Order Flow
Order Flow
If you are new to CrazyIvan then the way the messaging works may take a bit getting used to. There’s no better way to illustrate the order flow process than via examples. Let’s start with two scenarios for CrazyIvan.480 and then provide two more for CrazyIvan.30 which trades a tiny bit different.
CrazyIvan.480 Example 1:
<<<<<<<<<<<<<<<< 11:00 pm Alert #1 >>>>>>>>>>>>>>>>
CURRENT MKT POSITION: Flat
ACTIVE ENTRIES:
LONG SIGNALS: IP-L
IF BUY AUDJPY STOP @89.51.
THEN SELL AUDJPY STOP @89.145.
SHORT SIGNALS: IP-S, RTV-S
IF SELL SHORT AUDJPY STOP @ 89.145.
THEN BUY TO COVER AUDJPY STOP @89.51.
RISK: 36.5 pips.
EXPIRES:
New York: 8/14/2013 7:00:00 AM Eastern Daylight Time
London: 8/14/2013 12:00:00 PM GMT Daylight Time
Tokyo: 8/14/2013 8:00:00 PM Tokyo Standard Time
<<<<<<<<<<<<<<<<<<<<<<<>>>>>>>>>>>>>>>>>>>>>>>
This is what we call a pre-alert – the idea here is to advise you of currently active entry opportunities and to give you an opportunity to get positioned ahead of time and thus avoid unnecessary slippage (and stress). Pre-alerts are always sent at the roll-over to a new candle. In this case the alert was sent at 11:00pm, which is the beginning of the 5:00am candle on the 480-min chart. Let’s dissect the alert:
CURRENT MKT POSITION: Flat
This shows the current market position – which in this case is flat.
ACTIVE ENTRIES:
LONG SIGNALS: IP-L
IF BUY AUDJPY STOP @89.51.
THEN SELL AUDJPY STOP @89.145.
SHORT SIGNALS: IP-S, RTV-S
IF SELL SHORT AUDJPY STOP @ 89.145.
THEN BUY TO COVER AUDJPY STOP @89.51.
This is the meat of the alert – the active entries. In this case we have both short and long entries – either of them may trigger during the transition of the current open candle. As you can see we have both an Inside Period long and an Inside Period short setup at hand – either of them may trigger but we don’t know yet which one. There’s also a Retest Variation Short – so in fact we have two valid short triggers.
There are two sets of instructions here – we call them the long leg and the short leg. let’s look at the long leg first:
IF BUY AUDJPY STOP @89.51.
THEN SELL AUDJPY STOP @89.145.
The fact that there are two stop orders may be confusing but if you think about what a stop order is then it makes more sense: Very simply – stop orders are placed above or below the current market price – once their trigger price gets touched they convert into a market order. They can be used as stop loss orders but they can also be used as entry orders. Let’s assume the market is currently at 89.3 – by placing a buy stop order @ 89.51 we expect to be filled long as soon as the market touches that trigger.
The second part of the long leg is yet another stop and in this case it is a stop loss order – it will only become active once your first order has been filled. Depending on your trading platform you will submit both orders as one conditional order – they are also known as IF/THEN orders. As the name implies, IF/THEN orders consist of two entry orders. If and only if the first entry order is executed will the second entry order be placed. Once the first order has been filled you will have a position in the market and a separate order (your stop loss order) that was placed. Again, your broker or your trading platform may call them a conditional order.
SHORT SIGNALS: IP-S, RTV-S
IF SELL SHORT AUDJPY STOP @ 89.145.
THEN BUY TO COVER AUDJPY STOP @89.51.
Which brings us to the second leg. The idea here is the same – only in this case we set the first stop below the current market price of 89.3 – it will only execute if the market touches 89.145. If you paid attention then you may have noticed that this is also the stop loss trigger of the long leg. In this case the stop loss for our short leg is at 89.51 (the buy trigger of the long leg).
RISK: 36.5 pips.
Managing your risk is an important part of CrazyIvan. This shows the risk you are about to assume in full pips (or ticks on the futures side) – in this case your risk (calculated by our Protect R logic) will be 36.5 pips. Before taking your trade you may now use our handy Forex Risk Calculator to accurately compute your position size. It’s a rather nifty little utility I hacked up that may become handy to your discretionary Forex trading as well.For the ZB futures please use our Futures Risk Calculator instead.
This example assumes that your account currency is in USD – if not then change it via the very first drop down and RCalc will make the necessary adjustments automatically. The second field is your account size – in this case we assume a simple scenario of $100,000.-. The risk ratio is set to the recommended 1% – you can change that to whatever you want but we caution you to not exceed 2% max. Each additional integer above 2% increases your chance of account loss exponentially. Any trader worth his/her salt will choose a risk ratio between 1% – 2%.
