The ‘buy wall’ and ‘sell wall’ analytics are premium features on the APEX:E3 platform, giving users a real-time indication of market intent for all covered markets.
A buy wall is the result of a large composition of orders on the buy side of the orderbook. When the total volume of the buy orders greatly outweighs the total volume of the sell orders, we consider this a ‘volume order imbalance’. For example, if the sum total volume of buy orders came to 20BTC whilst the sum total volume of sell orders came to 10BTC, we would classify this as a ‘2x’ bid wall.
This imbalance in order volume can be caused by one large order from a ‘whale’ or wealthy agent or can be an accumulation of smaller orders. Due to the nature of trader psychology, large orders tend to attract other, smaller orders to the orderbook (‘does somebody know something I don’t?’), which can cause price movements with the added liquidity.
In Digital Assets, it is very common for bid/sell walls to appear and disappear quickly, due to a process called ‘spoofing’, in which large orders are added and removed from the orderbook to encourage others to buy or sell in a similar way to previously mentioned, causing price movements.
With some experience and trader initiative, users of the APEX:E3 system can be alerted to these order imbalances, evaluate which direction they believe the market is about to move & invest accordingly.
In the example above, the pair ‘DREP/USDT’ was highlighted at the number two position on the ‘largest bid walls across Digital Asset markets’ analytic, with a bid wall of 17x.
The purple line on the graph represents when the screenshot was taken. As can be seen from the graph, the price of the asset rose approximately 3% almost immediately afterwards.
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Credit: Stuart Moore