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Today, I will write about How to understand whether a limit order or a market order is large or small.
While you are looking at the T&S only (no DOM), the size of a limit order will be evident only when a market order hits it.On the other hand,to guess the size of market orders, time and sales prints is the only tool available, and it doesn't matter whether you have a DOM or not.
Assessing size of LIMIT & MARKET orders with Time and sales prints
Lets look at the following 4 situations:
1. Small Limit order+ Big market order....In this case the market order will eat this bid and go to execute the bid in the next level,giving rise to a series of prints with SAME TIME STAMP.After this happens, we can be sure that the initial bid limit we were looking WAS small.In this case SUPPORT WILL BREAK.
Observations:
a.Small bid print in Time and sales
b.Subsequent bid prints with same time stamp
c.Support associated with the bid under consideration is broken
2. Big Limit order+ Small market order....In this case, the market order will die before bid is exhausted and SUPPORT WILL BE MAINTAINED.
Observations:
a.Small bid print in Time and sales
b.Support associated with the bid under consideration is NOT broken
3. Small Limit order+ Small market order....We will have a small print at bid.Nothing can be concluded regarding the size of the market or the limit order.
Observations:
a.Small bid print in Time and sales
b.Subsequent trades will have DIFFERENT Time stamp
4. Big Limit order+ Big market order....In this case, we will have a large print at the bid.However,if the market order is larger than the limit bid,support will break and we will have multiple prints With same time stamp. On the other hand, if the bid is larger, support will not break
Observations:
a.Large bid print in Time and sales
b.Subsequent bid prints with same time stamp (if market order is larger than the limit bid)
c.Support associated with the bid under consideration is broken (if market order is larger than the limit bid)
d.Support will not break (if market order is smaller than the limit bid)
I think Im gonna go threw all the videos and change the numbering so the first video I made is 1. and the last one I just posted is gonna be 13. It will be better organized.
Bloom, when the price goes threw your support levels you gave me,(blue lines) should I remove them from the chart or leave them?
1) See how tape keeps getting stopped a couple of time after each move up.
2) Big prints are printing frequently but especially when breaks threw the 'rest stops' with a nice flow of tape upward.
3) 1.4476~ there is nice fast flow of tape but no price advance. Also big prints and no advance. Get out.
1) You see price going up toward purple line at 1.4430. Flow looks like decent flow but there is a lot of stop and go.
2) When we get to the purple line now something strong starts pushing tape down forcefully but well controlled.
3) When we get to the bottom of the candle, forceful pushing stops.
4) When moving towards the Low of Day nice flow of tape.
5) Probally go threw because most of buying was already absorbed.
