 All right, well welcome to the book map educational course. This is going to be a series here parts one through four We're going to go through part one today tomorrow part two and then on Friday part three And then next week we'll do it again and then get to part four as well Which will be about more advanced features today's course is going to be intro to basic market mechanics and Hesitate to put the word basic in there. This is actually It's essential to understand this information, but it is as well Actually gets quite complex pretty pretty quickly, but this these are the mechanics that move the market Okay, so we're going to go over this and in some detail and then you know show some some examples in book map and How you can identify these all right risk disclaimer trading equities and futures involves substantial risk of loss is not suitable for all investors Past performance is not indicative of future results For more information you go to book map calm. I become a member there And you'll have access to a lot of the free resources And then you can reach out to us at support at the locks pro calm or support at book map calm And I want to show a few more resources here so Here is our website We also have a Twitter. You can follow us on Twitter and then We also have a YouTube page And I'll reference this a little bit later because there's a few videos. I want to show you Okay, and All right, let's move on. Okay a little bit about me My name is Bruce Pringle. I've been a trader for 10 years in a variety of markets. I'm a product specialist at book map I lead the education trading here at book map and an expert in order flow and Market microstructure. Okay, I just showed the Twitter and the YouTube as well. So And support at book map calm, right? Okay, so overall this series of the goals here What we're going to go through in this educational course. Okay, we're going to provide you a structure Structured understanding of today's markets. We're going to cover theories And practical uses and we're going to give you something to take away and use All right, so we're going to give some strategies and some setups some training exercises And this is all hopefully going to allow you to With a high potential here To enhance your trading execution All right This is going to be a reference guide for you to return to if needed. You will always have it and then during the the daily webinars we are going to Cover this in the live markets Okay, so you'll always have the course to come back to but in the live webinars We'll go over current Condition of the the live markets using the same techniques used or learned from these courses Okay, and we're also going to introduce you to advanced HFT or high frequency Trading concepts and applications and this is both for futures and equities traders Okay All right today's course what we're going to go through we're going to start off with basic terminology It's important to understand that that we're all on the same page here And then we're going to get into the market mechanics and in these mechanics visualized Why price moves price sweeps why price trend stops and price behavior How it moves and then we're going to get into some of the training exercises later Okay, who is this course for right? So this is for Retail and professional traders alike Prop traders a dome or price ladder traders And because we can show the historical limit order book and order flow. This is also applicable applicable to swing traders And spread traders right so for the HFT environment a lot of the quants and HFT algo traders Are especially going to Understand this today's lesson But there is still a lot of good information in here For for the quants financial engineers and students and this can also apply to Compliance officers All right, so terminology we're going to start off with liquidity. Okay, and we're talking about liquidity here Obviously in the market places. We're talking about the the limit orders Okay, the the depth of the market Where traders are lining up to be buyers or sellers? They're bidding and offering In a market and they're providing liquidity. They are making the market without them price would be Very very hard to define. Okay, the BBO. Okay. This is the best bid and offer. Okay, that's The inside market exactly where a price is currently trading Hitting the bid. Okay, that's where we're going to talk about Aggressive volume that takes liquidity Off of the the best bid. Okay, someone hits the market sell button and they'll take liquidity Lifting the offer offer is the opposite. They'll hit the market buy button and they will take liquidity off of the best offer Okay, the LOB the the CLOB and the dome okay limit order book centralized limit order book and depth of market Okay, they're all basically the same thing the the CLOB is kind of important to understand though because The centralized limit order book is the Really what we're talking about here and and taking the data from there and then Transposing that onto the chart historically All right, we're going to talk about aggressor of volume classification. That's the market buys and the market sells The intent of trade That is the the traders lined up on the bid or the offer in the depth of market Okay, the current order book is the current state of that order book right now What's going on in the order book the depth on the offer the depth on the bid? the Best bid and offer the last traded volume and and the spread Okay, and then we're going to get in the historical limit order book and order flow Which I'll define it We'll see as we go on because we record all this data in that current order book and then extrapolate that and transpose it on to the historical chart Okay Alright Let's see How can the order book and order flow data help you right? Well as I was just explaining the current state of the market any dome will do this right? There's no lag to it. It's showing you the liquidity at price levels is giving you the the best bid and offer and spread The current price and the last traded volume. It is the current state of the market Okay, and then it gives you an understanding of where price might go looking at high liquidity that you can target that's going to be on the bet on the Depth of market in the on the