Originally posted at forexfactory on March 15, 2011:
Big difference. My mindset is an order flow trader is that I have to stay in harmony with everything what will generate order flow, no matter if it fundamental, or irrational, or logical, or a potential rumor, or something else.
I have my order flow sensors constantly on the lookout and playing scenarios about what will generate order flow.
So for example if tomorrow I determined, for some weird reason some crazy astrological pattern is generated order flow, then I need to pay attention.
If I determine that some moving average crossover generates sufficient order flow to move price then I have to pay attention.
You pay attention to weird/illogical things even if they conflict with your current view of the market. Because an order flow trader focuses on everything that can generate order flow no matter how irrational it can be. Now I don’t believe in astrology, or moving average crossovers just so you know. But, if I was to determine that they can move the market in the future then I need to adjust to that new order flow generator. If I was to determine that some really big hedge fund executed huge orders based off some astrological pattern, then you need to pay attention because……… its generating order flow!
Now I don’t believe in astrology, nor do I currently think it will generate order flow in the future. But as an order flow trader you need to be flexible to what can move the markets. You need to be open to different possibilities so you can perceive different mispricings and inefficiencies. You stay in harmony with whatever generates order flow. Now I have a certain process that I go through to determine if it does that works for me.
There are a ton of scenarios where fundamentals don’t generate enough order flow. Or the market misprices itself by a huge amount away from fundamentals. Yes there are those inefficiencies to take advantage of as well for sure.