Trading on a Silver Platter
Trading in its basis is extremely simple.
Next to no knowledge is actually needed .. yet most seem to fail to understand or acknowledge (the irony 😂 ) this.
Knowledge can help .. but it's not a must (plenty of examples out there, traders that (think they) 'know' tons of strategies and indicators yet fail to produce any meaningful amount of money but also people that continuously make money without understanding most of the 'mechanics').
While I usually extensively and vigorously try to explain that what is being presented to the trader is their actual downfall .. the actual trap .. I will not do so this time.
It always boils down to the fact that people are unwilling and/or incapable of learning a trait (to trade), they want everything presented to them on a Silver Platter.
(you can read my previous long rambling if you are bored out of your wits here)
CLICK 👇
.. or any one of the older ones .. the older they get the less fuzzy and weird, I either am losing my marbles or .. (mumbling something about "for me to know for you to find out")
"This time it is different" famous phrase .. really .. look it up, a real paradigm shift 🤦.
No, seriously though, this time I want to talk about what simple dynamic really moves the actual markets .. like .. fo'real .. on a Silver Platter so to speak.
No .. this is not going to be about Whales or other fabled creatures 👇
(by now, most should have clicked away already 😂 good, bye bye)
This is about how ORDERS are actually EXECUTED at an exchange and why that matters (how does this tie in with all those 'dumb indicators' .. why are they much less useful than most think).
There are tons of different types of orders a person can place.
For simplicities sake, I will be talking only about the 2 main orders and 2 directions.
Namely:
Long and Short
Limit and Market
A Long order meaning you buy in hopes it gains going up (getting worth more .. so you can sell in profit .. this time)
A Short meaning you are betting .. you hope .. it goes down ( 😒 )
If you like to make either of these two trades, you again have two possibilities.
You either place a LIMIT order, meaning you specify exactly at which price to buy or sell
or you take a MARKET order, meaning, buy NOW, (pretty much) regardless of current price (huge mistake many people make (butterfingers for the win 👍, thanks people, Love y'all ❤️))
So here is the thing in a nutshell:
No not this one again 👇
(is this guy ever going to stop pointing to his old dumb charts, stop telling us things we already know .. is he ever really giving us something useful .. on that silver platter of his ?)
.. did the last reader finally go away ? 👍
Without any orders in the ORDER-BOOK a MARKET-ORDER can not execute.
Since somebody has to actually be willing to sell when others want to buy 'right now' .. an order has to be present in the ORDER-BOOKS.
Those are the LIMIT orders.
The exchanges trade engines execute all orders against these LIMIT-ORDERS.
Whoever places those LIMIT-ORDERS is called a MARKET-MAKER (even though they do not use MARKET-ORDERS, they MAKE the MARKET, they provide Liquidity .. confusing enough for ya ? .. shenanigans .. manipulation .. all over the place, you're not supposed to understand, you're supposed to fumble and fail .. repeatedly, give them your money already, "better luck next time eyh?" 😉)
Without going into further detail on those .. if any sort of Leverage is involved, your "position" risks being Liquidated (forcefully sold - as MARKET-ORDER) or people have set STOP-LOSSES (usually LIMIT-ORDERS but different types exist)
Now the Trading Fun begins 🤑🤑🤑
Someone has set some LIMIT SELL ORDERS just above current price, they are small and evenly spread incrementally.
You now come running in an want to buy RIGHT NOW because you've heard your barber talk about ...
You smack down that MARKET-ORDER BUY Button and ...
one by one that other fellows LIMIT-ORDERS get filled ... by YOU.
BUT .. you inadvertently also trigger someone's SHORT-STOP and maybe even someone's SHORT-LIQUIDATION, which in turn trigger even more LIMIT-ORDERS creating a 'SPIKE' (wick, violent candle (on some miniscule time-frame)).
Let's take a look at Bitfinex's ORDER-BOOK for BTC derivatives (Perpetual contract - USDT) for example.
☝️
Current price is between 16552(ask) and 16553(bid) - these are the LIMIT-ORDERS (buy and sell).
If you now were to place MARKET BUY order for 10 BTC, it would (have to) fill everything up to 16562.
That one single MARKET order would, in other words, momentarily (briefly) spike the price up to 16562.
If there are any hidden orders, Stops or Liquidations between 16553 and 16562, the movement can become a lot larger (going up so triggering SHORT positions Stops and Liquidations).
You and the LIMIT-ORDERS are not the only participants at any given moment BY FAR, there are constantly some BOTS and other live traders looking at the current price.
