 Hello and good evening everybody, welcome to this webinar, this is the second last appointments we will have together to complete the series of webinars about Volumetrica Trading Platform and Trading with Volume in general. Today we will be looking at a very important part of the Trading with Volume which we will introduce the order flow. We will introduce the footprint chart intended as the most important, one of the most important tools in terms of order flow analysis and we will be getting started in a few minutes. Right before we get started let me just show you the disclaimer. The material provided for information purposes only should be not considered as investment advice. The views, information or opinions expressed in text belong solely to the author and not to the author's employee, organization, committee or other group or individual or company. The risk of operating with CFD and futures instruments is very high since they are complex instruments and come with a high risk of losing money rapidly to the leverage. Okay so before we get started let me remind you the promotion still being on by the collaboration with Volumetrica Trading and TickMail. For those who are already TickMail customers there is the chance to get the Volsys platform at a special price or otherwise if you are not TickMail customer already you can contact Volumetrica Trading team and request a free demo of the platform. For any questions concerning the topics we have talked about the webinar you can email me at this email address and I'll be glad to reply you with an answer. That's it. Okay let's get started about the order flow analysis. First of all how do we apply the order flow analysis to the chart? We do that using what is called a footprint chart. Okay first of all what is the footprint chart? It is something, it is a special type of chart showing basically what the aggressive orders are. So two webinars ago I was talking about the market microstructure and more specifically we have talked about difference from aggressive to passive traders. So no matter if they are buyers or seller we have talked about interaction between the aggressive and passive traders and what actually makes the market tick. But as you can imagine there are continuously orders entering the market very, very quickly. In fact completely immediately the driving from the market microstructure so basically when aggressive traders enter the market what does the exchange do in this case the CME specifically for the S&P 500 instrument. Which is a future contract for the S&P 500 index. It takes, it tracks the aggressive as we said part of any each transaction okay and by the timing cells which is something looking like this. Let me show you. Yeah in the timing cells you can see all of the aggressive part, the aggressive counterpart entering every single trade and basically this is a very quick representation of what is the pressure being applied to the market by aggressive orders. But as you can see aggressive orders enter the market very, very quickly and it would be very hard and difficult to understand those data okay because we would have to remember in our mind what was the pressure buying or selling pressure getting into the market maybe about an hour ago or one hour ago it is almost impossible to do that. And this is the main advantage which the footprint chart gives us because this footprint chart is something that just tights up what the aggressive orders are and specifically what does footprint chart do. It just aggregates all of the aggressive orders which have entered the market on specific levels and those order gets added up level per level and so we have an aggregation of this data being shown inside and within normal bars okay. So what we have with footprint chart is just a normal chart which we can decide which time frame we want to analyze it okay and for example I can decide whether to have a range representation chart like this one I am showing you otherwise I can go for maybe a time-based chart so I could decide that maybe I want to have a representation that's five minutes okay and I will have of course something completely different because what I have in terms of candles will still be a candle respecting the time frame but of course the volume in terms of aggressive selling and aggressive buying will be aggregated in a different way of course that strictly depends to the time frame we are using. Let's say the best way to have a proper order flow analysis would be on smaller time frames because in this case we can have an idea of what is happening in the small time frame okay so we can read in a very accurate way what's happening on specific price level. So let me give you a brief introduction of what on how we can easily read first of all the footprint chart this is what this part of the webinar is dedicated to next time which will be the last webinar we will have an application we will see how to apply those concepts to the how to make a decision how to make a trade but today we will concentrate mostly on how those information provided by the footprint chart can be first of all read okay as a first thing you can notice that some of the levels are colored okay in red most of the levels actually are colored red and green okay of course that will show dominance of buying volume or selling volume over some specific level more specifically if we where we have those dark red squares those would show a dominant pressure given by sellers into the market and specifically aggressive sellers this is the most important part we always have to keep in mind from footprint footprint we'll focus only exclusively on aggressive traders so aggressive orders which have hit the market and how can we read that in front in inside the chart in sorry inside the candle you can see every candle comes with two columns okay the right column will contain some number indicating buying volume okay so all of the numbers we can see on the right part of the candle will show the aggressive aggressive buyers which have entered the market okay so specifically at this level here at the bottom part of the candle there were zero buyers hitting lifting the offer okay at the level immediately at the top we had 47 aggressive buyers entering the market and so on okay on the left side of the candle we have shown the aggressive sellers okay so all of those sellers which entered aggressively the market they are shown on the left side of the candle now if you think about it that could be seeming counterintuitive as a thing because as when we were talking about the market microstructure and I was showing you the order book we had on