![]() Many traders will see a large order being placed and take a position in front of the large orders in the hope of profiting. When a big order is placed other traders can choose to trade with and against these large orders. People can see buy and sell orders being made and completed using what is called Level 2 data. They do this because they know that large orders can move the market. They will tend to complete the order in instalments. If a broker takes a large buy order from a client then they will not enter the order in one go. These major players often use moving averages of price to enter and exit trades in a market and to judge a bull and bear market. The vast majority of trades are done by major players, the big banks, broker dealers, hedge funds, investment and pension funds etc. Small, lone traders form a very small part of the overall number of traders in a market and account for a small part of the total volume of contracts bought and sold. This is sometimes a game that the big traders play. In fact, if you bought so many of the items that you forced the average market price up, then you will actually have had a hand in your own destiny. If you buy something below an average price then you have a good deal, don’t you? The deal will look particularly good to you if the average price rises after you bought it. The question is….How do you know that a good deal is a good deal? I’m not just talking about trading, but in general. Moving averages form elements of most successful traders trading strategies. ![]() The importance of moving averages in trading cannot be underestimated.
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