ORDER FLOW

TRADING
WORKSHOP
October 3 – 4, 2023
Order Flow Trading Workshop
Day 1… Day 2...

✓ What part of order flow matters the most? ✓ Recognizing when volume starts moving

✓ Why focus on the heavy volume? directionally.

✓ What is better, the left or the right of the chart?
✓ What does heavy volume mean to the
✓ When delta starts growing.
market?
✓ Trade Set Up 4 – POC Jumps
✓ Trade Set Up 1 – Consuming Traders
✓ Trade Set Up 5 – Delta Imbalance
✓ Trade Set Up 2 – POC Touchback ✓ Q&A
✓ Trade Set Up 3 - Pressure
✓ Q&A
Day 1
Topics

✓ What part of order flow matters the most?

✓ Why focus on the heavy volume?
✓ What does heavy volume mean to the market?
✓ Trade Set Up 1 – Consuming Traders
✓ Trade Set Up 2 – POC Touchback
✓ Trade Set Up 3 - Pressure
✓ Q&A
Order Flow Trading Workshop
What part of order flow matters the most?
Heavy volume trading at a specific price level in the market indicates a significant amount of buying or
selling activity occurring at that price. It suggests that there is a high level of interest and participation
from traders at that particular price point.

In terms of order flow, heavy volume trading at a price level indicates the presence of strong buying or
selling pressure. You have to take it a step further, what side of the market is it on? If there is heavy
volume on the buy side, and the market is selling off it means absorption, while heavy volume on the bid
side in a rising market suggests that there is strong bidding (demand). Conversely, if there is heavy
volume on the sell side in a rising market and the move stops it means absorption, if heavy volume
trades on the offer side in a falling market it shows supply entering the market.
Order Flow Trading Workshop
What part of order flow matters the most?
Monitoring heavy volume trading at specific price levels in a bar provides insights into support and
resistance levels, absorption or distribution, potential breakouts or breakdowns, and overall market
sentiment. It is one of the most important factors in order flow, in technical analysis that can help
identify potential trading opportunities or market trends.
Order Flow Trading Workshop
Why focus on the heavy volume?
Traders often focus on heavy volume in the order flow for their analysis because it can provide valuable
information about market dynamics and potential trading opportunities. Here are a few reasons why
traders pay attention to heavy volume:

1. **Confirmation of Price Movements:** Heavy volume can confirm the validity of price movements.
When there is a significant increase in trading volume accompanying a price move, it suggests that there
is strong participation and conviction among market participants. This can provide traders with
confidence in the direction of the price movement.
Order Flow Trading Workshop
Why focus on the heavy volume?
2. **Identification of Support and Resistance Levels:** Heavy volume at specific price levels can indicate
the presence of support or resistance. If a price level has previously experienced heavy volume and acted
as a barrier, it is likely to be an important level that traders should watch. It can serve as a reference
point for determining potential entry or exit points.

3. **Market Sentiment and Investor Interest:** Heavy volume provides insights into market sentiment
and investor interest. If there is a substantial increase in volume, it indicates heightened activity and
participation in the market. Traders can analyze the relationship between volume and price to gauge the
strength of buyer or seller interest and make informed trading decisions.
Order Flow Trading Workshop
What does heavy volume mean to the market?
In terms of order flow, heavy volume trading at a price level can indicate the presence of strong buying
or selling pressure. If there is heavy volume on the buy side, it suggests that there is a large number of
market participants willing to buy at that price level. Conversely, if there is heavy volume on the sell side,
it indicates a substantial number of market participants looking to sell at that price level.

The impact on the market depends on the balance between buying and selling pressure. If there is heavy
buying volume at a price level, it often results in upward price movement as the demand exceeds the
supply. On the other hand, if there is heavy selling volume, it could lead to downward price movement as
the supply exceeds the demand. But is it aggressive buying/selling or passive buying/selling? Is one more
important than the other?
Consuming Traders
Trade Setup #1

I spent a lot of time talking about the importance of volume because it matters where and how volume
comes into the market.

There is a method to how volume is traded by institutions. They don’t just come in and trade at market.
Consuming Traders
Trade Setup #1
Consuming Traders
Trade Setup #1

For a buy: Green bar, the heaviest volume level is a bar appears on the bid side is at least 25% more
than the heaviest volume level on the offer side.