The third field is the stop loss in pips – and that is the number we provide with each pre-alert (and also with the actual entry alert shown further below). The fourth field is the currency pair you want to trade – here we select the AUD/JPY. You don’t have to worry about picking the right currency pair to convert the AUD/JPY to your account currency – in this case the USD/JPY. All that is done automatically for you – it even will pull a recent quote from Yahoo finance – once again saving you a lot of time.
As a further convenience the account currency, the account size, and the risk ratio will be written into a cookie. This way you don’t have to type them in several times a day – it’ll also prevent you from making mistakes in a rush. Obviously as you either earn or lose money you will have to adjust the account size field occasionally – we recommend once a day. It doesn’t have to be accurate down to a Dollar obviously but the closer you are the more precise your risk management.
Next you press the ‘calculate’ button and you will see the results displayed in the last three fields. Here’s your risk in Dollars – $1000 as it should be if you want to risk 1% on a $100k account. The units field is for brokers that allow you to take fractional FX position sizes (e.g. Interactive Brokers) – if not then you will have to either round up or down the standard lots shown in the last field. It is up to you to figure out how orders are placed with your broker or platform – some allow you to place in mini lots, micro lots, and some only in full lots. Standard lots = 100 000 units – Mini lots = 10 000 units – and micro lots = 1000 units. So here we are taking either 2.69 lots, 26.9 mini lots, 269 micro lots, or 268959 units. Either way your risk will be limited to $1000 (not considering slippage of course).
EXPIRES:
New York: 8/14/2013 7:00:00 AM Eastern Daylight Time
London: 8/14/2013 12:00:00 PM GMT Daylight Time
Tokyo: 8/14/2013 8:00:00 PM Tokyo Standard Time
The final part of the pre-alert is the expiration – a 480-minute candle goes for eight hours and since this alert was triggered at 11:00pm EDT it will be active until 7:00am EDT. For your convenience London and Tokyo times have been provided as well – allowing you to convert it to your own time zone a bit quicker without looking up timezone tables and doing math (especially late at night when you are tired and may make mistakes).
<<<<<<<<<<<<<<<< 11:56 pm Alert #2 >>>>>>>>>>>>>>>>
SIGNALS: IP-S, RTV-S.
TRADE: SellShort at 89.145.
STOP: BuyToCover at 89.51.
RISK: 36.5 pips.
<<<<<<<<<<<<<<<<<<<<<<<>>>>>>>>>>>>>>>>>>>>>>>
At 11:56pm you received alert #2 informing you that the short leg has been triggered. If you followed the instructions above then there’s nothing for you to do. Your order should have been executed already and this alert is simply being sent as a courtesy.
<<<<<<<<<<<<<<<< 1:46 am Alert #3 >>>>>>>>>>>>>>>>
STOP REMINDER: BuyToCover at 89.51.
<<<<<<<<<<<<<<<<<<<<<<<>>>>>>>>>>>>>>>>>>>>>>>
Unfortunately the trade went against us and the stop loss order was executed at 1:46am (probably while you were sleeping).
<<<<<<<<<<<<<<<< 1:46 am Alert #4 >>>>>>>>>>>>>>>>
SIGNALS: IP-L.
TRADE: Buy at 89.51.
STOP: Sell at 89.145.
RISK: 36.5 pips.
<<<<<<<<<<<<<<<<<<<<<<<>>>>>>>>>>>>>>>>>>>>>>>
A few seconds later the long leg gets triggered – once again there is nothing for you to do as we had placed both orders previously. The risk is identical and it is simply the inverse of the previous short leg.
<<<<<<<<<<<<<<<< 7:00 am Alert #5 >>>>>>>>>>>>>>>>
CURRENT MKT POSITION: Long
ACTIVE ENTRIES:
SHORT SIGNALS: RTV-S
IF SELL SHORT AUDJPY STOP @ 89.06.
THEN BUY TO COVER AUDJPY STOP @89.57.
RISK: 51 pips.
EXPIRES:
New York: 8/14/2013 3:00:00 PM Eastern Daylight Time
London: 8/14/2013 8:00:00 PM GMT Daylight Time
Tokyo: 8/15/2013 4:00:00 AM Tokyo Standard Time
<<<<<<<<<<<<<<<<<<<<<<<>>>>>>>>>>>>>>>>>>>>>>>
At 5:00am you receive another pre-alert and if you are awake then you would place this short order despite the fact that you are currently long.
IMPORTANT: This does not mean that you are supposed to close the open long position – it is a new possible setup which has not triggered yet and thus does not (yet) affect the current campaign.
IMPORTANT: If the current stop loss needs to be adjusted then you will receive also a notification right below the CURRENT MKT POSITION line, e.g. ACTION REQUIRED: Raise current stop loss from Sell at 89.145 to Sell at 89.155. We didn’t get that so the current stop loss remains where it is.
