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Footprint and cluster analysis: what is it and how does it work?

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By Yuriy Bishko Updated December 19, 2022
BikoTrading Academy

Volume analysis in the cryptocurrency market is one of the key skills that will help to make money on scalping trading. For this purpose, cluster analysis was created, based on the Footprint and DOM indicators. Today we will tell you what Footprint and DOM are and how to use them, compare popular chart types, and learn how to determine when whales (big players) buy and sell.

KEY ISSUES: 

  • Types of charts and their comparison
  • What is Footprint and cluster analysis?
  • Instructions on how to use the Footprint indicator
  • Examples of trades using cluster analysis
  • Opening Footprint and DOM charts: ATAS platform

Types of cryptocurrency charts

type of charts

In total, there are 4 main types of charts: 

  • Line chart;
  • Bar chart;
  • Candlestick chart;
  • Cluster chart.

The linear type of chart is the simplest, presented in the form of an ordinary straight line, which reflects only the dynamics of changes in the quotes of a particular cryptocurrency. As a rule, this type of chart is used when several indicators are used at once, which simplifies the perception of information.

The bar chart is a more advanced type of chart that contains much more information about the price fluctuations of an asset. The lower left wick signals the opening price of the bar, the upper right wick – the closing price, and the part of the bar between them – the fluctuations of quotes during a given period (minute, hour, day, etc.). The maximum and minimum coin prices in the bar are its lowest and highest points.

cluster analysis

The candlestick chart is the most popular, although the bar is a candle, but without a color-filled body. Here, the price of the maximum and minimum value of the cryptocurrency for the period is the shadow of the candle, and the opening and closing price is its body.

The cluster chart and footprint are fundamentally different. Cluster analysis, as you know, is an analysis of volumes in the market, and Footprint is an indicator that shows past, already executed trades of other traders, as well as their volumes and the price at which assets were bought/sold. The footprint is the main indicator used in cluster analysis. It looks like this:

footprint trading crypto

In addition to the Footprint indicator, there is another indicator that can provide information about the current, not yet executed orders, and it is the DOM, also known as the Order Book or the Market Depth. Combining these two indicators, you will get the most complete picture of the market situation.

The question arises: how exactly will this help you earn money? The mechanics is very simple:

  • Analyze the Footprint and DOM chart and find large trades that can affect the quotes (for example, 10 thousand BTC, 1 million DOGE, etc.).
  • Determine whether it is a sell or buy order.
    -A large buy order will provoke an increase in the price of the cryptocurrency.
    -A large sell order will result in a fall in the pair's quotes.
  • Wait and watch for a retest of the volume.
  • Open a trade that repeats the actions of a large player (buy or sell).
  • Close the order upon receipt of profit.
 

How to detect a large volume in trading: examples of trades

First, let's open the Footprint chart for the ADA/USDT pair:

cluster trading crypto

In one of these candlesticks, we can see voluminous ADA buy orders of 1.05 million coins and 2.78 million coins. This is the main difference of footprint, because the candlestick chart or bars will not provide you with such clear information about the executed orders. Just look at the bar chart of the pair at the very moment when we found the high-volume trades:

bitcoin footprint trading

As you can see, from the candlestick, line and bar charts, we would not have guessed about the appearance of large players on the market, who influenced the quotes by their actions. Now it is time to return to the footprint and wait until the volume is worked out. A little later, we open a regular candlestick chart and notice how steeply the price of the ADA/USDT pair rebounded from these two trades with a total volume of almost 4 million coins.

However, the story didn't end there: after we closed the trade with a profit of $129.94, the ADA/USDT pair once again tested this volume and increased in price, reaching $0.48.

bitcoin footprint and DOM

After reaching such a value, this volume was the result of a sharp drop in the pair's quotes down to $0.425. This situation is a bright example of how a voluminous trade at any moment of trading can change the situation on the market, but without the analysis of the Footprint and DOM indicators, you would not be able to understand what is the real reason for such a significant price fluctuation.

bitcoin scalping trading

A more detailed overview of the strategies for using indicators and cluster analysis is available on our YouTube channel:

WATCH NOW: DOM and Footprint strategy

Where and how to view traders' orders?

How to install Footprint? Yes, this question is very common, because neither Binance, nor TradingView, nor other well-known platforms and exchanges contain this indicator. To analyze Footprint and DOM, you will need a special program that accumulates data from the largest crypto exchanges in the world, such as Binance, Bybit, Bitfinex, Bitmex, Bittrex, Bitget and others. This is ATAS software – a completely free utility that does not require the purchase of licenses or subscriptions. The software interface can be easily customized for yourself, and it looks something like this:

ATAS cluster trading

ATAS is a high-speed connection to leading exchanges, 14 chart types, more than 400 options for displaying cluster indicators, history of your settings and more than 240 indicators for volume analysis.

DOWNLOAD ATAS WITH FOOTPRINT AND DOM FOR FREE

Using the link, you will receive custom indicators from our team as a gift! 

Conclusion

Cluster analysis is one of the best scalping methods that allows you to trace the large trades of big players that have a strong impact on the market. The main indicators used in the analysis are Footprint and DOM. 

Today we have described the basic strategy of such trading, and to learn more about indicators and learn how to use them like a pro, we recommend you to sign up for our mini course, where we will analyze from A to Z how to analyze cluster charts and open profitable trades.

We wish you good luck and big profits!

 

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