Limit orders = Liquidity
Orders being pulled or the market being spoofed are obviously things that happen (all the time) but that does not change the point I was trying to make. It’s another discussion.
What do you want to call it ‘Potential Liquidity’ or maybe ‘that massive offer at 32 might be someone spoofing the market’ ?
It is what it is…
Many of the orders in the markets are not filled at the correct prices.
And this is why we have to see how fast the markets are moving and how much liquidity is present in them at any given time.
Has absolutely nothing to do with what constitutes liquidity. I am aware of how markets function and what makes them move. I have been staring at a DOM 5 days a week for 12 hours a day for the last 10 years 
Wikepedia provides a definition of liquidity which is pretty much textbook: “In business, economics or investment, market liquidity is a market’s ability to facilitate the purchase or sale of an asset without causing drastic change in the asset’s price.”
To the extent that a market order facilitates a transaction to be filled with little to no movement in price, it provides liquidity on that basis. I don’t contest the idea that market orders consume liquidity, but I would contend that limit orders do also when filled. All executed orders both provide liquidity to one party and consume it from another. A limit order could not be filled without there being liquidity by which to do it. Standing orders merely indicate the presence of liquidity at certain price levels (spoofing aside). That liquidity can still exist without the standing orders in the form of future market orders to be entered when a given price is reached.
And be careful in assuming that others can’t match or exceed your knowledge/experience. Not everyone here is the in “baby” stage.
In Financial markets Limit orders add liquidity and Market orders consume it! Posting a wiki extract that is defining liquidity in very broad terms will not change that. Phone any exchange in the world and put the same question to them.
From the book ‘The Microstructure of Financial Markets’ By Frank de Jong and Barbara Rindi:
"Market orders are ‘at best’ orders and are usually submitted by impatient traders who care about minimising execution time more than the price at which the contract is executed. These orders TAKE LIQUIDITY from the book and then disappear.
Limit orders are submitted by patient traders, who care about price terms and add an indication of the limit price to the order. Limit sell orders can only be executed at or above the price specified in the order, buy orders at or below it. Limit orders therefore SUPPLY LIQUIDITY and increase the depth of the limit order book."
You could also read ‘Trading & exchanges’ by Larry Harris’ which discusses order types in a very similar fashion, as does ‘The quant investor’s Almanac’ by Irene Aldridge
I can post loads more extracts and book titles discussing this topic but it will get boring very fast I’m sure.
I did not, at any point, assume anything about other peoples knowledge. If someone makes a statement that I believe to be incorrect I have the right to express my view. Seems like you’re the one guilty of making assumptions
This is a disagreement about semantics I realise.
Regards
The main thing that we have to understand is that Market Liquidity will not be the same at all the times and at those times when we can get our orders fulfilled at the correct levels we see our orders being executed at correct prices.
But yet then at other times this may not happen and this will eventually results in price mismatch 
I agree with you.
Probably so. Let me ask this hypothetical, though.
Say the market is at 100. If one trader puts in a limit order to buy at 100 and another trader puts in an order to sell at 100, both orders should immediately be executed. In this case, who is providing liquidity and who is consuming it?
Here’s a related scenario. I’m looking to get long the market. A dealer has indicated the market is bid at 100 and offered at 105. I put in a limit order to buy at 103. The dealer fills it. Who is providing liquidity and who is consuming it? I’ve done just this sort of thing trading options, so we’re not talking a strict hypothetical here. I would argue that even though I’m using a limit order, I’m consuming the liquidity the dealer is providing.
My gut instincts red flagged you very soon after encountering your presence on here & that was very much confirmed in the resulting chaos & circus performances that followed.
Thank god I didn’t waste any of my valuable time on you because the bits & pieces of feedback I’ve read since also confirms you’ve simply copied & re-packaged stuff from other folks found in books & forum threads.
You had no credibility under your previous multiple nicks on here & judging by your recent behavior, including slagging off the Babypips admin/moderators on twitter, just because you couldn’t get your own way, confirms nothing much has changed.
