The Game-Changing TRADING Tool of 2024

Candlesticks. Candlesticks. Candlesticks. That's the first thing we as traders focus on and that's the first thing we learn. Now what if I told you there's a deeper thing that you are missing from your trading that if you knew, you would know where a trade is possibly going to go? Now that is called footprint charts. Footprint charts, in my opinion, help you go deeper within candlesticks, help you understand who is in control. Is it the buyers, is the sellers? What is price really telling us if we combine it with order flow? And in this video, what I want to do is I want to put the pieces together, together for you guys and help you understand that missing piece and kind of start looking deeper within price. So with that being said, let's dive into it. So our job as traders is to identify who is in control of price. So when we look at this chart right here, our job once again is to understand, hey, if we do hit the supply area, right, will there be more aggressive buyers or sellers or will there be aggressive or passive sellers that pop up and start driving price down, right? And we want to be able to read this action, right? So when we look at just candlesticks within itself, it's hard to read that, right? So here's a footprint chart, and this is what I basically want to cover. And I want to show you guys how to read this, how to read what is happening within each area, right? So here's a footprint chart on the left and here's a candlestick chart on the right. So these are both five minute charts. So this is a five minute, five footprint chart. Five minute candlestick chart, right? And as you guys can see, they're both reflecting the same action, right? So when we look at this, we can see that happen right here. When we look at this, we can see that happen right there. And our job is to be able to see, can we read this action? Can we read this action? And can we read action happening in between? Now when we just look at candlesticks, it becomes really, really hard to know what is happening on, on a deeper level. And when we look at footprint charts, we can see who is in control. So here's a trade that I did, a trade breakdown for you guys on my YouTube channel a few weeks ago where I made about $48,000 on a trade. And on this trade I basically used footprint charts, right? And I have a breakdown of it. If you go check it out and I promise you guys, I will make a video. And here is that video that I promised you guys. And I'm going to break down essentially everything I saw right now. Before we get into footprint charts and before we get into all of that, there's one thing I want to. I want to put a lot of focus on. The market leaves clues on what it wants to do next. At times, it's your job as a trader to read the clues within the story the market tells you. So once again, the market leaves clues. Our job as trader is to read those clues via price action, via order flow, by identifying who, who is in control of the price. Is it the buyers? Is it the sellers? Now here is, is what we have to do first. First we have to understand buying versus selling. How do we understand what is aggressive buying? How do we understand what is aggressive selling? Okay, so here's, Here is a depth of market. So what this is basically showing us is showing us every order that is essentially on the bid. Every order that is on the ask. Right? Now this one for some reason isn't showing everything. I didn't take the right screenshot. But in simple terms, it's showing us this. These are all the prices. At 4532, there are 74 orders to buy, right? At 4532.25, there are 60 orders to sell. At 45,31,75. Let's just say for argument's sake, there's 180 orders to buy. At 45,32.50, there are 137 orders to sell. Now, these are essentially orders that are marketed, meaning they have not been executed yet. These are orders that people are wanting to get filled out but haven't gotten filled. Right now there is something, right? And this is depth of market. Once again, there's something called the tape or time in sales. Time. And sales basically shows us every single order that has been executed at the exact price. So if you look at this time, right, we're able to see at this time one trade or one order, one volume went through at 4532. At that time, the bid was 45,32. The ask was 45.32.25. The order got executed at 4532. So the order got executed at the bid, right? So this is where all the actual orders have happened. Our job when we see this is to identify who is once again in control. And every order that goes through is what shows up on the footprint chart. So the footprint chart shows us every single order that is executed. Guys, make sure you understand the difference of executed orders and orders that are just kind of marketed, that are shown on level two or in depth of market, right? Now, when these orders are executed as mentioned, they go into the footprint chart, and the footprint chart starts printing. How the orders got executed, were there. Were the orders that executed, were they aggressive buys? Were there aggressive sells? Like what happened in each transaction right? Now what we want to try to understand here is we want to understand what orders are aggressive buys and what orders are aggressive sells. So let's go through a list, okay? Now I want you guys to be with me on this, and I want you to really understand and answer this, right? Just take a second and answer this. So at this current time, okay, if you look at the order, let's go one by one. And I want you guys to answer this. At this current time, the bid is 4532. That means the buyers want to buy this particular instrument at 4532. That's what the buyers are looking for. The sellers are looking to sell it. 45, 45. 