Have you ever wondered what lies behind each move insight each candle stick print?
While candle sticks can provide the basic understand of historical price action closes such as where price opened / ranged / closed, foot print charts provide us traders with an extra layer of data of volume exchanged between buyers and sellers at each price interval within the specified time frame of choice !
This very tool can be very insightful to better understand the relationship between buyer and sellers in areas of key levels,
Candle sticks are the standard norm when analyzing technically a standard market chart but why do these moves happen?
Using foot print charts can help provide you with the insight of what is actually happening inside each candle stick that provides you with the exact exchange that occurred between buyers and sellers that resulted in the actual move of the market.
What Does a Foot Print Chart Show?
Price - Shows Each Level as a candle stick chart
Time - Each level shown on a specified time scale
Imbalances - Where one party was the aggressors
Absorption - Area of price where buyers absorbed
Delta - The difference between buyers and sellers at a given price
(Buyers - Sellers = Delta )
Stop Losses - Buyers or Sellers getting stopped out on an aggressive move
The orders getting filled on each side will be depending on whether you are a buyer or seller at that select price.
If you are a net buyer then the executed order will be filled at the Ask price.
If you are a net seller then the executed order will be filled at the Bid price.
The Foot print is very valuable because it shows you all the executed orders and not resting limit orders looking to get filled passively. It organizes them in a ledger that can be set by time frame of your choosing.
Imbalanced Buying / Selling
Regardless of the time frame you have set on any given foot print chart you will be able to identify imbalances occurring on the bid or ask.
In the example chart below you will see that there are yellow highlighted numbers shown on each side of the foot print.
The imbalance shown on the ask price (sell side) shows that the total traded contracts traded on the ask of xxx versus the xx contracts on the bid
This imbalance gets highlighted yellow whether the imbalance is found on the ask or bid by the specifications of the footprint chart settings. In my software I have them set to 300%.
Stacked Imbalances
Imbalances on either the bid or ask can be a great indication of aggressive at the market participants willing to hold price above or below a set area, which can be used as a high probability support or resistance levels .
Buyer / Seller Absorption
Absorption can be seen as much as on the Depth of Market (DOM) as it is on the footprint chart. These kind of price exchange behaviors are when price reaches a "balanced" price level of trading after a trend move where buyers / sellers are willing to equally meet the opposing party and transact. The visual representation of this is shown below where the volume nodes at the low and high end of the range are "thickest"
instert range 3 ps foot pring chart
Price absorption can also be found on attempted "breakdown" or "breakout" trades where buyer/sellers aggressively attempt to imbalance price but get stuck resulting in a failed breakout / down trading opportunities. In order to properly identify this setup, you must have a clean break of price from a consolidation period or trend move and price stall slightly at / below / above the key reference point. Price during these set up can result in either direction getting stopped out as late buyers/ sellers enter the market assuming price will break out of the range.
Unfinished Auctions
Moves in either direction up or down end when there is not more active buyers or sellers willing to buy as price becomes to stretched for the given buyer or seller in any given move.
These become "finished auctions" and are shown on the foot print chart dependent on a move up or down. A finished auction on a move down will be shown with a zero on the ask size . The inverse will be true on a move up the foot print will end with a zero on the bid side.
This indicates price couldn't tick lower / higher because there wasn't anymore passive buyers looking to participate.
Unfinished Auctions are also found at a high or low but will not end with a zero on either a bid or ask side of the foot print. These unfinished auctions are often times revisited to become "finished auctions" and should be used a focal points of reference only.
The ideal use of these unfinished auctions would be to utilize as an area of interest to target if you have a bull / bear trade thesis to take profit towards or at.
Do Foot Print Charts Work?
I am confident utilizing foot print charts are a layer of your trading system can help provide all traders with higher quality, cleaner entries on execution. They help you spot actual intra day supports and resistances using imbalances get filled by actual market participants, validate trade set ups, show signs of exhaustion or absorption and determine key zones to take profit to better manage your trade.
If you are interested in using foot print charts in your analysis for trading check out my video where I cover how I set up my work space using Jigsaw daytradr as my order flow trading software