Order Flow Trading For The Newbie

One of the most common questions I get asked is something along the lines of:  “I am starting with close to zero knowledge, zero experience, so how do I learn order flow trading fast to take advantage of the amazing market opportunities that I see passing me by.  Where do I start?  How do you teach a newbie?  Is there a step by step process?”

I applaud everyone who has asked me such a question.  It cuts right to heart of what they desire:  fast progress, fast results, a fast transformation from wherever they are, to where they desire.  That desire to leapfrog over the nonsense that is so prevalent in many of the trading forums where it seems like in the land of the blind, the one-eyed man is king.

#1:  Trading Attitude

First thing to do, is to change your trading and life attitude.  Don’t call yourself a “newbie” or “rookie.”  Be a person who thinks and feels that you are going places.  That, while your current environment and circumstances may be less than ideal, you know that you are not your current situation.  Follow the attitude of:

Have a renewed faith in your ability to figure things out.  Of course, it gets a lot easier if you have the proper information to work with that gives you hope, clarity, confidence, and competence.

I remember the first time I stared at a price chart.  It seemed foreign to me.  A bunch of green and red bars.  Some squiggly lines.  I had no idea how to make sense of it all.  I also had no idea about what the heck “shorting” the market meant.  I was nowhere near my current level of mastery of the Global Macro.

If you have gone through and read many of my blog posts, and also attempted some of the Order Flow Exercises, then you are well on your way.  (I will tell you the fastest way I know of to learn Order Flow Trading at the end).

#2:  Control over your Life = Responsibility

Realize that with fast speed, comes great responsibility, work, and a bit of chaos showing up in other parts of your life.

There is a saying:  To whom much is given, much is required.

You can rephrase that to incorporate your own expectations and desires:  I expect much in my life, so much is required of me.  Especially to become more than I am.

The reason trading and investing are one of the highest paid careers in the world, is because you have much responsibility.  The reason why some traders make millions and have triple digit percentage return years is because they have lots of control.  You have so much control over the trades you place, the price you get in, the position sizing you use, when to get out, etc.  With that massive control, comes much responsibility.

Do you desire more control over your life?

#3:  Amazing Trading Information:

So now you have a great attitude, ready to take responsibility.  So what’s next?  Well you start gathering information on your topic.  In this case, the topic is order flow trading.

There are some people who criticize what I do as not being order flow trading.  They say what I do is news trading or fundamental analysis, bla bla, bla.  To clear this up, let me explain briefly what I believe order flow trading is.  Order flow trading is about anticipating the future aggressive orders that will come into the market to move the price, due to a multitude of reasons.  In order for the price to move a certain amount, assuming normal liquidity conditions, a certain amount of aggressive market orders have to be executed.  Transaction flow has to happen – in an aggressive manner to cause the price to move.  Transactions have to occur.  A sequence of transactions (orders) has to happen.  There are some exceptions to this rule, for example where if the market is closed and the price gaps.

The people who only do one form of analysis – say technical trading, are only playing a very small game.  They are limiting themselves in a big way.  Price can certainly move some of the time due to technical reasons like a breakout or market positioning elements.  But the much more fascinating and lucrative game occurs when you reach the higher level of the trading profit ladder – the Global Macro Trading.

So when I talk about order flow trading – I am starting from a trading belief that I am a slave to what whatever actually causes the market to move.  Whatever combination of forces causes the market to move.  Now, thankfully, I discovered a while back that there were certain reasons markets moved that stayed constant for years and decades, even going back to the 1923 release of Reminiscences of a Stock Operator.  When I discovered this, I was so happy, I jumped for joy.  I finally figured out what really caused the market to move, whether it was in 1920 or in 1960 or 1980, or the year 2000, or in 2014.  It’s called a Global Macro scenario.

So if you are currently trading with mostly technical indicators, chart patterns or price patterns, and have a hunger for something more, I would strongly recommend adding a large information flow component in the form of Global Macro analysis.  Every single time I raised myself to the next level of the trading profit ladder, I had this burning desire within me that kept telling me:  “What’s next?  What is the next market secret that I can learn about, that is so important and that most people don’t know.”

