Everything so far has read completed price history. Order flow is the attempt to read intentions as they form — the resting orders in the book and the sequence of trades hitting it.
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What is genuinely readable
- Absorption. Price repeatedly tests a level, sizeable sell orders keep arriving, and price does not fall. Somebody is buying everything offered. This is the most useful single read available from the tape.
- Thinness. Small quantities across all five levels mean your own order will move the price. This is a practical execution fact, not a prediction.
- Spread behaviour. A spread widening sharply usually means market makers have stepped back — often just before or during a volatile move.
- Trade sequence. A rapid run of trades at the ask, then a pause, then continuation, is more informative than any single print.
What the book does not tell you
| What you see | What it might be |
|---|---|
| A very large resting bid | Genuine demand — or an order placed to be seen, and cancelled the moment price approaches |
| Small quantities at every level | A thin book — or iceberg orders, which display a fraction of their true size |
| Sudden disappearance of depth | Real withdrawal ahead of news — or routine algorithmic requoting |
| Steady buying at the ask | Accumulation — or an execution algorithm slicing one large parent order |
The honest assessment
Worth using it for
- Deciding whether to use a market or limit order right now.
- Judging whether a stock is liquid enough for your position size.
- Noticing absorption at a level you already identified for other reasons.
- Understanding why your fill was worse than the quoted price.
Not worth using it for
- Predicting direction from visible depth alone.
- Competing with algorithms on speed — a contest you cannot win.
- Any decision on a swing or positional timeframe.
- Justifying a trade your actual system did not generate.
Simple bhasha mein
Counter ke peeche ka nazara
Dukaan ke bahar se sirf rate dikhta hai. Counter ke peeche khade ho toh dikhta hai ki kaun bhaav-taav kar raha hai aur kaun chupchaap utha ke le ja raha hai. Order flow wahi peeche ka nazara hai — kaun aggressive hai, kaun intezaar kar raha hai. Bahut fast hai, aur retail ke liye aksar zaroori nahi.
What to remember
- Absorption — heavy volume at a level with no price progress — is the most useful read.
- Resting orders are intentions and can vanish in microseconds.
- Iceberg orders mean visible size is not true size.
- Retail depth feeds are a summary; certainty is not available.
- Use the book for execution decisions, not for direction.
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Common questions
Short, direct answers to what people ask about this topic.
- absorption meaning in order flow
- Absorption is heavy volume transacting at a price level with no price progress — someone is quietly buying everything being offered, or selling into everything being bid. It is the most useful single read available from the trade tape, and it is the same idea as Wyckoff accumulation observed at a much shorter timescale. The classic pattern is price testing a level repeatedly, sizeable sell orders arriving each time, and price refusing to fall.
- what is an iceberg order
- An iceberg order is a large order that displays only a fraction of its true quantity in the depth book, releasing the rest in slices as each visible portion is filled. For anyone reading the tape it matters because visible size is not true size — a book that looks thin can be concealing substantial resting interest, and a level that keeps refilling may be one order rather than many buyers.
- how many levels of market depth do Indian brokers show
- Retail trading platforms in India typically display five levels of depth on each side of the book, with a slight delay. Some brokers make a deeper feed available as a separate product, but the standard retail view is five levels, with no information about the size distribution behind each quote or who placed what. Professional order-flow desks work from full-depth feeds with microsecond timestamps.
- orders resting in the depth book are best described as
- Intentions, not commitments. They can be cancelled in microseconds and frequently are, so a large visible bid may be genuine demand or may have been placed specifically to be seen and then pulled as price approaches it. That is why treating visible depth as a reliable measure of demand is one of the ways retail traders get into trouble.
- is the order book actually useful for a retail trader in India
- It is useful for execution rather than for prediction. Checking depth before you send an order tells you whether the stock is liquid enough for your position size and whether a market or a limit order is sensible, and it explains why a fill came in worse than the quoted price. Reading direction out of visible depth, or trying to compete with algorithms on speed, is where the value stops and the trouble starts.