Using the Footprint Chart to Analyze Forex Pairs
The Footprint is normally used to track “volume at price” and display how volume is entering the market and where the order flow is going. With spot forex (foreign exchange) pairs we use “trades at price” instead of volume and build Footprint® charts that let us see inside the chart and track trading activity. This works similar to using volume but instead uses trades at the bid and ask and creates Footprints®.
Below is a sampling of various pairs and different Footprint® chart types. Only Footprints® allow traders to “see inside the chart” and see what is going one before others have a clue.
To setup the Footprint chart to plot “trades at price” right click on a Footprint® and choose Modify FP… and set the Data parameter to be Trades instead of Volume.
Clicking OK will change the Footprint® to plot trades instead of volume.
Clicking the Style menu provides the different Footprint® styles to choose between.
2 Forex Trade Footprint® Setups
It is very important to note that the Footprint® is a chart, not a trading system. There are literally hundreds of unique patterns that traders have identified and give them an edge in the market.
Here are a 2 worth noting, but we always encourage traders to look at the charts with fresh eyes and see what makes the most sense to you and your style of trading.
Progression of Most Traded Price
One of the best ways to confirm a trend is by seeing the most traded price migrate to higher and higher prices (up trend) or lower and lower prices (down trend). Because the Footprint® lets you see inside the bar, the information is at your fingertips. No pun intended. ?
In the chart below, the cyan (aqua) Footprint® within each bar highlights the most traded price. It shows which price had the most activity.
To plot the most traded price a different color right click a Footprint® and choose Modify FP… and click the box in the follow the windows below.
Here a very similar chart but using a single color for the Footprints®. Sometimes it is easier to see this way.
Buy/Sell Cluster Exhaustion
This particular pattern is only visible using an imbalance Footprint®. We have noticed it is quite common to get 2, 3, or more back to back imbalance Footprints® which often occur at the end of a bar.
Specifically in spot forex markets, we have noticed this pattern to represent near term exhaustion and a counter move, aka pullback, to happen in the very near term. We are not saying this is a long term reversal pattern, however it could turn out to be the case. It is a unique pattern only visible when seeing inside the chart with Footprints® and can be used to initiate a trade or take profits.
This pattern can be used with additional technical analysis as a way to qualify entries and exits.
Here is a video describing this setup in more detail.