[Soultrader]

Hello nsitt,

The most interesting part about the following days after the major decline is the continuous lower value placement. In my opinion we are still headed south.

Okay.. volume delta is a tool that plots the number of contracts at the bid vs the number of contracts at the ask. Let's say you were long... now you want to exit for a profit. Would you use a market order or a limit order? In most cases you would use a market order and hit the bid. This gets you out guaranteed.

Now if you were short and had to exit would you use a market or limit? Market would be the better decision here and you would hit the ask. Therefore, more contracts at the bid means selling. More contracts at the ask means buying. (shorts need to buy to cover)

The volume delta takes these two set of numbers and plots whatever the greater on top. So a volume bar with more selling would plot red on top of the green and vice versa. I have attached a snapshot.