Cumulative Delta is an indicator used in Forex trading to assess and analyze changes in the volume of buy and sell orders in the market. This indicator helps traders determine where the main forces are in the market (bulls or bears) by tracking the difference between the number of purchases and sales.
Delta is the difference between the buy volume (ask) and the sell volume (bid) over a specific period of time.
Cumulative Delta is the sum of all deltas over a specified time frame. The indicator accumulates the difference between purchases and sales, creating a "curve" or chart that displays changes in market sentiment.
When the cumulative delta rises, it may indicate a dominance of purchases (bulls) in the market, while a drop indicates a dominance of sales (bears). Traders use this tool to analyze market activity, identify potential entry and exit points, and assess the strength of trends.
Cumulative Delta can be useful when combined with other indicators, such as volume or market profile, for a more accurate understanding of current market sentiment and potential changes.