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Learning to Read the MarketDelta
®
Footprint
Learning to read
the MarketdeLta
®
Footprint
®
an introductory guide to Footprint
®
patterns and their interpretation
introduction
This guide is designed to introduce a structured way of learning how to read a Footprint
®
chart. It’s about
training your eyes what to look for, and training your mind to understand what it means. The material
presented here is not necessarily the only or best approach; so please feel free to modify the suggestions to
suit your needs. It is assumed that the reader has at least a basic understanding of what a Footprint
®
chart
is and how it is created. If not, then please view the
Marketdelta
®
Simpliied Video
and read the
anatomy of
a Footprint
®
document
before proceeding. Upon completion of this document, you should proceed to the
MarketDelta Footprint
®
Strategy Manual to continue your education and then consider attending a seminar
hosted by MarketDelta
®
to deepen your understanding and get hands on training. More details can be found
at the end of this document or at MarketDelta.com/education.
This data has traditionally been delivered in tabular form via what is generally called a Time & Sales
window. The age-old concept of “reading the tape” refers to the skill of reading and interpreting the
rapidly scrolling lines of the T&S window to gain insight into order low. Tape reading tends be be
mentally exhausting, it is relatively easy to miss something, and for all but a gifted few, the trading
patterns hidden in this data can not be directly observed. The Footprint
®
chart can signiicantly reduce
the challenges of pure tape reading, and even reveal market dynamics and trading behavior not easily
recognized in pure tape reading.
MarketDelta
®
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Suite 200
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312 922 7800
P
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F
www.marketdelta.com
sales@marketdelta.com
 Learning to Read the MarketDelta
®
Footprint
order FLow
If the meaning of the phrase “order low” is not clear to you, it should be by the end of this document.
Order low analysis is the missing link for many traders. It refers to how the orders are coming into the
market, how they are being illed; whether executing at the offer or on the bid. It is the dual auction at
the most micro-level. Assessing order low in real time can tell the trader how trade is being facilitated in
any direction, a key concept in auction market theory. The order low patterns, as revealed by the Foot-
print
®
chart, that we’ll be looking at are NOT traditional price patterns. Rather, these are T&S patterns
that you’ve probably never even realized existed. The T&S data simply moves too fast to comprehend,
and then in a lash the data has scrolled by, out of site. The Footprint
®
patterns can be classiied into
three general categories:
intra-Bar patterns, end of Bar patterns, Multi-Bar patterns
These patterns rarely, if ever, mean anything in and of themselves. This is where the MarketDelta
Footprint
®
diverges radically from traditional price pattern and/or indicator based analysis. No attempt
is made to oversimplify or under-simplify. Nor is the Footprint
®
a red light / green light type “system”.
Instead, the insight gleaned from a deep and experienced comprehension of the Footprint
®
, allows the
trader to integrate this data along with current market context and sound market logic. For example,
auction market theory or any other viable analytic philosophy which affords the trader the ability to
assign structure and thus meaning to what he/she observes, combined with the Footprint
®
, will provide
decision support of the highest possible quality. The Footprint
®
is not more or less important than either
of the other two elements just mentioned; it is equal.
In general, Market Proile
®
, support and resistance analysis, trend lines, and other macro-type big picture
analysis provides the
where to trade
. The Footprint excels in showing
when to trade
because of the
way it represents order low and volume.
Always Keep In Mind
A Footprint
®
is essentially a graphical
or spreadsheet-like rendition of the
most basic and fundamental market
generated data which trading activity
produces. It is a very natural way to
view the data.
MarketDelta
®
|
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| Asia / PacRim + 61.2.8003.4996
| support.marketdelta.com
www.marketdelta.com
2
 Learning to Read the MarketDelta
®
Footprint
After irst gaining a basic understanding of what a Footprint
®
chart is (which presumably you’ve already
achieved) the next step is to gain some level of observational awareness. Avoid making preconceived
conclusions. Avoid deciding, in advance, what something is going to mean. Instead, begin the process
with simply learning how to pick out key elements of Footprint
®
structure. That’s what this document is
all about. Once you have gained some facility with what the various elements of Footprint
®
structure are,
then you can begin coming to conclusions regarding the meaning of the elements in various contexts.
Also, you can begin to assemble the elements into patterns. In this way, you’ll start making your own
rules, based on what is real, not what some tradition, some book, or some trading guru has told you;
which may or may not be valid information. The Footprint
®
lets you come to your own conclusions, if you
learn to see the Footprint
®
in an unbiased fashion.
StructuraL eLeMentS
oF the Footprint
®
what ShouLd You Be watching For?
As you learned in the Anatomy of a Footprint
®
, there are many different variations of Footprints. Bid
by Ask, Total Delta, Total Volume, etc. For learning purposes, we suggest sticking to the Bid by Ask
Footprint
®
, and possibly the Footprint
®
Proile.
