Hi guys,
I have been reading allot of Darkstars posts and discovered this order flow stuff very interesting.
So I have been searching around the net for Order flow information and only discovered things about tape reading and level two orderbooks etc but here's my take on it:
Considering that the FX market is OTC, there's absolutely no center orderbook or whatever I need to call it. What we have is FXCMs orderbook, OANDAs orderbook etc. which wont help at all because no huge banks or large indivduals exchange their order thru those small retail brokers.
Now, the next issue is that the FX market moves so god damn quickly, how would ANYONE be able to process all that quickly moving data and reading a fake hand on bid/offers to take a counter trade?
What this boils down to is really my question, is there any method of localizing at which the orders MOST LIKELY will be ON A CHART.
That I ´ll give you an instance, as a rookie: I think as a FX loser. And this was portrayed to me by the market in a manner that made me think what the FUCK are you.
That is what occurred:
The market trended down strongly, then was in a consolidating or congestion, easily drawn by two horizontal lines.
Fair enough I thoughtI put up an upper and lower horizontal lines that also created my borders.
As intelligent as I am, I put up breakout orders BOTH directions (I know, I'm a sharp, covetous little kid. . Trying to ch both movements!!)
So how does the market humiliate me? Well it trades up and strikes my order I'm positioned LONG. Up a couple of pips and moves waaay down and strikes my stop-loss at the bottom boundary (remember the two flat lines?) .
Exactly what does this tell me?
That informs me that I am STUPID. That tells me that my entry was somebody elses short and my stop-loss was somebody elses take profit. It almost feels like somebody took my girlfriend.
So this made me think, I have seen allot of traders using order flow in the stock market (clearly because it is easier because it is centralized) and almost all other markets but not the FX.
Let us say it is not possible to use a order book in FX: how would we go about order flow? Are there any possible method of thinking about where the orders may lie?
The first thing hits my mind is that there should probably be stop-loss order below a consolidation range. And there should be some market orders SHORT.
And reversed, there should be long order over the range, attempting to ch a breakout.
But this can't be it, can't it? There has to be something more! (Ofcourse I understand there is no way of knowing 100% at which all the orders are).
So this is my take on what I have discovered on order flow and I am looking for more, it sounds extremely interesting!
And hope you men (n' gals) will help me out here, the way to think in which the orders must be and possibly point me to the path of getting more information about order flow.
Thank you and trust you had a great new year celebration!
PS. Except for the English, if you do not understand what I mean that I will attempt to explain it more.