Order Flow Trading

[Alphafuturestrading]

The subject is large and broad, but as I could not see an obvious order flow thread, regardless of the type on contract, I thought I'd attempt to start something on the subject.

Been trading order flow for 8 years and would be great to share with other adepts.

 

[trend2009]

when you say order flow trading, you mean level 2?

 

[Alphafuturestrading]

Order Book, Footprint, Volume profile, Market profile, supply/demand, absorption/exhaustion ...

Anything relating to microstructure really..!

 

[qlai]

Curious what futures you are trading using orderflow?

 

[Alphafuturestrading]

It applies to any type of Futures actually, and I mainly do currency and index Futs

 

[traider]

It applies to any type of Futures actually, and I mainly do currency and index Futs

how do you use order flow for currency futures when the spot market is much >>>>> bigger. Do you have access to EBS or Reuters for spot currency?

 

[emojitrading]

following!

 

[Alphafuturestrading]

how do you use order flow for currency futures when the spot market is much >>>>> bigger. Do you have access to EBS or Reuters for spot currency?

Hi Traider, no the currency Futures (as any other Futures contracts) follow (arbitraged) spot movements albeit with some pricing differential. Futures are of courses centralised and have official volumes when OTC spot does not so looking at the DOM and Tape/Footprint and all derived analytical tools, offers a global market view, unlike Spot FX.

 

[MattZ]

This article will help those who want to understand the fundamentals of order flow http://optimusfutures.com/tradeblog/archives/order-flow-fundamentals

 

[Alphafuturestrading]

Indeed order flow trading is analysis supply and demand effectively, and the mechanism which can be seen on the DOM with Limit orders Vs Market orders is the transaction view of supply/demand although there are many more clues as to where prices could be heading, and whether one chooses to observe and use the DOM or not, this is the reason why prices move in any market: Without Limit and Market orders, there is no price movement.
There are much improved DOM available than Ninja's native DOM and Footprint advanced tools that allow more clarity especially when you start with order flow, but understanding how it works and how everything falls into place is key.