how would you know who is buying or selling? It could be anyone! no?
My Wyckoff journal
- Thread starter damnpenguins
- Start date
In terms of an individual trade, it doesn't matter. Each and every trade involves a buyer and a seller. If price rises, buyers are willing to pay the ask. If they aren't, it doesn't. Volume is nothing more than the number of transactions. The result of all that activity is illustrated by price movement, up or down. But "big volume" on an upswing does not mean just more buyers; it also means more sellers. Without the sellers, there would be no transactions and price wouldn't move at all. What is more important than the initial movement is what happens once volume declines. This is when one can determine genuine demand from ordinary price manipulation.
However, there is a "who" factor when it comes to bar intervals. Amateurs love 1m bar intervals, or, at most, 5m. But some traders, particularly those who either can't sit or are not suited for sitting in front of their computers without interruption, prefer 15m bars, or even 30. Professionals tend to pay most attention to hourly and daily bars. So, as one sees price move through various intervals, from 1m movements to 5m to 15m and so on, various new groups of traders will enter the process (those who trade hourly have no idea what's going on in the 1m), which is why one so often sees dramatic movements when price approaches, meets, and exceeds the previous day's high or low, much less the previous week's high or low. And if one is buying all-time highs, he's trading with an entirely different group of traders than those who are futzing around with 1m bars.
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I posted this somewhere and some found it helpful when beginning observations, having to do with focusing on the behavior rather than potential entries:
What are they doing?
Where are they doing it?
Why are they doing it?
How are they doing it?
What were they doing before?
Think of going to some game with which you are unfamiliar: football, rugby, soccer, cricket, whatever. While you're watching the game, your chief thought is not when you should jump onto the field and begin playing. Your chief thought centers around the questions above, primarily What the Hell Are These People Doing?
Same with studying charts.
Brilliant. Really helpful.
I have to say I wish I'd have seen that before my previous attempts. Maybe I wouldn't have ended up writing "Crime and Punishment" each session like I did here and missing the entire point of the exercise.
It's a really useful template for the observation phase.
Thanks!
There is no such thing as "noise".
by 'they' you mean the majority of traders who trade a particular bar interval (and you assume they use classic TA?
If not, I don't understand how anyone can have even a clue about the answers to any of teh questions posed.
What are they doing?''Buying the breakout''
Where are they doing it?''at the mid morning high''
Why are they doing it?''because they think it will go higher after they enter''
How are they doing it?''Placing a mixture of market orders and limit orders''
What were they doing before? Some were doing nothing. Some were short trying to pick the prior high
If not, I don't understand how anyone can have even a clue about the answers to any of teh questions posed.
What are they doing?''Buying the breakout''
Where are they doing it?''at the mid morning high''
Why are they doing it?''because they think it will go higher after they enter''
How are they doing it?''Placing a mixture of market orders and limit orders''
What were they doing before? Some were doing nothing. Some were short trying to pick the prior high
I mean everyone who's engaged in the market.
If by "classic TA" you mean price behavior, possibly. Many may buy because they think the price is reasonable or even cheap based on fundamentals. They may sell because they think price is too dear, again based on fundamentals. But they still must buy or sell, just like anybody else.
As to the questions, you just answered them.
If by "classic TA" you mean price behavior, possibly. Many may buy because they think the price is reasonable or even cheap based on fundamentals. They may sell because they think price is too dear, again based on fundamentals. But they still must buy or sell, just like anybody else.
As to the questions, you just answered them.
I've seriously got to get better at this. I just spent 20 minutes trying to write a response and then ended up binning it when I saw DB's response!
Sorry, I thought it was directed to me. And this journal is probably not the best place to address these questions. So perhaps I can avoid a lot of back and forth by suggesting that anyone who reads these posts read the following:
1. The SLA/AMT.
2. Wyckoff's course, at least Section 7.
3. The Law of Supply and Demand.
4. Judging the Market by its Own Action.
Keeping in mind that no one learns trading by reading message boards. At some point, one has to read the material, study it, apply it, study it again, apply it, study it again . . .
And if one requires a structure, Developing a Trading Plan.
Beyond that, tho, I'd like to read what you were going to post.
1. The SLA/AMT.
2. Wyckoff's course, at least Section 7.
3. The Law of Supply and Demand.
4. Judging the Market by its Own Action.
Keeping in mind that no one learns trading by reading message boards. At some point, one has to read the material, study it, apply it, study it again, apply it, study it again . . .
And if one requires a structure, Developing a Trading Plan.
Beyond that, tho, I'd like to read what you were going to post.
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