TradingView's New Volume Footprint Chart: Tutorial

Volume Footprint Chart Tutorial

Introduction to Volume Footprint Charts

• The tutorial introduces volume footprint charts, explaining their purpose and functionality in trading analysis.

• The speaker highlights the visual representation of buy and sell volumes through color gradients on a daily chart.

• Buying volume is displayed on the right side of the candlestick, while selling volume appears on the left, providing a clear comparison.

Understanding Volume Data

• Each candlestick represents daily data; however, the volume footprint adds depth by showing specific buying and selling volumes alongside.

• Total volume is calculated by summing both buying and selling volumes for each candlestick, offering insights into market activity.

• The Delta number indicates whether buying or selling volume is greater; a green Delta signifies more buying activity.

Real-world Application of Volume Footprint

• An example using Reddit's RDDT shows significant Deltas over three days, indicating potential price movements based on buying pressure.

• Observing Deltas helps traders gauge market sentiment between buyers and sellers effectively.

Customizing Your Chart Settings

• Users can double-click to access chart settings; customization options include adjusting candlestick visibility and row sizes for better data clarity.

• Default settings use an Auto row size based on Average True Range (ATR), which can be adjusted manually for advanced trading strategies.

Advanced Features of Volume Footprint Charts

• Traders can choose how many rows are displayed based on their preferred tick size per row, enhancing data granularity.

Understanding Volume Footprint Tools

Overview of Buying and Selling Volume

• The default setting displays both buying and selling volumes, allowing users to analyze the Delta, which is the difference between buying and selling volume.

• Users can toggle to view total volume at each price level instead of separating buy and sell volumes.

Data Visualization Features

• The tool provides a data window that shows total buy, total sell, and Delta values alongside visual representations.

• The "apply gradient to background" feature highlights areas with significant volume differences using color gradients for better visibility.

Customization Options

• Users can customize colors for extreme levels in the chart; brighter colors indicate higher volumes.

• Point of Control (POC), marked by white boxes, indicates areas with the highest trading volume. This feature can be toggled on or off.

Creating Alerts and Strategies

• Users are encouraged to design strategies around extreme levels by setting alerts when these levels are reached.

• Summary information about previous discussions can be shown or hidden as needed.

Importance of Value Imbalance

• Value imbalance highlights significant discrepancies in buying versus selling volume at specific levels, which can be visually emphasized.

• Users can adjust settings to highlight imbalances greater than a specified percentage (e.g., 500%).

Stacked Levels Feature

• The stacked level feature identifies zones with multiple imbalances (e.g., three or more), indicating potential support zones.

• Adjusting parameters allows users to find stacked levels based on their trading strategy needs.

Defining Value Area

Volume Footprint Chart Walkthrough

Understanding Volume Distribution

• The discussion highlights that 70% of all trading volume occurred between specific points on the chart, identified as volume area highs and value area lows. This indicates a significant concentration of trading activity within this range.

• The speaker emphasizes the importance of recognizing these areas in live trading, suggesting that understanding where most volume occurs can inform trading strategies and decisions.

Utilizing the Volume Footprint Chart

• A full walkthrough of how to use the volume footprint chart is provided, including practical steps for accessing and integrating it into TradingView charts.

• The video aims to educate viewers on effectively utilizing this tool for better trading outcomes, reinforcing its relevance in day-to-day trading activities.

Conclusion and Educational Intent