Help with Market Depth and Price Movement

[phoenix_gr]

Hi, I am having trouble understanding market depth in practice, I will give you a scenario and try and explain my problem.
AGM (coy code not annual general meeting) made a price sensitive announcement, deeper mineral deposits and no fault as previously thought or something to that effect. I bought in at 1.105 and the market depth showed this.
BUYERS SELLERS
Orders Quantity Price Price Quantity Orders
8 407,011,834 1.100 | 1 1.105 10,127,401 151
2 20,026,152 1.095 | 2 1.110 977,387 42
2 15,000,000 1.090 | 3 1.115 125,423 5
1 10,000 1.085 | 4 1.120 138,000 10
2 81,000 1.080 | 5 1.125 63,387 6
2 6,000 1.050 | 6 1.130 2,585,811 6
1 15,000 1.040 | 7 1.135 43,000 1
3 20,664 1.035 | 8 1.140 278,748 7
28 335,592 1.030 | 9 1.145 73,038 3
4 22,000 1.020 | 10 1.150 1,270,982 21

note the first buy order quantity of 407,011,834, buying outstrips supply easily, now i note that the buyers arn't willing to pay the market rate, I just can't figure out why the price isn't reaching for the stars. Help

 

[Trembling Hand]

buying outstrips supply easily

No it doesn't. There really is no buying. Orders stuffed into the order book don't mean there is buying, it means at best, people aren't willing to chase a higher price.

 

[ceasar73]

No it doesn't. There really is no buying. Orders stuffed into the order book don't mean there is buying, it means at best, people aren't willing to chase a higher price.

yeah but surely its only a matter of time before they start buying and price will rocket?? or am I missing something here?

 

[phoenix_gr]

^^^ That's the logic i was using, not that i have any experience to backup my thought process.

No it doesn't. There really is no buying. Orders stuffed into the order book don't mean there is buying, it means at best, people aren't willing to chase a higher price.

hmmm, i have tried this twice (buy stock with a massive order in line), doesn't seem to be working when they arn't chasing a higher price . Thanks for the reply

 

[peter2]

You picked the wrong stock to learn about market depth.

Hasn't ZFX made an offer for all shares in AGM at 1.10?

 

[Trembling Hand]

yeah but surely its only a matter of time before they start buying and price will rocket??

Why? All that matters is if the buyers are hitting the offers. If they aren't, and their not, the price isn't going anywhere.

 

[phoenix_gr]

You picked the wrong stock to learn about market depth.

Hasn't ZFX made an offer for all shares in AGM at 1.10?

if they want my shares, they can come and get 'em. they just better ask themselves one questions "do you feel lucky punk"

 

[ceasar73]

Why? All that matters is if the buyers are hitting the offers. If they aren't, and their not, the price isn't going anywhere.

Agreed..but doesnt such a high demand mean that eventually someone will buy and the flood gates will open? Basically somethings gotta give soon.

 

[nomore4s]

Agreed..but doesnt such a high demand mean that eventually someone will buy and the flood gates will open? Basically somethings gotta give soon.

Not really, high supply could also come onto the market and watch the buy orders disappear.
What you want to see is urgency from the buyers, which will then cause the price to go up, just because they are in the depth doesn't really mean anything.

 

[ceasar73]

Not really, high supply could also come onto the market and watch the buy orders disappear.
What you want to see is urgency from the buyers, which will then cause the price to go up, just because they are in the depth doesn't really mean anything.

THE MORE I READ/LEARN, THE MORE I REALIZE I KNOW BUGGER ALL ABOUT THIS GAME!!!

ceasar

 

[ceasar73]

Not really, high supply could also come onto the market and watch the buy orders disappear.
What you want to see is urgency from the buyers, which will then cause the price to go up, just because they are in the depth doesn't really mean anything.

HOW CAN ONE FIND LEVEL OF URGENCY FROM THE BUYERS??

IS IT POSSIBLE??

thanks

ceasar

 

[Joe Blow]

Ceasar - please, no more posting in all capitals. It is the forum equivalent of shouting and is not necessary.

 

[Trembling Hand]

THE MORE I READ/LEARN , THE MORE I REALIZE I KNOW BUGGER ALL ABOUT THIS GAME!!!

ceasar

Step 1 almost complete.

 

[tech/a]

HOW CAN ONE FIND LEVEL OF URGENCY FROM THE BUYERS??

IS IT POSSIBLE??

thanks

ceasar

Yes of course.

Learn all you can about Volume Spread Analysis.
Google it.
Google Wyckoff
Google Tom Williams

Market depth has little meaning in practice.

Although those at Inside trader would disagree they do quite well out of their proprietary trigger service based upon Market depth.

https://www.aussiestockforums.com/forums/showthread.php?t=5924

Much here.
I wouldnt waste my hard earned though

A couple of examples Ive posted in the past.One hand done and one by Tradeguider VSA sofware.

 

[nomore4s]

HOW CAN ONE FIND LEVEL OF URGENCY FROM THE BUYERS??

IS IT POSSIBLE??

thanks

ceasar

That my friend is the trick.
You'll know when the buyers are showing so urgency, they buy at market not sit in the queue. But knowing when to buy yourself is a different matter, how much confirmation you need is up to you.
I personally don't pay much attention to the market depth, but I do know other people do, depends on how you trade I guess.

PS - Just seen Techs post. VSA/Wyckoff will give you a good insight into the market but it will require some study and hard work, I have been studying wyckoff and have found it very helpful. Motorway started a Wyckoff thread here with some good links.

 

[ceasar73]

ceasar73

Learn all you can about Volume Spread Analysis.
Google it.
Google Wyckoff
Google Tom Williams

Is the above best place to start If I wanna learn more about TA?

thanks,

ceasar73.