It is likely your order is not executed in one go either, zigzagging up and down before finishing yours.
The more participants, the more 'stable' price gets (less money to be made on short term, there is always someone outperfroming you).
The less participants (orders/money .. also known as "Low liquidity") the more 'Volatile' the market gets (more money to be made on short term .. if you know how to!).
☝️
Same thing can happen of course in the other direction.
You decide to MARKET-SELL your huge chunk (10 BTC) but the ORDER-BOOK is too thin, there are not that many people willing to buy at current price (there is no direct matching LIMIT-ORDER), so your sell will pull price down more and more until enough buyers are found. Again possibly triggering more and more LIQUIDATIONS and STOP-LOSSES .
Your order will pull the price down to 16542 (technically speaking: the price is already there, the price/the order-book is pulling your order down), again likely to trigger stop-losses and Liquidations on the way down, pulling price even further down (going down, so triggering LONG positions Stops and Liquidations).
Since ORDER-BOOKS are first come first serve, it might even happen that your sell order gets filled WAY lower than you anticipated or hoped for, since someone's stop-loss (set days earlier) might take priority and price moves lower and lower before yours get filled.
If you truly and fully understand all this and all of its implications, when you can visualize the order-flow, trading should become a walk in the Park (and you won´t be needing any of these humbug Indicators).
It is a very simple symbiosis.
Limit orders need market orders
Market orders need limit orders
and so the price keeps zigzagging up and down on a whim (a very small order can potentially trigger an avalanche).
Only to stop once there are no counter orders for either one party.
Then to continue once there are new orders, in either direction, based on the whim again of where ever the majority wants to go. The ever so slight tipping of the scale.
Little Bonus:
If you now understand how an exchange, a trade, truly works ..
If you also understand that the charts, the candles/bars, are a simple representation of that very movement in conjunction with an amount (volume) ..
and
If you understand that pretty much all indicators are simple mathematical regurgitations of previous prices (and sometimes volume) ..
How much validity do you (still) think most of these "Indicators" and thereof derived "Signals" truly hold ?
How much of it is just self-fulfilling prophecy if enough people gawk at them ?
If you also understand how the human psyche works (greed, fear, anxiety, panic, euphoria .. ) ..
.. what would be much more important and fruitful to be looking at ?
Next to no knowledge is actually needed .. yet most seem to fail to understand or acknowledge (the irony 😂 ) this.
Knowledge can help .. but it's not a must (plenty of examples out there, traders that (think they) 'know' tons of strategies and indicators yet fail to produce any meaningful amount of money but also people that continuously make money without understanding most of the 'mechanics').
While I usually extensively and vigorously try to explain that what is being presented to the trader is their actual downfall .. the actual trap .. I will not do so this time.
It always boils down to the fact that people are unwilling and/or incapable of learning a trait (to trade), they want everything presented to them on a Silver Platter.
(you can read my previous long rambling if you are bored out of your wits here)
CLICK 👇
.. or any one of the older ones .. the older they get the less fuzzy and weird, I either am losing my marbles or .. (mumbling something about "for me to know for you to find out")
"This time it is different" famous phrase .. really .. look it up, a real paradigm shift 🤦.
No, seriously though, this time I want to talk about what simple dynamic really moves the actual markets .. like .. fo'real .. on a Silver Platter so to speak.
No .. this is not going to be about Whales or other fabled creatures 👇
(by now, most should have clicked away already 😂 good, bye bye)
This is about how ORDERS are actually EXECUTED at an exchange and why that matters (how does this tie in with all those 'dumb indicators' .. why are they much less useful than most think).
There are tons of different types of orders a person can place.
For simplicities sake, I will be talking only about the 2 main orders and 2 directions.
Namely:
Long and Short
Limit and Market
A Long order meaning you buy in hopes it gains going up (getting worth more .. so you can sell in profit .. this time)
A Short meaning you are betting .. you hope .. it goes down ( 😒 )
If you like to make either of these two trades, you again have two possibilities.
You either place a LIMIT order, meaning you specify exactly at which price to buy or sell
or you take a MARKET order, meaning, buy NOW, (pretty much) regardless of current price (huge mistake many people make (butterfingers for the win 👍, thanks people, Love y'all ❤️))
So here is the thing in a nutshell:
No not this one again 👇
(is this guy ever going to stop pointing to his old dumb charts, stop telling us things we already know .. is he ever really giving us something useful .. on that silver platter of his ?)
