Video Transcript:
Hey guys, it’s Dale here. Welcome to the webinar. I’m really glad that you are here. order flow can look complicated at first. There’s a lot of numbers, a lot of colors, and data flying around. But once you know what to look for, it actually tells a very clear story about what’s happening in the market. And that’s what today is about. We will slow it down, break it apart and look at how to use Orflow to spot where real money is moving and how to get edge that most traders never see. So today we are going to cover a full journey through orderflow. First we will look at what orderflow actually is. Then we will go over the platforms, data, instruments and costs that you need to get started. After that, we’ll get into how to read Orafflow and then how to create your own Orflow workspace. From there, we will dive into trading setups and concepts. This will be the biggest and most important part. And after that, I’ll show you real trade examples so you can see it all in action. We will also talk about the most common mistakes that traders make with Orflow. And finally, I’ll leave you with some practical tips how to get started quickly. So, what I prepared for you before we even get started, I want to do a little quiz so you guys can see where you are at right now. And at the end, I’ll do another quiz so you can see how we improved after the webinar. All right. So, let’s start with the quiz. This is the first question. And the question is rather simple. Look at the chart. It is a footprint chart and price went upwards and just hit a resistance area. This resistance right here. I want you to tell me if the price is going to react to that resistance or no. So, think about it for a second. Take a look at it and tell me if the price is going to go up or down from that resistance. Okay, let me show you. the price reacted to that resistance and went downwards from there. Reason for that is that when the price hit that resistance, there was absorption right here. This is something that’s called absorption. We’ll cover that more in detail in this webinar. The main idea behind the absorption is that in this case sellers started to absorb buying pressure and then they reversed price. You can tell because there are heavy volumes both on bit and on ask in this volume cluster at this resistance. So this was a confirmation that the price is going to react to that resistance. Let’s go for the next question in here. I want you to tell if the price is going to go up or down from this place. Is it continue to go downwards to drop even more or is it going to go up? Take a look at those footprints here and make your mind on where you think the price will go. Okay, let me show you. Price went down. Reason for this is that there was a failed auction right here, right here and right here. The failed auction is also represented by this red dotted line which my software automatically draws and when price is close to failed auction or in other words unfinished business it likes to shoot past it. So that’s why the price continue downwards to test that failed auction right here. Also one other thing that showed us a strength of the sellers pushing the price downwards were those selling imbalances in this footprint. By the way, if you don’t understand a thing from this what I’m showing you now, don’t worry. I’ll teach you everything in this webinar. Last question. Take a look at this picture and tell me is the price going to go up or down?
Okay, let me show you.
The price went up and the reason for this is that there was a stacked imbalance right here. One, two, three. Three imbalances at top of each other. That’s something that’s called stacked imbalance. And it often works as a support and resistance zone, right? the price reached this place and from there it went up. So that was for the little quiz and you know you’ll learn everything from the quiz in the webinar. So don’t worry everything will be covered. Now what I like to do is to do a little introduction of myself because I haven’t done that yet. I’m Dale. I’ve been trading since 2008 and in 2016 I founded a website traderale.com where I taught thousands of traders how to trade like I do. I’m trading with my custom made volume profile or flow and vap indicators which I developed for Ninja Trader platform and later for other platforms as well. Currently I’m official Ninja Trader vendor and I’ve hosted many webinars with Ninja Trader. I’m also active on YouTube where I’ve published over a thousand videos and I’ve written five Amazon bestselling trading books. And you know, truth be told, I’m not big fan of talking about myself, but you can check out what our members have to say about me. There are hundreds of reviews on Trust Pilot and Forex Peace Army. So, just go there, search for Trader Dale there, and you’ll find the reviews there. But um really the most important thing are results, right? So what I do is that I post my trading predictions on trading view so everybody can check them out and see how they play out. There’s over 1500 of them so far and since 2016 they have a 67% win rate and that’s without any position management or order flow confirmation. No fancy stuff like that. What I’d like to do now is give you guys a little present and it is one of my books, a physical copy of my books or VUP volume profile, proper trading or stock investing. You pick one and I’ll send it over. No strings attached. Just, you know, go to the link which is on your screen now. I’ll also drop the link in the video description. Go there, order one of those books and I’ll send it over. I’ll even cover the shipping. No strings attached. Just get the book. I’ll send it over and enjoy it. Let me know how you like it. All right. So, let’s talk about Orflow
First, I’d like to cover what orderflow actually is. On your screen, there are two charts. This one, that’s a standard price action chart. Everybody knows this one. It shows price at time. nothing else. That’s it. On the right side of the screen, this is orderflow chart and it sort of gives third dimension to that candlestick chart because it shows volumes inside those candlesticks. So, as you can see on this chart, there actually are candles and at each price level there are also volumes that were traded there. volumes on bid and volumes on ask. And this gives you the third dimension because you can see exactly what volumes were traded in each candle which is very very handy if you are intraday trader. Gives you all the detail. You can see what everybody else is doing in the market. So nothing remains hidden. The downside could be that many people just get stuck in the numbers and they try to decipher what every number means and they just get, you know, lost in the details. But don’t worry about that. In this webinar, I’ll teach you how not to get lost in the details and how to read Orderflow without studying every single number which you see on your screen. Now, orderflow can have different looks. This is one of them. But what I actually prefer is this. As you can see, there are more colors and it helps me to read the order flow and to work out quickly what’s going on. If a cell is green, that means that basically buyers were more aggressive there in that cell. If it is red, then it means that sellers were more aggressive in that cell. So this way I can immediately tell what’s going on and who’s dominating the market whether buyers or sellers. Another thing that this does is that it sort of highlights heavy volume zones which are super important when trading with order flow. So heavy volume zones for example like this one or this one are in a little bit darker shade of the color. Right? If you compare it, for example, if you compare this with this, then you can see that there’s a difference between the shade of the color, right? One is darker, one is lighter. The darker it is, the heavier volumes are traded in that place. And that’s important information. So, basically, this is why I prefer this sort of visualization of orderflow. But the information that this one gives you and that this one gives you is the same. The volumes are the same. You can see the candles in both of those visualizations. So in the end of the day, it’s up to you which uh you choose. If you decide to use my Orflow software, then you can switch between those quite easily. Now before you even start trading with Orflow, what you need to do, you need to have a platform where you trade with Orflow and then you need to have data. So in here there’s a table with popular orflow platforms. There’s the Ninja Trader platform. It has largest retail community. It has many footprint or volume delta add-ons. It’s a little bit more complex to set up but nothing I would be worried about too much. There are two versions of Ninja Trader. One is free and one costs $99 per month. I’m actually using the free version and you know what the paid version gives you is you can trade through Ninja Trader and second thing you can use their orderflow their volume profile and their VWAP indicators but because I have my own indicators like orderflow volume profile VWAP and others I don’t actually need to use theirs and also I don’t really want to trade through Ninja Trader I want to trade through my broker which is IC Market and I want to trade through their platform which is C trader because if you want to trade with Ninja Trader you are basically stuck with brokers that they support right so I’m using the free version I’m using my indicators and I’m trading through my brokers platform this way you can use the Ninja Trader for free there are no other limitations to it so I think it’s perfect anyways the next one is Sierra Chart. This one is also rather popular platform. I must say that it is bit outdated. So that’s why I’m not really into it too much and it’s also hard to configure. But you know upside is that they have really good data. It’s unfiltered even historically. So this is definitely an upside and reason why to use Sierra Charts. The cost is not terrible, $36 per month. But if I had to choose between Sierra and Ninja Trader, I would always pick Ninja