Hi Micha
I agree with you that passive limit orders move the market and I also agree the Algo is selective in which limit orders it chooses to open.
For example if the market is rising and hits a deep pool of liquidity and plans a bearish move, if you place a a limit Sell order in the area of thin liquidity, perhaps say at the top edge of the pool, there is only a 50% the Algo will step up to open the order. If now we change that limit sell order to a Buy limit order and place it at the say spot, it will almost always open up the losing position.
That is what I see on a live chart trading around liquidity pools and it really does feel like your small retail order goes to the back of the queue and not to be touched, unless it suits the market makers. My stats say 2 to 1, it will only open a order that suits them.
This is why I no longer use passive limit orders and stops but choose to sit on my chart while a position is opened. One trick I do see the Algo perform a lot on M1 chart is to produce a wide ranging candle of say 8 pips, hold movement for 2-3 seconds then create a tiny gap up and move about half a pip. It gives the sense price is moving bullish. It then holds for another 2-3 seconds allowing time for those traders to jump in with market buy orders - Then goes strongly bearish.
Time & Time again.
So placing passive Limit orders on a chart gives only a moderate advantage to the retail trader unless they are can't be on the charts at the time, in my opinion.
Cheers Rick
I agree with you that passive limit orders move the market and I also agree the Algo is selective in which limit orders it chooses to open.
For example if the market is rising and hits a deep pool of liquidity and plans a bearish move, if you place a a limit Sell order in the area of thin liquidity, perhaps say at the top edge of the pool, there is only a 50% the Algo will step up to open the order. If now we change that limit sell order to a Buy limit order and place it at the say spot, it will almost always open up the losing position.
That is what I see on a live chart trading around liquidity pools and it really does feel like your small retail order goes to the back of the queue and not to be touched, unless it suits the market makers. My stats say 2 to 1, it will only open a order that suits them.
This is why I no longer use passive limit orders and stops but choose to sit on my chart while a position is opened. One trick I do see the Algo perform a lot on M1 chart is to produce a wide ranging candle of say 8 pips, hold movement for 2-3 seconds then create a tiny gap up and move about half a pip. It gives the sense price is moving bullish. It then holds for another 2-3 seconds allowing time for those traders to jump in with market buy orders - Then goes strongly bearish.
Time & Time again.
So placing passive Limit orders on a chart gives only a moderate advantage to the retail trader unless they are can't be on the charts at the time, in my opinion.
Cheers Rick
Trading thin liquidity at the boundary of the charts
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