Home › Forums › General › General Talk › SIGEN is a cryptocurrency trading platform. Exchange, P2P platform and exchanger › Reply To: SIGEN is a cryptocurrency trading platform. Exchange, P2P platform and exchanger
Movement in the order book: Trend and Manipulation
As mentioned in the previous publication, the order book may be a useful aid in determining the trading strategy on the cryptomarket.
The information in the order book clearly reflects the predominating market sentiment — buy or sell. You can see how demand and supply correlate. Each trader makes their own decision as to how they are going to trade using the order book data. However, most of them will follow the trend while strengthening it further.
When the price change dynamics is especially high, aspiring traders must be very careful not to fall victim to the stir around buying at a high price and not to take part in the panic selling of cryptocurrencies.
The trend may be modified by a big player or multiple players who create very big orders against the general trend. The price may also change under pressure from a lot of traders who simultaneously respond to certain events on the cryptocurrency market, such as the news.
Aspiring traders often confine themselves to the order books since the latter visualize things very well, and traders think they don’t need any other tools. This strategy, however, is a mistake.
The truth is the order book does not show the entire picture of the market:
– Big players may create false order and later cancel them. This will cause the trader to respond to changes in order book data randomly and incorrectly, thus suffering losses.
– Big orders with the price being 1 or 2 points lower or higher than the market price can be created for manipulation purposes, to create the feeling a massive buy or sell is about to happen.
– Some players don’t even create orders — they just store coins on their balance and sometimes use orders previously created by other players; therefore, the order book will not reflect the real demand / supply picture.
Order books are often manipulated; to prevent it, you need to crosscheck order book data using other tools for price movement analysis or even turn to the order book as the last thing. If price movement seems suspicious, you should compare prices on a few exchanges.