How does a spike in volume not move price?

[k p]

Yes, they have algo's that sniff out the size bids and offers. In the old days they called down to the pit and worked size orders through a floor broker.

Now what do you think happens if they don't find anyone willing to trade large? I mean the context here is that price was very much trending down by this point. If someone needed to get out of 600 contracts and hence looking for a big buyer, what if nobody showed up until many points lower? You would think the would slowly start to scale out versus just waiting to match up with one big order.

And likewise, since we are talking institutional orders, why is one prepared to go long 600 contracts in a down trend... will they be control the move up now? And why wouldn't the guys who are just selling so many be able to sense that an up swing might happen? Granted we don't know who is long and who is short, but I clearly am not thinking like they are.

 

[Maverick74]

Now what do you think happens if they don't find anyone willing to trade large? I mean the context here is that price was very much trending down by this point. If someone needed to get out of 600 contracts and hence looking for a big buyer, what if nobody showed up until many points lower? You would think the would slowly start to scale out versus just waiting to match up with one big order.

And likewise, since we are talking institutional orders, why is one prepared to go long 600 contracts in a down trend... will they be control the move up now? And why wouldn't the guys who are just selling so many be able to sense that an up swing might happen? Granted we don't know who is long and who is short, but I clearly am not thinking like they are.

ok look, you have a very retail centered mind. Most of the world has a reason for what they are doing that goes beyond squiggly lines and downtrends. At any given moment in time there is Always a size buyer or seller. What if someone is short 100 million in equities in a fund and they are waiting for a size seller to show up so they can hedge their exposure. What if market maker maker just sold 20k call options for a dime over fair value and needs to lock in the hedge. What if it's just someone who is outright short and the market is in freefall and he thinks there could be a vicious squeeze coming so he can cover everything at one price. There are ENDLESS combinations of possibilities. Stop trying to predict them.

 

[k p]

ok look, you have a very retail centered mind.

That is absolutely correct.

The thing though is that since I'm not a big player, I can't do what the big players do. So in a way, I think it makes sense to try and understand what they do, since they move price, but also I gotta do it within my limitations of being a retail guy. (not having access to all the info and not being able to sit on losing positions for too long)

 

[Maverick74]

That is absolutely correct.

The thing though is that since I'm not a big player, I can't do what the big players do. So in a way, I think it makes sense to try and understand what they do, since they move price, but also I gotta do it within my limitations of being a retail guy. (not having access to all the info and not being able to sit on losing positions for too long)

Yes, I understand that but you will never know what they are doing unless they call you and tell you. Just accept the fact that 99% of it is useless noise.

 

[k p]

Yes, I understand that but you will never know what they are doing unless they call you and tell you. Just accept the fact that 99% of it is useless noise.

Ah, yes, fair enough.... but then of course the question becomes what is the 1%!!!

Every now and then you see a post about how someone discovers something that totally opens up their mind about the market and then they are gone. LOL... There seem to be two camps. One says its all hard work, day in, day out, and another seems to say that once you look at the market from a different angle, it all becomes clear. With such a diverse set of opinions, looking for that 1% is pretty hard, especially since most of what you read might in fact be that 99% noise.

 

[Maverick74]

Ah, yes, fair enough.... but then of course the question becomes what is the 1%!!!

Every now and then you see a post about how someone discovers something that totally opens up their mind about the market and then they are gone. LOL... There seem to be two camps. One says its all hard work, day in, day out, and another seems to say that once you look at the market from a different angle, it all becomes clear. With such a diverse set of opinions, looking for that 1% is pretty hard, especially since most of what you read might in fact be that 99% noise.

There is no clairvoyance in this business unless it's someone selling you something. This business is a lot of very very very hard work.

 

[Ghost_of_Blotto]

especially since most of what you read might in fact be that 99% noise.

Two years and two thousand posts later - painful to see how worse off you are. Just reading through your posts on this thread - so many faulty concepts and incorrect assumptions about the market picked up from clueless posters on Internet forums and writers of books. You've basically polluted yourself so thoroughly with the wrong approach that it is questionable now whether any progress would be possible for you, at all.

At the very least you would have had to thoroughly forget everything which you have learned. And then, if you were able to come back with a completely fresh mind, you would still be up against the same disadvantages which caused you to start down the wrong path in the first place.

