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Glossary
Plain definitions of the order flow words used in this guide: limit and market orders, maker and taker, absorption, exhaustion, imbalance, delta, liquidity, value area and the rest.
Updated
Every word below is used somewhere in this guide. The list is short on purpose: these are the terms you need to read a chart, not a full dictionary of trading.
Absorption
Market orders keep hitting a price, but price does not move. Someone is filling all of them with limit orders and is not stepping away. This often marks a level worth watching. See how to read a footprint chart.
Acceptance
Price trades inside an area and stays there. Volume builds up. That means both sides agree with these prices for now. See volume profile.
Aggressor
The side of a trade that sent the market order, because it wanted to trade now. A buyer in a hurry pays the price a seller’s limit order is asking; a seller in a hurry accepts the price a buyer’s limit order is bidding. Order flow counts volume by aggressor, so “buying” always means market buying. See delta.
Ask
The lowest price a limit order to sell is waiting at right now. A market order to buy pays the ask.
Auction
The market as a process, not a picture. Price moves up to look for sellers and down to look for buyers. Where it finds enough of them, trading slows down and volume builds up. See what order flow is.
Bid
The highest price a limit order to buy is waiting at right now. A market order to sell fills at the bid.
Big trade
A large market-order aggression counted as one event, even when the exchange split it into many prints. The chart draws it as a bubble at the price where it happened. See whale trades.
Cumulative delta
The running total of delta over many bars, drawn as a line or as candles. It shows the direction of pressure over time, not the size of one bar. Short name: CVD. See cumulative delta.
Delta
Market buy volume minus market sell volume in one bar or at one price. Positive delta means buyers were in a hurry. See delta and the aggressor.
Divergence
Price reaches a new high or low, but the cumulative delta does not reach a new one with it. Less market buying or selling paid for this move than for the last one. See cumulative delta.
Exhaustion
Market orders keep coming, but they get smaller and price stops going further. The side that was pushing is running out of participants. See how to read a footprint chart.
Flow against price
How much market buying or selling paid for the move price made. A rise with little buying behind it reads below zero; a rise with heavy buying reads well above it. See cumulative delta.
Footprint
A chart that shows what traded inside each bar at each price, instead of only the open, high, low and close. Also called a cluster chart. See how to read a footprint chart.
Iceberg order
A large limit order that shows only a small part of its size. Each time the visible part trades, it fills up again, so the book looks thin at that price while the trades keep coming.
Imbalance
One price level where one side traded much more than the other — in this terminal, at least three times more. It shows where the pressure was one-sided. See how to read a footprint chart.
Liquidity
The limit orders that are waiting to be traded with. Deep liquidity means a large market order can be filled without moving price much. See the live order book.
Liquidity heatmap
A layer behind the candles that paints the waiting limit orders over time: the brighter the colour, the more size was resting at that price. A wall shows up as a bright horizontal line. See liquidity heatmap.
Limit order
An order with a price that waits in the order book until someone trades with it, or until it is cancelled. The trader who sends it is the maker.
Maker
A trader whose limit order was waiting in the book when the trade happened. The maker is the patient side of a trade; the taker is the side in a hurry.
Market order
An order with no price: it trades at once, at the best prices already waiting in the book. If the best price cannot fill all of it, the rest trades at the next price, and that is how price moves. The trader who sends it is the taker.
Naked point of control
A point of control that price has not traded at again since its period ended. It stays on the chart as an open level traders keep watching. See volume profile.
Order book
The list of all waiting limit orders to buy and to sell, by price. Also called market depth, or DOM. See the live order book.
Point of control
The price with the most traded volume inside a range you choose. Short name: POC. See volume profile.
One trade record published by the exchange. A single large order can arrive as many prints. See whale trades.
Profile shape
The outline of a Volume Profile, named by a letter. D: volume in the middle, the market is in balance. P: a bulge at the top. b: a bulge at the bottom. B: two bulges with a thin gap between them. See volume profile.
Rejection
Price reaches an area, trades there for a short time and leaves quickly. Volume stays low. That means these prices were not accepted. See volume profile.
Resting order
A limit order sitting in the order book and waiting for someone to trade with it. It is a plan, not a promise: it can be cancelled at any moment.
Spoofing
Placing large orders with no intention of letting them trade, to make other traders think there is real interest. The orders are cancelled before price reaches them. On many regulated markets it is illegal; on crypto exchanges you simply have to expect it. See liquidity heatmap.
Spread
The gap between the best bid and the best ask. A market order crosses it to trade immediately, which is what makes its sender the aggressor.
Stacked imbalance
Several imbalances on the same side, one price level after another, inside one bar. One side bought or sold straight through a run of prices without meeting much resistance. See stacked imbalance.
Standard deviation
How far a value is from its usual size, in units of its usual spread. About two thirds of values fall within one. The symbol is σ: “two sigma” means unusually far from normal.
Swing high and swing low
A swing high is a peak: a bar whose high is above the bars on both sides of it. A swing low is the same turned over, a bar whose low is below its neighbours. Traders read them as turning points.
Taker
A trader who sends a market order and takes a price that is already in the book. The taker is the aggressor of that trade.
Tape
The stream of trades as they happen, one after another. “Reading the tape” means following that stream instead of waiting for a bar to close.
Unfinished auction
A bar’s high or low where both sides still traded at the extreme price level. Trading there stopped because the bar ended, not because one side ran out. See unfinished auction.
Value area
The part of a range that holds most of the traded volume — by default 68 % of it. Its edges are called VAH at the top and VAL at the bottom. See volume profile.
Volume Profile
A histogram of traded volume by price over a range you choose. The widest rows are where most trading happened. It gives the point of control and the value area. See volume profile.
Wall
An unusually large resting order at one price. It can stop price, or it can disappear before price arrives. See the live order book.