Kuberomantic Turtle_3762:
You could see all those orders stepping down on the orderbook. It was very bearish. We just cleared all those orders so it could be bouncing back unless more orders come in at the bids.
romantic Turtle_3762Kube:
ah I see thank you. I'm kinda a beginner trying to get better at trading. I guess I misinterpreted the order book. I thought the steps in the bid were ppl tryna get in on the dip sorta like a support, but I guess it's actually the other way around since they are expecting to fall?
Kuberomantic Turtle_3762:
Yes, it's confusing at first because you would think that all those buyers means that the price should go up right? You can think of the market as like an auction. Buyers, they want to buy low while sellers want to sell high. Ironically, buyers wanting to buy at a cheaper price actually will drop the stock price while sellers wanting to sell higher will raise the stock price. The market maker's job is to facilitate transitions between buyers and sellers and keep the liquidity going so if there's no demand at the current level, they will move it to more there is demand. So if all these buyers want to buy lower, then market maker will move the price there to fill those orders. Same with sellers, if there's a lot more orders on the ask then the price will move there to meet that demand. Market orders is what moves the market, not limit orders. If there's significantly more orders on the bid size especially when it's stepping down like in the image I shared, then we need to clear those limit orders before we can move up higher.
Orderbook/Level 2 is just one indicator you can use. Another is Time and Sales/Tape where you can see the transactions that have actually taken place. If you see things like held bids or held offers or orders being filled closer to the bid price vs the ask price, these all help you identify where the stock may go next.
romantic Turtle_3762 : feel like should hit 30 after all the ppl selling on news. tho that dip sure is was scary
protraderx : As expected use the news attract the herd buy high chasing and then wash all of them down. Easy money.
Kube romantic Turtle_3762: You could see all those orders stepping down on the orderbook. It was very bearish. We just cleared all those orders so it could be bouncing back unless more orders come in at the bids.
romantic Turtle_3762 Kube: ah I see thank you. I'm kinda a beginner trying to get better at trading. I guess I misinterpreted the order book. I thought the steps in the bid were ppl tryna get in on the dip sorta like a support, but I guess it's actually the other way around since they are expecting to fall?
Kube romantic Turtle_3762: Yes, it's confusing at first because you would think that all those buyers means that the price should go up right? You can think of the market as like an auction. Buyers, they want to buy low while sellers want to sell high. Ironically, buyers wanting to buy at a cheaper price actually will drop the stock price while sellers wanting to sell higher will raise the stock price. The market maker's job is to facilitate transitions between buyers and sellers and keep the liquidity going so if there's no demand at the current level, they will move it to more there is demand. So if all these buyers want to buy lower, then market maker will move the price there to fill those orders. Same with sellers, if there's a lot more orders on the ask then the price will move there to meet that demand. Market orders is what moves the market, not limit orders. If there's significantly more orders on the bid size especially when it's stepping down like in the image I shared, then we need to clear those limit orders before we can move up higher.
Orderbook/Level 2 is just one indicator you can use. Another is Time and Sales/Tape where you can see the transactions that have actually taken place. If you see things like held bids or held offers or orders being filled closer to the bid price vs the ask price, these all help you identify where the stock may go next.
romantic Turtle_3762 Kube: thank you, that explains a lot and is very helpful. you got any recommendations on books or YouTubers or learning materials?