reading charts basics

M

mute9003

i need to fill in few gaps on some noob logic

things that are not apparent when you start learning
how everything interacts in the market(the cause and effect) im still struggling with this.

for example. the not so apparent thing to new traders is the end of the trading day all orders get cancelled at the same time causing a price movement
sell orders being cancelled price goes up because the market "sees" more demand and less supply?
and if more buy orders get canceled then price drops because there is less demand and more supply due to canceled orders?

and same thing on the market opening where orders are going through and it created more demand or more supply


or am i completely wrong about this?
nobody really talks about this in youtube videos or anywhere else. im getting small pieces of information here and there but its hard because without actual mentor all im getting is little turds of information scattered across the field... and i have to build a big lego turd and call it a trading system that will be profitable..

anyway.
can yall help me out and list what else i should know that is not apparent to new trader.(market logic or whatever it would be called)

and please dotn get stuck on just the above examples im sure there are more than opening and closing bell mechanics that can be discussed
 
mute9003 said:
for example. the not so apparent thing to new traders is the end of the trading day all orders get cancelled at the same time causing a price movement
sell orders being cancelled price goes up because the market "sees" more demand and less supply?
and if more buy orders get canceled then price drops because there is less demand and more supply due to canceled orders?
More...
Why would a cancellation just before a close cause a frantic move in the underlying instrument? Most of them get cancelled because they're usually way above or below the current best bid/offer (BBO). It ain't like they're only a tick or two above the BBO.

Maybe you're thinking of Market-on-Close orders, where you actually enter a trade just before the close. These will clearly move the stocks because everyone wants to get filled before the close.
 
mute9003 said:
doesnt the market close cancel all the outstanding limit orders that were entered throughout the day?
More...
Yes, all "day" orders will get automatically cancelled just prior to the close, usually within the last minute of the day. But these orders are sporadically placed all over the price ladder, it probably wouldn't make any big impact.

However, you're correct about more demand pushing up price higher and vice versa for less demand. During the day session, you do have spoofers placing and cancelling orders in order to artificially manipulate the market (even though it's banned outright). But that's not the same thing as day orders getting cancelled at the end of the session.
 
@mute9003 If you find a recurring pattern in the market then try to backtest it.

Either algorithmic or manual wise.

If you can’t extract any meaningful amount of money from it then move on.

Traders don’t need to understand the “How” or ”Why” behind prices.

Don’t waste time trying to rationalize everything.

Until you fully acknowledge it and take it for what it is: A hobby.

Because unless you’re paid by someone else than the market … No one is going to pay for your discovery.

That being said … I believe that someone in the ES journal talked about block orders being rendered public before EOD. Which would create some kind of activity within the market.

But we don’t have to know why this specific pattern is recurring over and over to actually profit from it.

There are a lot of different types of order …
At Open … At close … Daily … GTC …
Market, Limit, Within bid/ask …
More than we can think of.

But nothing, really, that could provide an edge.
 
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Well i just wanted more on the cause and effect
Im struggles with following through on market actions

explaining the market moves
Like chart move up
Why?
Because shorts are covering and longs are buying at the same time etc.
 
mute9003 said:
Well i just wanted more on the cause and effect
Im struggles with following through on market actions

explaining the market moves
Like chart move up
Why?
Because shorts are covering and longs are buying at the same time etc.
More...

Forget the WHYs

Reverse engineering the market won’t lead you to the holy grail.

It’s a very complex system,
No one’s going to be able to crack the code.

The only thing you can do is work along with it.

Researchers have tried to reproduce it,
You can go into auction theory; Agent based models …

Plenty of research around the HOWs and WHYs,
Truth is they don’t make a bucks from the market.

Creat some rules around a phenomenon,
Practice them over and over again.

Learn about reward to risk,
Position sizing, chart patterns …
Trend or Mean reversion. Conditions.

Find a system and follow it.

Maybe try to find a system to buy breakout or 1st and 2nd pullback within an established trend.

That’s going to be more rewarding than learning why prices move all around. All day.

Just something I’d have like to tell my younger self, 10 years ago.
 
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Have you ever heard about a surfer discussing the why and how behind monster waves ?

Or worse ! Behind every little tide ?!

Not me … They ain’t oceanist.

They just move towards the best spot,
Wait for their wave and do their best to ride it.

That’s the same with traders …

They go where opportunity are,
They wait for one to present itself,
They manage their position around it.

Different types of opportunity for different traders.

You just have to find your own angle of attack.
Never forget rule #1 Survival, Risk Management.

Wish you a happy new year.
 
I have always loved when people say it can't be done... But does take years, experience, know how to program, much dedication to do "what can't be done".

Best is learning failures of charting, smaller traders failing and designing system to take advantage of them failing . Learn how to hedge.
 
mute9003 said:
Well i just wanted more on the cause and effect
Im struggles with following through on market actions

explaining the market moves
Like chart move up
Why?
Because shorts are covering and longs are buying at the same time etc.
More...

OK some clues for you since it is the end of the year. :D

Learn how those Algos at IB work. They are used by large players. They move the market.

Most of us who have been around have read over 100 books on trading. And that gave use about 100 useful nuggets of information. Youtube has too much BS targeting illiterate newbies. Takes too long to get anything useful and often it is just bread crumbs down a time waste rabbit hole

PS: Try Pit Bull: Lessons from Wall Street's Champion Day Trader
by Martin Schwartz. Fast easy read, only 5 bucks used. The "nugget" is when he consolidates a position with ES in Chicago, and then sells the stocks from a mutual fund in NY. This directly addresses you post. Also the psychology concept of "some" is very useful. So two nuggets in that one book! Amazon shows I bought it in 2003, 20 years ago!! And I probably paid full price!

PPS: Try the CME website under Education or the IB Website under "Traders University". Learn all that before wasting time with Youtube BS.

An example from CME on a market moving "event".
https://www.cmegroup.com/education/...standing-basis-trade-at-index-close-btic.html
 
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