Trader over Sierra. The next one is ADAS, which stands for advanced trading analytical software. It’s limited to futures, crypto, and stocks. It’s quite userfriendly, and it’s built specifically for orderflow. The cost is 85 bucks per month. The next one is Quant Tower. It has a smaller community. That means fewer tutorials, but it’s quite modern and strong footprint and Delta tools. So, this one is doable as well. It costs 70 bucks per month. The one that I’ve listed here, but I wouldn’t really recommend using it, is Trading View. I listed it because it’s very popular, but the problem is that it lacks fullic data. It’s rather simple software for retail traders. So, it’s not really specialized in Orflow, VWAP, volume profile like the rest. You’ve probably tried it. It’s very easy to use. It’s very intuitive. and it hasn’t included Orflow in the past, but right now it does include Orflow. I must say that I’m not really a huge fan of their Orderflow, but if you have Trading VF and if you have one of their higher plans, then you can give it a try. The cost is 70 bucks per month and I think that’s the premium one where the Orflow is included. In the cheaper ones, the overflow is not included. So, as I was saying, you need platform and you need data. So, let’s talk about the data. For intraday trading with Oraflow, you already need precise data and you’ll want the CME data. There are a couple of exchanges and you can pick one based on what you want to trade. There’s the CME exchange where you’ll get data for the ES which is futures for standards and poor index 500 for NASDAQ for Russell currency futures and interest rates. The cost is roughly 12 bucks per month. Then there is Seabbot where you’ll get data for the DAO for 30-year bonds, 10-year Treasury notes, corns, soybeans, and wheat. Cost is also 12 bucks per month. Then there’s ComX where you’ll get data for gold, silver, and copper futures. Again, 12 bucks per month. Then there’s NAX where you’ll get data for crude oil and natural gas futures. Again, 12 bucks per month. Or if you opt out for all of them together, then you can get that for roughly 30 or 40 bucks per month. Now, what I’d like to show you is a little trick how you can get all the CME data for just four bucks per month. So the first step is you open account with Ninja Trader. There a couple of things that you need to fill out. The second thing is that you need to fund your account. There’s no minimum balance. So you can deposit for example 100 bucks. The third thing once you’ve done the step one and step two is you can purchase the CME data for just four bucks per month. Only thing that you need to remember is that every month you need to place at least one trade. The volume doesn’t matter. So it could be just the smallest order once per month and that’s it. And if you do that, your account remains active and you can get all the CME data for just four bucks per month. I’ve made a video on this. It’s more detailed. It’s step by step. You can follow it. Uh there’s a link here and I’ll also drop the link in the video description so you can check it out. It will lead you through the whole process and you can get the data for four bucks a month. That’s what I do. Now here is a little summary of what I recommend. Uh so I recommend using the Ninja Trader 8 platform using their free version. I recommend using the CME data for four bucks per month. And regarding the trading instruments, this is my personal preference and I like to trade currency futures and the ES. So I recommend starting with that. But obviously if you are not into currency futures or the ES, you can trade anything else you want. But you know this is just what I personally prefer and what I personally trade. Now let’s talk about reading orderflow. There’s one very crucial thing that I need to start with. It could be a bit difficult to understand but it’s critical to understand. Many orflow traders don’t know this and you know until they learn it. They just you know keep on guessing and wondering why the market did this and why the market did that. The thing is bid and ask and the difference between aggressive traders and passive traders. So if you look at this footprint right here at this picture, the left side of the footprint is called bid and the right side is called ask. Many people think that on the bit side there are only sellers. So if somebody shows on the bit side they must be sellers. It’s not true. It’s only half of it true. The bit shows aggressive sellers. That means sellers who enter their short position with market order, right? But the thing is that the bit side could also show buyers and it shows passive buyers. So if somebody enters a long trade with a limit order, then it also shows on the bid side. That’s the tricky part. That bit could show sellers as well as buyers. depending on what order they use whether it’s market or limit. If you talk about ask side of the footprint then there are aggressive buyers. Those are buyers that entered a long trade with a market order. And there are also passive sellers. Those are guys who entered a short trade with a limit order. Right? So on ask there could be buyers and sellers as well depending on what kind of order they used. There could be buyers with market orders and sellers with limit orders. So in the end the bottom line is you can never be sure if the volumes you see on bid are sellers or buyers and the volumes on ask if those guys are sellers or buyers. So, how do we tell? Well, it’s all about context, right? For example, if price is dropping in a downtrend like this, there’s no support standing in a way, then the volumes which you see on bit are most likely aggressive sellers pushing the price downwards, right? Sellers using market orders. If the price hits a strong support for example here and some huge order appears here on bid then it’s likely that it is a passive buyer who entered a limit long right it’s all about context we’ll talk about that don’t worry right now I know that it could seem bit complicated but I’ll try my best to make it easy for you so in this next part I’d like to teach you how to read orderflow. And because I was saying that you don’t need to focus on every single number that you see on the screen, I want to point out the most important stuff that you should keep your eyes on. All right, the first thing and maybe the most important thing are volume clusters. Volume cluster is a place where heavy volumes were traded. It’s important because big trading institutions usually reveal their trading activity in those volume clusters. On the screen, there are two significant volume clusters here. It is this one and this one. When you see a volume cluster, it’s usually a sign that somebody big was trading there. Probably some trading institution. The reason why those are important is that first they are footprints of somebody big and second price likes to react to heavy volumes. So for example, if you take a look at this volume cluster, price moves away from it and makes a pullback and when it goes back to the area where this volume cluster was formed, price reacts there. So it worked as a support, right? Heavy volumes often work as strong supports and resistances. So that’s why the volume clusters are important. They show significant support and resistances and activity of the big guys. Now I actually like to look for the volume clusters on this type of chart. It is a footprint chart which shows total volumes which means bid plus ask. Right? So the previous chart was showing bid and ask but this one is showing the total bit plus ask. Uh for me it’s easier to read and easier to spot those heavy volume zones. Right? This is the first one I was showing you. This is the second I was showing you. They simply stand out more visually. It’s easier to me to read the chart. So that’s why I use this kind of chart to look for those volume clusters. If you look at this example, then we have a rather significant volume cluster right here. What it could represent here is that when the price was dropping and reached this place, maybe there was some support here, somebody big started to trade here. Heavy volumes were traded and eventually this resulted in change of a trend. It all happened around this significant volume cluster right here. Again, I can show you this on that volume chart. In my opinion, it’s just better visible there. Right? This is that volume cluster that changed the direction of the trend. Now, speaking of the importance of heavy volumes, I also need to mention high volume nodes. There is a high volume node in every footprint. My software does a black bracket around that high volume node and it’s the place where the heaviest volumes were traded in each footprint. Right? So in each footprint there is a high volume node and it shows where the heaviest volumes were traded in that particular footprint. I’m not saying that you need to trade every high volume node that you can see on your chart, but it’s usually handy to know where the heaviest volumes were traded in each footprint, right? Especially if you have, for example, those high volume nodes next to each other like in here. My software highlights that in yellow and it represents support or resistance. So for example in here there was a pullback to this double high volume node and the price reacted there right? So you want to keep track of the high volume nodes as well because as I was saying and I’ll probably say many times in this webinar heavy volumes are important. Always keep track of heavy volumes. Now another very very important thing here is delta. Very simply put, delta is difference between buyers and sellers and shows who is stronger whether buyers or sellers. If delta is positive like for example in here in this footprint that means that buyers were in control in this footprint. If delta is negative like in here then in this footprint it means that sellers were in control. Right? Delta is ask. That’s the sum of those volumes minus bid. That’s the sum of those volumes. And my software prints the delta below each footprint. So in each footprint, you can tell