Hedge Pressure (also called dealer flow direction) is a cumulative measure of whether market makers are net buying or net selling the underlying as they rebalance their hedges throughout the session.
While GEX tells you the static positioning of dealers at the start of the day, Hedge Pressure tells you what dealers are actually doing in real time. It's a running total of the net delta hedging activity — the cumulative sum of dealer buys minus dealer sells as they adjust their hedges throughout the session.
A rising Hedge Pressure line means dealers have been net buyers throughout the session. A falling line means they've been net sellers. The direction and magnitude of the line provides context for price action that pure price charts don't show.
Hedge Pressure is inferred from options order flow. When large options trades occur — particularly sweeps and block trades that likely represent institutional order flow — the resulting delta change forces a hedging response from the dealer on the other side. By aggregating the estimated delta of these trades over the session, a cumulative dealer flow direction can be constructed.
The result is a signal that answers a simple question: are dealers, in aggregate, being forced to buy or sell the underlying today?
Divergence is the most useful signal: When price and Hedge Pressure diverge significantly, one of them is about to correct. Usually it's price catching up to the flow direction.
Pure price charts tell you where the market has been. Hedge Pressure tells you what the largest, most sophisticated participants in the options market are being forced to do. When these two align — price rising and Hedge Pressure rising — the move has mechanical support behind it. When they diverge, you have advance warning of a potential reversal.
This is most useful for intraday traders who need to decide whether to fade a move or follow it. A strong Hedge Pressure confirmation makes fading significantly more risky.
Hedge Pressure resets to zero at the start of each session. What matters is the intraday accumulation and the direction of the line relative to earlier in the session. A Hedge Pressure line that starts positive, turns negative midday, and continues falling is a meaningful shift in dealer behavior — regardless of where price is.