Someone posted this on facebook and besides what a marvel it is, it made me think of orderflow…lol
[QUOTE=“Sweet Pip;593071”]Someone posted this on facebook and besides what a marvel it is, it made me think of orderflow…lol Video Link: http://vimeo.com/31158841[/QUOTE]
Spectacular… Nature’s representation of a NFP Friday
An investor may read that and think that their particular order isn’t big or modified enough to get special treatment and that no one cares about its existence.
Liquidity is a very important aspect in dealing, especially for huge investors. The more fluid a industry is, the more it will entice other investors. Large investors cannot basically think about how much cost will shift, but also how they will get out of their business when plenty of time has come. This is not a issue for us retail store investor, but definitely a key aspect for those dealing big quantities of cash. Market purchases eat liquidity offered by restrict purchases. They are purchases released to buy/sell a particular resource at the present rate. A buy industry purchase will be loaded against the best provide and a provide industry purchase will be loaded in comparison to the best bid available. Market purchases take away liquidity from the industry as the individual that problems them wants to business instantly and consumes available liquidity via restrict purchases.
Thanks!
Rvdmarkets
Most speculators, especially in the retail forex market are attempting to place directional trades.
Very interesting approach. Will follow this thread.
Hi Dali,
Thanks for this thread, i have gone through this thread but i am not clear on some of the concepts so,can you please help me with below topics
1.Here the discussions are going on the bid/ask price but what is the current price which shows in the mt4.is it the average price of the bid/ask price(suppose bid/ask is 20/24 and current price is 22.)
2.How the pirce changes when the limit orders triggered .I am speaking about current price not bid/ask price.
Bid Price ask
80 10
79 10
78
77
4 76
5 75
19 74
20 73
In the above chart what is the current price (not bid/ask price)
3.In the above table what happens when all the ask orders get filled at 79.what will be current price then.
4.In the above table let us assume that half of the bid orders got filled at 76 and some one else has placed bid limit order at 77 when half of the orders got filled at 76.In that case whether it fills the orders at 76 and then it goes for orders at 77?
In the above what i mean about current price is present price which will be increasing or decreasing.like current might be 10 and bid/ask will be around it like 9/12.
Thanks&Regards,
Lifeboat
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current price would be the average of the bid/ask price. The difference in bid/ask is known as the spread. If a spread is too large is does not create an advantageous market. Therefore the MM will try to keep the spread down to entice both buying and selling. Or increase the spread to discourage buying/selling.
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limit orders would not tigger a move in your scenario (they are merely pending) as the spread is too far apart to make a deal based on the unbalanced model you have shown. however a market order (immediate order) in one direction could… Depending upon the size of the order the MM would try to utilize a combination of limit orders that would benefit the MM.
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if limit orders are exercised at 79 in your scenario, there would most likely be a liquidity vacuum behind that price, meaning price would drop and absorb the limit orders below until supply overtook demand. Again, the spread would determine how traders would exercise this scenario.
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you’re asking the same thing again in a new way maybe this will explain… What you need to understand is that supply and demand at whatever level will dictate the price. I.e. If their is more desire for higher prices, then prices will move higher, so long as there is supply to support the move higher. If there is no supply, price cannot move higher until a sufficient supply is available to those seeking the higher price.
Thanks nill for the clarification.
But I have one more doubt suppose i have 100 buy stoporders at 90 price and 100 sell limit orders and currently we are at price level 88 and gone to 90.Is spread becomes zero at that point? and also how price will be reversed when MM force to trigger the buy stop or sell stop orders.
Thanks and regards,
lifeboat
Please rephrase.
Edit: I think you’re assuming there is only one market maker… There are many intermediates who will offer buy and sell limit orders at many different prices, this is one of the basic tenants of market microstructure. The spread will never be zero as the dealer would not make a profit.
Think of it as a large network of interconnected brokers. If you have an order your broker cannot/will not cover because of internal liquidity; they can contact another broker who may be willing to cover that position, or has an order that can be paired against it, if there’s a difference in price that supports a profit for the brokers then all the better for them.
Fascinating Topic Dali i am really enjoying it so far, have subscribed and will look forward to trying to let it soak in. i particularly like the fact it delves deeper into the drivers rather that just Technical analysis which is really all i have focused on in my trading but the things happening behind the scenes often give an impression someone is watching over your shoulder just waiting to get you.
When you refer to market sentiment are you referring to for instance a Weekly chart for trend of more of a fundamental approach?
Keep up the good work appreciate it
Cheers
Crow
Dali, still wading through it. I managed to answer my own question below by reading the material! Can see how it is already changing my thinking. One thing i have picked up is the need to be on top of the news which has been actively discouraged in the past by a certain group i was following. Seems to be easier to make smaller profits and get them off the table than sit there on larger TF and getting knocked around waiting for larger moves.