on the bid or they offer Okay, and this gives you an advantage over the competitors. You can start to understand their activity Recall that this is a zero-sum game Structure within the marketplace. Okay, and we're going to integrate this information within the historical limit order book shortly Okay, so market mechanics the we're going to go through some basic examples and Now this this course is about education Okay, but we're going to show book map and and why that's because it visualizes this behavior Very very nicely. In fact the story of book map We Came from the HFT environment developing algos trading in the high-frequency Environment and needed some sort of visualization of where those trades were getting filled and Software was developed to understand that comprehend it and then I thought that was a pretty good idea and that led into Book map becoming a product. Okay, so that's why we're going to be showing book map here is to visualize these mechanics And you'll see exactly what I mean in just a minute Okay, so I need to show book map. I need to go over it here What are you looking at? in in the user interface This whole area here is historical data Okay Here is your current data here. Okay, this is your best bid and offer here Your last traded volume here, and you'll see that this is the depth of market I'm going to show you book map in just a moment here But this is the live market is a graphical representation of the depth of market Okay, the current state of that market. All right, so here's your your best bid and offer here your depth on the Offer and your depth here on the bid Okay, all right, so let's let me show you book map And we'll get it up here. Okay All right Okay, so here's book map. We're looking at the S&P e-mini and Let's see. I'll start off here and we'll just work Backwards very very simply. Okay, I'm going to take off all of the the data here So that we have something very very simple and straightforward to look at Okay, and Indicators all right Okay, so most of us are Very in tune to understanding a candlestick chart. Okay, so here it is in book map. All right and No further explanation is needed. You can see that between each vertical dotted line here. I have 15 minutes worth of data Okay, I'm going to start layering information on top of this Okay, first I'm going to add the best bid and offer Okay, now what we're looking at is the historical best bid and offer. Okay, we can let me zoom in a little bit here and so You can see this move to the upside here. Well, this was the best bid and offer within this candlestick period. Okay, so this is a one-minute chart and You can see the The the closer of that candlestick, but here's where the best bid and offer was during that time Okay, the red line is the best offer. The green is the best bid Okay, now let's add on some volume dots Okay, so now what we're looking at here is the volume traded within That best bid and offer Okay, so this candlestick that you see here this one-minute candlestick chart Well, you can see the where that volume took place You can see the type of volume it was I it was a lot of buying that took place and You can see that we're giving you the overall Delta of this information as well So there was some selling in here, but not as much. There was more buying in fact I'm going to zoom in here to this area. I'm going to take a quick closer look here So as I start to zoom in we can really zoom down and and show exactly What unfolded in these markets? Okay, and we can see the algorithmic activity here at very sub-second levels And we're down at the microsecond level here. Okay, all of this data is recorded But you can see as I zoom out this just becomes a bigger green dot Okay, and then you can see as I continue to zoom out We give you the overall Delta because there's so many so many trades that took place here that We need to Give you we only have so much screen space to give you something that is useful So this this data is aggregated only visually or graphically. Okay, and you can see now What comprises candlestick? Okay from the previous one here So this is very much like a footprint chart. You can start to understand where the volume took place how much or what type and Within how much of a time period here? Okay, so that's the the traded volume now. We have that on the chart and Now we're going to add the heat map here. Okay, so let's add that Okay, so now what are we looking at here? Okay, well all of this this heat map is The historical limit order book. It's all derived here from the dome Okay, so as I was explaining earlier, let's just go right back to this current market This window here We're giving a graphical representation of the liquidity in that limit order book Okay, so like right here. We can see 1347 contracts. Well that that area is painted bright white in the current order book window here So we know right right away. There's a reference here very high liquidity on the offer Okay, so that's what the it's just a graphical representation of that limit order book Now wherever this really gets interesting is that's the current market this window here But we we take this data and we transpose it onto the historical chart Okay, let me zoom in just a little bit and you can start to understand the behavior of these traders here on the bid Okay, look how they're adding and pulling liquidity in this area Okay, so we can start to understand their intent to trade at some of these levels Do they really want to be buyers or not? Okay, so that's the book map interface in general and We'll we'll look more at it a bit later but I do want to compare this to a dome just so you guys Really get this down. Alright, so here's here's our dome. We have our best price here Well, let's go through the price ladder here as you can see in the dome and here it is in book map Okay, the depth of offer Okay, here it is in the dome these numeric values here And you can see that those numeric values match up here in in book map now I also included the graphical representation of these numeric values here Okay, that is the offer here on in book map Okay, here's the depth of bid Okay, so this is the liquidity here in the limit order book in a dome and then in book map Okay, and then here's our inside market. All right