Order Flow Intro: Footprint Chart Basics Expanded

Alright guys, what's going on? This is Ryan with blockroots. And in this video we're going to go over a very helpful and extremely valuable order flow tool and that is the footprint charts. Okay? So normally for the most part most traders are using candle charts, okay. Or their chart setting is on candlestick setting. So what this is is essentially it shows the opening, the high, the low and the close, okay? So you can interpret certain strength or weakness in how these candles are formed with relation to certain supports or resistances or highs and lows. And if you get really good at say for example, price action trading, this alone can be an.

Incredible tool to have in your belt, right? So to be able to interpret price action as rather a useful way of getting into or getting out of trades and identifying whether or not there is strength and weakness on part of buyers or sellers. So very simply put, now the basic candlestick chart is pretty one dimensional. You get four figures from it, so you get the high, the low, the open, the close, but you don't really get any under the surface or as I've said, atomized or granular data, you don't get a look inside of the candle. So there are times when you'll be looking at a candle and it has say for example a really long wick and the wick might be really long to the upside. So this might be called an inverted hammer if it has a really small body and a really tall wick to the upside. So. So the body sometimes will give you the impression that that is where the majority of trading took place. Okay. Because it's a more substantial piece on the chart in relation to what looks like a skinny wick. Right? Now, just looking at a candlestick chart doesn't tell you whether or not the volume was in the wick or in the body. It doesn't tell you whether or not the volume took place closer to the open or to the close. All right. Or closer to the higher to the low. So this type of information can be extremely useful, especially when we are trading, let's say with volume profile or we're trading order flow and support and resistance and we're trading around structure, okay. Or trading horizontals, for example. So knowing where the majority of the volume took place, where buyers and sellers were most interested, or where there was evidence of absorption should be, or rather should have precedence over just whether or not where the candle closed or where the wick was. And some of these other ways that you might see traders will, you know, they'll either stick to creating a Trend line or a support and resistance line based on candle closes or based on wicks or some candle closes and some wicks. What I think is most important is where did a majority of the trading take place? Where was the last time? Rather what was the. In what location were sellers most interested? Okay. In what location were buyers most interested? In what location were sellers less interested? Okay. And the opposite can be said with buyers. Right? So when we're trying to identify.

Just where price might find interest on part of buyers and sellers within the auction, just candlesticks alone are not going to give US A complete 360 degree view of what is going on in the market. So this is why a footprint chart is so useful. It gives us an inside look at the candle, what goes on inside the candle as per volume traded at precise price points. So depending on how you have this aggregated, you could get it all the way down to a single tick. So a single tick in the market you could pull up basically the volume at the bid and the volume at the ask that took place at that tick. Alright, so candlesticks are again they're the one dimensional view of the market. So within the footprint chart, since we have all of the market generated information, we can see where sellers were interested, where buyers were interested, where potentially absorption took place. Absorption and auction.

Where did most of the trading volume took place. So as a whole, this is going to be particularly useful when we're talking about gaining acceptance or when we're talking about fake outs. For example, either fake outs to the upside or fake outs to the downside in terms of breakouts and fake breakouts and fake breakdowns. And then where we can find imbalances. Imbalances are areas where there was, as it sounds, a large imbalance between buyers and sellers. So say there was between a $5 range, there were 5 million more contracts bought relative to, let's say 10,000 sold. So buyers are definitely interested in this area. This could potentially show us points where there might be some type of passive form of absorption. Because if we have this at the high or at the low and price does not continue traveling in that direction, it might be worth noting that since a lot of volume traded at that location, that, that there might have been someone on the other side of it. So with all of this information, the point is to gain confidence by getting into and out of positions based on facts and not feelings. Adding on facts, not on feelings. Okay, so in the case of, if we're adding to a position.

