The MarketDelta Blog

NOTE: This material is straight from our guide “Learning to Read the MarketDelta Footprint®. It can be downloaded for free here.

If the meaning of the phrase “order flow” is not clear to you, it should be by the end of this document. Order flow analysis is the missing link for many traders. It refers to how the orders are coming into the market, how they are being filled; whether executing at the offer or on the bid. It is the dual auction at the most micro-level. Assessing order flow in real time can tell the trader how trade is being facilitated in any direction, a key concept in auction market theory. The order flow patterns, as revealed by the Footprint® chart, that we’ll be looking at are NOT traditional price patterns. Rather, these are T&S patterns that you’ve probably never even realized existed. The T&S data simply moves too fast to comprehend, and then in a flash the data has scrolled by, out of site. The Footprint® patterns can be classified into three general categories: intra-Bar patterns, end of Bar patterns, Multi-Bar patterns.

These patterns rarely, if ever, mean anything in and of themselves. This is where the MarketDelta Footprint® diverges radically from traditional price pattern and/or indicator based analysis. No attempt is made to oversimplify or under-simplify. Nor is the Footprint® a red light / green light type “system”. Instead, the insight gleaned from a deep and experienced comprehension of the Footprint®, allows the trader to integrate this data along with current market context and sound market logic. For example,
auction market theory or any other viable analytic philosophy which affords the trader the ability to assign structure and thus meaning to what he/she observes, combined with the Footprint®, will provide decision support of the highest possible quality. The Footprint® is not more or less important than either of the other two elements just mentioned; it is equal.

In general, Market Profile®, support and resistance analysis, trend lines, and other macro-type big picture analysis provides the where to trade. The Footprint excels in showing when to trade because of the way it represents order flow and volume.

After first gaining a basic understanding of what a Footprint® chart is (which presumably you’ve already achieved) the next step is to gain some level of observational awareness. Avoid making preconceived conclusions. Avoid deciding, in advance, what something is going to mean. Instead, begin the process with simply learning how to pick out key elements of Footprint® structure. That’s what this document is all about. Once you have gained some facility with what the various elements of Footprint® structure are, then you can begin coming to conclusions regarding the meaning of the elements in various contexts. Also, you can begin to assemble the elements into patterns. In this way, you’ll start making your own rules, based on what is real, not what some tradition, some book, or some trading guru has told you; which may or may not be valid information. The Footprint® lets you come to your own conclusions, if you learn to see the Footprint® in an unbiased fashion.

Continue reading here.