The theory behind OBV is based on the distinction between smart money – namely, institutional investors – and less sophisticated retail investors. As mutual funds and pension funds begin to buy into an issue that retail investors are selling, volume may increase even as the price remains relatively level. Eventually, volume drives the price upward. At that point, larger investors begin to sell, and smaller investors begin buying.
from .investopedia.com
Why doesn’t price rise when large institutions start to buy? Why does volume not drive price higher this week but will drive it higher next week?
Why doesn’t price fall when large institutions start to sell?
Showing what he says is dumb money on a chart is a salesman’s trick.
Why is this back again. And on two threads no less.
Already discussed ad infinitum on your other thread to begin with.
And as has already been pointed out to you on your other thread: the OBV indicator is useless to you on FOREX. The fact that it is supplied as standard with MetaTrader is neither here nor there and is of no consequence to you.
And trying to demonstrate it on a naked FOREX chart (no less) is futile. You don’t know why price moved the way it did on that chart. I know I for sure wouldn’t be able to tell you anyway. And always easy in hindsight as usual too not??? And even IF you had proper and meaningful volume: it’s being able to figure out at the time what you would do with that information that would be an achievement.
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for your info I could not delete the other one
this is not about OBV indicator nor about selling anything
but about how price can take a long detour before following its course
something retail traders should be aware of before setting that sell stop after seeing that big bearish candle in the end of the day
Alright. Whatever.
First of all you have an inside day bar formed. So you would have gone short at the low of that previous bar. And second your stop would have been above that same bar and then trailed. Looks like a perfectly valid (albeit a waste of time) trade to me. So I dunno what you’re on about. Only an idiot would have gotten stopped out and lost money in your example shown.
Anyway. Carry on. Don’t see the point. Must be me.
Ok. I have a question…
I understand the difference between “smart”, institution, and “dumb”, retail, money (if I was committed to an institution and still trading… would that make me smart money?)
As institutions build positions… what part of the price movement is based on all the algo trading?
I would imagine that has an impact.
KC
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The main difference between institutional investors and retail traders is that first ones make their decisions based on in-depth analysis while second ones could act under the impact of emotions. For example, if the price moves up substantially, investors would not buy it since the risk-reward ratio in such case would be poor, while retail traders would buy it due to the fear of missing large movement. Institutional investors always open or close position only during the consolidation periods to get the best possible execution price - they have to execute their orders partially due to the large size of the positions. They could also search for the assets that would be interesting in a few week or even months while retail traders buy them only when the price aready moves higher. At the same time, retail traders play important role in the trading ecosystem providing institutional investors with the liquidity they need to open and close thier huge positions.
The main advantage of retial traders if that they can open and close their positions jus in a few seconds while institutionals would need several days or even weeks. This advantage gives traders an exceptional flexibility - they can find way to make profit almost in any market conditions.
sorry
can you explain this i just did not get what you mean ?
that is the whole point
What I was trying to say
is that institutional investors manipulate (or push or pull) retail traders into providing them with that liquidity
here is an actual example that is happening right now thursday 1 and friday 2 august
Crude Oil
institutional investors know that price is going up
so they want to buy with the lowest price possible
so they started selling little by little until retail traders joined in and pushed the price that is comfortable for institutional investors
now the real buying will start
I hate to be the one to tell you this but even your so-called smart money got it wrong yesterday. Oil dropped for no other reason than Trump’s Tweet re: slapping another 10% tariffs on the remainder of Chinese goods not as yet being subject to tariffs and from 1 September.
Anyway and whatever the case: even IF you’re right then I’d like to know of what use this all is. Easy to see NOW on a chart. Do yourself a favor and scroll the chart to the right until you cannot see the last ten or twenty bars. Then see what you would have done.
A drop in price would be good for china
Crude Oil was in an upward slope for sometimes (I do not dwell on the reasons I am not an economist ) but smart money need to buy at the best lowest price
go buy Crude Oil (Actually you should have done it today about 2 gmt)
right now friday 2 8 2019 at 8 gmt
it looks like retracing
maybe wait until it hit bottom maybe by the end of the day
but do not sell
but do not sell
but do not sell
but do not sell
but do not sell
but do not sell