Welcome to NexusFi: the best trading community on the planet, with over 200,000 members Sign Up Now for Free
Genuine reviews from real traders, not fake reviews from stealth vendors
Quality education from leading professional traders
We are a friendly, helpful, and positive community
We do not tolerate rude behavior, trolling, or vendors advertising in posts
We are here to help, just let us know what you need
You'll need to register in order to view the content of the threads and start contributing to our community. It's free for basic access, or support us by becoming an Elite Member -- discounts are available after registering.
-- Big Mike, Site Administrator
(If you already have an account, login at the top of the page)
I've got a (probably stupid) question regarding the cumulative delta indicator. If market orders are the only type of order that moves price how can price move up if cumulative delta is moving down and market orders are hitting the bid? I understand absorption, but such an occurrence would result in prices remaining stagnant, i.e. cumulative delta moving down, market orders hitting the bid, but price not falling because buyers keep reloading their limit orders. So if cumulative delta is moving down because market orders are hitting the bid, what could possibly be moving the market up? How does divergence where cumulative delta is moving down while price is moving up, occur?
Imagine there are 20 bid @3900.00 and 20 offer @3900.25. Imagine there are 10 market 'sells' hitting the bid at 3900. Then imagine the offers @3900.25 get pulled and new bids are placed at 3900.25. Then you get one 'buy' lifting the offer at 3900.50. In this case, you have 9 negative delta, but price has still moved up.
You are asking the right questions. The fatal flaw with cumulative delta is that market makers pulling their orders and just letting it tick up or down on a minimal number of contracts is very influential on price. CD is very useful, but it only shows one side.
