Hi Salim,
After I publish my article about “Market Participants”, I will do an article about my chart analysis as OFT trader. I’m busy ATM, but I’ll do my best to get both articles finished in the next two days. 
Great!!!. Take your time mate. Will wait patiently. 
Participants in the FX Market
Before we dive further into the world of Order Flow Trading, we must be aware who participates in the FX market. While not all groups have the same characteristics, there are some most have in common. I will split the groups up and explain them all in more detail.
[ol]
[li]Dealers
[/li][li]Sovereign Names
[/li][li]Large Speculators
[/li][li] Real Money
[/li][li]Commercials
[/li][li]Retail Traders
[/li][/ol]
Dealers
Dealers are the main market makers for the FX market as they operate on the “Tier 1” level - the interbank market. A dealer quotes his customers a bid and an ask price and the difference (the Spread) will be his profit. As a transaction with his customer takes place, he takes the other side of the trade and can either get rid of his exposure via the interbank market or he can hold the trade if he thinks it will benefit him.
Dealers therefore can hold trades for speculation, but they usually close them in a short time period. They mostly finish their trading day without any open positions. Dealers are well-informed traders and have a good sense for short-term market movements, so it only makes sense for the banks to let them also do some discretionary trading beside handling customer trades. They participate in stop hunts, as I explained earlier in the thread, because they look to manage their book.
The network of dealers working for the top FX market-making banks build the “Interbank Market”, the highest tier in the FX market.
Sovereign Names
This group includes central banks and institutions like the Bank of International Settlements (BIS). Central banks operate in the FX market on a daily basis and when other participants become aware of their presence, they will pay a lot of attention to what they do. Asian Central Banks are one group within the Sovereigns that are often identified in the marketplace and news providers like Reuters are reporting about their business. Especially if things are rather quiet, they can have a strong influence, so keep that in mind! The “BIS” is an institution that handles transaction for other banks. The idea is basically that other CB’s can operate in the market without being identified. Nevertheless, any mention of “BIS” or “Basel name” in the news feed is worth paying attention to.
Large Speculators
Those are hedge funds, model funds (algo & HFT trading) and large traders. They are in this game for the profit and are the group with the greatest variety amongst members. Some trade intraday, some exclusively long-term and some combine all of this together. Model funds mostly focus on automated trading and volatility is something they love. Most of the hedge funds however, will look for stable trends to ride, like the current GBP and JPY downtrends. As they are leveraged players, they can feel the pain sooner when a squeeze is happening in the market. It is certainly not just the retail traders getting stopped out, large specs can be caught with a vulnerable stop loss too.
Real Money
They are called that way because they do not use leverage. Included in this group are mutual funds, classical investment funds and sovereign wealth funds. They are conservative and will generally either look to manage their currency exposure or, if speculating, look for stable trends. Hedge funds do too look for trends, but they have the ability to leverage up and switch to short-term trading if they wish to. As you’ll understand, real money funds that do not operate on leverage and cannot get aggressive, will not be able to operate that way. Real Money will be usually a bit late in a move, but their presence is still worth noting, as they look to accumulate positions. Example: Real Money accounts were quite present sellers in GBP/USD the past few weeks.
Commercials
Commercials (or corporations/businesses) are looking to hedge their currency exposure they have through their business operations, mostly due international business. Managing their risk is the number 1 task for them and not profits from speculation. Their activities can have an impact on the markets if they are trading in a big size, but they are not participants one should follow, as they are not profit-motivated in the first place.
Retail Traders
The number of retail traders that lose is hard to guess, but it is definitely high. The popularity of Technical Analysis (TA) led them to place their stops at predictable places and this can be exploited by Order Flow Traders. Even as the number of proven trading strategies shared free has increased over time, most retail traders lack the consistency and discipline to make it in this business.
I hope that gave you a good insight who’s operating in this market and some of their common characteristics.
Ben,
I appreciate the information that you are sharing with us here. Seeing that my knowledge of market structure and OFT is limited, I look forward to reading more. So far the structure that you are presenting seems well thought and progressive. I’m subscribing and patiently waiting to see how you approach trading with OF.
Again, thank you.
Excellent thread. Two thumbs up.
Hi Ben,
Thanks for Sharing I’m keen to see what you have in store for us.
Cheers,
Tave
Certainly… Highly Appreciated your work. :57:
This is fascinating reading. Very well presented. Consider me subscribed.
Highly appreciated of your work.
Thanks for the feedback everyone, I appreciate it.
Next article will be online within the next 24 hours.
Hi Ben,
I’ve been following your thread with keen interest and I must thank you just like others for all the efforts you put in it. You’ve really opened my eyes to what I really paid little or no attention. Thanks once again.
