Monday, 19 June 2017

Analyzing Order Flow (Nifty Future 19062017)

Yesterday's analysis played out well.  It broke out the last range B at open indicating pullback or correction was over and prices were ready to move toward highs.  It in fact made the high of 9697 rewarding all the traders who believed in price reading analysis.

I would also like to share one important observation that I made today.  I discussed the same yesterday with Srinivas, a passionate trader during mentoring session, while discussing different ways to properly analyze order flow.  The observation is about reading the order flow when Nifty approaches the important level.  The order flow at the important level will give us a clue of likely outcome.  One of the ways to read the order flow is studying the building up of positions. " If large number of positions are built up at or around the level ahead of testing of that level, markets will often do something at that level."  This will produce a good trade opportunity.  Now lets discuss it on today's chart,


As you can see in the chart, there were 2 attempts made to break the important level, HOD.  First attempt was not successful, but the second was.  Now lets try to find out the reason behind this by analyzing positions that were built up ahead of these attempts.

It shows before the first attempt to break the level, there wasn't significant build up of positions, marked by red circle.  It means there was lack of conviction among the traders about the breakout. However, before the second attempt, there was significant build up happening, marked by green square.  Also there were few shorts built up just before the breakout which may fuel the rally on successful breakout, marked by red rectangle.  So the stage was set before the actual breakout and upon breakout others participated which generated high volume and made the breakout successful.

8 comments:

  1. Great!!
    But Do you get this data real time on "Fresh add" / Sqr off? Amazing?

    ReplyDelete
    Replies
    1. Anand

      Yes, data are real time. Try to understand few things. You cannot only rely on data as data lot of times are confusing. You need to learn how to combine different available information. Here what I have done is, I have combined the FNO data information, position buildup, trend, big picture, today's price action, important levels and price reading. Everything combined made me to draw conclusion.
      URD

      Delete
    2. As for as data is concerned.. I think Anand required info on heckyl tools. (icici direct has this)
      https://blog.heckyl.com/2014/12/19/glassdoor-friday-fo-trading-made-easy-using-15-minutes-built-up-screen/

      But to make sense out of this, as URD mentioned, it requires many other things !

      Delete
    3. Anon
      Thanks. It's a good link explaining how to use the information. Made my job easier.
      URD

      Delete
  2. Hi URD,

    From where u are getting that data, is it free or paid?

    ReplyDelete
    Replies
    1. PA Trader

      I use TICK from Reliance Securities. Google it to get more info.
      URD

      Delete
  3. Thanks for the mention URD.
    market Gapped up and we saw only one deeper pullback in the morning.
    So where were the shorts to cover up eventually ?
    are these shorts of Friday ?

    ReplyDelete
    Replies
    1. Srinivas
      It was a countertrend full gap. Plus prices broke out of last two days range. Plus after the open there was follow through. This market information is enough to force sellers to cover their positions whoever tried to short either on Friday, Thursday or even at 9700 level.
      URD

      Delete