One of the misconceptions about reading the order flow is that once the trader understands where the market is going that they need to take a very aggressive posture. Sometimes an aggressive approach is the right approach. But, in many cases a less aggressive approach will work better. In fact, there are a class of order flow patterns which I've dubbed "cancelation patterns". These patterns tend to occur when many short term traders attempt to take the same trade at the same time-- the opposite tends to happen (at least immediately). As such, the most difficult part can be knowing whether to be aggressive or more conservative. AlphaReveal gives the trader greater insight to help make these decisions by showing how the order book and order flow are interacting.
Even so, its often at the highest uncertainty that the trader must make the difficult decision. As such, the best we can do is evaluate, adapt to the changing market, and work to improve.
Thursday, March 07, 2013 4:01:00 AM
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education