Delta and cumulative delta

Buying minus selling

For every bar, add up the volume bought at the ask and the volume sold at the bid. Subtract the selling from the buying. That is the bar's delta.

A bar with a delta of +1,200 had 1,200 more contracts bought aggressively than sold aggressively. It does not mean there were more buyers than sellers overall - every trade has one of each - only that the buyers were the ones in a hurry.

Cumulative delta

Add each bar's delta to a running total and you get cumulative delta. It reads like a price line for aggression: rising when buyers keep lifting offers, falling when sellers keep hitting bids.

Many traders reset it at each session's open so that each day starts from zero. AXL Charts' delta pane can draw it as a line or as candles, with a zero line.

When delta and price disagree

The most useful thing delta does is disagree with price.

If price makes a new low but cumulative delta does not, sellers are less aggressive than before: the push is tiring. If price makes a new high on weaker delta, buyers are running out of urgency. This is called a delta divergence.

It is a warning, not a signal on its own. Combine it with where price is: at a value area edge, a naked POC or the initial balance.

Delta at a single price

Delta can also be read inside a bar, price by price. A footprint in delta mode shows, at each row, buying minus selling.

Heavy negative delta concentrated at the bottom of a bar that closes off its low is a classic sign of absorption. Heavy positive delta at the top of a bar that closes off its high is the mirror image.