Jaymes Rosenthal - Market Flow

Market Flow/Feel/Volatility/Movement etc...

"Order flow" can be defined in various ways and seems to me to be a bit subjective.  Flow, momentum, feel, volatile, whatever you want to call it.  It's all in an effort for a market to reach equilibrium.  The intuitive part of knowing how to approach and trade that is what I am referring to.  Experience and knowledge of specific market action seems most important to me in regards to this.  So, what are some things I think about that affect market flow:

- number releases
- chart levels
- individual players and their urgency to execute
- time of day
-random news
- fear
- volume

Reacting to market flow is something, like many I'm sure, I feel very confident in at times and terrible at others.  When I think hard about it, it seems my best "feel" comes from sustained flow and volume in specific markets that allow me to be first or react in real time.  Seeing a move get "exhausted", a player entering or exiting, and/or planning my execution if and when X occurs in the market.  By that I mean building my story early during a move then executing quickly and aggressively if that idea comes to fruition.

An example of this may be a unique market that has increased in volume over multiple sessions and is moving toward a perceived important level.  Determining if the move should continue through that level or bounce/turn, where to enter if so, why, and what I'm looking for in a winner or a loser.  These are my strengths.  

I'll break it down a bit more when it comes to what I look for when it comes to a fade, and then similarly while attacking a trend...

Attacking Fades

- determining first if the cause of the move is a fundamental shift in price or based on an individual or reaction/hot money
- digging and observing deeper to try and find an individual causing movement, stops, lots of volume from lots of people, etc?...
- if it's an individual player can we see when he is done?
- where are some good pivot point levels of importance
- the extent of what to reach or not... should we be resting orders, only taking orders to enter,  how fast did it approach this point and what is market reaction to it?
- how much time do we need to see if our idea is "working" once we are in the trade?  Should we be holding?   Exiting immediately if not onside?  
- what are our winner/loser expectations and risk profile

Attacking Trends

- how strong is this move compared to "normal", does it express need to enter quickly or patiently
- searching for and identifying pullback "zones" that offer other assistance (specific orders, icebergs, chart levels like VWAP etc.)
- if entering a long at or through a top, why?  What are pullback (offsides) likelihood post entry and what's plan if so?  Should we be instantly getting out, letting the trade develop? what's our risk?
- using specific times as entry assistance such as early morning opportunities to enter with more precision and smaller risk.  These can provide spots to hold onsides positions into the main session and let them develop into the trend, making it easier to hold and to think clearly whilst in the trade itself.
- What are we expecting out of our trade?  Will this move continue for long time period?  Is it a repeated scalp in and out?  What are we best at in each case?
- ^These early, "planned out" mental thoughts on exit strategy can be based on history, time, strength of move, liquidity, etc.

Most of the time I am executing these types of trades, it feels intuitive in nature.  But really most times they are something I have seen coming based on constant market awareness/scanning.  This for me is best done early in the morning and includes lots of mental memory of what's been moving in the past few sessions.  Removing a lot of the "surprise" from moves that happen across markets is something that helps me trade situations more clear headed and equals a better bottom line.

My Struggle

Where I don't seem to execute a good feel for market flow is during number releases and random news events that occur midday.  My biggest concern here looking at it objectively is purely feeling last to react rather than first.  In this case I am mostly reacting to the reactors.  Being one step behind requires me to take on a whole different perspective than previously stated because I can't plan (as much) for them and find my head in the clouds often.  This especially impacts my first entry.  My instinct to help correct this is first to learn to understand the situation more efficiently, as in what caused it, and to look more for "secondary" moves in which I can now revert to being "first in" again.  

I think it's obvious that trying to execute the similar strategy I use in the Fade and Trend models I described above to these more unique, unexpected moves is very sub-optimal.  

Questions?

How do you approach expected and/or unexpected moves.  IS there some main fundamental shifts in your perspective, execution, risk tolerance, mentality, etc...?
What are some other considerations you look at when approaching getting on a trend path or fading one?
Does fading or trend following suit you better and what characteristics of your trading make that so?
Please add anything else to this category as it obviously includes much more!

Jaymes