Beginners Guide To Order Flow PART 4: Platform, Data, Instruments

In this last part of the Beginners Guide to Order Flow series I will show you how to get the trading platform running, how to get high quality data and what trading instruments are best to trade with Order Flow.

PLATFORM & DATA

Order Flow relies on good data. The best you can do is use Futures data in your analysis. The reason is that Futures is centralized (opposed to Forex which is decentralized). Centralized data means that everybody on the planet gets the same data.

NinjaTrader 8 (NT8) platform

My Order Flow software was developed for NinjaTrader 8 trading/analysis platform. This platform is completely free. You can use the trial/free version indefinitely. It will work 100% and it includes all the functions you will need.

There is also a paid NT8 version but you don’t need that!

I have been using the free platform in trial mode for years. The way I do it is that I do my analysis using advanced indicators (Volume Profile, VWAP, Order Flow) in NinjaTrader 8 platform, and then I place the trades in my brokers platform (not in NinjaTrader 8). I advise you do it the same way. This way you will be using a fantastic and free charting platform (NT8), and trade with your current broker (or with our recommended broker).

You can download the NinjaTrader 8 free platform here: NinjaTrader 8 trading platform download

How to get good NinjaTrader 8 data?

There are three ways how you can get good quality data into NT8:

  1. Purchase it: There are several data-feed packages you can purchase. For me, the best way has always been to email NinjaTrader support, tell them what instruments I wanted and then they gave me a quote for the data-feed. Their support is fast to respond and also really helpful. Their email is here: platformsupport@ninjatrader.com
  2. Use different emails to get free unlimited data: When you first apply for the NT8 platform, you will get free Forex or Futures data for 14-30 days. Then the data-feed expires and you will need to pay for it. What you can do is simply create a new email and apply for the NT8 trial again. This does not take too much time (a few minutes every month or so) and you will save some money. You can apply for the free data again and again here: Free NinjaTrader 8 data. I made a video on how to do this (it is an older video on NT7 platform, but it works the same with NT8):

3. Fund a $400 account with NT broker. You don’t need to use this account for trading. Just fund it with $400 and you will get free data-feed. I think this is the easiest and cheapest solution. Here is a link to do it: Open NinjaTrader 8 Account here

*There is a condition that you need to place at least one trade per month, so you may just open and close the smallest possible trade every month to meet this condition.

Recommended Forex Broker

Having a solid broker with low spreads and commissions is ESSENTIAL for PROFITABLE TRADING! Check out my recommended brokers

What to trade with Order Flow?

Order Flow is best used for day trading. I use it mostly for currency futures. The way I do it is that I do my analysis in NinjaTrader 8 with currency futures, and then I execute the trades with my Forex broker on Forex.

This way, every level I have on futures needs to be transferred to Forex. It is pretty easy. I show how to do it in my Video Course which is included in the Elite Pack and in the Order Flow Pack.

You can use Order Flow to day trade almost any trading instrument. The most popular markets are:

  • Currency futures
  • Indices (S&P 500, Nasdaq, Dow Jones, DAX,…
  • Oil, Metals (Gold,…)
  • Stocks

Trading Forex with Order Flow is also possible (at least with my software), but some functions of the Order Flow won’t work. The reason for this is that Forex data-feed won’t give you Bid x Ask data, but only Volume data (sum of  Bid + Ask). That’s why I prefer to do my analysis using currency futures.

Where to get Order Flow?

You can get my custom made Order Flow here:

TD Order Flow Software & Training – Click Here

The Order Flow Package includes Lifetime Access To:

  • Order Flow software
  • Order Flow Video Course (12 hours long)
  • Volume Profile Pack

Additionally, you can get our proprietary Order Flow software as a standalone product via the Order Flow page I’ve linked to above.

Happy trading!

-Dale

Beginners Guide To Order Flow PART 3: Trading Strategies

This article is a part of a four-part Beginners Guide to Order Flow. Here are links to all parts:

  1. Beginners Guide to Order Flow PART 1: What Is Order Flow?
  2. Beginners Guide to Order Flow PART 2: Special Features
  3. Beginners Guide To Order Flow PART 3: Trading Strategies
  4. Beginners Guide To Order Flow PART 4: Platform, Data, Instruments

In this article, I will show you some Order Flow trading strategies. First, we will break down two strategies that are based solely on Order Flow. Next, I will show you how to use Order Flow to confirm and improve your trade entries.

