The ONLY Orderflow Guide You'll EVER NEED

This is a candlestick, the foundation of trading, but to be honest, it doesn't give us very much information. What if we could enable a secret tool where it gives us 10 times the amount of data, but not only that, telling us exactly who's in control, the buyers or the sellers, who's likely to win, and if used correctly, tells us exactly what price is likely to do next. That would be pretty cool, right? Introducing Waterfall. Imagine going to one of those bidding auctions where they talk really fast. Now, say while at this bidding auction, you simply sit in your chair and wait patiently to hear what the next person bids and bid purely off that information alone. That's kind of what a normal candlestick is like. Very, very limited. But instead, imagine before you go to this auction, you're sitting in the parking lot and some creepy guy in a trench coat hands you a sheet of paper of what every single bidder in that room is going to bid. So even before walking into that room, you know exactly what everyone's going to bid, what the average bid is, how many people are in that room, and most importantly, where the final bid is likely to be priced at. Now, I don't know about you, but I'm grabbing that sheet of paper from that creepy guy. That sheet of paper is called order flow. Now, as a basic user, when looking at your chart, you might see a candle that looks like this. Now, the only information we can really gather from this candle is the buyers won the battle and price closed right here. So in reality, we're not really seeing much. We're really only seeing the outcome, not the actual story behind the candle. If we wanted to view this actual candlestick on a deeper level, we would enable what's called the volume footprint. To do this, go to trading view. If you don't yet have it, I'll leave a link in my description. Go to the top here, select the candle icon, then scroll to the bottom until you see the volume footprint. Now, I get it. When first looking at this, it can look like the cockpit of an F-22 fighter jet. There's a lot going on, and to say the least, it looks pretty confusing. What the hell? But it's actually pretty simple. To break it down, the left side is the sell volume. The right side is the buy volume. The numbers within these boxes are simply the amount of volume executed at that specific price. So if we zoom in here, there is 1.68 million in sell volume executed at this specific price, while there is only 1.57 million in buy volume. So in essence, there was way more seller activity at this price compared to buying activity, meaning sellers held control while we were at this specific price. The volume footprint will color code these numbers for you so you can quickly identify what's what. The darker labeled metrics show price levels with lower volumes. The lighter colors show price levels with larger volumes. The metrics labeled white are the price levels with the highest amount of activity. So in this example, this was the price level with the highest amount of volume and where buyers and sellers found fair value for the most part. This level can often be used for finding important support and resistance levels, but we're getting ahead of ourselves. We'll get to that later. Another key feature of the footprint is the value area and can be identified by these two white lines, the VAH, value area high, and the VAL, value area low. By default, the value area is where 70% of the volume occurred. So this zone here is where 70% of the volume from this specific candle occurred. This red number down here is the total of all the sell volume. The green number is the total of all the buy volume. The difference between those two numbers is the delta. Now, the delta is a very key statistic because it tells you who's currently in control, the buyers or the sellers. So say this number's red, that means the sellers are in control and there's more selling activity. If this number's green, that means the buyers are in control and there's more buying activity. The next metric is probably the most important one and is where we will generate a lot of our strategy from, and that is imbalances. These imbalances can be seen by these small red and green rectangles on the side of the volume footprint. These rectangles show up when one price level has at least three times more volume compared to the one across from it. So in essence, if you ever see a rectangle on the side of the footprint, that means that side is drastically winning the battle, and you can use these to quickly figure that out. And these little rectangles are going to be used in the core of our strategy. It's also important to note that we don't compare price levels horizontally. We compare them diagonally like so. That's because when buyers attack sellers, they do that one price level above. When sellers attack buyers, they attack one price level below. So if we take a closer look, the sellers had 990,000 volume compared to the buyers only having 195,000 volume, which is obviously more than three times the amount. So in return, a small red rectangle or imbalance is printed next to this number. If we use these imbalances correctly, we can predict exactly where price is likely to reverse. For example, if we have this candle right here, and there was a ton of buy imbalances at the top showing buyer aggression, price should in turn close above these imbalances. Since there's a lot of buy volume up here, price should correlate with that and move up from these imbalances. That's a healthy candle. But if price closes below these imbalances, this is showing the buyers are being absorbed by the sellers, and the sellers are starting to take back control. Same goes with bearish candles. If we have seller imbalances down here, price in theory should close below these imbalances, showing seller intent. If it doesn't, and price closes above these imbalances, that shows the sellers are being absorbed by the buyer. Now, this can be a great tool to find when a reversal is about to happen, but it's not showing when it's actually happening. That's why I added what I call the absorption initiation pattern or AIP for short. Yeah, I like the sound of that. So we went over the absorption scenario, but what's initiation? Initiation is nothing more than the agreement between imbalances and price. So in essence, what the candle should be doing. So going back to our example, if we have the buyer imbalances at the top of this candle, the price should close above these imbalances, showing the imbalances held their weight and there's directional intent with the candle. The same thing goes for selling. If we have multiple seller imbalances, price should be closing below