Part III – Order Flow [Best Trade Timing Tool Ever]

nifty order flow chart

Hello traders welcome to GTTE, I am Dean and I am going to take you through my trading journey which deals with the best timing tool ever Charts…

We saw how I came to know about the Smart Money via works of Tom Williams in Part I. Then we saw how we can understand what the market is doing right now. A big thank you to James Dalton for that. Now we turn to another important area of trading. Timing your trades.

It is probably the most focused on the topic in trading. Anyone entering the trading arena, invariably focuses on “how to time trades?”. It’s no surprise then most of the information and services offer you the best timing tools.

But once you fall into this trap of “timing tools”, it becomes very difficult to change. Later on when you realize, as I did, that timing is not the only thing in trading. It is already too late for your trading account.

Listen carefully…

Why I say these words is because I have gone through this predicament. I was trapped in this for a long time in my trading.

You know this when you see yourself doing the following,

  • Jumping from one oscillator or indicator to another.
  • Continuously tapering with indicator parameters and back testing strategies.
  • Seeing your “successful” models failing once the market condition changes.
  • Looking for buy-sell systems, there are plenty in the markets, trust me they don’t work.

Are you doing any of this? I have made most of these mistakes and much more. The reason was I thought I can figure it out on my own. And you can, but it takes a hell of a lot more time than if you could learn from someone who has done it before.

That is why I am passionate about sharing my experiences with those who are serious about trading.

It is not as simple as it looks…

Now timing the trades is a crucial part of the trading process. Yes, it is a process, the sooner you realize that the better off you will be. But many amateur traders start off on a wrong foot when they are trying to time their trades.

The correct place for timing comes after logic and context. The moment you mess the sequence up, your trading becomes no better than a hit and miss game. If you want to know more about this Logic-Context-Timing sequence please signup for our free email course “How to avoid No 1 Mistake in trading?”. Just sign up here…

If you have been through the course you know what I am talking about.

The best combination of Technology and Trading Logic – Order Flow!

One of the cool tools I came across for timing your trades is Order Flow. An order flow chart plots real-time trades based on which side they were executed on, bid or ask.

A trade executed on the bid side is an aggressive sell order and one on the ask side is aggressive buy order. Based on various combinations of these orders we can spot the following,

  • When the buyers or sellers are getting aggressive.
  • Are the buyers and sellers are getting trapped?
  • When the SM is going after the stops of amateur traders.
  • Is fresh new business is coming in and can it lead to the continuation of the current move?

Now all the above things are crucial for timing your trades. For instance, if the Sm is going after the stops beyond an important reference then this move is likely to fizzle out soon. However, if new business starts coming beyond important reference then you are likely to see the move continuing further.

Order Flow – Video Example

Now, this kind of thing one learns best through examples. I am sharing a webinar which I conducted earlier so that you can see for yourself how effective Order flow can be as a trade timing tool. Let me know what you think of the webinar…

Well how was the video, I am dying to know. Hope you liked it, if you did, please share it with your friends right now. A little effort from your side goes a long way in helping this content reach serious traders like you.

How to incorporate Order Flow in your trading?

Now you may ask, I am coming up with a detailed course on Order Flow very soon. So if this interests you, just join the early bird list below. I will let you know as soon as the course comes out.

Also, you will get special discounts for showing early interest…

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So these are the 3 parts of my journey as a trader. I went from clueless to overwhelmed to frustrated to confident to consistent during my journey.  I hope you find it helpful and learn some tricks to cut short your learning curve.

 

How To Trade Order Flow & Context?


Context is king in trading, especially when using Charts. Order Flow charts show whether buyers are sellers are aggressive at a particular level. But that information alone is not sufficient to make a prudent trading decision. So the key is to use order flow & context together.


Derivatives Trading involves substantial risk of loss and is not suitable for all investors. Past Performance is not necessarily indicative future results – Read Full Disclaimer


Why is context so important while using Order Flow?

There are many patterns on Order Flow Charts that show us the waxing and waning strengths of buyers and sellers. Most relevant of them all are delta divergences, trapped buyers and sellers, stop hunts, passive (limit) buying and selling), etc.

But the problem with Order Flow charts is that the indications of these patterns are present at multiple places in a given trading day, and not all the places are relevant and generate the desired follow through. So you have to use order flow & context together.

Lets look at some examples,

Order Flow & Context
Market Profile
Order Flow & Context
Order Flow

 

 

 

 

 

Example of Order Flow & Context

The example above shows following points,

  • Breach of important support brought in BD sellers.
  • But Order Flow Charts showed lack of interest as well as signs of accumulation.
  • Where amateurs were selling the BD, Smart Money had already accumulated their longs.

A word of caution though, Order Flow Charts show similar patterns at various places in a day. It is important to see whether prices are near important reference points so that you can try to gauge what smart money is doing at those levels.

Our goal is to match the smart money or at least avoid being on the wrong side of smart money.


Video For This Presentation