When conditions create volatility or imbalance, the spread widens and price tends to surge farther on fewer shares. While this movement can be nerve-wracking, it also provides most of the profit potential the day trader is likely to encounter. The electronic markets operate differently than the listed exchanges. The size of available shares shown on the tape tends to be accurate on the listed exchanges. Although the marketplace ultimately decides price direction, specialists and market makers constantly use their inside knowledge to trigger volume and profit their own accounts.
Specialists have the little black book that shows the location and size of all stop orders.
In the absence of more pressing market conditions, insiders will always push price in the direction they expect the most volume or one that will set up their own accounts for the most gain. In neutral markets, cash waits for opportunity and price can jump quickly when it appears. Serious traders also watch tick, breadth and index to predict the impact of the ticker tape. Use these measures to locate convergence-divergence with individual price action. For example, index movement provides highly accurate prediction on short-term direction for many individual stocks.