Predictor

These are my levels/estimates for highs and lows over the next 24 hours-- for anyone following along. Market is currently at 1416. I'm not tracking or trading it now. H2: 1424 H1: 1420 L: 1414

As requested, I've made a new video. In this video, I share a systematic strategy for trading using the order flow, and 2 techniques for trading the reactions to reports. I also walk through how I setup my trading for Friday. I also show order book imbalances and how those imbalances often lead to changes in the order flow. In several cases, I say "order book imbalance" when I'm really referring to the "mode". The book imbalance can only be seen in the far right column or LimitResistance. We might should rename this column to LimitImbalance because LimitResistance is more a phenomena that we see with market orders being exhausted.

Ingot, You may want to look at our embargo/trade restrictions on Japan which happened I believe the year/summer prior for clues. Many felt that the embargo would force a retaliation. I'm not an expert on this but I think it was a common belief at the time. Interestingly, the Japanese had a stock market even then... The American oil embargo caused a crisis in Japan. Reliant on the US for 80% of its oil, the Japanese were forced to decide between withdrawaling from China, negotiating an end to the conflict, or going to war to obtain the needed resources elsewhere. http://militaryhistory.about.com/od/worldwarii/a/wwiipaccauses_2.htm

Vince, The way you pose your question is almost insulting. You basically want to know if someone with no effort, no skills, and no ability can make big bucks by pressing a button and generating a system? And, you probably know the answer to that: probably not. >>I am not a programmer and not that Internet savvy. I always say stick to your strengths. Given you can't program and aren't computer savvy then it doesn't sound like this approach is for you. >>I ask because trade station programmers wouldnt be getting $100 an hour to program >>whatever you want if backtesting thru coding really was the answer. They would just >>code themselves up a neat simple winning system, no? Yeah, and I guess the myriad of trading firms wouldn't be able to hire programmers either if that were true nor would they offer them big fat 200k/year salaries. No? They'd just code themselves up a winning system. >>Also, what is all this backtesting tools with Ninja Trader and MT4. .... Not sure what you tried to say but I couldn't understand that. >>couldnt understand why it wouldn't work either thru massive winners or massive losers. >>Has any human being done well with a Neural network program/software or is it all >>junk? Sure, there are many firms who use such methods and make huge fortunes. Is that what you wanted to hear? I'm sure its true but don't know any personally. Most of the CTA's and funds use systematic trading strategies of one sort or another and many uses machine learning techniques including neural networks. It sounds like you're really asking.. is it worth my time to learn this stuff? Well only you can answer that. If you're really having success already and aren't driven to learn new things and don't have partner then you're going to be at a disadvantage when it comes to conducting research. Your best bet might be to subscribe to a research/quantitative newsletter or subscribe to another's trading system. Some of the quants offering information/research are Quantifiable Edges, MarketTells, Birinyi, -- Curtis OrderFlowDashPro - Enabling Trader Success

First, I think there is value in knowing who one is trading with. This ability to see WHO one was trading with was one reason traders used to pay big bucks to be able to trade on the floor. VOLATILITY and VOLUME have been shown to be correlated. While the true market behavior is an emergent behavior of all traders: not all traders are equal. There are some dominant traders. What I don't do is view the market as retail vs institutional. I view all traders as professionals. Think about it, you're not going to stay in the game long or be much of a factor if you're not a professional. The goal isn't so much about identifying a particular trader- but being able to recognize the types of traders and how active they are to make better decisions. A simplification of the market participants follows: Liquidity Providers: These are traders that are always in the market sitting on either side of the market with their limit orders. If you're a small trader, as most are, and you try to "buy a break out" or sell a breakdown and a liquidity provider is on the other side of your trade then you're likely to take a loss or be in the negative immediately. Some of these LQ providers use stops -- others average down. The market isn't likely to move much if these are the only guys active. Institutions: When an institution buys or sells then they are able to buy enough to exhaust the liquidity providers.. They can also create trends. Now they don't go in and say I'd like to drive my prices up and get the worst prices but they have so many contracts to execute that the liquidity providers have to respond to them. If you try to fade an institution then there is a good chance you will take a loss. Institutions can also influence the market by PULLING bids or offers above or below the market. Of course, not all institutions are savvy. If a single institution executes a lot of orders then it might create a blip of a trend and the market could go right back where it was. But if as a group they re-value the market then you know it will trend. Pit boys/Locals/Day traders: Everyone has a game to play. I use my order flow software AlphaReveal and tape reading to make sense of the market. My ability is I imagine similar to being a local on the floor.. only much more comfortable. I'm pay close attention to the market order flow and the LIMIT ORDER RESPONSE. My software helps me to see by showing limit order imbalances, and I can also read it from my experience in reading tape. Now, I also have quantitative researcher who conducts research for me, and we're looking at building systems based on these ideas. But, I think there is a great value in the discretionary approach. Context is king, as they say. - Curtis http://orderflowdashpro.com

