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Order flow is one of the oldest and best techniques used by day traders worldwide. It helps professional traders get a better understanding of the stock chart, keep a close eye on the price fluctuations in the market, and identify the supply and demand imbalances that affect stock prices. Traders must spot the imbalances in the market and create a trading strategy based on them in order to make a profit. If you want to understand how this technique works and how you can benefit from its chart-based strategies, keep reading as we’ve prepared a simple guide on how to learn order flow trading and identify the market imbalances between bid and offer prices.

Identifying Order Flow

Order flow is a form of data analysis that allows traders to predict price shifts before they happen by studying the flow of the trading orders in the market and how it affects the prices. In order for this to happen, traders have to watch how other participants are buying or selling the desired product to be able to predict the price changes based on the rate of supply and demand. This strategy is also called the tape reading strategy or the order flow analysis.

Using the order flow analysis system, a trader gets to look deeply through the volumes and numbers of buyers and sellers in the market, as well as the number of orders placed at each price level. The system presents these volumes in candlestick columns with the price levels in the middle. You can then read the number of sellers by choosing certain price levels and looking at the correlation to the highest number of buyers placing their bids. Additionally, the DOM, or Depth of Market, is a system that shows professional traders what the interests toward the market are from both sides: the sellers and the buyers.

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How to Use Order Flow as a Trading Strategy

To make the best out of order flow analysis, you need to watch the price levels that are traded the most. This entails looking for the price level that has the highest number of seller offers and buyer bids. Another important step in using order flow is to know when to trade rather than what price to bid. The largest numbers for buy and sell orders will affect the market price, and this is what you get to see on the order flow chart. Studying the traders’ intents and the rate of supply and demand will help you determine when to trade and at what price.

The system will also help you study the buying and selling momentum and the liquidity flow of certain items on the market. As per the stock trading experts from, to start trading you need to choose the financial instrument you will trade with and then start looking for the best brokers. To do this, you have to conduct deep research into the existing market brokers, depending on the price level controlling the market. This is why order flow is one of the best trading strategies, as it will help you choose the best brokers.

Tools Used for Order Flow

For displaying order flow charts and numbers, a footprint chart is used. Many platforms allow for drawing footprint charts but you will need to do your research to find the most suitable platform for you. Using the footprint chart, you can view the rate of aggressive buyers and aggressive sellers to identify where the big orders are placed and compare them with the market state at that time. The daily volume traded rates on the chart will show you the current state of the market and the number of transactions that actually took place rather than the advertised transactions or the limit orders.

The chart shows you the filled market orders to help you find the bid volume and the offer volume, compare them, and decide which one has the upper hand on the market. On the chart, you can see price levels placed in bars next to the volume traded for each bar. You will also see bid-to-ask volume indicators placed in cells. The bid and ask volumes will be displayed in green and red to indicate the rates of aggressive buyers and aggressive sellers.

Using the order flow strategy, you will be able to analyze the market movements and start trading in the right place and at the right time. The chart used for order flow will help you identify the bid-to-ask volumes for different price levels in the market, which, in turn, will allow you to predict price fluctuations, choose the right broker, and start trading at the perfect time. It’s also a powerful way of monitoring the market imbalances between the demand and supply rates, which are great indicators of the future market price.

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