Exchange glass and the trades feed on cryptocurrency exchanges
In the forecasts of financial analysts there is often the expression "stock market" and related terms. Many have heard them, but not everyone understands their meaning. Today, we're going to look into what the stock market and the transaction feed on cryptocurrency exchanges are all about.
What is the stock market?
The stock market glass or deal glass is list limit orderswhich are registered at the exchange. Orders are made in a table and are distinguished by color:
- Sell orders (Ask) - highlighted in red;
- buy orders (Bid) - highlighted in green.
All together such orders are called offers from the English word Offers (price offer).
The difference between the best order Ask and the best order Bid is the spread.
In addition to the one presented in the example, the stock market may have the following display options, which depend on the software used:
- table, in which Ask orders are located in the upper part, and Bid orders - in the lower part;
- a graphical display in the form of a histogram;
- charts and more.
What orders are displayed in the stock market
There are several types of orders on a cryptocurrency exchange, but not all of them make it to the exchange glass. Let's look at the three most common types of orders on cryptocurrency exchanges:
- Market order - instantly opens a deal at the current price. Such orders do not get to the stock market slider, but are displayed in the deals feed.
- A limit order is a The transaction on sale or purchase which opens only at achievement by the price of an asset of the value specified by the trader. Limit orders are immediately entered in the stock market.
- A conditional order is a an order assuming the occurrence of certain conditions in the market, after which a market order will be opened or a limit order, which will be displayed in the stock ticker.
If the limit orders of several traders contain the same price, then in the stock market they are displayed in one line, and are executed in order of priority.
What is a deal strip?
All orders, executed on the exchange, get to the tape of deals, where the time and price of execution of the order are indicated. Buy trades are marked in green, sell trades are marked in red.
In addition, the transaction tape contains information about the volume of each transaction. This record is called "print".
The trades feed is used to analyze the activity and sentiment of the exchange:
- if an asset's trade strip has reduced activity, then such an asset is low-liquid;
- If buying prevails in the ribbon, then the asset is dominated by bulls, if selling - by bears.
What stock players fill the stock market cup
Of course, the stock market glass is filled by traders, however, a trader is not the same as a trader, so for a more effective analysis of the stock market you need to understand what types of players take part in its formation.
- Major players
As a rule, these are investors who have quite large volumes of the asset on their balance sheet. Large players can cause serious changes in the price of the asset. Identifying them, as well as figuring out their goals, is the main task of stock market analysis. It is not very easy to do - often large investors break large volumes into several smaller orders, which can be seen when analyzing the tape of transactions.
- Mid-sized traders and investors
This is the largest audience of cryptocurrency exchanges. They trade on their their own tactics and strategies. This category is most susceptible to panic, and their behavior is easy to predict. Traders and average investors can be distinguished by the volume of their transactions and the frequency of placing orders.
- Market Makers
This category of players maintains the liquidity of certain assets in the market by placing orders and also reduces the size of the spread. This is beneficial primarily for the cryptocurrency exchanges themselves, as well as for issuers of cryptocurrencies and tokens with low liquidity.
Such activity is quite risky, so market makers use special algorithms for two-way quotes in their work. Crypto exchanges encourage market makers with preferential commissions, which gives them an opportunity to make transactions in different directions.
- Scalpers
This category includes traders and trading robots, which open a significant number of transactions during the exchange session with a short life time. This category of exchange players profits as a result of trading within the spread.
Roughly it looks as follows: having analyzed the stock market, the scalper places the order with the best price Bid and practically together with it the order Ask. If the moment is correctly calculated, the profit from the transaction will greatly exceed the commission.
Another option is possible. An order with a large volume appeared in the stock market. Often, such orders are not executed immediately. The scalper sees such an order and opens a deal relying on the fact that after the execution of such a large order, the stop losses of those traders who have bet on the price rebound will be closed. It is on price acceleration after stop-losses triggered that scalpers try to make their profit.
- High-frequency trading robots
Due to the almost instantaneous execution, orders of high-frequency robots are quite difficult to notice in the stock market, but they are perfectly visible in the trading feed. Robots work according to special algorithms and are distinguished by a very high speed of calculations.
How to analyze players' orders in the market depth and the trades feed
As we said above, the main task of the analysis of the stock market is to identify the major players. It is necessary to pay attention to transactions with large volumes in the cup. They will give an understanding of which way a major player can move the price of the asset. Orders with large volumes are called "wall".
At the same time, you should always keep in mind that a large volume in the bet is not always behind a major player - if the orders from several traders are set at the same price, they are displayed in one line.
If you, after analyzing the orders in the stock market, have found a wall, then pay attention to where it is located.
If the wall is located approximately at the maximum or minimum daily values, then such a level can be marked as a zone where most players plan to close their deals, which means that this will be followed by a price reversal.
In the case of a wall located near resistance or support levelIt should be understood that the price, most likely, will not overcome it, so the zone behind the wall is optimal for placing a stop-loss order.
If a large order is placed by just one large player, you should be prepared for the fact that as soon as the price comes up to such a wall, the player can cancel his order and the wall will disappear. In this case, the price will not hold anything back, and it will easily reach the stop-losses set behind such a wall.
Big players, masquerading as middling investors, can break their trades into several parts. This phenomenon is called an iceberg, the visible part of which is in the stock market. The underlying part of this iceberg is displayed in the trades feed. It looks approximately as follows:
- In the stock market there is always a large order at a certain price. As soon as this order is executed, the same order immediately appears in the stock - this is the visible part of our iceberg.
- The underside of such an iceberg will be visible in the trades feed as a multitude of executed orders at the same price.
If you notice an iceberg when you analyze the stock market and trade feed, you need to understand that you are observing a major player breaking his wall into multiple orders in order to keep the price of an asset at a certain level.
Conclusions
It is not an easy task to analyze the stock market and the trades feed. It requires diligence, concentration, attention and understanding of the processes occurring in the exchange market. However, this activity is more than compensated by the opportunity to accurately predict the price of a financial asset, determine the best point to enter the market, as well as the level where a closed deal will give the highest profit.
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