the right side the sellers and on the left side the buyers right but that was referring to the passive buyers and sellers since the footprint chart is showing the contracts which have aggressively hit the bid or the offer of course that's that's the reason why buyers are shown on the left on the right and sellers on the left because those aggressive buyers are those buyers who has hit the offer and then they hit basically they they they they traded aggressively the right side of the book and then for this reason they are shown here on the right side of the footprint candle okay the color expressing the dominance of sellers over buyers or vice versa as you can see here we have a green a green square that means we had here already this level we had 351 buyers eating market aggressively at 40 14.50 and at the very same on the very same level we had only 101 sellers selling aggressively okay so here we had dominance of buyers over sellers aggressive buyers over aggressive sellers okay and for this reason the footprint tool will plot this level as a green one okay as a dark green one because what does this color express actually how much delta for that level was so if we compare the number of contracts hitting the offer with the contracts hitting the bid over that very level we have a large dominance of buyers over here of course that comes with shading as well if we have a very dark green shading that means that the delta is more in favor of buyers okay so we still go back to the concept of delta we always have a delta when we compare aggressive with aggressive okay in this case aggressive buyers with aggressive sellers but this is a delta focusing only supposed to measure only the difference between those two aggressive okay traders so in this case we have a very dark green level shown here because delta is quite high for the very same reason but in the opposite side we can see here we have lots of sellers hitting the offer hitting the bid but delta is very high in terms of dominance over buyers because as you can see in the right part of the candle at the same price level there are much less buying commitments okay so we only have 57 buyers compared to 178 sellers and for this reason the level is plotted here as a dark red as an intense red okay this kind of delta so as you can see the concept of delta is very important in terms of order flow of order flow reading as well because it will always show how both aggressive sellers and buyers traded on a specific level and this is one of the two main delta analysis we can conduct on footprint charts what's the second kind of delta analysis we can conduct on this kind of chart is the diagonal delta why do we need to take the diagonal delta as well into consideration well because since going back to the market structure I was talking about two webinars ago a market never trades bid and ask at the same moment okay when a traded price when buyers aggressive buyers are trying to execute orders aggressively they will hit the first ask level in the order book and at the very same moment all of those traders hitting the bid so basically selling aggressively they will interact with the passive sellers being at the level so let's say prices never cross each other okay when market is trading an ask a level the bid level being traded at the very moment will be the one immediately below the ask okay so that gives me another evidence but of something different let's think about it if what does diagonal delta would express me what will give me an evidence of of the way aggressive traders aggressive sellers and buyers want to trade a specific price level in this case can you see where I have the cursor here uh 4013.0 okay this level 178 sellers wanted this level short only 57 traders wanted this level as a long one okay so that shows an evidence of interest of traders for that level the way they want to trade it okay diagonal diagonal comparison in terms of delta gives us another another information because that would just express us pressure being on at that moment it was created can you see these 40 contracts traded in the in the bid side okay this is plotted this is shown this is drawn in pink why is it highlighted in pink because this is an imbalance specifically a selling imbalance why because if I compare these 40 contracts traded in the bid with the five contracts traded on the ask but not at the very same level at the level at the top immediately above it it that shows that whilst 40 traders were hitting the bid aggressively only five traders were hitting the offer aggressively so this is not really an evidence as the diagonal delta as the horizontal delta was showing you a while ago uh of different traders uh the way out they want that price level here we are comparing aggressive traders trading two different price levels actually but they are compared diagonally what does that mean that whilst 40 uh traders were were going short aggressively only five were going long aggressively so that gives us the idea of immediate selling pressure over this area okay and for this reason when this difference is relevant when this reference is relevant then we have an imbalance we have an imbalance which can be considered as a pressure and acceleration of volume entering the market in a certain direction okay now what do I mean when I say uh this difference is relevant let's say normally in terms of order flow analysis it is considered and as an imbalance whatever goes over 300 percent so if there is a ratio of three times at least three times uh sellers and buyers like in these cases we have uh sorry just a moment yeah here we have 40 over five sellers are eight times actually the buyers at the being present at the very top level so in this case we have an imbalance of 800 percent okay normally this threshold of 300 it is what normally take traders on the flow traders tend to uh take into consideration in order to uh to say okay here we had an imbalance uh normally what is below this threshold is not that much relevant is not generally considered as that much relevant let's say in my personal experience a proper a proper imbalance threshold would be on almost all of the markets except some specific one I'll tell you why in a bit 600 percent okay this is something that for instruments where some more volume is traded like for example s&p 500 it is something that can give us a real clue when yet when we have an imbalance going over the threshold of 600 percent uh in thinner markets like for example the asdaq or the ym uh where less volume is traded uh it isn't that much uh it doesn't doesn't make so much sense uh going for higher thresholds