Unit 2 · Level 5 · The Engine Room
Microstructure: the engine room
Candles summarize; the ORDER FLOW is the raw truth, every bid, ask, and print. Microstructure studies how orders become prices: passive limit orders providing liquidity, aggressive market orders consuming it, and market makers quoting both sides for the spread. You met the order book in League 1. Now we read it like natives.
Free to play. No ads, no token, no account needed to start.
What you get asked
Market makers quote both bid and ask all day. Their business is…
Liquidity as a service, not direction bets. MMs are the market's shopkeepers. Understanding their incentives (get flow, avoid toxic flow, stay flat) explains half of intraday behavior.
Match the flow concept to its meaning
Price moves when aggression exceeds passivity at a level. Absorption (heavy selling that can't push price down) is one of the strongest tells in trading.
Stops clustered beyond obvious levels are pools of forced ___ that act as magnets for price sweeps.
You learned this as 'stop hunts' in League 3. The microstructure version: large players need size, and forced orders are the cheapest size available. Obvious stops feed them.
Practical consequence for YOUR stop placement:
Past the sweep zone, sized accordingly. Not 'no stops', SMARTER stops. The wick that sweeps the obvious level and reverses is a pattern you've now seen from three angles: traps, cascades, and flow.
Microstructure literacy changes your reading of a big red candle how?
Three causes, three different next moves. Same candle, three stories, three trades. Cause-reading is the master's edge over shape-reading. 🐜
The rest of this unit
Order flow, market makers, sweeps and execution: the market below the candles.