What do they mean with walls?
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I see the term “wall” a lot at the trading markets. Can someone explain this term?
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Exchanges list two sets of prices for every trading pair: The bid, and the ask.
The bid is people buying, and the prices they are willing to pay… what they’re bidding. The ask is the people selling, and the prices they are willing to sell at… their asking price. When a bid and an ask order have the same price, a trade is made, and both orders are removed from the order books.
A wall is when someone enters an order to sell or buy a LOT of a particular asset at a given price, which creates a market barrier to price changes: In order to move the price above or below that large order, someone would have to buy or sell ALL the volume being offered at that rate. We call this a wall, because there’s usually a lot of small orders on the market books which would be easy to buy/sell into, changing the price, but moving it beyond a large order, or wall, would require some more significant liquidity. When someone goes ahead and spends that liquidity to buy or sell out that large order, we call that taking the wall down, because it’s now easier to move the price beyond it… until you reach the next wall of orders.
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[quote name=“hammie123” post=“40551” timestamp=“1386339540”]
I see the term “wall” a lot at the trading markets. Can someone explain this term?
[/quote]They’re all fake I tell ya! Hit them a few times and watch them vanish. ;)
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Thanks for that information. I knew what a buy wall was, but didn’t understand how it built up.
I don’t like exchanges, it will be great when we can just do everything in Feathercoins.
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It’s a large Sell or Buy order at a certain price or groups of prices which when looked at on a histograph like [url=http://bitcoinity.org/markets]Bitcoinity[/url] resembles a wall. See the green and red lines in the bottom chart? This is the volume of orders at a given price. So if someone puts a $1m buy order at $1000 a Bitcoin that line will be higher.
In theory these walls have a psychological impact on peoples behaviour in the market. A very large buy order could prevent the price from going down because people wanting to buy would put their orders in higher to get a quicker trade. However walls can also be there to trick people in to settling a trade sooner than they would have liked a sub optimal price.
In a genuinely free market very price is a real price; it is an honest trade between buyer and seller each providing value to the other. However these are not perfect conditions and alas we are not able to know the true intentions behind each trade as any man made system is liable to manipulation given sufficient opportunity and incentives.
Hope this helps.
