http://www.traderslaboratory.com/for...n-markets.html
An excellent post to help people understand the Auction Market theory that we are all involved in. My broker friend sent me it the other day as we were talking on the phone he said although I was involved in the market I clearly didn't understand the market and what was meant by buying and selling pressure. His most successful clients never look at charts - they trade 'order-flow' as the primary entry/exit method and they all view chartists as behind the drag curve and a few orders too late!
But then I told him we are not trying to 'beat' the market, just ride on the coat tails of those big boys who do use the other methods. The charts just leave the pictorial trace of their activities for all to see.....
DbPhoneix see it as such:
1) An auction market's structure is continuously evolving, being revalued; future price levels are not predictable
2) An auction market is in one of two conditions: balancing or trending.
3) Traders seek value; value is price over time; price is arrived at by negotiation between buyers and sellers.
4) Change in demand drives change in price.
5) One can expect to find support where the most substantial buying has occurred in the past and resistance where the most substantial selling has occurred.
I know I'm not supposed to be reading Strat -but when snowed in over the weekend I deem this as valuable research into my craft.
I was abroad a few years ago with some 'special' soldiers and one of the troops surprised me as he was reading a book by Joanne Bourke (?) 'An Intimate history of Killing' -a thesis all about why we kill as humans etc. I asked him why as a young SF lad he was reading this book and his reply was ' Killing is my craft. You get better at your craft with research'. Quite apt with parallels in trading too I imagine!
An excellent post to help people understand the Auction Market theory that we are all involved in. My broker friend sent me it the other day as we were talking on the phone he said although I was involved in the market I clearly didn't understand the market and what was meant by buying and selling pressure. His most successful clients never look at charts - they trade 'order-flow' as the primary entry/exit method and they all view chartists as behind the drag curve and a few orders too late!
But then I told him we are not trying to 'beat' the market, just ride on the coat tails of those big boys who do use the other methods. The charts just leave the pictorial trace of their activities for all to see.....
DbPhoneix see it as such:
1) An auction market's structure is continuously evolving, being revalued; future price levels are not predictable
2) An auction market is in one of two conditions: balancing or trending.
3) Traders seek value; value is price over time; price is arrived at by negotiation between buyers and sellers.
4) Change in demand drives change in price.
5) One can expect to find support where the most substantial buying has occurred in the past and resistance where the most substantial selling has occurred.
I know I'm not supposed to be reading Strat -but when snowed in over the weekend I deem this as valuable research into my craft.
I was abroad a few years ago with some 'special' soldiers and one of the troops surprised me as he was reading a book by Joanne Bourke (?) 'An Intimate history of Killing' -a thesis all about why we kill as humans etc. I asked him why as a young SF lad he was reading this book and his reply was ' Killing is my craft. You get better at your craft with research'. Quite apt with parallels in trading too I imagine!
Trade less and become more profitable!