Cheers.
Nice explanation.
In order to be profitable, one has to participate to a large ecn and place his own bids and offers. No spread at all.
As far as I know, many forex traders use mt4 and are not in the real market.
So I don’t see what they could expect from order flow trading.
There is much more to say but this is enough to make everyone think seriously about trading conditions.
Some of my bids or offers are taken and others not. Things are changing fast all day long. So if I imagine someone behind his mt4 screen accepting the offer through the re-process of his broker and after paying the spread, I think it should be difficult for him/her to be profitable.
I’ll just mention this once, take it at face value. Try to avoid giving exact timescales to when you will provide further insight. People will chomp at the bit when it’s a missed deadline and this will be detrimental to how you feel about the thread.
Hello Dali) Thanks for sharing this and it,s quite informative.But i just can,t agree with the market fundmentals you mentioned here.Order flow is not the only element which is driving the forex market.What about those hundreds of news which are affecting the currency movements?What about the enonomic well being of the countries?What about trade balance and employment numbers etc .We retail traders are very small in no and we are not the ones who is mainly driving this market.Even for the biggest banks risk do exist as they don,t know about the order flow of other banks and the news and impact etc .Even you rely on the price action to get into the trade.And as a price action trader i do believe price is everything.
Good Thread Dali - full of very useful and well presented information.
yes mate price is every thing:61: but what drive the markets ? news ? or banksters or soverign names and large institutions ? news doesnt affect their positions , because in they cannot bet against each other, if they are willing to take the trend up or down news will have no effect @ them unless there is a disaster or war etc thats the only thing which can affect them, fundamentals are just only the catalyst to drive price in there favour where there are tons of orders are stacked…
And as a price action trader i do believe price is everything.
You can’t believe anything. Which is why whenever you commit money to the market you ensure you protect your capital in the event of things not going to plan.
yes mate price is every thing
What is price action?
What moves price action?
What is price action wholly dependant upon?
What shows itself as footprint from tick chart to monthly chart?
every thing is on the chart , and hope that helps, megacaps doesnt look for a pattern or a pinbar at swing hight and low !! the foot print is always in the charts if you know how to read and where to look and the rest is just a talk 
…
You didn’t understand the concept of Order Flow Trading. The execution of orders are ultimately what are driving the markets -> that is, what is moving price. What you mentioned above is reflected as orders are executed, i.e. a macro fund buying the Australian dollar as they believe the economy is improving.
I actually use fundamentals sometimes as part of my sentiment analysis. OFT is not just one way of trading, there can be many ways. I know some traders that focus more on the charts and PA and some which include fundamentals and sentiment analysis more heavily.
I don’t say PA analysis has no part in OFT, I use it myself, but OFT it is more of a mindset and understanding the market microstructure better, which will give you an advantage in the markets.
Random rant:
You are competing against other traders in the market and some of them are powerful players with a lot of experience and capital. Without losers, there would be no winners. Start thinking about how could you exploit the characteristics of other participants. Markets are all about fear and greed. As price moves, some will start to feel pain and will have to cover at some point. Hunting stops and initiating squeezes in the market place is not just about retail traders, professional traders also get stopped out or are forced to cover as the position moves against them. One of the most important thing my mentor Darkstar has taught me is that Order Flow Trading is a mindset that teaches you to exploit the weaker side of the market. You want to take the high prob opportunities and go with the flow.
Some questions to think about …
- What are the key themes in the market currently?
- Pick a currency and write down if current sentiment is positive, negative or mixed. What are the main factors driving current sentiment? You don’t have to be an analyst and you certainly don’t have to make it complicated. Follow a news feed or get some headlines from either Reuters, Bloomberg or Financial Times website. Keep it short in form of notes.
- What is price action telling you? As prices moves further, compare it to your sentiment analysis.
Think about the stops of other participants
Think about the characteristics of other participants
Don’t just see simple “Support/Resistance levels” … there is nothing magical about them, orders drive price action. Think about what it means for bulls if a key support level holds. Will they be accumulating further? Does PA indicates decent demand or are the upmoves quickly running into further selling? What if the level breaks, where does the pain start for the bulls?
I don’t want to make this complicated or confuse anyone, but in my opinion thinking more deeply about these topics is useful, especially for newbies. Eventually, I will cover this in more detail through the thread, but take some time to see the markets in a different way than you did before. When I just started with OFT, I thought about these themes and made a lot of notes and observed the markes. It was of tremendous help, but I overcomplicated things a bit. Then, I participated more frequently in the chat room of Darkstar’s website and through conversation with other, more experienced traders, I started to view things more clearly. Just make sure you don’t overcomplicate things!