Order Flow Imbalances & Why Context Matters

Posted by on Dec 26, 2022 in Blog

To understand order flow imbalances, we must keep context at the forefront. Markets are dynamic environments; market structure and changes in order flow lead to opportunities for active traders to make informed decisions.

Each order placed by a trader can have an impact on the market: as a result, it is crucial that a trader pays attention to their surroundings by understanding market structure and analyzing price movement over time to understand how context affects liquidity.

By observing trade volume relative to the overall liquidity, one can anticipate if and when they should enter or exit a position.

Taking into account these fluctuations in order flow and analyzing market structure can give attentive traders an advantageous edge when navigating trading opportunities.