Many traders think Order flow trading is all about watching
the order book and making decisions. System peddlers and snake oil vendors are
responsible for this misconception. I don’t think it is possible to trade the
markets looking at the flickering DOM of our trading terminal. Algo trading
super computers can feed, modify and cancel orders in milliseconds and many of
these actions are for deceiving retailers and other Algos.
Looking at the order book of any kind is not the way to
proceed. Traders are creating order flow by feeding the orders. Conventional
technical analysis does not address this aspect. Deconstructing the logic processes of
other participants is the way to go.We must learn to operate inside other traders OODA Loop.Real trading is metagaming. It is engaging the other players.
For me Order flow analysis is a mindset. It is anticipating
future orders and making decisions on it. I don’t think we need to see the
actual orders on our DOM to do this. It is all about projecting the future
price move based on other trader’s behavior.
Market is a place
where count less traders executes countless strategies at the same time and it
is very difficult to anticipate their future actions It is very important to
know who is in control of the market at the moment. Day traders, swing traders
and investors react differently to a situation. For example you might have
noticed that when higher time frame players dominate, Decision Points will not
work as expected. Our method work well when the day trading brigade controls
Real order flow trading involves anticipating where large
enough traders are going to enter and exit en masse and acting there without hesitation
allowing their orders to move our position to profit. Always think order flow.
We need to enter where there is enough order flow to support our direction and exit
where there is opposing order flow.
Patterns and setups are not that important. Trading is all
about people, their decisions and orders.
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