Who is on the other side

Four groups transact in any liquid market, and they are not trying to do the same thing. Hedgers transact to remove risk they already hold. Market makers transact to earn the spread and are indifferent to direction. Institutions transact in size and therefore cannot enter where they please. Speculators — you — transact to profit from a move.

This matters because it explains behaviour that looks irrational. A seller who is hedging is not predicting a fall. A market maker widening a spread is not signalling anything about value. Attributing intent to every print is the commonest beginner error, and knowing who else is present is the cure.