Introduction to Order Flow: Seeing Inside the Candles
A candlestick chart tells you where price has been. Order flow tells you what traders are doing right now.
The Auction Process
The market is just a two-way auction. Buyers want lower prices; sellers want higher prices. Price only moves when one side becomes aggressive and consumes all the available liquidity at a level.
Aggressive vs. Passive
- Limit Orders (Passive): Traders waiting to be filled. They provide liquidity. They are the "walls" you see on the DOM.
- Market Orders (Aggressive): Traders who want in NOW. They consume liquidity. They are the engine that moves price.
Why We Watch It
At YMI, we use order flow to confirm our KPL entries. If price hits a Key Price Level, we don't just buy. We look at the order flow (the footprint chart). Do we see aggressive sellers getting trapped? Do we see aggressive buyers stepping in (large green bubbles)? That is our signal to strike.
Risk Disclosure & Disclaimer
Educational Purposes Only: The content provided in this blog is for educational and informational purposes only. It does not constitute financial, investment, or trading advice. Young Money Investments is not a registered investment advisor, broker-dealer, or financial analyst.
Risk Warning: Trading futures, forex, stocks, and cryptocurrencies involves a substantial risk of loss and is not suitable for every investor. The valuation of futures, stocks, and options may fluctuate, and as a result, clients may lose more than their original investment.
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