0:00 you've been lied to about candlesticks question for you this is the perfect buying signal perfect Zone will we go up is it this one or this one or this [Applause] one candles only tell half of the story even the billionaire Trader who created the Japanese candlesticks wrote about tracking something else that no one speaks about if you want better entry signals so you can avoid fake outs and become consistently profitable this video is for you I'm going to teach you how to use orderflow for prle entries the top tools to use and show real life examples after watching this video you should be able to review your losing trades and instantly spot the fake outs
0:46 and false signals so let's get right into it candles are good but what I'm going to show you is better and everything that I say today is for me and I've learned what I've learned today from professional Traders all right so let's take it back now we all know the line chart and most of us would never go back to using the line chart exclusively U because the line chart it only shows us two coordinates price and time now the Candlestick chart though it gives us multiple points of data we have the open the low the high and the close and this gives us the behavior of buyers and sellers during this particular time so let's say this is a 5-minute candle okay now where's the problem if you ask the
1:33 majority of Traders now they are looking for smart money they're looking for investors they're looking for high liquidity you cannot identify the institutions by Price action alone in most cases if you look at these two candles they are exactly the same let's say they are bullish candles same open same low same high same close what are we missing here the amount of contracts trade here is 30 and the amount of contracts traded here is 30,000 so price action looks exactly the same but the participants the strength the interest for price to move up is 1,000 times greater here so when we combine candles and Order flow one of the building
2:20 blocks of order flow is volume so this is what we want to see the amount of contracts traded here at this particular time this will communicate strength interest there more Concepts that we're going to cover around order flow and volume now one more analogy so in this video I want to help you solve a problem a lot of people they look at levels price approaches that level and then it doesn't reach the level and it returns sometimes price reaches the level and then it reverses in the level sometimes price goes through that level and then reverses and sometimes price goes through that level and never comes back right so one of the problems here is if we use price price action only we may see the same exact patterns in our level but we won't be able to
3:06 identify uh the fake out order flow and volume will allow us to be able to identify fake outs also order flow and volume will allow us to identify when price is likely not to come up to our Zone order flow and volume will also help us identify when price goes through our Zone and then returns back to it if we're likely to continue down this was all communicated from order flow and is missing from most of the smart money concept conversations and then when we have a continuation pattern like we have here Order flow and the amount of volume that's being traded here will also communicate How likely prices to continue so quick analogy let's say uh we had someone pushing a car up a hill
3:51 old school car drawing and we had uh three people pushing that car so this is three people pushing the car and that car may move up the mountain up the hill and get to a point where it starts to slide back because it's only three people now if you were a bystander and you wanted to decide whether or not you're going to hop in the car and you may see this go up and go down go up and go down because there's only three people now let's say that you had here the same movement up and down but behind the move you had 30 people now it's likely that maybe 30 people putting their strength into the move or maybe if you had a tow truck the tow truck has more strength and can potentially push
4:37 that car up the hill right so same movement but there's a there's more effort and seeing how many participants are behind the move will help give you confidence and give you conviction and help you avoid a lot of the false signals that we see in the market dayto day so let's talk about order flow in detail there's a bunch of different platforms that will give us what we need but let's talk about there's two points I want to uh Define because orderflow has become a buzzword everybody's using it and I want to take us back to why we would even study order flow and where the real Edge is I see people talking about order flow and they just point to a price chart water flow has a much greater meaning okay three things I want to talk about the definition right it's
5:23 a type of trading that gives us an edge when we analyze okay advertised orders and executed orders so everybody that says you shouldn't add order flow um they're missing the point they think you're just complicating things but we are actually trading based on advertised and executed orders and now more than ever executed orders because of high frequency trading algorithms so we're looking at the volume of orders that were executed in order to do two things we want to profit off of imbalances that's mainly what we want to do so Edge appears for a small amount of time and we can react and see when Edge appears for us we can see when there's a
6:10 likelihood of of imbalance or actual imbalances we can see them when we look at executed orders in the context of our trade ideas okay so we want to find the imbalances between buyers and sellers okay or between supply and demand so now I want to talk about the theory real quick just a quick note there's something called auction Theory or auction Market Theory it's the idea that markets move higher or lower aggressively until price discovers a level of balance where there's a fair value for example okay let's say we have a Ferrari and this cost 300,000 fair value May fluctuate here and let's say
6:56 uh if there's an event that happens and prices go up as prices go up the buyers start to become more reluctant to buy at higher prices and the sellers become more aggressive because they want to sell their Ferraris So eventually we may reach a point to where we become balanced or Price may drop back to this point and then let's say there's a recall on something related to Ferrari and prices drop becomes the opposite right where sellers they begin to sell but they are more reluctant to sell at lower prices and some may be buying uh at these lower prices with the assumption that they may be able to fix
