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One reason many traders struggle is the lack of clear guidelines that assist in decision making. Frequent frustrations that traders suffer from include: Is the trend up or down? It s up on my hourly chart, but it s down on my daily chart and up on my weekly chart. Where do I get in? Where do I place my stop loss? Where should I take profit? Questions such as these not only block aspiring traders from progressing along the learning curve, they also confuse more experienced traders who can become prematurely unseated from their trades or suffer from bad timing. The bottom line is that trading is challenging at all levels, but certain information can make the journey much easier. OANDA s MT4 Open Order Indicator could help supercharge your trading strategy, by offering three essential pieces of information: Open long positions % versus open short positions % If total short positions outweigh total long positions, OANDA s clients are evidently bearish on that currency pair, while traders are bullish if total longs outweigh total shorts. This provides a clear line of sight over retail market sentiment. Retail sentiment is currently long on EUR/AUD OANDA MT4 Open Order Indicator: EUR/AUD daily chart with the Indicator set to non-cumulative open orders Open orders (limit orders, stop loss orders, take profit orders) This data point provides even more precise feedback. For example, a large cluster of sell orders above market price informs traders of potential resistance, while a large cluster of buy orders below market price suggests potential support. 2 oandamt4.com
Large buy and sell order clusters OANDA MT4 Open Order Indicator: USD/JPY 4-hour chart with the Indicator set to non-cumulative open positions However, large order clusters contain a mix of limit entry orders, stop loss orders, and take profit orders. Without additional information, it s impractical to believe that a support or resistance level will hold. To stack the odds even more in the trader s favour, firms also have open position information. Open positions (long and short) If there are many open long positions below market price, then a large cluster of orders above market will likely contain a number of stop loss orders (longs throwing in the towel), rather than limit entries. Vice versa, if there are many short positions above market price, then a large cluster of orders below market price will likely contain a number of stop loss orders (shorts throwing in the towel). Current open long and short positions OANDA MT4 Open Order Indicator: EUR/AUD daily chart with the Indicator set to non-cumulative open positions The trading style you choose to adopt whether range trading or trend trading does not impact the importance retail sentiment can have on your bottom line. 3 oandamt4.com
Supercharge your trend trading skills Successful traders always follow the line of least resistance. Follow the trend. The trend is your friend. Jesse Livermore. The first, and potentially most important piece of information that OANDA s MT4 Open Order Indicator offers traders is a direct measurement of retail sentiment. This is important because most retail traders trade against rather than with the trend. Usually, when there is a large imbalance between the percentage of long and short positions, a steady trend is developing and the odds are stacked against retail sentiment in favour of trend followers. AUD/USD is in a strong uptrend and retail traders are net short OANDA MT4 Open Order Indicator: AUD/USD 4-hour chart with the Indicator set to non-cumulative open positions The majority of traders (59 percent in this case) are fighting the trend and are therefore in losing trades. So, instead of fighting it, how do you follow the trend? The first clue lies in going against the retail crowd. When retail traders are net long, the smart trader will adopt a short stance. When retail traders are net short, the smart trader will adopt a long stance. Using this example, smart traders would likely veer on the long side of the market. The question remains, where are good levels to buy and take profit? In order to answer this, successful traders typically pay attention to the largest buy order and sell order clusters. 4 oandamt4.com
Retail open orders suggest looking to buy around 0.7560 and taking partial or total profit around 0.7700 OANDA MT4 Open Order Indicator: AUD/USD 4-hour chart with the Indicator set to non-cumulative open orders The largest open buy orders will likely act as support when price declines, so it makes sense to wait to deploy your favourite triggers to get you in position for a trip that will hopefully make it back to recent highs, where the largest sell orders are clustered. It makes sense to take at least partial profits at this level because the sell orders will create resistance. By knowing which side of the market retail traders currently prefer, you can take the opposite side with confidence. Similarly, by knowing where the largest accumulation of orders sits, much of the guesswork around entry points can be eliminated. Supercharge your range trading strategies It may seem strange, but when the market turns range-bound, it is entirely possible to trade alongside retail traders. Retail traders, as a group, have a tendency to try and pick turning points. When the market finally turns into a range (whether short or long term), retail traders will typically find the best possible spots to play the range. OANDA MT4 Open Order Indicator: AUD/JPY 4-hour chart with the Indicator set to non-cumulative open orders 5 oandamt4.com
In the previous chart, retail orders are scattered neatly at the edges of the range, and until the range breaks, the best bet is to buy near the bottom and sell near the top. So, how can retail sentiment assist traders and offer even more information? Once again, the percentage of traders with long versus short positions comes in handy: If the range is developing within an uptrend and retail traders are net short, smart traders look to buy near the bottom end of the range and take partial or total profits near the top. However, they do not sell at the top. The fact that retail traders are net short means there is a possibility price could break higher. If the range is developing within a downtrend and retail traders are net long, smart traders look to sell near the top end of the range and take partial or total profits near the bottom. Again, they do not buy at the bottom. The fact that retail traders are net long means there is a possibility price could break higher. If, as in the chart previous, retail sentiment is fairly balanced, then successful traders typically view this as a warning sign that the price could go either way and therefore play the range from both sides with small position sizes, because sooner or later it s going to break. It s useless trying to guess exactly when, so it s best to understand that one of the range trades will become a loss that will need to be cut quickly so you can reverse your stance and start following the new trend. A new era in retail trading Available exclusively to OANDA clients, the proprietary MT4 Open Order Indicator reveals critical information never before available to the retail trader. By presenting an overview of current buy and sell orders placed by OANDA traders directly on your MT4 charts, the Indicator enables traders to capture market sentiment, identify large order clusters and trade contrarian trends. This effectively stacks the odds in your favour by providing access to the same strategies typically used by institutional traders and interbank dealers. To learn more about OANDA s MT4 Open Order Indicator, please visit oandamt4.com. 6 oandamt4.com
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