My Signature Orderflow Model: transcript

In this video, I will show you our proprietary trading model that I built after years and years of research. This study use granular order flow data to spot where volume is effortlessly moving price. Hence, where is the path of least resistance? I use this edge as part of my daily trading routine and I've done extensive quantitative validation around it. I will show you how to use it and contextualize with deep trades to take the highest probability areas. As a part of my contribution to the deep charts research and development program, I worked in the role of alpha research to make it available exclusively on deep charts. And now, let's go through the deep effort together and understand the logic behind how it works and why this

is an amazing tool to get more precise using order flow. I come from a study called volume spread analysis, the VSA. I started this study when I was using vertical volume to refine the area of confirmation using the relationship between volume and result of price. If I have a wall of orders here and I have the price striking here with a lot of volume, I see that there is no result, so no follow through of all this effort and the effort is going on. This one for me becomes an area, becomes a potential point of reversal, becomes a level that I wants to notice. At the same time, if I see the market doing an amazing movement with really low efforts, okay, on the buy side and I see buyers interacting really aggressively to break this level and then I see low effort to

make an amazing result. What the market is telling me? That the balance between forces here change. And now the path of least resistance is on the buy side. It's like a traffic light gives me areas and gives me situation where the edge is on my side in a specific moment of the chart. And the logic behind it was built is because when you use volume analysis, for example, you can get into consolidation area and you can try to execute multiple times taking a lot of break even. So, the logic behind was I only want levels where everything is telling me that one side is more aggressive than the other. So, having an a directional edge and a specific area edge, so I can have a clear stop loss in the direction of the model. For example, you can pair this with the statistical

model of IVB. Now, all this logic behind that you can use here is based on one simple order flow concept. And this concept is the law of effort and result. And this is really important because you need to understand that volume and price gives you two different information. The volume is telling you how many orders are entering. The result is telling you how much these orders are having an impact in price movement. So, if we are here, for example, on this floor and we see aggressive market participants striking on this level with a huge volume. And we see that every time the maximum they can do is printing weak. I will not consider a continuation because I see that this level getting really interesting from a passive participants

perspective. They are keeping all these orders, okay, they are absorbing here. This is a usual pattern of a absorption. And this one comes also from the volume spread analysis. So, you are not considering only one side, only the price, but you are taking also into consideration the volume. At the same time, on the other way, when we see aggression of the buyers and at the same candle aggression of the sellers, and we see that the sellers are completely absorbed and the buyers are rewarded, what the market is telling us here is that in this battle they have maybe the same effort, but the result it's heavy skew on the upside. So, what I can do as an analyst, I can understand that the probability that we continue higher, so we go to tap into this high is the biggest one, but the effort is the same.

Maybe you have the same effort from aggressive buyers and aggressive sellers, but the sellers are completely absorbed. So, we need to put this and to frame this into one single law, the law of effort and results. And the step that we did later was, how can we make sure that this it's transferred into one script and that is taking into consideration everything. And after this study came out, the logic of putting in relationship price, volume and putting also in relationship the granularity of the order inside. And on this we have a proprietary model that is capable of filtering all the noise and is giving you what I like to call triggers, triggers to potentially execute. And it's giving you an edge when you have, for example, frame your area, your point of interest maybe using price action, using everything, and you approach the level back again here and you have your

deep effort telling you, "Look that from this moment we are askew on the downside. So, you have your area. And what this is telling you that the probability from this box on is to continue lower. And this can be amazing also for profit taking because when you see a an opposite area on the buy side, you can understand that now this selling pressure it's almost exhausted and the probability instead of continuing that you will go up to this level it's higher. So, the consideration that you can make is that it's not worth to risk all this profit that I make just to make an additional small movement by risking all this profit. So, I take it out my position. What I do? I consider putting stop below. So, if the market wants to continue, I'm into the position again. I took profit on the first one and I have my liquidation here. This is a smart way of managing trades. Now, let's go to the chart and let's understand together how

the deep effort it's giving you an edge. We are in Nasdaq on this week and we will see some session where you have a consolidation phase, some session when you have a directional phase and we will understand how much this is powerful when paired with logic of regression and logic of bias of the day. So, the bias for the 26 and the bias for 27 was long. So, I had a clear bias for the day and for this I use profile framing. So, all the short setup if I have a bias, I'm not interested into taking, okay? So, I can save the counter trend setups.

Amazing. As you can see, it start giving you areas where the buying pressure is dominant. From this, we have an overlap of two cluster here. This one is the first area that the model identify aligned with the long term. So, you can build from here the first positions as a trigger in direction of the overall trend. Now, not all the days will be so directional, so it's smarter to have multiple profit targets. One position you take out, for example, at 50% of the full profit, and the other one you leave a runner. The second area that gave us is this one. This one it's a momentum setup. Why momentum setup? Because it closed above it and never test. So, this one you couldn't take because the market don't give you a test. Here it gives you an area, immediately test, gives you another area, immediately test, so you could make a lot of trades on this one.

Then you have a small stop loss here because even if you are right on the direction, if you want to be precise, you need to accept some stop loss. So, if we go to count it, we have Let's not consider the full take profit. Let's consider one to three. You have three R here. This one it's unfulfilled. You have minus one R here. Okay. You have another unfulfilled. Okay. You have a stop loss here. So, you have minus R. And finally, the market comes back to your area. Okay. So, you have an entry point here because this is a virgin area, and the market immediately confirmed this with another area that unfortunately it's unfulfilled. So, let's consider this small cluster of setups. You took six R of profit, okay, three and three, and you lost two. You are four R positive just by taking setups in line with the direction bias of the day with profile framing. Now, also this day, as I explained to you, I was long in in bias from profile framing. So, the volume profile is telling me that the pressure is building on the upside. So, I don't take short

even if this were would have been one to 2.5, one to three, all take profit, I don't consider them. I start to consider the market from this one. And as you can see, this area it's amazing because it give me exactly the pressure. What's unfortunate here that these two setups are unfulfilled because the market is so aggressive that it's not back really high. The first setup that I will be able to take is the test of this virgin area. This one would have been an amazing one to three risk to reward and you close the day with only these setups. So, you need to take into consideration that there will be days where you don't have any setups, okay?

Also, for this day here, I am long in bias, okay? So, when we open the New York session here, okay? I have one setup that it's some filled, unfortunately, here and then I have another setup that it's filled. So, I have one stop loss in this area and then the market break the structure. This is the beginning of the range. So, when it breaks on the opposite side using the deep effort, I don't go trend counter trend on this one. So, I need to wait that we have another confirmation of directional. But, unfortunately, this day we never go back to this level till late in the session. Look how much this would have been amazing with these setups. What's the problem that we are late in the night, okay? This would have been like six take profit at once, but this was not viable for me because we broke below the initial balance and as you know, I like to pair the NASDAQ effort with the IVB model. So, you need to keep in mind a profile framing or IVB

directional bias paired with the deep effort to give you a confirmation. I want to show you this setup even if these one are not executed cuz I want to show you how the market is not identifying momentum candle, but it's identifying for you areas that are potential strong point retest. This one have been retested perfectly. This one have been retested perfectly. This one have been retested perfectly. And in situation of long momentum, it's not so difficult to take amazing risk to reward by covering below the areas, okay?

Unfortunately, when they are outside the timing or counter trend in respect to the bias, we don't take it. This is was the night. I hope you enjoyed the video. See you on the next one.