our level one data our best bid and offer our BDO Okay, so we just have our best bid and offer and you can see they match here within the dome Okay, and then finally our last traded volume this number here matches with the last price And here's your last traded volume with your last last price here Okay All right, so now let's get into the Integration of that current data, okay the going through the order flow Data integration here the current data the real time in the dome is fleeting You know, it's you'll see those numbers Display very quickly and then they'll be re-displayed with and refreshed with new data So you'll have to remember those areas that may have been high liquidity or low liquidity And and that can be a little challenging to do because you have to remember specific areas And then when price comes back to those areas, are they still bidding or offering? Do they still show interest? That's where the historical limit order book and and data comes in very very Handy, okay, so we record all that data and then you can see and understand how we're looking at book map We can understand how it unfolded in detail in specific areas Okay, and it's very easy to see it and that gives us context to those those areas as well Okay, so like I like I mentioned that let's say we have a double top pattern Well, they were bidding there before or are offering there before With high liquidity and if we return back to that area, are they still interested? We'll get context from understanding the auction in those areas Okay, this gives you a nice advantage over your competition. All right, so now let's jump in here and and Yeah, here's our historical dome our current dome in the book and then Here's our current dome in book map Okay, and jump in here and that why does price move? Okay, we're going to cover aggressor volume Okay, market transactions and the intent of trade. Okay the a centralized limit order book auction Okay, so why does price move? Okay aggressor volume explained here We're talking about the the limit orders are they're passive. They sit or their rest Yeah, within the depth of market. Okay, they provide liquidity They want to be buyers or sellers within those specific areas on the price ladder Okay, market orders. This is the aggressor they cross the spread and they consume the liquidity on on the in the depth of market Okay, they'll consume the limit orders Okay, so most of us are familiar with this but this is the Classification of the volume that we'll be looking at here is the aggressor classification the market orders. Okay the transaction, right? Price trades where this aggressor is matched with the liquidity in the best bidder offer And then now let's start to jump in here and we'll go through some examples. Okay Here's current price trading on the best bidder offer Okay here the last trade that just took place here was it was a market buy with a volume of one right here Okay, now. This is just illustration We we can see the spread here. We have the the liquidity within the Best bid and offer here we have 12 contracts on the offer and on the best bid we have 16 contracts Okay, this is where it last traded here. So that is the current price Okay, now a very very simple Market Sell order. Okay, the aggressor hits the hits the bid With a market sell order. Okay, they consume the liquidity here So we did have 16 contracts well They consumed one and now we have 15 contracts and price has now changed price has moved. Okay one tick And this is how the market Moves the aggressor is the one that that can move the market Okay Now here's an example of what that looks like in book map All right, you can see the the aggressor here these little green dots here our market buys Okay, and price was trading here at at 52 89. We're looking at oil Okay, and then you see the aggressor here Market sells with the red dots on the best bid Okay, so it's just going back and forth here now you can see Something pretty interesting already And you can see the complexity we're going to get into with just this very very simple binary example We're recording here algorithmic activity. Okay. I mean very very clearly you can see you can see the time And the orders and the size of the orders are all equivalent here So these these two algos are battling back and forth Okay, and you can start to understand That this this is really how these markets trade today Okay, there's all these algorithms that are trading back and forth and we can understand their behavior here within The historical limit order book. Okay, all of that record which would be rather difficult to see in the dome Okay, here's another example as well, and we're going to see a lot of this kind of information And data displayed in book map. This is an algo here that is Lifting the offer, but it's not really lifting price here. Okay. It's trading On the best offer Okay, and you can see it's very very clearly with the the mechanical movement here or of the buying and selling That they are consuming liquidity here, but they're not lifting price against them Okay, so this is they're accumulating a position here over time Without moving price against them Okay, so Now let's get into next. Why does price move the imbalance in the intent of trade? Okay, so what we're going to talk about here large imbalances in the order book That skews the auction All right now the size of these limit orders is going to affect the best bid in the offer All right, so They may pull liquidity. They may add liquidity, you know, there might be a big spread now when the Mechanics mechanics here Operate and you get our market sell order to move price. It hits the bid. Well, we might see a big move in that price Without much volume it's because they pulled their liquidity. There was an imbalance and They they pulled their liquidity on the on the bid and and the transaction occurs at a new lower price Okay, let's go through the example. All right. Here's our volume of one Okay, we and and then they hit the bid here with another volume of one All right, so 12 contracts 16 here on the bid one is consumed that becomes the current price now We have an imbalance here in the depth of market on the on the offer. Okay, you can see previously. We had You know pretty equal Book here, right rather equal. I