Topic 13: Buyers and Sellers (The Footprint)

Four Types of Market Participants

Aggressive Buyer

• Bought the OFFER (ask price) — paid market price to get in
• Willing to pay what the seller asks
• When large aggressive buyers enter → price often rallies

Passive Buyer

• Bought at the BID price — an aggressive seller sold to them
• Uses LIMIT orders — lets the price come to them
• Sits patiently on their bid, doesn't move until filled
• Often INSTITUTIONS — they step in when price gets cheap and buy everything

Aggressive Seller

• Sold on the BID — sold to get out or into the market
• Willing to sell for the price the buyer offers
• When aggressive sellers enter → price often drops

Passive Seller

• Sold at the OFFER price — an aggressive buyer bought from them
• Uses LIMIT orders at specific levels
• Often institutions — they sell when price gets too high

Key Distinction

• For EVERY trade: one side is aggressive, one is passive
• A buying/selling IMBALANCE doesn't have to happen on every trade
• Aggressive buyers/sellers ≠ imbalances (commonly confused)

How to Read on Footprint

• Major imbalances arise when aggressive participants enter → visible on footprint
• Passive buyers/sellers offer support and resistance
• When market cannot get past a big passive buyer = signal market ready to turn
• Large numbers on BID at a LOW = passive buyers (institutional support)
• Large numbers on OFFER at a HIGH = passive sellers (institutional resistance)

Market Movement Rules

• MARKET ORDERS move the price — limit orders do NOT
• To push price UP: traders must buy at higher prices
• To push price DOWN: traders must sell at lower prices
• Market moves between levels of passive buyers and sellers

Application to Supply & Demand

• At S&D levels: watch volume when price enters
• Heavy selling at bottoms / market tops = "hits a wall" and turns
• Big volume number supporting the market > average number = more reliable
• These high-reliability setups don't happen daily but are strong when they appear

Images

Homework

Explain aggressive vs passive buyer/seller in own words. Are you an aggressive or passive trader?

Key Takeaway for Bot

• The gold bot reads ASK side for sellers (aggressive sells) and BID side for buyers
• Large numbers on BID at lows = institutional passive buying = BUY signal
• Large numbers on ASK at highs = institutional passive selling = SELL signal
• This is EXACTLY what the 11 gold lessons teach — now with the theoretical framework
• Bot should distinguish: is this aggressive market order activity or passive limit absorption?