Order flow trading

[3] Traders can use Order Flow analysis to see the subsequent impact on the price of the market by these orders and therefore make predictions on the future price and direction of the market.

Order flow trading is a type of short term trading strategy as it is used to enter the market accurately based on recent executed buy and sell orders.

[4] Order Flow analysis shows the volume of Buyers and Sellers at a specific price point and at a given time, it can also show the accumulation of orders waiting to be executed at different price levels.

[4] A buy imbalance tells us that there are much more buyers than sellers at that price point, indicating potential support levels.

[9] The volume of buyers and sellers is also used to indicate potential trend reversals and is a strategy that some order flow traders will apply to footprint charts.

Footprint chart showing trend and reversals
Footprint chart showing trend and reversals
Footprint candle
This shows the size of buy and sell limit order at each price point. Known as order book or DOM
Order Book/ Depth of Market
Image credit: https://www.jumpstarttrading.com/footprint-chart/
Shows the Individual buy and sell orders executed at each price