We have facts. Okay. It's not Just it's not an arbitrary method, it's not gut feeling. We actually have market generated information. So this is all in an effort to move towards a more informed, actionable way of getting in and out of the market. Now, that being said, now that we clearly have some type of grasp as to what the footprint chart tells us, let's take a look at what two examples of footprint charts look like. Alright, so this is the chart that everyone is familiar with. Okay? This is a Japanese candlestick setting. And you know, we know that if it's red, it means that sellers are in control. If it's green, it means buyers are in control. The body indicates where we started off from and where we finished. And the wicks indicate basically the high and the low of the range. Right. So right now we're looking at a 30 minute rotation. Alright? And I don't mean rotation as in within the auction. I mean that this is the period setting of these candles. So there are traders that specialize in just trading price action and they can pick up on certain patterns, certain candle types, and where these occur in relation to higher time frame support and resistances, certain swing highs or swing lows, and that is their bread and butter. This leaves out a lot of information though. It leaves out whether or not the majority of the volume took place in the wick, whether or not it took place in the candle, where certain buyers are stepping in, where certain sellers might be stepping in. This leaves out all of the information that you could only find within the candle. So there is something to be said for each candle representing the tug and war between buyers and sellers, and how there are certain patterns that indicate that buyers are in control or sellers are in control. And that if you observe this long enough, you should be able to glean some type of understanding, some type of grasp as to when we are in bullish conditions, when buyers are strong, or when we are in weak conditions and things are looking bearish. But I've laid out an example right here that I think is very useful. So this was after a major sell off, this is the first area that we bounced first wick. Now we have it with the candle bodies here. The bottom portion of this wick is where the bottom of this box is extended. And we've kind of consolidated sideways before dumping through here and then closing back above. So now price is consolidating forward again, moving with somewhat of a range, moving confined within somewhat of a range. And we proceed to what looks like dump through the midpoint again. So we dump through the midpoint of this structure. I know these lines aren't perfectly straight right now, but I'm just trying to basically encapsulate what is a midpoint. So we dumped through the midpoint of the structure and now we are again testing the top of this box. Now we just came off of a major sell off, so there is something to be said for this potentially resulting in continuation. And we can see that the first part of this sell off was on high volume. So it was high relative volume. So relative to the volume that preceded it, above average volume. And we're looking at the volume moving average and we could just tell this type of candlestick stands out and we're looking at the lower time frames. So we know that this candlestick for this volume is basically the dominant portion of this selling right here. So we are now in a position where we are sitting right here and we are wondering whether or not this is an opportunity to buy based on a retest of something that was support or this is something that we should fade if price does check back up. So when price begins to move back up again, do we want to try to fade this? So keep this in mind. Now I'm going to go over what a footprint chart is. Alright? So I'm going to show you two platforms and keep in mind that footprint charts, no matter what platform you're on, are going to look identical. So certain platforms might offer you fancier features and configurations, but a footprint chart is a footprint chart. So if you're using Tensor, if you're using XO again those configurations, the setups might be different, but it's basically showing you the exact same thing. Now if you don't have access to either of these platforms, let's say you have a Mac, for example, you can use something like Sierra Charts or. Which is less, I'd say it's less user friendly. You have to seek out all these configurations. The benefit of Exo charts and Tensor is that they're pretty easy. They give you an idea of what each setting does and what you're looking at. And it's pretty easy to figure out once you spend some time with it. So first I'll get onto Tensor charts. I feel like most people have access to Tensor charts. So I'm going to show you again. This is just what a regular bar chart looks like. Okay, now let's focus on this candle right here. So this candle right here and let's turn up the footprint so you could set the opacity so that it's darker or lighter. All right. The Brighter boxes are going to be where a dominant portion of the volume took place. So in this candle right here, where we have a wick to the downside, a wick to the upside, a very small candle body. All right, from this alone, you can't really tell where a majority of the volume took place. Now we put on the footprint, we could see a good amount of volume in the middle, but a majority of the volume took place at the bottom. At the bottom of this candle, you can see that 1,800 hit the bid. So sells hit the bid and 1,100 buys hit the ask or rather lifted the offer. Now, on these platforms, you can identify where the high volume traded price was. So if we go to volume studies, okay, we could click high volume price, and we could point out within these candles where the majority of volume took place. And again, pay attention to the blue boxes. So the blue boxes are where the high volume took place. Now let's turn down the footprint, and you'll see many times the majority of the volume does not occur within the candle. Okay, so it's common misconception that the Kendall body means that that's where a dominant spike or portion of the volume took place. Sometimes it could be the exact opposite. So this is the basic footprint chart. Now we'll take off this volume study and show you one other thing. So volume imbalance. The volume imbalance is going to highlight the boxes where imbalances took place. And this does not work from a left to right translation. So this does not mean that there's an imbalance. Say, for example, we're looking at this red box right here. So 244 to 138. That's not the imbalance. When we're looking at an imbalance, we're looking at it from a diagonal. So we're considering that if price is in the middle, as price was moving up and down, that at some point there was a large imbalance between buyers that lifted the offer and sellers that hit the bid. So in this case, from a cross section on an angle, rather on a diagonal, 244 to 9. So this is a large imbalance of buyers and sellers. Much more sellers hitting the bid than buyers lifting the offer in this area. And you can see that most of the upper portion of this candle had an imbalance where there was not much buying interest and there was much more selling interest. And we turn again, this candle opacity down, we could see that this candle opened up here, aggressively sold down to here. So identifying where the imbalances took place or when an imbalance is taking place. Because as this is printing, you can see this occurring in real time is extremely useful because it could give us an indication as to whether or not we want to enter or exit a position, or enter a short, or enter a long, depending on what direction this is occurring. And moving back up to this area, you'll see that when there's a large amount of imbalances that will form at either a high or low, this will further signify this being an important area of support or resistance, depending on what direction we are traveling from. So volume imbalance. And you could change the setting for this. So in this case I have it at 1,000%, which is basically a 10 times multiple. So you could make it five times. So 500%, you can make it a 100% difference. And what you can see is obviously as you drop that percentage, you pick up on more. So we could set this to 2000 and only show the portions of the candle that had a massive imbalance. So you can see there's a massive buy imbalance right here. It's a green box now. So if I turn the opacity down.

