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Attachments: Discussions on Order Flow/Volume
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Discussions on Order Flow/Volume

Quoting DonPato
{quote} What you so aptly described is very typical of market behavior and as you have noted, it occurs right before the very move you wish to catch. Since you are only watching the DOM and even that has only 5 ticks above and below the last transaction, it is difficult to know if the market might be preparing for a reversal or a continuation...on such a micro level these clues are very hard to find. I would humbly suggest you that using some from of charting might help you "bias" your entries with additional data. So what happens in your description...
^^ This will do for me.
Thanks for the time!
A trade should be based on an assumption based on facts
I have a question not related to Order flow.

Your previous advice on watching a chart along with level II worked well. Thanks.
A trade should be based on an assumption based on facts
Attached Image (click to enlarge)
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Monday and Yesterday's price on GBPUSD.

Monday has ended with huge selling but price has stalled through out Tuesday.
Tuesday volume (yellow arrow) was also high comparing to its price response.

I am assuming there is an absorption happening.

Edited : Don, I also want to ask about how do you decide if you are wrong or not. I assume that you evaluate your current trade based on development of order flow.
So when you are wrong, do you close your trade before your stop get hit?

Attached Image (click to enlarge)
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As an example, I attached a hard sell on 23/7/2019. I think this is one kind of absorption? Again, the yellow arrow on the right point to that day's volume.
After that the price continue to go lower quite fast even after 26/7 which is not shown on the chart I attached.

Question is, will you see that you are wrong by looking at order flow between 23/7 and 26/7? What do you see in any graph that might change your mind?
Pay attention to what specific effect this has on the actual transaction?
Quoting Antth
... I am assuming there is an absorption happening...
Yes in your screen shot there was some absorption occurring...buying liquidity was stalling the price advance...This may be a clue to future price rise...IF (and this is a BIG IF)...sellers give up. But as you can see, price did NOT rise. It kept pounding away at that buying liquidity, and it was the BUYERS who have up, and price continued to fall.

So this brings me back (once again) to this concept: How does price respond to the order flow? THIS is the key concept. If price is not responding as you think it should then something is wrong.

If I may also take another moment. I have said this before but it just doesn't seem to sink in on this forum. Order flow trading is NOT (I repeat "NOT") some superior form of technical analysis...yet many here seem to approach it from this point of view...you look for "signals"...or "triggers". It just doesn't work that way. You MUST observe the order flow AND ALSO watch how price is responding to it. If you see some heaving selling at the bottom of the day's candle...that is a possible sign of exhaustion...but has price really responded to it yet? In your case NO. Sellers kept pounding away at the buying liquidity until it was all used up or withdrawn. and price dropped again.

You can use these clues to show where the "real" level are for your concept of resistance and/or support. You can bet that on the way back up...this same area will produce some active order flow...and again...how price responds to it will tell you what to expect.

Quoting Antth
...Edited : Don, I also want to ask about how do you decide if you are wrong or not...
Its not rocket science...I lose. With the way the market has been lately...with the issue with Ukraine...I have been doing a bit of that lately. increased volatility in the markets has caused everyone I know to take a step back and perhaps some time off until this volatility settles down again.
Do more of that which succeeds and less of that which does not - Dennis Gar
Quoting katienotcat
Pay attention to what specific effect this has on the actual transaction?
This is exactly right...how does price respond?
Do more of that which succeeds and less of that which does not - Dennis Gar
Quoting DonPato
{quote} Yes in your screenshot there was some absorption occurring...buying liquidity was stalling the price advance...This may be a clue to future price rise...IF (and this is a BIG IF)...sellers give up. But as you can see, the price did NOT rise. It kept pounding away at that buying liquidity, and it was the BUYERS who have up, and price continued to fall. So this brings me back (once again) to this concept: How does price respond to the order flow? THIS is the key concept. If price is not responding as you think it should then something is wrong....
I have learned a lot from your posts on the market structure and order flows.

I have developed a semi-automated trading system for risk-averse retirees that generated daily income by trading symbols whose 2-way trading costs are lower than 1 pip or 1 tick or 10 points and are volatile (2% ADR) and mean-reversion tendencies. DAX index is a fit candidate. I am sure the system will benefit from your practical knowledge since trading plans are drawn manually and execution of orders is done by bot or algo.
https://www.forexfactory.com/thread/...verse-retirees
Practice makes a person perfect
Quoting bhardeman118
To be honest order flow is really mitigation and mitigation is just order flow. 99% of people trade completely wrong. This video actually shows how to properly identify order flow and it shows you what order blocks are and how to trade them. in its simplicity, the video actually shows you how to trade like the banks to. I must say this got me started off on the right track. Good luck everyone ! https://www.youtube.com/watch?v=hwiUDKU9wgE&t=9s
Just do not buy this guy's course. Their discord group is completely abandoned and you get zero replies and even less support.
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