The Battle of Marathon, 490 BC. The Greeks are outnumbered by the attacking Persians looking to subjugate Greece. Two choices faced the citizens of Athens: accept surrender and die, or use their limited resources and keep the Greco legend alive.
What unfolded was a decisive victory for the Greeks that marked a turning point in the Greco-Persian wars. Thanks to a ‘double envelopment flanking maneuver’ the Greeks were able to fool the Persians into concentrating their forces in the front and committing too early in the fight.
Every day, millions of retail traders commit precious capital resources to a reversal that’s merely a Greco-like feint. Understanding how to use Order Flow Sequence Tracking Intelligence will help you let the battle of price unfold — allowing you to strike at the right moment.
A battlefield mistake made by many retail traders
The Battle of Marathon was considered a watershed moment in the Greco-Persian wars. It gave the Greeks newfound faith that the Persians could be beaten. The Persians were drawn in with an initial feint and came charging, believing they could crush the Greeks in a decisive blow.
With the overconfident Persians rushing straight in, the Greeks were able to move their forces alongside the frontal assault and encircle the opposing force. Thus the resulting maneuver and outcome came to be known as the Pincer attack.
With every bull or bear candle, retail traders come charging in with positions believing they can take crushing profits with an ensuing swing. Only when they’re overtaken in short order with a stop do they realize they jumped the gun.
Often burned by lagging indicators that are late — or miss swings altogether — many of the premature entries made are heavily reliant on candle formations and oscillators. While an RSI (Relative Strength Index) or MFI (Money Flow Index) may be fully pegged, price may still be headed for a continuation — with no signs of let-up coming any time soon.
It’s this lack of real visibility between buyers and sellers that burns retail traders every time.
Conditions that tell you when you’ve outflanked price
Critical to the Greek’s strategy was to calculate the distance of the front line from the infamous Persian archers. Gauged at right around 200 meters, they managed to come right up to this line in a broken formation and then change course — instead, sending forces in from the sides. The result caught the Persians off-guard and allowed heavily armoured Greek forces to crash into the soft Persian center.
The same genuine conditions can be spotted when looking for a genuine opportunity to attack a reversal. Unlike the retail trader-like Persians, relying on their arrow indicators to do the work — you have the benefit of Order Flow Sequence Tracking Intelligence. This tells you the line you’re looking to see crossed — and the conditions that a retreat is coming.
Looking at our ES example above, which has multiple, profitable reversals, you can see the following:
- Price Extreme: Instead of grinding right along in the value zone, price breeches Value Area Low (VAL) at the bottom, creating an oversold condition.
- Sequential Decline: With price bottoming out relative to value, the sellers start to back off, sensing that conditions are getting too cheap.
- Responsive Activity: With sellers backing away, the Greek-like buyers come in overwhelmingly — outflanking the sellers and turning the tide of price.
Without visibility into either value or the buy/sell battle, you would have been left wondering when, if, or how to profit from this price condition. Fortunately with Order Flow Sequence Tracking Intelligence, you can make your move at the right moment.
Striking at the right moment for profits
When the Persians realized they were beaten, they made a run for it. Some who were unaware of the local terrain, ended up in the swamps where they met their fate by drowning. Herodotus recorded 6,400 Persian bodies on the battlefield.
You can avoid being another casualty on the battlefield of the market simply by using OFST conditions to time your strike. When price breeches a value area watch for tapering conditions. The lead-up to this can be spotted with decreasing deltas that culminate in Sequential Decline.
When the opposing force steps in with Responsive Activity, your signal to move is approaching. Your final ingredient is Volume Rejection — the ultimate location for a reversal point. This is a level where price has backed away in the past and is likely to do so again.
As price reaches this final pitch in the battle, your moment to move has finally arrived with confirmation.
Waiting = staying alive to fight another day
With so many variables, many will ask if they’re leaving money on the table by waiting. The reverse is actually true. By holding off until conditions and candles have fully developed, you have the opportunity to confirm that the opposing force is backing down.
Many traders will trade right within an auction or candle, simply because it’s reached a particular price point — or completed a desired formation. This simply leads to an early entry, devoid of any of the intelligence as to what’s really taking place on the battlefield.
By waiting until a candle has had a chance to fully show its hand — and every move within it — you can gain the confirmation you need as to whether a reversal is genuine or merely a feint. This allows you to move, or more importantly, stay put if need be.
Staying put, and potentially doing nothing, keeps your account alive.
Spot real reversal and strike for victorious profits
Sun Tzu, in The Art of War, speculated on the Pincer maneuver but advised against it — fearing that an army would run away before the move could be completed. He argued that the army should be given the illusion of an escape path — because if completely surrounded, they would fight more ferociously.
When effectively flanked, price has nowhere to hide when genuine reversal conditions reveal themselves. Wait for a candle to fully develop to the final minute before committing your entry. Watch as the COT advances to its final location and supporting conditions fall into place with Sequential Decline and/or Responsive Activity.
If you don’t see optimal conditions at the close of a candle — don’t do anything. Live to fight another day. If the conditions are there, and you’re approaching a Volume Rejection Level or Institutional Trading Level — make your move.
Beat off the intruders at the gate and profit victoriously by outflanking price!
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