market direction theory

[Nathan]

Hello MQL5 community,

WhooDoo22's trivia :)

The biggest order (namely a buy order) is contained within an unknown currency pair. There is a drastic difference in size between this buy order compared to all sell orders combined contained within the unknown currency pair. This buy order is fifty points in profit and it's financial manager decides to close the buy order. Will the market travel rapidly down once the buy order is closed? If so, why? If not, why?

Thank you

[Sergey Golubev]

I am not sure that I understand sorry ... 50 points in case of 5 digit broker = 5 pips.

Market may be moved if financial manager is the government and this 5 pips = few billion dollars for example :)

[Nathan]

newdigital:

I am not sure that I understand sorry ... 50 points in case of 5 digit broker = 5 pips.

Market may be moved if financial manager is the government and this 5 pips = few billion dollars for example :)

Thank you for your post newdigital, maybe I can simplify this?

Does a currency pair's price move when a large order is placed, closed or both?

Thank you

[Dua Yong Rew]

when you close a buy order, you are actually doing a sell.

you will fill those sell orders for a few levels and trigger those stop loss if the amount is huge enough 

[Nathan]

doshur:

when you close a buy order, you are actually doing a sell.

you will fill those sell orders for a few levels and trigger those stop loss if the amount is huge enough 

Hello doshur,

A currency pair consists of two forces (buy size whole number vs sell size whole number), whichever buy/sell whole number is larger determines price direction, correct?

My interpretation of your statement "when you close a buy order, you are actually doing a sell." is-

Buy size whole number decreases while sell size whole number remains the same if a previously opened (but now closed) buy order increased the buy size whole number to a greater size than the sell size whole number.

What is the meaning of this statement "you will fill those sell orders for a few levels and trigger those stop loss if the amount is huge enough"?

Thank you

[Nathan]

Scenario: Buyers are stronger than sellers so price is traveling up and when price is traveling up, price is hitting stop losses periodically.

The scenario above contains two factors which adjust price direction. These two factors are one, buyers size is larger than sellers size and two, as price travels up, price is breaking through seller stop losses which increases the speed for a very temporary "rush" in price as price continues traveling up.

Apparently price has a "long term" direction (based on size of buyers to sellers) and price also has a "short term" direction (based on buyers/sellers stop losses getting broken through).

So, ultimately its all about price hitting stop losses which determine "short term" price direction and size of buyers to sellers ratio witch determine "long term" price direction.

Any outside input would be appreciated.

Thank you