Delta trading: Mastering market moves and analysis

In the recent NinjaTrader Ecosystem webinar, “Mastering Market Moves With Delta Analysis,” Calvin Harris of Success Futures explored the role of delta analysis in day trading futures. Harris is passionate about transforming traders into top achievers by mastering market moves with delta analysis.

What is delta in trading?

• Delta is the net difference between aggressive buy orders (initiated by the buyer hitting the ask) and aggressive sell orders (initiated by the seller hitting the bid).
• Positive delta means there were more aggressive buyers than sellers (buyers lifted more asks).
• Negative delta means there were more aggressive sellers than buyers (sellers hit more bids).

To put this in a mathematical formula, if you have 200 buy orders and 150 sell orders, then the delta number would be +50.

Unlocking the secrets to spotting market weakness with delta trading

One of the benefits of using delta to analyze order flow is determining where the market is weak and where it’s being exhausted. Harris identified three exhaustion clues:

• Cumulative delta
• Delta divergence
• Delta transition

If you use any of these three separately or together, they can provide clues as to whether a move has become exhausted or weakened, showing you where to make a trade in the opposite direction to avoid the “falling knife.”

Delta provides an additional layer of analysis on top of volume information. Volume by itself is not enough intel to make informed trading decisions. Using delta analysis is akin to peeling back layers of an onion so you can see the underlying behavior of the markets.

Harris goes in depth on delta trading and options in the full presentation. Watch a sample clip here:

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