There are two analysis types available in Insider Bars:
- Raw Data – Traditional volume at price analysis as seen in other order flow programs
- Auction Point Data – An easy-to-interpret display style exclusive to Insider Bars
Raw vs. Auction Point
Insider Bars offers a new style of price x volume analysis called auction point analysis. Once you get to know it, you will find that is much easier to interpret than that the traditional methods you have seen in other platforms. However, it is a little confusing at first. Let’s look at an example.
The blue and red shading represents prices where volume is skewed toward buyer and sellers, respectively. Note that there is only one column of numbers per bar, not two as with traditional order flow. Yet you have all the important information.
So let’s see how this works. Auction point analysis is a more natural way to display and interpret market activity. Typically, order flow analysis has compared upticks and downticks (or bid and ask) at the same price. But if you think about it, this is not how the real world works. In an actual auction, the market bounces between, say 2081.00 (bid or downtick) and 2081.25 (ask or uptick).
Order flow analysis is about analyzing auctions, and if you compare bids vs. asks or upticks vs. downticks at the same price, you are comparing apples and oranges.
The chart below shows three different views of the same price bar:
A Total volume traded at each price of the bar
B Traditional display of uptick vs. downtick (or at bid vs. at ask) data
C Auction point analysis in Insider Bars
Traditional order flow analysis (B) either has you 1) compare the trades at bid on the left side of the bar trades at ask at the same price on the right (which is just plain wrong), or 2) compare trades at bid and at ask diagonally so that they go together (which is needlessly difficult). Interpreting any fast moving numbers is not something at which we humans excel. Our brains’ operating systems process information in shapes and patterns. Numbers require translation, and slow our reaction times.
Auction point analysis sorts trades as they actually occur – as uptick/downtick or at bid/at ask pairs – for easier interpretation.
Insider Bars offers both raw data and auction point options. For calculating statistics like VWAP, value area and VPOC, raw data is all you need. And it is very helpful when first starting out, to understand how Insider Bars works. But most people eventually gravitate toward the easier interpretation of auction point.
Note: Blog posts like this one offer basic information. For more details, see online help.