Orderflow
Easily identify areas of high activity and visualize the tracks left by other traders
Charting
Choose from a selection of chart display options
Imbalance
Visualize imbalances using the advanced draw styles
Trade Ideas
Market generated information to help qualify trade ideas
Management
Another tool to help with trade management / exits
The Basics
The Delta Dots study monitors volume at price data and provides a selection of different configuration and display options, including, Dominant Side, Ask / Bid Split (segment), Ask / Bid Pie, and Ask / Bid Gradient Fill. The functionality is very similar to the Volume Dots study, but with the addition of extra filtering options based on delta: Ask / Bid imbalance %; and Ask / Bid difference.
The additonal filtering options enable the highlighting of prices where significant imbalances between Ask and Bid aggressive (market) order are present. The study display can be either a simple visual indication showing whether Ask or Bid aggressive orders are dominant, or a graphical representation showing the actual balance between Ask and Bid orders.
Delta Dots and Delta Dots – LW studies are included in the TWFX Volume Dots study package (Delta Dots – LW is a lesser featured version of Delta Dots).
enable the highlighting of prices where significant imbalances are present…
Possible Uses
Similarly to the Volume Dots study, this study is quite flexible and can be configured to suit different uses. As an example, the study could be used in addition to (or in place) of the Number Bars study to highlight high volume Ask / Bid imbalances within price bars, as and when they appear, providing immediate and obvious indications of orderflow behavior. Used in combination with other methods, the study can be a useful tool for validating or qualifying entry / exit criteria.
One example of a particular situation where the study might prove useful could be, to quickly identify the location of potentially trapped aggressive traders who have been absorbed by a large passive trader during a false / failed breakout attempt. The combination of the large passive trader and the trapped aggressive traders can be an early indication that a short term reversal is imminent.
highlight high volume Ask / Bid imbalances within price bars…
Some More About the Study
As well as the display mode options, and the volume and delta filtering options, the study also provides configurations options to control delta dot size, color and color intensity. The volume and delta filters are used to control how frequently delta dots are displayed, for example, setting the volume filter to a high value relative to the typical volume at price for the instrument can ensure that only delta dots having significant possible absorption are displayed on the chart.
Delta dot size can be set to a fixed value, or, using a minimum and maximum size, the dot size can be calculated based on the volume as a percentage of the highest volume value in the chart, during the current trading session, or within the visible chart range.
If the ‘Dominant Side’ display mode is being used, the delta dot color can be fixed or variable, based on dominant side Ask / Bid volume imbalance percentage relative to the highest imbalance percentage in the chart, during the current trading session, or within the visible chart range.
volume and delta filters are used to control how frequently delta dots are displayed…
Combining with Other Studies
The Delta Dots study can be a powerful tool for quickly identifying absorption into areas of expected liquidity, as indicated by the Sierra Chart Market Depth Historical Graph study. When combined with other methods and knowledge, these studies can be helpful in identifying potential reversal locations and trade entries (exits). The Delta Dots study is not required to identify absorption or trapped aggressive traders, as this can also be achieved simply using the Number Bars study, however, the Delta Dots study can provide a more prominent visual indication, which in turn can result in quicker identification of interesting price levels.
The charts below highlight an example of the situation described above, showing how the Delta Dots study makes identification of the absorption level quick and simple. As price tests the liquidity level at the low of day excess aggressive selling (imbalance) is highlighted, however price almost immediately reverses, showing that not only are there now aggressive sellers potentially absorbed (by a passive buyer) and trapped in losing positions, but also that aggressive buyres are now interested and dominating aggressive sellers.
can result in quicker identification of interesting price levels…
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