Keeping it simple, the ‘current price’ is the price last traded. The highest bid and the lowest offer is the spread.
If limits at 79 were all consumed and no one placed higher bids, the spread would be 80/76. Current ‘fair value’ is the average between the spread(best offer vs best bid)
News is discouraged too much as traders get frustrated when good news turns a market bearish & visa versa.
It helps to pay attention to what news will impact.
ie; Australian Retail Sales may come in worse than expected, and a CPI (inflation) increases, so the market may take that bearish tone with the retail sales but the RBA is looking directly at inflation figures to cut or hold rates so the selling would be met with informed buyers that know this. Orderflowtrading.com posts bank reports that go over news releases and projected market impact.
Not all news is taken same by the market! Good trading.
Hey Bro, you know I have been trying to follow along with you guys on the orderflow forum. But its hard to keep up. Everyone is having there own conversation and doing their own thing and its hard to learn. I am still having trouble reading sentiment and it feels like no one can answer my questions with straight forward answers.
It now seems as though the forum and chat is pretty much all about making money off of teaching order flow , Granted the price darkstar is charging isn’t that bad for what he is teaching, the chat isn’t much help when its pretty much a social gathering for those who know and understand what to do all ready.
The questions on how to read sentiment never gets answered. "It’s well look at the news, read this website… it means nothing to me if I cant enterpret what it means in terms of taking a trade.
I mean understanding sentiment , but the news is after the fact and no one has taught how to interpret what the news is saying. I am just frustrated and the fact that I am not able to be online in the am and chat with you guys, it makes it more difficult for me to pick up on whats going on. Now I read the forum and darkstar says that there are many successfull traders that are trading full time from his teachings. Are you one of them and how many guys are actually making consistent profits and have quit their day jobs?
Or is that just all marketing and promoting hype to sell a service?
Not trying to attack you or the forum or anything, so don’t take offense to my rant.
Now I understand how to find where price turned, now in essence that’s where stops will be placed,marking off these supply and demnad levels is pretty much easy. The problem is knowing if to buy or sell when price is approaching or leaving these levels. The sentiment reading is my problem. All the economic data to process is over whelming to me, what is significant to look at and whats not. That’s my hang up, ever since.
Thanks so much to all who are making this information available! I am still in the process of going through the “School” tab of the BabyPips site, but have also subscribed to the newsletter which led me to this forum - what a fantastic place to learn. I want to continuously learn as I trade, and eventually help others. While I consider myself to have a better-than-average financial industry background, I’m definitely a newbie to FX trading & love what I’m learning - hoping this will lead me to be among the 5% who can do this full time. Question to Dali = do you ever use Fibonacci levels to find good possible “stop hunting areas”? Thanks, GainsMax
Hello Dali et all,
This thread is really awesome.
I believed the indicators are just derivatives of PA and merely depict the numerical values of bid price.
Moreover, they cannot reasonably explain the intention of other participants of the game taking opposite side of trades.
Finally, I got some insights of what’s going on behind the charts.
First, I’d like to thank you for your disinterested and selfless concern for the well-being of others (which some dictionaries describe this as altruism).
I’d love to see this thread continue.
Thanks again mate.
And, let the big pips be with you. 
Hey Dappa,
i’ll try to answer your question.
First of all, sentiment is not for entering trades. Sentiment is for understanding what the market is thinking about that particular asset (positive, negative, mixed). How to do this (without falling into analysis paralysis)? Follow the main themes of the market. The Taper, Abenomics, RBA less dovish are just some of the themes i’m keeping watch on.
You will know whether the sentiment is positive or negative based on the price action of the main asset (so the futures of each single currency if you’re playing FX). Look at a large 4H chart: is price clearly going up? Probably sentiment is positive. Is the large 4H chart choppy? Sentiment is probably mixed. Is the large 4H chart negative? Sentiment is probably negative.
Since sentiment is ingrained in price action, which is basically the representation of market psychology and how it’s playing out, then if something is moving well in one direction there is probably a good fundamental reasion for it (sentiment is clearly defined). Find the reason, and stay informed on it. There’s not much more required.
Entering trades is another matter altogether. It’s best to enter on uni-directional assets that are proceeding in a clear stair-step manner (showing momentum and clear sentiment). Then, identify clear reactive levels where stop orders usually accumulate around (prior day high/low, prior week high/low, big round numbers, evident swing levels) and then hop on board in line with the trend/sentiment with whatever price action confirmation you use.
But a lot depends on your objectives Dappa. We may both see that 1.3700 held up the euro between thursday and yesterday, but we may have executed in different places (close to 1.3700 which is the value area where stops were) and have different profit targets. That will also impact our stop loss and our trade management.
I hope this points you in the right direction, and clarifies some aspects of sentiment reading…
Where are these themes located, who announces them, where to look?
Thanks for the reply by the way.