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  #38  
Old Jan 10, 2011 7:31am
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Originally Posted by Carnegie View Post
In each case (up or down) price should cascade in the direction. BUT IT DIDN'T. And I have to know why, I just can't live with the idea that something happens 95% of the time and 5% not. I have to atleast know WHY.
It would only cascade in a direction (i.e. down) if the orders there (breakout shorts and stop losses from longs... and then anyone else who joins in later) are of sufficient size to consume the bid side liquidity for whatever
cascade distance. Also consider that even if there are good sized sell orders below consolidation, there can be already existing shorts that push below consolidation and buy back their positions from the sell orders below consolidation, thereby consuming the breakout/stop loss positions without causing a price cascade to the down side - in fact if the existing shorts are larger than the sell orders down there, their buying back will likely cause price to go right back up (and then the new shorts will have floating losses and will start buying back their positions as well etc.)
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  #40  
Old Jan 10, 2011 10:48am
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Originally Posted by Carnegie View Post
Your comment here is very good and I quoted the part most interesting. Isn't this what is referred to as "stop hunting"? Triggering the stops and the big guys buy into the short orders that are triggered in the move down?
Yes in a way, I merely made that example to show one reason why even if there was good sized sell orders below consolidation, price would not necessarily have cascaded/fell. Is it stop hunting? Depends on what stops are. When most people say "stop hunting", they're referring to their actual stop loss orders. It needn't be those, just a "liquidity pool" to the appropriate side which others can dump their existing position into, and/or take an opposing position, without moving price against themselves as much as they would if that liquidity was not there. Now don't think I'm suggesting that if price breaks below consolidation and then goes back up then that's necessarily a stop/liquidity hunt.
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  #143  
Old Jan 18, 2011 4:56pm
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It looks like a graph of liquidity distribution by trader type. I guess pending is other, the Y axis is millions, and if the liquidity being shown here is from a real source then I think it's Oanda due to the 10 mio at market. The latent thing on the other hand is a perfectly linear distribution so doesn't seem like it can be actual liquidity - maybe just a concept of liquidity.

Last edited Jan 18, 2011 6:07pm
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  #147  
Old Jan 18, 2011 7:05pm
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The market was where it was, then price moved. In the first image the liquidity was made of the dealer's liquidity at market, and liquidity from orders placed at and beyond the market. When price moved, all the liquidity from the orders between the original price and the new price were consumed. If price moves further in the same direction, there is liquidity from orders which have not yet been filled plus the dealer. If price falls back there is only liquidity from the dealer, and unlike the pending orders which will fully absorb any "demand" in that direction before price moves further, the dealer will be quick to shift his quote and there are no more orders (only or a few that came in in the meantime) to absorb liquidity demand in that direction.

That's my interpretation of it. Out with it, the rest of you!
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  #152  
Old Jan 18, 2011 7:19pm
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Originally Posted by Darkstar View Post
Good. Now what is the implication?
The implication is that it takes a certain amount of buying power to move the market in a given direction, but less to move it in the opposite direction after the fact. Exiting the position would consume the same amount of liquidity in the opposite direction, but the opposite direction's liquidity is now thin. Therefore the market mover needs those red techie orders which will be consuming liquidity in the market's direction. But I feel that this explanation is right back where we started, though with the added concept of the liquidity distribution.

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Originally Posted by Darkstar View Post
BTW... did you notice the shift of latent demand to pending?
I did, but I can't say I understand what it is. I'm aware of what latent demand is but I can't see it being that due to the linear distribution - you can't possibly know its distribution, can you?
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  #160  
Old Jan 18, 2011 7:42pm
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Originally Posted by Darkstar View Post
Depends... Who does the latent demand represent? It isn't tech because they are already represented.
A function of orders and time? The further way a given price is from the market, the more time for orders to be added there. Close to the market that potential is smaller, though some of it has turned into actual orders placed.
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  #163  
Old Jan 18, 2011 8:08pm
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Nice, that explains it. Thanks.
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  #371  
Old Jan 23, 2011 2:51pm
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Originally Posted by grkfx View Post
I know the thread title is about cluster of stops on chart....
Agreed - I did something similar though not quite to that extent (will do though). Blocking out all the "noise" and just sitting with a blank sheet of paper can be very educational.
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