who was in control, buyers or sellers. Now needless to say, we have the limit orders which can mess things up. They mess delta up. So, it’s not the holy grail of all indicators. Otherwise, it would probably be, but it’s not because we have the limit orders, which could mess things up. But still, I consider Delta a very, very powerful tool, and I always keep track of it. Now, speaking of delta, I also like to use the cumulative delta, which is nothing else than how the delta was developing since the start of the day. Right? So if you look at this picture here, then there’s a summary right here at the bottom of the screen and in here it shows the cumulative delta. So the first footprint of the day was delta minus 62. It shows in here but it’s not really visible. It’s hidden behind this. Anyways, the next delta is – 10. So – 62 – 10 is – 72. Right? That’s the cumulative delta minus 72. It shows how delta was developing since the start of a day. The next delta is positive. It is 12. So – 72 + 12 that’s 60. Right now I must say this is quite challenging to keep track of if it’s just you know numbers at the bottom of the screen. That’s why I use this chart. It’s also cumulative delta but in this case it is a simple line chart. It shows the same thing how the delta was developing since the start of a day. If you look at it like this, it’s way easier to read, right? One simple look and you know that cumulative delta is dropping and that sellers are in control. Very very simple and very very effective. I really like to use the cumulative delta. I’ll show you how later. By the way, my software also gives you the option to use this line chart of cumulative delta rather than just, you know, the summary at the bottom like in here. Right? So, if you get my software, you’ll get this one as well. Very, very handy feature. Now, another thing that’s very very important to keep track of are imbalances. An imbalance is when one side of the market is way stronger than the other. For example, buyers were way stronger than sellers or sellers way stronger than buyers. The definition of way stronger is three times or more. Right? So take a look for example at this footprint and take a look at this number here 313 it’s highlighted in blue that means that it is imbalance right my software highlights those so I can spot them easily and you always compare diagonally that’s how you read orflow like this so you compare 313 to 96 if 313 13 is three times or more bigger than 96 which is then it gets highlighted in blue and it shows imbalance. Sellers were way more aggressive than buyers in here. If we look further in the chart we have imbalance in here then imbalance in here. Those are selling imbalances because they are at a bit. But there is for example buying imbalance right here. It shows at ask. That means that buyers were in control here because we are comparing 35 contracts and 108 contracts. Right? So that’s why it gets highlighted in blue because in here buyers were more aggressive. The way I use those imbalances is I often look for stacked imbalances. And stacked imbalance is where more imbalances are stacked at top of each other. Like in this footprint, you see all those blue numbers. Those are imbalances. If they are at top of each other, then they are stacked imbalances and they often represent a strong support or resistance zone, right? Because this is a place where sellers, in this case, sellers were way more aggressive than buyers. What my software does is it highlights those areas. So for example in here we have stacked buying imbalance and it gets highlighted like this and represents strong support. So if there’s a pullback the price is likely to react there. All right. This is how I like to trade the imbalances. I mean the stacked imbalances. So remember imbalance or stacked imbalance shows aggression and strength of uh either buyers or sellers. Now as I was saying it is very important to keep track of what the big picture is and for that I like to use volume profile. Volume profile is that thing on the left side of the screen, this histogram right here. And it is a daily profile which shows how volumes were distributed through the whole day. One quick look and you know that there is a significant volume zone in here. Another significant volume zone in here. Light volumes in here. Light volumes in here. And this gives you the big picture, right? which is so important when trading with orderflow. I know that orderflow is all about, you know, the details, but it only works if you know what’s going on on the bigger picture. That’s why volume profile is that important and that’s why it’s also part of my Orflow software. Now, what I like to do now is do a little summary of the things that I showed you. There are a couple of them. So right now you can see all of them on one screen and basically if you open a orflow chart like for example this one those are the things that you should focus on and you should always keep in mind. So you should keep track of the volume profile where the heaviest volumes are and what important areas in the chart are. You should also keep track of the heavy volume clusters. Also, you should look for high volume nodes like this one, this one, this one. Then you should look for stacked imbalances like those or those. You definitely want to look for multiple high volume nodes like this one, this one, or this one. You should keep track of delta below each footprint. and also cumulative delta. Right? So if you open up a orflow chart, those should be the things that stand out. Don’t try to read every single number that you see on your screen. That’s no help. You’ll just get lost in that matrix. Just read those things and the overflow will start to make sense, right? It won’t be complex. You just need to know what to look for. Right? And those are the most important things to look for now. At this point, I like to show you my workspace. You can copy it. You can let it inspire you. And here is how it looks right here on the top left. Uh there’s a chart which is a 30 minutes chart and it shows the total volumes. So it’s not a bit and ask chart only total volumes on this chart I sort of look at the bigger picture right because it is a 30inut chart I look for the significant volume clusters like for example this one I look at the volume profile and as I was saying this is the bigger picture another chart which shows the bigger picture is this one it is something that I call trades filter it only shows single trad trades that were bigger than x amount of contracts. So it filters out all the noise and shows only the big orders. For example, here one order of 182 contracts. As you can see in this case, this actually turned the trend from downtrend to uptrend. Right? So this is the trades filter. Very useful feature. It also gives me sort of a bigger picture. Then on the right side of the screen there is this chart and this one gives me more detailed look because this is bid and ask chart. It is five minute chart and I use this one to look for the orflow setups to look for confirmation setups to look for nuances. I also use this one to look at deltas and oops all the stuff which I’m going to show you today regarding let’s say trade confirmations or other orderflow setups. So this is the detailed look into bit and ask and the last chart this one it’s a combination of two charts. The first one is a one minute chart of price and below that one minute chart of cumulative delta. I compare those and I look for divergencies there. So this is how the original workspace looks like. And in order not to lose the big picture, I also have a volume profile chart with simple candles. I have that on my other screen. It looks like this. And I have volume profile here which is a weekly volume profile. Then there’s a volume profile which I can move around like this. That’s flexible profile. I also have a weekly VWAP here. By the way, this is 30 minutes chart. So this is the big picture. I look for my levels here at first and then I trade those levels uh with orderflow. So that’s about the workspace. By the way, if you guys would like to join our trading community, you get access to all those orflow indicators to the volume profile indicators. We’ll also install everything for you, set everything up, the workspaces, the data, the platform, everything. If you want to join us, then head over to my website. It is traderale.com. If you click trading course and tools, then it’ll take you to this page. In here, you can browse my education and indicator packs. This is the Orflow pack which includes 12-hour course on Oraflow trading, my Oraflow software and also my volume profile software. Also tech support which will install everything for you. There are also other packs which you can get here. The volume profile pack, the VWAP pack, smart money pack. You can get them separately in here or scroll down a bit. You can get them for a discounted price in here. all four together. So this is how you can join us. But let us now continue with the presentation because the next part is going to be really interesting. All right. So in this part we’ll talk about orderflow setups and concepts and we’ll start with my favorite one which is called absorption. Absorption is when unusually heavy volumes appear on bit and also on ask at the same time. That means that buying or selling pressure is being absorbed. I’m using five minute or 30 minutes chart for this. Preferably I would say the five minute I use it more on five minute chart. So if you look here this is a example where buying activity gets absorbed. So the price was going up then probably hit some resistance here and unusually huge volumes were traded both on bid and ask. It’s important that the heavy volumes are both on bit and on ask. All right. So we have heavy volumes on bait and ask and this means the market is absorbing the buying pressure and eventually the buyers run out of fuel and sellers take over and the price goes down. Right? So this is buying activity absorbed. If you look at the next picture here, then the price goes down and then there is this