Step #4- Market Flow- Volume Indicator Uses

Market Flow - Volume Analysis for Entry Confirmation, Execution and Management

The T3 Market Flow indicator plots visual patterns traders use to refine entries and exits. With a few simple patterns, the trader's entry methodology is greatly enhanced. First, it is recommended that you watch the video for the T3 Market Flow indicator. You will see traders and chat room runners refer to the T3 Market Flow indicator as market flow or MF for short. After the video, this step will cover the best use cases and common patterns in the T3 Market Flow indicator.

Market flow education needs a warning; it is a powerful, helpful, and confidence-building indicator when used properly. It is best if you only use the market flow indicator at Fibonacci and trigger line areas with a high probability of success before executing an entry. Do not try to digest all of the market flow information. The vast majority of the bars will be worthless to your trading plan. Great market flow trading will occur when you focus on 1 line or one to two specific bars.

Only use T3 Market Flow at the "best" spots that you need a signal to enter the market

The market flow is helpful when you take trend trades that need entry confirmation. The "triple-chart" strong trigger line trend trades do not need the market flow signal before entry. When you have a specific pre-trade indicator configuration that requires a signal before an entry to improve the winning odds, the market flow will be of great assistance.

When deciding if it is possible to take one more trade after the market reaches a Fibonacci area or against a divergence pattern that may include multiple divergences, the market flow will give you the answer.

The general rule of thumb for limit order entries on a "non-antenna signal" is HVA high or low +/- # of dots favoring the trade. In the following edge trade short with a yellow paint bar, the entry signal had 3 magenta dots. This would mean you need to place your entry order at the HVA LOW -2 ticks +3 more ticks.

general limit order entry concepts to study

When the market flow signal presents as an antenna bar, you must enter immediately with a market order. This idea is essential if the antenna bar has stranded buyers or sellers. If you hesitate and try to get a better fill, you will normally miss the trade.

Anenna with stranded sellers at Fibonacci- GO NOW!

This trend trade shows an entry after 2 very distinct market flow advantages were present. The first advantage is the presence of a high volume area(HVA) line. The HVA is the magenta line that is produced by the white paint bar plus one bar that closes beyond the white bar. The second is a "double" signal; the antenna bar pattern and a yellow paint bar are true on the same bar. These factors help instill confidence that one more trend trade was possible despite the divergence and Fibonacci present on the 5-1 chart.

Market Flow signal from HVA line for one more trend trade short

When there are multiple-choice support areas for a trend trade plus divergence on the 5-1, let the market flow signal help you define the entry. Also, notice the 8-range high was marked by a yellow paint bar followed immediately by a white paint bar. Waiting for the long signal to be true is best. Waiting for a signal after the small triggers on the 5-1 chart have turned down strongly and have too much momentum into the multiple-choice trend trade area. When there is not a buy signal, there is not a trade. This simple rule will save you many losing trend trades on the 5-1 chart. This may be the time to look for continuation setups after the small trigger lines roll if the edges hold.

Divergence plus a yellow white paint bar combo- wait for a signal
Divergence on 5-1 with yellow white paint bar combination

When a trade is taken after a yellow-white combination and divergence on the 5-1, pay particular attention to the small trigger strength on the 5-1 at the HVA line. This setup calls for exiting half of your position at the HVA 10-15 ticks profit and break-even or better on the remaining position.

management with hva lines is prudent when trading into potential termination conditions

In the following picture, divergence on the 5-1 with a yellow-white paint bar combination during the strong trend. Some experienced traders elect to sell the white paint bar high in anticipation of a down signal. This is best during a strong trend and only when all triggers are helping the trade 100%. If you wait, you will look for entry after the market flow signal. Stops are placed 2 ticks above the market flow arrow signal.

entering after a white paint bar or after the signal is ok in strong trend.

A market flow "trick" is when the strong market produced stranded buyers sell-signal. The market will generally retest the stranded buyer dots, then continue the trend. This is a VERY LOW-RISK trade when you use a limit order 1 tick below the stranded buyers and protective stop 3 ticks above the stranded buyers.

