So what exactly moves the market again? | Traders Hideout


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So what exactly moves the market again?

  #7 (permalink)

North Carolina
 
Trading Experience: Beginner
Platform: NinjaTrader, Tradestation
Favorite Futures: es
 
Posts: 644 since Nov 2011

@Revan What you are showing is the "mid point" which is a hypothetical price. It is not a real price that anyone can buy or sell at. It would be the average though if equal contracts traded on the bid/offer. The price that you see on the charts is normally the "last traded price" which is different then the "mid point". The "mid point" can be thought of as the instantaneous fair value because if it were not then arbitrage would be possible: this is relevant if you are trading non-primary markets.

Try to pull up a time and sales. A market buyer or market seller must cross the spread. There are always 2 prices in the market, the bid and offer. The limit order trader gets guaranteed price but not guaranteed fill. The market order gets guaranteed fill but not guaranteed price. Market order traders tend to be looking for bigger movements where the spread is a smaller percentage of the trade. Limit order traders tend to be higher frequency. Limit order traders are price sensitive. Market order traders are time sensitive.

The following is more advanced and not very relevant: normally, the orders cannot cross (to my knowledge) because it would be similar to jumping in line.

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