See that green box? That means that there's a massive buy imbalance. You can see that there's mass zero sellers hitting the bid right here at this portion in relation to 331 buyers aggressively lifting the offer. So these are the things you cannot pick up on when you're just looking at a Japanese candlestick chart. So again, this is on Tensor and I would suggest you play around with this. But another thing to notice is why are these different colors? So they're basically different gradients rather than some are lighter, some are brighter because that is indicating volume as well. So the really bright areas on this chart are going to be where a majority of the volume traded. So again, at the bottom over here, at this bottom over here, you can see towards the tops. Okay, begins to fade out. And as we approach the top, what you'll see is if the area is an area where within the auction it was previously a resistance. Okay. As we move further and further up, we'll find less sellers up here, actually less active sellers. So all of the selling we see up here is in the form of passive selling. And we could see there's a good amount of not only imbalance up here. So if we look at the volume imbalance, we just set this down to, let's say 500. You can see the first imbalance right here. If we set this down to 1000, let's see if it picks that up. Yeah, same thing. So there's 10 times the amount of buyers right here relative to active sellers. So what that means is where are all these buying, where are all these buyers hitting into? Okay, they're hitting into a limit wall right here. So that passive order flow up here. So you cannot see this if you don't use a footprint chart. Now we know this area exists up here and this was an area where there was a large rejection as a lot of volume took place. We could expect that if we come back up to this area that we'll find some type of level of rejection or resistance from sellers. Again, whether or not at this point, if we come back up to it, it is passive sellers or active sellers remains to be seen. But nevertheless, you wouldn't have an idea of whether or not just from looking at a candlestick chart. If you should, let's say for example, be paying attention to the close of this body. Alright, so the close would be right there. Okay, so I'll put on the volume study again.