For example, lack of discernment (ignoring good advice and listening to the wrong people).
Next time at least do your own work and don't listen to anyone who isn't verified to be successful at what you are attempting. (maybe spend some time working out how you could be of value to those people?)
It is with no pleasure whatsoever that what I warned you about in my message to you some two years ago has transpired.

I note with wry amusement that my rescuer compulsion isn't quite cured yet, as evidenced by this post.

Honestly, a break for at least a year - nothing about trading whatsoever - would be the best thing for you. You can always come back, but the break would be more productive than another year moving even further away from the goal.

 

[k p]

Two years and two thousand posts later - painful to see how worse off you are. Just reading through your posts on this thread - so many faulty concepts and incorrect assumptions about the market picked up from clueless posters on Internet forums and writers of books. You've basically polluted yourself so thoroughly with the wrong approach that it is questionable now whether any progress would be possible for you, at all.

At the very least you would have had to thoroughly forget everything which you have learned. And then, if you were able to come back with a completely fresh mind, you would still be up against the same disadvantages which caused you to start down the wrong path in the first place.

For example, lack of discernment (ignoring good advice and listening to the wrong people).
Next time at least do your own work and don't listen to anyone who isn't verified to be successful at what you are attempting. (maybe spend some time working out how you could be of value to those people?)
It is with no pleasure whatsoever that what I warned you about in my message to you some two years ago has transpired.

I note with wry amusement that my rescuer compulsion isn't quite cured yet, as evidenced by this post.

Honestly, a break for at least a year - nothing about trading whatsoever - would be the best thing for you. You can always come back, but the break would be more productive than another year moving even further away from the goal.

You make a lot of assumptions in your post about my progress or lack there of.

The funny thing was that as I was going through your post, I kept thinking... ok... this line sucks, and this line sucks... but look, there are still a few more paragraphs to go so maybe it gets better. And then I got to the part where you said your "rescuer compulsion isn't cured yet" (somehow missing the wry amusement part), and I thought ok, now its really going to get good. And before you know it, the post was over! LOL

Honestly Blotto... you've taken your entire post to put me down and offered absolutely nothing. Not a single piece of something useable to actually help a person get to their goals. I still remember once where you showed off with your trades.... where you made 3 NQ points (maybe 4 at the most), and yet sat through price moving against you more than 4. (its all in my history if anyone is brave or bored enough to look it up)

You took a trade that had more risk than reward! With your keen understanding of the markets, why didn't you get in at a place where you would only take a few ticks of heat? Is this setup that you have, a trade that gives you more risk than reward batting over a 90% win rate? This would be the only way that your example of trading finesse would actually have positive expectancy.

If you want to be helpful, why don't you comment on the thread topic. Maybe you can even back up what Maverick said or perhaps offer a different interpretation. You in your vast knowledge must be the guy who knows the guys who put on these 600 contract trades in the middle of the afternoon, no?

Seriously, either provide something beneficial or piss off.

 

[billyjoerob]

fwiw, my way of thinking about this is that there are always sellers in a stock, but there are not always buyers. that's why there are some situations where there is no buyer at any price. likewise, there are a million reasons to sell, only one reason to buy. therefore you want to look for situations where buyers continue to absorb large amounts of volume without affecting price because there is more information in the buying than the selling.

 

[learner2007]

But here, price hardly moves.. why? How can you have so much selling, and buying, without the price moving if this is a quiet time?

The examples you attached show a very common situation where a spike in volume is seen at the end of an extended move. It can be seen in any time frame and it often called a selling climax or blow off when found on daily charts. This price movement often leads to an immediate reversal, or signals that the end of the run is very near. While a normal reversal may be extended over a period of time, this volume spike at the end of a wave results in the same change in supply and demand during just a few price bars. Keeping this in mind can save you from buying when everybody and his brother is also buying.

Such spikes also show up at insignificant price levels and with zero change in price. These are block trades placed simultaneously by a broker.

It sounds as though you are overly concerned about who's doing what. It really doesn't matter if the big buyer is Buffet or my granny, does it? All that matters is the effect the buying/selling has on the supply/demand balance, IMHO.