Delta volume measures the difference between buying and selling pressure in the market. By analyzing delta, traders can see who is in control - buyers or sellers - and identify potential reversals before they show up on price charts. Here is how to use delta volume analysis.
What Is Delta Volume?
Delta is the difference between volume traded at the ask price (buying) and volume traded at the bid price (selling).
- Delta = Ask Volume - Bid Volume
- Positive delta = more aggressive buying
- Negative delta = more aggressive selling
- Zero or low delta = balanced market
Key concept: When traders want to buy immediately, they hit the ask (market buy). When they want to sell immediately, they hit the bid (market sell). Delta measures this aggressive activity.
Types of Delta Analysis
Candle Delta
The net delta for a single candle.
- Shows buying/selling pressure for that period
- Useful for identifying strong moves
- Compare to candle direction for confirmation
Cumulative Delta (CVD)
A running total of delta over time.
- Shows the trend in buying/selling pressure
- Rising CVD = sustained buying pressure
- Falling CVD = sustained selling pressure
- Used to identify divergences
Delta at Price
Delta calculated at each price level.
- Shows which prices have buying or selling dominance
- Helps identify support/resistance
- Used in footprint chart analysis
Delta Calculation Example
In one 5-minute candle:
Volume at Ask: 5,000 contracts
Volume at Bid: 3,500 contracts
Delta = 5,000 - 3,500 = +1,500
This positive delta shows buyers were more aggressive.
Delta Divergences
The most powerful delta signal is divergence from price.
Bullish Delta Divergence
- Price makes a new low
- Delta is less negative (or positive)
- Indicates selling pressure is weakening
- Often precedes a bounce or reversal
Bearish Delta Divergence
- Price makes a new high
- Delta is less positive (or negative)
- Indicates buying pressure is weakening
- Often precedes a pullback or reversal
Bearish Divergence Example
First push high: Price $152, Candle Delta +2,500
Second push high: Price $153, Candle Delta +800
Price made a higher high but delta is much weaker.
This divergence suggests the uptrend is losing steam.
Trading Strategies with Delta
Strategy 1: Delta Confirmation
Use delta to confirm breakouts and trends.
- Bullish breakout with strong positive delta = confirmed
- Bearish breakout with strong negative delta = confirmed
- Breakout with weak or opposite delta = suspect
Strategy 2: Cumulative Delta Trend
Trade in the direction of the CVD trend.
- CVD making higher highs = look for longs
- CVD making lower lows = look for shorts
- CVD flat = range-bound market
Strategy 3: Delta Divergence Reversal
Trade reversals when delta diverges from price.
- Wait for clear divergence pattern
- Enter when price confirms the reversal
- Place stop beyond the divergence extreme
Pro tip: Delta divergences at key support/resistance levels are the highest probability signals. Always combine delta analysis with price structure.
Strategy 4: Absorption Detection
Identify when large orders are absorbing aggression.
- High delta but price not moving = absorption
- Someone is absorbing the aggressive orders
- Often leads to reversal in the opposite direction
Chart Analysis: Delta Patterns
Delta Spike
Unusually high positive or negative delta.
- Shows extreme buying or selling activity
- Can signal exhaustion or strong conviction
- Context determines interpretation
Delta Buildup
Gradually increasing delta in one direction.
- Shows consistent pressure building
- Often precedes breakout moves
- Trade the breakout in the delta direction
Delta Reversal
Sharp change from positive to negative delta (or vice versa).
- Shows sudden shift in control
- Often marks short-term tops or bottoms
- Look for follow-through
Delta with Other Indicators
Delta + Volume
- High volume with high delta = strong directional conviction
- High volume with low delta = balanced market, possible reversal
- Low volume with high delta = less reliable signal
Delta + Price Action
- Green candle with positive delta = confirmed buying
- Green candle with negative delta = suspect rally
- Red candle with positive delta = buyers stepping in
Delta + Support/Resistance
- Positive delta at support = buyers defending
- Negative delta at resistance = sellers defending
- Watch delta reaction at key levels
Delta at Support Example
Price drops to $100 support level.
First test: Delta -500, price bounces
Second test: Delta +200, price bounces strongly
The shift from negative to positive delta at support
shows buyers are now defending the level aggressively.
Cumulative Delta Charts
CVD is often displayed as a separate indicator below price:
- Rising CVD line = net buying over time
- Falling CVD line = net selling over time
- CVD trendlines can identify regime changes
- CVD divergences are powerful reversal signals
Common Delta Mistakes
- Ignoring context: Delta means different things in trends vs. ranges
- Trading delta alone: Always combine with price structure
- Overreacting to single candles: Look at delta over multiple candles
- Wrong timeframe: Match delta timeframe to your trading style
Best Practices for Delta Analysis
- Start by observing delta patterns without trading
- Focus on delta divergences first - they're the clearest signals
- Use delta to confirm entries, not as the sole trigger
- Pay attention to delta at key levels
- Compare candle delta to cumulative delta
- Track which delta patterns work for your instruments
Analyze Your Delta-Based Trades
Pro Trader Dashboard helps you track performance of trades using delta analysis.
Summary
Delta volume measures the battle between buyers and sellers by comparing volume at the bid vs. the ask. Positive delta shows buying pressure, negative delta shows selling pressure. The most powerful signals come from delta divergences where price and delta disagree. Use cumulative delta to track the ongoing trend in order flow. Always combine delta analysis with price action and key levels for the best results.
Learn more: Footprint Charts Guide and Volume Analysis.