The How's & Why's of price

Call it a character flaw, but I've always needed to know the how and why of 'things' (ie - price movement).

Over the last 3-4 months, I tinkered with and tried to cross correlate just about every indicator under the sun. I feel rather empty in the process. To me indicators are like peering through a prism rather than a looking glass.

I've come to the conclusion that MY only edge will be an clear understanding of the How's and Why's of price movement.

My father always said that $ talks and BS walks (so true). Therefore ... it would seem logical to understand liquidity and its impact on price. To know how it impacts price one would have to understand market dynamics.

To do so, I'm buying the book: 'Trading and Exchanges: Market Microstructure for Practitioners' (any reviews by members - the book looks heavy ?)

In a similar vein, I'm trying to understand the inner workings of option barriers and order flows. (again $ talks and BS walks) Is there any definitive material that pertains to forex that would help the learning curve?

I'm confident that if one understands the flow of money (big money ?) in and out of the market, it would be a step in a different direction ! (note to self - this ain't gonna be ez)

Oh ... Thanks to darkstar and Mrtrend ... for even mentioning that they trade without CHARTS ... My wife curses you

I thought I'd throw this on the wall to see if it sticks. But these type of threads seem to die a quick death. ( kinda hard to turn this into an EA )

That book and a long time sitting and thinking alone are all you'll need.

And it's ok about your wife. When she gets done showing off all the jewelery you bought her from Tiffanys, she'll be building a little shrine to us in your closet.

Whoooaaaa .... no pressure here

If wifey sees this thread ... she'll walk uphill both ways to Amazon.com to get the book ... shove it under my arm with a calculator and a #2 pencil ... and lock me in the basement indefinately !

Serious question ... is the book far removed from the 'working papers' I've been reading through recently? These 10-30 pg papers are littered with formulas that would make Stephen Hawking cringe. (for me - like walking the road to perdition)

Ah ... but ... if was easy then ... well

This is something that interests me also - have just ordered the book! Looking forward to some deep thinking .

Forexhen

Thanks! I had the book ordered abt a week ago. Thinking...thats a hard thing to do man.

Now you got started, you should consider taking a look at "The Microstructure Approach to Exchange Rates" as well. You could also check out some of the papers by the author of the book.

Remember: Knowledge is Everything.

Here's more on that title:

This title seems to have been used by a couple of different authors.
Anyway, it looks good. Hope I can understand it. It seems to address
the concept of order flow.
http://ideas.repec.org/p/mnb/opaper/2005-42.html

Micro-structure Wiki definition and links:
http://en.wikipedia.org/wiki/Market_microstructure

Are any of these book(s) written by a trader, per chance?

Those that can't teach

Here's a PDF of extracts from it:
http://www-rcf.usc.edu/%7Elharris/Tr...ok-extract.pdf

Does it matter?

It did to LTCM. They had plenty of Nobels but not enough "smarts". Universities kind of do that to you. Great for theory, not so for putting into practice.

Trading and Exchanges: Market Microstructure for Practitioners is a book about how markets function, who functions in them, how price is affected by these participants, order placements, bank roles, and a whole lot of other stuff. It is a deep study of functionality of the market, and (as the title of the thread suggests) How's and Why's of Price. Whether it was written by someone who trades live or not does not matter, because it is up to the reader to take the information and devise his or her own way of using it. The author merely presents the information.

But, in most all professions you need the theory before you can
start practicing in your field (medicine, law etc.).

Isn't it best for us to learn the underlying theories in our field too?

Yes as to me I think understanding a theory is also very important to be professional as to can use it in practic...the first we have to learn theory and only than to practise!

Signing up.

Lenoxer

There are 100's of quantitative funds and the only one people mentions is LTCM... The thing about university is that it forces you to look into stuff you might consider useless. If you study economy it is likely you are forced into study market micro structure although your trading buddy told you it is completely useless. In the end this might turn out to be not so bad after all.

Useful information is useful no matter where it originated from.

Btw, thx for the link FXSurfer.

Hey Rustbelt

Did you read the book, if you did has it made your trading profitable or have you lost your account ............. from your long silence I'd assume the latter.

Either way please do let us know.

Does anyone know if there is an ebook version of 'trading and exchanges: market microstructure for practitioners'?

Ive already read the incomplete papers and found it very interesting.

I only ask because paper is more expensive and im a little tight on cash atm. If not then Ill just try and get the cheepest 2nd hand copy I can find.

From what ive read so far I would recomend it, a quick googlin' of the book title will get you the free version.

Leon