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There are four Biblical truths that need to be fully and deeply understood in order to fully understand the issue of baptism.

1. God Works Covenantally.
The Latin “testamentum” means covenant so the Old and New Testaments are in reality covenants. The Bible is a Covenant Document. If you look at how God has worked from Genesis through Revelation you will see, without contradiction, his agreements, pacts and promises are covenants. In addition to the actual covenants, there are signs and markers that show the covenants…show the manifestation of His covenants. (Rainbow, Circumcision, Communion, etc…). In Hebrews 13:20 we are told of the Eternal Covenant between God the Father and the Son long before the creation of the world. This is why Christ told us that The Father had given to Him those who will be His (See John 6, specifically verses 35-40 ; and John 17). The New Covenant—the Gospel message-- is shown in its manifestation by Christ Himself. The understanding of the fact that God works covenantally is essential to understanding Baptism.

2. What is baptism exactly?
Baptism is an outward expression of an inward reality. It may represent several different things that are inward realities. It best represents the inward washing of Christ’s blood upon the soul. It is therefore used in different ways with different meanings:

A. It represents the death of a person (Romans 6:3-5)
B. The union of a person with Christ (Galatians 3:27)
C. The cleansing of that person’s sins (Acts 22:16)
D. Identification to the one being “baptized into”, such as the Isrealites with Moses (1 Cor 10:2)
E. United into one Church (1 Cor 12:13)
In addition to the above, Baptism is one of the signs and seals of the Covenant of Grace.

3. Covenant of Grace
Baptism is indeed on of the signs and seals of the Covenant of Grace. The CoG is the promise of God to mankind of eternal life, based upon the sacrifice of Christ on the cross and the condition is faith in Jesus Christ. The New Covenant brought to us changes because Christ became the ultimate sacrifice for all those who would believe. Therefore our Communion Supper replaced The Passover…and in like manner Baptism replaces Circumcision. In the OT circumcision was the mark of entering under the Abrahamic covenant...it did not save a Jew (adult or child) but it-circumcision-, as an outward sign of an internal reality, put them under the covenant between God and Abraham. (Gen 17). Now the New Testament speaks of circumcision often. But to this topic Colossians 2:11-14 is very clear:

11 In him also you were circumcised with a circumcision made without hands, by putting off the body of the flesh, by the circumcision of Christ, 12 having been buried with him in baptism, in which you were also raised with him through faith in the powerful working of God, who raised him from the dead. 13 And you, who were dead in your trespasses and the uncircumcision of your flesh, God made alive together with him, having forgiven us all our trespasses, 14 by canceling the record of debt that stood against us with its legal demands. This he set aside, nailing it to the cross.

Baptism and circumcision are connected related in these verses above. Just as in Luke 22:20 we see the Communion supper replaces the Passover supper because no longer was there a need to celebrate and commemorate the shedding of blood of the Egyptian captors because Jesus Christ was about to he His own Holy blood for the redemption of all our sins….thus the New Covenant and True Gospel message is revealed in Christ. So it is with Baptism and circumcision…there is no need for bloodshed within circumcision any longer because Christ has poured out his own blood on our behalf. In baptism no blood is shed. Why? For because the blood of Christ has been shed and circumcision, which ultimately represented the shed blood of Christ in his covenant work of redemption, was a foreshadowing of Christ's work.

Baptism is a covenant sign , and if one understands this, then one can see that it is a representation of the REALITY of Christ circumcising our hearts. It is our outward proclamation of our inward spiritual blessing of regeneration---the Gospel Message alive in us. Thnis outward way of proclaiming that Christ is within us comes after Faith, which is a gift of God.

Romans 2:28-29: 28 For no one is a Jew who is merely one outwardly, nor is circumcision outward and physical. 29 But a Jew is one inwardly, and circumcision is a matter of the heart, by the Spirit, not by the letter. His praise is not from man but from God.

Romans 12:1-3: I appeal to you therefore, brothers, by the mercies of God, to present your bodies as a living sacrifice, holy and acceptable to God, which is your spiritual worship. 2 Do not be conformed to this world, but be transformed by the renewal of your mind, that by testing you may discern what is the will of God, what is good and acceptable and perfect. 3 For by the grace given to me I say to everyone among you not to think of himself more highly than he ought to think, but to think with sober judgment, each according to the measure of faith that God has assigned.

Our spiritual regeneration is the circumcision of the heart and our baptism is our outward expression of that inward reality.

4. It is the Gospel that saves
The Bible tells us that it is the GOSPEL that saves us..that covenant relationship exposed for us to see God’s perfect gift of grace through our faith in His Son Jesus Christ who lived and died on the Cross for the payment of the penalty for our sins. 1 Cor 15:1-2; Romans 1:16

The blood of Jesus Christ is the key…that is where redemption truly lies and that is the Gospel message. Hebrews 9:14; Romans 5:9; Ephesians 1:7

Romans 6:4 "We were therefore buried with him through baptism into death in order that, just as Christ was raised from the dead through the glory of the Father, we too may live a new life."

Because the believer is so closely united to Christ it is said that the symbol of baptism is our death, burial, and resurrection. Obviously we did not die -- unless, of course, it is a figurative usage. And that is what it is here. The figure of baptism represents the reality of Christ's death, burial, and resurrection. It is a covenant sign for us. Remember, a covenant sign represents the covenant. The covenant sign of baptism represents the covenant of grace which is that covenant between God and the Christian where we receive the grace of God through the person of Christ by means of his sacrifice.

Titus 3:5 "he saved us, not because of righteous things we had done, but because of his mercy. He saved us through the washing of rebirth and renewal by the Holy Spirit."

The washing of rebirth can only be that washing of the blood of Christ that cleanses us. It is not the symbol that saves, but the reality. The reality is the blood of Christ.
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In conclusion, these four concepts are key into understanding the gospel message and how baptism fits into it. Faith and the blood of Christ is what gives us redemption and salvation--we are therefore justified before God. Salvation comes first with a circumcision of the heart (the inward baptism). To be obedient however, we are to be baptized by water--that outward identification of us indwelling with Christ and the public display of the inward reality. Every professing believer needs to be baptized.