The video emphasizes the limitations of traditional candlestick charts for day traders and advocates for the use of order flow tools. It explains that candlestick charts alone may not reveal potential market reversals. Using the S&P 500 as an example, the speaker points out that a candlestick chart might not indicate a reversal at a specific point (00:00:16,440). However, order flow tools like Depth of Market reveal crucial information. Specifically, a negative Delta of -4632 at the 4589 level is highlighted. Delta is defined as ask volume minus bid volume. A negative Delta signifies that more trades executed at the bid price than the ask price, indicating aggressive selling pressure. The speaker argues that if there's significant aggressive selling at a low price point but no subsequent downward movement in the market, the logical conclusion is that the market is likely to reverse upwards (00:00:49,557). This same insight can also be observed using other order flow tools such as footprint charts (showing a negative Delta of -4400) or heat maps, which would display aggressive selling at the lows.

Carmine Rosato

If you're a day trader, you need to stop relying on a normal candlestick chart and start relying on more order flow.

The reason for this is, looking off of this chart of the S&P 500, we don't see anything down here that's indicating the market can possibly reverse based off of a candlestick chart.

However, looking at order flow tools such as a depth of market, what we're going to see down here at 4589 is a negative 4632 Delta. What Delta tells me is ask volume minus bid volume. So, if we have a negative Delta, that means there are more trades which hit the bid aggressively than the ask. That translates to, if there's all this aggressive selling at the low but no downside follow-through, the only option is for the market to reverse higher.

You can also spot this data off of a footprint chart, negative 4400 Delta, or a heat map with all this aggressive selling at the low.

Orderflow is better than candlestick charts !

if you're a day trader you need to stop
relying on a normal Candlestick chart
and start relying on more order flow the
reason for this is looking off of this
chart of the S P 500 we don't see
anything down here that's indicating the
market can possibly reverse based off of
a Candlestick chart
however looking at order flow tools such
as a depth of Market what we're going to
see down here at 4589 is a negative 4632
Delta what Delta tells me is ask volume
minus bid volume so if we have a
negative Delta that means there are more
trades which hit the bid aggressively
than the ask that translates to if
there's all this aggressive selling at
the low but no downside follow-through
the only option is for the market to
reverse higher you can also spot this
data off of a footprint chart negative
4400 Delta or a heat map with all this
aggressive selling at the low

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Orderflow is better than candlestick charts !

Transcription