Order flow

Order flow is not a trading technique or a genre, it is more like providing a new perspective, allowing you to rise from a two-dimensional space to a three-dimensional space, and see the whole picture of the market more clearly. The essence of trading is nothing more than price, K-line and trading volume. The essence of driving price movement is nothing more than supply and demand, and supply and demand are reflected in trading volume. Order flow can deeply analyze the trading volume inside a certain K-line, clearly You can clearly see the reaction of the price in this range, and this information cannot be observed through the traditional K-line. The advantage is that you can use it with any trading technology that you are already familiar with, so that you , to further accurately analyze the current market conditions and verify your trading ideas.

Common nouns in order flow are summarized below:

Tick: The smallest fluctuation unit. Usually, the smallest fluctuation unit that has risen several times is said to be a few ticks. This is customized and adjusted according to the unit price of the currency and the time period. The shorter the time period corresponds to the smallest tick, such as the minimum tick of BTC The unit is 1, ETH is 0.1, DOGE is 0.01, etc. The tick here is a multiple based on currency price fluctuations. As shown in the 5-minute K-line order flow diagram of BTC, the tick is set to 1, then the numbers on the left and right sides of the K-line represent the corresponding price change and the corresponding amount.

Active buyer: The active buy order at a certain price is much larger than the active sell order, which means that there are many active buyers entering the market at this price.

Active seller: The active selling order at a certain price is much larger than the active buying order, which means that there are many active selling orders entering the market at this price.

As shown in the figure below: the number on the left side of the K line is the trading volume of the corresponding active selling order at a certain price, and the number on the right is the corresponding trading volume of the corresponding active buying order at the same price.

Passive buyer: A trader who entrusts a limit buy order and waits for the active seller to appear and make a deal with him

Passive seller: A trader who entrusts a limit sell order and waits for an active buyer to appear and make a deal with him

Here, the passive buyer's transaction corresponds to the active seller's transaction volume, and the passive seller's transaction corresponds to the active buyer's transaction volume.

Top main buying ratio (full name top-end main buying volume ratio): the number of main buying orders at the top sub-low price/the number of main buying orders at the top price

Bottom main selling ratio (full name bottom end main selling volume ratio): the number of main selling orders at the bottom sub-high price/the number of main selling orders at the bottom price. According to the size of the ratio, it is necessary to focus on two extreme situations.

Micro order (single/small prints): The active buy order at the top price of a K-line is obviously smaller than the active buy order at the lower price, or the active sell order at the bottom price is obviously smaller than the active sell order at the higher price, the small prints at the top and bottom Transaction, the experience ratio is greater than 28

Large prints: The active buying order at the top price of a K-line is significantly larger than the active buying order at the lower price, or the active selling order at the bottom price is significantly larger than the active selling order at the higher price, and a large number of transactions at the top and bottom, The empirical ratio is less than 0.699.

Unbalanced demand: According to the auction theory, comparing diagonal prices, the number of active buying orders at a certain price is much greater than the number of active selling orders at a lower price, indicating that the bulls are strong. Our default ratio is usually 2.5:1

Supply imbalance: According to the auction theory, comparing diagonal prices, the number of active selling orders at a certain price is much greater than the number of active buying orders at a higher price, indicating that the short power is strong. Our default ratio is usually 2.5:1

Accumulation imbalance phenomenon: It means that there is a continuous demand imbalance or supply imbalance phenomenon in a certain price range, which can better reflect the crushing advantage of a certain force in this range. We judge that three consecutive price imbalances constitute accumulation imbalance phenomenon, usually Considered as forming a resistance band or a support band.

Trapped traders: The volume of active buy orders at the top price is significantly enlarged, indicating that there are a large number of traders who buy at the end of the upward trend, that is, trapped long traders. The volume of active selling orders at the bottom price is significantly enlarged, indicating that there are a large number of traders who bought at the end of the downward trend, that is, covered short traders. The price moves in the direction opposite to the expectations of the covered traders, making them in a very passive position

Delta: A certain price Delta inside the K-line is defined as the volume of active buying orders - the volume of active selling orders. Delta in a K line refers to the total amount of active buying orders minus the total amount of active selling orders

Absorption: The price is originally in a trend. When a large number of passive traders absorb the orders of active traders who push the trend to run at a certain price, the trend stops, and the K-line Delta value fluctuates around zero, and the trading volume increases. , the trend stops and oscillates in a certain price range.

POC: the price with the largest sum of buy and sell orders among the multiple price levels inside the K-line

Order Flow Divergence Signal: For a bullish divergence, we need the trend to create a relatively lower price, have a positive Delta, and close a positive candle. For a bearish divergence, we require a new high, a negative delta, and a close below the open.

The signal when the covered trader appears: a large number of traders buy or sell at the end of the trend at the top or bottom, and then the price moves in the opposite direction, making the investors who joined the trend at the end very passive, panic and give up their positions; Single and micro orders emphasize the relative relationship between the first and second levels of trading volume at the top or bottom; demand imbalance and supply imbalance emphasize the relative relationship between the volume of active buying orders and the volume of active selling orders at a certain price. These concepts do not conflict with each other and can appear at the same time at a certain time. If 2-3 trading signals appear at a certain price at the same time, this is undoubtedly more convincing.