<<<<<<<<<<<<<<<< 3:00 pm Alert #6 >>>>>>>>>>>>>>>>
1R PROFIT VERIFICATION AT 3 BAR LIMIT:
Required profit in pips: 36.5
Price ought to be at or above 89.875 but prior candle closed at 89.48
Insufficient profit – scheduling to close long position.
<<<<<<<<<<<<<<<<<<<<<<<>>>>>>>>>>>>>>>>>>>>>>>
At 5:00pm the next day we receive a notification to close the trade as it has not produced 1R within three candles. That is part of our Protect R campaign management logic so the system has instructed us to exit.
<<<<<<<<<<<<<<<< 3:00 pm Alert #7 >>>>>>>>>>>>>>>>
EXIT REMINDER: Sell at 89.48 and clear all stops.
<<<<<<<<<<<<<<<<<<<<<<<>>>>>>>>>>>>>>>>>>>>>>>
Just in case the system is sending you also a final reminder to close your position and clear all stops.
CrazyIvan.480 Example 2:
<<<<<<<<<<<<<<<< 7:00 am Alert #8 >>>>>>>>>>>>>>>>
CURRENT MKT POSITION: Flat
ACTIVE ENTRIES:
LONG SIGNALS: IP-L
IF BUY AUDJPY STOP @89.945.
THEN SELL AUDJPY STOP @89.465.
SHORT SIGNALS: IP-S
IF SELL SHORT AUDJPY STOP @ 89.465.
THEN BUY TO COVER AUDJPY STOP @89.945.
RISK: 48 pips.
EXPIRES:
New York: 8/15/2013 3:00:00 PM Eastern Daylight Time
London: 8/15/2013 8:00:00 PM GMT Daylight Time
Tokyo: 8/16/2013 4:00:00 AM Tokyo Standard Time
<<<<<<<<<<<<<<<<<<<<<<<>>>>>>>>>>>>>>>>>>>>>>>
As before we receive a pre-notification instructing us to place two separate conditional legs – one short and one long. The risk this time is 48 pips which we again use in our Forex Risk Calculator to accurately compute our position size. Then the both order pairs get placed and you either make breakfast or try to catch another hour or two of sleep.
<<<<<<<<<<<<<<<< 9:50 am Alert #9 >>>>>>>>>>>>>>>>
SIGNALS: IP-S.
TRADE: SellShort at 89.465.
STOP: BuyToCover at 89.945.
RISK: 48 pips.
<<<<<<<<<<<<<<<<<<<<<<<>>>>>>>>>>>>>>>>>>>>>>>
Here is the actual entry reminder. As you already placed both legs in your trading console there’s nothing for you to do – at this point you should be filled short and your stop loss order is active.
<<<<<<<<<<<<<<<< 3:00 pm Alert #10 >>>>>>>>>>>>>>>>
Market at 88.855 – lower stop down from BuyToCover at 89.945 to BuyToCover at 88.985.
<<<<<<<<<<<<<<<<<<<<<<<>>>>>>>>>>>>>>>>>>>>>>>
After the next candle roll over the market has moved in our favor and we are instructed to move our stop loss from 89.945 to 88.985.
<<<<<<<<<<<<<<<< 3:14 pm Alert #11 >>>>>>>>>>>>>>>>
STOP REMINDER: BuyToCover at 88.985.
<<<<<<<<<<<<<<<<<<<<<<<>>>>>>>>>>>>>>>>>>>>>>>
Our new stop is touched at 3:14pm and this reminder notification concludes this campaign.
CrazyIvan.30 Example 1:
<<<<<<<<<<<<<<<< 1:00 pm Alert #1 >>>>>>>>>>>>>>>>
CURRENT MKT POSITION: Flat
ACTIVE ENTRIES:
SHORT SIGNALS: FO-S
IF SELL SHORT EURUSD STOP @ 1.31165.
THEN BUY TO COVER EURUSD STOP @1.3128.
RISK: 11.5 pips.
EXPIRES:
New York: 9/5/2013 1:30:00 PM Eastern Daylight Time
London: 9/5/2013 6:30:00 PM GMT Daylight Time
Tokyo: 9/6/2013 2:30:00 AM Tokyo Standard Time
<<<<<<<<<<<<<<<<<<<<<<<>>>>>>>>>>>>>>>>>>>>>>>
As you are now familiar with the respective components of the pre-notifications let’s just summarize: After receiving this alert at 1:00pm you place an order to sell short the EUR/USD at 1.31165 with a conditional stop 11.5 pips higher at 1.3128. Your risk is 11.5 pips and once again you use the Forex Risk Calculator to precisely calculate your risk exposure:
As you just funded your account you have exactly $100,000 available. Per the 1% rule you only want to risk $1000 on each trade and given the 11.5 EUR/USD pips that currently comes out to 869,565 units. You place the trade and your stop and go on with your business. When trading CrazyIvan you are strongly encouraged to not watch your trades in between the roll-over times or modify them in any way unless otherwise instructed by the system.
