Using Order Flow To Trade A Low Of The Day Spotting Opportunities In Orderflows
When a market makes a low there is usually a reason for it. But for order flow traders the reason doesn’t matter, we are just looking at how the order flow comes in once the market trades a new low.
Basic trading, 101, a low is support. That basic common knowledge. If it wasn’t support the market would have kept dropping further.
Markets are always looking for a balance between supply and demand. When an area of the market has too much supply, prices drop to increase demand until it finds support.
It is important to recognize that these low prices can offer opportunities for traders.
But keep in mind, when you identify support (LOD) the next thing you want to see in the order flow is demand come in because that is what will cause the market to rally. If a market fails to rally off support (go sideways instead of up), then there is still selling pressure which often leads to new lows.