Limit player
Also called: big limit player, limit buyer, limit seller, large limit order
A limit player is the reason a level exists. Price does not stop by itself. When a fall of several days stops at one price, someone bought everything that was sold there, and that someone was waiting with limit orders at that exact price.
How a limit player stops price
A big player who needs to buy a large position cannot do it with market orders: they would push the price up against themselves. So they place limit orders at a chosen price and let sellers come to them. Every sell order that reaches that price is filled by the limit player, and price cannot go lower until those orders are used up. On the chart this is a low that price keeps returning to, often to the cent.
Example. A limit buyer wants 50,000 shares at 100.00. Over three days sellers bring 42,000 shares to that price, and each time price touches 100.00 it bounces. The level holds while 8,000 shares of the order remain. If sellers bring more than that, the order is filled and price breaks through.
Signs of a limit player on the chart
- A move that stops at one price with no obvious reason.
- Repeated touches of the same price; four or five touches show a big limit player.
- Candles that stop a little short of the level, again and again.
- Long wicks into the price that close away from it, a sign of absorption.
Limit player vs market orders
Limit orders are static: they wait at a price and make levels. Market orders are dynamic: they take the available price and break levels. A level holds while the limit player absorbs the market orders and breaks when the market orders outlast them.
Limit players in this course
The candle that forms a level explains why every stopped move points to a limit player, and limit-player levels covers the level type built on them. The order-level mechanics are in what happens at a level.
Questions about limit player
What is a limit player in trading?
A large trader who works with limit orders at one price instead of market orders. A big buyer at 100.00 absorbs every sell order that reaches 100.00, so price stops there. That stop is what you see on the chart as a level.
How do you know a limit player is in the market?
Any price that stops a rise or a fall points to one. Four or five touches of the same price suggest a big limit player holding it. On the order book a limit player can be visible as a large order, or hidden as an iceberg order.
What is the difference between a limit player and a market player?
A limit player waits at a price with static limit orders and makes levels. A player using market orders, dynamic orders, takes whatever price is available and breaks levels. Levels hold while limit orders absorb the market orders, and break when the market orders outlast them.