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Understanding volumes bid/ask?


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Understanding volumes bid/ask?

  #1 (permalink)
fxSOL
Belgrade Serbia
 
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Please understand I am new to all this. Have trades currencies in past but now with options and market depth/volumes I have started to notice a pattern.

In my world I have always believed the more bid(buyers) the market is bullish and if more ask than bid then market is bearish.
But after having looked at data most often when ASK is higher than BID in volumes - the price goes up and if BID is higher than ASK the price goes down.

Well this could also be to the case that if a price moves down, bids(buyers) are adding positions and therefor usually in a drop there are more buyers since they have added positions.

In a large uptrend usually ASK is greater than bid - why?

Have I understood things correct or is my settings in chart software wrong?

And how on earth can this be?

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  #2 (permalink)
 Miesto 
Monte Carlo, Monaco
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fxSOL View Post
Please understand I am new to all this. Have trades currencies in past but now with options and market depth/volumes I have started to notice a pattern.

In my world I have always believed the more bid(buyers) the market is bullish and if more ask than bid then market is bearish.
But after having looked at data most often when ASK is higher than BID in volumes - the price goes up and if BID is higher than ASK the price goes down.

Well this could also be to the case that if a price moves down, bids(buyers) are adding positions and therefor usually in a drop there are more buyers since they have added positions.

In a large uptrend usually ASK is greater than bid - why?

Have I understood things correct or is my settings in chart software wrong?

And how on earth can this be?

If 1000 contracts (offered) at the (inside) ask and 500 at the (inside) bid and I buy 2000 contracts at the market the price will go up. In other words you only see the order book (DOM) with resting LMT orders which is changing every tenth of a second. You don't see the orders placed at the market. Therefore the assumption that price must go up when more bids or must go down when more offers is wrong. I wish it was that easy.

p.s. for what it is worth, with a footprint chart you can see the actual traded volume at bid and ask. Good luck.

-Mich

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  #3 (permalink)
 Miesto 
Monte Carlo, Monaco
Legendary Market Wizard
 
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Trading: Futures
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  #4 (permalink)
fxSOL
Belgrade Serbia
 
Posts: 60 since Mar 2020
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Mich62 View Post
If 1000 contracts (offered) at the (inside) ask and 500 at the (inside) bid and I buy 2000 contracts at the market the price will go up. In other words you only see the order book (DOM) with resting LMT orders which is changing every tenth of a second. You don't see the orders placed at the market. Therefore the assumption that price must go up when more bids or must go down when more offers is wrong. I wish it was that easy.

p.s. for what it is worth, with a footprint chart you can see the actual traded volume at bid and ask. Good luck.

-Mich

Thank you for taking time to respond - appreciate it! Actually footprint chart is the reason why I have begun this new journey and with Sierra. Its a steep climb and it will take time to learn and a lot of new ground to cover.
Thank you!

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Last Updated on May 1, 2020


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