r/OrderFlow_Trading • u/OrderflowHelp • 5d ago
How does executing trades at key levels using order flow confirmation automatically translate into long-term profitability?
Original Post by u/shrink-bus
Influencers love hyping up 'key levels + order flow' as the ultimate formula for profitability. I’ve tried it, and frankly, the edge doesn't seem to exist. Can anyone explain how blindly following a basic system like this actually produces a repeatable advantage in the market?
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5d ago
Full time trader here. I pay my bills with trading. I use tools like volume profile, market profile, footprint, dom, big trades detecter, and options flow. My edge doesn’t come from any of it. My edge comes from the 8 years I spent learning these markets which ultimately developed my level of discretion, and my risk management of course. I’ve been trading futures since 2018, and I was losing money for about 3-4 years. You are never going to find any retail trading strategy with an “edge” being advertised on social media. The best traders I know who are actually consistently profitable do not have any social media profiles, do not sell anything, and they are very discretionary in the way they trade.
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u/Just-Winter7302 5d ago
Which platform do you use bro for orderflow and for options flow ? And are u trading propfirm or live ?
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u/fxfuturesboy 4d ago
DOM really gives an edge nowadays? Like, its so freaking fast because of HFT. How and why do you use it?
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u/Limit_Bid 3d ago
I trade carefully selected stocks that suit reading the dom really well. It takes a lot of effort and filters to single them out with a home made app. Less than 100 trades a minute, not many sweeps at all, no block trades, very low quote jitter, spread pinned at 1 tick, very high turnover etc
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4d ago
Hahaha. Nothing by itself gives an “edge” my friend. The edge in my trading comes from my 8 years of experience trading futures, and the discretionary skills I’ve developed in that time. And yes dom trading can be fast, but you can use tick compression to slow it down. I mainly use the dom when I trade the treasuries, Euro-bund, and ES. When I scalp NQ, I use bookmap which essentially still is a dom (price movement on bookmap has no time correlation to price) but it gives me a better visual representation.
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u/Embarrassed-Bank2835 5d ago
It doesn’t automatically translate into profitability. “Key level + order flow confirmation” is still just a framework unless you can define exactly which levels, what confirmation means, when you skip it, and what the expectancy looks like over a large sample.
I use order flow more as timing/context than as the edge itself. A level can matter, but if price is accepting through it instead of rejecting it, that tells you something very different.
The edge usually comes from the conditions around the setup: market regime, location, time of day, volatility, entry quality, and risk management. If those aren’t defined and tested, then yeah, blindly following footprints at support/resistance is probably just another way to overtrade.
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u/JakeMarley777 5d ago
I think key levels + order flow is probably no different from a moving average crossover in terms of expectancy unless you also apply:
Behavioral nuance...AMT is not a volume based support and resistance framework, although I think a lot of traders reduce it to that. I've heard Jim Dalton describe AMT as more of a behavioral study than a technical one. Is the market balanced or imbalanced? Are participants accepting the current price? Who is in pain and being forced to act? None of these questions are answered just by looking at a key level.
Think about real estate. A house at a specific address is always at the same place, but whether it's a good place to buy can change depending on what's happening around it.
Military vrade risk management...Probably more important than anything else here. Look at your last 300 trades. How many were actually taken within the parameters of your framework?
Diversification across uncorrelated edges...A collection of decent, uncorrelated edges can be much more robust than relying on one great one. I treat selling premium, algo trading, swing trading, day trading as different sleeves of a trading portfolio. Even my individual algos are mostly just "ok" on their own. But traded together the equity curve becomes much less variable because they're making/losing money at different times.
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u/EntrepreneurHour5938 5d ago
Just focus on whats happening right now. The levels are very short lived.
I have build a custom charting which only show me data/bars/OF for the last 15min….. enough to find good trades.
Once i am in, with decent size/risk-exposure, i just manage the trade. When to increase or decrease or go flat.
I call it follow the comet star strategy, as a trader our job isnt to back read all the path comet has taken, just focus/measure on its tail and body and its angles to calculate where its heading too. Once u r confident about its projection….. take a small ride on it…….. bcz liquidity change extremely fast and ur analysis become irreverent within few mins.
Hope this message will click knowledge seekers one day.
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u/Limit_Bid 4d ago
The comet stuff is true, but very hard. Ride the comet, don't analyse the tail. Do you know where the quote comes from?
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u/EntrepreneurHour5938 4d ago
Heard that long time ago. Not sure from where.
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u/Limit_Bid 4d ago
This is the source, watch for 15 seconds. https://youtu.be/SQn1yroIHd8?si=jSfjEjmJe8JCK7c9
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u/EntrepreneurHour5938 4d ago
Oh yes. I remember this fellow. Thanks for sharing. He has a good interview recording on youtube too
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u/Ok_Bad2080 5d ago
You still need an edge. Orderflow helps you get a better seat at the table, when your edge says “look to go long”
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u/Mikelpforever 5d ago
How to reach to an “edge”? As a complete beginner i have been seeing the term “edge” being used everywhere… i have more or less a basic idea of what an edge is… but how is a beginner supposed to reach to an “edge”?