<<<<<<<<<<<<<<<< 1:13 pm Alert #2 >>>>>>>>>>>>>>>>
SIGNALS: FO-S.
TRADE: SellShort at 1.31165.
STOP: BuyToCover at 1.3128.
RISK: 11.5 pips.
<<<<<<<<<<<<<<<<<<<<<<<>>>>>>>>>>>>>>>>>>>>>>>
While you are gone the trade executes at 1:13 – the system sends you a courtesy alert but as you already placed the order there’s nothing for you to do.
<<<<<<<<<<<<<<<< 1:30 pm Alert #3 >>>>>>>>>>>>>>>>
Market at 1.31205 – lower current stop loss from BuyToCover at 1.3128 to BuyToCover at 1.3127.
<<<<<<<<<<<<<<<<<<<<<<<>>>>>>>>>>>>>>>>>>>>>>>
Things seem to go our way – at 1:30pm you receive an instruction to lower your current stop to 1.3127. Excellent.
<<<<<<<<<<<<<<<< 6:00 pm Alert #4>>>>>>>>>>>>>>>>
Market at 1.3117 – lower current stop loss from BuyToCover at 1.3124 to BuyToCover at 1.31205.
<<<<<<<<<<<<<<<<<<<<<<<>>>>>>>>>>>>>>>>>>>>>>>
A few hours later at 6:00pm you receive another alert telling you to lower your stop. You do as instructed and then go on with your day.
<<<<<<<<<<<<<<<< 6:03 pm Alert #5 >>>>>>>>>>>>>>>>
STOP REMINDER: BuyToCover at 1.31205.
<<<<<<<<<<<<<<<<<<<<<<<>>>>>>>>>>>>>>>>>>>>>>>
A few minutes your stop gets touched and the order closes out. All combined you spent less than ten minutes managing this trade.
CrazyIvan.30 Example 2:
<<<<<<<<<<<<<<<< 10:00 am Alert #6 >>>>>>>>>>>>>>>>
CURRENT MKT POSITION: Flat
ACTIVE ENTRIES:
SHORT SIGNALS: IP-S, RTV-S
IF SELL SHORT EURUSD STOP @ 1.3149.
THEN BUY TO COVER EURUSD STOP @1.31725.
RISK: 23.5 pips.
EXPIRES:
New York: 9/5/2013 10:30:00 AM Eastern Daylight Time
London: 9/5/2013 3:30:00 PM GMT Daylight Time
Tokyo: 9/5/2013 11:30:00 PM Tokyo Standard Time
<<<<<<<<<<<<<<<<<<<<<<<>>>>>>>>>>>>>>>>>>>>>>>
The next day you are receiving a new alert at 10:00am at which time you place an order to sell short the EUR/USD at 1.3149 with a conditional stop 23.5 pips higher at 1.31725. This time your risk is 23.5 pips and as always you use the Forex Risk Calculator to precisely calculate your risk exposure:
Your first trade was a small loser at 3.5 pips which cost you $300 without commission (let’s keep it simple). Once again you only want to risk 1% on each trade and given an account size of $99,700 and a stop loss of 23.5 EUR/USD pips you arrive at a position size of 424,255 units. As the stop is larger this time your position size will be smaller than last time. Again you place the trade and your stop and then go on with your business.
<<<<<<<<<<<<<<<< 10:05 pm Alert #7 >>>>>>>>>>>>>>>>
SIGNALS: IP-S, RTV-S.
TRADE: SellShort at 1.3149.
STOP: BuyToCover at 1.31725.
RISK: 23.5 pips.
<<<<<<<<<<<<<<<<<<<<<<<>>>>>>>>>>>>>>>>>>>>>>>
Just a few minutes your order is executed in your absence.
<<<<<<<<<<<<<<<< 12:00 pm Alert #8 >>>>>>>>>>>>>>>>
Market at 1.31185 – lower current stop loss from BuyToCover at 1.31725 to BuyToCover at 1.31265.
<<<<<<<<<<<<<<<<<<<<<<<>>>>>>>>>>>>>>>>>>>>>>>
Once again things seem to go our way – at noon you receive an instruction to lower your current stop to 11.31265.
<<<<<<<<<<<<<<<< 12:46 pm Alert #9>>>>>>>>>>>>>>>>
STOP REMINDER: BuyToCover at 1.31265.
<<<<<<<<<<<<<<<<<<<<<<<>>>>>>>>>>>>>>>>>>>>>>>
46 minutes later your stop gets touched and the system closes out the trade. There was nothing for you to do and this was merely a courtesy notification to let you know what happened. This trade was a 17pip winner which translates into 0.72R or roughly $718 given your position size of 424,255 units.
