25. INSTITUTIONAL ORDERFLOW

  • Introduction to Trading Concepts

  • Importance of understanding trading from a supply and demand perspective.

  • Focus on concepts like institutional order flow, footprint charts, and volumetric bars.

  • Institutional Order Flow

  • Refers to the activities of large market participants.

  • Can gauge order flow through data represented in footprint charts.

  • Visual representation provides insights on buy/sell orders and volume activity.

  • Footprint Charts

  • Footprint charts deliver a detailed view of market actions at each price level.

  • They illustrate price, volume, and transactions occurring simultaneously, giving traders 'X-ray vision' into market activities.

  • Comparison with candlestick charts: Footprint charts show how many trades occurred and the balance between buyers and sellers.

  • Understanding Market Orders

  • Market orders executed at bid and ask prices:

    • Buying at Ask: When a trader buys a market order, they pay the ask price.
    • Selling at Bid: A seller receives the bid price when selling a market order.

  • Bid prices represent willingness of buyers, while ask prices represent willingness of sellers.

  • Footprint Indicator

  • The TDU footprint indicator (Trade Doubles Indicator) is shown as essential for analyzing footprint charts.

  • Recognized industry standard priced at $459 for a lifetime license.

  • Chart Types

  • Different types of charts include range, minute, tick, and volume charts.

  • Range charts aggregate a specified number of ticks and print new candles accordingly.

  • Bid and Ask Mechanism

  • Left side of the footprint chart represents bids; right side represents asks.

  • The chart provides real-time insight into market orders including buy/sell orders occurring at various price levels.

  • Significance of POC

  • POC (Point of Control) indicates price levels with the highest volume traded.

  • Important for scalping opportunities and determining support/resistance levels.

  • Usually, there are three POCs identified in any given candlestick.

  • Delta Calculation

  • Delta measures the net difference between the total of ask and bid orders, indicating aggressiveness in buying/selling.

  • A positive delta: more buyers than sellers (bullish character).

  • A negative delta: more sellers than buyers (bearish character).

  • Example of how price action behaves in correlation to delta readings.

  • Understanding Imbalances

  • Imbalances occur when there’s a significant difference in buy/sell orders at certain price levels, indicating potential price movements.

  • Stacked Imbalances refer to multiple significant imbalances existing concurrently, providing key price levels for potential trades.

  • How Price Movement Works

  • Price moves due to the balance or imbalance in demand and supply.

  • When buyers outnumber sellers at a certain price point, prices tend to rise; when sellers outnumber buyers, prices tend to fall.

  • Closing Thoughts

  • A thorough understanding of these concepts increases effectiveness in trading.

  • Continuous exploration of real-time data through footprint charts provides traders an edge in decision-making.