high volume node with heavy volumes both on bid and ask and this means that selling activity is being absorbed here. Right? Sellers are selling pushing the price downwards. But at this level buyers step in and they start to buy everything the sellers have to sell. That’s why the price stops to move and from this place eventually the sellers run out of fuel and buyers take over and the price goes up. So that’s the absorption right market is absorbing buying or selling pressure. Very very important thing this needs to appear in support or resistance zone not just anywhere. So if you see heavy volume node like this at random place on the chart doesn’t really mean anything right it’s absorption only if it appears around strong support or resistance level. This resistance level could be for example based on volume profile, price action, VWAP or FIBO or whatever you guys like to trade. But this needs to appear around strong support or resistance level and it is a confirmation that the level is going to work. Here is the first example. Imagine that there was a resistance in here. And by the way, resistances and supports are not just lines. They are always areas, right? Imagine that we had a strong resistance here and the price is reaching that resistance and when it reaches this area of resistance you see this unusually huge volumes both on bit and ask. Now it doesn’t need to be at one volume node or in one cell in the footprint. It could be spread across multiple cells. Actually it’s more often like this spread over multiple cells. But if you spot unusually huge volumes both on beta and ask here here also here and here around the support or resistance zone then it is the absorption right and you know I don’t have a exact definition of unusually huge volumes but what you can do is just look at the chart and compare it with what’s going on in here compare the typical volume, right? So, in here, for example, we have 962 contracts on bit, 789 contracts on ask. If you look here, can you find volumes like that in here? No way. So, this is unusually huge volume activity, right? And that’s the absorption. In this case, buyers are pushing the price up, but sellers start to sell in here. They’re absorbing the buying pressure, and that’s why the price goes downwards. Again, important thing. This needs to happen around resistance zone. Otherwise, it wouldn’t really give us that strong confirmation, right? It wouldn’t mean that much. So, here’s another example. Again imagine that we have a resistance for example in here this whole area is resistance and when the price reaches that resistance then you notice this unusually huge volumes both on bit and ask right again you can compare the volumes in this block with for example this area the volumes in here are nowhere close to the volumes in this absorption high volume area. Right? This is telling you that sellers are absorbing buying pressure. Eventually the buyers run out of fuel. Sellers take over and it is a signal for you to go short from there. Right? It is a signal that this resistance is going to work. Now, here’s another one. A third example of the absorption. Imagine that we have a strong support here. Could be based on anything. I like to base those on volume profile, but it could be, you know, whatever you guys like. For example, price action setup. the price reaches that level or that support zone I should say and unusually huge volumes start to appear especially in this high volume node 549 at a bit and 359 on ask right this is something out of ordinary if you compare it for example with this area so something out of ordinary appeared at that support this is telling you that buyers are buying everything. The sellers had to sell here. That’s why the price stopped and eventually sellers ran out of fuel. Buyers took over and boom, price goes up. So this is the confirmation for you to go long from this support. So what I’d like to cover now is confirmation by limit orders. Now at this place I’d like to remind you that selling limit order will appear here on ask and on bid thereby buy limit orders. All right. So imagine then in this scenario the price goes up and reaches some resistance. Let’s say that there was some resistance zone again let me mark it. And in that resistance zone, what you notice is this 857 contracts. That’s really huge number, right? If you compare it to the rest of what you see here and especially when it shows up at a resistance. So now you need to think what is this telling you? Huge volume appears at a resistance and it appears on ask. It could either be aggressive buyer with market order or it could be a sell limit. Now remember we are at a resistance. So if somebody big, probably some institutional trader jumps in with their trade in here, is it wise to enter a long when the price reaches a resistance? It makes no sense, right? Makes no sense. It’s more likely that somebody big was waiting with the limit order at this resistance level and when the price reached that resistance, their limit order got filled. Right? So in this case it’s more likely that this heavy volume order is sell limit and it is a confirmation for you to jump in that trade as well. I hope that was clear. Uh let me show you another example. If it wasn’t clear then hopefully this one will. Um so what you have here on this little chart, this is a price action chart. 30 minute time frame volume profile VWAP indicators and in here we have this level this support level the blue line it’s based on the heavy volumes it is at the beginning of a heavy volume zone here also at a place where first deviation of weekly VWAP was. So this was a support right? I found this support on this chart using volume profile V1 price action and then when price was close to that support I opened the orderflow software and I was looking for confirmation and since we are talking about limit orders you can probably guess that in this case the confirmation will be a huge limit order. So here is how the price was dropping towards that support the blue line that was the support and when it hit the support 1,046 contracts showed up just one tick above that support. Now you need to think what this represents. Since this is at bid, it could mean either aggressive seller with market sell order or limit buy. Which one is it? What’s more likely? Remember, the price reached support. So, is somebody big entering a huge short at a support? Not very likely. What’s more likely is somebody big was waiting at the support with a limit order, right? So, it’s more likely that this is a limit buy and that means a confirmation for you to enter the long trade. All right? So, this is a confirmation by limit order. Let me give you one more example of this so it’s crystal clear. So, what do you see here? If you look at the volume profile, then you can see that here is the point of control. Point of control is essentially the strongest area or strongest place in the volume profile because it shows where the volumes were the heaviest through the whole day. Right? So this is the daily point of control. The volumes were the heaviest in that day. Price likes to react to the point of controls. So potentially this level was a support If you don’t want to trade this blindly, you’ll want to see confirmation on order flow. So price goes away from the point of control, makes pull back to it, and as it hits the point of control, 678 contracts show up at bit. And again, you need to think, is this a market sell or is it a limit buy? Well, since the price reached a support, it’s not very likely that somebody big would go short at a support, right? So, it’s more likely that somebody big was waiting with a limit order at this support with a limit buy order. So, it’s very likely that this is a limit buy order and confirmation for you to go long. All right. And again, as you can see, this is unusually huge number. Compare it to the rest of the volumes which you see here. And nothing’s not even close to this, right? So, this definitely stands out. So, that’s how you can spot a huge limit order. Now, another concept is aggressive traders. You want to keep an eye on those especially when price reaches strong support or resistance zone. So imagine that in here we had a resistance. Again, it doesn’t really matter if it was based on volume profile or VWOP or whatever. We had a resistance and when the price reached that resistance, aggressive traders start to show up. And since this is a resistance, you want to see aggressive sellers. In this case, you can see the aggressive sellers mostly in here. You can see all those selling imbalances. That means sellers are way more aggressive than buyers. So what happened here is that price hit that resistance. There was some kind of absorption right here, first confirmation. And then after the absorption took place, other sellers start to jump in with their market orders. Those are the market orders. And that’s what started to move the price downwards. Those are the aggressive traders with their market orders, right? The volumes which you see on bit, those are sellers with market orders. And this is what drives the price. Because if everybody was using limit orders, the price wouldn’t really move. The price moves because of market orders, because of aggressive traders, right? When aggressive traders are present, that’s when the price starts to move, right? Because they trade with market orders. So you can spot them like this and it is a signal for you to join them as well to enter the short. All right. Again, this is important. You want to keep track of this only when the price reaches strong support or resistance then it could be the confirmation. It’s not like you see aggressive traders going up or down and you you know push buy and sell whenever you spot aggressive buyers or sellers like this. It’s not like that. You want to be patient. You want to wait for price to reach some important area, some support or resistance and then wait for your confirmation could be limit order. could be absorption, could be aggressive traders. So you need to keep an eye on that but only around