Our Most Popular Blog Posts of 2011

Posted in News, User Tips by tharnett on December 21, 2011

As the year winds down, we were looking over what you thought to be the most interesting blog posts of 2011. We also wanted to include one from late 2010 that had lots of traffic and lots of comments.

Most Visited Blog Post of 2011
Step through of a trade setup – we just posted this a few weeks ago and already it is the most visited post of the year! We will post more timely examples like this next year since everyone seems to like them.

Most Commented Blog Post of 2011
Chart of the Week – Auction Market Theory Order Flow – Thanks for all the comments on this one. Lots of people really found this chart to be an eye opener for them and served as way to learn more about auction market theory. If you haven’t read this post, check it out for sure. Great educational tool.

Winner for 2010
Save Money on Data Costs – What’s not to like about this one. With 2012 right around the corner, we will soon be adding support for a few more brokerage feeds. They are OEC and CQG. Both will be free brokerage based data feeds and fall under the same category as IB, TransAct/Infinity, Zenfire, and Rithmic. Stay tuned!

Forex Buy/Sell Signals with Delta Divergence

Posted in Footprint® Chart, User Tips by astoeckley on December 8, 2011

Delta Divergence is our commercial signal package for automatically generating buy and sell signals on charts using our order flow analysis tools. The signals are good in rotational markets as they seek to identify reversals when order flow moves opposite price direction, suggesting an imminent turn-around in prices. Traditionally, the Delta Divergence signals use Ask and Bid volume to measure the sentiment of market-priced trades.

The Forex market is many times larger than the equities and futures markets – combined. Spot Forex remains one of the largest markets in the world and is particularly popular with short-term traders and scalpers. However, as this is a de-centralized market with no true “exchange”, there is no true and accurate volume information available. So, how can you use Delta Divergence on a market like Forex, if you don’t know Ask and Bid volume information?

We provide the features to set our order flow studies based on “up tick” and “down tick”  so you can compare the price ticks in a positive direction with those in a negative direction. This is a form of order flow analysis, but does not use the actual contract size of those individual trades and ticks.

What are the results? Here is an example from this week on the EUR/USD spot forex instrument:

Click for a larger view.

 

 

 

 

 

 

Step Through of a Trade Setup

Posted in Footprint® Chart by tharnett on December 6, 2011

Earlier today we tweeted out that “cumulative delta is deteriorating..”. This was based upon the fact that cumulative delta was putting in new lows for the day while price was not. Many times we see cumulative delta lead price. Either way, when cumulative delta is making a push and price isn’t, something is going to happen, its just a matter of time.

Why? Well either price will follow cumulative delta and the aggressive order flow will prove to have been correct OR the shorts (as was the case when we tweeted) are getting sucked in at the low of the rotation and will fuel an often quick move in the opposite direction.

Now for a very important observation that is extremely valuable when you see it. Today’s price action up to the time we tweeted was tight and range bound. Just a very well defined 8 point rotation. This lends to more rotation inside the well defined range UNTIL proven wrong. The delta was deteriorating but at a very well defined support. So, the trade opportunity is actually a long at this support level with a tight stop. The tight stop is suggested because if price does start to breakout it should be accompanied by some follow through and range extension. See the Footprint chart of this example below.

If this deteriorating cumulative delta pattern were to occur on a day that was not tightly range bound, then a breakout would be more likely versus a snap back from the well defined support level.