Using the delta momentum indicator in your futures trading

The term “delta” may be most closely associated with academia, but in futures trading, delta is the difference between the market buys and sells at each price in each candle/bar or over a period (known as “cumulative delta”).

Futures traders have used the delta momentum indicator since delta was first used in trading more than 20 years ago. It was then that the footprint chart—a type of candlestick chart that offers trade volume, order flow, and other supplemental data to price—was developed and first used in futures trading.

What is a delta momentum indicator?

A delta momentum indicator shows the total delta value for each candle. When the delta momentum indicator reflects price behavior, this reinforces the current trend as valid. When the delta momentum indicator moves in opposition to price (known as divergence), the possibility of a reversal in price exists.

Delta momentum indicators can be both positive and negative, denoted by the color of the bars:

• Green bars: Indicate positive order flow, resulting from buyers being more aggressive in a candle
• Red bars: Indicate negative order flow, resulting from sellers being more aggressive in a candle

What are momentum indicators?

Momentum indicators are technical analysis tools in futures trading that can help determine the strength or weakness of the trend in the price of a specific stock. Delta is a specific type of momentum indicator.

Momentum indicators can be more relevant during rising markets when compared to falling markets due to bull markets typically outlasting bear markets. They can tell futures traders the strength or weakness in the issue’s price.

In addition to delta, the RSI or relative strength index and MACD or moving average convergence divergence are other popular momentum indicators to consider when futures trading.

Examples of delta momentum indicators

The cumulative delta indicator for NinjaTrader 8 from ninZa.co monitors the accumulation of bar-by-bar volume delta throughout a trading day. Its formula equals market trends from adding analyses of cumulative delta to the moving median of cumulative delta to price action. Learn more about it here.

Additionally, the indicator spotlight from LizardIndicators is a free alternative for futures traders, offering a monthly download available from the NinjaTrader Ecosystem. Learn more here.

To learn more about the delta momentum indicator, and for full access to a growing library of other indicators plus market analyzer and SuperDOM add-ons and more, visit the NinjaTrader Ecosystem’s trading apps and services section.

How to Add 3rd Party App to NinjaTrader

To import your 3rd party app or add-on to NinjaTrader, simply follow these 3 steps: