Order Flow Trader (for NinjaTrader)
– Combines order flow techniques with trend techniques and translates them into a simple display
– Easy to use and extremely powerful
– With minor tweaks and optimising per underlying asset, it can make 20% per underlying per year on low to moderate risk
– Could be the only trading product you ever need
Get the Indicators as part of our Forex Trading Course Here, or purchase a 14-day Trial for just £10
Performance of our Order Flow Indicator (click thumbnails to enlarge):
For full details, use performance tab below
The LFX Order Flow Trader delivers clear directional trading signals based on the confluent crossing of both the Order Book Regression and Psychology Indicators. The indicators map Non-Commercial flow and volume in the market offering the opportunity to trade in line with the major financial institutions rather than against them.
The Psychology Indicator is looking at open and close prices and typically looks at continual trends. This plays on trend following, based on psychological theory.
The Order Book Regression Indicator allows traders to tell with a quick glance at the screen whether orders are trending up or down, and slowing down or accelerating. When these two indicators cross through their midlines in the same direction, powerful market signals are generated on your charts in the way or Red Arrows for sell and Green Arrows for buy.
LFX Order Flow Trader works best in conjunction with the Littlefish FX Forex Trading Course.
To be used with NinjaTrader. Learn more about NinjaTrader here
Performance for the Order Flow Trader was created using a combined portfolio of currency pairs using money management rules we teach in the course based on our own style. Currencies used in this portfolio are; AUDJPY, AUDUSD, EURAUD, EURJPY, EURUSD, GBPJPY, GBPUSD, USDJPY.
Figures produced by finding favourable risk/reward settings for each currency pair under the conditions seen in the past 11 years.
Installation & TechDownload the NinjaTrader Installation Guide
Watch the Installation video below
What is Order Flow? What does the LFX Order Flow Trader do? When should you use it? All of your questions about our Order Flow Trader answered…
Ok, so Order Flow. What’s all the fuss?
It’s difficult to give just one definition, as there are a wide range of different techniques associated with Order Flow. Generally speaking, though, Order Flow strategies are based on the idea that the study of orders in bid and ask gives traders buy/sell signals by anticipating movements in price.
Order Flow can give an insight into what is happening in the market at any given moment. Then, if they are exploited in the right way, they can provide a deeper understanding of market dynamics that cannot be gained by studying price action alone.
Tell me more about the market dynamics…
In order to understand the importance of the analysis provided by the Order Flow approach, it is necessary for us to consider how the market works. A market can be divided into buyers and sellers, both of whom want to close their deals. A trade happens when a buyer and a seller agree on a specific price considered “fair” by both parties. Thus, price is determined by the agreement of two parties, one who wants to sell something, and one who wants to buy something.
In economics, there is a well-known theory called the Efficient Market Hypothesis, which asserts that financial markets are “informationally efficient”, because there is no room to achieve return in excess of average returns on a risk adjusted basis. Different versions of this theory exist, known as weak, semi-strong and strong.
It is arguable that markets are not perfectly efficient, since there is an important knowledge asymmetry between market participants. Because of this, Order Flow techniques provide traders with the opportunity to gain a better understanding of what will succeed in the markets.
Sounds good. How does the Order Flow Trader look in action?
Well, let’s take a look. Then lets look at a trading example where we can implement the Order Flow Trader and extract profits from the markets.
In the chart example above we can see how the Order Flow Trader indicator is represented on our price charts, the indicator creates a pictorial representation of the order flow positioning of the larger market participants It does this in two ways primarily it creates an arrow alert that alerts us to a change in flow green represents buying pressure and red represents selling pressure.
The second aspect of the indicator which serves as a continuous confirmation or filter is the shading and dot representation on the charts. Once a green/buying pressure arrow appears the next candle if it confirms the continuation of the current order flow will print a dot under the candle and a shaded area around the candle of the same colour as the order flow direction.
So how can we use the signals to succeed?
OK. Well let’s walk through how we can use the signals from the indicator to execute and manage trades profitably.
In the example below we see that price make a potential double top, we monitor the candles for a change in order flow dynamics to potentially enter short positions against the structural resistance level.
When the next daily candle closes we get an Order Flow confirmation meaning that larger players are now participating in selling and it is there is a high probability signal for us to join them a sell. As such we enter short positions on the close of the candle with protective stops initially placed above the double top resistance.
So now our job is trade management, we want to monitor each candle close and use the Order Flow indicator signals to manage our risk as the trade potentially progresses in our favour. As long as the red dots and red shading continues to print we stay short the market. If the market continues to move in our favour we can use the Order Flow Trader to trail our stops and take profits.
Once the Order Flow gives a counter position signal we have two options, take profits on existing position at market or trail stops on current position using the last red dot that formed as our trailing stop level. In the example above we trail our stops from our 1.3760 short entry to 1.37 locking in 60 pips profit.
As price consolidates from the impulsive decline from the double top we hold our trailing stops on our short positions. Price break lower from consolidation and we monitor the price action for the next opportunity to tighten our trailing stops and secure more profits. We get a a counter signal to our position and trail our stops to the last red dot again. By this stage we have secured nearly 500pips in profit.
As the price action continues to develop we repeat the process our trailing stop eventually get triggered after we have secured nearly 1000 pips in profit. From this example I trust you can see the advantages of using the Order Flow indicator and how trading on the coat tails of the big boys can really turbo charge your profits!