I don’t respect or pay any attention to liars & sock puppets.
There are too many genuine professionals out there who are only too willing & able to verify & validate their credentials to bother with the likes of you.
Limit orders can only be filled with market orders. A limit can’t be filled with a limit!
The bid 100
The offer 101
If a trader has a limit order on the inside bid at 100 he is waiting for a seller to cross the spread (with a market order) and fill his limit.
If the seller did not want to use a market order and placed a limit instead, he would now be sitting on the inside offer at 101 waiting for a buyer to cross the spread (using a market order) and fill his limit.
If no one was willing to cross the spread using a market order, hypothetically speaking of course, nothing would happen.
The person using the limit order is offering liquidity, the person using the market order is consuming it.
In the other scenario, the trader placing a limit order inside the current best bid/offer spread is adding liquidity (and also changing the bid/offer spread) Any trader that decides to hit the bid and sell to the limit buyer at 103 is using a market order and consuming liquidity.
Regards
Michael’s latest video (all 25Mb of it) tries to prove he took a trade he didn’t.
The video shows a Twitter screenshot on Aug 21st that claims he called euro long at 1.1087. However, the title of the tweet was “Retail minded traders buy here”, so he obviously didn’t buy at that point.
The next screenshot shows price has gone up to 1.1290, and he claims he is in the trade. However, there is no proof anywhere that he took that trade. In fact, EURUSD moved 57 pips lower first to 1.1030, before making the move up. 57 pip stoploss anyone?
(Of course, I meant 200+ pips in the screenshot. Even worse showing the evidence 200 pips after it’s moved.)
Finally, either Michael is running a MyFXBook or not - this trade is not on his MYFXBook record which is not surprising, as he didn’t take it.
ICT SimTrader System by AverageJoeToPro | Myfxbook
… even then, it’s only demo, so there’s no excuse not to take it.
You wanted us to call you out Michael, and we will continue doing it. Cheers buddy.
You missed the Tweet I posted and it appears in the video where the Eur/Usd setup. The MyFxBook link is teaching subscribers to double their account over a year. I made that percentage 6% for August already. Compounded is over 100% return.
I called the trade from beginning to end and the 1.1350 target before it happened. You guys want so badly to feel like you exposed me as a con but it’s me proving in the presence of over 2900 people I’m not. Continue to do your best, those who see it as it happens know how silly you and the handful of similiar minded are on here.
You certainly do entertain me. lol
I apologize for answering the misinformed in your thread Op
However, if you invite me to show you some “fast moves” in September I’ll gladly show them here. For your learning and reading pleasure. 
[QUOTE=“MichaelHuddleston;718287”] You missed the Tweet I posted and it appears in the video where the Eur/Usd setup. The MyFxBook link is teaching subscribers to double their account over a year. I made that percentage 6% for August already. Compounded is over 100% return. I called the trade from beginning to end and the 1.1350 target before it happened. You guys want so badly to feel like you exposed me as a con but it’s me proving in the presence of over 2900 people I’m not. Continue to do your best, those who see it as it happens know how silly you and the handful of similiar minded are on here. You certainly do entertain me. lol <img src=“301 Moved Permanently”/>[/QUOTE] lolol. Everyone waited with bated breath for years to see the ICT myfxbook that he blew up back in 2012, to be posted again, showing a full recovery and at least six figures. Instead ICT sets up a new myfxbook using a demo account. Bahahaha… I’ve seen traders with less than a month trading experience take 10k demo accounts to a million, then blow their live account up in the first month. There’s a reason ICT is using a demo account, I think everyone here is smart enough to figure that one out.
Anyways, 90% of fast moves are caused by data or events that dramatically alter the markets outlook and perspective. It’s that simple. If an economic data release indicates that’s monetary policy may be changed, there will be a very fast and strong move the following minutes after the release. Sometimes you’ll even see the central bank itself intervene in the market, acting as a buyer/seller of its own currency with the intent of shifting price quickly and heavily.