Trading Strategy #1: Volume Clusters

This strategy is based on trading significant areas of heavy volume. These volume areas are places where the BIG guys (institutions) and their trading algorithms placed/filled a large portion of their orders. The exact steps to follow are:

  1. Set your Order Flow software to show Volumes (not Bid x Ask). This will make it way more easier to identify heavy volume zones. The Order Flow will show in shades of grey and heavy volume areas will stand out (darker shades).
  2. Look for dark grey areas (heavy volume areas) that stand out. Those show heavy volumes (institutional activity). The best place to look for those is within a trend or in a strong rejection of higher/lower prices.
  3. You need to see the price move away from the heavy volume area making at least one or two whole footprints (candles) above or below this area. I like to use 30 Minute footprints for this.
  4. Then you need to wait for a pullback. When the price returns back to this heavy volume area, then you enter your trade.
  5. Your trade entry should be at the beginning of the volume cluster or at the place where the volumes were the heaviest (within that volume cluster).
  6. If the heavy volume area was formed in an uptrend, then you go Long. In case it was formed in a downtrend, then you go Short.
  7. If the heavy volume area got formed in a rejection of lower prices, then you go Long (in the direction of the rejection). In case there was a rejection of higher prices, you take a short trade.

Example of Volume Cluster created in an uptrend. Instrument EUR futures, 30 Minute chart:

Example of Volume Cluster created in a rejection. Instrument EUR futures, 30 Minute chart:

The reasoning behind this setup is simple. Smart Money was entering their positions and then they pushed the price their way. A pullback to this area is an opportunity for us as smart money will most likely want to defend their previously entered positions. Because of that, these high volume areas represent a clear level of support/resistance.

Recommended Forex Broker

Having a solid broker with low spreads and commissions is ESSENTIAL for PROFITABLE TRADING! Check out my recommended brokers

Trading strategy #2: Trades Filter

Trades Filter is a unique feature of my Order Flow software. It enables you to filter-out the noise from the market and to display only the largest trading orders (the BIG guys). This strategy is based on following those big orders.

In the indicator settings you can set the Trades Filter to show only trades bigger than X lots. In the picture below I set the filter to 25, which means it will only show trades with more than 25 lots.

The strategy is very similar to the previous strategy (Volume Clusters). Here are the steps:

  1. Set your Order Flow to show BID x ASK. Then enable the Trades Filter in the indicator settings and set minimum trade size. For EUR futures I use 25 lots.
  2. Look for highlighted values (red/green) on the trades filter. Those are big trading orders and they work as strong Support and Resistance zones.
  3. You need to see the price move away from these areas first, making at least one or two whole footprints (candles) above or below this area. I like to use 30 Minute footprints for this.
  4. Then you need to wait for a pullback. When the price returns back to this big order area, then you enter your trade.
  5. If the price hit this area from above, then you enter Long. If it makes a pullback from below, then you go Short.

The example below shows AUD currency futures, 30 Minute chart with Trades Filter ON.

Another example below shows two more possible trade entries based on the Trades Filter strategy:

Confirmation Strategies

A Confirmation is best used around strong Support/Resistance zones which you found using your main strategy. For me that would be strategy based on Volume Profile.

This is how it works:

First, I go through the chart and analyze it with Volume Profile. When I find a Support or a Resistance I mark it in the chart. I then wait until the price makes it to this area. When it does, I switch to Order Flow and I wait for a confirmation. After a valid confirmation I enter the trade. There are many possible confirmations that will give you the final signal to enter your trade. In this article I will show you two of them. Confirmation by Limit Orders, and Confirmation by Absorption.

Confirmation strategy #1: Limit Orders

When the price reaches a strong Support/Resistance zone you want to see a sign that it will react to this zone. This sign could be some BIG guy/institution jumping in the market around that zone.

You want to see somebody big who has been waiting there (as well as you have been) to jump in the trade. When traders wait for the price to come to them, they use a Limit Order. They don’t chase the market with aggressive Market Orders. A Limit Order is better because they get filled for the price THEY want.