support and resistance zones. Right? So again let’s imagine that there was a resistance here and when the price hit that resistance there was some kind of absorption but that’s not really what I want to focus on now. I want to focus on what happened next and that’s aggressive sellers. Heavy volumes on bid right here. Aggressive sellers and then aggressive sellers in here as well. Those selling imbalances right. So those are aggressive sellers jumping in right after the level got confirmed with the absorption here. They start to jump in. They want to join in that move that’s likely to come. and you should do the same. So when you spot this, then you enter the trade. The sooner you spot it, the better obviously because when market orders start to jump in, it’s usually quick, especially if the market participants are really aggressive. So there’s not usually that much time to act. So you need to be quick, right? What I like to see is first confirmation of the level, for example, absorption or limit order. And after that what usually happens is market participants start to jump in. So what you can do is when you spot the absorption you can enter your trade immediately after that. But if the absorption is not too strong or if you’re not too sure about it then you can wait for additional confirmation and that could be the aggressive traders other people other traders jumping in with their selling orders with their market setting orders. Right? That could be the second confirmation that could confirm your trade entry, right? If you are for some reason not sure after the first confirmation. All right, let’s check out this example. Imagine that we have a support in here. The price comes towards the support, hits it. Then might be this could be a buy limit order. Might be this could be absorption. Sometimes it’s not so clearcut. So sometimes you may not be so sure about that confirmation. So you want to see some additional confirmation and it could be the aggressive traders. In here we have a beautiful buying imbalance in here. This is actually a stacked imbalance because three imbalances are at top of each other. And we have another imbalance in here. As you can see, the volumes on ask are rather heavy here. And it seems that buyers are way more aggressive here than sellers. So those are the aggressive traders in this case, aggressive buyers jumping in and when you spot them, you jump in as well. All right. So this is confirmation by aggressive traders and remember aggressive traders are using market orders. So if there’s an uptrend then aggressive buyers show in here at ask. If there’s a downtrend then aggressive sellers are here on bit. Now another orderflow setup that I like to show you is big orders or confirmation by big orders. And here is how it goes. Take a look at this picture. And this is the chart, the trade filter chart where it only shows the big single orders, right? So it filters out all the noise, only shows the big orders. And imagine that for example in here we have a support zone. Price goes towards the support zone and as it reaches it, a massive order appears in here. And this is one single order. So it’s not iceberg order, not couple of separate smaller orders. This is one huge order. 700 contracts at our support. Somebody big jumped in right now at this support. This is clear signal that this is important level and signal for you to go long. In this case, when dealing with uh those big orders, it’s not that important whether it appears on bid or ask. But you know, it’s better if for long trade entry, it actually shows here at bid because if it’s at bid, then you can tell for sure that this is a huge buy limit order, right? But essentially, you just want to see a huge volume appear around the support zone, right? on this trace filter chart. Then it’s confirmation for you to enter the trade. Let me give you an example. Imagine we have a resistance in here. The price hits that resistance zone and in that resistance zone 101 contracts show up on the trace filter. Again, this is one trade, one signal trade. Somebody just entered over 100 contracts here at that resistance level. It is this at ask. So it’s very likely that this is a huge limit order, huge sell limit order, right? And confirmation for you to hit short. So this is confirmation by the big orders. Again, you need the trades filter. My software does it. With my software, you can easily filter out all the noise and track only the big orders. I’m pretty sure that other software has it as well, but I can’t really tell which one has it and which one doesn’t. So, Trading View probably doesn’t have it. Anyways, here’s another example of the confirmation by the big order. And imagine that we have a resistance in here. And as the price reaches that resistance, we have one order of 600 contracts, another order of 400 contracts both on ask. very very likely is that somebody big was waiting here with their sell limit order and when the price reached that resistance those limit orders got filled and they went short and so should you. All right. So, that’s a confirmation. By the way, a funny thing which I noticed here is that we also have 400 contracts in here and 600 contracts in here. And it’s likely that it’s the same trader quitting his trades here. Right? So in this case it wouldn’t be bad idea to actually do the same sell in here and then quit the position around here. All right, trade with the big guys. That’s the whole logic of my trading approach. Just follow the big guys who move and manipulate the market. We are just, you know, small fish. We can’t really do anything. But if we follow the big guys, then that’s how we can make our money. All right. Another concept I like to share with you is the failed auction or could also be called the unfinished business. As I was saying at the beginning, my software draws the failed auction lines automatically like this red line, this red line, and this red line. And what the failed auction is all about is that every footprint needs to have its high or low in a certain way. So if you look for example at this footprint then the high needs to look like this. There needs to be zero at bit and then some number on ask. This is how it should look like right. Also the low for example here the low should be some number here and then zero the zero is important it needs to be like this right zero in here zero in here that’s important if it’s not like that if the low of a footprint looks for example like this where this number should be zero but it’s not then it’s a failed auction right the market should have continued a little bit lower but it didn’t went up. Auction failed because markets are always in auction up and down, up and down. It’s always one never ending auction, right? But this is a failed auction. The auction failed and that’s why my software draws a line here and market likes to test those failed auctions because there are imperfections. It shouldn’t be like that. So market likes to test them and create a successful auction. Right? Now I’m not saying that if the price is moving for example here then you just go short from here because the price will want to test this. Now unfortunately it doesn’t work like this. But it what does work is when you have a failed auction or cluster of failed auctions like in here we have three next to each other or very close to each other and if the price comes close then it’s very likely that it will test that failed auction cluster and go below that. Right? So this is how you can use the fail auction theory because when the price is close it likes to test that right. So let me give you a couple of examples. For example in here we have failed auction in here. This is also a failed auction. Right here this is also a failed auction. So we have a little cluster of failed auctions and the price comes close and tests that right. So let’s say for example just you know for the sake of this example that you are short from this place and you are wondering whether you should quit the trade in here for some reason. But you see that right here there is a failed auction. Below that there’s another failed auction. So you may want to hold that trade a little longer at least one pip below the last failed auction and take your profit in here. Right? Because failed auction is likely to get tested especially if the price comes close to it. It works sort of like a magnet. All right. As you can see for example in here and in here again failed auctions got tested right or another example we have failed auction in here in here also some historical which is not visible but we have those three lines rather close to each other and price went boom testing all three on this example again we We have those three failed auctions and see what the market does. Tests that boom, right? When it comes close, it’s likely to continue and test the whole failed auction cluster or in here couple of failed auctions here from the past and what the market did was boom boom went past all of them. Funny thing is that it created a new one in here. But you know market likes to test those failed options. Now another concept that I like to show you is trapped traders. This is quite popular concept and it’s funny that it’s actually called trapped traders because those traders are not trapped but people keep calling them trapped traders. So let’s stick with that terminology and let’s talk about them as trapped traders as well. Here’s what it means. Take a look at this chart. price goes up and then at this footprint the oriflow is giving you every signal that it should continue to go up. Right? We have heavy volumes here at top of this footprint and those heavy volumes are at ask which means aggressive buyers jumping in in here at top of this footprint. Right? So this is screaming at you that the price should continue to go up. But for some reason it doesn’t. It goes down. That’s weird. It shouldn’t do this, right? So if the price doesn’t go up, well, it’s likely that it’ll go down, right? There is not really any other option. So basically, this is telling you that buyers started to jump in