a question for all clever Traders

Discussion in 'Trading' started by jjf, Nov 14, 2007.

  1. jjf


    Why does the price of ES rise when orders on the bid are accumulating faster than orders on the ask.

    This can happen under heavy volume when the price is moving quickly, when you would assume accumulation on the bid would drive the price down.
  2. could you explain further what you are asking? Are you saying that price always goes up when the bid side is bigger than the ask?
  3. You do realize your talking about trying to use bid/ask info to explain volatility analysis.

    I don't recommend such nor is it accurate.

    Simply, if you want to analyze ES when volume is heavy and moving quickly...

    Just stick to basic volatility analysis and stay away from bid/ask info as an explanation for ES volatility.

  4. jjf


    It is a matter of curiosity to me and my question is more of a technical nature.

    I am curious to know how the price rises when the accumulating orders at the bid, outstrip those on the ask.
  5. Well, a basic explanation is (and dont know if this is even accurate for ES trading), that people/programs buy mkt when they see big size on the bid and therefore take out liquidity on the ask and thus moving prices up.

  6. jjf


    Thanks Sword,
    When they see big size on the bid and start buying, what are they buying on. Bid or ask?
  7. The ask for sure, you have to pay the spread otherwise, if you place a buy limit order, you go to the back of the line on the bid, behind all the big size who placed their orders first.

  8. jjf


    Thanks Sword.

    So for the dumb question, I just wanted to be sure that we were both on the same page.
  9. jjf


    OOPs, I meant

    Sorry for the dumb question, I just wanted to be sure that we were both on the same page.
  10. Don't try using this for stocks however. Stocks tend to "go to size" - so don't be afraid of a big offer a few pennies up if you're long. Just FYI.

    #10     Nov 14, 2007