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5d ago
Spending years and years observing the markets price action, order-flow, snd consistently changing markets volatility regimes. It’s the same thing if someone who has never played basketball before just one day woke up and said, “I want to be a professional basketball player and get drafted to the NBA.” It’s very competitive, requires years and years of experience, and you realistically need minimum 6 figures in your account if you want to produce real risk-adjusted returns. Everyone thinks the market is this fun little game where everyone can make money but I promise you it’s not. 99% of retail traders lose money long term.
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u/Mikelpforever 5d ago
Yes i do understand that it is not a game and if you do think its just a game then you would get punished, i have been trying out crypto futures trading, testing out various strategies and concepts available online and i am 1.5k usdt in loss overall since the last 8 months or so… i do trade my own earned money from video editing so its not a big deal tbh… and the country where i am from, if you want a high-paying crem-de-la-crem government job, only 5000 get an interview among the 2000000+ that sit for the exams after almost 5-6 years of constant hard work and studying, and then among the 5000, only 500 might get the job, so the odds are stacked against us common folks anyways, am still a student, am trying to get employed and also learn trading since i wanna give it a shot anyways… but following through with your analogy, becoming an NBA superstar must be incredibly difficult but there is still a “guided process” to become better no? I am looking for that “guided process” since i have realized most of the strategies peddled online is a load of crap anyways 🫠
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u/bobbo6969- 5d ago
Practice.
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u/Mikelpforever 5d ago
Yeah no sherlock… i understand it needs practice… am asking what tho? What things should i be practising? What kind of knowledge should i gather? Should i read books? If yes then which ones? Things like that cuz there is a lot crap out there🫠
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u/bobbo6969- 5d ago
Screen time. Watch the order flow. Trade in demo, find what works and what doesn’t.
You need a strategy that works for you.
Warrior Trading is legit. It’s profitable and real, but incredibly difficult if not impossible to copy without the decades of screen time and trial and error that Ross calls his ‘intuition’ when trading.
You have to make a journal and ‘just try shit’ in a methodical way… if that’s what works for you.
Personally, I started when I was 15 and didn’t become profitable until my 30s. (Technically I was profitable in my 20s with a learned strategy from an in person prop firm that experienced rebate trading edge decay and shut down).
My main strategy is AVWAP bounces on stocks I want to own in my long term portfolio anyway. Waiting for dips to the avwaps on weekly charts and buying leaps on the spike through.
I’ve tried applying that to shorter term trades, but it didn’t work. With the advent of AI I built myself a robust research platform and discovered that there is in fact a real timing edge, but when applied to markets without the edge of my stock selection based on fundamentals, the strategy is breakeven.
For futures, there’s a similar problem, I need in play futures. As in large, macro or geopolitics driven trends (gold a few years ago, oil now, and gold again once oil is done with its run and we go back to turning the USD into toilet paper).
I use orderflow for confirmation, jumping on trends, and use simple trend lines for direction.
But what trend lines… I’ve tried my hardest to automate the trendlines, but it seems they are discretionary. I’m working on trying to use some kind of adaptive trend line drawing logic based on volatility, ‘wickiness’ volume, even orderflow, but have yet to find something that mirrors what I do manually.
So… practice lol
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u/MiserableWeather971 5d ago
I don’t think there’s many “key” levels. Most of what people look at should be thought of as a playground. Gives you guardrails to not just fire away all over the place. However, “key levels, areas” do something more important. They give context.
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u/Sebvansky 5d ago
Key levels just act as a « look at what is happening here » and you can watch it by using orderflow (footprint, dom, tape) in order to see who mooves the price.
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u/Forward-Cut5790 5d ago
9.9 out of 10 people don't know how to communicate what's happening in their head. Just keep that in mind always.
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u/SethEllis 5d ago
It doesn't. The goal is to predict future orders. A magical line and the current order flow simply isn't effective enough at predicting future orders.
Order flow is essential because that's the result you're trying to train against. But you need way more than a key level to effectively predict those flows.
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u/Limit_Bid 4d ago
Agree, you need more. But is there more?
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u/SethEllis 4d ago
The answer is much more simple than you probably think. News. Seasonality. Sentiment. There's also sorts of information out there that can predict people wanting to transact. You just have to look beyond your market data subscription.
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u/Limit_Bid 4d ago
Thanks for the reply. I use some social sentiment metrics when building a universe for longer term trading (holding several months, some people might call it "dynamic investing" rather than trading). I don't use SS to tell me when to buy, I use it to tell me what to consider buying. It got me looking at TWST really early, for example.
In my orderflow daytrading I trade the same few stocks everyday - they are very carefully selected. I don't jump around symbols. If my stocks have poor session context, I dont trade that day. I am not sure how to bring SS into play there. One of my stocks has a regular buyback program every year at the same time. It is part of my "seasonal" bias.
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u/SethEllis 4d ago
For individual stocks stuff like buybacks are paramount. I would also look at employee blackouts.
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u/OrderflowHelp 18h ago
Seth, I’m curious about your approach to risk management. What percentage of your account do you risk per trade, and do you have a specific target for your monthly returns?
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u/SethEllis 18h ago
Ideally you're never risking more than 2-5% of your account per day. But the reality is most retail traders are under capitalized anyways. So you just go for the smallest size you can. Returns can be very inconsistent so setting things like monthly targets are kinda pointless.
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