Understanding Volume Imbalance Threshold And Volume Imbalance Ratios

Posted by on Jun 24, 2017 in Blog

In this video I explain the volume imbalance setting in Orderflows Trader.
There are two setting that you can adjust:
First one is “Volume Imbalance Trigger In Percent” and the second is “Imbalance Volume Threshold.”

In Volume Imbalance Trigger In Percent the setting I use is 400 which means for a buying imbalance to occur there has to be 4x more volume traded on the offer than the bid. For a selling imbalance to occur there has to be 4x more volume traded on the bid than the offer. This is measures diagonally, not horizontally.

In Imbalance Volume Threshold I usually use a setting of 50. What a setting of 50 means is for an imbalance to register on the chart there needs to be a minimum quantity of 50 lots on the offer for a buying imbalance or 50 lots on the bid for a selling imbalance. If the volume traded on the bid was 2 and the volume traded on the offer was 51 a buying imbalance would show. If the volume traded on the offer was 49, the buying imbalance would not show.

In the video I explain why you should adjust the Imbalance Volume Threshold depending on the market you are trading.

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