because as volume traded is in overall less uh even if I have a very low volume but I have a very strong imbalance let's say for example 10 over 1 I yeah I would have in this case is a thousand percent imbalance so very very strong but built with small volume with light volume so uh let's say is much less uh reliable than a balance built on high volume in terms of in terms of volume traded over a single level okay uh so for thinner markets I still wouldn't go over the 600 threshold but in order for them to be considered as reliable I would look for at least four stacked imbalance so that means that I have four levels of consecutive imbalance in a consecutive in the same direction or at least 600 percent so I would love to in order for it to be considered as a proper pressure a proper pressure given by the volume at least for imbalance let me just figure out some possible situation might occur yeah something like this if we had something like this as you can see every single level would uh go over the threshold of 600 but that happens for for consecutive uh levels of price so in this case this is what is called a stacked imbalance also known as a pressure zone a pressure zone is exactly where we have more imbalance being uh happening uh at consecutive levels of course those two kinds of delta comparison which in the first case the horizontal delta expressed here by the coloring of the of the cells here that gives us the interest okay the level the the number drawn in pink gives us the evidence shows us where a negative a selling balance like in these cases because of course it is shown on the selling side occurs okay and that this is an evidence of a pressure in a certain direction okay uh those two elements of we can easily achieve from the order flow reading are the most important ones the most important ones in order to uh building more strategies of trading using those elements because of course the interest of some traders for a specific price area gives us what the idea of effort so many traders here have tried to push the market lower okay did they make it well actually not immediately okay not immediately but the effort is very clear over these two levels so uh next time we will uh see what absorption is actually and this is something very similar to this situation here when we have lots of efforts put in a in trading in a certain direction a certain level but market doesn't follow through in this like in this case for example then we we have here the evidence of that something very similar to a wall as happened a wall given by volume when we have pressure what what does it mean it means actually pressure okay so volume accelerating in a specific direction of a specific amount and this is given by the amount of the uh of the volume making the pressure then those two elements of course can be combined together in order to start reading the order flow bar by bar for example as you can see here this is a very very nice example here we have lots of buying interest being shown for this level interest okay because it is plotted as a dark intense green did the market actually go long not at all it went immediately the other way so we can straight away assume that those buyers weren't strong enough even if they were spending lots of energy lots of fuel in terms of trying to push the market higher they didn't make it so this is a very important clue because how can market actually go long if despite a lot of efforts in buying volume didn't go long at first place so here we can say we have a wall we have a wall confirmed by the volume what happens then when market comes back to that area do we still see that interest in buying not at all not at all but let's say this area is still neutral because we don't even have we don't have a selling pressure either here on this level so this is still neutral market keeps starts ranging then and what do we see here two finally two selling imbalances very at the let's say more or less at the same area where market has has seen lots of those sell of the lots of those buyers being not able to do the market higher there are no buyers anymore but sellers are getting even if they are still not so many sellers but they are much more powerful actually more more present than buyers compare the diagonally so we have two selling imbalances here at which at least I I said I said the indicator plotting an imbalance of at least 600 percent so if I have a wall here then here I have a pressure starting in the very same direction of the wall confirming what the wall was okay so this could have been a first indication of a short opportunity okay so that was that this is a very quick reading of the order flow we are doing together which we will go deeper deeper into next time next week but just to give you an idea on how those evidence which are objective actually this is objective that here there were lots of buyers which didn't push price higher so this is an objective wall and here we have an objective selling pressure with an objective lack of buyers which already in the same level have been declared by the market not efficient in moving the price higher so this is a very good way very simple way actually there are so many ways to put together the order flow elements but this is the very universal way to combine the elements we can read from the footprint chart therefore by the order flow okay so next time we will get deeper into this topic and we'll see how to combine things together in order to make this is the trading decision based on order flow elements okay of course this voltage platform is very is very focused on the what is the order flow analysis because this indicator which provides the footprint chart comes with many functions in order to have in a very visible way to have all of these evidence immediately clear okay so we can decide if we want to have the chart set up let me just show you the the settings the indicator building the footprint chart is the order flow analyzer indicator we can decide if we want the footprint chart drawn by volume so total volume like in this case so we can decide if we want to see the total volume exchange over a single level or if we want to have only the delta shown okay so instead of having buyers and sellers on each side then we will have only a single column showing the overall delta of the level or of course ask bit split was the configuration i was showing you and the one actually i am using all the time because i want to see every single volume traded of the ask and every single volume traded of the bit for every single tick the chart the candle has gone through and then otherwise we