.. did the last reader finally go away ? 👍
Without any orders in the ORDER-BOOK a MARKET-ORDER can not execute.
Since somebody has to actually be willing to sell when others want to buy 'right now' .. an order has to be present in the ORDER-BOOKS.
Those are the LIMIT orders.
The exchanges trade engines execute all orders against these LIMIT-ORDERS.
Whoever places those LIMIT-ORDERS is called a MARKET-MAKER (even though they do not use MARKET-ORDERS, they MAKE the MARKET, they provide Liquidity .. confusing enough for ya ? .. shenanigans .. manipulation .. all over the place, you're not supposed to understand, you're supposed to fumble and fail .. repeatedly, give them your money already, "better luck next time eyh?" 😉)
Without going into further detail on those .. if any sort of Leverage is involved, your "position" risks being Liquidated (forcefully sold - as MARKET-ORDER) or people have set STOP-LOSSES (usually LIMIT-ORDERS but different types exist)
Now the Trading Fun begins 🤑🤑🤑
Someone has set some LIMIT SELL ORDERS just above current price, they are small and evenly spread incrementally.
You now come running in an want to buy RIGHT NOW because you've heard your barber talk about ...
You smack down that MARKET-ORDER BUY Button and ...
one by one that other fellows LIMIT-ORDERS get filled ... by YOU.
BUT .. you inadvertently also trigger someone's SHORT-STOP and maybe even someone's SHORT-LIQUIDATION, which in turn trigger even more LIMIT-ORDERS creating a 'SPIKE' (wick, violent candle (on some miniscule time-frame)).
Let's take a look at Bitfinex's ORDER-BOOK for BTC derivatives (Perpetual contract - USDT) for example.
☝️
Current price is between 16552(ask) and 16553(bid) - these are the LIMIT-ORDERS (buy and sell).
If you now were to place MARKET BUY order for 10 BTC, it would (have to) fill everything up to 16562.
That one single MARKET order would, in other words, momentarily (briefly) spike the price up to 16562.
If there are any hidden orders, Stops or Liquidations between 16553 and 16562, the movement can become a lot larger (going up so triggering SHORT positions Stops and Liquidations).
You and the LIMIT-ORDERS are not the only participants at any given moment BY FAR, there are constantly some BOTS and other live traders looking at the current price.
It is likely your order is not executed in one go either, zigzagging up and down before finishing yours.
The more participants, the more 'stable' price gets (less money to be made on short term, there is always someone outperfroming you).
The less participants (orders/money .. also known as "Low liquidity") the more 'Volatile' the market gets (more money to be made on short term .. if you know how to!).
☝️
Same thing can happen of course in the other direction.
You decide to MARKET-SELL your huge chunk (10 BTC) but the ORDER-BOOK is too thin, there are not that many people willing to buy at current price (there is no direct matching LIMIT-ORDER), so your sell will pull price down more and more until enough buyers are found. Again possibly triggering more and more LIQUIDATIONS and STOP-LOSSES .
Your order will pull the price down to 16542 (technically speaking: the price is already there, the price/the order-book is pulling your order down), again likely to trigger stop-losses and Liquidations on the way down, pulling price even further down (going down, so triggering LONG positions Stops and Liquidations).
Since ORDER-BOOKS are first come first serve, it might even happen that your sell order gets filled WAY lower than you anticipated or hoped for, since someone's stop-loss (set days earlier) might take priority and price moves lower and lower before yours get filled.
If you truly and fully understand all this and all of its implications, when you can visualize the order-flow, trading should become a walk in the Park (and you won´t be needing any of these humbug Indicators).
It is a very simple symbiosis.
Limit orders need market orders
Market orders need limit orders
and so the price keeps zigzagging up and down on a whim (a very small order can potentially trigger an avalanche).
Only to stop once there are no counter orders for either one party.
Then to continue once there are new orders, in either direction, based on the whim again of where ever the majority wants to go. The ever so slight tipping of the scale.
Little Bonus:
If you now understand how an exchange, a trade, truly works ..
If you also understand that the charts, the candles/bars, are a simple representation of that very movement in conjunction with an amount (volume) ..
and
If you understand that pretty much all indicators are simple mathematical regurgitations of previous prices (and sometimes volume) ..
How much validity do you (still) think most of these "Indicators" and thereof derived "Signals" truly hold ?
How much of it is just self-fulfilling prophecy if enough people gawk at them ?
If you also understand how the human psyche works (greed, fear, anxiety, panic, euphoria .. ) ..
.. what would be much more important and fruitful to be looking at ?
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