mitsubishi: Yes, the first ever posters stick out like a sore thumb. However, I'm glad that TopStepTrader chose to post here because it allows for an unbiased discussion about their offerings. I applaud the admins here for providing a positive atmosphere where both vendors, trader/vendors, and traders can share and discuss without being viciously attacked. Some forums go quite far in protecting their "streams of income", i.e paying vendors, at the cost of honest and unbiased discussion -- while at the same time stifling trader/vendors (non paying) from sharing and contributing. I've been shut out of more then a few discussions because I offered a trading system or sold a product. And the reality was that I was offering the best information, the best content, of anyone in the group. The tendency to stereotype and come to wrong conclusions is common. As such, I know both sides of the coin. One of the reason I'm versed on the TST program is because I've monitored it sense inception as I considered to do it. I believe the IDEA has a lot of promise. There aren't many sources of funding for traders. The question each has to ask is whether or not the value proposition is there... When they first started, I decided for me it wasn't there. Perhaps due to exposure or better sense, they've made changes to the program for the better. Right now, I'm undecided if the value is there. I don't suspect it is but I'll continue to monitor the program. You know one of the main problems I have with the whole idea still is that if I'm funding a trader and they perform consistently then I will ramp them up to the maximum leverage I'm comfortable with them using quickly. I actually met and discussed a position at one of the largest prop firms in the US (stocks not futures). The head guy said listen: we don't start you at much but as you prove yourself we'll ramp you up to unlimited buying power. I didn't take the position because the firm was clearly having trouble. But this was the real deal and what he said made sense. As such, it has always felt strange to me that they have tiers. If I'm a backer then I'm always going to start a trader at the minimum leverage and make them prove themselves -- least risk for me. I once talked to a joker on the phone who wanted to know if I could handle a 100 lot-- anyone who would start an unknown trader at 100 lot doesn't have too many marbles. At the same time, if a trader is consistent then like the head manager at the firm I spoke with, I'm going to ramp him up the maximum I'm comfortable with very rapidly. I guess they could have their reasons, i.e psychology or whatever. But still the tiered approach has always seemed "unique" to me.

I recommend a trader to focus 1 or 2 markets only.... I only trade a single market ES. I view myself as a specialist. Can you really be a specialist in 10 different products? As others noted, the only way I would trade many products is if I had lower frequency systems that triggered. As a small trader, I can't afford to be surprised by a market I'm not an expert in. Larger traders will probably find some value in selectively and carefully expanding but I've always felt that the right way to trade was to focus on 1 market.

For those following me, what we seen in this case was a strong negative order flow and limit orders took all that supply. I feel the flow was institutional/algorithmic but it wasn't enough to drive the market to new lows. If the sellers aren't able to drive price to new lows then they must cover. This is why I take an agnostic approach to order flow. I'm looking for the patterns in terms of the current context. What makes trading difficult is that any indicator you take that works well in a range market will fail in a trending market and vice versa.. All the rules just reverse. I never had more then 1 tick F.E in that trade which was a warning but there were several times when it seemed like it could work. My goal is to use my read to guide me. So, I'd rather exit on my read then take the stop hit. In this case, I pulled my stop in and lost about 2 ticks more then I should have. But, it was a close call and I didn't lose the maximum. One of the ideas on my mind, beyond the order flow and book imbalances, was this consumer credit report coming out and the negative sentiment report: I thought that traders might connect the two. Apparently.. jobs report trumps all. Sellers have shown a new response from 17.. If you recall 16-20 is the sell range for the day. Worth to consider if the day structure is setting up as a trend day.. in which case we could close in that region

Sounds like a specialized game. I'm interested in futures spreads. But, I'm more interested in whether/how-to it would be possible to model spreads that are mean reverting and can be traded intraday, somewhat like a vertical options spread. What I'd really like to do is to trade inside a vertical spread... i.e to be able to trade like a futures but have my risk at the extents bounded. NADEX offers the closest thing to what I'm describing but they aren't as efficient as trading the ES for me. If they could improve that efficiency then I'd take a look at them again..