It’s mutual entertainment buddy. I don’t see any trade entries or exits on your chart.
Easy to take a chart, add some vague musings to it and then later claim it was a successful trade.
And what serious trader trades from their mobile phone? Are you sure you’re not posting these from the kitchens of Colonel Sanders LMAO :18:
Yeah, that was Eur/Usd, on Wednesday Aug 19 at close. I suggested then to check out Gold, the currency of security.
When you are thinking of pulling money from risk, what riskier is there than stocks, so where is the next likely fast move going to be, don’t tell me it could be a sell on any of the Stock markets on Thursday or Friday.
It’s not smart money, it’s just common sense money
Michael, thank you for all of the incredible insights, years of mentoring, and the three piece with a biscuit.
Even todays stock market moves help answer the question. Notice on a daily chart, the YM made a lower low but the ES did not. This is simply a wealth transfer.
2015-08-24_1150 - Hogarste’s library
This is not because Dow traders smoke and eat more than S&P traders Bob.
Some reasons behind price action and its volatility.
There are a multitude of “reasons” behind volatile moves, or “spikes” in the market and the resulting retracements that occur.
As previously mentioned/discussed – ahead of any major economic indicator the “market” will have discounted any possible move based on market estimates. So when data is released there is always a “reaction” based on actual re estimate and any adjustment from the previous release.
However, there are certain events, like we saw on Monday August 24th that are not a result of economic data/FOMC announcements etc. What we saw was a reaction to the dramatic slide in China’s stock market being mirrored on the worlds stock exchanges. This, in turn, saw massive moves in the value of currencies as investors looked to “cover” positions (take profit or loss) or enter new ones (speculate). The forces of supply and demand kick in and we see demand outstripping supply.
To the question of how large banks/market makers move markets……
All Banks have clients that will leave take profit or stop losses with them. Normally, as the market flows freely, these orders are “triggered” and the client gets “filled” accordingly at or close to the requested “price”. However, Banks will also have much larger limit and stop orders that are, invariably, a distance away from the current market price. In times when there is increased volatility and the markets are moving directionally and spreads are widening with less volume then a Bank trader will look to “mitigate” risk by “covering” the order in the market ahead of the “price” of the order.
For example:
A Bank has a buy stop at 1.1275 for €500 MIO. EUR/USD is trading at 1.1225-26 when a significant piece of data hits the market resulting in a dollar sell off. Naturally EUR/USD starts going bid. The market starts to rally 1.1230 bid 1.1240 bid 1.1250 bid. The fear, and expectation, is that the market will continue to rally. Therefore, rather than waiting for the stop to get triggered by the market the Bank with the order will start to buy EUR. Chances are they may get €200 to €300 million in before the market goes 1.1275 bid and the stop is naturally triggered. They then cover the remainder of the order between 1.1275 and 1.1300. The market continues north and hits a high of 1.1350! Hopefully the average purchase price is close to 1.1275 so they can “fill” their client accordingly. Regardless, they will endeavor to fill the client as close to the stop order as possible. Remember that stops can be some of the hardest orders to fill. Clients regularly leave standard limit orders which can be “finessed” by the holder of the order – and in doing so Banks can, occasionally balance their P&L with a deep order book of both stops and limit orders.
If we also take the above scenario – where a large stop needs to be filled there will be times when a large sell limit is in the market. However, many traders still manually enter orders and do so as to not “show their hand” to the market. In such instances a heavy (panic) buying rout can go through levels where a Bank has a large sell order (in this example) by the time they realise their sell order needs to be filled the market has moved 20+ pips higher. Now the seller is desperate to fill his sell order so the trader will start “hitting” the market. These “corrections” or “reversals” happen a lot and are quite visible when they happen.
I am not suggesting that this is the only reason for a reversal/correction but I have seen such first hand. In addition a Bank will also have clients calling them throughout the day placing orders. So a client seeing a significant move may want to sell into it. If the order is in size then that too will cause retracements.
#DoubleHit #TradeSafely
