What Moves the Market

In order to be a consistent futures trader, it is crucial that you understand what moves the market. In his recent NinjaTrader Ecosystem webinar How Institutional Traders Decide Where to Trade, Day Trade like a Pro founder and CEO Ephraim Olschewski explained it in simple terms.

“The price of a market moves because there are more aggressive participants on one side of the market,” he said.

You may have heard that price moves when there are more buyers than sellers (or more sellers than buyers) in the market, but Olschewski has an issue with that definition. After all, he explained, in order for there to be a buyer there also has to be a seller and vice versa. Instead, think of price movement as occurring when either buyers or sellers are behaving more aggressively in the market.

It is this imbalance that you can see on a chart. If you can spot that imbalance, Olschewski explained, that gives you an opportunity to participate with traders who missed out on the initial move.

Of course, it’s crucial to understand how these imbalances affect the market. Remember, when supply exceeds demand (when sellers are behaving more aggressively than buyers), price will go down. On the other hand, when buyers are being more aggressive and demand exceeds supply, price rises.

In this short clip, Olschewski explains these concepts in greater detail.

To learn more, be sure to check out the full-length webinar How Institutional Traders Decide Where to Trade. If you enjoyed this clip, be sure to watch these other market-analysis webinars Bringing Market Structure to Life with Mark Sedlak of Trade by the Numbers and Automation and The Secret to Great Setups with Steve Wheeler of NaviTrader. You can browse the full library of free webinars from the NinjaTrader Ecosystem here!