ORDER FLOW: Foolish to Ignore…

Order Flow

An interesting week! More than most… mainly because of the matchbook traders conference.

As you may expect, some interesting individuals and thought-provoking debate. Especially amongst drinks after the conference.

One of the topics that came up several times was order flow, and trading styles…

What is Order Flow Trading?

Order flow – as the name suggests, is a trading style that’s based upon current market activity. Sentiment and momentum if you like.

Within all markets order flow is an interesting topic. I’d argue it applies to sports trading, and within horse racing more than any other.

Why? Because of the market make-up.

If you look at another trading environment, such as in-play tennis betting. There are considerably fewer variables or possible outcomes for that matter. The money will always drive a market through the universal laws of support and resistance. However, when there are so many possibilities and unknowns throughout racing, it makes sense to listen to the market that bit more. This is of course where order flow comes to the fore.

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Shock Horror!

One of the questions at the conference was along the lines of “How important is form and racing knowledge to your trading?”. To which it seemed many were surprised with the answer. Despite both Dan and Peter’s responses being a little more subtle than mine, we all come up with a very similar response; it appears to be more of a hindrance than anything.

That’s not to say form and racing knowledge doesn’t help, it certainly does. Those who have read the recent guide update will know exactly what I’m talking about but the average viewer looks at the form in the wrong way (from a trading perspective at least). This is also the reason that racing fanatics rarely make good traders. Trading is often about trading what you are seeing, rather than what you want to see. The form is just helpful when understanding the betting market conditions and parameters.

Matchbook Conference

Interestingly, Dan Weston attributed some of his success to the fact it’s not his favorite sport.

How Do You Measure Order Flow?

When it comes to order flow, the difficult part is deciding how you’re going to quantify the flow of money entering the market.

For someone new to this way of thinking, the snap-reaction is to look at order flow and weight of money as the same. They’re not.

When we talk about order flow it’s more a case of fluid money entering the market, that is being matched. Not simply unmatched money piled up either side of the current pricing.

Effectively quantifying the genuine flow of money as it hits the market is the tricky part. But the first clue would be to make sure you know when the points of peak activity are, trading 20 minutes out is likely to produce far more random results (and be incredibly boring). Plus there’s an added problem to your mindset when attempting to trade a market that is not truly active. Impatience, doubt and general emotion creep in far quicker – leading to impulsive behavior that’s never any good.

traded volume bars geeks

Several of the software’s have similar features, but a while ago I paid the guys at Geeks Toy to add in an extra setting to the traded volume bars (shown above). It’s not exactly the holy grail, but a useful feature none the less. Not so long ago it was released to all. You can activate it by right-clicking the ladder and selecting:

Visual Options > Last Traded Bar History (Seconds) > Select Time

Looking at the snapshot above it just adds another dimension to that traded volume, making it a little easier to see where the most recent money has been.

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11 thoughts on “ORDER FLOW: Foolish to Ignore…

  1. Hi Caan,

    How are you getting the green shades in that column? For instance, at 7.2, the row is almost fully shaded and it is a darker green then most of the prices above it. What does that mean?

    Thank you and I enjoy your blog.

  2. I know nothing other than basics about Horse Racing, I used to trade Tennis (which I enjoy as a sport) but I found myself becoming married to an opinion. This lead to me holding on to losing positions. You know the rest. With Pre Race I trade price action with basic price lines as confirmation and it works for me. The only thing I can’t do is go through the days races in the morning and predict drifters or steamers. But this isn’t an issue really other than a small reduction in income.

  3. Hi Caan ..I trade with Bet Angel and they have the same thing which I find very useful and hardly ever trade outside the latest money and also it matches with the amounts traded almost exactly so you have two indicators showing the same picture so I am not saying its perfect but its very good and if a price breaks out there is almost always a very good reason if you can find it …One thing I am not sure of is the setting which I have on 33 33 33 so which is the best do you think for trading 5 minutes in ?

    1. Hi Gary,

      Sure, there is the same feature with the money dropping in on Geeks. Not sure what you mean about a reason? Not familiar with the setting you mean either – can you explain a little more?


  4. I don’t get that. Surely the current price is where the most recent money has been traded, and therefore the current price will always be the dark green area?

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