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Old 04-21-2011, 07:34 PM   #1

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Order Flow Advice

How do people learn to read bid|ask footprints/orderflow? Do they only look at footprints at key levels or can you trade with just footprints without looking at candlesticks/barcharts by just 'going with the flow'? Is the best way to learn by just staring at it for hours each day?
Any advice appreciated. Thanks.

-Paul
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Old 04-21-2011, 08:58 PM   #2
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Re: Order Flow Advice

Quote:
Originally Posted by pbylina »
Is the best way to learn by just staring at it for hours each day?
Any advice appreciated. Thanks.

-Paul
Regardless of what you are looking for, thought is needed. Just looking and staring and looking for answers wont help (thats what the magic of TV is for )
look to test ideas, look to confirm ideas and look to see when things work - and dont work, based on your theory of the markets and for why you think they should work.
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Old 04-21-2011, 09:53 PM   #3

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Re: Order Flow Advice

Quote:
Originally Posted by pbylina »
How do people learn to read bid|ask footprints/orderflow? Do they only look at footprints at key levels or can you trade with just footprints without looking at candlesticks/barcharts by just 'going with the flow'? Is the best way to learn by just staring at it for hours each day?
Any advice appreciated. Thanks.

-Paul
Go to the CBOT website...
they have lots of free material on Market Profile

that is a good start.
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Old 04-26-2011, 01:08 AM   #4

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Re: Order Flow Advice

I learnt how to read the footprint from http://www.ioamt.com. Some other helpful sites are Discovery Trading Group & L2ST - www.inthetradingzone.com - L2ST - www.inthetradingzone.com.
They all use a footprint chart.
Market profile sites:
http://www.cmegroup.com/education/interactive/marketprofile/handbook.pdf
Market Profile
Articles by James Dalton | Free resource to understand Market Profile and James Dalton’s approach | James Dalton Trading

The footprint is most productive at key price levels. I use bar charts and point & figure charts, but the footprint is my final entry tool. Keep in mind that reading order flow is an art form that takes time to master. I do know someone who used a small time frame chart to learn the patters, but why bother with that when you have good teachers out there.

Also, take everything you read on the trading forums with a grain of salt, including this post.

dVL
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Old 04-26-2011, 12:55 PM   #5

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Re: Order Flow Advice

Paul

As with most things in life, how you approach this depends in part on what you are trying to do..

If for example you want to learn to trade equities, you will probably need to learn to read the DOM ("depth of market" display). It has become difficult to navigate and you will need to find a person willing to spend time showing you the ins and outs of that system.

If you are interested in trading futures, in my opinion the best method is to "read the tape" which requires that you learn to monitor a "time & sales strip" as well as the NTSE tick and volume. The tick and volume are used to to support your trade decisions as you "read" the time & sales strip.

Finally, if you have MarketDelta you can (eventually) learn to read either their "footprint" charts or their multi-line "break" charts...and again it takes time to learn and you will need to find someone knowledgeable to show you how it works.

Here's what I can tell you about this...first, it is difficult but certainly not impossible, and you will need to spend considerable time getting accustomed to seeing the data displayed, learning a system that works, and then practicing until you acquire some proficiency...Second, even when you have "learned" to use these tools you still have to have a framework on which to base your trading decisions. In other words, tape reading is a tool that you use to try to obtain favorable entry, but by itself it isn't a viable system (just my opinion).

I know these methods and after long years of trial and error I would suggest your best odds of success lie with learning to read the time & sales strip (also called "reading the tape")
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Old 04-26-2011, 03:04 PM   #6

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Re: Order Flow Advice

Quote:
Originally Posted by daVinciLite »
I learnt how to read the footprint from http://www.ioamt.com. Some other helpful sites are Discovery Trading Group & L2ST - www.inthetradingzone.com - L2ST - www.inthetradingzone.com.
They all use a footprint chart.
Market profile sites:
http://www.cmegroup.com/education/interactive/marketprofile/handbook.pdf
Market Profile
Articles by James Dalton | Free resource to understand Market Profile and James Dalton’s approach | James Dalton Trading

The footprint is most productive at key price levels. I use bar charts and point & figure charts, but the footprint is my final entry tool. Keep in mind that reading order flow is an art form that takes time to master. I do know someone who used a small time frame chart to learn the patters, but why bother with that when you have good teachers out there.

Also, take everything you read on the trading forums with a grain of salt, including this post.

dVL
Thanks. Whats a point & figure chart?(I think I heard a lot of people use it with order flow..)
Yes, I assume it would take a lot of practice/time to be really good. Like learning a musical instrument(which is an art also).

Any opinions about Constant Volume Bars?
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Old 04-26-2011, 03:58 PM   #7

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Re: Order Flow Advice

Steve,

Quote:
If you are interested in trading futures, in my opinion the best method is to "read the tape" which requires that you learn to monitor a "time & sales strip" as well as the NTSE tick and volume. The tick and volume are used to to support your trade decisions as you "read" the time & sales strip.
Yea, Im interested in futures. What is "NTSE tick and volume"? Why is the Level 2/Dom not important(just asking)?

Quote:
Finally, if you have MarketDelta you can (eventually) learn to read either their "footprint" charts or their multi-line "break" charts...and again it takes time to learn and you will need to find someone knowledgeable to show you how it works.
I will be using MarketDelta. What are "break charts"? Would you consider the 'footprints' better than "Time and Sales"?

Quote:
Here's what I can tell you about this...first, it is difficult but certainly not impossible, and you will need to spend considerable time getting accustomed to seeing the data displayed, learning a system that works, and then practicing until you acquire some proficiency...Second, even when you have "learned" to use these tools you still have to have a framework on which to base your trading decisions. In other words, tape reading is a tool that you use to try to obtain favorable entry, but by itself it isn't a viable system (just my opinion).
Ok, around key levels of Volume Profile, Pivots, etc.

Quote:
I know these methods and after long years of trial and error I would suggest your best odds of success lie with learning to read the time & sales strip (also called "reading the tape")
Ok I will try.

Heres a cool interview of a guy who uses Order Flow:
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Old 04-26-2011, 04:19 PM   #8

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Re: Order Flow Advice

A little knowledge can get you in trouble, but here is an example from the ES today. The point and figure chart took out all the noise in the market so I could see when buyers really stepped in and drove price higher. Then on the pull back (an entry point) buyers came in at the same level and pushed prices back up. We could retest the high again.

The market profile told us to go with any breakout today, either a breakdown or breakout. The P&F chart would of told you to stay in a long position as price never down ticked more than six ticks until 1346.

No opinion on volume bars. I try to keep it simple.

If an am going to compete with institutional people like Steve, I need a real edge. LOL. Sorry Steve.
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Last edited by daVinciLite; 04-26-2011 at 04:29 PM.
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