Strong Bid

Watching for relationships between price and order flow can be more useful then watching either price or order flow alone. We've shared the idea of context and how context will help to determine the meaning of the order flow. One trader recently wrote to me and asked, "What is a strong bid?"

First, it will help to understand that the large speculators often "drive" the market by sitting off market with large limit orders. A strong bid is when selling is unable to tick the market lower. A strong bid indicates that limit order buyers are stepping up and refilling the bid such that the market is unable to tick lower. A strong bid is a sign of demand.  Likewise, a weak bid occurs when even minimal selling is able to drive the market down several ticks. Weak bids are often warnings that the market may be getting ready to turn and drive lower.

A high volatility on the bids and offer in general may indicate a higher level of risk and higher volatility.

Thursday, February 28, 2013 2:16:00 AM Categories: education


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Hypothetical performance results have many inherent limitations, some of which are described below. no representation is being made that any account will or is likely to achieve profits or losses similar to those shown; in fact, there are frequently sharp differences between hypothetical performance results and the actual results subsequently achieved by any particular trading program. One of the limitations of hypothetical performance results is that they are generally prepared with the benefit of hindsight. In addition, hypothetical trading does not involve financial risk, and no hypothetical trading record can completely account for the impact of financial risk of actual trading. for example, the ability to withstand losses or to adhere to a particular trading program in spite of trading losses are material points which can also adversely affect actual trading results. There are numerous other factors related to the markets in general or to the implementation of any specific trading program which cannot be fully accounted for in the preparation of hypothetical performance results and all which can adversely affect trading results.