Why price keeps changing
Order flow, liquidity, news and sessions.
Understand what moves price, and stop looking for a cause behind every small swing.
Price moves through an imbalance between buyers and sellers.
Price is the last trade a buyer and a seller agreed on. The moment one side carries more volume than the other, price shifts. That is the whole mechanism; everything else is detail about where the imbalance comes from.
- Macroeconomic data and central bank decisions
- Large participants who need to fill a large order
- The level of liquidity: in a thin market the same order moves price further
- Trading sessions: activity in London and New York is higher than overnight
- The ordinary background flow of small orders — the noise
The practical conclusion is not obvious but it matters: most small moves have no particular cause. Trying to explain every candle with a news item is a path to invented stories rather than analysis.
What is worth tracking is a change in the character of the move. If the candles suddenly double in size, volume has arrived: news came out, a session opened, or a large level was hit. Your reaction to that change is to reassess the risk, not to enter immediately.
Volatility is not simply “a strong move.” It is a change in the scale you are working at. The same expiry on a quiet market and on an accelerated one means entirely different risk.
In LEVEL 06 and LEVEL 10 we go through this in detail: how a timeframe changes the picture and why OTC instruments live by their own rhythm.
What people do
Looking for an explanation for every candle. Those explanations are always found after the fact and create false confidence in the next forecast.
What works
Make a habit of asking one thing before a session: is the market quiet or accelerated right now? The answer sets both the trade size and the expiry.
A practical example
Open the same instrument at 4:00 and at 15:00 and compare the size of the candles on M1.
Overnight the range is narrow and the moves sluggish. On the overlap of the European and American sessions the candles are larger and the moves sharper. Same instrument, different behaviour.
Key takeaways
- 01Price moves through an imbalance between buyers and sellers.
- 02Most small moves have no separate cause — they are noise.
- 03A change in candle size means a change in the scale of your risk.
Lesson 7 of 10 in “WELCOME TO MERCER”