1. Yes, mainly in OTC markets. 2. A general example would be removing risk prior to the close of a market or before a scheduled economic number is released. The impact on prices depends on whether the market is net long or short that day and how nervous the traders are going into that event.
If price action evolved in such a way that my entry into a long position was to place a buy stop 1 tick above the last high, and I could see how many buy orders and how many sell orders were sitting at the price where my buy stop order was sitting, and I could see how many of the buy orders were initiating orders and how many were offsetting orders and there was a regulation that disallowed the cancellation of orders once they were placed...Well, THAT might be helpful to me!
You may want to reread my 2 posts. If one makes an order at a new high it is absolutely certain that if the order is filled the other side is NOT a losing long. That was my point. No other information is needed.
And I concur. The extra layer of information would not deter the larger participants from their underlying agenda.
You began this thread asking, "If one were to know whether the other side is a long closing a winning, flat or a losing trade (3 cases here), and in the case of shorts opening a new trade would this information help in building an edge?" To which I replied it would be of no use to me as a price action trader. So I still don't understand your point. If I buy a new high from someone because of a technically sound price action setup, the fact that the counter-party to my trade is a long closing out a profitable trade (as opposed to a short initiating what may end up being a profitable or unprofitable trade) is totally irrelevant to me and I have no idea how such knowledge, even if known in advance of placing the order, would give me any more edge than my price action setup provides. Also, just because a counter-party is closing a long position at a new high and is not losing money on that particular trade doesn't mean s/he isn't a losing trader. It's possible this trader is awful. Maybe s/he went long 5 ticks from the high and sold me the contract 1 tick above the high and is now only 34 ticks in the red instead of 40 for the day, while my long at the new high produces the 40-tick profit that would've made them whole again.
There are 800 others trading at the same price as you at the exact instant. What is the edge in knowing just who is on YOUR side of the trade? (assuming you dont trade super mega size)