How to Read Order Flow: A Beginner's Guide
Order flow shows you who is buying and selling — not just how much the price moved. This guide explains it in plain language and shows how to read a daily flow report.
What is order flow?
Group a stock's trades by size: large orders usually come from institutions, small orders from retail. Net them out and you get the day's net inflow / outflow — which side is in control. Order flow is data, not a prediction.
Order flow vs dark pool vs short volume
- Order flow — lit-market activity split by order size (institutional vs retail).
- Dark pool — off-exchange block trades (ATS / TRF) away from the public book.
- Short volume ratio — the share of off-exchange volume that is short.
The key order-flow metrics
- Net inflow / outflow — net buying or net selling for the day?
- Institutional vs retail split — large + block vs medium + small orders.
- Purity — the institutional share of net flow, isolating smart money from retail noise.
Example (data only): "XYZ closed +3.2%. Institutional net buy +$12.0M, purity +$9.0M, dark pool net −$2.1M, SVR 21%." Reads as institutional net buying with low short pressure, offset by some dark-pool selling — a mixed picture needing more days.
How to read a report (4 steps)
- Direction first: net inflow or outflow?
- Then who: institutions or retail?
- Cross-check + price context: do the dark pool and SVR agree? Up vs down changes the meaning.
See it in a daily report
EquityMosaic turns order flow, dark pool, short volume, options P/C and market sentiment into one clean per-stock report, delivered daily.
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This article is for educational and informational purposes only. It presents market data and does not constitute investment advice.