What determines price?

[MedianVelocity]

The buying and selling by a markets participants determines supply and demand and sets price. However, what determines what causes participants to buy or sell?

In my opinion, it's primarily price. People are a bunch of price worshipers. Price and it's changes over time are the primary driver of most peoples decisions IMO. Certain amount are more of price/volume worshipers than plain price worshipers.

People who trade off price + news or price + fundamentals should just select that. It's assumed you also look at price. But, price is not the main thing causing your decision to buy or sell.

Everyone fill out the poll and we will see why traders on ET are influencing supply and demand. Even though it is a small group, the results might be interesting... Big fund managers are heavily influenced by fundamentals. Dividend yield on stocks vs fixed income yield is a big driver of supply/demand.

 

[MedianVelocity]

Yep, just as I thought... Price is king. Now, lets talk about agents (traders/bots) with active vs passive influence on supply and demand.

If you short as price is going down, or buy as price is going up, or vice versa... You act as a active influence on supply or demand.

However, what most people don't realize is a large part of the market is passive influence. When you look at a price chart and decide price is falling too fast to buy, you are contributing to the lack of demand. Even though you are not in the market or placing any trades, your still an agent affecting price by withholding demand based upon price falling too fast over a amount of time.

 

[doggyfx]

It is not a secret that you have to act according to the psychologic trends. If traders buy you have to do the same as the price will increase. It is on short-term trading. The opposite expectation and action is applicable to long-term trading,