Trade Point Technologies

	Order Flow & The Balance of Trade

	Then and Now

	In the days before computerized exchanges, the biggest advantage pit traders held over the public and other off-the-floor traders was that they could see the order flow/balance of trade in real time as it was being created. In those days a trader would signal his desire to buy by showing both hands with palms inward and with one hand indicating price and the other indicating his size. Palms out to sell. The liquidity in the market came either from orders received via the phone banks or from commercial house traders in the pit. To know the balance of trade or oder flow all the trader had to do was to look at either known commercial traders in the pit or at the phone banks. If he saw a sea of palms that told him a wave of selling was about to hit the market, palms inward - buying, mixed indicated no particular bias. Traders quickly learned to know and recognize the commercial traders that executed on behalf of the big trading houses because they know that when those traders put their hands out that they had size to do and that such size was often sufficient to form a local if not a session extreme. Today the traders that do that kind of size trade from all over the world and the trade that forms these extremes is often executed by computers that issue these orders in a stream separated by milliseconds or even microseconds. Today's astute practitioner can easily spot such activity by the use of such indicators as our indicator of The Intensity of Short Term Commercial Trade. We measure order flow and the balance of trade with 3 indicators - Session New New Commercial Trade, The Harmonic of Buying and Selling Volumes and the Volume Histogram, all demonstrated in the 5 charts shown below.

Trade Point Technologies
Home	The Basis	Mission Statement	A New Paradigm for Proprietary Trading Operations	Services	Contact