With this educational post, I am going to cover the following 5 questions, with some strict to the point answers:
1. Why the price is moving up and down?
2. How the price is moving up or down?
3. What is inside a candlestick, or how do they form?
4. On what markets is this applicable?
5. How can you benefit on this information to your advantage as a trader?
1. WHY THE PRICE IS MOVING UP AND DOWN?
The prices are influenced by the supply of a given asset, and of course, by the interest over the given asset.
If we take Bitcoin as example, we know that there is a limited supply, and so, if the interest is high, than the price will increase ( people are willing to buy at higher prices )
WHEN THERE IS NO INTEREST IN THE ASSET, this means that there will be a big supply of the given asset sitting on the side, and so the price will decrease ( people are selling their holdings, with no interest from the buyer side at market price )
High interest=High Demand=Low Supply=Price will increase
Low interest=Low Demand=High Supply= Price will decrease
2. HOW THE PRICE IS MOVING UP AND DOWN?
You can see both aggressive and passive market participants with the help of order books indicators like, DOM, TIMES AND SALES, etc.
TRADINGVIEW is offering an orderbook, but you need to buy data from an external provider, in order to get access to full orderbook.
The interaction between market participants with different opinions about the market, will make the price to move up or down.
There are two types of market participants:
A. Aggressive market participants - are opening trades at the market price.
B. Passive market participants - are opening trades at higher or lower prices than the market price, with pending orders. The majority on this category are Market Makers.
In the above example, you can see that there is a pending order of BUY of 1250. When there are not enough aggressive sellers to consume this buy orders and other orders under it, than after the 1250 order will be filled, the price will move to the up side, with the smaller sell volumes, being consumed buy aggressive buy market orders.
3. WHAT IS INSIDE A CANDLESTICK, OR HOW DO THEY FORM?
Unfortunately, there is no advanced footprint indicator on tradingview, but by this occasion, I would like to ask if there are any pine script programmers reading this post, that would like to create together with me, a more complete or complex footprint indicator, that we can share it for free with the tradingview community. I have been designing trading indicators for a few years already, and I am sure we can develop a great indicator.
You can see inside of a candlestick, the filled aggressive market orders, and NOT pending orders, with the help of footprint indicators.
You can see the actual '' war between bears and bulls ''.
In the left side you will see SELL volume and in the right side BUY volume.
Some indicators will display the difference between SELL and BUY as DELTA VOLUME.
This information that you can find inside the candlestick with the help of FOOTPRINT indicator, are showing what the market is doing at the present time, and it is a good indicator for which side of the market is more dominant.
4. ON WHAT MARKETS IS THIS APLICABLE
All mention above, are applicable to the majority of financial market - Crypto, FOREX, Stocks, Futures.
ATT BEGINNERS !!!
All traded instruments are quoted to a certain currency. Every time you want to buy an asset, you will automatically sell another one.
In the Forex Market, when you want to buy EURUSD, this means that you will automatically sell USD.'
In commodities, usually Gold, Oil or like, are quoted to USD or EUR. So even though they are listed as GOLD or OIL on trading platform, they are in reality GOLDUSD or OILUSD.
One of the reason I had to mention this, is in connection with correlation between currencies, because when you see for example a big SELL volume, on EURUSD, you might consider that as a buy volume for USD. This means that the pair like USDJPY, will be indirect influenced by this, and it might go up.
5. HOW CAN YOU BENEFIT ON THIS INFORMATION TO YOUR ADVANTAGE AS A TRADER?
Indicators like footprints and orderbook, are used by institutions or professional traders.
While the majority of the indicators are displaying information based on past data, the footprint indicator and orderbook, are showing what the markets are doing in the present. So for a trader, in order to make future price prediction, these information can be a huge advantage.
Not only that, but when you see big volumes coming to the market, you can see on what side of the market institutions are placed, so you can be on their side too.
I hope this is useful to you, and if you have any questions, please leave a comment and I I will be happy to answer.
