Aggressive vs Passive Participants
By the end, you can tell the difference between traders who take price and traders who wait.
A busy deli counter. Passive traders take a ticket and wait at the price they want (limit orders). Aggressive traders skip the line and pay whatever it takes to be served now (market orders).
Aggressive buyers lift offers — they cross the spread to buy immediately, accepting the seller's asking price. Aggressive sellers hit bids — they sell into the highest waiting buyer right now.
Passive participants wait with resting limit orders and let price come to them. They provide the liquidity the aggressive side consumes.
A move happens when the aggressive side is hungry enough to eat through the passive orders sitting in its way. That's the mechanical picture behind a fast candle.
“The candle is big, so something big happened.”
“Aggressive orders consumed the resting liquidity quickly — that urgency is what made the candle big.”
An aggressive buyer does what?
- Aggressive orders take price now; passive orders wait for price.
- Buyers lift offers, sellers hit bids.
- Fast candles are aggression eating through resting liquidity.
Up next — What exactly is the aggressive side eating through? Next: liquidity.