Order Flow Trading Stocks and Shares

Obviously I am a big fan of the Foreign Exchange Market and I love trading Forex.

But today I wanted to really talk to you about the trading techniques we use and why they don’t simply work for Forex, in fact you can can use them on any market; the key is just the information you have.

So here we are going to give a couple of quick examples of Order Flow Trading Stocks and Shares but as always the best thing to do is go get yourself a trial of our software, read through the introduction to our material and course and give it a go for yourself.

So going to use the SP500 as an example to start with.

    Image shows Littlefish FX Order Flow Trader Indicator in action on the SP500 Index. You can try the Indicator for Free
Image shows Littlefish FX Order Flow Trader Indicator in action on the SP500 Index.

This is a weekly time frame, you can obviously go down to any time frame you want.

On this data feed we have the volume data which is actually much easier to get for Equities and Stocks than it is for Forex and that’s because they are exchange driven and not Over the Counter markets (OTC).

As you can see though following the trend in SP500 with the volume would have resulted in you riding the trend higher for the past year pretty consistently; especially when most market commentators have been screaming every few months to get short as the end is nigh.

And here is a nice screen shot of the Order Flow working on AAPL.

AAPL (Daily)  03_10_2014 - 29_04_2015
Image shows Littlefish FX Order Flow Trader Indicator in action on Apple Shares.

The key here is it is really easy to spot a trend with a little bit of additional information on volume flow in the market. The key to making this a profitable trading strategy is to really focus on building your key risk and reward metrics on top of this so that you only lose small amounts in market noise and chop and manage to capture the trends when the market is pushing the underlying asset in one direction.

So if you fancy trying to diversify your portfolio, why not have a look at Futures and Equities; when a concept is based on a bias and has fundamental reasons why it works it can work on pretty much anything.

The fundamental reasons behind these techniques are simply presenting information in a way to you that makes the trend seem more obvious; and all we are doing is using additional information about the underlying order flow in the market and after all the market price is just formed from orders connecting.

A lot of the challenges we see from Retail Traders and Investors is that they are informationally disadvantaged, they aren’t normally a disciplined when it comes to risk and reward and probabilities (some is lack of knowledge some of it is emotional) and finally their technology is disadvantaged.

Presenting the information in a new way on a platform you are comfortable with can alleviate two of those challenges and level the playing field a little bit. The final challenge can then be addresses with a bit of training and some good old practice.

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