For a sell: Red bar, the heaviest volume level in a bar appears on the offer side and is at least 25% more
than the heaviest volume level on the bid side.
POC Touchback
Trade Setup #2

What makes POC so important? Volume.

What happens when you get a heavy volume area retested and rejected? A move.
POC Touchback
Trade Setup #2
POC Touchback
Trade Setup #2

Sell: Red bar, red bar. 2nd red bar pulls back to the exact POC of the first red bar.

Buy: Green bar, green bar. 2nd green bar pulls back to the exact POC of the first green bar.

Can you do red bar, green bar for a buy? Or green bar red bar for a sell? No. You want the market to be
moving in a direction.
Pressure
Trade Setup #3

Stopping volume stops a move up or down. But that is one part of it. You also want to see lack of
aggressive trading after the market hits the stopping volume.
Pressure
Trade Setup #3
Pressure
Trade Setup #3

Sell: Red bar with heaviest volume on the top offer side and then it declines on the way down (next two
offer levels).

Buy: Green bar with heaviest volume on the bottom bid side and then it decline on the way up (next two
bid levels).
End of Day 1
Q&A

Any questions?
Day 2
Topics

✓ Monday’s questions.
✓ Recognizing when volume starts moving directionally.
✓ What is better, the left or the right of the chart?
✓ When delta starts growing.
✓ Trade Set Up 4 – POC Jumps
✓ Trade Set Up 5 – Delta Imbalance
✓ Q&A
Day 1 Questions
Q&A

XAUUSD = Gold Spot

US30 = Dow Jones
9:30 AM ET is cash open. Many different ways to trade the cash open. ORB, but on what time frame?
What about failed breakouts? i.e. make a new low then rally back and make a new high?
Why not just trade Futures? GC and YM.
Day 1 Questions
Q&A

Any questions? Depending on the market. On a 5-minute chart in ES set exhaustion to 10. POC
untouched.
Day 2
Topics

Recognizing when volume starts moving directionally.

Directional volume can confirm the validity of price movements as it suggests a higher probability of
a sustained price trend.You can have the best set up ever, but if price doesn’t initially move in your
direction, the chances of the move you are expecting to happen decrease.
Day 2
Topics

What is better, the left or the right of the chart?

Charts have two sides, the left and the right of the current bar. You look to the left to see where the
market has been. You look to the right to see where the market can go.

However, it is the information on the left that can help us learn where value and volume have built up.
Day 2
Topics

When delta starts growing.

Growing order flow delta signifies an increasing imbalance between buyers and sellers. A positive
order flow delta indicates stronger buying pressure, while a negative order flow delta suggests
stronger selling pressure. An expanding order flow delta in the same direction as the prevailing price
trend can provide confirmation of the trend's strength. For example, if the price is rising, and the
order flow delta keeps growing positively, it suggests continued buying interest and reinforces the
upward price movement.
POC Jumps
Trade Setup #4

POC Jumps are clear POCs to the left of the current bar.

A bar whose POCs are above the previous 3 bars highs (lows).

What is happening in the market is volume & value are starting to clearly migrate higher or lower.
POC Jumps
Trade Setup #4

POC
POC Jumps
Trade Setup #4

For a buy: Green bar whose POC is above all the highs the previous 3 bars’ highs.

For a sell: Red bar whose POC is below the low of the previous 3 bars’ lows.

Trigger: As soon as the next bar trades higher (lower) than the signal POC bar.
Delta Imbalance
Trade Setup #5

Look at Delta/Volume. You are looking for a 10x increase positive for buys or negative for sells. Ideally at
or around a swing high or low.
Delta Imbalance
Trade Setup #5

For buys: 2 consecutive green bars with delta/volume % that increases over 10x to the positive. Both
bars have to have positive delta.

For sells: 2 consecutive red bars with delta/volume % that increases over 10x to the negative. Both bars
have to have negative delta.

Can’t have bar/delta divergence, i.e. first bar cannot be red bar small positive delta/volume % followed
by green bar with 10x positive delta/volume % or green bar small negative delta/volume % followed by
red bar with 10x negative delta/volume. That would imply something different.

Look for the move to happen immediately. Don’t give it a lot of time to work out.
Delta Imbalance
Trade Setup #5

Not looking at the headline delta number as that can be misleading. Look at the delta/volume %.
End of Day 2
Q&A

Any questions?