buyer and sellers interaction in a chart pattern

M

mute9003

i dont think i asked my last question correctly in a way that everyone understands
i will try my best and be more specific this time

what i meant to say is
im trying to learn what buyers and sellers are doing while trend is forming
like head and shoulders pattern
how are buyers and sellers and hodlers and shorts involved in that pattern

like what is happening during each part of that pattern

im trying to understand the mechanics so i can for example look at a chart and understand where the sellers are acting and where buyers are acting and where longs or shorts are stuck while trend is going against them and where they can possibly exit etc..

the falling knife pattern with its retracements is the only one i understand so far
like falling knife is where alot of longs are stuck with alot of sell orders of theirs trying to get out
small trend reversals cause new longs to buy into what they think is a dip buy
and during the small retracements some longs give up and exit the trade causing the downtrend to continue after that small retracement
and the bottom is where longs have liquidated most of their positions and selling pressure drops enough for new buyers to start loading up and push the trend upwards again
but then there are shorts. how are they involved in that trend
are shorts the ones also causing the trend continuation after that small bump upwards
 
i really dont know how to explain it any better
basically im trying to understand what the people are doing while trend is forming
i know there are institutions and robo traders and hft also involved but im not there yet i will integrate that later
 
upload_2022-2-22_11-18-4.jpeg

now we get even giddier reading these.

anyway, refer to the answer in your previous thread.
 
mute9003 said:
i dont think i asked my last question correctly in a way that everyone understands
i will try my best and be more specific this time

what i meant to say is
im trying to learn what buyers and sellers are doing while trend is forming
like head and shoulders pattern
how are buyers and sellers and hodlers and shorts involved in that pattern

like what is happening during each part of that pattern

im trying to understand the mechanics so i can for example look at a chart and understand where the sellers are acting and where buyers are acting and where longs or shorts are stuck while trend is going against them and where they can possibly exit etc..

the falling knife pattern with its retracements is the only one i understand so far
like falling knife is where alot of longs are stuck with alot of sell orders of theirs trying to get out
small trend reversals cause new longs to buy into what they think is a dip buy
and during the small retracements some longs give up and exit the trade causing the downtrend to continue after that small retracement
and the bottom is where longs have liquidated most of their positions and selling pressure drops enough for new buyers to start loading up and push the trend upwards again
but then there are shorts. how are they involved in that trend
are shorts the ones also causing the trend continuation after that small bump upwards
More...


They are making patterns that people see and often make people jump and make mistakes. That's why people saying "be patient" is good advice although "be patient for what" is the question. Be patient for other people to make mistakes and than you take advantage of their mistakes.

As an example let's say there's a buy setup (whatever that means to you, not going into micro detail just giving an example) and that buy setup fails (leaves a target open above that normally gets filled). Well people are going long looking for that target or high to get taken out. So if you start trading and candle closing below the origination of the buy setup that indicates a decent probability that buyers are being trapped, so if any type of momentum gets going in the opposite direction, those buyers are likely to get pushed out which is going to cause sellers and shorts to come in as well as buyers getting out.

In return that causes a sharp down move, often creating imbalances (potential means reversion levels) that will be filled generally speaking intra-day(although if we're extremely bearish on larger charts less of a probability that they get filled). Buyers typically will come in now seeing a discount or perceiving value in the lower prices and start to buy, which in return generally speaking will cause some shorts to cover which often would take us back to some of the mean reversion levels / imbalances that got created on the sharp move down.

Essentially this pattern is being played out over and over on all time frames all day long. #1 Trapping people #2 Forcing people out #3 Often a means reversion can take place once larger players have forced weaker hands out and basically just debited money out of their accounts into there's.

Not sure if this is what you're asking or helping at all. Just my two cents.
 
If you want to develop deep understanding of how buyers and sellers interact in the stock market and use such understanding in an actionable way, the best resource I have found is The Arora Report. You can also look at money flows on a Bloomberg terminal.
 
Concinnity said:
They are making patterns that people see and often make people jump and make mistakes. That's why people saying "be patient" is good advice although "be patient for what" is the question. Be patient for other people to make mistakes and than you take advantage of their mistakes.

As an example let's say there's a buy setup (whatever that means to you, not going into micro detail just giving an example) and that buy setup fails (leaves a target open above that normally gets filled). Well people are going long looking for that target or high to get taken out. So if you start trading and candle closing below the origination of the buy setup that indicates a decent probability that buyers are being trapped, so if any type of momentum gets going in the opposite direction, those buyers are likely to get pushed out which is going to cause sellers and shorts to come in as well as buyers getting out.

In return that causes a sharp down move, often creating imbalances (potential means reversion levels) that will be filled generally speaking intra-day(although if we're extremely bearish on larger charts less of a probability that they get filled). Buyers typically will come in now seeing a discount or perceiving value in the lower prices and start to buy, which in return generally speaking will cause some shorts to cover which often would take us back to some of the mean reversion levels / imbalances that got created on the sharp move down.

Essentially this pattern is being played out over and over on all time frames all day long. #1 Trapping people #2 Forcing people out #3 Often a means reversion can take place once larger players have forced weaker hands out and basically just debited money out of their accounts into there's.

Not sure if this is what you're asking or helping at all. Just my two cents.
More...

thats pretty much it
just trying to understand that better
someone explained to me how falling knife and basic bear trap pattern works and who is trapped by who and where exactly and thats the only one i know
now im trying to find that same kind of breakdown for other common patterns
 
maxinger said:
View attachment 278749
now we get even giddier reading these.

anyway, refer to the answer in your previous thread.
More...

im reading the other thread now as well
it probably made no sense because i dont really know what to ask about i dont know the keywords to search for or to use in a question so people know what im actually asking
 
im already confused enough. i dont think at this point more information will have any effect on confusion
i just watched about dark pools and hfts and bunch of haim bodek videos over the weekend

so im way past confusion lol
 
The patterns you are seeing is the result of randomness. Trends exist in financial markets, and those trends are driven by the slow diffusion of information…so try to assess the catalyst that provided new information and then build your view from there.

“Oh, stock missed earnings and guided lower… stock has been choppy but mainly lower since…”
 
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