Order Flow Trading Mindset

Is it subjective because like Darkstar said orderflow trading is a mindset. Even if you are an orderflow trader you still need to mold that style of trading to fit your personality.

Just as each technical analysis trader has his own way of entering and exiting trades so do orderflow traders. You can have 10 orderflow traders and they each consume liquidity at various points throughout the day/week. Some of them can be in competition with each other for the liquidity, some of them aren’t.

Again it is subjective because if you asked orderflow traders why prices did what they did they can come up with some different answers. Every person be it a TA trader, Fundamental trader, orderflow trader has their own definition of WHY price did what it did. Whose interpretation is correct? Well you can never know for sure because you can’t see who is making every trade as well as know exactly what is going through their head. However there are many times you can discover a pretty good reason.

Order flow trading is a journey of personal discovery, development as well as market discovery. You can look at the information that appears on a chart, but more importantly look at the information which doesn’t appear on the chart such as news, economics, politics, market sentiment, stops, option barriers. You can look at what is going on economically on a global scale etc. All of the information is available publicly so as many other people said it’s about putting the pieces of the puzzle together.

This process can take a long time as you are going through the personal discovery process as well. For me it took about 6 months and around 1,000 hours before I felt confident that I knew the reason WHY prices was doing what it was doing. Then add another 4-6 months to refine your strategy and get your psychology and money management straightened out and you can become successful. That’s not to say that with 2,000 hours you can become successful. It’s more around 5,000 hours ++ as I spent a good 2 years messing around with expert advisors, technical indicators before I even discovered order flow trading. For some people getting through this process can be the most difficult because they struggle to determine with conviction why price did what it did. They struggle to capture and explain to themselves the market variables that occur. Once you learn what orderflow trading is and you spend some time on it your view of what exactly it means begins to change as you start to mold it to fit your personality.

I guarantee you that your view/interpretation/meaning of order flow trading is much different once you spend a few months on it. Some people may never truly understand what order flow trading is beyond the textbook definition. You need to enshrine it into your mentality/way of thinking and personality.

Once you start learning WHY price is doing what is it doing you need to start making some judgment calls about what is affecting the market and what is NOT. You need to be able to say with a high degree of certainty that this variable or series of market variables moves the market. You start to learn what is dominant theme that is in play. You start to learn what is important what is not important and most importantly the market environment that is required to render certain variables in play. You begin to play out in your mind various scenarios for different countries and how that would play out in the currency markets. You learn what are the variables required to cause a rise and fall. You learn what are the risks to the upside and the downside and play out the scenarios in your head. You learn why the market can ignore this variable one day and then the next day it is in in play again. You can watch a interview of a trader/investor and determine fairly quickly whether they are right or wrong in their interpretation of WHY the market is doing what it is doing. You start to get a ‘feel’ for the market and a certain intuition/subconscious market understanding. You need to be very careful not to confuse these with the emotions of fear/greed.

The answer to the above questions can differ substantially from trader to trader because trading is a very personal experience but at the end of the day each trader needs to have the conviction to place a trade and say I know with a high degree of certainty that the order flow will come in and validate my analysis.

There are of course days and time periods during the year when I have absolutely no idea why price is doing what it is doing. It is either because something is happening which I have not learned about yet, in which case the market learning process continues and you get a better ‘feel’. Or it is because the market is legitimately acting very weird and you stay out of the market until you can figure out what is going on which usually happens after a few days or a week.

That’s my wisdom and trading journey. Take what you can from it. Hope it helps.

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