Knowing your market inside out

[RobinHood]

I've heard, and gathered, from some successful traders that the key to making it is to know your market inside out.

When I hear this I think about the order flow firstly. Picking up on patterns in the book(what sits, what hits) and thereby learning about the players.

I still feel like theres something missing though. I try to watch as many instruments as possible so I can pickup correlations and relationships (which I have yet to figure out).

I may hear things like "rollover ratio", "2,5,10 fly", "arb buyer propping us up" (don't know how one figures out that it as an arb responsible for the buying). Another thing that comes to mind --
I'll also be unsure why there is a 85 lot taking the offer (HSI) when there was only 3 lots sitting in there and we only move up 1 price level -- when HKFE states that a block is only 100 lots or over.

All these things seem to tell me that there are still lots I need to learn about the markets I trade to really know them "inside out" like the pros, but the problem is apart from watching order flow I'm not sure how.

I look on HKFE site but there explanation of their order routing system is pretty bare and didn't answer any of my questions.

How important is watching order flow reaction to news real-time? (I don't have live news feed) - and considering subscribing to a good one.

What else, apart from watching the raw order flow, needs to be studied and can be done in order to know your market(s) inside out?

(I picked up Larry Harris' market microstructure book, which has helped).


cheers

 

[Trembling Hand]

Practice.

You don't have to know everything. Just what works for you.

 

[MRC & Co]

Practice.

You don't have to know everything. Just what works for you.

And isn't THAT the truth!

Robin, I think your reading too much into it.

Put important levels on your chart of support and resistance.

Maybe just look at Nikkei and S&P and make the charts small, so you only look for big moves in them and see how the HSI reacts to it. If it begins to follow (half the time it does it's own thing), then go for the trade.

Look for chart patterns in your market, like BS rounding tops, a rounding top followed by a spike to get all the bears out, before it rolls over anyways.

Try to get a 'feel' for the flow in the order book (something I am still working on and it is the main thing I am working on).

Now click click click on the SIM and eventually, you will be sure to come accross an edge.

Try not to over analyse every little detail.