Flow Trading: How To Read Order Flow

A well-liked technique for traders to profit from swift price changes in the financial markets is flow trading. The capacity to read order flow, which refers to the real-time buying and selling activity in the market, is at the core of this method.

We’ll talk about reading order flow in this article and how it can make you a better trader. If you are planning to trade Bitcoin, you may want to invest in a reliable trading platform like https://thecryptogenius.software.

Understanding Order Flow

The continual buying and selling that occurs in the financial markets is referred to as order flow. It depicts the supply and demand for a certain asset in real time as traders issue orders to purchase or sell at different price points.

There are two main types of orders in the order flow: market orders and limit orders. Market orders are orders to buy or sell at the best available price in the market, while limit orders are orders to buy or sell at a specific price or better.

Importance of Market Depth

Market depth refers to the number of orders and volume of contracts available at each price level in the order book. The order book is a record of all buy and sell orders in the market, and displays the bid and ask prices, as well as the number of contracts available at each price level.

Market depth is important for reading order flow because it provides insight into the strength and depth of the market. For example, if there are more buyers than sellers at a particular price level, this suggests that the market is bullish, and may continue to move higher.

Using Volume to Read Order Flow

Volume is a measure of the total number of contracts traded in the market during a specific time period. It is an important indicator of order flow, as it provides insight into the strength and momentum of the market.

In order to read order flow using volume, traders look for patterns in the volume data. For example, if there is a significant increase in volume at a particular price level, this suggests that there is strong buying or selling activity at that level.

Identifying Imbalances in Order Flow

Order flow imbalances occur when there are more buy orders or sell orders at a particular price level than there are contracts available. This can happen when there is a sudden increase in buying or selling activity, or when there are more buyers or sellers in the market than usual.

Identifying order flow imbalances is important for traders because they can be an early warning sign of a potential trend reversal or continuation. For example, if there is a significant order flow imbalance in favor of buyers, this suggests that the market may be bullish, and traders may want to enter long positions.

3 Strategies for Trading Order Flow

Follow the Big Players: Observe the order flow of large market participants, such as institutions or hedge funds, and take positions in the same direction as them.

Monitor Bid-Ask Spread: Pay attention to the difference between the highest price buyers are willing to pay and the lowest price sellers are willing to accept. A narrowing spread may indicate a forthcoming price move.

Use Volume Analysis: Analyze the volume of orders coming into the market, as higher volume may indicate a trend or momentum. Look for a large volume of orders at key price levels as they can act as significant support or resistance.

Tools and Platforms for Reading Order Flow

Trading Platforms with Order Flow Indicators: Many trading platforms, such as NinjaTrader, Sierra Chart, and Tradestation, offer order flow indicators that allow traders to visualize order flow data in real-time. Third-Party Software for Reading Order Flow: There are also several third-party software options, such as Jigsaw Trading and Bookmap, that provide more advanced order flow analysis tools and features.


In conclusion, understanding order flow is a crucial ability for traders who want to profit from sudden changes in price in the financial markets. Trading decisions can be made more wisely by traders who have a thorough awareness of order flow, market depth, volume, and order flow imbalances.

There are a number of tactics and tools available to assist you read order flow and enhance your trading success, whether you’re a scalper, day trader, or swing trader.