Order Flow: Understanding the Battle Between Buyers and Sellers

Editor's note: Order Flow is also examined in Articles 171, 187, 203. These are progressively deeper, standalone treatments of the same subject.

Encyclopedia Classification

Category: Advanced Trading • Market Microstructure • Real-Time Market Analysis

Discipline: Order Flow • Auction Theory • Volume Analysis • Institutional Execution

Prerequisites

• Article 151 — Market Structure: Understanding How Crypto Markets Actually Move

• Article 153 — Liquidity Analysis: How Markets Hunt Stops, Create Traps, and Move Capital

• Article 156 — Volume Profile: Understanding Where the Market Actually Trades

Related Articles

Market Makers • Footprint Charts • Delta Analysis • Liquidity • Institutional Trading

Definition

Order flow is the study of actual buying and selling activity occurring inside the market.

Instead of only analyzing price movement, order flow examines:

• Who is aggressively buying

• Who is aggressively selling

• Where large orders appear

• Where buyers or sellers are being absorbed

• Whether movement has real participation behind it

Beginner Explanation

Most traders look at a candle and see:

Green candle:

"Buyers won."

Red candle:

"Sellers won."

Order flow asks:

"What actually happened inside that candle?"

A green candle may mean:

• Aggressive buyers overwhelmed sellers

or:

• Sellers were exhausted and buyers absorbed remaining supply

The candle alone does not tell the complete story.