Delta Scalper Offer For Existing Users Of Orderflows Trader
Imagine for a moment the possibility of determining the direction of a price movement before it happens without relying on analysis of price. You will probably think I am crazy.
What if you could price out of the trading picture altogether? Delta Scalper does just that.
It has often been said that volume precedes price.
Why is volume more important than price? When institutional traders are moving size in the market, they try to hide their size (volume) and not price. When you see price trade you form an opinion of the market but when you see the volume, you see the facts of the market.
What if you could measure the true strength of the buyers and sellers in the market and make profitable trades based of that information? Delta Scalper does just that.
Before I explain how it works let me explain first about Delta.
Delta is calculated by taking the volume traded on the offer side minus the volume traded on the bid side. If Delta is positive there are more aggressive buyers, traders who are buying the offer price. If Delta is negative, there are more aggressive sellers, traders who are selling at the bid price. Delta measures the strength of the market’s auction process.
For a trade to occur in the market there has to be a buyer and seller. At every traded price there will be a buyer and a seller. When price moves higher people will often say there are more buyers than sellers. That is impossible. Price moves higher when buyers become aggressive and think the current price is cheap. Think about it. Wouldn’t you rather buy something now for $25 when you know later you can sell it for $30?
When prices start to move, the reason it moves is because of a series of aggressive buying or selling which will show up in the Delta of a bar.
The most important component of Delta is volume. Volume must be understood in context of the market. When the volume is expanding positively or negatively, a trader must watch its strength to fully comprehend the shift in supply and demand. It is important to note that Delta does not take into account price.
Delta Scalper allows you to see the positive or negative expansion between buyers and sellers so that you can make predictable and exploitable positions in the market.
What drives price movements in the market? Differences of opinion. When a market is trading as per normal, at equilibrium so to speak, the delta should be relatively low or not changing much. Supply and demand at that point is about equal. The problem is no one know where this level of equilibrium is, it constantly changes. Delta Scalper measures the difference of opinion and, more importantly, how it is changing.
Many traders fail to realize that MACD, RSI, moving averages and even economic numbers such as Non-Farm Payrolls are attempts to represent market opinion, but they are not opinion in itself. Trading levels such as Fibonacci levels, Pivot Points and trends lines only exist on charts. Support and resistance levels are often taken to represent the relationship between buyers and sellers.
One of the main reasons so many traders lose money or fail at trading is because they come in to the market thinking that all they have to do is “buy low, sell high.” While that may sound logical and prudent it is probably one of the main reasons most traders blowout – because they simply don’t know where the low is to buy or where the high is to sell. Often times they are buying only to have the market keep dropping after they have bought or sold and the market keeps on going higher against them.
What successful traders do is buy when the market is showing strength and sell when the market is weak. The successful traders buy high and sell higher or sell low and buy lower. Think like a mercenary. You want to fight on the side that is winning. You don’t want to waste your time trying to fight a losing battle trying to pick highs and lows trying to gain some glory. Your first priority is to stay alive and earn a living and you do that by being on the winning side, whether it be in a battle or in the markets. If neither side is winning, then the beauty of Delta Scalper is you don’t even need to fight (or trade) at all. Just sit on the side until one side starts beating the other side up.
There are five scenarios when it comes to Delta in a bar:
- Extremely positive Delta number – indicates aggressive buyers have dominated the bar. Buyers are buying all the available supply offered by sellers moving the market higher.
- Average positive Delta number – indicates aggressive buyers outnumber aggressive sellers, but not overwhelmingly. This can be a sign of accumulation when a series of average positive Delta bars is put together.
- Small positive or negative Delta number close to zero – indicates aggressive buyers and aggressive sellers are pretty much evenly matched. Price is at an equilibrium where both buyers and sellers are happy to trade at.
- Average negative Delta number – indicates aggressive sellers outnumber aggressive buyers, but not overwhelmingly. This can be a sign of steady reduction of positions or shorts building up.
- Extremely negative Delta number – indicates aggressive sellers have dominated the bar. Sellers are hitting every bid as they dump their excess supply in expectation of lower prices.
What Delta Scalper does is look at the relationships between the different Delta numbers as they come in and analyse them. Delta Scalper then generates buy or sell signals in real time as the occur allowing you to get in at the earliest possible time.
The ratio of buyers to sellers is what determines the market direction at any given time.
Many traders struggle to grasp the importance of Delta analysis. They have difficulty understanding that there is a “strong hand” in the market because after all there for every buyer there is a seller. What Delta Scalper does is alert you who are in control of the market.
Delta Scalper alerts you to areas in the market where buyers are drying up and sellers are getting stronger (up moves) and also where sellers are getting less and buyers are starting to dominate (down moves).
One of the key benefits of Delta Scalper is you can have tight stops. When the Delta is extremely negative (meaning a lot of aggressive sellers) and can’t go down, buyers are absorbing the sellers and the market will trade in the opposite direction. This is often the sign of a large passive buyer, often hiding his full size with an iceberg order or some other type of algorithm. You have two choices: 1) take a small loss or 2) reverse the position. I prefer the first option.
If you have ever struggled with staying out of the market when there is no reason to trade or you lack the ability to react and trade instantly when a trading opportunity appears then Delta Scalper will change the way you trade.
I have always been a big believer in keeping your charts as clean and uncluttered as possible and only display the information you need to make a trade.
When Delta declines as prices increase, what are the longs doing? They are taking profits, selling out their long positions. What are the shorts doing? They are covering, buying back and taking their losses.
When Delta declines as price declines it is a sign of liquidation and aggressive selling.
When Delta increases as price increases, buyers are taking control of the market from the sellers. This is an aggressive action.
When Delta increases as price decline it is a sign of a bottom forming. Longs are starting to accumulate a position.
In the rally who has been right about the market? The buyers. Who was wrong? The sellers.
As a trader you want to be on the same side as the “smart money.”
DeltaScalper is now available for use with NinjaTrader.
The beauty of DeltaScalper is that it can be used on any chart type: bar chart, candlestick charge, footprint chart. Finally a way to interpret order flow without an order flow chart.