What is Order Flow?

The expression ORDER FLOW seems to have spread all over the boards on the web in the last few months. People make assumptions about what the expression means in trading and how it manifests itself, how the trader can discover or see it and, most importantly, how the trader can use it to make money when he identifies it correctly.

Firstly, it is said that Order Flow is VOLUME. Volume is a number and you can't see a number. You can count items and when you add them up you get a number. On the floor we saw the transactions. We saw whether the broker who brought the "paper" had his palms facing towards himself or away from himself. We could look around the pit and see the hand signals that told us how many contracts were trading. We don't have that with electronic trading.

But we do have other tools.

For example, we have MarketDelta's Volume Breakdown which identifies whether a trade took place at the Bid or Ask. We have the MarketDelta Footprint which puts this information into a structure. But that is only part of the story. This is not just The Age of Aquarius, it's the super hi tech age. The big guys have big bux that they throw at their trading. They also hire guys with big brains. They don't want the whole world to know what they are doing so they try and hide it as much as they can until they're ready for us to know, by which time it's usually too late. We have by then, swallowed the frog.

When I was a kid, there was this great movie, in black and white, called "The Invisible Man". You probably have heard about it or about one of the many remakes. Great movie based on a story by H G Wells. Unless the Invisible Man wanted to be seen, which was when he wrapped bandages around his face and put on clothes, we couldn't see him. But when he was invisible and we looked hard, we could see his footsteps on the ground where he went.

That's what we do today in the electronic markets. We "deduce" the order flow not just from what is revealed clearly but from it's footsteps. What can we see? We see the Market profile and the types and lack of rotation. We can measure the momentum. We see price, of course, and it's direction as it changes and the speed with which it changes. And of course, we can see where it is located from what is considered a fair price.

It takes all of this for me to see the Order Flow and the tools I have shown in the blog are what I use to identify it. Of course I'm always looking for better tools too.

BTW, I have started tweeting to StockTwits and Twitter as you can see from the right hand side box on this blog. I don't know how intrusive I'll find it, but I may be able to give a "heads up" on a few things if I can post and trade at the same time.

I was scalping the Euro today as you might have seen me tweet. I reduced the range bar to 3 ticks. It was pretty tiring. I was looking for 5 to 7 ticks profit per trade. I was trading in the European morning, took a break to take Kiki to the airport and scalped in the afternoon.

This type of trading can also be done as HT (see yesterday's post). When the context sets up, I can just switch on the version of Flo that suits and let her do the entries with me just managing the trades with exits. This type of scalping can pull in 100 ticks/contract on a good day, especially using Flo when I don't get so tired from concentrating. I think I'll make a new DVD on scalping manually and using an autobot and add it to the training course. I'll let you know when it's there.

A New Year, Hybrid Trading and Longer Term Trading

I am hugely excited about the start of a new year. All the expectations, back from a good rest and new ideas for the blog and training.

First, Hybrid Trading. I have touched on HT in this blog before, but I think that it is now deserving of more attention as it's something I will be addressing in the new training materials I am preparing this year for both longer term trading and day trading.

Firstly, what is Hybrid Trading?  HT, as I refer to it, is using the computer to identify the most common entries and execute them, and then leave the management of the trade to me. In some cases, I need to exit immediately as I don't like the context. So what's the benefit? Quicker entries, not needing to be so focused, being able to trade more than one market at a time and so on. As soon as the trade is executed by the platform, I turn the auto trader off and manage the trade. I expect to do more of this as the year progresses. Our FloBot has improved a lot over the last year and to give Flo extra duty seems like a good idea for my bottom line.

I am also going to talk about some longer term trades. Trades that last a few days. The methodology for these trades is virtually the same as for my day trading, but uses daily data and MarketProfile a little differently. I use a variety of instruments in this longer term trading: futures, ETFs and options. The instrument of choice for a particular trade depends on the context of the trade. Not too complicated, but requires a little more thinking. As I'm using daily data, I only have to do this outside market hours and I have plenty of time to make my decisions. I use Flo to identify the trades, as there are more markets involved: S and P, Gold, Coffee (I'm Nespresso's favourite customer), Oil, Euro and Treasury Notes as a start. More markets to be added.

