15 July, 2016

Delta Divergence

Rationale & Trading Techniques

Delta is the difference in buy volume (trades transacted at the ask) and sell volume (trades transacted at the bid). A bar where more trades occurred at the ask than the bid, i.e. more buying than selling volume will have positive Delta and a bar with more selling than buying volume, i.e. more trades at the bid than the ask, will have negative Delta.

Delta provides confirmation of price movements. With more buying than selling activity, a price rise will be accompanied by positive Delta. As buying activity slows and selling activity increases, negative Delta can be expected. It follows therefore that buying activity accompanied by negative Delta is an indication of the possibility that price will pause or change direction.

The emoji trading Order Flow Suite Delta Divergence indicator signals when price reaches its daily high or low if the Delta is opposite to what would be expected from the price direction and we have seen a reversal in the direction of price at the bar’s close.

This indicator provides a strong signal of the possibility of a reversal in price direction.

Delta Divergence conditions are also indicated as part of the Delta Snapshot indicator.

 


Examples

Delta Divergence - Emoji Trading Order Flow Suite

 

Note the clarity that can be achieved by utilising a Text draw style with the Delta Divergence Indicator SG2 subgraph:

Delta Divergence - Emoji Trading Order Flow Suite

 

 


Delta Divergence Settings


Input Name Description
Symbol Offset (Ticks) Specifies the indicator’s display position above/below the current bar.

 


Indicator Subgraphs

ID Subgraph Description
SG1 Delta Divergence Condition Evaluates to -1, when a sell Delta Divergence occurs, 1 when a buy Delta Divergence occurs, 0 otherwise.
SG2 Delta Divergence Indicator The symbol used to indicate Delta Divergence.