INTERMEDIATE // TRADING DESK
MODULE 02 // BEHAVIORAL SIGNALS

Order Flow Analysis.

Analyze trader behavior patterns in order submission, modification, and cancellation sequences.

ORDER PATTERN ANALYSIS

Order flow reveals trader intent. Legitimate traders show patterns consistent with their strategy and market conditions. Manipulative traders show anomalous patterns: rapid order/cancel sequences, unusual timing correlations, or order sizes inconsistent with typical behavior.

Key behavioral signals: order velocity (orders per second), modification ratio (changes/new orders), cancel ratio (cancels/submissions), time-in-force patterns, and price aggressiveness relative to market.

ABIS builds trader behavioral baselines from historical order flow. Deviations from baseline—sudden velocity spikes, unusual cancel ratios, or strategy changes—trigger alerts for investigation.

OPS
Order Velocity
Orders per second. Baseline varies by trader type; deviations indicate potential issues.
C/S
Cancel Ratio
Cancels divided by submissions. High ratios may indicate spoofing or quote stuffing.
M/O
Modify Ratio
Modifications per order. Excessive modifications may indicate layering strategies.
KNOWLEDGE CHECK // Q02
How do cancel ratios help detect potential market manipulation?