How to tell when limit orders are soaking up all the volume?

nirav34 · Mar 17, 2011

Quote from NoDoji:

I trade CL and I often see unusually large size parked at key levels. I've noticed that the majority of the time price moves to, and through, the level whether the size evaporates at the last minute or whether the size actually gets "eaten", so to speak.

When I see large size parked at a key level in CL, I will frequently put on a trade prior to that level in the direction of the level because of that "magnetism effect" of the large size.

Not sure if this occurs often in other instruments, but I've found it to be a very high probability signal in CL, if I'm not already positioned.
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Yes I observe this in ES also.

Runningbear · Mar 17, 2011

It's a double edged sword. Sometimes market orders will get absorbed and price will reverse. Other times market orders will eat the available limit orders and price with breakdown even further.

bigsnack · Mar 18, 2011

Quote from NoDoji:

I trade CL and I often see unusually large size parked at key levels. I've noticed that the majority of the time price moves to, and through, the level whether the size evaporates at the last minute or whether the size actually gets "eaten", so to speak.

When I see large size parked at a key level in CL, I will frequently put on a trade prior to that level in the direction of the level because of that "magnetism effect" of the large size.

Not sure if this occurs often in other instruments, but I've found it to be a very high probability signal in CL, if I'm not already positioned.
More...

Absolutely true on the ES as well. Actually I meant to mention it when I was writing the earlier post, but forgot when I was done rambling

If you see 4500 orders stacked at a price on ES, you could definitely get away with placing a trade in the direction of that price point.

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How to tell when limit orders are soaking up all the volume?

nirav34

Runningbear

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