Dear DS and the experienced traders, This is my first post. After reading the book the second time and spend sometime thinking about the concept, I am writing some of my understandings so that you can comments/help me to know that I am on the right track or not. Any comments/ corrections is welcomed. 1. Order flow trading is a mindset applicable to trading all time frames. While the book describes the micro-structure of price changes in lower time frame, the logic also applies to higher time frames. Price changes at higher time frames are the result of order flow consumed and supplied during longer period of time. 2. Price actions (i.e. a pin bar, a bar closed above/below a significant resistance, etc.)are the results of (1) the market's "decision" on sentiment, (2) the consumption and generation of liquidity. 3. While the order flow trader may anticipate the reversal points of the market and hence enjoys nice profit due to bigger position and tight stop loss, order flow trading mindset does not necessarily follow this "Stop Hunting" approach. Rather, it is about (1)understanding the current market sentiment (via understanding of market themes and conditions), (2) reading the order flows built up near/at the level, (3) identifying the reversal/continuation in market sentiment (due to news/event) and (4) position accordingly. 4. Understanding sentiment is critical and the pre-requisite for order flow trading. With understanding of sentiment, the trader can create his own trade plan with different scenarios of sentiment changing/continuing. At the tipping point (when news/event is announced), the order book changes , then the trader's position should follow the path of least resistance to make profit (i.e. going with the stronger order flow). 5. Without understanding sentiment, the trader have no other ways than waiting for the market to tap its hand as Price action bars formed, which may be "safer" as price confirmed the direction of the move, but results in less trading opportunities, and lower profit due to the size of the position and stop loss. 6. As a retail trader, we should follow the larger operator's order flows. A large operator needs order flows built up to provide liquidity for his desired position. The building up of liquidity may takes minutes, hours or days Depending on his desired position size and the liquidity offered by the market (at a particular time of the day, under a particular current sentiment, before a particular news/event, etc.), the large operator may design his own tactic accordingly: - if buying into the level is weak, he may buy into the level to generate others' buy orders to consume sell limit orders at the level, and then liquidate his position at the SL of those sell orders (i.e. Stop hunting). - If buy order flows into the level is sufficient to consumes all sell limit orders at the level, all he needs to do is waiting until these sell orders are consumed, then enter a "small" buy orders to trigger the SL and liquidate his long position plus placing more sell orders at the SL levels. John

Edited by user 5 months ago | Reason: Not specified