Hi,
Excuse the newbie question, but i'm struggling to fully understand the order ladder, i've seen many basic video/blog explanations, but one thing in particular is confusing me. The current "best" price is obviously where the main immediate buy/sell activity is, however if I look at the ladder say 4-5 ticks away, I'm surprised to see the queued number of orders fluctuating wildly up & down, why "down"? I can understand people might cancel orders thus reducing it but the wild fluctuations is more than that. I am sort of guessing it's "bots" putting orders in then removing at alarming rates...? The other reason I guess could be people buying/selling not at the "best" price, but that would seem stupid?!
I've probably just demonstrated my total missunderstanding of the subject! so any help much appreciated?
Thanks
Fully understanding the "Order Ladder" ?
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CallumPerry
- Posts: 575
- Joined: Wed Apr 19, 2017 5:12 pm
- Location: Wolverhampton
Bots, people choosing an entry they want, people choosing exit points, stop losses, adding or taking away from positions (scaling in/out of trades) etc pretty much all of this adds to the 'noise' of the market. There can be quite a lot of chaos in some markets.
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ShaunWhite
- Posts: 9731
- Joined: Sat Sep 03, 2016 3:42 am
You can't actually transact at worse than best price (it's in the terms) so as Callum says it's just people getting positioned early. If you're at the front of the queue you have a better chance of being filled if the price is just touched. And as you can also have bets persist through to in-running, even offers way way out of the current range can come into their own during the race.