The Footprint - Faded Volume - Session IX - The Pit Futures Trading

#daytradingfutures #daytradingstocks #orderflow

Footprint (Faded Volume)

Footprint charts offer significant opportunity over other chart styles simply due to being able to witness trading volume at a specific price point. They also offer disadvantages that are not immediately realized. The S&P500 has significant volume that can be easily read to identify good structural patters, other markets not so easy. Markets with thinner volume may display structural anomalies that impede an accurate assessment. We can view this from the perspective:
I. Structural patterns diminish with low volume markets
II. Structural patterns in high volume markets will dimmish with shorter duration charts
a. Moving from a S&P 60 min chart to a 5 min chart will yield a different structural representation.
III. The inverse is true
a. Moving low volume markets to a higher time frame chart can yield more consistent structure patterns.

Moral of the story here, pick your chart and stay with it.

This is critical to understand when it comes to faded volume. The chart below of the 60Min S&P shows volume fading or waning as the chart moves lower and finally resolves with a completed auction.

➢ Note: the term fade can represent going against i.e.: Trader A is buying the market and I faded his trades. In this example “fading” defines less volume or waning volume.