Or the imbalance or above the close. Okay, so you can see here's the close above it is where majority of the volume took place. So on exo charts it's a little bit fancier. So here is exocharts. Okay, so you could see that right now this is showing a bid ask profile. So I'll just run through what else this shows as well. So on, on exocharts we have a breakdown of the dominant order size. So from a million and up from 400,000 up to a million 200,000 up to 400,000. So basically your big traders up top. So big traders up top over here, your smaller traders down here. And then as a breakdown of delta, it'll show you who is more aggressive. So how bright. So the brightness, or rather when there's more blue, that indicates that's where majority of the volume took place. And again, this will show whether or not it is sellers hitting the bid or buyers lifting the offer and what size those orders were. And then we go down here, we're looking at footprint bar statistics. So with each bar we could see what the volume was. So for this whole rotation here, which is a four hour rotation, we can see that just under 1 billion contracts were traded. Okay, the delta is negative 4.4 million. That means that sellers sold negative 4.4 million contracts, or rather sold 4.4 million contracts more than buyers bought. So in terms of the buy volume versus sell volume, there was more selling Volume in this candle. And then CVD is the cumulative volume delta. So it's a running total of deltas. So we know how to use that. When we look at if you watch the CVD or the cumulative volume delta divergence roadmap ideal, and then below that is the point of control. This is going to show where the point of control within this candle was. And this is going to be very important because this is where the dominant trade volume took place. Just like when we were looking at tensor charts as indicated by these blue boxes. The point of control is the area where most of the trading volume took place. The point of control for each bar showing us that this One is at 6906 and then the high and the low. So the high and the low in this case is $342. And why is that going to be important? Well, identifying what the high and the low is or knowing what the high and the low is going to be important because when we're paying attention to the either delta in favor of buyers or sellers, okay. And we see that, you know, a certain amount was aggressively bought, paying attention to how much price moved is going to be an important thing to pay attention to. Now figure this out why. So if there are a really large amount of buyers, so delta is really high, but price does not move much, what does that potentially indicate? Well, that could potentially indicate some level of absorption. And on the flip side, if there is a reasonably sized delta, either positive or negative, but price moves a lot, this could indicate obviously that there's no resistance in the face of price or that there is a lack of liquidity. So two things that this might potentially indicate. Now, aside of these features down here, let's again talk about what we're seeing in this bar. So with the bid ask profile, what we're seeing is these bars indicate the volume and then again the bid and the ask. So the volume at the bid on the right hand side, so traders aggressively lifting the offer and then on the left hand side, the volume at the bid. So sellers hitting the bid. So this is, these are your sells right here and these are your buys. But again, if this is a buy right here aggressively, that means that it was a sell passively. So if I am executing at market, what am I doing? I'm buying into a limit order. So this is the bid ask, which is going to give us an idea of what the volume profile looked like on the bid and on the ask. Now if we go through the volume profile, we could just see where a dominant Portion of the volume took place. So dominant portion of volume took place at this bottom. If we go to delta profile, this is going to show us the volume profile, but within each level. So from left to right, whether or not there is a positive delta or a negative delta. So this indicates whether or not buyers are more aggressive or sellers are more aggressive. And then moving down volume cluster indicated by shades of color. The darker shades are going to be where a dominant portion of the volume took place. The lighter areas are going to be where it was more thinly traded or where there was not much volume. This is going to be important, identifying either highs and lows and identifying where there might be important supports and resistances or areas where price might interact with in the future. If we have a bunch of these dark areas lining up. Okay, again then going down to delta cluster, this is very similar in that the darkness again indicates the volume, but the color is going to indicate the delta at the certain areas. So rather at certain price points. So we could see that this is blue because there are 25 million contracts bought relative to 24 million sold. And then moving down, we have candles, we have candle box. Okay. This is just your basic footprint. Again, this is all of the inside the box information that you cannot identify by just looking at a Japanese candlestick. So let's look at delta. Okay, Delta profile. And let's keep on. Let's say if we're going to. Okay, so really quick, what we'll see is the volume now. So it'll show you again, dominant portion of the volume is traded down here. Now you can see the volume for this area. So 77 million, 78 million, 86, 81. All right. And this means that there were more aggressive sellers right here, more aggressive buyers here, more aggressive buyers here. All right, now the delta is the difference between those values. So difference between buyers and sellers. And now the imbalance. So now let's take it back to the chart that we were looking at. Okay, so this is the one hour chart, or rather the 30 minute chart. And this was either a potential retest of the support. Okay. Or potentially continuation downward after a major move to begin with. So we were consolidating, but we came down from. From above. Okay. Quite violently. So if you're just looking at a candlestick chart, there's not a whole lot to interpret right here. You might see this and say, okay, a lot of volume right here.

