Volume profiles in the Footprint Chart

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It does not make sense to look at every single number in the Footprint Chart. You can quickly see how much volume was traded on each individual price with the Volume Profile displayed in the Footprint Chart. Most important for me are the places with a lot of volume and little volume.

Volume Profile Delta Chart:

Another good charting method for footprint trading is the delta. This means the BID and ASK numbers are directly offset against each other. So you can see the direct buying or selling pressure in the candle or market.

For example, in the Right Candle you can see a huge selling pressure further down. Sellers sold the market heavily. Yet the market closed with the candle further up. This means the sellers were taken out of the market by sellers or the sellers were fought by other buyers.

Recognize imbalance between buyers and sellers

What makes the price of securities move? It's pretty simple: buyers and sellers. When there are more buyers than sellers, the price is driven up. When there are more sellers than buyers, the price is driven down.

Wouldn't it be useful if you could quickly see when big buyers or sellers enter the market? One can! To do this, we can look at buy and sell imbalances on a footprint chart. Imbalances are simply many more buyers than sellers, or many more sellers than buyers at a given price.

In the chart above, you can see some of the volumes highlighted in red and green.

The volumes highlighted in green are buy imbalances because they occurred at the offer and were over 250% higher than the corresponding offer. Those highlighted in red are sell imbalances because they occurred on the bid and were over 250% higher than the corresponding bid.

Note: 250% is the value I use for my buy and sell imbalances. Most charting packages allow you to change this.

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Multiple buy and sell imbalances

Stacked imbalances are simply multiple buy or multiple sell imbalances in a narrow price range.

Imbalances are very useful for determining support and resistance levels. If one or more traders are aggressively buying or selling in a particular price zone indicated by stacked imbalances in https://sgexness.com/login/, chances are they will defend that level when the price returns there.

On the chart above, you can see several sell imbalances stacked on top of each other in the candle (see arrow). On the following candle, sellers pushed the price down with stacked sell imbalances, but could not go further down as buyers defended that zone, which led to a rally.

I find it very beneficial to project these price zones forward on my charts when they occur to indicate future support and resistance areas.

Notice that I said zones. You may have 4 or 5 imbalances stacked on top of each other with a few price levels in between with no imbalances. These should still be considered valid stacked imbalances.

Imbalances can be used in a variety of ways and we will look at some real trading examples later in this post.

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