think there was a bit of a skew in the on the bid side, but We can see this is rather balanced, right now we have an imbalance Okay 120 contracts versus it was 16. Okay 24 contracts and 32 they turned into 85 and 72 so we have a very heavy imbalance here In and the limit order book. Okay, they're they're offering here with a lot of With high contracts a big contract size how that affects price Okay, well we can see here these 15 and 18 contracts here on the bid these guys that they get scared They don't want to to trade any longer at these levels and they'll pull their liquidity Okay, so our last trade still occurred here with that volume of one Okay, but the best bid has now shifted down a couple of ticks Okay, so now we're down here Two ticks lower at 22 contracts. Okay All right, so with a volume of one. Okay, sell market volume of one. They've moved price now One two and three three ticks here. Okay, we consume one Contract here and that becomes the current price and this is how the intent of trade can Effect and move price. Okay, when in periods of high liquidity, you're gonna see this all the time Okay, and I'm sorry of high volatility so Fundamental releases or economic data releases as well as just a skittish market There's a lot of volatility because there is a lack of Liquidity and in any imbalance with high liquidity You'll see pushes and polls of markets very quickly Okay, that's this is what this looks like in book map Okay, we have high liquidity here that stays in the book, but we come up into this area here And they get very very aggressive. We get an imbalance in that book Okay, and you can see that how it how price is affected here Okay that is is pushing price down into an area and You can see we're gonna get very advanced about this We're talking about potential spoofing here into Liquidity here on the bid. Okay, but there's an imbalance in that book. Okay, so Advanced concepts the potential spoofing here in balance to a drive price lower and maybe get off bids filled in at lower price levels Okay, there's also You know strategies that you can and we're gonna go over later with momentum looking for momentum Or spoofing you can start to look for that or layering Icebergs in ignition ignition algos So let me cover the ignition algos here. You can see the example With the imbalance here in the in a limit order book on the offer. We see it once They come in again that algos still working here And then finally you can see this one here and it finally does drive price lower Okay, so now we're gonna start to understand and comprehend this data within the historical chart Okay, because it's all recorded here and you can see the You know, the you know, we're not we're not talking about just this is not just Milliseconds of data where you know, this is 10 seconds between each vertical dotted line here You know, so we're looking at You know like a minute here of price activity a little bit more Okay, but you're gonna be able to utilize and consume that data and look for You know a potential Order execution here that's going to be enhanced Right. Here's another example. We have very high liquidity here on the Best offer jumps into the book very quickly and I'm gonna show you a sequence here Okay, so we can also see them down here on the on the bid this 2420 level and Let's how did this unfold? Okay, so here here's that same action is here again And we can start to see how it affect price Okay, it affected price and drove it lower Into some of these lower areas here Okay, we're gonna we're gonna talk about this concept a bit later But I'm gonna introduce it between short term high liquidity Skewing the auction. Okay, and then longer term liquidity here that remains in the book Okay, so this longer term liquidity is already already understood by the auction Right, but this new information that jumps into these areas and then polls It needs to be digested by the market Okay, and then and you can see that in balance that heavy in balance has an effect on price Here's another example. You can see this is the open and 9 9 30 open here we see an imbalance here driving up into high liquidity here longer term high liquidity It was basically in the market from the get-go of the 9 30 open And then here's our imbalances with shorter term high liquidity Driving price up into some of these areas Okay, so next concept. Let's go over sweeping of the order book So what we're talking about here is just not moving price back and forth. We're trading through one or more price levels This is an important concept to understand. This is typically how price trades into a new range All right, and we're gonna witness this with a combination of In balance in the order book and very sizable aggressive market orders Okay, so here's an example. We'll start off again here. Here's our market Buy with volume of one, but now You can see here. We have a market sell with a volume of 50 Okay, so what occurs they're hitting the bid with 50 contracts here. We have 15 15 contracts On the on the best bid at this at this point Okay, well it sweeps through that 15 so 15 trade that is the Last last trade that took place here is still the current price Now what what remains of that 50 lot order? Well, it's still still market sell But it already swept this price level, but it traded 15. So there are 35 contracts remaining in that big Market sell order Okay, so what what occurs next price level still hitting the bid? It sweeps through this price level here with the 18 contracts Right and and you can see we swept it and now there's 17 left still remaining in that 50 lot order And and it's still hitting the bid here, but we have 22 contracts here. Okay, so what unfolds? All right Okay, it takes 17 of them, but there's still five eight five remaining. Okay, and that is our sweep of the book Okay, this this 50 lot now is filled Okay, and and you can see we swept down, you know a few a few ticks here into lower levels All right Important concept to a lot of times and it depends on the market Thinner markets, you'll see this a lot more often the ES you will rarely see this but you can see the spread has widened out here Right because they swept through all these levels here, but where's the best offer? Okay, it's still up here at this at this