Depth - what is the significance?

[dutchie]

I am interested to know what the significance of depth is?
(have also noticed that things can change suddenly when buyers/sellers not on the depth list take action)

Are there generalisations that can be gleaned from the depth list.

Just noticed that before trading has started that for BSL
some clown has put a buy in for 1 share @ 9.5 (close @9.26 and sell @ 9.00) next level is @ a more realistic 9.35 - I assume they are just trying to raise the buy bar ??

 

[tech/a]

No Dutchie they are just entering to clear an odd lot.

Saw another explaination somewhere but cant remember someone will post it Im sure.But no there is no manipulation here.

Personally I place little value on anything outside the first 2 buy and sell levels.If your serious about buying or selling youll do it at market other levels will move like rockets if a frenzie either way begins.

 

[ghotib]

Stefan posted this message about pre-open and post-close: https://www.aussiestockforums.com/forums/showpost.php?p=1986&postcount=8

The ASX website has a full explanation of the process for determining the opening and closing prices.

I don't understand why people place pre-open bids well above offer though. For example, TIM closed yesterday at 2.23 after an intra-day all time high of 2.24. It made a breakout in early January and has since formed support at 2.20. There's a huge block of sell orders at 2.25, which I assume are profit-takers. So why place a pre-open order now at 2.28, even when it's a small block and you can be absolutely certain that you won't pay that price?

 

[dutchie]

What are the trades happening before trading opens as shown by volume.

 

[RichKid]

This is the full thread of the post referred to by Ghotib above: https://www.aussiestockforums.com/forums/showthread.php?t=945

Might be good to read it first to get some background. There's also another thread on the issues somewhere (if I recall correctly) but you may have to search for it.

 

[dutchie]

Thanks to those who have replied so far.

I think I understand the opening bids & offers better now.

i.e. If someone (buyer) thought that the price would keep going up the next day they would place a high pre - open bid to ensure that they got in early (first cab off the rank) for the, presumably, lowest price of the day (the algorithm open).
Vice versa for someone (seller) who thought the price was going to drop all day would place a low pre - open offer to ensure that they got in early (first cab of the rank) for the, presumably, highest price of the day (the algorithm open).

However I still do not understand how volume can change pre - open. I assumed that you could only trade whilst the market was open.

 

[Cosmos]

You are correct in the reasoning for people putting higher/lower orders in dutchie, but please remember if I was to put an order in for say AMP at $50 for 1 share, I would not buy at $50, but I would buy at the opening price for the day.

As for there been volume before the market opens, 3 things cause this. One can be an off market transfer of shares (these are usual very large orders), the second and most common is the exercising of options, and the 3rd is early morning trading mostly from the US.

The market depth has a long history stretching back to 1800. A lot of traders used to use the tape to predict where markets where going and thus how the market depth go so popular for people that had access to it back then (namely at the exchanges). In today’s market it means nothing as it can change in a few seconds, very little can be sourced from it.

Cheers

 

[dutchie]

Hi Cosmos

Thanks for the info.

I realise that the first sale is at the open price (irrespective of what bids/offers that may be shown) as per post by Stefan referrred to previously.

I have been watching the depth shown on Comsec and found it interesting to watch the ebb & flow of the bids & offers (and corresponding volumes).

I remember those old (B & W ) movies with those ticker machines in them - often wondered what info they were getting out of them (now I know).

 

[dutchie]

I know that it is sometimes/always dangerous not to exit when your system has told you to do so.

What would you do if before exiting you saw that there were a lot more (say at least double) buyers than sellers - would you be discretionary and sit on them for a bit longer??

 

[mikii_v]

how can u find out how much people buys/sells at a certain price??
Ghotib : There's a huge block of sell orders at 2.25, <----- how do u find that information?

 

[doctorj]

From the Level II/Market Depth Information.

If you have Commsec, they provide this on the share quote screen. Other brokers are similar.

 

[mikii_v]

ohhh... thanx mate



cheer, happy trading