First of all let us agree on several presumptions:
•It's the job of the market to fill orders (in order the market to be efficient).
•The job of the insiders, at least in large part, is to fill orders (by insiders here I mean big banks and other market makers).
•In the absence of the large order flow from outside of the market (money pools, hedge funds, central banks etc.) price will always go where the preponderance of orders are located.
Where the orders are located should be our primary consideration before entering the trade.
So where are orders located?
Orders tend to be located at support/resistance levels. What we talk about terms support and resistance are either pivot points on the chart (don't confuse with intraday - daily pivots!) or tops and bottoms of congestion areas.
Okay how can we use information which almost every trader knows?
It is when market makers (or insiders – call whatever you want) will move market to fill these buy/sell orders we want to enter the trade and swim with the flow – orders filling flow.
Market makers or insiders will move market to fill orders, go where orders are, run stops – whatever you choose to call it. That is nature of the markets and driving force behind price action.
Take care.
Vidas
- - - - - - - - “Do not sell morning weakness in the strong uptrend” – old Sumer proverb.
Last edited Jan 23, 2011 4:30pm
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