ES Order Flow Trading

Just thought i'd share this youtube video of es order flow trading in case anyone else found it interesting

Thanks D-toast.

An estimate would be better than just guestimating.

Last week I mentioned your webinar in the ES thread....part two is today at 1p. EST. I appreciate you stepping into the lions den here but also not being bold enough to spaam us...here is the info for your webinar today for anyone interested:

To join the webinar, simply go to the following link http://www.topsteptrader.com/TradingFloor

Sign in as a guest and choose the "Lounge' room in order to participate in the Q&A Session following the presentation.


Many I talk with get turned off to order flow because there doesn't seem to be a large sample or evidence that the orderflow can really help us over time. If I was marketing an orderflow product that is suppose to work I'd want people to watch me trade as it happens over a period of weeks to get a feel for it and to see how often it helps and how often it hinders.

I've watched hundreds of orderflow and footprint videos over the past 5 years or so and it looks much easier on those recordings. Taking the trade as it happens is a whole other world.

Lets take absorbtion in the ES for example: Suppose we see lots of volume on the ask price but price isn't going up and price eventually rolls over to the downside - well how many times did we see absorption but it was a fake out and price kept going up ? That could have happened a lot but we don't usually see those failures on the recap videos. It may actually be a bad thing to look for absorption at highs in your chosen market.


This probably seems it's directed at you Peter but I'm only making a point that the order flow vending market currently lacks credibility especially to those of us who have been around. We don't need to discuss this too much here as other forums seem to have that covered. My comments apply to footprints as well. I'm eager to see more of what you offer. I'll be joining you today on the webinar and look forward to it. I enjoyed the first one.

Originally posted by dionysustoast

Originally posted by Lynx54

I've looked into that Jigsaw Trading. From what I can work out he's just pushing to buy his DOM and doesn't offer any training. Anything that's talking about additional software I'm staying away from. A couple of prop guys that I've spoken to say you just need a standard TT X Trader DOM, or a standard DOM that has the same features as X Trader, to understand a handful of concepts and what you're looking for, and then a load of screen time.

I thought my ears were burning!

As someone that sells a DOM, I can confirm that I do like to sell my DOM. Guilty as charged there.

I don't offer training because it's not my thing. John at nobsdaytrading does a better job than I could.

Be assured that if I did offer training, someone else on a forum like this would be slating me for doing that! This is the nature of forums.

I do give away free lessons which anyone with Google could find and I do help people out for free on a 1 on 1 basis. The amount of help is quite small because I just give people pointers and it's probably 3 or 4 people a month and an hour or two each.

The thing is, as you have pointed out, most of the learning process is having an idea what to look for and then putting in the screen time. There is no substitute for the screen time. Sometimes people ask questions and I give them the following "instructions"...

To get the most from it, I would advise the following 'training sessions' to quickly get you to the point where you can absorb the information.

1 - 60-90 mins per training session
2 - 1-2 training sessions per day
3 - No charts, no browsers, no tickstrike, no audio, no TV

Initially focus on the trades hitting into the bid/offer. The pace of the ticks up/ticks down. The amount of time it spends on the bid vs the offer. Areas that get rejected and most importantly the size at each level.

You will quickly get to a point where you can absorb that information and also you will see how the size is quite telling in terms of reversals. Once you can absorb this OK, then you can also focus on the pulling/stacking of orders as well as levels of depth that have exceptional quantity.

Do 5-6 sessions like this and then fire off questions.


Quite often, a week later, I get a question and based on that question, it is clearly obvious that they have not done the above. Some people just want to be told what to do and don't want to actually do any learning themselves.

To me formal training seems like a full time and painful job - who gets into trading for that?

In terms of XTrader - it's not a bad DOM but let's face it, it looks like Windows 3.1 and it costs $1000+ a month to lease. You can get it for free off a broker but then you pay thru the nose in r/t fees.

Because retail traders are basically lazy and because order flow is this years "Price Action", you will see lots of pretty tools come onto the market that offer you the opportunity to read order flow without reading order flow and without putting any effort in. Such is the industry.

Welcome to the Forum dionysustoast !

Appreciate your taking time to stop in to add your insight and fill in some details of your work.

I watched a couple of your youtube videos last night and was very impressed with the tool set you have developed. I have done a lot of order flow work, developed a few things to help myself get a better handle on order flow analysis, and thus can certainly appreciate the high quality of your order flow tools.

The iceberg concept, is that something you came up with or where did that terminology originate if you know ?

Also, I would like to hear your thoughts on how the character of the ES tape has changed in the last several years. Specifically, large block trades seem to be less prevalent on the ES tape today as compared with say 2 or 3 years ago. How does this affect your work, if at all ?

I just stumbled into another Order Flow product that is in the making...
http://orderflowdashpro.com/blog.aspx

Disclosure: I don't have any interests to promote this product.

Oh yeah,

Predicator ( he runs the site you linked) and D-toast battled it out a bit on Traders lab but I'm not sure what happened to that thread. A concern of mine is that I first saw the Bids and offers video because Peter posted it on Elite or Big Mikes...can't remember which forum he posted it to...now I see the bids and offers blog is giving a plug to Jigsaw-Peter on their blog. Back at ya !

These guys are taking care of each other ! Never like these forms of promotion as it makes it seem they work together now. still gonna watch Part 3 this Friday. Peter seems to know his stuff but so far I'm not sure I can watch a DOM to trade. I'm hoping he goes into some live examples on the last webinar and hoping the Traders Lab thread comes back online.

In the thread that you are referring to...there is "mediator" who seems to be egging on these two to go at each other...it was a fun read!

Originally posted by BruceM

Oh yeah,

Predicator ( he runs the site you linked) and D-toast battled it out a bit on Traders lab but I'm not sure what happened to that thread. A concern of mine is that I first saw the Bids and offers video because Peter posted it on Elite or Big Mikes...can't remember which forum he posted it to...now I see the bids and offers blog is giving a plug to Jigsaw-Peter on their blog. Back at ya !

These guys are taking care of each other ! Never like these forms of promotion as it makes it seem they work together now. still gonna watch Part 3 this Friday. Peter seems to know his stuff but so far I'm not sure I can watch a DOM to trade. I'm hoping he goes into some live examples on the last webinar and hoping the Traders Lab thread comes back online.

I have studied order flow for a while now and have created a few simple order flow tools along the way, so have some real life experience with order flow analysis. It is a subject that I find interesting and the study has been instructive.

To really understand order flow, we need context, meaning price structure. If you go back and watch Peter's video in the OP, and pay very close attention, he does explicitly structure his order flow analysis and trade setup based on the larger context of the price structure he is showing in the example. In his example he points out he is looking for a reversal of order flow direction (from sell side to buy side control) because the market at that time had dropped over 10 ES points in a directional down trend price move. Without that larger context, of a sell side trend washout and reversal setup, his anticipation of buy side control would have been random and essentially meaningless (of little or no statistical significance). Going directly to Bruce's point: staring at a DOM or some representation of the Time and Sales stream with no context or understanding of price structure is a complete waste of time and of no value to the student. If a student has a limited capacity to recognize developing price structure in real time, then staring at a DOM is not going to help that individual in any way. If on the other hand the analyst or student has a reasonably accurate understanding of the current market environment (where trade is taking place within the overall price structure), then the study of order flow patterns can be beneficial.

It is my opinion, in most cases order flow is the underlying force that creates most chart patterns. Once we understand this concept, then when we see a typical chart pattern form in real time, we will know what order flow to expect to complete and confirm the chart pattern, thus creating a trading opportunity, as demonstrated by Peter in his video.