Trading based on bid/ask (image)
- Thread starter 1a2b3cppp
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Sounds so wrong. What timeframe are you talking about - minutes, hours, days, weeks?
I'm not sure I agree with your premise that large orders attract price. More likely, (as I believe Mark hinted), they are used to do the opposite. In any case, how would you trade it? Let's say you see large order on the bids, would you short by hitting the bid and wait for the price to move down to that order? How many ticks away does that order need to be from the ask(actually I was not clear if you are only checking top bid/ask sizes or multiple levels of depth)? What if that order goes away, do you immediately cover at the ask? I think this kind of strategy was used long time ago pre-hft and pre-anti-spoof rules.
Look, I say it doesn't make sense. But that's what seems to happen.
We can think about it. There are a lot of ask orders sitting there waiting to be filled. Here lots of people want to sell. Lots of sellers should mean price goes down (supply more than any demand). But, it seems it doesn't work that way.
Pretend there are 300 limits on the base and 500 limits on the offer. Price should decrease. But it doesn't. Why? I don't know. That makes no sense to me. But it does. Maybe bunches of people want to sell and hardly anyone wants to buy. Why does price go up? No grasp.
Likely @JigsawTrading shares a lot of videos that explain this.
I love how I've mentioned @JigsawTrading in a ton of threads and he has never responded. I'm his biggest fanboy that doesn't currently use their software.
We can think about it. There are a lot of ask orders sitting there waiting to be filled. Here lots of people want to sell. Lots of sellers should mean price goes down (supply more than any demand). But, it seems it doesn't work that way.
Pretend there are 300 limits on the base and 500 limits on the offer. Price should decrease. But it doesn't. Why? I don't know. That makes no sense to me. But it does. Maybe bunches of people want to sell and hardly anyone wants to buy. Why does price go up? No grasp.
Likely @JigsawTrading shares a lot of videos that explain this.
I love how I've mentioned @JigsawTrading in a ton of threads and he has never responded. I'm his biggest fanboy that doesn't currently use their software.
Well, because it doesn't represent imbalance really. You don't see what is hidden. You don't know if there is algo splicing big orders. The only reason anyone would display large order and seat there like a duck is to signal something to the others, imho. This signal should be interpreted differently depending on the context. I will venture a guess that the reason jigsaw doesn't answer you is because your thorough analysis will eventually lead you to believe that their tool is close to useless in today's markets (well at least for instruments like nq and es). Much easier to sell to people who don't bother asking too many questions.
You just gonna leave us hanging like that!?