Quote:
Originally Posted by Scotty B Most traders would be shocked to know how little volume it takes to turn a market around.
...after each party trades on that information and equilibrium is reached. One of the most important things that happens is that liquidity dries up in the direction of the informed trader's trades. So if informed traders are buying, the available size at the asks will decrease, thus accelerating a price move in that direction.
The original dealer... |
Quote:
Originally Posted by Scotty B who provided liquidity to the informed trader will speculate on the information inherent in the informed traders trade by buying at another banks asking price, netting out his bad inventory and acquiring a profitable position at the sake of his competitor. After his position is established or simultaneously, he will cancel his remaining asks.
When he cancels out his asks, other bank's trade robots will see this and follow suit, and the waters of liquidity are parted like Moses and the Red Sea. ... |
(reading....)
While you seem to be describing big-$ liquidity, the idea could also be applied to float vs. news, in stock-speak. And, this guess: Almost no float left stalls or repeats price and important news moves price in a new pattern.