Posted by Mike on Aug 23, 2023 in Blog
The value area gives traders insight into price acceptance, support/resistance, market sentiment, and fair value. The value area represents the price range where the most volume or trading activity took place during a specified time period. Looking at the value area can help traders see where most market participants valued the asset during that time. The value area often acts as support or resistance. Since it represents an area with a high concentration of trading...
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Posted by Mike on Aug 22, 2023 in Blog
Order flow can make technical analysis more powerful. For example, using order flow you may see strong buying interest coming in at a key support level on the chart, giving higher conviction for a long trade. Using technical analysis alone runs the risk of missing changes in order flow that may invalidate chart patterns or trend signals. Combining technical analysis with order flow helps confirm whether buyers or sellers are supporting the move. Technical analysis helps...
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Posted by orderflows on Aug 21, 2023 in Blog
One of the comments I recently received was asking to explain the importance of Delta/Volume. Order flow traders look for unusual surges in delta/volume to anticipate potential market-moving trades by large institutions or firms. Unusual trading activity can give you clues as to the direction big traders expect the underlying to move. Delta/volume data combined with price action can help order flow traders understand when options activity is signaling a shift in sentiment...
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Posted by Mike on Jan 25, 2023 in Blog
Do you every wonder why a market rallies on aggressive selling? Well in this video I explain how the aggressive selling is met by strong passive buying which results in the negative delta and selling imbalances. When there is aggressive selling but it is met with strong passive liquidity in the market, the market won’t go down. In fact it will probably go up instead because traders are absorbing the aggressive selling taking place. Once the aggressive selling ends,...
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Posted by Mike 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...
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Posted by Mike on Dec 23, 2022 in Blog
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...
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