A wall (buy wall, sell wall) is a large limit order in the exchange order book whose volume is so big that it can temporarily halt price movement. A buy wall is placed below the current price and can hold back a decline, because to break through this level the market needs to absorb the entire volume of the order. A sell wall, on the contrary, is placed above the price and slows down a rise.
Walls are often used as a tool to influence the market. A large participant may place a noticeable order to create the impression of strong demand or supply and nudge other traders toward certain actions. At the same time, such an order may be withdrawn before it is actually filled — maneuvers like this create a false picture of the real balance of forces.
How traders perceive walls
- Buy wall — strong support from below that holds back a decline;
- Sell wall — strong resistance from above that holds back a rise;
- A wall can be either a genuine defense of a level or a manipulative signal.
Since walls can either reflect genuine intentions or mislead the market, experienced traders treat them with caution and do not make decisions based solely on a single large order in the order book.
