Trading requires a thorough understanding of technical indicators. These tools may not be entirely accurate. Understanding the underlying orders is as important as comprehending the price behavior of a stock or derivative. This article will define NinjaTrader order flow and describe how to build trading strategies around it.

What is Order Flow in Trading?

The technique of evaluating the order flow and attempting to foresee how it might affect the instrument’s price is known as order flow analysis. You can observe how other market players are navigating the market. Consider it a close-up examination of candlestick patterns.

You can see the market forces thanks to the order flow. For instance, you might anticipate that the sellers may have to offer a lower price to sell their product if there are more buyers than sellers. Similar to how more consumers would increase costs, fewer sellers would have greater freedom to set their prices.

Every trader interprets the NinjaTrader 8 order flow differently. The order type (buy/sell), order volume, and price trend are typically considered to be the three most important elements in order flow analysis. To better comprehend the direction in which the price will move, some traders are also interested in dividing limit orders from market orders.

Order Flow Trading Strategy

We’ll pause and demonstrate how the footprint chart works before we detail how to apply the order flow trading method.

You may be wondering how to use the footprint charts. Using these charts may create a more thorough understanding of the market. The price and order flow statistics are all displayed in the footprint charts (volume).

The footprint chart shows the volume transacted at each price for each bar and price level. Let’s discuss some fundamental ideas of trading order flow before moving on to the footprint charts.

Individually footprint chart has three pieces of data:

  • The footprint chart’s rows are developed at different costs.
  • The cell showed the bid-ask volume indicator.
  • Order flow (for aggressive buying, you can see green numbers, and red numbers show aggressive selling).

Read more also – [Video] SuperTrend Pro + Heiken Ashi & RSI Blend indicators

Understanding the Chart to strategize the Trade

You will need to place a bid if you’re a competitive seller looking to enter the market. Alternatively, you might hit the market order and raise your offer if you’re a quick buyer and want to fill a limit order immediately. The footprint chart will show the entire process.

  • The number will turn green once the buyers start acting more aggressively. This means the number of customers exceeds the number of sellers.
  • The number on the footprint will turn red when sellers become more assertive.
  • These imbalances should be stacked one after another; this is a sign that buyers and sellers are becoming more aggressive. Depending on where they occur, you can look to qualify deals based on these imbalances.

Ending Note

If you want to trade more efficiently and exceed your profit record, you need to have these basic ideas of reading flowcharts. This will help you understand the order flow and plan accordingly.

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