OrderFlow-assisted scalping

Had a decent scalping session today: took three long trades on EU towards expiring option at 1.3725, market was around 1.3680. Made +10, +20, +13 pips. Then engaged into scalping, bit of mess, lots of small winners and losers, my mistake was I started doing it too late, around mid-way through US session, and the best time is start of London. In any case did around 30 trades during the day, net result +70 pips.

Some trading rules to follow:

To do:
1. Wait for a decent trend to establish on M1, don't trade ranging market on M1.
2. Identify support or resustance on a pull back, or breakout-pull back (the best)
3. Use Order Flow and OrderBook sentiment bar to identify sentiment and pressure
4. Wait for a signal from MFSI and confirmation from PA with a price moving same way, on a decent volume at least through the half of a first M1 candle and enter
5. Decent pressure on OBFX viewer bar is a big bonus
6. Start trading option/stops run around 2-2.5 hours before expiration on counter-trend breakout/pull-back

Not to do:
1. Don't trade after 4 PM CET
2. Don't trade ranging market and indecision
3. Don't trade against immediate trend and H1 trend if present
4. Don't trade against an expiring option or noted stops cluster

OrderFlow trading: Option Assault

I was given an opportunity today to test DarkStar's method for a second time, the first attempt was last week. And again it played out by the book:

1. This morning information about a resting put option with a strike 1.3600 was leaked on TalkingForex.

2. EurUsd was in an intra-day down-trend, which quickly reversed, just as DarkStar noted.

3. A short up-trend was used to achieve a better price to accumulate offers being sold to break out buyers, to shake out short weak hands and to invite bottom callers to long, in order to hit them with a big sell-off forcing their stop orders into liquidation.

4. With a break out from a short-lived up-trend the down trend resumes, occasionally producing long up candles, scaring weak hands again and use propelled price to add to shorts at a better price.

5. As time is closing to the cut at 10AM NY, the price is breaking under 10-pip zone of 1.36. My first target is hit at 1.3615 and 1/3 position closed.

6. A fierce battle commences for about 15 minutes storming the 1.36 barrier. The option underwriter fiercly defends the strike price in order to avoid a pay-off and retain a premium. An option buyer fights to avoid paying a premium and to capitalize on whatever profit may be (a number of pips a price will be below 1.36 at a cutouff time).

7. An option buyer and stop raiders won again as price closed at around 1.3598, creating a small profit for  an option owner forfeiting a premium. But the battle is not over yet as now there are less defenders left to protect 1.3600 since the option underwriter doesn't care any more. Only people who care are stop raiders and people who have stops below 1.3600.

8. Half an hour later raiders managed to push price below 1.3595 and force a stop liquidation, visible on a strong down bar. However there was no cascading stop liquidation what would be visible as charts failed to produce consecutive large down candles. Therefore there was no more selling interest and it was a time to close positions.

9. I had an entry split in 3 parts and also had 3 take profits, all 3 were hit as limit orders.

10. The best part is this highly profitable fun happens several times a week in FX for every major, every week :)

Result of the trade: 130 pips collected within 3 hours. Stop was 50 pips as emergency, I would be closing positions if retraced over 20 pips. OrderFlow principles and OrderBook data feed was used to select entry points precisely and also monitor for the potential bail-out.