Stopped on the last one.. I never like to take a stop, rather exit before stop is hit but had trouble making the decision. DFD... met profit target.. started to lose. shutting down

Trade hasn't shown a FE fav.exc. I track that closely. However, strong limit order resistance in this area.. I need the OF to come in and support me.

rtg: Your basis is seasonal? I'm weighing if I could be wrong... strong OF buying came in after I made that call. But, it was unable to drive price to new high. I'll probably adjust/pull in my target.

I'm short off the 14 with a target of 10..

OF is somewhat negative from the 15.50 down to 14.25. Break of 14.25 could bring 11 to 10s back in play. Buyers keep getting exhausted.

rtg... everyone has to trade according to own rules. I'm interested in spread trading. What do you spread? Any day trading opportunities in your spreads?

zdo: Michael Patak, patak head-honcho, has stated numerous times they don't train traders. They don't offer training of any sort. They may have changed this recently but that's been their line from Day 1. They offer psychological training but not how to trade. I'm just trying to inform the readers here of what their deal is. I honestly believe this is one of the few things they do that make sense.. as a prop firm you don't want everyone trading the same way.

zdo... Good points. They let you trade own account if you pass but I think they put up a 1 year hold if you leave (before you to go another prop shop). They don't offer training. They do have a psychologist and offer various "products" -- most of which fall into the entertainment category. I think the program is much better then it used to be. Now the total loss limit is 3x the daily loss limit before it was just 2x loss limit which was just plain ridiculous Note, if you touch the daily loss limit on any day then its back to the sim. I have considered it. The last time I evaluated it I just couldn't make the numbers work -- to make sense. But, if they improve the program/odds then it could be worth trying. None of the other prop firms will take remote traders.

Thanks.. this was a 1 shot.. after we cross 20 I considered that the market might be outside my range/abnormal. In these situations, you have to protect yourself.. I've tried this before, took a small stop, and came back the market was 20 points higher.

One theme we are seeing repeated is that techs, traditionally a leader, are weaker. We've seen this for a few days now. This may be an important theme. It may indicate that the market is rallying on relief of various fears but that outlook for tech is poor. If outlook for tech is poor then that raises a question in my mind... At this point, I've soundly exceeded my profit targets and don't anticipate to be taking any more trades. The market is fairly 2-sided right now... most of the order flow is buying but there is heavy limit order supply exhausting this order flow so far.

I've exited at 14.25.... When I say 'entered market' or went to market it means I entered market order. If I say bid or offered it meant I have a resting limit order. Also the time stamps don't matter on these messages because I go back and edit them. I do this because the minimum message length rule. Of course, the messages here are delayed. Often I will have a bid and be reading tape at the same time... if we take out an order book imbalance or I feel we can drive higher then sometimes I'll go to market.. its a riskier trade but often works well. My software and ability to see the OB and OF imbalances I feel is an edge for me.. Levels came spot in today too (just by chance -- as I said they aren't all that accurate but still more accurate then any published levels). One feature I really liked today was ability to paint an area.... I paint the high zone red and then the low zone blue.

Order imbalance at 14.50 which is stalling the drive up... sense is that buy programs are triggering though. Target is 15.50 but may not hold until then

horaace... what part of entered market do you not understand?

Boehner... no progress made Market is in range we are look for OF reversal.. I'm bid 9.25 -- Entered market.... look for drive higher now

Have approximately met my profit target for today... so will be watching only for exceptional opportunities now. The trade setup was... I mapped out the extents of market in advance... waited for an OF reversal at the extents, i.e used my tape read. Very nice being able to catch that response to that report... At this point I'm trying to look for a retracement to get long but keeping in mind a short drive

Short from 21ish... very good report.