Delta
From lesson 1, we know that the Footprint Chart shows the volume of Market Buy orders and Market sell orders made, but how do we use these numbers in our trading. Before we can answer that question, we first need to understand what these numbers represent.
Essentially, these numbers (Volume of Market Orders) are called Delta numbers, or just Delta.
Using the charting style 1 (See Figure 1) of having the Sellers Delta on LHS and Buyers Delta on RHS, means that at each price level you can see the volume of Market Sell Orders made (Sellers purchasing the Bid) on the LHS and the volume of Market Buy Orders made (Buyers purchasing the Ask) on the RHS.
Using charting style 2 (see Figure 2) of having only the total Delta visible, means that when the Delta number is positive (Green), tells us that there were more Market Buy Orders made than Market Seller Orders. When the total Delta number is negative (Red), tells us that there were more Market Sell Orders made than Market Buy Orders.
The total Delta is simply a calculation:
Total Delta = Number of Buyers that purchased the Ask - Number of Sellers that purchased the BidGreen Plus Delta = more Buyers purchased the Ask
Red Minus Delta = more Sellers purchased the Bid
Continue your learning…
Now that we know what the Delta numbers represent, we can finally begin to read the Footprint Chart. In the next part of this trading tutorial series, we shall see in more detail how to read the Footprint Chart.