The Imbalance Tracker tracks the order book imbalance of every liquid instrument. The indicator shows historically how imbalances developed over time, and it will send an alert at the moment when a predefined imbalance threshold is reached. It also alerts when the zero line of the imbalance in the sub-chart is crossed from one side to the other.
All markets seek equilibrium, or balance, of buyers and sellers. When an imbalance is presented, the price has a predisposition to move toward the more heavily weighted side of the order book. Observing historical inequalities will assist a trader in determining the market’s current and future direction. The zero-cross signals show when the market shifts in the general direction from one side to the other. It also indicates congestion zones where markets are indecisive and shouldn’t be traded, and when the congestion is dissolved.
The Orderbook Imbalance is the difference between the number of quotes on Bid and Ask divided by its sum. It shows which side of the orderbook has more quotes accumulated. Based on the theory that liquidity attracts prices, the basic strategy is to look for these imbalances over time. Important to note: In our trading experience and opinion, we do NOT look at the current single point of imbalance. The current imbalance can be very volatile. Never trade based on that information point alone. We always look at historical development to see when a market has changed interest to trade from one direction into another.
The Imbalance Tracker shows us the imbalance line in the sub chart where we can track the historical development over time and alerts the user when a certain threshold of imbalance is reached.
Settings window for Imbalance Tracker
Imbalance LineThe Imbalance Line is the line in the sub-chart that shows historical development and the current value of the Orderbook Imbalance.ColorsChoose the colors of the Imbalance Line and the Zero Line in the sub-chart by clicking on the colors (Default: Light Red for Ask Imbalance, Light Green for Bid Imbalance, White for Zero Line).DOM Level from and toImbalances are calculated by looking at a defined price range within the orderbook using the current traded price level as a reference point. This range needs to be adjusted by the user based on the traded instrument and its specific current market situation. In this example, the imbalance calculation is based on a price range (DOM Level from/to) of 1 tick to 60 ticks from the current price level, both on the Bid and Ask side of the orderbook.
Imbalance AlertsImbalance Alerts can be defined so that the user gets a signal when a certain threshold of imbalance is reached. These alerts are shown on the chart. Default: Small colored triangles below or above-traded price, with the value of imbalance equal to or exceeding the value of the user-defined parameters.Trigger (%)Define the trigger value (value of imbalance) at which the signal is shown on the chart. In this example, a signal is displayed when either the Bid Imbalance is 20% higher than the Ask Imbalance (Green triangle) or when the Ask Imbalance is 20% higher than the Bid Imbalance (Red triangle).Signal DesignBy clicking the “Edit” Button, you can customize the signal shown on the chart by defining color, symbol, size, position, and the display option for prices.