Clearly price is sort of retesting from above. Okay. It is holding this if you consider this some type of support. All right. Rather that if we were looking at this right now and this was a low, that this was potentially price coming down to low and then finding support right here. But there's not a whole lot you can tell from that. Okay, so if we look at exo charts, we're able to see that there was a large amount of volume traded down here. This is the four hour candle for this period. So if we're looking at a four hour candle right here and then we go down to here, you can see what this candle looked like on the four hour, but it doesn't tell us about what went on down here. If we look at xo, we could see there was a large amount of volume that traded down here.

This was primarily larger buyers, larger contract sizes, a ton of volume that took place, 26 million contracts sold. So this is a negative delta candle, but it's a green candle. So what does that mean? All of this volume down here is being absorbed. And another sign, okay, this imbalance down here. So if we look at this right here, we look at this green box, okay, 183 to 11,000. 183,000 to 11,000. Okay, we can see that there's a large imbalance. And at the low, this zero right here means that as price was walked down, it did not find any more buyers here aggressively. And instead what we have is all of this absorption is taking place into a limit wall. And the last thing you could observe this as it's being printed. So you can see that when price is down here, that it's printing this large amount of volume and that it is primarily buyers rather than sellers. So you can see that the delta as indicated by blue shows a large amount of buying and most of the volume took place right here. So with the point of control down there and the delta being negative, there being a large amount of positive delta in this area, this indicates that this is potentially a retest of support and that buyers are interested in pushing this forward. Okay, so there's something that can be observed down here that you cannot see yet just looking at a candlestick. So now we understand what took place in this candle. Okay, we can see all of the volume transacted down here. A ton of two way between buyers and sellers. The candle was negative. So, so negative delta, meaning more aggressive sellers in this whole thing than buyers. So what that means is someone was absorbing all this because we finished up here. So if we put on the value area tool for this. So value area, you could see that most of the trading volume took place from here. To here. Yet we finished above this value area. And as the cherry on the top, most of the trading in this candle was larger position sizes. So from 100,000 contracts end up pretty much mostly from 200,000 to up. So a ton of volume, that cumulative volume, delta divergence and that delta divergence, a ton of support. Clearly because we have this two way down here, it was absorbed in some way, we have this imbalance. So buyers stepping in, forcing this up. There's a lot of reasons to look at this and say okay, this is bullish. So if we're looking at this test and we get this four hour candle close, we could say, all right, this might be a good area to enter into a swing trade. You place your stop over here, you know that all this support took place down here. So this portion of the candle had a ton of trading volume. So you could say with some reasoning that this is likely going to hold and move upward and you would target these highs. So this is the only type of thing that you rather you can only observe this type of information when you're looking at a footprint chart. So this is why footprint charts are so valuable. Alright, so hopefully everyone understands the importance of these now and if you want to have access to these, go on to exo charts, go into tensor charts. If you want to download Sierra, sign up for that. There's a bunch of new alternatives that are coming out. Any ones that I, that I observe I will share with you guys as well. But as always, exercise proper risk management and trade effectiveness.