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Here’s a full-depth article based on the transcript you provided. It explains the concept of Delta Volume Flow and how traders can use low-volume profiles on higher timeframes to identify high-probability trade setups.
In future trading, market participants will often look for more advanced tools to understand institutional activity, price movement behavior, and volume participation. One such advanced tool is Delta Volume Flow, paired with a volume profile analysis to identify low-volume zones on higher timeframes. This approach can give you early warnings of potential explosive moves and help you pinpoint key areas of support and resistance with more accuracy than traditional technical indicators.
In this article, we’ll use the British Pound Futures (6B) as a case study and explain how to apply this technique step-by-step.
Why Use Futures Instead of CFDs?
Many traders operate in the CFD market, which unfortunately doesn’t provide true volume data. This means you cannot accurately gauge how much buying or selling occurred at a specific price level. On the other hand, futures contracts, like 6B for the British Pound, are centralized. This means they provide actual traded volume at every price level, allowing for precise volume profile and delta flow analysis.
Key point: Futures give you real volume, while CFDs do not.
What Is Delta Volume Flow?
Delta Volume Flow is the difference between the volume traded on the ask (buyers) and the volume traded on the bid (sellers). This allows you to see whether buyers or sellers are more aggressive at a specific price level.
- Positive Delta: Buyers are in control (more aggressive buying).
- Negative Delta: Sellers are dominant (more aggressive selling).
When combined with the Volume Profile, Delta Flow can help you identify:
- Where institutional players are stepping in.
- Where market imbalance happens.
- Areas of price acceptance vs. price rejection.
Step-by-Step Guide: Analyzing Delta Flow with Volume Profiles
Step 1: Choose the Right Timeframe
To understand where the market accepted or rejected prices, look at a high timeframe, such as the daily chart. In the case study, more than one year of data (36 daily candles) was used to construct the Volume Profile.
Step 2: Identify the High-Volume Node (HVN)
On the Volume Profile, the Highest Volume Node (HVN) represents the price where the most contracts were traded during the entire year. In our example:
- Price level: Around 1.2700
- Volume: Over 700,000 contracts
This area becomes a magnet for price, and is often used by institutions to accumulate or distribute large positions. It’s a great target level when planning trades.
Trade Tip: Use HVNs as profit targets or areas where you can expect consolidation.
Step 3: Focus on Low-Volume Profile Areas (LVNs)
This is where the power of the strategy comes in. Low Volume Nodes (LVNs) are price zones where very few transactions occurred. This typically means the price moved very quickly through that level — either up or down — with minimal resistance.
Why is that important?
Because when price returns to these LVNs, there is a high probability it will move quickly again, due to the lack of market interest or lack of resting orders in that zone.
Example from the Chart:
- LVN at ~1.2600
- Volume: As low as 160–180 contracts
- Reaction: When price entered this low-volume area, it moved over 100 pips in a single day with no choppiness.
These fast moves are often referred to as “volume voids” and are ideal for breakout traders.
Step 4: Marking the LVN Zones
To make use of these areas, simply mark them with horizontal lines on your chart. These act as:
- Potential breakout zones
- Key support/resistance levels
Watch for the price to enter or break these zones. If the price falls below an LVN support, it often continues with momentum due to the lack of counter orders. The same applies to price breaking above an LVN resistance.
Key Observations
- LVNs lead to fast price movement.
- HVNs often lead to consolidation.
- The combination of delta flow and volume profile gives you a view of trader aggression AND market structure.
Historical Context:
This technique is not new. Professional traders from hedge funds and trading pits decades ago used similar logic without screens, only using order books and paper. They manually tracked price levels that showed significant or little interest and made decisions based on weekly and monthly observations.
Final Thoughts
If you want to trade like the pros and understand how the market moves, you need to go beyond basic indicators and candles. Volume Profile and Delta Flow—especially when applied on high timeframes—offer a data-driven edge. They help you avoid choppy zones and position yourself for large, high-probability moves.
Pro Tips for Implementation
- Use futures data for accuracy—6B for GBP/USD.
- Look at at least one year of data to identify true HVNs and LVNs.
- Use delta flow indicators to assess whether buyers or sellers dominate specific zones.
- Wait for the price to approach an LVN, and prepare for a potential explosive move.
- Combine this with fundamental analysis to validate directional bias.
Conclusion
Delta Volume Flow and Volume Profile techniques are powerful tools that can reveal institutional footprints and uncover market inefficiencies. By identifying low-volume zones on higher timeframes and observing how price interacts with them, traders can significantly improve their entry timing, risk-reward ratio, and market context understanding.
He is an expert in financial niche, long-term trading, and weekly technical levels.
The primary field of Igor's research is the application of machine learning in algorithmic trading.
Education: Computer Engineering and Ph.D. in machine learning.
Igor regularly publishes trading-related videos on the Fxigor Youtube channel.
To contact Igor write on:
igor@forex.in.rs
