What is Order flow?
A simple answer – Organising time and sales data in a format which makes it easy to read the information coming to you. It allows you to make relative comparisons between various stages the market may be in.
The different marketing companies who sell the product, have also given it different names like Footprint, Orderflow
It is popular as tape reading, reading the print etc etc, but to us, as traders, they mean one and the same thing.
Normally a trader would trade with a candlestick or a bar chart , even a pnf or renko chart sometimes which allows him to read the movement of price on a chart.
An Order flow trader gets to see the entire activity within the candlestick or the bar or even the pnf, renko or volume chart.
This is illustrated below
So a candle stick trader would just get to see 4 parameters which are the Open, High, Low and Close. He would then proceed to trade with these 4 parameters. An Orderflow trader wants to work with more information, such as location, competition, volume where the max trades occurred, other volume history etc.
An Order flow trader gets to see inside the candle and can read in real time whether the move has more aggressive buyers or more aggressive sellers and the volume behind the move.
The Volume is the most important part here and it is the record of trade.
Most novice traders think that there is only one price in the market. There are actually two . The bid price and the ask price. The Volume which happens at the bid or the ask will tell you what is happening beneath the surface and who is driving the price move.
In Order flow we collect all this info and organise it in a way which starts making sense.
This organization of data which is the commitment of actual traders in the market and demonstrates to us real time their bias which is backed by real money is called Order flow.
The video below will explain more.
To understand OrderFlow well you have to know what an auction process is.
The best way to understand an auction is through the Market profile process.
You can read about the Market Profile at – https://vtrender.com/what-is-the-market-profile/
The Order flow method of trading is knowing accurately and transparently what is happening in the present- as in now.
Most traders fail at short term trading because they are looking at only the info from the past.
OrderFlow is the current – the present and will tell you what is happening now.
We have a number of orderflow trading strategies which we put to use in live markets in the Vtrender Trading Room. You may wish to look up another article on Order flow here – https://vtrender.com/why-i-trust-an-orderflow-chart/
The Vtrender Trading Room is a premium product of Vtrender which has live customised order flow charts which in itself can show you what the market will do next.