Does Order Flow Trading Work?

Order Flow is a sophisticated charting application that allows you to read all trading orders processed in the market. It is possible to track the BIG financial institutions by looking at their trades.

The order flow analysis method takes a different approach to trading economics. It allows traders to avoid potential problems by allowing them to estimate with a high degree of certainty where prices might be in the future. This will enable them to enter the market with precision and confidence. When used correctly, order flow trading can give traders a significant advantage over other traders in the market.

What Exactly Is Order Flow Trading?

Order flow trading is a type of trading that focuses on understanding how orders enter the market as a result of traders making decisions. Order flow trading is not a new trading method; it has existed since the dawn of modern financial markets, just not in the format we know today. The term order flow refers to how buy and sell orders ‘flow’ into the market from various market participants making trading decisions such as placing trades, closing trades, and taking profits.

In all other financial markets, order flow trading would be carried out with the help of an indicator known as the order book. The order book is a trading indicator that provides the trader with a wealth of information about the buy and sell orders entering the market from various financial institutions. It displays the prices at which buy and sell orders are being placed, the type of orders being placed (i.e., pending orders or market orders), and the size of the orders.

The order book provides a significant advantage over other types of market analysis for those who have access to it. As with anything in trading, it does require a considerable amount of training to learn how to use it effectively.

How Does Order Flow Work?

The idea behind order flow trading is that if you understand when and where traders are likely to make trading decisions, you can predict the market’s direction accurately. The reason for this is that whenever a trader makes a decision, such as placing a trade or closing a trade, an order is placed in the market, which has the potential to cause the price to change. A single order is insufficient to cause a price change; however, thousands of orders entering the market simultaneously can cause the price to change.

So the primary goal of an order flow trader is to understand how other traders in the market trade, as this will allow him to predict when a large set of orders will enter the market and cause the price to move up or down. Trying to figure out how other traders trade is difficult because there are so many different trading strategies out there that people use to trade the markets. Fortunately, we don’t need to know the specifics of people’s trading strategies. All we need to know is what their trading method’s primary goal is, and from there, we can predict when and where they will make a decision that will cause orders to be placed in the market.


If you want to become an excellent trader, you must first understand order flow trading. Price action and other types of trading can only take you so far; order flow trading provides additional knowledge that allows you to understand better what’s going on in the market and why different events are occurring.

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