level with these 12 contracts Okay So there's a vacuum here Within there's a bigger spread the spread widens out between these two And a lot of times the ES though very very quickly will fill in right What does that look like in book map? All right. Well, this is a fundamental release and We can see the Just massive Red dots here sweeping each price level as it goes lower Okay, you can see the vacuum effect that we're talking about as we return almost back to where we dropped from here Okay Here's another example and this is a market Market buy okay sweeping Sweeping up to new levels. Okay, we see the this is the initial release. You can see that's Here's a 1030. This is oil. It's the oil inventories Actually, nothing really occurred for a few seconds and then all of a sudden they really lifted the offer here Okay Okay, let's look at some of the advanced concepts and some of the sweeping here. All right Like for example looking for pullbacks start to enter if you're if you believe that the sweep here was We're gonna start to accept down to lower levels. Well, then you can start to enter some of your limit orders in some of these areas here Okay For looking for that pullback into some of those areas because there's been a vacuum Right guys, I see your questions here. I'm gonna go through all the questions later, but I Want to I want to continue on and get through the presentation Okay, so You could also play momentum looking for that sweep and then joining in Or you maybe you're looking for rejection and I'm gonna show an example of that You're also gonna see book flipping. You might see sweeps into icebergs And then those ignition algos as well. Okay. All right, so here here we are with an example in Oil again, and and you can see we swept down through to a lower level here And it looks like price is starting to accept down below this lower level here Here's our pullback to it and we get another continuation All right, we actually see another sweep to the upside okay, and it and This one it sweeps up into Basically where it dropped from up here But it's what this is a little different here and I'll explain in just a second. All right We see yet again another sweep Okay, price starts to accept above this level and we sweep through it We get our pullback here and we sweep on down yet again And we can see very nicely and cleanly we get our pullback right to where we drop from So this concept of sweeping although the mechanics look very simple is very profound You can start to see we're gonna lead to a very nice setups to understand looking for those vacuums or maybe you want to join the Momentum on the way up Anyway, we can start to Look at some of these levels here and then also how they start to affect the volume profile We're gonna cover volume profile tomorrow, but you can see as I drew a line across here I'm gonna have our point of control up here basically for this range. Whoops. Sorry And and we that's where we come up and test Okay, now the sweep down through this area here is going to be your low volume node Okay, and you can see it here and yet again Here's where we swept down and broke from again here and that is your low volume node here So now you're gonna start to understand the sweeping action and moving to lower levels or higher levels within the volume profile okay, now here's an example of rejection, okay, and We can see that this is again oil That we have a range situation Developing here. We sweep down into a lower level, but we turn right back into the range okay, so You can you can also play it that way if This is a lot of the times what you'll see in this kind of behavior or stop runs getting traders You know stopped out running the wrong way Maybe buying or I'm sorry selling the breakdown here and then trading back into the range And then you can see they actually trade it to the opposite side here and grab all the stops On the other side. All right, so there's the potential here for understanding this and trading it as rejection Okay, here's a concept here of a flip of the book. So here's our sweep as you can see And then here's the the limit orders on the on on the bid here. Okay, we swept through it and Yet now what are we return back to okay? We you know, I actually I would start to anticipate returning back to this level here But now we're starting to understand a flip of the book because high liquidity here on the Bid has now flipped to the offer and that's where we come back and test All right, not only once but twice and three times here Okay, so you're gonna start to extrapolate and understand this data within the historical limit order book chart All right, so that's Sweeping let's get into why price trend stops. We're going to go through absorption and exhaustion Okay, absorption is the limit orders that that take up and absorb all the aggressive buying or selling Okay, it could also be iceberg orders, but we're going to cover that in the advanced Session and let's go through an example. Okay start off again with our market buy volume here of one and That's where current price is trading, but there's a distinction here Okay, we have longer-term high liquidity down here in the depth on the bid Okay, so 125 contracts and Compared to very very high compared to all the rest of the book Okay, now, let's just speed things up here. We sweep the book lower into some of these lower levels here that 50 lot is You know there were 22 contracts here. It takes 17 Now there are just five left and that is the current price Okay, so we still have now. We're down at the one tick away from our 125 Contracts, okay, so they sweep it again here sell market order volume of 50. Okay, what happens? Okay, you hit the bid those five trade and now we have a volume of 45 Trading into these 125 contracts Okay The 45 trade now that becomes 80 contracts here on the on the best bid that they absorbed all of those contracts Or those 45 okay from that that 50 lot Okay, they hit it again here. Okay market sell with a volume of 50 what unfolds? Okay, so hitting the bid we have 80 contracts here Okay, 50 of them trade and now they're 30 left. They absorbed all of that Order at one price level okay, and So now that this this one trader or let's say it's one actor one trader They they came into the market very