What Are Buy/Sell Walls And How To Use Them
Buy and Sell walls are being used more in more in all forms of trading but crypto trading has made use of them like no other industry before. They are particularly useful when it comes to short-term investments and they have become many crypto traders’ new best friends.
So, what are they exactly?
Well they are actually two separate entities for starters, as in there are Buy walls and then there are Sell walls. So let’s treat them as such by explaining them separately.
- Buy Walls- A buy wall occurs when the number of buy orders for a certain coin is greater than the amount of sell orders. Simple, right? But, what does it mean? Essentially, it’s a good sign for the coin! The bigger the buy wall is, the bigger the belief is in that coin. So a big buy wall can let you assume that the coin is fairly popular and high in demand, especially if it has been that way for a while and has a stable timeline.
- Sell Walls- Sell walls are just the opposite. But just to be clear: a sell wall happens when the sell order numbers are bigger than the buy order numbers. So basically when there are more people wanting to sell than there are people wanting to buy. It means that times are tough for the affected coin
Look out for fake walls!
Fake walls may be a confusing word as the walls aren’t really fake, they are more like artificial walls. They are ‘controlled’ by crypto pump groups, where traders buy and sell according to what the crypto pump leader wants them to do. This causes sharp spikes in buy walls and then sudden sell walls occurring. The way that you can tell these apart from natural walls is that these fake walls are far more vertical and major action takes place very quickly. Newbies often fall into the trap of buying into fake walls as the vertical climb gets them excited, thinking the price can only come up but meanwhile a sell wall could occur before your transaction has even been processed.
So how do you use buy and sell walls to your trading advantage?
Well once you have established that the buy or sell wall is definitely not fake then you can go by the golden rule of buying when a steady buy wall occurs and selling when a definite sell wall occurs. This is because it’s imperative (especially for short-term trading) that when you buy into a coin, it already has a positive sentiment. The same goes for selling. One of the only ways to be sure that the market for a coin is steadily declining is to see a steady sell walls, that will let you know that the best time to sell would be as soon as possible!
As always, take probability into account and don’t forget to factor in outside factors that could play apart in market rise and falls.