Definition
Order Flow / Tape Reading
Order flow analysis reads live buy and sell orders, the depth, and executed trades to gauge short-term supply and demand.
Tape reading watches the order book (bid-ask depth) and the stream of executed trades to see where aggressive buyers and sellers are acting in real time. Tools like the depth-of-market ladder, footprint charts, and cumulative delta show whether market orders are hitting the bid or lifting the offer.
Indian intraday and F&O scalpers use order flow on liquid Nifty and Bank Nifty contracts and large-cap stocks to time precise entries and spot absorption or exhaustion. It demands fast execution and deep liquidity, so it is mostly used on the most actively traded instruments.
Related terms
- VWAPVWAP (Volume Weighted Average Price) is the average price of a stock over a period, weighted by the volume traded at each price.
- Volume ProfileA volume profile shows how traded volume is distributed across price levels or across the trading day, used to anticipate liquidity and to design execution schedules.
- LiquidityLiquidity is how easily an asset can be bought or sold quickly without significantly moving its price.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.