Why it matters
It explains why price can move ‘too far’ too fast without new information: the information is the order flow itself.
Operational use: this is how the market taxes urgency. When it appears, slow down or size down.
Common trap
Fading cascades with tight stops. Cascades are fast and mechanically violent; poor positioning gets shredded.
Example
Price breaks a round number and accelerates 20 pips in seconds. It’s not a narrative. It’s stops becoming market orders and pulling the book thin.
Operational cue: if you can’t point to it on the chart, in the DOM, or in your broker logs, treat it as a story and trade smaller.
Notes
Quick rule
- If you see this repeatedly, you are in a different regime than your model assumes.
- Regime change usually means position size change.
- When in doubt: trade smaller, or don’t trade.