Cumulative Delta Volume Analysis is an advanced volume analysis method where traders can actually “see” the auction process within the market. Some traders refer to it as order flow analysis because traders are analyzing the order flow as it appears on the chart. Comparisons between buyers and sellers are studied for divergences and momentum shifts as potential entry points into a trend or counter trend trade.
Cumulative Delta Volume Analysis Chart
The commercial institutions do not enter the market using limit orders. Instead, they pulsate their orders into the market using market orders. Cumulative Delta Volume Analysis captures these market orders as they are initiated (which constitute 70% of the commercial institutions’ order flow). Then we can use the Cumulative Delta Volume distributional patterns created by the market order driven order flow to identify the prominent levels in the delta that we can index.
The Cumulative Delta Volume Analysis chart looks just like a price chart. The only difference is that instead of plotting price it is plotting candlesticks that represent buyers and sellers on each individual price bar. The video below is an introduction into Cumulative Delta Volume Analysis. We have more training and courses at Fulcrum Trader website for those that want to learn the technique. Multicharts also now offers the cumulative delta chart on its platform.
The Intro to Cumulative Delta Volume Analysis course is no longer available.
Cumulative Delta builds from the order flow — both on market order and limit orders. Since the bars build the same as price bars, you should be able to see the same patterns in both the Delta and the price bars. Cumulative Delta is used to enter trend movements and to spot ends of trend using divergence.