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What Is An Order Flow In Trading?

One of the things most profitable traders keep to themselves is the order flow in trading. And this has many reasons behind it. The first one is that order flow trading is a bit “hard” for beginners. Don’t worry, I’ll simplify it. And the other one is the obviously huge amount of successful trade people have using this.

The order flow in trading is based on three simple principles, make sure to keep it simple, practical, and effective. That’s it. Many professional traders use order flow trading in their daily system at a prop trading firm. Trading using order flow is the best way an investor has to take some advantage over the market. Since the method itself is clear and effective, it is really profitable when combined with price action.

The main advantage of order flow trading is the amount of information this can give you. (As you know, day trading is full of information). Trading using order flow will help you have a better insight into what is going on in your trading chart.

  • Can help you stop hunting trade and chasing price.
  • Momentum Buying and Selling and Momentum Exhaustion. When you see a low or drying activity in the order flow, it may be a signal of a price reversion.
  • The size of the buy and sell orders will tell you about the liquidity flow of the market.
  • You’ll know about the reasons for a movement in the market.
  • It’s faster than a normal trading strategy.
  • Will help you draw more sensitive areas, support, and resistance.

I can take for granted that you, by now, want to learn order flow trading. As I always say, let’s start with the most important thing:

What is order flow in trading?

As the name suggests. Trading order flow is a type of trading analysis that is based mainly on watching the flow of trading orders and the impact those have on the current price of an asset. The main goal of order flow is to anticipate future price movement.

Trading order flow analysis will help you to see and understand in a better way how other investors are doing their trades. Usually, people saw the order flow trading as volume trading.

The order flow chart will show us exactly how many buy and sell orders are happening in the market at each price level.
There are many things you can see on a DOM (Depth of Market) window. The price ranges, what prices are attracting more or fewer traders. You can have a better overview of the correction movement in a trend. And you can see the disappearance of buyers or sellers at a certain price level. All this information is highly useful when it comes to trading.

DOM for order flow trading strategy
This is the DOM in MT5

Does order flow trading work?

Yes, order flow in trading works. But it will only depend on you. People usually trading with price ladder and order flow strategies have more useful information about a market and more successful trades. The fact that professional traders working in a trading firm use the order flow tells you that this analysis does work.

Learn order flow trading, read the market, and have a better insight about the market in order to have a more successful trading experience. This is why whether order flow works or not is up to you. Practice and backtest a lot.