Mistagear

I admit to having NOT read the previous pages. It is my understanding that every time based bar from a 1 minute to a daily bar begin at the first transaction reported by the Exchange . Essentially a day's trading is broken down into whatever time increment the trader desires but if there is 6 hrs of trading, then everyone who is looking at a 1 min chart will see the same 360 bars as everyone else.The local time at your computer does not affect the number of bars or when each bar begins and ends. The start and stop is set by the live data from the exchange. The consequence of this, it is possible in the short term to manipulate price action to give an impression which not what is actually happening. A large trader knowing exactly when a 1 minute bar will end, could sell into the bid for say 45 seconds and then buy a smaller amount from the offer in the last few seconds. This could create an impression that high volume is entering the market and the bar closes on its high. Most traders will think this is mostly demand hitting the market when in fact it is supply heavy. Rinse and repeat this process for 5 consecutive minutes and you now have every trader that is using a 1 min, 2 m, 3m, 4m or a 5 min chart with a false impression of what is happening. Do this at times throughout the day and even longer intra day timeframes are also affected. eg, a 30 min bar could close near the high on big volume and have the same false impression created. I believe it is possible to sometimes see this happening when using a 1min chart and a volume chart simultaneously. Because all momentum based indicators are lagging, I think it probably has some detrimental affect and creates a false impression there as well, although I dont use any so can not say for sure.

Horace, IMHO Bid/Ask volume on a DOM ladder IS NOT THE MARKET. A market exists only when a trader crosses the Spread. It matters not how many Bids or Offers are positioned on either side of the Spread. What has to happen, is for a new seller prepared to sell below the spread or for a new buyer to pay higher than the spread. The relative depth on either side can induce new trades to cross the spread, and in most liquid markets includes bids and offers which have been placed in the depth, only to try and influence general perception of strength or weakness. If you think about it, sellers are always the controllers of market price. eg. if last price traded was $10.00 where the next lowest holder prepared to sell his parcel is at $15, what happens?... nothing happens. if a buyer appears at $12.00 and still no sellers below $15.. nothing happens. Nothing happening continues until someone is prepared to cross the spread, either a new buyers steps up to pay the $15 ask or a new seller is prepared to accept the bid. Why I say sellers control the market, if last sale was $10 and no bids exist above $5, the price does not automatically drop. Last price remains at $10. Price heads to the lowest price where sellers exist. When all sellers are exhausted at a particular level, price can not fall further. Usually this creates a buying rush once bidders realise there is no chance to fill their orders at any lower level. When price has been rising and suddenly there are no more buyers prepared to cross the spread, price will only drop if new sellers enter the market by crossing the spread to sell lower.