aggressively with 150 contracts one swept the book lower one Swept the book just one price level and then was absorbed and then that last 50 lot was completely absorbed At that price level Okay, and they're 30 contracts still remaining at that price level Okay, so let's say someone jumps in now And with a market buy volume of just one Okay, well if there if the spread is still had widened out after that sweep And remains that condition just with a volume of one they've moved the price up three ticks All right, so this can allude to a lot of different things. We can start to understand trapped volume and some of these areas Or you know, maybe you're trading in down into an iceberg order here on the on the best bid okay All right, so as mentioned the aggressive buyer lifts lifts price or lifts the offer with just one contract And that becomes they take one liquidity one contract of liquidity off of the 12 here and that now becomes the current price okay, and Let's go through the example here in book map. What does this look like? Okay? Here's our high liquidity here on the offer Okay, we see the aggressive market buys Trading into that area and they remain in the book Okay, these guys up here at 44 20 they want to to be sellers and you can see they continue to the aggressive market buys continue to trade into that area and they and the Limit orders on the offer absorb all of that aggressive buying Right, it finally dries up here and then you can see that they very aggressively then Hit the bid with large market sell orders. We trade below that level Interestingly enough just like the sweep we we trade now below at a new level here Okay, and you can see some same same concept here down on the bid They're they're starting to absorb it down here, but they actually overpower the limit Bies here and they sweep through that level. Okay, but this is the absorption part up here Okay, another example trading into high liquidity here. You can see the aggressive Market sells taking place here on the best bid and they just don't take it any lower Okay, so any of that aggressive selling has been absorbed and and then we can see the Price they start to lift the offer with aggressive market buying Liquidity pulls here and we continue on up Okay, let's go through a few advanced concepts V bottoms V bottom reversals pullback strategy that we covered earlier You can look for stop runs trap volume and book flipping as well and Let's take a look Right. Well, here's our sweep down to the bottom And then you can see look at how they very aggressively come in here. This is this is gold And they come in here with 149 contracts at this price level here of 1244 and a half And and they remain in the book. Okay, the You would maybe start to anticipate a move back to where it broke from but this information here understanding the depth of the of the market Gives you that insight that We're not going back up to here because these guys want to be sellers at a lower level All right. Here's an example in Apple You know we Book map was also available for for equities in the US And let's go through this a really nice example here of absorption okay You can see the aggressive selling into some of these areas here and finally down here we see 2557 contracts trade on the Best bid you can see it's all selling here. Okay, and our in our profile All right, and you can see all of the selling here. Look at the buying here. There's very little All right completely absorbed by the larger traders with their limit orders. Okay, and this is going to be our example with the V bottom here, but the All absorbed here. We do actually get that retest, but we don't go all the way down to the to the bottom We get we can start to anticipate those retests to Maybe where we start to see some buying come back in All right And and this is what it looks like on the higher time frame Okay, so a real Very quick sharp drop into an area here on the On the bid completely absorbed and you can see the reaction that it had in the V bottom Okay All right, so that's it with the absorption. Let's go over exhaustion. Okay, what is it? It's the lack of aggressive volume activity Okay, so you can see here We're gonna go through the market The by market order here volume of 50 Okay, and that had already occurred so we still have 12 contracts here and that is the current price Okay on the best offer Okay, now they come in and they sweep the book lower lower here 15 contracts and and then And then 13 and then there's they're still hitting the hitting the bid here Now we have a sell market order volume of five Curse here into these 10 contracts. I do need to Just mention here look at the lack of now it doesn't have to be a lack of liquidity for it to be exhaustion Okay, it's a lack of aggressor Volume that makes it exhaustion But a lot of times you won't see very high liquidity All right, so we come down into and now we're hitting the bid with five contracts into 10 On the on the bid so it trades those five And you and you can see that becomes now the current price Okay, next example, they continue to Hit the bid we have another Sell here of five what occurs? Well, they sweep that level Okay, that's your last traded volume now. We're trading down here on the best bid into these eight contracts All right But that's it. There's there's no more buying there's a lack of you can see that it started off as pretty big but It started to dry up in some of these lower levels here and instead now They don't come down and test the the best bid here these eight contracts and instead the Market buy with a volume of five Lifts the offer into these 10 contracts here and that becomes the current price Okay All right, and this is what it looks like in bookmark and you're gonna see this all over the place in bookmap, right? You're gonna we can see we come down into an area and they're pulling liquidity In this area here, but look at the the the aggressor, okay? There's nothing no trades that took place here here here We finally get a little bit of market sell here But we test a little bit lower and there's complete lack of trading one tick lower Okay, well we rotate back up we come back down again and complete lack of trading no one's interested in trading at this level Okay, so the the mechanics here are