here, but then they didn’t really follow through. The big guys probably have different plans for the game. And if it’s not up, then it’s down, right? Those guys are called trapped traders. Like if they were trapped in their long positions. Obviously, they are not. They can quit their long positions anytime, but you know, people call them trapped. Eventually, they’ll have to sell sort of fueling this sell-off. But, you know, the sell-off is not just caused by those guys getting rid of their longs. It’s not the main logic is that you got clear signal that the market should go up. It didn’t went down and that’s a confirmation for you to go short as well. Right now, here is another example of the trapped traders. Uh the price went slightly up and at this point we had a buying imbalance. This is basically screaming at you that the price needs to go up, right? buying imbalance at top of this footprint but funny thing it doesn’t price goes down. So if the price is not to go up, then it’s likely to go down, right? Those guys are trapped traders. They got trapped in their longs. Price reversed. They’ll eventually have to quit. And if the price did not follow through and did not go up, then you should go short because clearly the plan is not to go up, but to go down. Now, one last example of the trapped traders in here. You can see the price was dropping and this was screaming at you. Those selling imbalances were screaming at you that the price should go even lower. By the way, those heavy volumes don’t need to be at the low of the footprint, but should be close, right? It should be really screaming at you that the market should go down. But if it doesn’t in the next footprint, if it doesn’t, then you should go long because those guys are trapped sellers. Right now, here is one last concept that I like to share with you and it’s quite popular one. It’s easy to spot. It’s effective and I highly recommend if you want to start with one or two confirmation setups then cumulative delta divergence should probably be one of them. It’s very very effective very simple to use. So what you see before you two charts one minute price action chart and cumulative delta chart. What you want to see is divergence between those because you know very very often most of the time they move in tandem. They move the same way but if they don’t then it’s a divergence. And remember this price follows delta. So if in this example the price goes up at the same time the delta goes down. And by the way, don’t mind the colors of the delta. Whether it’s green here or red, doesn’t really matter. What matters is the direction of it. Right? So in here, we have clear divergence between price and delta. And as I was saying, price likes to follow delta eventually. So that’s why the price dropped in here to follow delta. Right now, there are people who trade this as a standalone setup. I don’t. Uh what I actually do is I like to see this when price reaches some strong support or resistance level. Again, could be volume profile based, price action based. But let’s say that in this example we have a resistance level or I should say resistance zone and price is going towards that resistance and as it is going towards that resistance and goes up delta goes sideways that’s already a divergence but then starts to drop. So we have a divergence and when the price hits that resistance there is already a divergence between price and delta and that’s a confirmation that this resistance is likely going to work because sellers are already entering their shorts and the price is likely to follow the delta right so the price is likely to react to that resistance That’s how I use the cumulative delta divergence. It’s rather simple. Let me give you another example here. Imagine that we have a resistance in here. And as the price is going towards that resistance, it goes up. Delta is already going down. So sellers are entering their positions even though the price is going up. So when the price reaches the resistance that’s when you want to go short right you don’t go short when you see first signs of the divergence for example here you don’t you wait for your moment you wait for the price to reach that resistance and this is where you go short right this is where you enter your trade eventually the price will follow delta the cumulative delta is very very powerful tool even though it’s just you simple line chart but it is a very handy thing. So in this example you can see also that there is a divergence between price and delta. Price was going up and delta going sideways. As I was saying this is also a divergence when price is going up and delta sideways. Right? Usually they move the same like for example here they move the same right
but in here they don’t. There’s a divergence and the price is likely to follow delta especially if there’s for example some resistance level the price hits that and then that’s the signal for you to enter your short. Now one last example of the price and delta divergence. Imagine again that we have a resistance here. And as the price is approaching that resistance then in this area there’s a divergence between price and delta. Price going up delta going down. And that’s the confirmation that you should go short from that resistance. All right, simple and effective. Now, so far we’ve covered a couple of setups or concepts and what I like to do now is do a little recap because there was quite a lot of them and you know just to place everything on one screen and make it clear so you can distinguish clearly between uh those setups. So first setup we covered was absorption. Absorption is when heavy volumes show up both on bit and ask. On this example, buying pressure is being absorbed and sellers take over. Next, we covered confirmation by limit order. In this example, the price was going downwards, hit some support here, and at this support, a huge order appeared on bit. This is likely to be a buy limit order because it is a huge order appearing on support. So even though it shows on bit, it’s likely to be a buy limit. All right. So that’s the confirmation of a limit order. This is telling you to go long. Then we covered aggressive traders. In this example, price went up. There was some kind of absorption here and then aggressive traders started to jump in in here in here in here. You can see that the bit is way bigger than ask. So that’s aggressive traders jumping in. They really want to jump in with a market order so they don’t miss the move, right? That’s why they’re using market orders. So they saw the confirmation and now they want to jump in and you should jump in as well. So go short from there. Next thing we covered big orders. You see those on the trades filter chart where you filter all the noise out and see only the big orders. In this example, price was dropping down. It hit some potential support here and confirmation was this massive order, right? Massive order. One order, remember? Then the trade filter shows single orders, not icebergs, not separated orders, just one order of 700 contracts right here at that support. So that’s confirmation to enter your trade. Next thing that we covered was failed auction. Failed auction is when footprint ends like this or like this or like this. auction is not ended properly and if the market is close to that it likes to test that that means go past that right so this is how you can use the failed auction another thing was the trapped traders trapped traders is when the market is giving you a clear signal that trend should continue there’s a heavy volume activity screaming at you that the price should continue to go up but it doesn’t. The next footprint is bearish. So if the price is not going to go up then those guys are trapped buyers and the price is going to go down. All right. And the last thing that was the delta divergence where you look for divergence between price going one way and delta going the other way. The logic behind this is that price eventually always follows delta like this. So when you see a divergence especially around strong support or resistance level, it’s a beautiful and effective confirmation that you should jump in your trade. All right, guys. So, so far we’ve covered quite a lot of stuff and what I like to do now is put everything together and show you how you can put it to use. And I’d like to demonstrate this on couple of real trades. So, let’s first take a look at this trade. Trade number one. This one was on the Euro futures. This chart on the left is a 30 minutes chart. And first, let’s start with the reasoning behind uh the trade entry. So I used volume profile here to identify this significant volume zone and this was a support from which I wanted to trade. The reasoning was that there were heavy volumes formed within strong uptrend. So that’s basically telling you that buyers were active here as they were pushing the price up this significant volume zone here. So this was reason number one for this support. Another thing was that there was fair value gap right here. That’s from smart money concepts. And those two things were basically the reason behind the support. Now stop loss was in a low volume area. I like to place my stop loss in low volume area like this or behind a swing point but in this case it was behind this heavy volume area. So this was the stop loss and I planned to take the takerit at the VWAP. VWAP generally speaking is a good place for a takerit because it works sort of as a magnet. Right? In this case this was a weekly VWAP. So this was the original setting how I planned uh the trade. Right? Now on the right side what I want you to take a look at is this chart. This is the price versus the cumulative delta, right? So as the price was reaching my level right here was going towards the level and the level being this blue line at the same time delta was rising. So we have a divergence between price and delta. As I was saying, this is one of my favorite trade confirmations. And as you can see, it worked like a charm because the price hit that level and from there immediately went upwards. Right? Price likes to