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What is Market Generated Information in Order Flow Trading?

• By OrderflowHQ Team
What is Market Generated Information in Order Flow Trading?

Market generated information (MGI) is the foundation of order flow trading. Unlike technical indicators that lag or predict, MGI shows you what’s actually happening in the market right now - the real-time data that reveals true market dynamics.

What is Market Generated Information?

Market generated information is real-time data that comes directly from the market itself:

  • Price: Current and historical prices
  • Volume: How much is being traded
  • Time: When trades occur
  • Order flow: Who’s buying and selling
  • Market depth: Where orders are waiting

Key Principle

MGI is factual data from the market, not derived calculations or predictions. It shows what’s happening, not what might happen.

Market Generated Information vs Indicators

Market Generated Information

Characteristics:

  • Real-time data
  • Factual information
  • Direct from market
  • No lag
  • Shows actual activity

Examples:

  • Current price
  • Volume at each price
  • Bid/ask spread
  • Order book depth
  • Time and Sales data

Technical Indicators

Characteristics:

  • Calculated from price/volume
  • Derived information
  • Lagging or predictive
  • Mathematical formulas
  • Interpretations of data

Examples:

  • Moving averages
  • RSI, MACD
  • Bollinger Bands
  • Stochastic
  • Fibonacci retracements

Types of Market Generated Information

1. Price Information

What it shows:

  • Current bid and ask
  • Last traded price
  • High and low of period
  • Opening and closing prices

Why it matters:

  • Shows exact price levels
  • Reveals support/resistance
  • Indicates price acceptance/rejection

2. Volume Information

What it shows:

  • Volume at each price level
  • Total volume for period
  • Volume distribution
  • Volume at bid vs ask

Why it matters:

  • Shows where interest is
  • Reveals conviction
  • Indicates support/resistance strength

3. Time Information

What it shows:

  • When trades occur
  • Speed of trading
  • Time of day patterns
  • Duration of moves

Why it matters:

  • Shows urgency
  • Reveals timing patterns
  • Indicates market conditions

4. Order Flow Information

What it shows:

  • Who’s buying (at ask)
  • Who’s selling (at bid)
  • Size of orders
  • Speed of execution

Why it matters:

  • Shows initiative
  • Reveals aggression
  • Indicates momentum

5. Market Depth Information

What it shows:

  • Orders waiting at each price
  • Size of pending orders
  • Order book dynamics
  • Liquidity levels

Why it matters:

  • Shows support/resistance forming
  • Reveals potential moves
  • Indicates institutional activity

Why Market Generated Information Matters

1. Real-Time Accuracy

MGI shows what’s happening now, not what happened in the past or what might happen:

  • Current price: Exact level right now
  • Current volume: What’s trading now
  • Current orders: What’s waiting now
  • Current activity: What’s happening now

2. No Lag

Unlike indicators that lag, MGI is immediate:

  • Price: Updates instantly
  • Volume: Shows in real-time
  • Order flow: Current activity
  • Market depth: Live order book

3. Factual Data

MGI is factual, not interpreted:

  • Price is price: No interpretation needed
  • Volume is volume: Actual contracts traded
  • Orders are orders: Real pending orders
  • Trades are trades: Actual executions

4. Reveals True Market Dynamics

MGI shows what’s really happening:

  • Who’s active: Buyers or sellers
  • Where interest is: Price levels with volume
  • What’s happening: Actual market activity
  • Why price moves: Order flow pressure

Using Market Generated Information

1. Price Action Analysis

Use MGI to understand price:

  • Price levels: Where price is trading
  • Price acceptance: Where price holds
  • Price rejection: Where price bounces
  • Price movement: Direction and speed

2. Volume Analysis

Use MGI to understand volume:

  • Volume distribution: Where volume traded
  • Volume at levels: Support/resistance strength
  • Volume patterns: Imbalances and absorption
  • Volume trends: Increasing or decreasing

3. Order Flow Analysis

Use MGI to understand order flow:

  • Buying pressure: Volume at ask
  • Selling pressure: Volume at bid
  • Imbalances: One side dominating
  • Absorption: Large orders getting filled

4. Market Depth Analysis

Use MGI to understand market depth:

  • Support levels: Large bids
  • Resistance levels: Large asks
  • Liquidity: Available volume
  • Potential moves: Order book dynamics

Market Generated Information Patterns

1. Price Acceptance

When price trades at a level with volume:

  • MGI shows: Volume building at price
  • Meaning: Market accepting this price
  • Signal: Support/resistance forming

2. Price Rejection

When price bounces off a level:

  • MGI shows: Volume spike then reversal
  • Meaning: Market rejecting this price
  • Signal: Strong support/resistance

3. Volume Imbalance

When one side dominates:

  • MGI shows: More volume at bid or ask
  • Meaning: One side more active
  • Signal: Directional pressure

4. Absorption

When large orders get filled:

  • MGI shows: Large volume, no price move
  • Meaning: Opposite side absorbing
  • Signal: Strong support/resistance

Combining MGI with Analysis

With Context

Always consider:

  • Time of day: Market conditions
  • News events: External factors
  • Overall trend: Bigger picture
  • Market conditions: Volatility, liquidity

With Multiple Timeframes

Use MGI across timeframes:

  • Higher timeframe: Overall direction
  • Lower timeframe: Entry/exit timing
  • Multiple timeframes: Complete picture

With Risk Management

MGI helps with:

  • Entry timing: Optimal prices
  • Exit timing: When to take profits
  • Stop placement: Key levels
  • Position sizing: Volume considerations

Best Practices

1. Focus on Facts

Stick to what MGI shows:

  • Actual price levels
  • Real volume data
  • Current order flow
  • Live market depth

2. Avoid Interpretation

Don’t overthink MGI:

  • Price is price
  • Volume is volume
  • Orders are orders
  • Keep it simple

3. Use Multiple Sources

Combine different MGI:

  • Price + Volume
  • Order flow + Market depth
  • Time + Size
  • Multiple timeframes

Tools for Market Generated Information

Professional MGI analysis requires:

  • Real-time data feeds
  • Live order flow tools
  • Market depth displays
  • Historical replay

Vtrender provides comprehensive market generated information tools for professional order flow trading.

Common Mistakes

1. Ignoring MGI

Don’t rely only on indicators:

  • MGI shows what’s happening
  • Indicators lag or predict
  • Use MGI as foundation

2. Overinterpreting MGI

Keep it simple:

  • MGI is factual
  • Don’t add meaning
  • Let data speak

3. Not Using Real-Time Data

Use live MGI:

  • Historical is useful for learning
  • Real-time is needed for trading
  • Stay current

Conclusion

Market generated information is the foundation of order flow trading. By focusing on real-time, factual data from the market itself, you can see what’s actually happening and make better trading decisions.

Start using Vtrender’s market generated information tools to access real-time order flow data and improve your trading.

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