The Order Book — What Traders Must Know About Supply And Demand


John Grady is an independent futures trader from Florida, who primarily trades Treasury bonds. His trading is purely discretionary, based upon his read of order flow. Essentially, he’s a scalper.

Until recently, I’d never really taken the time to understand the order book and make sense of order flow. Sure, I understood the order book at it’s most basic level, but really, not much beyond that point.

Having now learned more about the subject, I feel as though it’s something I should’ve learned long ago. And regardless of whether you decide to use the order book as a part of your trading, it’s my opinion, that it’s at least valuable to understand.

And that’s the reason why I asked John come on the podcast, to share some of his insight and experience with you…

Topics of discussion:

  • The (basic) terminology you must understand to make sense of an order book, the value of an order book, and what an order book shows that others don’t see.
  • How John trades order flow; his reasons for trading certain markets, using order flow to gauge entries and exits, managing stops, when to use which order types.
  • With a lot of numbers changing rapidly, how does a trader make sense of the order book? Plus, a few tips ‘n tricks for how to build skill in reading order flow.
  • The impact of HFT; things which scalpers can no longer get away with, staying alert to spoofing in the order book—and how it can occasionally be detected.
  • A snapshot of John’s screen, displaying three order books.

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