Quant Master Flow [Cumulative Volume Delta]

Quant Master Flow [Cumulative Volume Delta]

The Quant Master Flow indicator is a tool that analyzes market aggression by tracking the Cumulative Volume Delta (CVD), providing critical insight into institutional participation and short-term liquidity absorption. It acts as the "Conviction Filter" to confirm the statistical signals provided by the Z-Oscillator.

Core Philosophy: Aggression vs. Absorption

The CVD measures the running total of the difference between aggressive buyer-initiated volume and aggressive seller-initiated volume. By plotting this cumulative total, the indicator reveals whether the net effect of market orders is one of accumulation (aggressive buying, driving the price up) or distribution (aggressive selling, driving the price down).

Key Components

Cumulative Tally: The indicator plots the running sum of the volume delta. A rising CVD suggests buyers are more aggressive than sellers; a falling CVD suggests the reverse.

Color Coding: The CVD is colored to visualize flow:

Green: Periods of net aggressive buying (accumulation).

Red: Periods of net aggressive selling (distribution).

Volume Thresholds (Optional/Implied): Allows for filtering of low-impact noise, ensuring the cumulative line only reflects significant shifts in order flow.

Strategic Use Cases

The power of the Quant Master Flow is realized by comparing its trajectory to the price action, validating Z-Score extremes, and spotting liquidity grabs.

1. High-Conviction Confirmation

Use the CVD to confirm a directional signal from the Z-Oscillator:

Bullish Confirmation: When the Z-Oscillator hits Oversold ($\pm 2\sigma$) and the price begins to move up, a strong rising (Green) CVD confirms that the reversal is being fueled by institutional accumulation.

Bearish Confirmation: When the Z-Oscillator hits Overbought ($\pm 2\sigma$) and the price begins to fall, a strong falling (Red) CVD confirms that the drop is being driven by institutional distribution.

2. Divergence (The Early Warning System)

Divergence between the CVD and price is the strongest signal of impending failure or reversal, indicating that the current price movement is unsupported by institutional commitment.

Bearish Divergence: Price makes a Higher High while the CVD makes a Lower High. This is a warning that institutional players are distributing into the rally, signaling a failure to continue the trend.

Bullish Divergence: Price makes a Lower Low while the CVD makes a Higher Low. This shows institutional accumulation is occurring despite falling prices, often preceding a strong reversal.

3. Flow Exhaustion

When the CVD line flattens out during a strong price rally or drop, it signals that the market aggression is exhausted. This often happens right before the Z-Oscillator hits its $\pm 3\sigma$ Extreme zone, providing the earliest warning of a statistical reversal.