hi all,
price moves because buyers and sellers interact with each other, continuously.
for price moves, it is irrelevant why market participants trade (i mean trade intension here), one side can be a short term scalper, daytrader, or a hedger, the other side can be a longterm investor.
they interact, and based on limit and market orders the price moves.
i know, some guys analyze the interaction of market participants. be it a pure bar chart with or without any indicator, or the trading DOM. the trader seeks to find an answer to which side is more dominant.
is there really a value in analyzing the interaction of sellers and buyers trade by trade or bar by bar?
some will say "yes, of course. you can see hidden orders, absorption, size entering the market ..."
my experience is somewhat different.
i think, it doesn't f..cking matter. i have seen many many times in the DOM, that if one iceberg order appears, there will be other market orders that will hit this order aggressively. which side the market will move next is a 50/50 coin flip. iceberg orders doesn't f..cking matter!
i used the jigsaw reconstructed tape for monthes to see size entering the market to catch moves before they happen. i could not find any edge with that. when size enters the market, it will drag the market up or down, but thats it. on the recontape you see what happened, there is no guarantee of follow through.
next comes the bar chart: i think the bar chart is a good tool to see how price moved from A to B, and how volatile price was within the bar period. i don't think there exist any bar to bar relation, it is 100% random.
i want to address one other issue, too.
give the technical trader a chart, and he will start drawing f.cking patterns and lines on it and draw scenarios: 1.scenario: if price breaks and retest, enter. 2.scenario:if price fails to breakout on good volume, fade the breakout when price bar closes back within range. .....
most technical traders do not even know what the underlying markets represent.
the technical trader will trade the ES like he trades CL.
The ES represents underlying stocks. there can be 500 reasons why ES moved 10 points within 1 minute or why one 100 lot market order moves the market and then the other 100 market order does nothing. it can be a hedge, margin call, options related, stop run, something related to one sector, arbitrage, intermarket correlation.
it can be something that just lasts for a minute, for 5 maybe.
my point is, i think previous price action might be useful, BUT it might also not be useful at all. making trading decisions based on what happened is a 50/50 coin flip IMO.
