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Williams%R, SAR X-over 15 minute candles
- #5,664
- Edited 11:58am May 11, 2024 11:31am | Edited 11:58am
- Joined Sep 2015 | Status: Trader | 2,516 Posts
Trading thin liquidity at the boundary of the charts
- #5,665
- Edited 2:27pm May 11, 2024 1:54pm | Edited 2:27pm
- Joined Jun 2022 | Status: Evolving | 236 Posts
Did someone say Cumulative Delta? That's one of my favourite Order Flow tools!
Cumulative Delta is a very powerful tool (when used correctly) however as Rick said, without Level 2 Data it's value and effectiveness is utterly diminished. This is not gatekeeping or flexing, it is a critical part of what you are trying to visualize. To further explain, for context, I am going to quote some of my post on a separate thread on the topic of Cumulative Delta:
"As you may know, Price-Cumulative Delta Divergence can accurately predict moments where price has a high probability to turn and follow the Cumulative Delta. There is actually a reason for this unlike your standard divergence indicators, that being, Cumulative Delta is its most basic form is orders coming from either buyers or sellers (positive/negative respectively). So for example, when sellers are jumping in - pushing Cumulative Delta down but price is still rising, there is opportunity and risk that price may soon turn and follow delta!"
Now that's just an example of how I mainly use it, of course it can confirm the strength of a price movement equally as well. The point is we are trying to see the trades from both buyers and sellers and how they are interacting with one another. That is basically (disregarding limit orders for now) what Cumulative Delta is showing.
So how does this relate to needing Level 2 Futures Data? Futures are centralised, meaning every single market participant sees the exact same price & volume. Forex is decentralised, each broker shows a slightly different price and will never give accurate detailed volume data and it is always the brokers sole volume - which is almost irrelevant. So if your using the volume data from your broker to input into your Cumulative Delta tool/indicator you can see why it won't work as expected or give a clear view of the market compared to using real Level 2 Market Data.
Rick is absolutely correct about being mindful when and where you use it, especially in low liquidity & low volatility markets. This is mainly due to the fact that Limit Orders distort the Cumulative Delta reading, as for example aggressive buyers (market orders) appear on the ask however so do Limit Sell Orders. You can confirm what you are seeing on the Cumulative Delta by getting up a footprint chart (Order Flow - Level 2 Market Data) to see the orders that were placed and that the CD is showing.
Ill attach a screenshot from a post the other day of mine, that shows my standard Price (EUR Futures) + Cumulative Delta (Level 2 Data) 1-minute line chart and an example of how I use it:
In the above situation I would (providing a setup presented itself) go short, anticipating price to turn and follow Delta. It really can be a leading indicator! You don't come across those too often.
Trade safe,
MM
Cumulative Delta is a very powerful tool (when used correctly) however as Rick said, without Level 2 Data it's value and effectiveness is utterly diminished. This is not gatekeeping or flexing, it is a critical part of what you are trying to visualize. To further explain, for context, I am going to quote some of my post on a separate thread on the topic of Cumulative Delta:
"As you may know, Price-Cumulative Delta Divergence can accurately predict moments where price has a high probability to turn and follow the Cumulative Delta. There is actually a reason for this unlike your standard divergence indicators, that being, Cumulative Delta is its most basic form is orders coming from either buyers or sellers (positive/negative respectively). So for example, when sellers are jumping in - pushing Cumulative Delta down but price is still rising, there is opportunity and risk that price may soon turn and follow delta!"
Now that's just an example of how I mainly use it, of course it can confirm the strength of a price movement equally as well. The point is we are trying to see the trades from both buyers and sellers and how they are interacting with one another. That is basically (disregarding limit orders for now) what Cumulative Delta is showing.
So how does this relate to needing Level 2 Futures Data? Futures are centralised, meaning every single market participant sees the exact same price & volume. Forex is decentralised, each broker shows a slightly different price and will never give accurate detailed volume data and it is always the brokers sole volume - which is almost irrelevant. So if your using the volume data from your broker to input into your Cumulative Delta tool/indicator you can see why it won't work as expected or give a clear view of the market compared to using real Level 2 Market Data.
Rick is absolutely correct about being mindful when and where you use it, especially in low liquidity & low volatility markets. This is mainly due to the fact that Limit Orders distort the Cumulative Delta reading, as for example aggressive buyers (market orders) appear on the ask however so do Limit Sell Orders. You can confirm what you are seeing on the Cumulative Delta by getting up a footprint chart (Order Flow - Level 2 Market Data) to see the orders that were placed and that the CD is showing.
Ill attach a screenshot from a post the other day of mine, that shows my standard Price (EUR Futures) + Cumulative Delta (Level 2 Data) 1-minute line chart and an example of how I use it:
In the above situation I would (providing a setup presented itself) go short, anticipating price to turn and follow Delta. It really can be a leading indicator! You don't come across those too often.
Trade safe,
MM
Seeking Fair Value
- #5,666
- Edited May 12, 2024 5:16am May 11, 2024 2:35pm | Edited May 12, 2024 5:16am
- Joined Jul 2012 | Status: Trader | 1,880 Posts
- #5,668
- Edited 5:02pm May 11, 2024 4:26pm | Edited 5:02pm
- Joined Sep 2015 | Status: Trader | 2,516 Posts
Trading thin liquidity at the boundary of the charts
- #5,673
- Edited 12:50pm May 12, 2024 11:41am | Edited 12:50pm
Updated template and indicators.
-Included a S&R Indicator which I like.
-Sorted out issues with signal indicator (for jp chart).
-Included HA Indicator but not part of template. Add as needed.
Template can be added to Renko Chart, however I think I will have to code a separate signal indicator for renko as behaves differently and entries don't quite match rules. Always something when coding....
-Included a S&R Indicator which I like.
-Sorted out issues with signal indicator (for jp chart).
-Included HA Indicator but not part of template. Add as needed.
Template can be added to Renko Chart, however I think I will have to code a separate signal indicator for renko as behaves differently and entries don't quite match rules. Always something when coding....
