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A footprint chart is a widely embraced trading tool, particularly favored by traders engaged in futures and forex markets. By utilizing this type of trading chart, you can gain a detailed view of where buying and selling pressure is concentrated, identify support and resistance levels, confirm breakouts, monitor live market activity, and so on.
In this guide, you'll learn:
A footprint chart is a candlestick chart with multi-dimensional data, offering more than just the security's price; it includes valuable insights such as trade volume and order flow.
Order Flow Presentation is a special order flow indicator in NinjaTrader 8 that plots informative footprint charts.
On this trading chart, the horizontal (x-axis) represents time intervals (e.g., 1 minute, 5 minutes), and the vertical (y-axis) corresponds to price levels, making up its two main axes. Similar to traditional candlestick charts, you can adjust the chart's time-frame to examine the security's movement on short, medium, or long-term scales.
Within each bar, you'll find colored or shaded sections that reflect the volume traded at various price levels during the time interval. Usually, green or blue segments indicate buying volume (bid volume), while red segments represent selling volume (ask volume). It is recommended to pay attention to areas with thicker or taller sections on the chart, as they indicate higher trading activity and significant volume. These regions are referred to as high volume nodes and play a vital role in identifying significant support and resistance levels.
Each type of chart offers unique perspectives on trading activity and volume distribution. Below are some of the common types:
This is the most basic and common one. It exhibits the volume traded at both the bid (buy) and ask (sell) prices within each time interval. You can easily see buy and sell imbalances because the chart uses different colors to represent the two sides of the market.
This type of chart highlights the net disparity between buying and selling volume at different price levels. The delta footprint provides you with confirmation of the beginning and ongoing nature of a price trend.
In the volume footprint, you can observe the total number of contracts traded at each price point, irrespective of bid or ask trades. This feature is valuable for identifying price levels with concurrent interest from buyers and sellers.
To harness the power of these trading charts and leverage their insights in your trading strategy, you can access them through various platforms such as NinjaTrader, Sierra Chart, Tradovate, and others.
These platforms offer a range of features, including charting tools like footprint charts, to enhance your market analysis and decision-making process. Additionally, you may explore software with advanced features offered by indicator vendors. These specialized software solutions can provide you with even more comprehensive and customizable footprint charting capabilities, tailored to suit your specific trading needs and preferences.
By incorporating footprint charts into your trading toolkit, you can gain a deeper understanding of market dynamics, spot profitable opportunities, and make well-informed trading decisions. Remember to explore different types of charts and consider how each one aligns with your trading style and goals. With skillful utilization of this multi-dimensional chart, you can elevate your trading performance and stay ahead in the competitive financial markets.
