What is Orderflow Analytics?

Welcome everyone to Orderflow basic tutorial series. In this tutorial, we will be getting into the orderflow basics and key terminologies required to interpret orderflow charts.

Orderflow is a visualization tool to understand the flow of bid and ask orders (market orders). Orderflow explains what aggressive buyers or sellers are doing in the market. It helps you to get the microscopic view inside the candles to understand how the buyers and sellers behave.Orderflow analytics helps traders to understand the market mechanism that moves the price and focus on what is happening in the market right now. Traders can understand the current trading behavior Big orders, Momentum buyers/sellers, Momentum Exhaustion, Stop hunting, trapped buyers or sellers, and many more nuances which helps traders in scalping/intraday trading to take very short term trading decisions.Different Names to Orderflow
  • Tape Reading
  • Volumetric Bars
  • Footprint charts
  • Bid x Ask Ladder
Traders Confidence: Track weak & strong player's behavior at key support/resistanceAbsorption: Track how large orders absorb the liquidity and create a ceiling effect.

Most of the classical technical indicators/patterns look into the past data to make a trade decision. Whereas Orderflow studies rely only on present information and focus more on what is going on right now in the market.Tools used for Orderflow AnalyticsSome of the Frequently Asked Question before getting into the Orderflow Basic TerminologiesCan I use orderflow to find Big Buyers/Big Sellers?
Yes you can use orderflow to find big buyers / big sellers

Can I use orderflow to find Key Support/Resistance?
Yes, it helps traders to identify scalpers/intraday traders to find key support / resistance levels which are critical for them to time their entry and exit. Can I combine Orderflow with my existing studies?
Definitely, orderflow is a decision support tool that helps traders to get the short-term context and it improves the way you are looking into the market and your technical studies.

Does Orderflow bifurcate volume into Buyers Volume/Sellers Volume?
Yes, it does. In fact, it does more than that. Which is the Best Timeframe to Apply Orderflow?
It depends upon what kind of trader you are. If you are a intraday trader then 3min/5min orderflow or a range bar charts order flow would do better. However if you are a positional trader then one can consider using 15min or 30min orderflow information.What knowledge is required to study the Orderflow Context?
Knowledge in Auction Market Theory (Market Profile) or Price Action or Volume Spread analysis helps traders to evaluate the underlying context.

Can I use Orderflow as an Independent Decision-making tool?

Yes, one can. But Knowledge in Auction Market Theory (Market Profile) or Price Action or Volume Spread analysis helps a trader to take better trading decisions.In the next tutorial, we will look into the basic terminology and key components of orderflow.
Tue Oct 26, 2021