If it were perfect information price would not change and the stock market would flatline.
Is Trading a Perfect or Imperfect Information Game?
- Thread starter Pinozi
- Start date
Not correct. Size doesn't execute like that. With reference to the bigger players, that type of move is a result of participation being withdrawn rather than simultaneous coordinated selling by large interests.
The velocity was sufficient to scare out the weak holders who "follow trends" and were long from the upward drift the prior day. Having shaken those longs out of the market and stimulated uninformed traders to open short, the selling has been accumulated with a predictable future outcome.
Attempting to execute a size order when liquidity is withdrawn from the market is a foolish proposition indeed. You may flatter yourself that you are fading the big boys and trading ahead of them with your one lot, but I would suggest that if you want to become really successful you concentrate on where size can be dealt and why. After all, if you aspire to move up, you will someday need this information.
The outcome arrived as expected, with the market being made to lift to take out these traders stops positioned above the high at 104.54.
You will see that we have lifted over $2 since my post. You cannot complain I do not tell you everything.
Hopefully this illustrates to you why those velocity down bars were not representative of large interests selling and being slipped! (and once again, that the outcomes are decided in advance)
Here speaks one of the few.
Understand liquidity and you understand the markets.
Predict liquidity and you predict the markets.
I am positive this is one of the main reasons small traders fail. Because they are not affected by liquidity constraints they are not stimulated to consider the necessary actions (and subsequent ramifications) of those that are.
Hats off to you Blotto. You are more generous than most. I do not share my insight so freely.
How can someone make money despite the chart, if that is their only input? Or if their returns with watching prices are superior to if they do not watch prices?
TA vendors obviously are just motivated by a desire to spin bullshit for profit, that doesn't have anything to do with people who actually have traded profitably for a living.
As for the original question, it seems absurd - how could any market participant possibly have perfect information, given that the subject is the world? Besides, all you need is better information than the market.
TA and using charts to trade are two different things. I use charts and I make money using them. There are plenty of traders much greater than I that rely on charts (not TA!) to make money. Also 3 famous traders that come to mind are Paul Tudor Jones, Dan Zanger and Eric Bolling all attribute much of their success to charts.
Outcomes may be highly likely in advance, but are never decided in advance, unless you believe every large trading desk (including random hedge funds) collude with each other as a team to push price in certain directions (though I'm not implying this is out of the question).
Price lifted over $2 since your post, but how would your post have helped an intraday trader who uses a 5-min chart to capture pieces of price swings in either direction throughout each trading day?
In my time frame I captured over $2 today trading twenty small intraday moves according to my specific trading strategy. I'm flat at the end of the day and not prone to the news-induced rogue moves that unhedged swing traders have to endure.
The point I was making in my post about how all the information I need is contained in the price footprints left on the chart in my time frame is a valid point. By staying positioned based on the current price action in my time frame, I'm prepared to capture the benefit of violent news-induced moves, and also prepared to cut my risk as quickly as possible by way of hard stops based on my time frame.
If I were swing trading crude oil futures and was not already positioned long on 3/17 on the break through 3/16's high, I would have my buy stop order placed in advance to trigger @ 104.54. Anyone still short on 3/17 would certainly consider 104.54 the end of the short road because on 3/17 price broke up through the 20-day EMA that previously served as resistance in the down move, then found support at the 20-day EMA, left a small inside bar on 3/21 (any swing trader would be foolish to short the break of the low of an inside bar once price found support at, and closed above, the 20-day EMA) and so a break through 3/18's high of 104.54 was a place where swing traders initiate, or add to, a position.
So on a daily time frame, everything I need to know is contained in that price footprint, just at it's contained in the price footprint of my preferred intraday time frame of the 5-min chart.
I don't need "inside" information from the Big Boys, because the information I find useful is found inside the footprints of the price bars within a given time frame.
If your trading strategy does not take account of Big Boys...
then best not guess at what you think they are doing. I see the point you are making about price action generally, and reading the market well enough to be on the correct side of big moves. However, my posts above were designed to show you that the large interests were net buyers during that move, not net sellers and certainly not dumping size longs. There was net selling in that move, but by another group of participants entirely.
The detailed answer to this would be beyond what is prudent to publish. Those who have worked size in the commodity markets either for commercials or specs will understand why. The answer can also be arrived at by thinking logically about the limitations common to every large trading desk.
To make the most of what is available from a session, the gyrations up and down in either direction, it is useful to know the "template" of the day you are planning to trade. One basic example would be that it is helpful to know the bigger picture destination of price, and how it is likely to get there.
More generally, the post could have nudged participants here to think deeper than what is commonly presumed. The easy and "obvious" is that all the big energy desks were caught offside during news and had to dump longs, causing the price to go down. This isn't logical, and in fact really couldn't be more wrong.
Yes, this is related to why it was very likely that the market would be caused to rise to those levels.
Think more about how price is created. You may be using more "information from the Big Boys" than you realise.
It probably isn't prudent to say more, but this should be enough of a nudge.