7:41 the car up right so what we are trying to spot are these imbalances here Order flow will show us if an imbalance will continue a trend will continue or or if prices will turn back right so uh technical analysis is the fake outs that I mentioned in the in the beginning it's easier to suffer from those if you only have technical charts but if you have volume and Order flow actual executed orders and the volume of those orders then you can see the volume of buyers that are pushing price higher or you could see the volume of sellers that are pushing price lower and you can gauge the interest through a combination of
8:26 technical analysis and Order flow so just want you to remember that the orderflow trader we are trying to determine when the market is balanced and imbalanced if the market is imbalanced then we are should be trending if the market is balanced we should be ranging so this coupled with news Catalyst technical Catalyst the right types of zones and actual executed orders this all brings together a formidable Trader and a formidable strategy I want to show you some tools related to order flow now the first and most commonly used tool is the level two the Dom and the time and cells okay so the Dom here you have the bid column
9:13 this column uh represents the limit orders for Passive buyers the ass column represents the limit orders for the passive sellers these are the advertised orders what Traders would do is get a picture of supply and demand and they find large blocks uh where or l or levels prices where there were larger levels and this is used to determine when there's High liquidity low liquidity supply and demand zones uh were were perceived through the advertised orders and then time and sales shows the executed orders so orders that are actually executed so you get a flow you get a rhythm uh you see at this price 56222
9:59 5 you see these orders uh being executed at that level and you start to get a flow and a picture of where price is going something that has become very very popular nowadays is bookmap what bookmap does it visualizes the level two okay it visualizes the Dom and I know this looks like a lot it is but these heat Maps will show you potential levels of of liquidity real liquidity and false liquidity so this is a tool that some Traders tend to use but I think a lot of Traders don't actually understand why they should use these tools so most shy away from it so I'm going to start off with some of the more basic tools some of the more basic concepts um we won't
10:45 do level two in this video we won't do book map in this video I want to focus on two that are easy to understand you have the volume Delta and the volume profile let's take a look at those okay let's talk about cumulative Delta if you have haven't seen my video on how to use volume click the link in the right hand corner we're going to go a step deeper so when it comes to order flow we are looking for imbalances an imbalance between buyers and sellers that's it if we can spot an imbalance between buyers and sellers that's a small window of edge for us and it may be it may last for 5 minutes 15 minutes 1 Hour 4 hours or for days I'm going to show you from the lower time frame but I'm going to explain the concept first so you want to understand the concept of Delta so Delta is basically the difference between the
11:33 buyers and the sellers so we take the buying pressure and the selling pressure okay and subtract it and then this will give us Delta let's say we have 200 contracts that are bought at the ask and 500 contracts that are sold at the bid then we will have a negative Delta of 300 this is signifying that there is more selling pressure pressure at a particular time than buying pressure and if this continues to happen let's say we have -300 -500 800 and it's escalating like this this is showing an imbalance okay so the general rule is if Delta is greater than zero then that's
12:19 buyers there an imbalance with the buyers buying more buying pressure If Delta is less than zero then we have more selling pressure okay so we we can look at this PL out on the chart if you look at the chart here there's an indicator that shows when you have aggressive buying or more Delta if you look at here so here's the line of zero this is showing more Delta on the buying side so as price breaks through this level here this is a resistance level as price is breaking through that volume is rising okay the Delta is rising so this is confirmation this is Convergence with price and volume Delta all right and as price comes back back down to this level we have an imbalance between buyers and sellers here there's more selling pressure but relatively to the buying
13:06 pressure uh this is a lot lower okay so this gives us a sign that this is likely to hold this level is likely to hold right now so as price starts to return what do we see we see price action rising and we see the Delta Rising as well relatively so this gives us a story now this is a lot to look at here in this format so there's something called cumulative Delta cumulative Delta Delta it plots out the Delta on the chart for us uh same example here as price breaks this resistance look at look at the delta look at the difference here so small movement here major massive uh amount of Delta on the buy side relative to previous volume so this is
13:51 confirmation as we break through that resistance level and then another uh Delta imbalance and this price drops back down we see on the pullback the Delta is uh pulling back slightly but relative to the buy small amount of selling pressure here okay so as price continues to rise also we see a rise in the volume Delta so this is confirmation for someone that is in a trade that the trade is likely continue as it's breaking these levels breaking levels but not only is it breaking levels with the price we also see the volume is increasing even on this pullback here we see price is pulling back but look at the volume relative to the pullback and then we even have prices pulled back
14:38 even more but the volume is increasing so this can uh be an indication that we are likely to continue so that's how we'll use volume data so with cumulative volume we'll be looking for validation right and then we'll also be looking for Divergence so it's two concept I want to talk about in regards to Divergence these are very important Concepts and this will help us dominate uh in the markets when we use this in Confluence with our overall trade idea so one concept is exhaustion exhaustion exists when less buyers are willing to buy at new highs or less sellers are are willing to sell at lows so we want to look for these points when we start to
15:24 see that uh price action is rising but we see we see when in regards to volume we're going to see a Slowdown in volume here okay and on the cell side exhaustion starts to happen we want to see like a Slowdown in that volume why is that because this will indicate to us that we have a potential reversal here's an example of exhaustion so price uh comes and creates a new high here uh and then we start to see the sideways movement now the same high over here on Delta so Delta should be pretty much align with price so as price pushes down we see uh the sellers are uh in control and then as price turns here aggressively um the