32.25, right? Now, the order got executed at 45, 32. So the order hit the bid. Okay? So once again, in this example, the order hit the bid. Now, question, if the order hits the bid, it gets filled at the bid. Is that aggressive buying or aggressive selling? Right? The answer is it's aggressive selling. Meaning the seller, whoever executed this order, was more interested in being aggressively selling because they were willing to hit the bid. Now, if they were willing to hit the ask, they are then aggressively buying. So in this example, or not even, let's just say we go to an aggressive buy. So if you look at this example right here, right, the bid is at 45.31.75. The ask is at 45,32. The order got filled at 45,32, which was the ask. So the trade got filled at an aggressive buy, they hit the ask, right? And I'll show you guys more examples of that to put it together for anyone that is lost up until now, right? Now, a few things that we need to keep in mind, right, for, you know, just putting the orders together is there's a buyer and seller for every transaction, right? So if you see volume one, there was a buyer, there was a seller, they came together and the volume was 1. The volume is 15. 15 buyers, 15 sellers or 15 shares sold. 15 shares bought equates to volume 15, right? Now, obviously the question is, at this 15, was it aggressive buying or aggressive selling? Here was aggressive selling. Selling. Here was also aggressive selling, right? Once again, one sell needs One buy in order to complete a transaction, which equates to volume being one. There's aggressive orders and there's passive orders. Aggressive buyers buy on the ask, they are hitting the ask. If you are an aggressive buyer, you will pay whatever the market wants for that particular security. Aggressive sellers sell on the bid, they are looking to aggressively sell on the bid. Passive buyers, these are buyers that are maybe hitting, they're maybe not hitting the bid, they're maybe not hitting the ask. They're a little bit different where they're not on the depth of market. They're popping up as we hit a certain key level. The passive sellers are providing maybe liquidity. They're offering more sell orders coming here that are popping up, that maybe aren't hitting the ask, maybe aren't hitting the bid, but they're now popping up from the sidelines. And that could also be seen and that could also be read. Right now just. I just want to go through this really quick. And then, as mentioned, passive buyers buy on the bid and passive sellers sell on the ask. Okay, and we'll get to that in a bit. So these are just key things I want you guys to understand before I dive into a footprint chart. Okay? Now, before going into a footprint chart, I'm assuming everyone has an understanding what a candlestick is. Here's a five minute candlestick. Obviously, if it's red opening price, closing price, the lowest, the candlestick went to the highest, it went to vice versa here. But if it's a green candlestick, this is where the price opened on the five minute candle. This is where it closed high and low. Right? Real simple. Now, a footprint chart is essentially taking the same movement. So if this is a five minute candle. Right. The footprint chart will have a low, it will have a high, it will have a close, it will have an open. Very, very similar. So when we look here at these exact footprint charts, you can see it's a big red candle. Open, close, high, low, open, close, high, low. Same exact thing. But the footprint chart, as mentioned, has a story within the candle that we can read. This is what the footprint chart shows. Now let's dissect that. Now, on the left side, you have all of the orders that were hit on the bid. So let's just start writing this together so I can walk you guys through it. Because I know it's a little bit. Some things here seem a little bit complicated. Right? So on the left side, every order that hit the bid show up on the left side, every order that hit on the right side or show on the right side, hit the ask. Now, once again, when orders hit the bid, that is aggressive selling. When orders hit the ask, that is aggressive buying. So make sure you understand this part really, really well that I was explaining in order for you to be able to put the candlestick part and the order flow part of footprint charts together. Now, the what we as traders look at is we look at each level to identify, okay, well, how many orders were aggressively bought, how many orders were aggressively sold, right? So for example, if we look at, let's just say we look at this trade, right? And a stock or something is trading at 45, 32, 50. At 453250 level, we can see that 200 orders got filled on the bid. 300 orders got filled on the ask. And like I, like I was showing you guys earlier, this is all the orders that are getting filled. So if we take, let's say this example, right, 4532. So this got filled in the bid. So at 4532, right? If we were to go here, let's just say 45, 32, we would have so far one order here and we'd have nothing here, right? Let's just say if we keep going down this list, we go down this list, it got filled on the bid, 15 got filled on the bid. So now when we go down here, we are now going to put another 15. So we have 16 total now, right? If we go here now, 45, 31, 75, 45, 31, 75, we hit the bid, right? One at the bid. So if I go here, 45, 31, we now have one at the bid, right? Just to kind of just to give you guys some sort of context of just reading through what is happening here, right? If you go to the next one, 45, 31, 75, 45, 32 is where it got filled at 8, right? So we hit the ask at 4532. So when we go down here, 45, 32, right? We hit 8 on the ask, right? So when we look at this, this is how a footprint chart is formulating. Then on the footprint chart, we basically have something called delta, right? And I'll show you what and how delta is used. So Delta. So in this situation, 16 orders got filled on the bid, eight orders got filled on the ask. The delta is negative eight, meaning there are more orders filled on the bid than the ask. And then if we start like painting it out and what it means or what it could mean, right? This Essentially means that there is more aggressive selling at this level, right? So when we look at this right here and I have the delta going on, we can see where more aggressive selling was, where more orders got filled on the bid and, and where more orders got filled on the ask, right? And that's where, you know, when we look at the footprint chart we're able to understand that and we're able to tell the story between the buyers and sellers at key levels. Right? Now the question is, well, how do we, you know, what do we look for, what do we try to look for in footprint charts? We understand what a footprint chart is, we understand how a