Hi guys
I get the impression that, when the WOM is pointing very strongly in a particular direction, the market often behaves as expected (possibly due to self-fulfilling prophesy).
Whilst I appreciate that money 2 or 3 ticks from the spread may just be spoof money, I'd say that the money directly next to the spread may be significant in terms of working out what the price is likely to do.
Let's say you have £50 at 8.2 and £1000 at 8.4. The layers may think 'someone wants to place a large bet, so if we hold fire we'll get a better price'. Some of the backers may think 'I'm not going to get matched at this price anytime soon', and, through panic or impatience, snap up the £50 and make 8.2 become the new price for money waiting to be matched by layers. This can set off a chain reaction.
I'd be interested in people's thoughts on the above.
Jeff