I'll keep the longer term trading in this blog, but may make a second post at around 1 am or so, New York time, as I usually do the analysis early in the morning European time. Let's see how it goes.

I'm also planning on using Twitter and StockTwits more in market related activity. Candace has some good ideas and I'll see what I can do so that readers can learn during market hours if they want.

I was skiing in the morning with Kiki (she's a board rider) so no work in the morning but the year went off to a good start with a couple of ES trades. The Gap trade did not trigger so the only way was up, as the song says. Nothing to lean against on the sell side. The pic below shows the trades.

Happy Holidays - Yes a Little Late

Happy Holidays even if it is a little late.  Just like my birthday (happens very close to Christmas) I got caught up in the swinging of things and let a few others go. But never fear I am back and here is another fascinating edition of small business news for Southeast Missouri. I got a bit of good news today - a client of mine was able to obtain a small business loan. This client is one of six

PET third stage COTS tank

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Before:


During


After




Betterbottle makes 5 and 6 gal PET water bottles. I could only find a source for the 5 Gal, so that is what I tested.

Empty 674 gm
MR with water of 29 with peroxide 39!
Burst at 125 PSI.
Long period of plastic deformation at around 100 psi
It burst in the thin center with the ends remaining substantially thicker.
This means one could probably prevent the banana deformation and increase the pressure with a center overwrap.

He sees you when you're... ballin'

Santa Claus and his elves watch closely as the Lady Colts defeat North Hills 51-42 Wednesday night. No word if Mrs. Claus was also in attendance. Read both the boys and girls varsity basketball game stories on Chartiers Valley Patch.

Our favorite Docs things - 2010 Year in Review

[Cross-posted from the Google Docs Blog]

We’ve been keeping busy this year with over 85 new enhancements to Google Docs and Google Sites, making it possible for you to work, communicate and collaborate entirely in the cloud. We wanted to take a moment to share a few of the most exciting enhancements from 2010 that are making it easier for you to go “100% web.”

In addition to some of the most requested favorite features like mobile editing, OCR, advanced sorting rules and a more consistent look, here are more of our team’s favorite things from this last year:

• A new Google Docs built from the ground up for real-time collaboration
• The new Google drawings editor for making flowcharts, diagrams and more
• Upload and store your files in the cloud and stop worrying about losing files
• Simplified sharing with new features like “Private”
• New charts editor and chart types because pictures are worth 1000 words
• New revision history UI in documents and spreadsheets make it easier to see what has changed
• Horizontal navigation in Sites gives you more options when building your sites
• More fonts in documents provide you with more ways to express yourself
• Formula highlighting in spreadsheets makes it easier to understand your formulas
• Google Docs demo makes it easier for anyone to try Google Docs

We look forward to bringing you more improvements next year. Let us know what is at the top of your Google Docs and Sites wish list in the comments.

On behalf of the entire the Google Docs and Google Sites teams, happy holidays! We’ll see you in the New Year!

Posted by: Jonathan Rochelle, Director, Product Management

Way out of the box presure system...

Another out there concept... this won't work with the muiulti segment tank of the last wild idea, but will work for a single tank.

In a H2O2 rocket 80% of the propellant volume is H2O2, so you need to pay more attention to the H2O2 side than the fuel side.

Leave a small space at the top of the H2O2 tank. In this space put a solid silver screen/catalyst hung from a thermally compatible string. Unwind the string into the tank letting the silver decompose the H2O2 pressurizing the tank, raise and lower the catalyst to control pressure.

Fuel is pressurized with a bladder from the gas in the main oxidizer tank.

Main propellant valve is a simple burst disk.