I hear all the time:
-the price is going up, the buyers are in the market.
-the price is doing down, the sellers are in the market.
I don’t believe it is true. I think it is exactly the reverse situation.
If 100 traders open buy positions and the price goes up, who is loosing ? Where is the profit coming from ?
Do the banks really want the quote to go up at their expenses or are they in the game for profit also ?
I’ve seen somewhere a DOM window, but I have my reserve about the concept.
In my view:
If I open a buy EUR/USD order, the bank sells me EUR for USD
The spread reflects a broader concept: I buy higher than the sell quote. If I buy 10 mil the bank would sell me 10 mil. The next thing for the bank would be to buy back the same amount at a lower price to make profit.
How does it do that ? It drops the price until the traders will sell the entire amount of 10 mil. At this point the bank has done it.
According to the concept above, the buyers move down and the sellers move up the price.