Scalping with Order Flow: Mastering Small Market Movements
Scalping with Order Flow is one of the most precise and technical strategies for trading in financial markets, especially in futures, forex, and liquid stocks. It is based on exploiting minimal price movements (often just a few ticks or pips) through detailed analysis of order flow, volume, and liquidity.
Unlike traditional scalping, which relies on lagging technical indicators, Order Flow allows you to see in real time how large participants (institutions, market makers, and professional traders) are interacting with the market, providing a significant advantage.
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🔹 1. Fundamentals of Scalping with Order Flow
📌 What is Order Flow?
Order Flow is the study of buy and sell orders executed in the market, revealing:
- Aggressive orders (Market Orders): Indicate urgency and may signal the start of trends.
- Passive orders (Limit Orders): Provide support/resistance and show liquidity areas.
- Volume by price: Shows where activity is concentrated.
- Delta (buy vs. sell): Indicates whether there is more buying or selling pressure.
📌 Why Order Flow for Scalping?
- Accuracy: Identifies entries and exits with high probability.
- Liquidity: Detects areas where the market can accelerate or slow down.
- Transparency: Shows the actual action of large players, not just the price.
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🔹 2. Key Components for Scalping with Order Flow
📊 1. Footprint Chart (Volume Profile by Price)
Shows the traded volume at each price level, highlighting:
- Absorption points: When there is a lot of volume but the price does not advance (possible reversal).
- Imbalances: More volume in buys than in sells (or vice versa), indicating direction.
📊 2. Depth of Market (DOM)
Allows you to see limit orders in the order book:
- Hidden liquidity: Large orders that are not shown but affect the price.
- Icebergs: Large orders executed in small parts.
📊 3. Time & Sales (Tape Reading)
Real-time record of each executed trade:
- Execution speed: Fast orders may indicate manipulation or accumulation.
- Order size: Large blocks suggest institutional participation.
📊 4. Delta and Volume Profile
- Net Delta: Difference between buying and selling volume.
- Volume Profile: Shows high volume areas (key points for scalping).
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Remember:
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