Literature and trading philosophies developed around 2021 have highlighted the increasing need to understand liquidity and market microstructure, especially with the rise of high-frequency trading (HFT) and algorithmic market makers. Understanding order flow allows retail traders to see where large institutional orders are entering or exiting the market, often referred to as "following the smart money." Core Components of Order Flow Analysis
The tape moves incredibly fast, causing analysis paralysis for beginners. order flow trading for fun and profit pdf 2021
: The market constantly oscillates between balance (where buyers and sellers agree on price) and imbalance (where one side becomes aggressive, causing a trend). : The market is driven by the interaction
: The market is driven by the interaction between passive orders (limit orders waiting in the order book) and aggressive orders (market orders executing immediately). 2. The Core Tools of the Order Flow Trader causing a trend).