Don't stumble trading. Trade Safe!
1. Why the price is moving up and down?
2. How the price is moving up or down?
3. What is inside a candlestick, or how do they form?
4. On what markets is this applicable?
5. How can you benefit on this information to your advantage as a trader?
1. WHY THE PRICE IS MOVING UP AND DOWN?
The prices are influenced by the supply of a given asset, and of course, by the interest over the given asset.
If we take Bitcoin as example, we know that there is a limited supply, and so, if the interest is high, than the price will increase ( people are willing to buy at higher prices )
WHEN THERE IS NO INTEREST IN THE ASSET, this means that there will be a big supply of the given asset sitting on the side, and so the price will decrease ( people are selling their holdings, with no interest from the buyer side at market price )
High interest=High Demand=Low Supply=Price will increase
Low interest=Low Demand=High Supply= Price will decrease
2. HOW THE PRICE IS MOVING UP AND DOWN?
You can see both aggressive and passive market participants with the help of order books indicators like, DOM, TIMES AND SALES, etc.
TRADINGVIEW is offering an orderbook, but you need to buy data from an external provider, in order to get access to full orderbook.
The interaction between market participants with different opinions about the market, will make the price to move up or down.
There are two types of market participants:
A. Aggressive market participants - are opening trades at the market price.
B. Passive market participants - are opening trades at higher or lower prices than the market price, with pending orders. The majority on this category are Market Makers.
In the above example, you can see that there is a pending order of BUY of 1250. When there are not enough aggressive sellers to consume this buy orders and other orders under it, than after the 1250 order will be filled, the price will move to the up side, with the smaller sell volumes, being consumed buy aggressive buy market orders.
3. WHAT IS INSIDE A CANDLESTICK, OR HOW DO THEY FORM?
Unfortunately, there is no advanced footprint indicator on tradingview, but by this occasion, I would like to ask if there are any pine script programmers reading this post, that would like to create together with me, a more complete or complex footprint indicator, that we can share it for free with the tradingview community. I have been designing trading indicators for a few years already, and I am sure we can develop a great indicator.
You can see inside of a candlestick, the filled aggressive market orders, and NOT pending orders, with the help of footprint indicators.
You can see the actual '' war between bears and bulls ''.
In the left side you will see SELL volume and in the right side BUY volume.
Some indicators will display the difference between SELL and BUY as DELTA VOLUME.
This information that you can find inside the candlestick with the help of FOOTPRINT indicator, are showing what the market is doing at the present time, and it is a good indicator for which side of the market is more dominant.
4. ON WHAT MARKETS IS THIS APLICABLE
All mention above, are applicable to the majority of financial market - Crypto, FOREX, Stocks, Futures.
ATT BEGINNERS !!!
All traded instruments are quoted to a certain currency. Every time you want to buy an asset, you will automatically sell another one.
In the Forex Market, when you want to buy EURUSD, this means that you will automatically sell USD.'
In commodities, usually Gold, Oil or like, are quoted to USD or EUR. So even though they are listed as GOLD or OIL on trading platform, they are in reality GOLDUSD or OILUSD.
One of the reason I had to mention this, is in connection with correlation between currencies, because when you see for example a big SELL volume, on EURUSD, you might consider that as a buy volume for USD. This means that the pair like USDJPY, will be indirect influenced by this, and it might go up.
5. HOW CAN YOU BENEFIT ON THIS INFORMATION TO YOUR ADVANTAGE AS A TRADER?
Indicators like footprints and orderbook, are used by institutions or professional traders.
While the majority of the indicators are displaying information based on past data, the footprint indicator and orderbook, are showing what the markets are doing in the present. So for a trader, in order to make future price prediction, these information can be a huge advantage.
Not only that, but when you see big volumes coming to the market, you can see on what side of the market institutions are placed, so you can be on their side too.
I hope this is useful to you, and if you have any questions, please leave a comment and I I will be happy to answer.
Don't stumble trading. Trade Safe!