follow delta. And in this case, this was the only confirmation and you know, I didn’t really need more. This is a strong confirmation, right? So, you don’t need to have multiple confirmations or have the perfect confirmation. This is enough, right? Good support confirmed by divergence on delta. That’s all I need. So that was the trade number one. Now let me talk about another trade here and this was trade on the Japanese yen. So this is Japanese futures and 30 minutes time frame. First take a look at this chart. And on this chart, you can see that there were heavy volumes formed in here in this little rotation followed by this aggressive selling activity. This is telling me that sellers were active here accumulating their short positions and then they push the price aggressively downwards. This is a setup which I call the volume accumulation setup and the price usually reacts to it like this. Right? So this blue line that was a level from which I wanted to trade but I was waiting for some kind of confirmation on the order flow and in here we actually had couple of confirmations which was quite of cool. First I like to focus on this five minute chart which shows bit and ask. This blue line here, that’s the resistance. And after the price hit that resistance, there was this unusually huge numbers on bit and on ask. And as you probably know, this is the absorption, right? Buying pressure got absorbed in here and as a signal to go short. But that was only the first confirmation. The second one was right here on this filtered chart. This is a 30-inut chart again of the same symbol obviously and price went up towards that level, the blue line that was the resistance level. And after it hit that resistance level, what showed up here was this 165 contracts with one order. Right? Remember this is just one order. And very likely this was a limit sell right because it appeared on ask and also around a strong resistance. So it was very likely that this was a big limit order of somebody big to go short. So that’s another confirmation. And finally third confirmation was on the cumulative delta right here where this was the resistance. This is how the price was approaching the resistance and at the same time delta started to go sideways and here even started to drop a little. So there was a divergence on the cumulative delta divergence between price and accumulative delta. Right? So, we had three confirmations that this level is going to work. And this was the reaction. Unfortunately, I had to quit that trade a little bit earlier because there was the end of the week and I never hold my intraday trades during the weekend. So, I had to quit the trade uh in here. Now, on this example, we have just two charts. This is a 30 minute chart of the ES and this was where I made the original analysis. This is where I found my support level. The support was based on weekly point of control. If you look at the gray volume profile, then it’s the widest in here. That means that this is weekly point of control. That’s very very strong level. Also there was little fair value gap which is a sign of aggression of buyers. It was just a small one. So the biggest reason really behind this trade was the weekly point of control and also very close to it was a weekly VW upline. All right. So when the price made a pullback into this support area, I wanted to see a confirmation and the confirmation came in on this chart which is the trades filter right here. This was roughly the support zone and at that level over 1,000 contracts appeared here on the trades filter. So this was a huge order. Somebody big jumped in right here and that was the confirmation for me to enter the trade. Ideally, it would be better if that huge order was in here at bid because it would be clear sign that this was a limit order by limit order. In this case, it was an ask. So it probably was a market order, which is kind of weird, but ES is quite liquid. So it’s quite possible that somebody actually was able to enter over a thousand contracts here. And as I was saying, this was a confirmation to jump in that trade. As you can see, uh the reaction was just beautiful. The stop loss for this trade was behind the heavy volume zone
and a takerit was this volume cluster right here. So the trade went from here to here. If I wanted to trail this or take a second takeprofit, I would probably take the second profit as the price reached this second heavy volume zone. Right? But generally speaking, I like to place my takeprofits before a barrier which I consider heavy volumes. I consider those barriers. So take profit before that barrier and stop loss goes behind barrier and barrier in this case was this heavy volume zone. So that’s why the stop went behind this barrier. Right? So this was the stop, this was the takerit and this was the trade entry. Now let me show you one more. And in this case we are looking at the chart of Euro futures and I found the strong support on this chart which is a 30inut chart which shows order flow and it shows total volumes and as you can see there was strong rejection of lower prices here and within that rejection there was this significant volume cluster right you see how it stands out right this is probably some big algorithm jumping in reversing the price right so I wanted to trade from that so this was roughly that support line or you know as I was saying it’s not just one level but it’s general area but I draw those in my charts as simple line but I know that above it and below it I could also look for those uh confirmations there so I want you to take a look at this chart This is a bid ask chart, five minute chart. The price was approaching the level and the first thing that I noticed here was that below this footprint which was in a downtrend. Uh there was a positive delta which is kind of fishy, right? Because when the price is dropping there usually is negative deltas, right? But in this case there was positive. So that was like the first sign that there could be a reaction to this support. Also, as the price reached that level, you can check out this trace filter chart and see that there were one order of 77 contracts here very close to the level. So somebody big jumped in possibly with a limit buy order going long from there. So that’s another nice confirmation here. And a third one was those aggressive buyers jumping in. As you can see those blue numbers, they represent buying imbalances. That means aggressive buyers were jumping in, right? The price hit the level and then boom, boom, boom, aggressive buyers started to jump in because they wanted to participate in that trade, right? And after that, the price just shot upwards. So those are the confirmations I used for this trade. Uh the takerit for this one was uh around the point of control. If you look at the volume profile here, then point of control is a good place for a takerit or a little bit below it just you know to make sure. And my stop was in here. That was the low of this rejection area. So this is how you can use what I taught you in your real trading. As you can see, I’m using couple of confirmation setups to confirm my trade entry. It’s not always the same setup, but you know, you don’t need to use all of them like I do because I’ve been using this for years. So you can start with one or two confirmation setups. you know get comfortable with them and then build on that right and regarding those levels I’m publishing those levels for our members so if you guys want to join us then go to my website join our team of traders and then you’ll be getting those levels which I’m going to trade in advance so you’ll have those lines on your charts and you’ll know exactly where I’m going to trade that day right now at this point I’d like to point out some common mistakes that beginner traders do when trading with order flow and the common mistake number one is overanalyzing every footprint and I know I was talking about this couple of times during this webinar but this is really important because so many people just focus on every single number they see on a chart which is clearly insane. What you should focus instead are the big things and the things which I showed you at the beginning of the webinar which is for example heavy volume zones, significant volume clusters like this one or like this one. Those are the things which should stand out you know when you look at the overflow chart or for example this one. You should take a look at what the delta is doing. You should look at the imbalances here or here or here. Those are trapped traders here. So, keep an eye on those as well. Stacked imbalances like those because they represent strong support and resistance zones like in here. As you can see, the price made a beautiful reaction to that. So, keep an eye on those important things. the big things not every single number right so don’t overanalyze the overflow it’s a mistake that so many traders do but don’t do that what comes hand inhand with that is mistake number two ignoring the big picture and that’s why I think it’s very important to have chart like this on one of your screens where you see the big picture where you have weekly volume profile where you have let’s a 30 minute time frame and you can also have a weekly view up or something similar which is showing you the bigger picture. Right? You need to see what’s going on from the bigger perspective before you dive in into the details of Orflow. You can also use something like this. This is also 30 minute chart but in this case it is a footprint chart but but it still shows you the big picture because there’s the volume profile and also you are seeing that there are those heavy volume clusters that are very important in your decision making. So this also give you sort of a bigger picture right. So have those on your screens. It will definitely help to see where the market is going, what it’s doing, whether it’s rotating or trending, where are the big levels, where are the significant volume zones, stuff like that, right? And you need to see that before diving in into details of orderful trading. Now, common