Manipulating the order book

I just wanted to summarize on what I learnt today as I thought it was really valuable to anyone who is trading, and even if you don't learn anything from my post I am sure you will be able to from reading the thread on t2w.

Its always been my intentions to trade outrights eventually. I do struggle when it comes to reading the order book, but it is a tough thing to do! It seems so random and crazy. Although I knew the markets are massively spoofed and somewhat controlled by a few big guys, this thread really opened my eyes further into these three markets that I trade, the bund bobl and schatz.

http://www.trade2win.com/boards/money-markets/29286-bund-bobl-schatz-thread.html

It starts getting good around page 12 onwards. To summarize briefly, it talks about how the markets are maniuplated by a few big traders, which is something I already knew. Although people posted some really insightful information. Firstly they talk about two types of orders, one from locals and the other from paper.

"Since locals are liquidity providers and usually trade the opposite of paper and fade large moves they should be sitting on the bids/offers and not giving up edge. When every tick counts they don't want to give up edge so I could find it entirely possible that most locals are making the bid/offer and not taking the bid/offer. While on the other side the paper which is usually longer term does not want to mess around with giving up a tick or two and just wants to get the order filled and move on."

An interesting point was these big traders are doing everything to exergerate moves, they try to push the market further in one direction, then locals will have to cover their positions aka puke their positions and this drives the market further and the paper then takes the opposite side. The really interesting thing I read was about crossing, which from my understanding is big traders buying into themselves to create the illusion that there is buying in the market. If a trader is offered at a price and has a large proportion of the offer he doesn't just have the option to flip it across (printing a small buy on the order book) or create a spoof on the bid he can buy into himself which neither makes him long or short. Apparently crossing is more likely to take place when the markets are quieter and attempts to get other traders to push the market where they want it to be. Most traders know its smart to follow the paper, as you typically lose money going against it, so this is why the paper is trying hard to fool others and trick you into taking the other side of their trade. Fascinating thread though and worth a read!