ZoneTraderPro Order Flow Indicator
The ZoneTraderPro Order Flow Power indicator compliments a suite of indicators which includes the ZoneTraderPro pattern matching suite, the Order Flow Pattern Matching suite, and the Accumulation Distribution tool. The purpose of the tool is to place an easy to read order flow indicator on the chart in an easy to read intuitive style. The Order Flow Power indicator graphically plots the market order and tracks order flow in real time. The above chart has 3 instances of the indicator with a slightly different setting. The indicator can also show when a large player is accumulating or distributing contracts.
In the picture above from the CL Futures, the market makes a top, the power indicator is dark green, indicating heavy buying. However price is not going higher. Additionally the Accumulation Distribution indicator is indicating distribution. And that is what happened. Each time price traded back to a ZoneTraderPro zone, the Power indicator only showed weak buying and the Accumulation Distribution indicator is indicating distribution.
In this picture from the ES market you clearly see the Buy pressure made a high before the price made a high, creating a divergence. You can clearly see the order flow and increasing selling. Within several ticks of the high, the indicator turns dark red, indicating heavy selling. The slope of the line is a constant and price follows into a significant selloff.
You also clearly see a Tick Divergence Exhaustion trading pattern and a significant divergence in the Power indicator. This is a great reason to exit a trade and re-enter a long trade. This was then followed a trend trade pattern where there was no heavy selling and Accumulation being shown on the Accumulation indicator.
This indicator compliments the ZoneTraderPro suite of indicators. On this chart you clearly see that as price is making a high, the Order Flow Power indicator is dark green but price is not responding, indicating a distribution.
On the huge advantages of the indicator is the ability to keep you out of trades. As price dropped to the blue counter trend zone, this may be a possible long trade or an opportunity to cover the short trade. However when you see the indicator dark red as price approaches the blue zone, you have a valid reason you an see not to go long and decide to cover your short trade lower.
The next interesting point to make about the chart is the deep V that you see at the price bottom. This is an obvious reversal and is combined with the Accumulation tool indicating accumulation. The people selling after price traded at 2369.50 are the dumb money. They didn’t have software or training to see the order flow or the accumulation. The market had fallen 6 points and they were just pulling the trigger on the 1st pullback they saw. That’s not good trading. The V pattern will be confirmed with the Order flow pattern suite, usually with a trapped trader, POC Absoption, or ZTP Order Flow signal.
The ZoneTraderPro suite of indicators get you into trades early based only upon real time information and not when some overbought/oversold indicators says its time to trade.