Trading market assets is one of the most promising activities for those who want a source of income independent of crises, quarantines, and other restrictions. In the global market, some assets are getting cheaper, others are getting more expensive, and each time, you can make money on exchange rate fluctuations from the comfort of your home. For example, for Forex transactions, a person will need a computer, the Internet, knowledge of trading principles, and an account with a brokerage company. But to trade successfully, you will need to delve into some details. We will learn about the order flow, its specifics, and how it can be applied in DotBig trading from the blog below.
What is an Order Flow?
Order flow is a trading concept that involves analyzing current orders in the market to predict future price changes. With it, traders get a clearer understanding of market dynamics by focusing on the actions of Forex participants such as institutional investors. Studying the order flow can be helpful to make more accurate and informed trading decisions.
The order flow revolves around the idea of tracking where the big money is going. By analyzing the volume and type of orders (buy or sell), traders can gain insight into potential market trends. This method contrasts with traditional technical analysis, which primarily relies on historical price data and various indicators.
Its key components:
- Order Blocks: These are areas where a significant number of buy or sell orders are concentrated. Identifying these blocks can help traders understand potential support and resistance levels.
- Changes in liquidity: This happens when the price moves to capture liquidity at a certain level, which often leads to a reversal or continuation of the trend.
- Fair Value Gaps (FVG): Gaps between candles can indicate an imbalance of supply and demand, indicating strong market movements.
Types of Order Flow
There are two types of order flow in the Forex market – ascending and descending.
Bearish Order Flow
A downward order flow in trading can be seen when the price updates its local lows and lowers the highs. During the correction period, it is possible to find a point for opening a sell transaction during the withdrawal of buyers’ liquidity with the restoration of the price level to the whale orders.
The possibility of breaking the downward structure is not excluded, in which new lows are not formed. However, the strategy often works out. The trader’s main task is to open short positions, and it is advisable to wait until the liquidity is updated or the price chart tests the POI zone.
Bullish Order Flow
An upward bullish order flow can be used while the price of an asset is rising and updating the local maximum, as well as increasing the minimum. A correction, in this case, removes liquidity from sellers. The trader needs to identify entry points in the POI zone to accurately open a long contract.
In this situation, it is best to enter the buy after the test of the zone of interest with the withdrawal of liquidity of short trades takes place. At the same time, it is crucial to place the limit stop loss at a distance sufficient so that it is not touched during the collection of liquidity by large market participants. A similar principle applies to short trading.
Trading with DotBig
DotBig Forex broker is the best option for trading beginners. Due to the wide range of cryptocurrencies (over 200!) and a variety of assets, the broker stands out from its competitors. The platform is also ideal for users seeking to diversify investment portfolios with multiple assets.
One of the strengths of the DotBig website is the provision of a trading platform covering the main trading instruments. In addition, the use of analytical tools allows the exchange’s clients to optimize trading solutions, increasing the efficiency of transactions.
Thus, if you are a novice investor who is interested in using the experience of leading traders and access to a wide range of assets for trading and investing, DotBig Forex is suitable for you.
What Does DotBig Offer for Trading Order Flows?
DotBig broker offers its clients a wide range of charts and indicators for technical analysis. On the website, you will find various types of charts: linear, candlestick, bar charts, and others. With their help, you can choose the most appropriate data display format for their strategies.
In addition, the DotBig site provides access to a variety of indicators, including Moving Averages, RSI, MACD, Bollinger Bands, and many others.
- Moving Averages demonstrate the average price value for a given period on each bar of the price chart. The direction of the curve or the price position relative to it indicates the direction of the trend.
- The RSI calculates the strength of the ascending and descending impulses based on the difference in the closing prices of the assets for the period, smooths the values of the moving average, and calculates their ratio. The result is a line that tends to 100% when prices rise and 0% when prices fall.
- The MACD shows the connection between two moving averages of market prices. The moment when the main line passes through Zero (the intersection of the moving averages) is considered the moment when the trend changes.
- The Bollinger Bands are a volatility sign based on a simple moving average. The boundaries are calculated based on the standard deviation of the value. They allow you not only to determine the direction of the trend but also to estimate the probability of its change in the width of the channel (change in volatility).
The given tools help traders analyze market trends, identify entry and exit points, and make more informed decisions.
One of the key advantages of the DotBig investments is the ability to customize charts to meet individual trader needs. Thus, anyone can change time intervals, add or remove indicators, and customize the colors and styles of data display.
For those who are just starting to master analytics and charts, DotBig Broker offers extensive training materials. The DotBig website provides users with articles, online tutorials, and webinars that help them figure out the basics of technical analysis and learn how to use trading indicators and charts. DotBig reviews emphasize the usefulness of these materials for novice traders.