Someone asked me the question, and wanted to know how the order flow, liquidity and efficiency to be determined.
Order Flow
I order the flow of the transaction flow. Do you want to enter a command and executed. This may come in the form of market orders, limit orders hitting the stands. Or come in the form of a limit order becomes the best limit order. Do you want to flow. Flow of a series of transactions in the market, and implemented. Or are there in large enough that you should consume limit orders at various prices. But a series of transactions and limit orders to touch at various price levels.
If a market order of $ 100 million consumers because they consume liquidity in the limit laws.
Order flow is usually in the form of market orders. These aggressive commands are generally necessary in order to drive the market.
There are other ways to make a transaction, or only a small number of transactions.
For example, if the limits of the best bid and best offer for a different limit switch, without the transaction price levels, this will cause prices to move. This is usually the time required is usually associated with a lack of liquidity and news. While some transactions are usually at different price levels, even if small.
Liquidity
I love a lot of liquidity to limit orders. If you use a limit order $ 50 million to 50 pips from market price, adding liquidity. Limit the number of the best order of liquidity in terms of size, and they distributed between minimum fluctuations.
For example, if $ 100 million limit order is available on the EUR / USD is the best bid / offer, $ 100 million will be distributed in an increase in the pits, this is a very liquid market.
There must be many orders to limit the liquidity to consume. Because if a large market order arrives, and you want to do, you need to seek liquidity in limit order.
When spreads are tight, it may indicate that a liquid market. But it is also possible that a tight spread, pray bid / best and next to a small limit order. It is likely to spread in EUR / USD a pip, but only 10 million dollars in cash pip.
See my article on what a liquid currency pairs.
The best is when market liquidity and tight spreads a large number of limit orders available on every pip.
Inefficiency
There are many inefficiencies in the market. There are opportunities for arbitrage, not the stop loss, etc.
Weak points you want to trade large market movements. The market moves higher, the greater the efficiency of my head.
Big market moves enough =
Do not forget that there is already a major market force, both in liquid and liquid environments.
Most likely, the market moves 300 pips and consume a large border to prevent the price movement guarantee. This is both in the country, sooner or later, as long as willing to take command of the limit order.
There is also a large market movements in illiquid environment, where a small limit order occur.
You can use both. Big market moves that occurred when the consumption of large limit orders are generally the most durable. This is usually the most durable because they are usually in the news / mood / core / macro forces on their side. This means that the result is a significant step
Order Flow
I order the flow of the transaction flow. Do you want to enter a command and executed. This may come in the form of market orders, limit orders hitting the stands. Or come in the form of a limit order becomes the best limit order. Do you want to flow. Flow of a series of transactions in the market, and implemented. Or are there in large enough that you should consume limit orders at various prices. But a series of transactions and limit orders to touch at various price levels.
If a market order of $ 100 million consumers because they consume liquidity in the limit laws.
Order flow is usually in the form of market orders. These aggressive commands are generally necessary in order to drive the market.
There are other ways to make a transaction, or only a small number of transactions.
For example, if the limits of the best bid and best offer for a different limit switch, without the transaction price levels, this will cause prices to move. This is usually the time required is usually associated with a lack of liquidity and news. While some transactions are usually at different price levels, even if small.
Liquidity
I love a lot of liquidity to limit orders. If you use a limit order $ 50 million to 50 pips from market price, adding liquidity. Limit the number of the best order of liquidity in terms of size, and they distributed between minimum fluctuations.
For example, if $ 100 million limit order is available on the EUR / USD is the best bid / offer, $ 100 million will be distributed in an increase in the pits, this is a very liquid market.
There must be many orders to limit the liquidity to consume. Because if a large market order arrives, and you want to do, you need to seek liquidity in limit order.
When spreads are tight, it may indicate that a liquid market. But it is also possible that a tight spread, pray bid / best and next to a small limit order. It is likely to spread in EUR / USD a pip, but only 10 million dollars in cash pip.
See my article on what a liquid currency pairs.
The best is when market liquidity and tight spreads a large number of limit orders available on every pip.
Inefficiency
There are many inefficiencies in the market. There are opportunities for arbitrage, not the stop loss, etc.
Weak points you want to trade large market movements. The market moves higher, the greater the efficiency of my head.
Big market moves enough =
Do not forget that there is already a major market force, both in liquid and liquid environments.
Most likely, the market moves 300 pips and consume a large border to prevent the price movement guarantee. This is both in the country, sooner or later, as long as willing to take command of the limit order.
There is also a large market movements in illiquid environment, where a small limit order occur.
You can use both. Big market moves that occurred when the consumption of large limit orders are generally the most durable. This is usually the most durable because they are usually in the news / mood / core / macro forces on their side. This means that the result is a significant step
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