All brought to light in about a day. Not bad!
Lol It was a hard days work.
you talking about selling and your bio is a sales pitch. tf
I like your birds of a feather analogy and IMO thats closer to the answer than solely market manipulation.
I think although there are market makers who’s job it is, is to understand how institutional and retail traders trade and bet against us, this only counts for a portion of the market and does not completely dictate the direction of the market.
I think a more accurate explanation lies in the fact the humans think much more alike than we realise and that life in general has a grander design than we understand with greater forces pulling the strings than just “the powers that be” that we usually accredit responsibility for the unexplainable.
I recommend a book called The Quarters Theory by Ilian Yotov
To counter this way of thinking: for every buy that happens, there has to be a seller and vice versa. So the fact that there are more buyers than sellers to move price up or down is incorrect. There is always an equilibrium of buyers and sellers. (source: alexander elder, ‘trading for a living’)
So if I would follow the thinking of Alexander Elder, I would assume that price goes up when the average price of all shares bought and sold today is higher than the average price bought and sold yesterday
Correct me if I’m wrong, but so far, this is the most logic explanation i have found on how price moves up or down.
Thank you for your explanation. I prefer yours than that of tradeforex007. Cause what you said is actually true. Buyers are paired with sellers, so how are they more buyers than sellers or vice versa? I believe it’s highly controlled.
Yeah I’m open to learning different views but i dont really understand that view of average being more than yesterday. Also there isnt an equilibrium of buyers and sellers otherwise price would not move:
I thought this was pretty basic stuff. If you use a DOM in trading you’ll be able to see all the limit orders waiting at each price. And price moves up when more contracts are bought than what are being sold. So at any moment one big order can move the market. And you see the effect at that time.
Quite simply, If there is one buyer and one seller at price 1.0 then itll stay there. But if another buyer comes in but no more sellers then the buyer has to buy at the next available seller price which will be 1.1
What I mean by ‘being in equilibrium’ is that if there are 100 buyers, there have to be also 100 sellers. The difference is at what price people are buying/selling in relation to the actual market price.
Let’s say price of a stock is going at 10$. If buyers today are very bullish and believe price will go upwards, then they’re likely to buy at a higher price (for example 11$), therefore price will rise.
What I’m saying here is just my view and understanding. I still struggle sometimes to see it clearly. So please correct me if i’m wrong.
Btw, what is a DOM ?
You might be saying the same thing but in a different way. But buyers are not likely to buy at a higher price. They only set buy limits or if they buy at market where the next sellers are.
Just keep it simple. The movement of price is only down to an imbalance of buyers and sellers.
At each price there are the same number of buyers and sellers transacting. If there are more buyers than sellers then price will move up. But the transactions are at different prices.
You dont have 10 buy contracts and 5 sell contracts at $10. The 10 buy contracts only transact 5 contracts then the remaining 5 move to the next limit sell order and transact there. Eg there are 2 contracts at $11 and 5 contracts at $12. So those 10 market buy contracts move to $10, then to $11, then to $12. Where it sits until more buyers come in to take out the sellers orders. That’s it.
Hence when price is moving up, it’s not that buyers are willing to buy higher. No. They are buying wherever there are willing sellers. And as those sellers are filled it moves to fill the ones higher and price move up like that. If a 100 sell contracts come in suddenly, then price will fall filling all the buy orders.
Yeh if you want to be precise it’s not buyers who push price up it’s their buy orders. But I just say buyers because it’s more simple.
Just a few additional thoughts here:
When someone wants to buy currency they do not usually buy from someone wanting to sell nor does someone wanting to sell usually sell to someone wanting to buy. Most transactions take place via market-makers (as intermediaries) whether it is in the interbank market with real money or via brokers or even in a high street foreign exchange shop.
And these market-makers do not care whether you buy or sell, they just quote a bid/offer. That is their function. However, their bid/offer is not fixed, it reacts to the business they are getting. If the majority of customers are buying on their offers then they raise their bid/offer. Alternatively, if their bids are getting hit then they will drop their bid/offer.
Naturally, these market.makers need to offset their positions as they go and they are just as active between themselves in the interbank market, hitting each others’ bid/offers to lock in their spread profits and thereby maintaining a unity in prices, and price movements, throughout the market.
Another factor to consider is that not all deals are purely forex speculation. A huge amount relates to international trade. For example, if an international wholesaler buys goods from China priced in USD and for sell in Euros in the EU then he will know what EURUSD rate will allow him to buy the goods and sell them in his market with a mark-up profit.
The same applies to commodities like Oil and Gold which are generally priced in USD. Buyers and sellers of these commodities will act when exchange rates reach a level that works for them.
These trade deals are one reason why certain price levels seem to often form what we would call S/R. But they are not so precise as what we see on the charts. This is largely because the hugely wide use of TA naturally sharpens these general “zones” into lines. When enough traders identify the same lines they become magnets focusing all the limit and stop orders to the same tight area.
Another area where price movement is not entirely related to speculative trading is the vast sums of pension and investment funds which are shifted and adjusted according to their portfolio changes. These funds are like tankers and take a long time to change course. But, again, the exchange rate that triggers their action is related to the income they are seeking from their investment. If they are looking for interest rate income from foreign bonds then the forex rate is a factor in the decision making and timing.
But it is certainly true that the impact of short term speculative trading is significant because one can see it in the calmness of the markets during a major holiday session. But all this short term trading is via the various market-makers (banks and brokers) who simply push the price up or down in reaction to the pressures from the traders and from each other.
Just my thoughts…
Realize that at least 60%-70% of people lose their money just because of money management. There is nothing else behind it …
They way you’ve described the proces makes a lot of sense.
By reading all kinds of articles and different opinions of different people, it get’s a little cloudy and confusing sometimes.
Thanks for clarifying.
My conduction is based on your resolve. You for example would be subject to the brutal truth of your ignorance, until the ego subsides. I know how to produce effective winners. With all due respect, you don’t know sh it.
There’s nothing wrong with a “retail strategy” or a “retail trading approach”. Most fail in the retail trading space because of poor risk/trade management which comes down to a proper trading plan and conditioned trading psychology. All of this comes with EXPERIENCE. There is no holy grail in this space. We each do what best suits our lifestyle and personality.
However, if you’re genuine in your question. Roughly 80% of the volume is generated from banks and financial institutions. Understand their role and you’ll understand the why behind price movement.
No worries. But remember this is explained at a basic level to understand the process. Overall theres loads of other stuff going on but we dont need to know it.
I’m surprised you’re still here. As you cant post anything of use to anyone here on babypips, its pointless advertising yourself.
Probably also entirely oblivious to the giant flashing Dunning-Kruger sign on his forehead.
its interesting your so definite only 1 % retail traders win, when yet it is not a science
I study human behavior to give me an edge in the markets. Its enjoyable taking advantage of normal people like most of you on here. I’ve become wealthy taking your money, why act like we’re friends. You’re publically exposing yourselves by inheriting a loser’s rhetoric. We appreciate you, trust me. Every here and there a brave soul humbly asks to be trained. So i stay, although the entertainment is limitless
Unnecessary crap. You’re wrong by the way