset.
Hereâs an example for USD/JPY. There are large bids reported between 101.20 and 101.00, with sell stops below 100.80. The first test was successful and I will monitor now how PA will develop further. A re-test followed by another rally higher would be a confirmation that buy flows are stronger and we could head towards the buy stops above 101.80.
Two Japan life insurers - Taiyo Life and Daido Life - are sitting down there.
They have been feeding their orders since Tokyo Open. Options are placed at 101.00/50 and 102.00 levels for protection. Itâs a 50 pip - 100 pip range they are looking at to get their - Good After Time (GAT) Orders / Good-Til-Date/Time (GTD) Orders - placed.
It wouldnât surprise me to see orders shuffled again after 10am NY Option cut.
Weâll know soon enough who is holding the ace card.
You working for a FX option desk or got a friend there? 
Thanks for the info.
Applying Order Flow Techniques on the Charts - Part II
In the last article I described the process of finding large stop clusters on the charts. Now, I will try to explain how I read price action with the Order Flow mindset applied.
So why do key support/resistance levels work most of the times? There is psychological attachment to them! Letâs take EUR/USD for example. 1.2980 to 1.30 is currently strong resistance and sellers are lining up offers there in anticipation that the level will hold. Traders that are short EUR/USD are watching this level closely and a break above 1.30 would be painful to them. Just think of the situation where you feel quite comfortable with a position and think it will run further in your favor and then suddenly you see a sharp move which takes out a i.e. key resistance level. Even professional/institutional traders have such situations where it doesnât make sense for them to hold a position further.
As the 1.2980-1.30 zone is an established resistance zone, EUR/USD shorts are watching it closely and how price action behaves in the zone can largely influence market sentiment. If we get another run into 1.2990, but it fails to even reach 1.30 and drops back quickly, the bears will feel renewed optimism. Bulls on the other side will feel frustrated and will question whether their EUR/USD long position makes sense. Stops are building on both sides and itâs just a matter of time until it becomes clear which side has the upper hand.
What if we get a breakout above 1.30 and stops from EUR/USD shorts get triggered? Bulls will have gained the upper hand in the short-term as they cleared some of the shorts, but much will depend on price action after this event. Most important of course, are fundamentals. But then, are the dips well-bid compared to the selling that occurs at the rallies? Are bulls showing a strong initiative to keep price above? A false breakout followed by another drop would mean this was just a short victory for the bulls.
To conclude: When trading you want to think about the other participants and what they are likely to do in a certain scenario. Sentiment analysis can give us a very good edge and it can compensate if you struggle a bit with understanding fundamental analysis. Price action can also reveal a good amount of information - keep an eye on how the dips and the rallies look like. If we have small rallies, but strong downmoves, the bears are in control.
Stay tuned for Part III.
Very nice thread you have going here Dali 
I have a question about sentiment analysis, where do you start? Are you able to give us an example of how you came up with whether sentiment was positive or negative for a currency pair? I learn better by examples 
Hi stinsfire,
I start by checking the relevant headlines on Reuters, Bloomberg, reading the opening reports on OrderFlowTrading.com and then write down what I perceive as prevailing sentiment for each major currency. All resources you need for sentiment analysis are available for free, so there is no need to subscribe to any services with in-depth analysis. When I was a beginner in OFT, I found it more useful to focus on the key headlines and topics traders are talking about.
When you got an idea about sentiment, compare it to price action, make brief notes and see at the end of the trading day if you got it right. Again, donât get confused by all the intraday noise, but focus first on medium-term sentiment.
Since youâre from Australia, the AUD:
Hope that helps a bit
That does help clarify that aspect, so thank you
I would also like to see more trade examples, not just from you Dali, but from other participants in this thread, myself included (eventually, when I start to get the hang of order flow analysis). I think this is a very interesting topic and I think this thread has great potential.
GBP/USD looks like another good example. Overall, USD is strong across the board and central bank expectations indicate we will see a stronger Dollar in the near-term. GBP sentiment is negative and therefore I consider selling upmoves the appropriate strategy. 1.5070-1.51 is a key resistance zone and a rejection would mean bears have still the upper hand and their stops are not threatened currently. There is barrier option at 1.50 with demand ahead, but I think once down momentum picks up and the USD rally gains steam again, it will not be a major hurdle.
I got in at 1.5069 with a take profit @ 1.5000
Price started falling as expected and I thought of leaving it till it hit the 1.5000 level.
Came back to my desk after a few moments and price was at 1.5040. At first I was quite satisfied but something was urging me to get out of the trade. So I got out at 1.5036 with a profitâŚand then **** hit the fan!
Thatâs called a great intuition!
Seems the moves in the major pairs were mainly driven by profit-taking from USD longs, no news or change in fundamentals. But still, we should be careful in such situations. Better to wait for the markets to settle a bit than catch tops/bottoms.