can decide to have them both shown so delta and total volume over two different columns okay so in this case on the right part of the candle i will have the total volume and then on the left part i will have only the delta tick by tick okay but the most important things when it comes to footprint is definitely the coloring scheme of the single levels why because the order flow analysis works better if it's done in a relative way what do i mean with that if i have here let me just show you yeah that's that's okay actually also with this representation if i have here minus 110 of delta horizontal delta is that relevant is that still not that much is that a lot well it makes sense if it is put into the right context so i have to there are two two possibilities actually uh if i know that that instruments i'm trading very well then maybe i can assume oh 100 minus 110 delta is a lot because i know that instrument or otherwise i will have to try and guess the coloring scheme actually does this work for us because it makes an average calculation of what the average delta over the last hand candles was and then it will plot a red or a more intense red or a less intense red accordingly to the average of the last of the last hand candles okay so even if we trade a market an instrument which we don't know very well or actually if it happens something like it it's happening over the last few days where the volume traded over the on the s and p 500 is much different because volatility is increasing so what is being traded today is far far different by what was trading maybe two months ago in average this is not a big deal because the footprint software will do the uh hard work for us so it will calculate whether this delta is really a relevant one so that will be plotted as a dark red showing that this is yeah this is a relative delta or otherwise if it doesn't respect the uh relativity rule then it will be just a plain delta so even if it comes with high delta but is not uh high enough to be considering that specific context it will just stay light red okay or pink well like this one let's say a light color this is a very very important function uh present in the bolsis platform because most of the footprint charts indicators uh being in the market today actually it doesn't take into consideration this relativity concept and of course order flow analysis works best when it is relative to the situation we are looking to trade okay okay so we are almost at the end of the webinar there is a question let me let me just quickly read that answer it uh is this footprint chart solely for future market alone or is it available for stocks and crypto market as well uh well very good question let's say it uh it can be applied to any market but of course if you are applying this kind of analysis to a market where there is a centralized exchange uh actually taking track of what the centralized volume uh is and what kind of volume is being traded uh it works way way better even if there are some ways to also use this kind of representation and analysis uh for example uh for export market so or crypto as well as well so therefore there is not a centralized exchange behind it stock actually it is centralized exchange so it would just if you if you're trading stock maybe you won't be trading on the CME because uh you may be trading the NYSE or NASDAQ but there is still a centralized exchange beyond the sorry behind the stocks market so you can definitely use that volume to build your footprint chart and conduct an analysis on it uh also do we need to subscribe or own data provider like this feed or rhythmic data etc yes definitely uh normally normally uh when you're trading a centralized exchange uh the broker will provide you uh with the account your trading uh a data feed as well and that data feed will automatically uh create will interact with the platform as long as the platform allows this kind of tool then you can have yeah the the footprint obtained by that data okay uh well let me just uh explain this thing about forex spot market because as you can as many you're welcome as many of you already uh i know uh for example forex spot when i when i talk about forex i mean the forex spot market so uh the one which is traded OTC but as you know many uh forex uh by many currencies also have a future instrument and in that case you can easily conduct the analysis for example if you want to trade the euro versus dollar uh that would be the spot uh pair but that derives from the 6a future which is the euro versus dollar future in that case since this is a future and comes with uh in a centralized exchange here you have proper volume even if it's not 100 of the volume traded but this is a centralized exchange so what you see here all of the volume dynamics you see in this uh in this future then is still uh allow you to make an underflow and volume analysis based on the centralized data there is another question if i have pro account or future account with tick mill then can i get this plate platform accent yeah definitely and if you already a tick mill customer you can get you can get of course a very uh the the access to platform so you can purchase or lease for a single monthly platform and then maybe renew it uh uh the bolsis platform that let me just show you the link once again yeah this is the special offer and that comes with cqg data so uh in terms of the data feed you will have cqg data that the one uh the bundle provided by tick mill and uh well for more detailed info maybe you should ask your uh your account representative or the support but uh you can get this offer and getting a monthly payment of 35 euros for uh for the bolsis platform and in that case yeah you should be able to run it with your cqg data feed all right so uh let me know let me please know if there are further questions so far or otherwise let me remind you my email address so just in case you want to ask me some questions about the very complex topic we have we have gone through today i am perfectly aware this is not something so easy but uh this is something normally uh completely normal the first approach then you can very easily get used to the order flow dynamics so this is my email address feel free to email me if you want to ask some questions and the next webinar will be and will be the last one of this series uh next monday same time and we will be talking about some very easy setup we can build on this order flow and footprint analysis okay so let me thank you for your attention uh hope this webinar you like this webinar and the topics we have discussed together wish you a good evening and a good training