Understand order flow and how bank traders place orders?

For retail traders like us, placing orders doesn't make us think too much. We can place orders wherever and whenever we want (as long as the market is active so we can trade). This happens because when you enter an order, you will have to have someone on the market trading at the same time with us and trading against us (basically, when you buy, there must be a corresponding seller).

And the trading volume that we can buy or sell also depends on the volume of transactions that other traders in the market place orders at the same time as us. If you want to buy 100,000 EUR, someone has to place a sell order with 100,000 EUR at the same time, otherwise, no trade will be made. The problem is that for retail traders like us, we cannot buy or sell in order to influence the market (our trading orders are only a very small part of the market). The small volume allows us to buy or sell any time we want because the market always has enough liquidity for our orders to trade.

For bank traders, the problem is very different, their orders are bigger than ours, which means that it will be harder to place orders, as large volumes will require large volumes. corresponding. Therefore, in order for bankers to place orders, they need to know when a large number of traders place orders in the same direction (enough liquidity for them to trade in the opposite direction).

Look for the area where the big hands place orders

Although we cannot know the exact time when banks want to enter a buy or sell order, once we understand the order flow, we can search for the zones according to their wishes (find the areas where most traders are thinking in the same direction or placing large orders in the market). That is the time when the bankers will pay attention because enough liquidity for them to trade.

Let's take a look at some of the charts below, the chart is marked with supply-demand zones, and see if we can determine when the big hands place orders to make the market move.


This is the demand area on frame H1 of the USDJPY pair.

The bull market started in the demand zone because the bank traders placed orders to buy into the market. In order to be able to find the area where buy orders are placed, we need to find the area where short orders are traded with large volumes.


Also the chart above, however, this figure has been drawn more possible points where bank traders place buys orders. You can see that these zones are all swing low zones. The swing low area is the moment when the bank trader's trading order "consumes" all the trading orders that are entering the market from the traders opposite them.


Here is the next example. With this figure, you can see that the demand area caused the market to increase. When did they place a buy order? Swing lows are formed before the market moves up. And before the market formed the swing low, the price fell very quickly and strongly, which means that most of the traders in the marketplace sell orders (the market falls). The fact that traders placed orders in the same direction attracted bank traders to place buy orders to liquidate their trades.

Conclusion: defining the supply-demand zone at the time the bankers enter the command is just the first step in your research on price action. You will need to learn how to measure the power of supply-demand zones, learn about price behavior in these zones, and how to place orders in the supply-demand zone ...