Sell Wall

Beginner

Community Submission - Author: Vitor Mesk

The term sell wall refers to a very large limit sell order or a cumulation of sell orders at one price level on an order book. It is the opposite of a buy wall, which refers to a large buy order or a cumulation of buy orders at one price level. 

While a sell wall can be created by a single entity, it can also be created by the sum of multiple orders placed at the same price level. Typically, when the sell wall is created by a single trader, they are referred to as a “whale.” Due to their large holdings, whales are often able to influence the price of an asset, and sell walls are one of the tools they may use to do that.

For example, if a trader places a sell order of 10,000 BTC at $5,000, the order book will show a big sell wall that will most likely prevent the price from going above the $5,000 mark. In other words, it would require a strong buying pressure and a significant amount of money to go through the sell wall and breach the $5,000 resistance. 

However, sell walls are often placed just to scare or cause certain impressions on other traders. This means that those orders are rarely filled in their entirety. In fact, whales often create and remove sell walls multiple times in an attempt to influence the price of an asset. For instance, a sell wall may induce other traders to place their selling orders below the wall, potentially causing a downward movement.

One way to quickly look at buy and sell walls is by looking at the depth chart. These charts are provided by most trading platforms as a graphical representation of the current order book, with all buying and selling orders that are visible within a certain range.

Glosariusz

A sequence of unambiguous instructions used for the purpose of solving a problem.

Pełna definicja
Glosariusz

In the context of financial markets, it is the value buyers offer for an asset, such as a commodity, securi...

Pełna definicja
Glosariusz

A single huge buy order or the composition of multiple large buy orders at the same price in the order book...

Pełna definicja
Glosariusz

The difference in price between the lowest asking price and highest bid price on the order book for an asset

Pełna definicja