The Limit Confirmation Strategy is simple. You would identify a significant S/R zones and then wait for somebody big to jump at this level using a Limit Order.

When there is a Resistance, you want to see a Limit Sell order appear. When trading around a Support zone, you want to see a Limit Buy.

Now here is a tricky part so read this carefully:

A Limit SELL shows on ASK.

A Limit BUY shows on BID.

It is tricky because it is exactly the opposite as with Market Orders. For the purposes of trading this strategy it is enough to just know and understand that point. If, however, you would like to learn more about it you can watch my Order Flow webinar here: Volume Profile & Order Flow Webinar. Additionally, you can learn about it in detail in my Order Flow Video Course.

Steps to Limit Orders confirmation strategy:

1. Identify strong Support/Resistance zone using your main strategy (this could be Volume Profile strategy, Price Action strategy,…).

2. When the price gets near that zone, open Order Flow and wait for a big Limit Order (unusually big volumes) to appear. For a Short trade confirmation, you want to see a big number on ASK. For a Long trade confirmation it needs to appear on BID.

With this confirmation I like to use 5 Minute chart.

3. Enter your trade as soon as you identify the big Limit Order. Sometimes it does not appear all at once and it may take a few minutes until the whole big order is placed.

Below is EUR futures, 5 Minute chart, showing a Long trade confirmation.

Below is EUR futures, 5 Minute chart, showing a Short trade confirmation.

Confirmation strategy #2: Absorption

This confirmation strategy is a bit similar to the Limit Order strategy, though, a bit more simple.

In this case, the confirmation on the Support or Resistance is buyers or sellers who absorb all the pressure.

Imagine for example, that sellers are pushing the price downwards. They are entering aggressive Market Sell orders which push the price down. When strong buyers appear, they absorb all the selling orders. The price does not drop anymore and heavy volumes start to appear. Those heavy volumes appear on BID (aggressive sellers) as well as on ASK (aggressive buyers).

So, when you see that there are unusually large volumes traded on the BID and ASK around some S/R zone, then it is most likely Absorption. The pressure is getting absorbed and the price is likely to turn. That’s the confirmation you want to see!

Steps to the Absorption Confirmation Strategy:

1. Identify a strong Support/Resistance zone using your main strategy (this could be Volume Profile strategy, Price Action strategy,…).

2. When the price gets near that zone, open your Order Flow chart and wait for unusually heavy volumes appear on the BID and ASK. For this, I like to use 5 Minute chart. As previously stated, the absorption needs to appear around the S/R zone.

3. Enter your trade as soon as you identify the Absorption. It may take a few minutes until all the orders on BID and ASK are placed and you safely identify that market is absorbing the buying/selling pressure.

EUR futures, 30 Minute chart. Sellers are absorbing a buying pressure:

ES (S&P 500 futures), 5 Minute chart. Buyers are absorbing a selling pressure:

Where to get Order Flow?

You can get my custom made Order Flow here:

TD Order Flow Software & Training – Click Here

The Order Flow Package includes Lifetime Access To:

  • Order Flow software
  • Order Flow Video Course (12 hours long)
  • Volume Profile Pack

Additionally, you can get our proprietary Order Flow software as a standalone product via the Order Flow page I’ve linked to above.

Happy trading!

-Dale

Beginners Guide to Order Flow PART 2: Special Features

In this article, I would like to show you some special features which I implemented into my Order Flow software.

Those special features make trading and reading the Order Flow a lot easier as well as allowing you to see things which you would otherwise miss. Let’s have a look at them one by one!

Order Flow for Forex

One of the most important features of my Order Flow software is that you can use it for trading Forex. This is not very common, because Order Flow is usually used with centralized data (Futures).

Still, NinjaTrader has a good Forex data feed with reliable volume information. We were able to use this and adjust the Order Flow to work even with Forex!

The Forex data that is provided does not give Bid and Ask, but only Volume (=sum of Bid and Ask). For this reason you cannot use all the functions when trading Forex. Still the Volume data is extremely useful and the Order Flow gives you a great edge even without Bid and Ask.