16:11 move from the the Delta isn't aggressive from the buyers right we failed to create a new high here with the Delta so this is showing that uh the buying volume the buyers are getting exhausted right um so even when when you have this push uh we still haven't created a new high so this is an indication that we are potentially um this move is not a strong move a lot of us can get faked out when a new high is broken we're looking to Scout and continue uh but the Delta here uh diverges from Price this can help prepare us for a potential slowdown in price and that's exactly what happened right before the close all right let's talk about absorption
16:56 another very powerful concept so absorption is when buyers are unable aggressive buyers are unable to take price higher but the volume that's traded continues higher so let's say this is a volume bar and this is price and price is not able to continue higher but there's a large amount of buying Delta right this can communicate that there are potentially large passive sellers here that are absorbing the volume and that if if we're speculating and we want price to go up we may be headed into uh potential reversal we don't want to be buying against the passive large sellers here on the flip side absorption can happen when the sellers aren't able to push price because there's a large passive buyer
17:42 here or several but the selling volume continues the Delta on the sell side continues so a lot of contracts uh sold here but the price doesn't reflect it so that's absorption that move so let's say we are trading a sell and we're trying to ride that wave lower and if we see a large buyer there we see the sell volume being absorbed then it's likely that we're going to stall and consolidate or we may see a reversal so these are early signs that we can't see with price alone all right so here is a case of absorption so let's say we are in a Cell here and our price is declining as well as our selling
18:31 Delta okay volume Delta is declining and then we come here and we see large amount of selling volume selling Delta but price is not moving that's an indication that we have passive buyers here they're absorbing the orders here right so if we were holding on to the sell uh this is a potential area of strong demand so we want to get up out of there so we may consider exiting when we see our reasion to close okay let's jump into the last one for this video and that's volume profile now again you have to digest this information and then learn how to incorporate it into your strategy none of these things that I mentioned are Standalone confirmations by theirselves when you have the combination of a great trade idea
19:17 Catalyst a great setup and then you put you incorporate order flow and volume uh then you have a great strategy that can help you be consistently profitable um and this is the way Pros trade so now Now volume profile visualizes order flow for us okay it visualizes it you have different types of volume profile the most basic one that you already know about is the x-axis volume profile right you see these spikes in volume um here this is the x-axis volume profile another one that I recommend as you start to understand more about volume I recommend that you start to incorporate would be the Y AIS volume profile right so what this one does there's a few benefits right of of this one we can use
20:03 them for support and resistance okay many times when you look at a chart you see multiple touches on a particular chart and you don't know the volume traded at certain levels so a lot of times you're waiting for price to go to that level and you don't know if it's going to hold many people reach out to me and say hey I struggle with support and resistance levels is it should it be higher should it be lower where should it be right so a lot of times the support and resistance we can use volume profile to Target the areas where you have the most volume as areas that will likely continue to be support and resistance in the future so a lot of us look for supply and demand zones based on a candle or drop based drop or just a
20:49 the the confirmation candle I'm trying to look for these zones if you want to find them use the volume profile look at where the most liquidity uh is based on contracts actually executed executed orders right if you go back to advertised orders and executed orders right so support and resistance is one uh another one is again imbalances so we want to see where imbalances are number three is determine the strength of a trend or breakout that's another one also places that you can uh your TP you have your take profit also your stop loss based on high liquidity area is okay so let's break down what the volume profile this particular one is which is
21:34 the most popular style of it and I'm going to do a more detailed video on this but I'm just kind of giving you a primer so you're going to have your high okay you're going to have your low this is a low of uh price just like uh the candle you have the high you have the low and uh this is going to be your open here that's why it's red like the bearish candle and this is going to be the close and on the green candle this is the open and this is the close okay now you have something called the point of control PC or P okay and the point of control here shows where the most volume was traded for this particular uh time interval okay so here the most volume
22:21 was traded here here the most volume was traded okay this is a significant area now lastly you have two things you have your you have a high volume node which is called a high volume node or hvn um and then you also have a low volume Noe right so these are used for two different things the high volume is used for potential reversals those are high areas of liquidity the low volume normally we expect price to trade through these areas pretty easily okay so I'm going to do a dedicated video on all of these Concepts but I'm just showing you how you can add these to your charts and incorporate these into
23:06 your trading so let's look at an example of how you would use a volume profile before I go on I'm going to stop this video here and make a part two before I continue this series please let me know in the comments if you enjoy this content by liking subscribing and commenting if you like this series I'll create a full playlist on orderflow I go into each of the indicators that I listed here and I'll show you a full trading strategy full scalping strategy that you can use using some of these indicators together to be profitable in the markets thanks for your support if you want to see the video that I did on footprint charts watch this video