that If no one it wishes to trade at this level well price is going to trade higher It's going to look for liquidity now on the on the best offer and now it's looking for For sellers and where are the sellers? Well, they're up in some of these areas, but there you can see them pulling their liquidity All right. All right as mentioned a lot of times what you get with this Absence of the aggressor is In these trending markets, you'll see the pullbacks and you'll see very little aggressor Volume take place at some of these areas. Okay, so you can see a complete lack of We have one two three four basically tests here And into this this price level in gold and and and no selling Okay, so we rotate back up and we actually sweep the book one higher We get a minor pullback here And and you can see there's there's no one interested in selling Okay, there's the sellers are out of the market. Basically. All right We can also see look at the limit order book here. We see in a skew in that auction So where do we come back up into? Okay? We trade back up into the it's searching for that high liquidity on the On the best offer and we start to trade into that area We get a pullback again, and we can see lack of aggressive selling All right another sweep And then and then you can see we get the nice pullback here, but a lack of lack of selling all right, so Start to to piece these together into some strategies looking for exhaustion points after a sweep All right Okay Advanced concepts here starting to understand that lack of activity well One concept. I just wanted to to go over here was It doesn't necessarily mean the that there's a lack of high liquidity Okay, that may exist right and this in this example It does and it looks like they're starting to absorb it here, but then there's just a lack of Aggressive buying right we get one two three tests here And no interest at all. We start to rotate lower Okay, and I also want to integrate this into the bigger picture since we're looking at You know microstructural stuff here in the bigger picture. This is what occurred right we we can see the aggressive Behavior with the limit order book wanting to offer at lower price and then no one's willing to really take them on in these areas here all right Okay, and again that same concept of You can see there's a little bit of trading that takes place here, but look at the overall All right as we sweep higher here into a new price level And there's just a very very little Aggressive selling compared to the aggressive buying okay a lot more green dots here All right some sideways action here, but now you start to see in the trending areas Lot of green dots up in these areas very little trading here on the pullbacks Okay, and you can see the trending environment higher and where do we go searching for high liquidity that you find here on the on the best offer Okay, all right so That's some of the basic market mechanics but And this is essential stuff to understand But we also want to integrate into this how it not just why it's moving Stopping but how Okay, so the volatility the depth of liquidity Thinner markets versus thicker markets All right thinner markets like gold for example You're going to see a lot of volatility you're going to see a lot of price movement backwards and forwards because there is a lack of liquidity All right thicker markets like the S&P or the bonds are going to be slower moving And you're going to see a lot of pullbacks and Retracements back to areas where they broke from I start to comprehend the behavior of the price movement and You're really going to gain a lot of insight With some of these basic mechanics Okay, looking for flurries of activity. Okay within the auction Or the volume or within time cycles like the S&P cash open, okay, or in the NASDAQ as well Start to understand the speed of the markets How quickly is that occurring? Or was it a slow movement that took place? Okay? It's going to give a lot of insight to some of these basic mechanics All right Yeah, the fast slow retest liquidity shifts, etc. Each market Has its own unique characteristics, but these basic mechanics are all the same all right, so let's end up here and Part one some of the training exercises Okay, so go back and start to identify these basic market mechanics Okay, that we just covered and Start to mark up your charts the more the better Okay, look for the variations in how price moved within these examples Okay, you can consider using the book map replay mode is an excellent way of I've seen this data you can replay it again and again within that replay file And then you can start to draw your own conclusions from these examples Okay, noting the different times the different markets the varying liquidity the speed that it moves, etc all right, so Once you start to comprehend that you can start to anticipate these kinds of mechanics occurring in real time Okay, so understanding these basic market mechanics are critical and this will lay the foundation for the next Few few lessons that we're going to cover all right okay, so Tomorrow what we're going to go through and part two is we're going to take a step back and look into the bigger picture Historically and start to understand order flow within structures. Okay micro structure and even Maybe a bit bigger Okay, and we're going to we're going to go over auction theory and and volume profile All right Okay, let me get to your questions and then we'll wrap it up and and call it a day Okay Yes, it's being recorded recording will be up on the YouTube page. All right, let's see here Algorithmic activity Michael. No, it's not all aggressive Market orders, but that example I showed the very basic example of accumulation Is clearly an algo? Okay, but most most the algos are you see shifts in liquidity in that limit order book But it can be a combination as well All right Yes, our our what this is recorded Is the sweep in the book a stop run it could be But not necessarily whatsoever and we're going to go over that a bit more tomorrow within some of the structures Okay, looking at micro structures Okay, Ash and you're talking about looking for a pause Yeah, well, I mean you're going to start to you're going to notice that you know Let's say you get you see a very aggressive sweep down