Order Flow used with Forex Volume data looks like this:

Every cell shows the volumes that were traded at the given price level. The heavier the volumes, the darker the shade.

Volume Clusters

When trading with the Order Flow it is very important to pay attention to heavy volume areas and low volume areas. This would be almost impossible if you just looked at the numbers in each cell.

For this reason, I designed my software to recognize heavy volumes and use darker colors to make them stand out. This way you can immediately identify heavy volume areas by just quickly checking the chart.

When there is an area which is way darker than the surrounding areas, then it marks a place where the BIG trading institutions and their algorithms were trading.

Those are very important areas to keep track of as they often represent strong areas of support and resistance.

Those Darker areas are also shown on the Bid x Ask visualization as in the chart below.

The heavier the volumes, the darker the color:

Recommended Forex Broker

Having a solid broker with low spreads and commissions is ESSENTIAL for PROFITABLE TRADING! Check out my recommended brokers

Multiple High Volume Nodes (HVN)

A very important place in every footprint is the High Volume Node. It is the place where most of the volumes got traded (Bid and Ask combined).

An especially strong level is formed when two or more High Volume Nodes meet at the same price in consecutive footprints. When two nodes meet I call it a Double Node, when it is three nodes, then a Triple Node, etc,…

My software automatically detects those Multiple HVNs and highlights them in yellow. This way you can quickly identify them at first sight.

Those Multiple HVNs are very important in my Order Flow analysis because they often represent a strong Support and Resistance zones.

Imbalances

An Imbalance is when Buyers are way more aggressive than Sellers or Sellers could be more aggressive than Buyers.

If Buyers are way more aggressive than Sellers, then the number on Ask is printed in BLUE.

If Sellers are more aggressive than Buyers, then the number on Bid is printed in BLUE.

You will often see imbalances at the start of a strong and aggressive trend, as well as within the trend itself.

Imbalances are a great way how to keep track of the market sentiment. Only with order flow do you see this type of critical market detail!

Stacked Imbalances

Stacked Imbalances are three or more cells with imbalances at top of each other. Learning to spot these areas provides extremely important information to us as traders.

Stacked Imbalances are a sign that one side of the market (buyers or sellers) is dominating and in complete control. Those buyers or Sellers  are really strong, aggressive and determined to push the price their way.

My Order Flow software automatically highlights areas with Stacked Imbalances. Those areas represent strong Support and Resistance zones.

Unfinished Business

Another unique feature the TD Order Flow software is that it automatically detects Unfinished Businesses (Failed Auctions).

Unfinished Business represents market imperfection. It shows that the market went one way and when it turned the other way, the high or low was not formed properly.

What I mean by that?

Every footprint represents an Auction process. This process needs to end in a certain way. A properly formed high needs to have 0 contracts traded at the BID and a properly formed Low needs to have 0 contracts traded on ASK.

When the market turns from a new low or high without this happening, then it is called Unfinished Business (or Failed Auction).

It is an imperfection which the market has a tendency to fix. The price has a tendency to re-visit such places and “finish the business”. Essentially, you can think of these areas as a sort of magnet to the price.

My Order Flow automatically detects these areas and draws a line there. This line is drawn until the price re-visits this place again and fixes this market imperfection.

Trades Filter

This unique feature filters out all the noise from the market and leaves only the biggest trades (trades of the BIG guys we want to track).

It makes the Order Flow really easy to read and you can be sure you won’ miss any big action! When the BIG guys are present, it will show on the trades filter.

You can set the filter anyway you like – depending on how much “noise” you want to filter out. I personally prefer to set it in a way that only the biggest trading orders show.

You can build nice Order Flow entry strategy based just on the Trade Filter as taught in the Order Flow Video Course.

Cumulative Delta

This is a separate indicator which you will get as a bonus to my Order Flow software. It works so nicely with the Order Flow that it would be a shame not to use these two together!

The Cumulative Delta prints the difference between Ask and Bid. In other words –  Cumulative Delta identifies the difference between the Buyers and Sellers.

If there are more aggressive Buyers jumping in, then the Cumulative Delta is rising. If there are more aggressive Sellers than Buyers then it is falling.

