As a discretionary trader, the MOST IMPORTANT question you can ask during analysis and trade management is:
Where are the orders?
I had an email chat this week with a trader, Bruce, who is progressing well in identifying potential sources of orderflow for trade entry. Bruce took a limit order buy entry at point B on the following chart, based upon the principle of Prior Resistance Becoming Support.
The main problem with this particular trade though, is failure to consider other potential sources of orderflow that may oppose the trade premise.
The following charts will explain better than I can via text:
The first stage in learning to trade with awareness of orderflow is in identifying sources of potential entry orderflow. The second is in expanding your awareness to other areas that will be of concern to those already holding positions, which may act to oppose your trade premise
Always ask, “where are the orders?