these imbalances to show directional intent. If we pair the absorption candle with the initiation candle, we can get some scary good reversal prediction. For example, if we have a demand area or a key level of support, as price starts approaching this area of demand, we see price closing below imbalances, which in turn agrees with the idea of selling directional intent. But as we get closer to this area of demand though, we see an absorption candle where price closed above our seller imbalances. So the moment price hit our area of demand, buyers stepped in and started fighting off the sellers aggressively. Directly after that, we see an initiation candle where the candle closed above the buyer imbalances, showing buyers now have directional intent. So if we pair these three powerful tools, a strong key demand zone, an absorption candle, and an initiation candle showing confirmation, we can find some mind-blowing reversal areas where price is likely to reverse the most, and in return, we make millions of dollars. But we ran into a slight problem. So sure, we can get an area of demand, have an absorption candle printed, and then directly after, an initiation candle printed. But that doesn't always mean price will react the way we think it'll react. So we have to find some sort of way to raise the probability even more. And we're going to do that by using the delta. The delta is simply the difference between the ask and the bid volume. So if we have a positive delta, that means there's more buying volume. If we have a negative delta, that means we have more selling volume. A bullish candle usually has a positive delta. A bearish candle usually has a negative delta. But this isn't always the case. You can have a red candle with a positive delta. And that, my friends, is called delta divergence. Delta divergence is a sign of And just like you're thinking now, we can use this to our advantage. And to take advantage of this scenario, we're going to use a little tool called the CVD, which is the cumulative volume delta. To do this, go to your indicators tab and search cumulative volume delta. Click this one right here. So to break it down, if price is making higher highs, but the CVD is making lower This means even though price is going higher, the delta is going lower, which means buyers are getting exhausted and price is likely to fade out and head lower. The same is true if we get a scenario like this. If price is making lower highs and the CVD is making higher highs, this means buyers are trying to go up, but sellers are absorbing them, which price is also likely to head lower. The opposite of this is also true. If price is making lower lows, but the CVD is making higher That means the sellers are losing steam and price is likely to head upward. Same goes with if the price is making higher lows, but the CVD is making lower lows. It means the sellers are trying to go down, but getting absorbed by the buyers. So price is likely to go up. So now we're not only looking at what the current market is doing, but we're also adding a layer of divergence to see what's likely to happen. If we use this in coordination with everything we just talked about, we can get a mind-blowing prediction of what price is likely to do next. And on top of that, it's extremely accurate. Let's put all of this to the test and do a real-life example. To do this, we're going to go on the four-hour time frame. This strategy will work on all time frames, but I personally like to use it on higher time frames. Next, we'll select a random stock. Let's go with Tesla. To start us off, we need to find a key level of demand. You can find this by finding the beginning of a strong move upward. So here, the strong upwards move started from this candle. So we'll mark from the bottom of this candle to the top of this candle. This is our area of demand. Next, we wait for price to come back down to our area of demand. Now, instead of entering as soon as price enters our demand zone and just guessing that it'll go up, we are going to use the volume footprint to read the room and see what buyers and sellers are thinking while in this zone to see if it'll even respect it or not. To do this, go to trading view. If you don't yet have it, I'll leave a link in my description. Go to the top here, select the candle icon, then scroll to the bottom till you see the volume footprint. Next, we're going to wait for price to come down to our demand zone. Once it reaches our demand zone, we're going to zoom in on the candles inside our demand zone. Once we do this, we see a couple key important things that are happening. First, notice how there's seller imbalances down here, saying there are a lot of sellers down here at this price. But also notice how this specific candle closed above this imbalance, showing the sellers are getting absorbed by the buyers. As price moves forward, the next candle is printed. Notice on this candle, there's now a buyer imbalance. Also notice how price closed above this imbalance. This is our initiation candle and is showing buyers now have control and are showing buying intent. Next, we're going to go to our indicators tab and search CVD. Any of these will work, but I personally like to use this one. So there's something very interesting going on. Notice how the price is going down, making lower lows. So in return, the CVD should be going down just like the price, but it's not. The CVD is making higher lows, which means there's delta divergence. And once again, a sign that sellers are being absorbed. So as a quick recap, we found a key level demand by finding the start of a strong move on a higher timeframe. We waited for price to come to this area of demand. We then turned on the volume footprint to see if price was respecting our zone. We got an absorption candle, then directly after an initiation candle showing buyers are absorbing the sellers in this demand zone. Then we checked the CVD and saw there was delta divergence also showing the sellers are being absorbed. So we enter here, set our stop loss below the area of demand and set our take profit at the highs. And just as we predicted, price does exactly what we thought it would and hits our take profit. Actually, before I entered into this trade, I posted it in my newsletter. It's basically a newsletter where I share all of my trades, important news, and overall just a really good place for trading knowledge. The best part is it's absolutely free. If you're interested in joining, I'll leave a link in my description. Well, that's how I use order flow correctly. Try implementing this in your trading and let me know how it works for you on my Instagram. Thanks for watching and I'll see you guys next time. What the hell?