Using stranded buyers as an entry point

At a termination condition that is also confirmed by a yellow-white paint bar confirmation, this creates an opportunity zone. When price trades back toward the yellow HVA "bar area," when a new white paint bar is true, the subsequent arrow signal for a long trade is usually a good first reversal trade attempt. The arrow must be confirmed. The entry for this type of market flow long signal would be a stop entry order. As in most market flow trades, stops are placed on the other side of the signal.

Termination opportunity zone with a market flow signal

The market will sometimes present "Medium Probability" trades. This is when the market flow indicator may help fine-tune your entry. Notice the yellow-white combination from the low; the entry is taken after the market flow signal. The bonus to this short was the HVA magenta line at the high. Notice the 13-2 and 8-range small triggers were down while at the same time, above the crossed down large triggers. The trigger line reading in step #1 covers the normal continuation of the trend look.

yellow-white combo that created entry after signal from HVA line

This same idea is used in this chart with a twist. As noted in the market flow video, a yellow-white paint bar combination will help validate a termination condition. Notice the divergence on the 5-1 and yellow-white bar in succession from the low was also Fibonacci support. John Novak discussed the following picture during the live class. The 5-1 trend trade would not win. The market flow did not generate a short signal; the market went up. You may avoid a losing trade by recognizing the termination condition at the low.

Strong Market Flow validates a bottom

HVA trades with the market flow will be easy to spot now that you are well-versed in Fibonacci and trigger line reading. After termination conditions are present on every chart, you will use the HVA lines for entry areas.

Sometimes the Fibonacci edges are good but not great. You may intuitively know the high or low of the market is near. Many traders wait for a market flow signal from the edge of Fibonacci support or resistance to enter a trade to reverse the market. If you need a signal, wait for a signal.

Waiting for a market flow signal to trade the bottom

The prior picture 5-1 chart was not speeding into the low with strong momentum. Below we will look at a different scenario with a similar HVA low. The faster the market trades into a potential entry zone, the less likely that trade will win. This is referred to as catching a falling knife. In the following example, this is not a favorable market speed to initiate the HVA long trade. The result of the trade was also poor.

do not enter against VERY strong moementum, you will not win often

Another exit case for the market flow is seeing a white paint bar into a pivot stop out. Typically the best exit is immediately after the white bar closes. This exit will be extra effective when other reasons such as a wrong color background or Fibonacci areas.

exit after white paintbar into a pviot stop out with other conditions present

One of the exits we discuss in the management section of the plan is at yellow one-to-one dots on the 5-1 chart. Using your situational awareness, you will see that the one-to-one dots are also at a prior HVA line. Both of those areas are also inside wide down large-trigger lines on the 21-3 chart. When you have layers of reasons at the same place for targets, you will trade with precision and confidence.

Prior HVA lines make great targets! When you take any trade that is first against the prior trend, watch for the prior hva lines as target #1 and reduce risk.

Prior HVA lines make great targets

When studying the "gap" to the large triggers this is a typical use of the HVA LINE. When there is a big gap present, and a trend trade fails, you will see the HVA line combined with one-to-one dots on the 5-1 chart helped fine-tune a better long trade attempt as the gap to the large triggers was closed.

closing the gap to the large triggers at the hva and one to ones

When trading termination conditions, please have favorable triggers and wait for a market flow entry. In the following case, down or weak trigger lines on both charts prior divergence line ups the odds of a top happening. This termination spot, plus the weakness of the triggers on both the 13-2 and the 8-range charts, proved to be a great opportunity to take a short trade.

Trading termination areas and conditions using market flow signals

We strongly suggest no counter-trend trades against strong trigger lines are not taken by new software users. However, since new users will do it regardless of the warning, make sure it looks exactly like this when it happens. Should you lose your first counter-trend trade, stop all counter-trend trading until after the trigger lines have rolled. "One and done" is a phrase you will hear in the chat room when experienced users talk about counter-trend trades.

Counter trend trading against strong triggers is not for new users

Some traders choose to use the T3 Market Flow semi-automated hybrid strategy to facilitate entries when waiting for a signal. The following video teaches you have to activate the Market Flow strategy.