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1/ Weekend OrderFlow Prep
Week 1
Absorption & Trapped Players
These two are a bit intertwined so we will combine them together.
#ES_F #OrderFlow #Absorption #Traps #ImNotAFuru
Week 1
Absorption & Trapped Players
These two are a bit intertwined so we will combine them together.
#ES_F #OrderFlow #Absorption #Traps #ImNotAFuru
2/ Absorption is simple in concept, lets say you have aggressive buyers firing 100 lots 200 lots at a time like a machine gun, and price isn't moving. Or you have 1000 lot order hit and price doesn't move.
3/ Generally what is happening is there is a player on the other side taking all of that buying thus absorbing him. He's on the other side saying "thanks, I'll take more, more and more".
4/ What happens when next is key, who runs out of ammo? a) buyer runs out of ammo, gets tired, exhaustion, he may fire off one more large order and step away, if this happens you'll most likely see a pullback to next area of support.
5/ Now lets say we pullback, we find more buyers and return to this absorption area, if the seller is no longer there (or he thinks he can sell at higher prices) we "should" blow through this area and travel to the next zone.
6/ That's scenario one. Scenario two we have someone absorbing and continuing to offer anytime we return to this area. This can lead to trapped buyers. .
7/ So how do we spot these trapped buyers? It's actually pretty similar to the first scenario except we want to see an immediate and painful pullback from their buying (say 7 - 8 pts min) of pain.
8/ Then when we get back to that area of absorption we want to observe offers stepping back on the gas. This is a good r/r trade for a short.
9/ What we are expecting here is the original seller to protect his position (ie continue to sell aggressively at that level) and we are expecting stuck buyers to cut their positions for as close to break even as possible thus creating more sell pressure.
10/ I will follow this up with some videos (slower LOL) of observed absorption and trapped setups.
