The ladder displays the actual orders in each price level. The ladder also displays the last volume. These are the important things we should watch in the ladder:
The big size on bid or on offer does not necessary mean support or resistance. It is more important how the orders are changing. If there is an uptrend, we will see big sizes on offer but they gradually diappear or move higher. This means those who want to sell are not forced to do it ASAP. They place their orders and wait for the paniced traders to fill their orders. When they see, that there is volume and uptrend, they will move their orders higher. They want a better price. We will also see that the bid orders gradually move higher. Those are orders of traders who are impatient because they missed the big movement and they want to be in position as soon as possible or traders with losing short positions and they want to cover their losing short positions but they are waiting for a better price.
Many times the movement ends in the following way: the bids are gradually moving higher until there are big sizes on bids but the price does not want to go up. In the next moment the price falls back several ticks and the big sizes dissappear.
Many times it looks like there is support in a downtrend and resistance in an uptrend but supports and resistances are broken all the time.
The size of the orders could be misleading. It is more important how they change.
Small trades are not important. They do not influence the market significantly. In the EuroStoxx 1-2-5 contracts are irrelevant. The big guys trade with at least 50, but 100-200 is more appropriate for this filter. Watch mainly the big trades.
Watch if the big size hits the bid or offer. It can show if the sellers or buyers are eager to open or close position.
Also watch if the ladder is active or quiet. The quiet market could be a market before the breakout, or a market where there is no big movement and volume. Everything depends on the context.
There is an order type, the iceberg order. This type of order hides big volume. If it is a sell order, we will see 200-300 contracts on offer. Somebody buys 600, the order dissappears and reappears again. Somebody buys again, but the size of the order remains the same. The computer could sell several thousand contracts but we will not see such a big size on offer. The computer sells everthing in small pieces.
Many times we can place our order on the iceberg order and it will be filled with it. Iceberg order can show us the support and resistance levels but beware: it is possible that somebody closes his position and as soon as he finished, the price will move through that level. The first rule is: trade in the direction of the trend. Do not trade because you see an iceberg order. It could mean anything. You should know the context for the proper meaning.
If there is a buying pressure, the sell iceberg order can move higher and if there is no volume because the price is too high, the order can move back a little bit.
The big size on bid or on offer does not necessary mean support or resistance. It is more important how the orders are changing. If there is an uptrend, we will see big sizes on offer but they gradually diappear or move higher. This means those who want to sell are not forced to do it ASAP. They place their orders and wait for the paniced traders to fill their orders. When they see, that there is volume and uptrend, they will move their orders higher. They want a better price. We will also see that the bid orders gradually move higher. Those are orders of traders who are impatient because they missed the big movement and they want to be in position as soon as possible or traders with losing short positions and they want to cover their losing short positions but they are waiting for a better price.
Many times the movement ends in the following way: the bids are gradually moving higher until there are big sizes on bids but the price does not want to go up. In the next moment the price falls back several ticks and the big sizes dissappear.
Many times it looks like there is support in a downtrend and resistance in an uptrend but supports and resistances are broken all the time.
The size of the orders could be misleading. It is more important how they change.
Small trades are not important. They do not influence the market significantly. In the EuroStoxx 1-2-5 contracts are irrelevant. The big guys trade with at least 50, but 100-200 is more appropriate for this filter. Watch mainly the big trades.
Watch if the big size hits the bid or offer. It can show if the sellers or buyers are eager to open or close position.
Also watch if the ladder is active or quiet. The quiet market could be a market before the breakout, or a market where there is no big movement and volume. Everything depends on the context.
There is an order type, the iceberg order. This type of order hides big volume. If it is a sell order, we will see 200-300 contracts on offer. Somebody buys 600, the order dissappears and reappears again. Somebody buys again, but the size of the order remains the same. The computer could sell several thousand contracts but we will not see such a big size on offer. The computer sells everthing in small pieces.
Many times we can place our order on the iceberg order and it will be filled with it. Iceberg order can show us the support and resistance levels but beware: it is possible that somebody closes his position and as soon as he finished, the price will move through that level. The first rule is: trade in the direction of the trend. Do not trade because you see an iceberg order. It could mean anything. You should know the context for the proper meaning.
If there is a buying pressure, the sell iceberg order can move higher and if there is no volume because the price is too high, the order can move back a little bit.
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