Clusters in trading: simpler than it seems

2025-11-29 02:13:37

How to read prices on the chart? The Candlestick shows only Open/High/Low/Close, but inside it, a twisted drama unfolds - buying and selling at each level.

This is where clusters come into play. It's like breaking one Candlestick into several layers of price levels ( and showing how many trades are at each layer:

Cluster = one “cell” in the Candlestick at a certain price
In each cell - the volume of transactions and their balance )buys vs sells(
If the balance is positive - purchases prevailed, negative - sales

If the candlestick covered $1000 with 100 trades, cluster analysis will tell: at the level of $50,100 there were 30 trades )70% buy(, at the level of $50,200 there were 50 trades )50/50(, at the level of $50,300 there were 20 trades )30% buy(.

Why is this needed? To see the microstructure of the price — where market makers buy, where they sell off, where there may be traps.

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