Best Trading Tools Introduction
In this blog post, we will explore the best trading tools used by Axia Traders. We will break down for you three videos that explain the tools in a different light than you might be used to. Regular readers are familiar with our in-depth use of tools such as Market Profile, Volume Profile, Price Ladder (DOM), and Footprint. On top of that, we will dive into Bookmap and Cumulative Delta as well. The key objective of this article is to explain WHY and WHEN we use these tools and how combining them can make you a more efficient decision-maker.
Best Trading Tools
Footprint, Bookmap, and Price Ladder – The WHY
Different tools serve different purposes. A good analogy is a football. When you use a tool such as a price ladder, it gives you immediate action, the intention as well as what just happened. Footprint on the other hand gives you information about what actually happened. Where exactly the ball went but not the intention of the player where he wanted to pass it. Your goal is to leverage these tools so they maximize your information processing capabilities.
So when do you use these tools?
- Use the price ladder to understand the real-time playing field.
- Use bookmap and footprint to confirm what you are seeing on the price ladder.
Let’s talk about a great example of combining all three tools of Price Ladder, Footprint, and Bookmap together.
Case study of trading tools:
- Price Ladder – if you think somebody absorbs at the price ladder, you can go and check the footprint if a large number of orders is being accumulated at a given price
- Footprint – seeing this absorption on its own on the footprint, does not give you information on how the orders got accumulated. Was it one large order or a series of smaller orders? That is what bookmap is gonna help you with …
- Bookmap will tell you if there was a large resting order or if the orders started to build after a certain period of time
Use the tools in combination. Let them confirm what you are seeing on a price ladder. Combine them.
There are two important tools we at Axia Futures find valuable. Market Profile for a contextual understanding of where we are, where are we trying to get, and how good of a job the market is doing getting there. Market Profile gives us the superpower of seeing inside the price action movements for what they really are.
We have talked about Footprint and what it can tell you. It is the harmony with Market Profile that can create an interesting opportunity.
Case study of trading tools:
- Footprint offers and creates a b shaped profile on a lower timeframe
- The Market Profile confirms that the location where this b shape profile was created is a good location to get a reversal from
Understanding the landscape using the market profile is one way to gain an edge and then you can use the Footprint to pinpoint the exact location for the trade.
Footprint, Delta, Market Profile, and Price Ladder – The HOW
When it comes to your charts and indicators, a good rule of thumb is to ask yourself: What value will this bring to my decision-making process? Where will it improve my process? If you can’t answer these types of questions with a clear one-sentence answer, then there’s a good chance that you are wasting some of your mental capacity. Cut the fat and notice if there is any impact on your decision-making process.
In this video, Richard breaks down every indicator he uses and what value each one brings to his decision-making process.
Here is the breakdown of trading tools:
- 60-minute candlestick chart – how far the market can go
- Market Profile chart – for the contextual layer, the landscape of the market
- 1 or 5 min charts – for managing risk
- Short-term moving average – for fast momentum trades
- VWAP – for directionality of the day
- Relative volume – is the move being built on a strong foundation or weak foundation
- Cumulative delta – who is controlling the aggression, is there a divergence between price and delta
Given all of the above, we have sat down with one of our traders and designed a masterclass exactly for that purpose. For the purpose of finding the best trading tools. If you want to learn in-depth, how we combine all of the above, don’t forget to check out the masterclass here.
If you liked this type of content, you might check these videos as well:
- Junior Funded Trader 2020 Performance Review
- Lessons From My Biggest Trading Loss
- Trader Training: How Long Does it Take a Trader to Become Consistent and Profitable | Axia Futures
If you like our content and would like to improve your game, definitely check one of our courses that teach you all the techniques presented by AXIA traders from a market profile, footprint, or order-flow. If you are someone who likes to trade the news, we have a great central bank course. And if you are really serious about your future trading career, consider taking AXIA’s 6-Week Intensive High-Performance Trading Course.
Thanks for reading again and until next time, trade well.