mistake number three is misunderstanding the bit and ask. We talked about that a couple of times today. I just wanted to make sure to mention it again because this is really really important. So just to repeat it once again on bit. You can have aggressive sellers with market sell orders as well as passive buyers with limit buy orders. On ask there could be either aggressive buyers with market buy orders or passive sellers with limit sell orders. Right? Keep that in mind. Now, another mistake is that when people think that orderflow is not just for intraday but also for swing trading, it’s not. People keep asking me that if they can use Orflow for swing trading. No, this tool is good for intraday trading or for sculping. But for swing trading, there are other tools like volume profile. You know if you want to trade with orderflow you can use for example the tick charts or 1 minute through 30 minute time frame that’s like the maximum right if you want to use higher time frames like let’s say hourly 4 hour daily time frames then the orflow is not tool for that tool for that is something which shows the bigger picture right that’s the volume profile now another common mistake is that people think that if they trade more markets with Orflow, they’ll have more winners. But truth is they probably won’t. Markets differ in so many things. They differ in average volatility, typical volume, time of activity when most traders are active there or things that they react to, you know, different setups, different kind of news. So every market is different. You can’t apply the same thing on every market. Yeah, you can apply the same principle, but for example, the volumes will be completely different. The volatility will be completely different. So that’s why I highly recommend focusing on one or two markets. Take a look at those two tables here. The first table shows average daily volatility. For example, the crude oil average daily volatility is 7%. If you look at the Euro futures right here at the bottom, then the average daily volatility is only half a percent. You can’t really trade the same way those two instruments. You can’t you need to become professional on trading just one or two, right? Just focus on couple of them because they are clearly very very different. Vatility is different also the average daily volume. So if on the crude oil typical daily volume is over 1 million contracts whether for example on the euro futures it’s only 150,000 contracts the charts will look completely different the volumes will look completely different if for example you wait for uh confirmation by absorption then the absorption will look completely different on crude oil than on the euro futures the volumes will be completely different right so you need at least roughly to know what typical volumes are on that instrument you are trading right so that’s why I’m saying that you should specialize on one or two markets and one very very interesting fact here is this one there was a survey that one of the top prop firms made and it said that top six traders were taking 43% of total payouts trade only one market. This is insane, isn’t it? Read it again. Top 6% traders, top traders, the best traders, those are taking 43% of all the payouts. Just couple of traders, just 6% of traders. And those guys, those top traders are trading just one market. So learn from them, right? Don’t try and take many trades with the goal of multiplying your winners. Chances are that it probably will end up the other way and you won’t be as successful as you plan. So stick to one or two markets. That’s my best advice regarding this I can give you. Now another thing that people keep asking me about is questions about level two data. For some reason, people still think that they need level two data if they want to trade order flow. The difference between level one data and level two data is that level one data shows executed trades and level two data shows market depth or in other words pending orders. So, orderflow is showing you executed trades. Trades that somebody actually executed, that actually went to the exchange and that they were actual trades, right? Somebody was trading with their intent to buy or sell and they executed that trade. That’s what level one data shows. That’s what order flow shows. Level two data is pending orders. But pending orders are orders which are very very often not executed. And here you can see DOM the depth of market and those are the pending orders. And for example if an algorithm wants to manipulate the price to go up. What it does it places pending orders here in order to lure the price to go up. But if the price starts to rise and it’s getting close to that pending order, they withdraw their pending order, right? So it’s not actual intent of trading there. And that’s the big difference because orderflow shows actual trades. The DOM or the market depth or the pending order are not actual trades, right? So you don’t need level two data, just level one. Now, we’ve covered quite a lot of stuff and now I’d like to give you a couple of tips to get started quick. So, first step, there’s no avoiding this setting up. You need to install the platform software, connect data, then you need to set up the indicators and create the workspaces. Well, when I was saying that there is no way around this, there actually is. If you join us, then what our tech team will do is they’ll do this for you. So, you actually don’t need to do this if you join us. Anyways, that’s the step number one. Step number two, pick one trading instrument that you want to focus on. I recommend the Euro futures. That’s my favorite. My setups works best on that. So, if you want to pick one, I recommend the Euro futures. Step number three, you need to learn the basics. How read the orderflow and that’s the stuff which I was showing you at the beginning. So that’s spotting the volume clusters, reading the delta, spotting the imbalances, all that stuff. You need to learn that. So you just go through the charts and pick the stuff up and after some time they’ll just, you know, pop up to your face and reading or flow will be easier. Um, you simply need to be able to understand what the order flow is telling you before you start placing trades. And step number four, I recommend picking one or two setups and focus only on practicing those. Could be for example the absorption setup and you can look for it around strong volume zones, right? So for example, you use volume profile to identify significant volume zones or daily point of controls or weekly point of controls something like that strong volume profile levels and when the price comes to those levels then you open the ORFL software and look for one or two setups to confirm your trade entry. could be for example the absorption setup or if you want to pick two could be the absorption and then for example the cumulative delta divergence. Those two are rather easy to spot, easy to learn. So we can for example start with those two. All right. So those are the tips to get started quick. And now what I like to do, I’d like to do a little quiz to see how you improved by watching this webinar. Question number one, I want you to tell what is the most important place on this chart? What stands out? What should strike you in the eye as a orflow trader? So if you look at it, it should be this volume cluster and this volume cluster. At least for me, when I look at this chart, those sort of pop up to my face. Those are for me the most important places I should be aware of. Now, next question. Is the price going to go up or down from here? I’ll give you a second to think about it. And price goes up. The reason why it goes up is that there were those buying imbalances, aggressive buyers showing up. So this is telling you that there’s strength on the buy side that are aggressive buyers and that they’ll probably push the price up. Another thing to notice and if you notice that I congratulate you it is a failed auction right here and eventually the price if it’s close it might want to test that. Right now here comes the last question. I want you to tell me if the price is going to go up or down from here.
The price goes down even though at this point it looked like it would go up because there were heavy volumes on ask. So it looked like market orders of buyers going long. There was even this imbalance here, buying imbalance. Let me go back and show you right here. The next footprint was bearish. So, this is telling you that something’s fishy about this because the price should go up but it doesn’t goes down in this footprint. So, those are trapped buyers and that’s why if the price is not going to go up, we’ve got trapped buyers and market goes down. All right, so that’s about it. I hope you guys liked the webinar. I know that there was ton of stuff here. You can replay this anytime. You can get over the webinar again and again. Pick just the stuff you want to learn. I’ll make those timestamps so you can look for only the stuff that you are interested in. By the way, if you guys want to join me and my team of prop firm traders and trade with us every day in live trading room, then you just go to my website which is trader-dale.com. And if you click FTA, that stands for funded trader academy. Then in here, you can read about it. There’s also a video at the top where I talk about the funded trader academy. What I recommend is clicking this button, talk to a mentor, and we can have a chat. We’ll walk you through the service, tell you everything about it, answer your questions, and see whether it’s a good fit for you or no, and then you can decide whether you want to join us or whether this service is not for you. All right, so check it out, give us a call. We’ll be looking forward to talking with you and we’ll be super happy to welcome you on board if you decide to join us. All right, so thanks again for watching the video. Thanks for sticking out until the end. I know this was a long one and I’ll see you next time. And until then, happy trading.
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