Order Flow
Order flow is the study of actual buying and selling. Don’t trade charts — trade the orders.
What Is Order Flow?
Chart shows: Price
DOM shows: Who is buying/selling
Order flow shows: What the market is doing
Order Flow Basics
The DOM (Depth of Market)
| Side | What Shows |
|---|---|
| Bids | Buy limit orders |
| Asks | Sell limit orders |
| Spikes | Large orders |
| Pulling | Orders removed |
Reading the DOM
Asks (sellers): Bids (buyers):
100 lots @ 1.1100 50 lots @ 1.1080
50 lots @ 1.1095 100 lots @ 1.1075
25 lots @ 1.1090 200 lots @ 1.1070
Reading:
- Large asks above = Resistance
- Large bids below = Support
Order Flow Patterns
Absorption
Price falls to bids
Bids keep appearing
Price doesn't fall
→ Go long
Exhaustion
Price rises to asks
Asks exhausted
No more buying
→ Go short
Emptying
Bids suddenly removed
No support
→ Price drops
Volume Analysis
Volume at Levels
| Volume | Meaning |
|---|---|
| High at resistance | Selling pressure |
| High at support | Buying pressure |
| Low on breakout | False breakout |
| High breakout | Real breakout |
Volume Types
| Type | Signal |
|---|---|
| High + up | Strong buying |
| High + down | Strong selling |
| Low + price move | Weak move |
Order Flow Trading
Step 1: Find Key Level
Support, resistance, or order block
Step 2: Watch DOM
Approaching level
See order absorption?
Step 3: Confirm Price Action
Bounce or break
Step 4: Enter
With confirmation
Common Mistakes
1. Fake DOM Data
Problem: Not from exchange.
Solution: Use exchange direct data.
2. No Confirmation
Problem: Trading DOM alone.
Solution: Confirm with price action.
3. Ignoring Time
Problem: Not considering overnight.
Solution: Trade liquid hours.
Key Takeaways
- DOM shows orders — See actual flow
- Absorption — Buying pressure stops fall
- Exhaustion — Selling finished
- Confirm first — Price action before trade
- Volume confirms — High = real
Related
Trade the orders, not just price.