OnlyTicks

OnlyTicks

25-09-2022

06:35

Which side of orderflow participants do i like to look at for my execution and why? An Orderflow ๐Ÿงต๐Ÿ‘‡ #ES_F $SPX $SPY #NQ_F #Orderflow

2/n: I'm not that surprised to see that in my previous Twitter Poll, that 60% of people said that Liquidity Takers are responsible for moving price. I would have guessed the results would be more of a 70/30 result rather than 60/40. I suppose that just goes to show how educated

3/n my audience base is ๐Ÿฅฒ. Although it is Liquidity Takers that are actively moving the market, they are only doing so because Liquidity Providers are *responsible* for them do so. So in essence, it is the passive side of the market that is always in control of moving price.

4/n I like to look at passive participants when executing. I want to always be on the passive side of the market. I believe that passive participants are always indirectly influencing the market. Yes, aggressive participants move the market, but what if

5/n those aggressive participants are being manipulated into getting into poor trade locations. Why would i want to follow the aggressive side of the market when they can be too easily manipulated. Aggression lifting the offer? Why follow it when i could be running straight into

6/n a large passive seller that is eager to sell to me & drive the market lower. No thanks, i've been that guy before and getting cucked in the market isn't fun. So when a passive buyer puts out a bid to absorb several hundred contracts, and perhaps thousands, sure i'll

7/n want to buy that, that's just basic absorption that we all know and love. But going an extra step further, i like to look at the absorption in all subsequent bars as the market likes to go bid up. If there was a large buyer at a low, chances are that either he did not get

8/n his entire position filled, or there is going to be other larger traders who are seeing the market go bid and need to get aboard this train, hence, they will often put out a bid and chase the market higher as it continues to go bid up. You can visually see this happen on

9/n the DOM, especially on thinner markets such as NQ or RTY. Where that bid that is chasing price is legit or not doesn't matter to me, what matters is if they get filled and i can i see it on the footprint. If the market continues to hold bid on subsequent bars up off a low

10/n then that is rather significant to me and i consider that a solid foundational move to hold for 30, 40, 50points intraday. However, the key to successfully trading absorption is identifying significant absorption and getting aboard that. If you get aboard just any old

11/n absorption at any place, you might as well just close your account while you can. The idea is to observe absorption that is above average for the session. There's several ways you can probably think of to see this, but whatever you decide, it's important to remember

12/n that context and market structure precedes all of this. One last thing, โ—๏ธHow to use orderflow to tell if your read on the market is accurate: What didn't happen is just as important as what did happen. If i see a wall of bids get filled, and the market pops up 8ticks

13/n but then dumps lower, you best believe that i am re-evaluating my thesis and directional bias for the day. If big boys are being wrong on a direction & are getting run over just like that, then this is where i lay off the gas pedal and recognize that i may have misread

14/n the market. This point is KEY. Most traders will see significant absorption fail to hold and will go, "well this absorption concept sucks, it didn't work!" Or maybe it did work, and you need to take in what just happened or didn't happen into context that you're bias is

15/n probably wrong on the day. The best orderflow trades that work, work immediately and without fuss. This is further confirmation that your read on the market is right.


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