into an area Well, we're going to cover it more in the setups starting to understand that aggressive sweep I did it auction correctly on the way down or way up And if that is the case it will lead to you know, you know higher probability of of you know looking for exhaustion on the way back up and Yeah, and then that that's where you can be you know starting to place your your limit orders Gunther no FX futures book map will work with but not for X cannot the spot market the reason being is there's no centralized limit order book Okay When exhaustion becomes induction to the opposite side Well, not not really, um, you know, I mean it did Exhaustion is just the lack lack of activity So the market needs liquidity and and the aggressor to trade to be matched for that to take place Maurice Yeah, we Know no no thinkorswim platform at the moment Action. Yeah, I'm sorry. You won't see the other. This is go-to webinar. You don't see the other people's questions here Let's see John Yeah, the the dots in book map are the that's the aggressor right they're taking liquidity, okay Yeah, action Well, I mean you read that sweep, you know Understand that sweep and how it's auctioning and then and then start to anticipate and like again like go through the exercises here You know to see it again and again in in replay mode potentially here And then you'll start to get an understanding of what you're exactly what you're looking for you'll be an expert at it Absolutely, Maurice. This is a Something that Maurice is asking about swing trading And finding volatility for option trades as well Yeah, absolutely. This is what is is distinct and Unique here is that now with the historical limit order book Let me take the candlesticks off here Okay, so let's look at the the S&P right now Okay, well you can start to understand You know and because it's all recorded Even for swing traders very easily you can start to Incorporate this into your your trading I mean you look at how we came down into and that and we see the buying interest down here on the bid And then where did it come up to? Well, you can start to target these areas start to understand these areas of high liquidity here at 2430 in the S&P All right Okay Let's see action more about exhaustion. Okay I'm not I mean, okay, so exhaustion. Let's just take a look at the current market, right? and Here let's look at some of this trending action. Okay, so The Look at this. I mean, it's not, you know, these these areas here I mean, it's not complete exhaustion, but look at the amount of trading compared To the higher highs. Okay. These are higher lows. Okay sweeps up. Okay, and this is you know, we see it every day right We see a sweep up and a return back here and we see a lack of Selling activity Look at look at the overall buying here in this area And we can see that it's uptrending. We see more volume in green aggressive buying at higher highs on the pullbacks. We see very little volume Aggressive cells. Okay. It might be complete exhaustion. This is complete exhaustion here We see nothing that traded here, but look at some of these other little areas here There's very little here it exhausted here. We got a retest though and We can see the there's just really a lack of selling activity All right. Okay All right a few more questions here, and then let's wrap it up Maurice if you're talking about, you know, you're talking about the Greeks in in options and You know, I don't know I mean how those are going to be valued in your You know looking at your IV for example, okay That that's that's something a little different Right, but you I mean you I think this is you're still going to see this the same type of behavior here and I don't know if the IV is going to go down on some of these pullbacks, right? Potentially, but maybe not right so it's a derivative and that's that's a little little more challenging There's another layer of information there. Okay All right, and let me see here just a few more questions, and we'll call it a day well Option okay, so here's an example of the sweep of the book here To the you know in the S&P you're talking about this 1030 area Very aggressive. It actually starts right here And there's a little bit of selling in some of these areas, but look at the majority, right? And this was so aggressive and such a quick charge up Well, you know there's there's a complete lack of of interest here We're starting to look at you can start to see a book flip here as well Start to materialize They're buying here on the they want to be buyers here on the bid But this was aggressive enough that we don't even get a retest of the area Okay, so we just have a higher trading range up here, right? So that's that's how you're gonna have to start to comprehend by looking at your examples and studying and understand like You know, you don't get that pullback, right? Look at this look at this sweep here to the higher side You can start to understand that that well, this wasn't as aggressive, right? It didn't take As many ticks to the upside here. We get a pullback to where we actually broke from here All right, so that's that's how it's gonna help But you're gonna have to you know start to put those pieces together yourself You know, we're covering the market basics here and then we will go over more and Later in some of the other Educational sessions oh SJ, I mean on average, what's the Approximately a monthly return using book map. I mean that's gonna very you know tremendously different trades Traders different styles of trading You know, they might be trading once or twice a day or they might be trading like hundreds of times a day or thousands of times a day Yeah, actually in the stocks are look a little different. There's a lot less liquidity for the most part Compared to the futures All right guys, well, yeah, thanks for coming and tomorrow we're gonna go through part two and Just that review again here Part two is going to we're gonna look at some of the micro structures And the same market Mechanics within the the structures, right? And we're gonna start to get into auction theory and volume profile within the order flow. Okay. All right. All right guys Yeah, thank you very much. Yeah. All right. I hope it was helpful and we'll see you tomorrow. Okay. Take care