The Bid by Ask Footprint
®
displays all the data, broken down into the inest resolution possible. Only
after you have experience with the Bid by Ask Footprint
®
will you be able to make an informed choice
about other ways to slice and dice the data which best its your personal trading style. For now, we are
only focused on training your eyes what to see. Don’t trade while learning the Footprint
®
. The act of
trading and the emotions involved can and usually does remove ones ability to clearly see what is, in
an objective fashion. The added pressure of learning the Footprint
®
while in a position or pondering an
action to enter or exit, will likely cloud what you’re seeing, such that you see what you want to see which
supports your position… and not what is actually there.
Again, even if you end up preferring to work with a Footprint
®
style other then bid/ask Footprint
®
, it is
recommend starting out with the Bid by Ask Footprint
®
for learning purposes, so you can see all the data.
The other Footprint
®
variants simply rearrange, ilter, or alter how this basic data is displayed.
MarketDelta
®
|
U.S + 1.312.922.7800 | U.K. + 44.20.3287.9954
| Asia / PacRim + 61.2.8003.4996
| support.marketdelta.com
www.marketdelta.com
3
 Learning to Read the MarketDelta
®
Footprint
the BuiLding BLockS oF
Footprint
®
patternS
The following sections will provide examples of some of the more important order low patterns which the
Footprint® exhibits. The patterns can be broken down into three general categories:
1. intra-bar patterns: those patterns which form within and as a bar builds in real time.
2. end of Bar patterns: those patterns which can only be assessed and analyzed at or
after the time which the bar closes.
3. Multi-bar patterns: which build over a series of bars.
Looking at the inest resolution of how the patterns are built up, leads us to the three considerations
below. It is these considerations that form the building blocks (or elements as they will be referred to)
upon which the larger patterns are composed, perceived, and analyzed by the trader. As you go through
this document, and more so as you begin your learning and discovery process working with actual
charts, it is these three pattern types which you can lean on if you become stuck or confused. No matter
where you ind yourself in the process, you can ask yourself questions about these three pattern types.
Questions about context, about relative and absolute changes between the elements within the pattern,
and about how these three elements can create actionable patterns. Here are some of the key elements
to watch out for within the three pattern types.
1. intensity of volume and/or delta in a given Footprint
®
bar or cell.
2. the level of imbalance or balance between bid traded volume and offer traded
volume in a given cell or cluster of cells.
3. the ability or inability of price to continue in the direction of the current order low,
judged in the context of items #1 and #2 directly above.
intra-Bar patternS
coLorS & ShadeS oF indiViduaL ceLLS
The darker the shade, the more imbalanced is the order low. Lighter shades indicate a more balanced
scenario. Likewise, a series of adjacent cells, all the same color, indicate directional trade. Roughly
alternating colors (candy-cane-like if you will) indicate balance and/or indecision. Don’t expect to see
“perfect” patterns. You may ind it easier to ask yourself what something doesn’t look like, rather than
what it does look like. This inverse way of thinking can sometimes release you from being too attached to
what you believe, instead of what’s really there.
MarketDelta
®
|
U.S + 1.312.922.7800 | U.K. + 44.20.3287.9954
| Asia / PacRim + 61.2.8003.4996
| support.marketdelta.com
www.marketdelta.com
4
 Learning to Read the MarketDelta
®
Footprint
reLatiVe and aBSoLute nuMeric VaLueS
Relative balance between bid volume and ask volume in each cell provides clues
about trade facilitation and supply and demand. Roughly equal levels (within an
order of magnitude) of bid volume versus ask volume indicate balanced trade.
Unequal amounts indicate directional trade. However, once the inequality reaches
an extreme, this suggests a wall of demand or supply has been reached. For more
detail on understanding this phenomenon, see this article from the MarketDelta
®
Blog:
how to Spot Supply in Marketdelta
®
.
Note variations in
color and shade.
Are the sequential
cells the same
color?
When observing factors such as just described, keep in mind where price is and
where it has come from – The overall context. For example: are you witnessing
an extreme imbalanced cell AFTER a signiicant price move, or at the beginning?
Does price currently reside at the boundaries of a long-term bracketing market,
or is it dead in the middle of the range? The context will turn out to make all the
difference in the world.
As price moves to new extremes (intra-day high or low, new daily high or low, etc),
what is the bid/ask volume doing? The goal while observing the Footprint
®
is to
determine whether trading activity is drying up, being facilitated, or increasing in
pace at one form of price extreme or another.
Or, do they vary,
with only 2 or 3
cells in a row the
same color?
The numeric values can have both relative meanings and absolute meanings.
By relative, we mean how a particular value compares to its own value earlier in
the bar formation, and to adjacent cells and bars. Absolute numeric values will
help with anticipating volatility. Each market will exhibit characteristic absolute
values, as well as speciic chart periodicities doing likewise. All this really means is
depending on the market being followed and periodicity being viewed the numeric
values shown on the Footprint will vary. Time of day, special events (pre-holiday
trade, quad-witching day, news events, etc) should be considered when evaluating
absolute volume levels.
Moderately
Imbalanced
Extreme
Imbalanced
Dry Up of Activity
MarketDelta
®
|
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| Asia / PacRim + 61.2.8003.4996
| support.marketdelta.com
www.marketdelta.com
5
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