footprint chart has been calculated. But what do we look for? Now these are some of the things I look for. I look for delta at key levels. Number one, if we are going to this key level, what is happening? Are we getting a more aggressive orders? Are we getting more, you know, aggressive buy orders or sell orders? And the way I can see that is by this delta, right? So when I go to this delta, right? And I look here, right, if we look at this candle, this is a five minute candle, this delta is showing me that There were negative 7k orders. What that means is not negative 7k orders. There were, there was a negative of 7k in between the orders that got filled on the ask in the bid. 30k orders got filled on the bid, 23k orders got filled on the ask. That gives us, that gives us a negative 7K. This means there was more aggressive selling happening in this five minute candle. When we go to the next candle it's giving us a positive delta of 389. So 389 orders more than usual got filled on the ask here. So about 389 was the difference between the ask and the bid. Right. When you go to the next one, negative 74, negative 164, negative 1k, 663 negative 2k, negative 4k. And you guys can see how it's increasing. Now looking at delta itself will not tell us the story. As I mentioned earlier, we have to look at context close to be able to read what is happening, right? So just something real quick. We see a lot of strong aggressive selling happening. Price reacts. And right after we, we don't really see any sort of heavy interest. We do see passive orders come in. Passive orders drive this up a little bit higher as we go to our key resistance zone, right? More aggressive buyers don't step in, new buyers aren't stepping in. And that's not going to drive Price higher. In order for us to be able to break this level, we need more new aggressors to come in or strong orders or strong buyers to step in to be able to drive this higher than our massive supply zone. Because that wasn't there, right? And I looked at Delta as being one of the, one of the many things I looked at, right? That was one confirmation that, hey, there wasn't any strong buying here, there wasn't any interest here. So that's one of the things I as a trader look at. What are some other things I look at? Right. I look at how aggressive buying for selling is changing at key levels. If we do come to key levels such as this, Right. Is aggressive buying and selling rapidly changing? Right. We go from aggressive selling, we go from a negative 7k delta to no change, no massive change. After we hit a key level, another key zone or supply zone, no massive change. So buyers are not in control, New buyers didn't step in. That is what I'm reading. That is what I am looking for, right? What else am I looking for? Who's currently in control? Is it strong buyers or strong sellers? Right. Are there any trapped participants? Right. So sometimes you'll see unfinished auctions, you'll see buyers or sellers get trapped. You know, footprint charts do help us paint the picture for that. And that is another thing I look for. Another thing I look for is, is there follow through at key levels with volume? Meaning is interest still available? So if we are going to key levels and we are hitting this wall, are new buyers stepping in? Is there volume stepping in? Is there any sort of interest here? If interest, I think dies down here, new players don't enter or the current players aren't active, there's a low probability that this will go higher. Right? So those are some things I look at with footprint charts. Now I just want to wrap this up and just give you guys some notes, right? Number one, footprint charts itself, guys, would, will not give you buy and sell signals. Just don't open up footprint charts and look for Delta. I see so many new trader open a footprint charts, look for Delta and, and base their entire trading around that. Right? Footprint charts are great, but you need to know what you're looking for based on your strategy and your approach on the market. You need to combine footprint charts with market structure, bigger picture, context, right? You need to understand what is the bigger picture of the market. What is the market sentiment? What is the market structure? What is going on on a bigger timeframe so you can have a directional trade on the market, you have to be able to read the depth of market. So this is something I pay attention to a lot. And if you guys want a video on this, let me know down in the comments. You know, if, if this is something you'd like to break down. And just side note, if you guys like this so far and like these type of explanations of me going on slideshows and you know, talking without a lot of crazy edits and stuff, let me know because I, I want to try to put together more slideshows and more information, but I don't know what direction to go in. So if you guys like this style more, let me know down in the comments or you know, give the video a thumbs up. But yeah, reading DOM Depth of market. Looking at supply and demand levels. Understanding supply and demand levels. So for me, this trade was able to be a success because I knew what my levels were. I knew what levels I'm paying attention to on the footprint chart. I knew what levels I need to pay attention to in, in, in general, if I didn't have my levels, it would make it very difficult for me to understand what are the areas I need to pay attention to. Right? So that's where my supply and demand levels kick in of just understanding where the market will possibly shift if it does shift, and then understand understanding balance versus imbalance sessions. Right? So a lot of these things, if you're not aware of what they are. I plan to make videos in the upcoming week on my YouTube channel and like I said, I will make a lot of videos on examples of what are balanced sessions, what are imbalanced sessions, how to trade them, how to react off them. Right? And simple. Like I said before, guys, the market is a storyteller. Our job is to read what the market is telling us, read how the market is trying to leave us context clues and trade off that. Now with that being said, if you guys want me to make videos on some of these topics, comment that down below and I will see you on the next video. Thank you.