Lesson 01

The market is an auction

Price moves to find the level where buyers and sellers are both willing to keep trading. When it finds that level it stays. When one side stops showing up, it moves on.

In one linePrice advertises. Time and volume tell you whether the advert was accepted.

Price advertises, time accepts

Every move up asks a question: is anyone willing to buy here? Every move down asks: is anyone willing to sell here? Price keeps probing until it gets an answer.

The answer is written in time and volume. If price reaches a level and trades there for a while, with plenty of contracts changing hands, that price has been accepted. If it touches a level and leaves fast, on little volume, it has been rejected.

The probe up gets little volume and price leaves quickly. The probe down holds, and the profile on the right fattens there. Illustration from simulated prices, not a real session.

Who does the probing

Short-term traders trade inside the range. They buy low and sell high and keep price rotating.
Longer-timeframe traders (funds, hedgers, anyone holding for days) do not care about a few points. When they act, they push price out of the range to a new area.

Most of the day, short-term trade dominates and price rotates. The big moves come when the longer timeframe steps in. Learning to tell which one is in control is most of what this course is about.

Key terms

AuctionThe process of price moving to find two-sided trade.

AcceptancePrice holds at a level and volume builds there.

RejectionPrice touches a level and leaves quickly on thin volume.

Other timeframeLarger, slower participants whose orders move price to new areas.

Try it

Pick yesterday's session. Mark the highest and lowest prices, then ask of each: did price stay there, or leave quickly? That one question already separates accepted from rejected levels.

AXIS Desk · AMT Fundamentals · free. Education only, not trade advice. Futures trading involves substantial risk of loss; past patterns do not guarantee future results.