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What is Order Flow Trading?

Order flow is nothing but recording the continuous flow of orders that get executed on the exchange. The emphasis is on the word “executed”. A simple order flow chart or footprint chart or a ladder chart does not plot pending orders. There is a a lot of misconception surrounding this amongst traders. Add to it the sheer amount of misinformation propogated on the subject traders are often under wrong impression about order flow.

The exchange provides the data of the executed orders and whether it was executed on bid or ask price. Based on that information an order flow chart will decide which sideof the order that is the buyer or the seller is aggressive and will plot on the respective sideof the chart.

Aggressive seller is plotted on the left side…

Aggressive buyer is plotted on the right side…

Once this information is recorded it can provide some deep insights into what the traders are trying to do at a particular level or zone. Concepts like absorption of supply or demand, trapped buyers or sellers, stop hunt, breakouts or breakdowns can be observed in realtime on the order flow chart.

How Order Flow is used in trading?

Now this gets traders all excited, they believe that since you can o0bserve so many things happening in real time on a chart, you can actually trade it easily. The only thing I have to say in response to that is if it was so easy everybody would be using the same thing and making money, but thats not possible right. So whats the catch?

Well as per my understanding, if you and me, retail traders, can observe this kind of thing happening on the chartts then obviously the smart money or traders can do it too. In fact they can use this information in a much better manner than you cna me. And that is where the retail traders get trapped.

Smart money is known to create situations in the markets that attract retail traders to the trade and then either…

  • Retail traders will be trapped ina  bad trade, eg. a false breakout, or,
  • They are trapped out of a good trade, eg. a stop hunt…

So how can retail traders use order flow?

The best bet is to use it for confirmation. The reason is it is almost impossible to differentiater whether the trades recorded on the order flow chart is from smart traders or not. Consequently you need to find something better than order flow to understand the actionsof smart money.

And there is no better tool than Market Profile for the job. My suggestion is to first get good at market profile and then try your hand at order flow. Obviously I have covered all of this in great detail in my DTF membership…

Order Flow Trading Software

The next thing that traders often ask me is what software to use for order flow. Well the question is difficult to answer becasue order flow software is costly. Addf to it the fact that there is a high chance that a retail trader can misinterprete the charts, it is a difficult job to suggest someone to invest in the software. unless a cheaper solution presents itself.

The best thing to do is to first invest in learning about the software and order flow in general, and then if it really seems useful go for investing in the software. I have covered in detail the software I personally use inside the course. Not only have I showed how to use it but have also shared my exact settings too. So the information is inside the DTF membership.

Order Flow Trading Indicators

An order flow chart is a fantastic tool, since you can arrange the buy sell information in so many ways and extract insightful information from the markets. Add to it thedeeper tanding that comes from market profile charts and you have a great cmbination for finding and timing trades. 

Order flow indicators come in different forms, someof the more popular are…

  • Bid X Ask Charts
  • Bid X Ask Imbalance Charts
  • Bid X Ask HIstogram
  • Delta
  • Cumulative Delta
Much more in the DTF Quarterly membership…

Dean Trading Framework

Dean Trading Framework helps you learn powerful tools that can take your trading to next level in a systematic manner. The content is arranged in a logical sequence to help you make the most of it.

The topics included are…

  1. Advanced Technical Analysis Course English & Hindi
  2. Market Profile Course English & Hindi
  3. Order Flow Course English & Hindi
  4. Volume Spread Analysis Course English & Hindi
  5. Detailed discussion on the software I use and its settings…
  6. Special offers on the software I use…

There is much more to this topic of trading and we cover it in great detail in the DTF Membership. So if you are curious and want to bring consistent profitability in your trading consider subscribing to our quarterly membership…

Free Dean Trading Framework Masterclass

To know more about how the Dean Trading Framework works enrol for a free masterclass on DTF Membership. You will learn all about the membership here, answers to common questions like…

  • What topics are included in the membership?
  • How is the content delivered?
  • How the queries and questions are handled?
  • How long will you have access to the content?
  • What happens when your membership expires?
  • What about the new content that is added during your membership?
  • And many many more…