This Footprint Advanced article builds upon the Footprint Basics, to provide a in-depth guide to ensure that you are fully utilizing the range of features and customizations available through the 4 TradingLite Footprint styles.
If you have not read the Footprint Basics guide, its is highly advised to begin there, to gain a good foundation first, which will enhance the context given here. Platform basics such as how to enable footprint charts are explained there.
All 4 of TradingLite's Footprint styles, offer the ability to toggle 'Delta Mode'.
Rather than displaying Market Sells and Market Buys within each candlestick, the delta of the two is instead displayed.
The Delta is calculated as follows:
Market Buys - Market Sells = Delta
'Delta Mode' can help quickly identify where either market buys or market sells were more dominant over another. This can also help with the visualization of the order-flow whilst adding an additional level on analysis.
You can enable Delta Mode by navigating to:
Chart Settings > Select your active footprint layer > Select Delta Mode
In order for any trade to take place, a market order has to fill a limit order. Therefore, market orders are the only way for a new price to be registered.
As TradingLite's Footprint Charts allow you the ability to view market orders, Footprint Imbalances highlight areas in which the ratio of market sells and market buys, between prices, are unusually disproportional.
Imbalances are always compared diagonally between rows of prices on a footprint chart. They are not compared horizontally across the same row.
The ratio of these abnormal imbalances of market orders between price rows, is calculated in real-time. If the ratio exceeds the imbalance value, the imbalance is highlighted.
The below example is of a footprint imbalance ratio of 250%.
This means that the imbalance of market sells and market buys between prices is 2.5x.
The default, and minimum Imbalance ratio value on TradingLite is 250%.
The maximum imbalance ratio that can be configured on TradingLite is 1,000%.
Given that imbalances a notable sign of inefficiency within the market, having these areas highlighted can often add to other confluences as a potential sign of reversal.
When enabled, a continuous ray will be drawn from the point of imbalance, until price re-visits to test the previous point of inefficiency.
Enabling Imbalances is slightly different depending upon the Footprint layer:
Chart Settings > Select Footprint Cluster > Mode: Imbalances
Chart Settings > Select Footprint Cluster/Profile Plus > Imbalances Toggle: Enable
Once you have enabled the imbalance mode, you will then be able to choose and select from a list of imbalance ratio values.
As a reminder, the Point of Control (or POC) is the row in which the most volume occurs. Whilst it more synonymous with VPVR, VPVR + and VPSV, the same logic can be applied within each candle of a footprint chart.
To make these Point of Controls even easier to identify in relation to future price action, you can choose a naked extension option within your TradingLite footprint layer.
If enabled, the POC will extend indefinitely, until price re-visits to test the previously identified high volume node.
You can enable the Footprint Point of Control via:
Chart Settings > Select Footprint Cluster > Point of Control > POC: Enable
Similar to the other Volume Profile Tools available within TradingLite, the Value Area (defined as the range in which the majority 68/70% of volume was traded) can also be enabled with TradingLite's footprint charts.
If a row within the footprint is colored, it is within the Value Area. Rows that are colorless, fall outside of the Value Area.
You can enable the Footprint Value Areas via:
Chart Settings > Select Footprint Cluster > Value Areas > Enable
Enabling the Value Area will highlight the area in which the majority of the volume took place. The areas outside the Value Area will be color-less. This percentage value is configurable to suite your desired range. The brightness in comparison to the rows that fall outside the Value Area can also be configured.
Enabling this will highlight each row of the footprint cluster, in which the total volume exceeds your given threshold.
This is especially valuable when in Delta Mode, as a visual indicator of high volume, and therefore by extension, high interest by market participants at that particular price point in time.
Note: Regardless of delta value itself, if the total volume of the row exceeds your minimum volume threshold, the dashed visual highlight will be rendered.
Whilst some of the more advanced tools and customizable options available for TradingLite's Footprint Plus layers can help easily identify points of interest, some basic order-flow strategies can also help in your trading decisions.
A common use-case of Footprint based order-flow analysis (in combination with technical analysis), is when price either increases or decreases, past a major point of support or resistance. Sustained buying or selling pressure adds confluence to the suggestion of a newly formed ‘support’ or ‘resistance’ level.
If one was to choose a Footprint view, the aggressiveness of market orders can be assessed. It may be possible to determine whether the move below ‘support’, or above ‘resistance’, will be a protracted move of price, or possibly, an attempt to temporarily squeeze other traders out of their positions (only to reverse the price movement soon after).
By combining a real-time view of TradingLite’s Footprint charts, in addition to either TradingLite's official Open Interest indicator, or one of the many community written Open Interest indicators, we may be able to deduce whether the intensity of market orders, led to an increase or decrease of open positions. This may in turn influence how long-lived the trajectory of the price movement is, or perhaps, will be.
Alternatively, using the real-time view of both TradingLite’s Footprints chart and Heatmap, it may be possible to determine, whether a price level highlighted by the TradingLite Heatmap will act as a barrier to price. We can make this assessment by assessing the value of these long-standing limit orders, in comparison to the market orders the succeeded them. If the intensity of the buying/selling pressure at particular point is strong, or if the limit orders get pulled, price is likely to continue unabated.
Ultimately, using TradingLite’s Footprint based charts, in addition to the suite of other TradingLite tools, may provide valuable insight, in an otherwise ‘noisy' trading environment.
Be sure to to take a look at the Footprint Bar Statistics layer. It a welcome accompaniment to your Footprint Layers.
Looking for more order-flow related content. Not to fret, we have you covered below:
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