But I have digressed, back to accumulating trading information.  Information comes in many forms and mediums.  You can read something in the form of a book, e-book, articles, etc.  You can watch something in the form of a video.  You can listen to something in the form of an audiobook.  And you can learn from direct experience with other people – say in a conversation or interview with another trader, or in a seminar.

So many people complain that they have no traders in their family, so no information to work with, etc.  Say What?  There is an information explosion nowadays.  It is kind of becoming a jungle out there.  This isn’t the year 1900.  It’s the year 2014.  You can get information about any topic you desire – this week, today, and this instant!  And besides, if you really look back at the great traders out there, they didn’t grow up with a trader in their family.  They are first generation self made rich traders.

Also, I am here to tell you that my greatest revelations up to this point have come from deep study in isolation of books and articles (and relentlessly applying what I learned).  I developed a very powerful edge – which I call an Interpretation Advantage, which I applied to whatever I read and experienced, and I figured things out.

What did Michael Milken do in his early years?  He was riding on a bus with a miner’s headlamp and he read and read, company prospectuses to help become the person who in a single year in the 1980’s made $550 million from the bull market.

As Harry Truman said:  “Not all readers are leaders, but all leaders are readers.”

Whether you become a leader from reading, depends on if you can develop a sufficient interpretation advantage to extract the proper insights and then take massive action on them.  Notice the different aspects of the process.  There is the reading aspect, the interpretation aspect, and finally the action/implementation/execution aspect.

I cover the accumulation of trading information in this article:  Mentors, Idols, Books and Trading Information

Click Here To Get The Free Report

#4:  Trading Beliefs

As you are reading and consuming information, make sure it doesn’t just stay information.  Make sure it becomes knowledge.  The conversion process from information to knowledge occurs when you develop a philosophy, a belief system, a set of principles to follow.

There was a time in my life when I didn’t know what beliefs were.  Didn’t know what philosophy meant.  Didn’t know what principles meant.  It was a dark time in my life.  When I started forming and organizing the information I was consuming into a philosophy, belief system and set of principles to follow, then things started changing for me very fast.

Ever wonder why it’s called Ray Dalio’s PRINCIPLES?

#5:  Habits, Actions

You’ve got the proper trading attitude, and philosophy.  You have taken responsibility.  You have accumulated the great trading information and formed it into some principles to follow (which you will revise and tweak as you go along).

So what’s next?

Well, as Jim Rohn said in The Five Major Pieces of the Life Puzzle:

Take all that you feel inside, all that you know, and show it to the world – through your actions.  Through your disciplines.

In short – Develop Trading Habits!!

All these things are nice.  Philosophy, Information, Knowledge, Attitude, etc.  But what are you going to do with it?  You may feel very good inside – even to the point of  mental ecstasy as you play out your dreams in your imagination.  The next step is to convert that into physical reality!

Therefore, going back to initial question that sparked this blog post:  how do you teach an aspiring trader?

The best and fastest way is to having trading habits that you do every day, 5 days a week.  These habits form a core part of the system you use.  A sequence of actions that you take, that lead to a desired result.  Then, at the end of the day you take time to evaluate, and do some reading to grow your knowledge.

So what are the trading habits I use every single day?  That is what I reveal in The Order Flow Mastery Course.

In the course, you will learn the concepts on a Deep Tactical and strategic level, as well as the philosophy and story about how I discovered them and why they are so important.  A potent combination if I may say so.

So invest in the Mastery Course today by clicking here, so you can feast upon the knowledge and strategies that can change your life.

P.S.  If you decide to invest in the course, you also get 1 year access to me to ask me questions via email.  Some gurus or expert traders may stay unreachable.  I don’t do that.  You can contact me and I will read and answer your question, typically at the end of week.  Unbelievable value.  I know that once you gain the knowledge from The Order Flow Mastery Course, the caliber of your questions will be much higher, and they are a joy to answer as I know my clients are advancing alongside myself.

P.S.S.  Here is another one of my embarrassing confessions:  In my early days, whenever I had a free day, I would decide to daytrade and follow the market closely.  I would wake up all pumped up on enthusiasm.  The only problem was… I didn’t know what to do.  I didn’t have habits that I believed in that I could follow.  If you are interested in my trading habits that I have honed over the past decade, then CLICK HERE.