"Marketsurfer is correct: There is no Trends!" --- There are only Turns!
- Thread starter OddTrader
- Start date
Isn't this just a recognition of the "sawtooth" patterns in all trading. Market Makers drive prices up, retail players BUY, and then MM drives them down, retail players SELL. This fundamental pattern, which is no doubt "fractal" on all timeframes would suggest, in simple terms, that "The trend is your friend, but not for much longer."
Naturally, this "fractal nature" means that the "supertrend" may continue, while the lower timeframe trends will oscillate more frequently, as most traders realize.
HyperScalper
Do you mean the upward drift when you mention the supertrend?
Well, no. All my research is proprietary, i don't just give it out on command! Although tbh, it ain't that complex. Certainly not for a PhD from Chicago, lol.
Surf, no offence mate, but although your boss has a phd from chicago, how about you? Are you qualified to talk to me about this subject? I mean, i hold a rather fancy degree from what you would call an ivy league school.
Btw, i know your boss may have made a billion, but you forgot the part where he gave it all back plus more...
No I'm just saying that, assuming we can identify or define "timeframes", that the higher timeframe "trends" will have more durability and lower timeframes less temporal stability, in general.
Price movement should probably be considered like audio, where the overall waveform can be decomposed through Fourier-like analysis into sub-frequencies of sine waves. Just the common sense observation that "trend" cannot be defined without some reference to "timeframe" since an uptrend which lasts 4 hours, say, consists of lots of "lower timeframe" pullbacks, and we see this "sawtooth" fundamental form.
The way I see things is this: Market Makers trade against the entire market simultaneously. To retail Buyers, MM will Sell. From retail Sellers, MM will Buy. So I propose the concept of "trend" or "momentum" be better understood in terms of MM's "inventory". If MM gets too much Retail Buying, then MM's inventory is "short" and we are at the peak of the sawtooth, so MM will drop price to get Retail Selling, thus neutralizing or moving net inventory to "long".
In all cases, estimates of MM's inventory or long/short/neutral stance must also be referred to a specific timeframe. Over a longer timeframe MM may be Long, and experiencing excessive Retail Selling; but over shorter timeframes, MM can easily be Short, and experiencing excessive Retail Buying. Remember MM takes the opposite side of all Retail trading, as most traders know.
I used to do a lot of this "inventory analysis" from Market Maker's perspective in order to find pivot points or "trend reversals". MM becomes Long (and taking risk) and then moves price in the other direction to become Short (and take risk). This maximizes Market Maker's profit, through "playing" the sentiments of the entire Retail population. In Day Trading, at least. So it's one way of thinking about, or explaining persistence of trending; and anticipating reversals of those same trends.
In effect, "trending" continues because MM is moving overall inventory from a Long through neutral to a Short stance (or the reverse process). So a prolonged decline will attract many Retail Sellers, from whom MM will be Buying of course. This results in MM becoming "long" (too much buying and not enough selling). So then when MM gets "enough" on the Long side; the "trend" is reversed and the price is persistently driven upwards, which attracts Retail Buyers, to which MM is selling off its Long inventory through a neutral inventory and eventually to a Short inventory.
So MM is driving prices up and down for its own purposes. I realize this is a little bit off topic and I'm sticking my neck out, but the only reason prices "trend" is that MM wants that continued movement in order to "tempt" retail players to enter the market in a particular
direction for MM's purposes. BUT that's a long story probably best dealt with in a different thread...
HyperScalper
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When I say "retail" I mean all players, large and small who Buy the Ask/Offer price and who Sell the Bid price. Market Maker is non-retail, in the sense that MM Buys the Bid and Sells the Offer, thus "making the spread". Large institutions, specifically, are most often "retail" players against whom Market Maker trades. Of course, nobody cares much about the "little fish" but unless you are Market Maker status, you are "retail".
Remember in the Blade Runner movie where he says: "If you're not Cop, you're Little People..." or something like that. All Retail players (including many Institutions) are forced to follow the market, they do not move the market, and that's my view.
HyperScalper
'Yet, even a cursory look at commodity, stock, and currency markets confirms that trends are the rule rather than the exception'
- page 30, Alchemy of Finance, George Soros
So there you have it. The Master himself declares there are trends in the stock market. He says you can tell this just by a 'cursory look', not need for fancy stat tests unless you are that way inclined (and you will find the same if you are!)
Suggest you give a copy of the book to VN and tell him to fire his staff.
- page 30, Alchemy of Finance, George Soros
So there you have it. The Master himself declares there are trends in the stock market. He says you can tell this just by a 'cursory look', not need for fancy stat tests unless you are that way inclined (and you will find the same if you are!)
Suggest you give a copy of the book to VN and tell him to fire his staff.
Point taken... Or "non market mover" maybe.
Usually there is only 1 "800 pound gorilla" in a given market,
and she sits wherever she wants. Within "price elasticity"
in day trading, she moves price where she wants...
HyperScalper
I am sorry to hear that. and I am not here to fight.
We share our research, so I take your response to mean that you really don't have any. No, I don't have a PhD or any high level degrees-- I am a law school drop out. However, I know how to identify and differentiate BS and intelligence--- not to mention being married to an ex central banker micro-structure PhD who helps myself and my highly pedigreed associates on these issues. Therefore, I trust our research rather than anonymous names on the internet. You know who I am , who are you? surf