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What does an increase/decrease in volume after a rise/fall in the market imply? There is not necessarily a right or wrong answer to these questions, what is important for your trading is that you start to create a means of interpreting the price action, based on your own observations. If you misinterpret a particular behavior you will soon know, as the market will prove you wrong. This is one of the wonderful aspects of trading; you get perfect feedback. Here are some possible interpretations: What does an improved bid imply? This is usually a bullish indication: the buyer is keen to buy and does not want to join the current bid and wait in line; an improved bid implies that the current offer is more than one tick above the current bid (the spread is greater than one tick) which is not aggressive selling. What does an improved offer imply? Inverse of above. What does a big bid imply? This is usually a bullish indication, but it is more useful to observe how the market responds to this bid. What does it imply if this big bid is sold in one hit? This suggests that there are sellers waiting on the sidelines, a sign of weakness What does it imply if this big bid is sold gradually? Suggest some tentativeness by sellers, if they manage to sell the entire bid the market will often dip briefly and then rise suddenly because the sellers have exhausted their ammunition selling the large bid. 72 What does a big offer imply? As above, I have also noticed that when big offers appear that are just trying to intimidate the market (you know this when they appear briefly and disappear before being hit) it is usually a sign of strength. Perhaps if sellers are resorting to bully tactics their position is weak. What does it imply if this big offer is bought in one hit? Clearly a sign of strength. What does it imply if this big offer is bought gradually? As above for big bids (inverse). |
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