It is best to watch the Cumulative Delta around strong Support and Resistance zones. If strong Buyers or Sellers start to enter their trading positions there, the Delta will show you!

What I really like is to look for divergences between price and Delta on 1 Minute chart.

For example: The price is heading downwards, but the cumulative Delta is going upwards. This tells me that even though the price goes down, there are buyers entering their longs and that the price will most likely reverse and turn upwards.

It is best to look for Price x Delta divergences around Support and Resistance zones.

Where to get Order Flow?

You can get my custom made Order Flow here:

TD Order Flow Software & Training – Click Here

You can get it as a part of OF Package which consists of:

  • Order Flow software
  • Order Flow Video Course (12 hours long)
  • Volume Profile Pack

Or you can get is as a standalone software product via the Order Flow page I’ve linked to above.

Happy trading!

-Dale

Beginners Guide to Order Flow PART 1: What Is Order Flow?

ORDER FLOW DEFINITION: Order Flow is an advanced charting software which enables you to read all trading orders that are processed in the market. It helps to track the BIG financial institutions through the trades they make.

Most people get confused when they open up a chart with Order Flow for the first time. There is no shame in that. Order Flow shows so much information and it is easy to get overwhelmed and confused if you don’t know what to look for!

This Beginners Guide will break down how Order Flow works, and how you can start using it your trading today!

In this 1st part of the Order Flow Guide I will show you around the Order Flow interface.

Footprints

The Order Flow does not show standard candles, but it shows FOOTPRINTS.

A footprint shows not only Open, High, Low, Close (as standard candles) but it also shows orders traded in that candle.

Orders can be placed on Bid or on Ask.

When a BUYER enters a long position (with a Market order), then his order shows on the ASK side of the footprint.

When a SELLER enters a short trade (with a Market order), then his order shows on BID.

This is how the Order Flow chart is drawn.

Green/Red Cells

Inside every footprint there are green or red cells.

The cell is GREEN if the number on Ask is larger than that of the Bid.

It is RED when the Bid is larger than the Ask.

This represents the strength of Buyers versus Sellers.

For this reason, the bullish footprints are primarily green (stronger buyers) and the bearish footprints are primarily red (stronger sellers).

Recommended Forex Broker

Having a solid broker with low spreads and commissions is ESSENTIAL for PROFITABLE TRADING! Check out my recommended brokers

High Volume Nodes

Possibly the most important place in any footprint is the High Volume Node. It represents the place where the heaviest volumes were traded.

It is marked by a black outline, making easily visible at first sight.

If there are more Heavy Volume Nodes exactly at the same price, in two consecutive footprints, then they are highlighted in yellow. Price levels like these represent a support/resistance zone.

Delta

Below each footprint, there is a number which is either green or red.

It is GREEN (positive) when there are more trades executed at the Ask (in that whole footprint).

It is RED (negative) when there are more trades executed at the Bid (in that whole footprint).

This basically tells you who is stronger in that footprint – whether buyers or sellers.

Footprint Summary

The panel at the bottom shows summary of each footprint.

You can set it up any way you want so it shows the information you need to keep track of with your strategy. It is best not to have too much summary info there and only focus on a the most useful things.

I personally like to use only Delta, Cumulative Delta and Volume.

Delta shows whether there were stronger Buyers or Sellers.

Cumulative Delta shows delta changes throughout the whole day.

Volume shows the overall volume of each footprint.

The screenshot below shows my Summary settings:

Volume Profile

My Order Flow software also has its own Volume Profile.

It is a Daily Volume Profile which shows the volume distribution throughout the whole day.

This is really important feature because it shows you the bigger picture, which is critical when trading with the Order Flow!

The BLUEISH/GREEN color on the Volume Profile represents orders traded on Ask (Market Buy orders) and the RED color represents orders traded on Bid.

Where to get Order Flow?

You can get my custom made Order Flow here:

TD Order Flow Software & Training – Click Here

You can get it as a part of OF Package which consists of:

  • Order Flow software
  • Order Flow Video Course (12 hours long)
  • Volume Profile Pack

Or you can get is as a standalone software product via the Order Flow page I’ve linked to above.

Happy trading!

-Dale