Hi fellow traders,
I need clarity on how some traders claim to trade like big banks and use unfilled orders to predict market points.
- How can we spot the unfilled orders ?
or is it just a fancy name for demand and supply zones?
Just high timeframe support and Resistance really and best guess
2 Likes
Every tradeable market on Earth is comprised of “unfilled orders”.
Price only exists because someone decides to hit the bid or offer.
When orders are consumed at a price level, the market moves from one bid/ask to the next.
“Trading like the big banks” is an incredibly vague statement.
Just like us retail traders, all banks have vastly different trading strategies.
If you see photos/videos of floor traders and brokerage desks/rooms with manual trading today (not the majority), you’ll see most are using a DOM as their primary tool to interact with the market.
The DOM provides you with the visibility to look behind the charts / curtain and see the true order flow and market structure.
1 Like
For me it’s a combination of the correct use of a few key indicators, combined with years and years of looking at the charts. It’s hard to articulate this particular point, but it becomes obvious after a while and I feel I’m at the point where the next few minutes in the market almost becomes blaringly obvious. And you know you’ve done it right when you enter a trade and it moves 40, 50, 60 pips in your favour in a matter of minutes.
So call it what you will, but there are most definitely price zones with explosive power.
1 Like
there are most definitely price zones with explosive power
If you had to summarize how you find them before price actually touches it, how would you do that?
1 Like
Good question. One of the most reliable ways I’ve ever found is for price to pull back and hold above certain moving averages. They mark the line in the sand where institutional traders are forced to decide what to do next because statistically that’s as far as a retracement is expected to go. Any further and the trend reverses or a range starts. These same levels line acts as dynamic support or resistance. It’s almost uncanny how they line up with other structural support and resistance as well, adding even more weight to the level. I hope that makes sense?
3 Likes
So you’re waiting for “price to pull back and hold” to identify (aka confirm) the zone?
Unlike stocks or futures, which trade on centralized exchanges, and transaction data is transparent (outside of dark pools and other off-exchange venues), FX is a decentralized, OTC marketplace.
Due to the inherent structure of FX, it’s difficult, if not almost impossible, to see the “true” order flow in the FX market.
Not only have market participants become more diverse, but trading venues have been multiplying.
So due to the increasingly complex and fragmented market structure, trades are now executed across a large number of electronic venues.
You would need access to all the central limit order books (“CLOBs”) of all these separate venues to get an accurate view of order flow.
Even if a retail trader had access to an ECN (which is difficult unless you trade large), that would only be just one out of many pools of liquidity.
What makes it even more difficult is the rising trend of the big banks pushing their own “single dealer platforms” (or “SDPs”).
Banks prefer their clients to use SDPs due to the obvious reason that there is no competition from other liquidity providers (“LPs”) to capture the spread. This allows them to internalize client orders and wait to offset against opposing client flow.
The more client orders that a bank can offset internally, the less the need for it to “go out into the market” (primary venues like EBS Market and Reuters Matching that provide “price discovery” to the overall FX market) to hedge any imbalances in terms of net risk exposure.
More internalization means that there are fewer trades made visible in the broader marketplace, which means less order flow information.
Through their SDPs, the big banks get to keep all this order flow information to themselves. This proprietary “intel” gives banks an informational advantage that normal traders will never have.
4 Likes
It’s a confluence of certain pivot points, moving averages and support and resistance levels that line up in a way that forces the market to make a decision. A break through and the market sentiment changes, a hold at the level and the current sentiment is once again confirmed and continued.
That sounds like Fibonacci levels, as opposed to moving averages. Is that correct?
Hi, No I definitely mean moving averages and moving average bands. When price has moved so far away from certain longer-term moving averages it always returns back to the “mean” fair-value price, and this price is indicated by… you guessed, it the moving averages.
They mark a line in the sand so to speak for how far price can still pull back without the current trend sentiment changing. If it holds, the sentiment remains. If it breaks, the structure of the market changes to ranging or reversal.
Fibonacci can be massively useful, but I only use it occasionally for confirmation of possible targets.
1 Like
Pippo- agreed! The context of that quote was not a commentary on using some type of order flow tool to trade FX. The original post on this thread was on how professional traders trade. My take on that answer provided some insight on how floor traders back in the day (even some today) utilized the DOM.
If you watch any financial network, or interviews with investment strategists on brokerage floors/trading desks you’ll see literally everyone has at least 1 DOM up. 
It’s good to understand what the DOM represents at a high level because it could help solidify the basics of trading.