In other words, there is a willing seller ready to take the other side of your transaction. The reason why we can purchase FB stocks is that there are people who have put limit orders on the order book. The liquidity allows buyers and sellers to trade in that market. The top of the book is a key part of the order book because it shows you the highest bid or the best bid and the lowest ask price or the best asks. There is a situation that happens quite often with the order book, namely canceling orders.
This is something known as spoofing the limit order book. What is spoofing?
In simple terms, spoofing is the process of submitting large sell or buys limit orders added on the order book but with no intention to want to get filled on that particular order. The purpose of spoofing is to manipulate the market price and create a false depiction of liquidity in the market. By doing this, the smart money is trying to manipulate one side of the order book buy side or sell side and convince other market participants to join the market on the same side.
However, once enough traders bite the bullet, the large order gets canceled and never gets filled; but instead, the smart money is switching sides and go on the opposite side of the initial limit order. To spoof the market, the big player needs to create a false impression of a major seller order coming into the market.
Different Order Books Available
This will mislead other traders and high-frequency robots to believe there is a real interest to the downside. Once other market participants join in the market and sell, the price will start dropping. Your job is to train your eyes to spot this kind of spoofing activity and take advantage of it. In summary, the limit order book can be used as an additional trading tool in your trading toolkit. Most successful short-term traders in the world use order book trading.
We specialize in teaching traders of all skill levels how to trade stocks, options, forex, cryptocurrencies, commodities, and more. Our mission is to address the lack of good information for market traders and to simplify trading education by giving readers a detailed plan with step-by-step rules to follow.
Orderbook — TradingView
Forex Trading for Beginners. Shooting Star Candle Strategy. Swing Trading Strategies That Work. Please log in again. The login page will open in a new tab. After logging in you can close it and return to this page.
Time Your Forex Trades To Perfection With Open Orders And Positions
Info tradingstrategyguides. Facebook Twitter Youtube Instagram. Table of Contents hide. Author at Trading Strategy Guides Website.
Search Our Site Search for:. Close dialog.
Sunday at AM. Saturday at PM. Non-repaint arrow alternative indicator. Mar 25, Indicator Brilliant reversal indicator. Mar 23, Max 5 for binary and forex indicator. Mar 22, Oasis isisM5 binary indicator. MRS Indicator loking for. ATR exponential forex mt4 indicator.
Understanding Order Flow in the Forex Market
Mar 21, X Kinetic Scalper Indicator, the ultimate forex trading tool. Mar 19, Fire signal indicator for Binary trading 1Min tf.
Mar 18, Does anyone have a really good Market Sentiment Indicator. Mar 17, General coding an indicator to be used as trial version. Mar 16, Master entry indicator. Mar 15, Quake sm 5em1Forex and Binary Options indicator. Slope Direction Line Indicator. Show Pips Indicator. Support and Resistance Indicator. Candle Time Indicator. ATR indicator.
Order tickets
New EA hi everyone, anyoone with vix crush indicator. Mar 14, I got the golden road blueprint indicator, what's the best time frame and the currencies to use it on? Mar 9, Mar 8, Can anyone help to convert this indicator from mt5 to mt4 please!!! Mar 5, Anyone who has a non repainting indicator for vix mt5??
Mar 4, What is the best 2 min arrow indicator for binary option trading? Mar 3, The beast indicator for volatility indices. Mar 2, Indicator Any Trading Indicator for step index. Feb 28, Feb 27, Feb 26, Driver Indicator metatrader4.