Video Lesson - Order Flow Scalping with John Grady

Video Lesson - Order Flow Scalping with John Grady

21 April 2015, 09:11
Sergey Golubev
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3 961
Reducing trading to it's most basic fundamental level
What is happening? Why do prices fluctuate? Why should order flow play a critical role in your methodology? It's an auction. When buyers overwhelm sellers, the market goes up. When sellers overwhelm buyers, the market goes down. This is why size matters. What we're trying to do is ride the coattails of guys who move size and ride the wave created by all the small traders who pile on board and help create the domino effect.


The importance of a good DOM
Most people do not understand why order flow is important because they have never seen a good DOM.

An inside look into the world of proprietary trading firms
Explanation of how prop firms work and how they train traders.

Technical analysis vs. reading the tape
Charts only show you the past price. They do not show you how the market traded at that price. How much volume changed hands and the way that exchange affected price makes a difference if you are contemplating getting involved in that area.


Predicting the future
Believing I know where the market will be an hour from now, let alone three days from now, is believing that I know something the rest of the world does not know. If large institutions, speculators and high frequency trading programs who move thousands of contracts and actually move the market are not currently involved and showing no signs of playing the game (i.e. a slow market with very little volatility), why would I want to be involved?

Video samples showing different types of action
Would like to show a few samples of prices being hit during fast action vs. dead action. Not going to show any actual trades as I do not want it to look like I'm pitching myself or cherry picking winners. Just want to demonstrate how sometimes it's obvious that you should probably be going one way if you're contemplating an entry and other times there's simply no educated guess to be made. This is clearly seen in the order flow.

Methodology vs. psychology

Developing a winning methodology is only the first part. The next part, which is equally important, is developing a proper risk methodology and understanding your own psychology when it comes to adhering to this risk methodology.

John Grady's trading career began the same way as most. He lost money for many years by experimenting with various strategies which were based on misguided ideas about how the markets work. After multiple failures using traditional technical and fundamental analysis, he took a job as a proprietary trader for a large futures trading firm in Chicago. While trading there, he learned the importance of order flow (a.k.a. reading the tape) and he also learned why the markets behave the way they do. He currently trades for himself and he also runs an educational business which helps other traders develop scalping strategies that are based on understanding order flow.


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