Analyze market data with NFL efficiency for consistent first down trades.
It’s third down, you’re backed up on your own 20 yard line and with penalties you need 15 for a first down. Needless to say, you have to convert. Yet, you’ve got the hostile crowd which sounds like a thousand jets taking off. Coaches are yelling in your ear. The play you’re about to run has five options.
Trying to process this successfully with five 300+ pound pass rushers ready to level you can be a tall order. Yet, this is exactly what most Forex traders face when attempting to make an entry in an already pressure-packed market.
By working the intelligence funnel, you can quickly process the data you need to quarterback a winning entry and exit. It’s simply a matter of managing macro and micro data in the right order using Order Flow Sequence Tracking.
Why market data ends up hurting Forex traders more than helping
Throughout the season, Tom Brady has been rated one of the most accurate quarterbacks under pressure. Most notably, he’s also been the most accurate on passes over 20 yards down field. He does this by processing exactly what the defense is doing, as they do it - and then making the right play at the right time.
In the Forex market, you have the institutional ‘Tom Bradys’ of the world, capable of processing all types of market data - consistently and successfully. Then you have retail traders - looking for a red or green arrow and hoping for the best. For many retail traders, the more data you provide - the worse things get.
This is mostly due to the fact that market intelligence is hard to prioritize. For many retail Forex traders, there isn’t a clear hierarchy that outlines what they should pay attention to first, second, third and so on - before making a trade.
Using the intelligence funnel, you can quickly cycle through your data points to qualify solid entries and manage your trades for profitable exits.
A way to organize market intelligence as it comes to you
Watch pre-game coverage of any Patriots game and you’ll find that a critical receiver is almost always injured and on the sidelines for the game. Just as quickly, commentators will mention that it really doesn’t matter. This is because Tom Brady has an innate ability to process the field as it develops and find the open, high-probability play.
As a retail trader, being able to read the market for the ‘high-probability play’ is your lifeline to profits. Looking across the field, thanks to Order Flow Sequence Tracking intelligence - you have multiple data points that can be used to inform your execution. The key is to organize the data into a coherent, prioritized pattern that you can quickly read in succession.
Consider the market intelligence funnel as a way to take the mixture of data that comes to your chart and turn it into a series of qualifiers for a trade. Visualize a literal funnel - with long-term macro data at the top - and your trade at the bottom.
Using just a handful of Forex Alpha tools, these include:
Macro: Institutional Trade Levels - where to expect rate action based on long-term institutional activity
Intermediate: Confluence - rate levels to watch based on prior daily volume levels and value areas
Micro: Intra-Day Value - dynamic Value Area High (overbought) and Value Area Low (oversold) conditions.
Organize your market data quickly and easily, starting with the macro, working your way into the micro.
With this in place, mapping candidate ‘receivers’ - or trades - using the funnel can be done quickly and decisively.
Reading the field for high-probability pass plays
‘I don’t really ever want to snap the ball into a bad play,’ Tom Brady told a local radio show when asked about his ability to read the field. The instant he takes a snap, hours (if not days, weeks and years) of preparation have been put in to prepare for that moment. He knows how the defense will unfold and where his options will be located.
The same philosophy should apply when evaluating a trade using the intel funnel. Going into each entry, you’re looking to trade with a combination of the data points offered with the funnel - starting with the macro, all the way into the micro.
Using our ES example, we’re looking first for an institutional trade level - ideally in conjunction with an area of confluence. Finally, we’ll stalk a location where the rate ventures out of the value zone either above or below value area high or value area low.
Just as Gronkowski himself would appear in the back of the endzone - so does our candidate location for a reversal. Now we simply have to read the Order Flow Sequence Tracking for final confirmation that the buyers are going to take over (in this instance).
Read the funnel quickly for qualified reversal entries!
Knowing the difference between analyzing and executing
They say the success rate for an NFL quarterback selected in the first round is less than 50%. It’s not the physical capability that separates the elite from the rest - it’s the ability to analyze real-time data from the field. If putting information in a funnel, mixing it up and pushing something out the other side resulted in championships - more teams would do it.
The same is true when managing market data. Pushing data into a funnel and simply making entries is a mistake many retail traders make. After organizing the data, it must be analyzed in the context of Order Flow Sequence Tracking. This will give you the real-time confirmation that buyers and sellers are responding to the location you’ve plotted.
To avoid costly turnovers, consider the macro and intermediate (top and middle) portions of the funnel your advance pre-market work. The bottom portion, combined with Order Flow Sequence Tracking - your line of scrimmage analysis.
Guide your trades to first downs that lead to trophy profits
Super Bowl-winning quarterback Tom Brady can process an entire defensive formation, evaluate his receivers, and release the ball in less than 2.5 seconds. While it sounds unbelievable, he’s done this 432 times so far this season. He’s headed to the Super Bowl… again… after dismantling the Steelers.
By comparison to number 12, you have an eternity when you drop into the pocket on a trade. Start with the macro and work your way in. Plot the institutional levels knowing that these are long-term historical moments that rates respect. With those in place as your primary targets, validate them with intermediate daily volume profiles and confluence.
As you zero in on a play to make, check Institutional Supply and Demand relative to the day’s Value Zone. All in you should be able to process your funnel in a matter of seconds. Unlike an NFL quarterback, if you don’t like what you see - simply sit the play out and save your capital.
Guide your trades to first downs that lead to a championship-level account by managing the funnel!
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Author: Forex Alpha
Company: NOFT Traders
Services Offered: Training, Funded Trading
Markets Covered: Futures, Stocks, ETFs, Forex
The NOFT team is made up of highly respected institutional trading figures in the professional trading world. With decades of experience, they’ve been top performers in premier Prop firms in the U.S.