When price is in a range why do some people buy at the top? lol

[viruscore1]

The amount of cash held in a fund is regulated. They must buy to use up the cash. Top or bottom is not always the main driver. Search cash to see % ...
https://www.oecd.org/daf/fin/private-pensions/2017-Survey-Investment-Regulation-Pension-Funds.pdf

 

[propwarrior]

pension funds have to buy at a new high-they don't give a shoot about their fundholders

Yes they buy on behalf of investors not traders. Who is selling to the pension funds?

 

[punisher]

If price has been in a range for sometime why do some people insist on buying when the price is well above the average price of that range? It's just a really dumb thing to do. When these people go shopping do they actively seek out overpriced items to buy and ignore the cheaply priced items.

Didn't have the time to go through the entire thread but here are my $0.02 worth:

Consider this: if the only right thing to do was to sell the top of the range (or buy the bottom) then the price would never get out of the range. So right there you know this is not correct thing to do 100% of the time.

In reality everyone works of a different timeframe. Range on one timeframe is a small pause (or top, or bottom) on the other timeframe. Smaller time frame trend trader might be buying where you see the top of the range on a bigger time time frame. Longer time frame trader might be buying because the recent news/fundamentals support buying decision.

 

[jeffalvinson]

If price has been in a range for sometime why do some people insist on buying when the price is well above the average price of that range? It's just a really dumb thing to do. When these people go shopping do they actively seek out overpriced items to buy and ignore the cheaply priced items.

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I totally agree with you propwarrior, all my math based mechanical systems are buying low and selling higher.
"But, my systems are doing that while the markets keep moving higher making new highs and higher lows."
Its all a matter of time frame.
A trader looking for a pullback to support using daily candles and a standard daily candle moving average support line has a really long time between pullbacks in this market!
But if you change your time frame to 5 minute candles, pullbacks to 5 minute candle MA support happens much more frequently then one would think.

Look at the attached (left chart) 1 month of the DJIA (Dow) using daily candles & 20ma. In particular "look at Jan 24 (3rd to the last candle)."
Most trading schools subscribe to the idea of waiting for a pullback to the 20ma and then buying the next move up off the 20ma that is higher than the previous candle's high.
Tell me how how many times that happened in this one month chart?

Now look at the attached (right chart) 2 day / 5 minute / Pivot Points /
200 & 400 EMA chart of the INDU (Dow) for Jan 24 (the day on the right side of 5 minute chart).
Compare Jan 24 on the daily chart where price is way above the 20ma , to
the 5 minute chart on Jan 24 where there was a great opportunity to buy low and sell higher.

 

[volpri]

TF says it all. What is a range on a 5 min chart may be a Pb on a 30 min chart. You got traders trading both charts accordingly.

Nevertheless, a range is a range irrespective of the TF so you trade it accordingly until a BO happens then you re-assess in terms of now trading a BO (if it is a successful BO).

To compound matters. The market, at all times, is in a channel. Ranges are in channels. Channels are in channels...etc ad nauseum. BO’s are in channels. Furthermore, ALL channels are ranges! (Tilted ranges) ROFLMAO. Think about it.

 

[Illini Trader]

If price has been in a range for sometime why do some people insist on buying when the price is well above the average price of that range? It's just a really dumb thing to do. When these people go shopping do they actively seek out overpriced items to buy and ignore the cheaply priced items.

Nothing trades range bound forever. They obviously buy because they think it is or is about to be breaking above the range especially if the prior movement in the stock has been up prior to going into the range. Some people call this a "ledge trade".

Or it may be in a John Carter squeeze that is firing long. His definition of a squeeze is when the keltner channel is within the bounds of the bolinger bands creating pressure that must be released in the stock one way or the other.

 

[jeffalvinson]

Nothing trades range bound forever. They obviously buy because they think it is or is about to be breaking above the range especially if the prior movement in the stock has been up prior to going into the range. Some people call this a "ledge trade".

Or it may be in a John Carter squeeze that is firing long. His definition of a squeeze is when the keltner channel is within the bounds of the bolinger bands creating pressure that must be released in the stock one way or the other.

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I think we are talking apples and oranges here.
My post above was comparing daily candles (apples) with 5 minute candles (oranges).
I wasn't looking for a long term hold, I was looking for a quick intra-day +100 point pop.
This occurs on 5 minute candles in a month's time, more often than you think.
Buy Low, Sell Higher.
I am like a Produce Store owner.
I can't afford to pay retail (previous closing price on index) and sell to my customers at
the same retail price?
I have to buy at wholesale (intra-day dip to support) and then sell to my customers at retail.
"Don't you want this poor produce saleman to make a buck too?"

 

[Sprout]

TF says it all. What is a range on a 5 min chart may be a Pb on a 30 min chart. You got traders trading both charts accordingly.

Nevertheless, a range is a range irrespective of the TF so you trade it accordingly until a BO happens then you re-assess in terms of now trading a BO (if it is a successful BO).

To compound matters. The market, at all times, is in a channel. Ranges are in channels. Channels are in channels...etc ad nauseum. BO’s are in channels. Furthermore, ALL channels are ranges! (Tilted ranges) ROFLMAO. Think about it.

It’s cool, I realize your comments are not personal attacks. To continue with your line of thinking,...

All true. As a counterpoint to simplify matters, three points are all that’s necessary to define the range regardless of slope. Since the market’s system of operation is composed of nested and opposing trends/ranges, the best place for an exit of a current trend is the best place for entry of the developing trend.

However, this trading endpoint is in a zone that operates on negative fuzzy logic, waiting for a confirmation by definition indicates this moment to have passed. This moment also by definition indicates price could go either way - therefore being fuzzy. When price does commit by being one thing then it cannot be another - this being positive logic. The moment that came before this is the zone of negative logic - the lack of something appearing. The lack of something comes before the presence of something.

The SYM price case is a good illustration of that moment. The unique form can be reduced to 25 distinct degrees of sentiment. The form can be one bar, two or multiple bars.
The number of bars indicative of the number of participants on various timescales and timeframes converging on ‘fair value’ before taking off again in price discovery mode.

A BO is a type of Volitility Expansion. VE’s occurring on both increasing and decreasing volume.

As with most paths to self-discovery and mastery, it’s all about the follow through.

 

[Windlesham1]

Yes they buy on behalf of investors not traders. Who is selling to the pension funds?

The guy with the big expense account seels to the pension funds - the sale trader who has no idea what to do when the market tanks.Thankfully they will have a massive bank account and perks-all courtesy of the dumb money

 

[Adam777]

Here is a market that is currently trading. Is it quite dumb to buy at the red X? Surely much better to buy at the yellow X?

View attachment 181829

Wow that chart moves around a lot! The last time you posted a chart I ended back testing for 6 months with 20 years of data. I didn't work it out, but I did learn a bunch of other stuff

Buy at yellow (average in) and exit at the middle; sell red (average in) and exit at the middle. Other than wondering what chart this is, which I don't expect you would ever reveal, I am wondering about stops ... I'm guessing there are none and it's all about position sizing for the historical drawdown? It's just a guess...