When everybody is buying, Who is then Selling?

Hey there,

I can't really find an answer to that?
Let's say we have hypothetical so-called "self-fulfilling" pattern and EVERYONE goes, let's say, short on that pattern. Since we always need a buyer when we're selling, who is than going long???

Curious about your inputs,

Greetings
mike


edit: another way to put is: Where does the money come from, when EVERYBODY is going long and price rises?

When everybody is buying, WHO IS THEN Selling?

i am.....

Where does the money come from, when EVERYBODY is going long and price rises?

EVERYBODY is never going one way....

i wanted to put an extreme. Let's say we have an increadibly obvious support and price rises after hitting that support. Why does price rise? I mean if we assume that let's say 75% of the people will go long, then i do only have 25% people that are willing to go short at most. So 25% sellers cancel out 25% buyers. What's with the last 50% of buyers, won't their order getting filled?

I think I do have something awefully backwards. My question is why does a "self-fulfilling" entry-setup work, if almost everybody is either selling or buying, depend on the "self-fulfilling-entry"? E.g. that support scenario, where most ppl want to go short, but then there is almost no one left who wants to go long?

Let me actually clear this on a realistic example:

Let's say we have an pullback after the break of a strong resistance. Now, everyone throws his buy orders on the market (buyers want to get more shares, sellers want to get out of there short positions, and the ones who stood aside want now to get it). At least the big player who move the market (and thus do have the big amounts of share) now this and are all long now...
How is it possible that everyone (at least ME WAS ALWAYS FILLED AT ANY SPECIFIC PRICE I WANTED) still gets filled at the bottom of this pullback, when the big player want to buy shares and almost nowone is selling ? Wouldnt we usually have big gaps?

Idk about the gaps thing. I think the forex market is too liquid to have gaps on major charts where no one would exchage at all at that price. There are people going for tiny profits and institutions going for bigger profits.

In your last example, you and everyone just bought a ton of XXX/XXX currency with market orders causing price to shoot up all of a sudden with no end in sight. When do you think the big guys would start selling? You think the big guys sell all their currency with one huge market order, or they have sell limit orders which cause price to bump it's head (resistance!) somewhere then rise, just to bump its head again since market sells will only bring price down faster than they want. When will the herd see this new resistance being made and start taking their profits w/ limit and market orders (making price retrace)?

Now, when do you sell? With the big guys making that resistance or once price starts heading down? Buy low sell high right?

Idk if my analogy is correct at all, but that's what I think causes movement.

Yes there is always people (market makers) that sell when you buy, and if they sell less then people buy, price tend to "consume" their sell orders and go up to the next one (there are sell orders every pip), eventually if buyers buy more than market makers want to sell, price go up. And when there is nobody looking for sell, price go up and up untill there are sellers that want to sell (again market makers banks etc).
So, if everybody buy and nobody sell, you will see a spike, eventually also a gap (everytime price move up of more than one pip in the same tick variation, we can consider it a gap, no?).
Of course the market rarely move in one direction without making little waves with retraces etc., this because the liquidity and numbers of traders (or algorithms) is soo big that there is always some traders looking for make fast and little profits, creating the up and down (somebody call it noise).
This is how i see it

There is always a buyer for a seller. If 75% of the people go long, then the price probably goes up because there is not a lot of sellers. So people willing to sale wants a higher capital gain on their trade.

Remember, always a buyer for a seller every time

The scenario you describe would not happen because then there would be no market. A market exists to facilitate trade (buying and selling) - what you are describing is a situation where there is no market.
Get this book
http://www.amazon.com/Markets-Market.../dp/0941275000
go to your library as they probably have a copy or can order one, as its rather pricey.
Then after you have digested it pick up:
http://www.amazon.com/Trading-Exchan...5914815&sr=1-1

good luck to you.

Alright, thanks guys, I now understand that there is probably so much liquidity and that there're prolly always people that are going for very short profits, so that there're sell orders at all price levels.

However even with this high liquidity i find it difficult to believe that my order gets ALWAYS FILLED AT THE PRICE I WANT, even if it's at let's say the top of a resistance. I mean EVERYONE/AT LEAST THE MAJORITY knows that you shouldn't buy at resistance. So how does it come that I do always get filled by my broker at the price I want, even if im up against this increadbily clear resistance and most people want to sell (either taking prodits or enter new positions). As a consqequences the buy orders must have been consumed soon by this big flow of sell orders. So have I been always increadibly lucky since now (namly that I got in at a price, although there was a big imbalance of sell and buy orders), or do I still have something backwards?

If I understand your question correctly, I think you may be misunderstanding the principal of one buyer for every seller.

To use an extreme example:

Imagine that for one reason or another 99% of all the traders in the world decided they were all going to buy. All it takes is for one person with the opposite opinion and very deep pockets to be able to sell to them all. So you have thousands of traders buying and only one entity selling to them all. Each individual trade will have a buyer on one side and a seller on the other, but the seller is the same person in each case. The number of individual buyers and individual sellers is not balanced.

And in this example with only one seller but thousands of buyers, the demand is high and the supply is limited, and therefore the seller can increase the price they sell at for each person who wants to buy from them, and the price goes up. Simple supply and demand.

And in terms of what is obvious support or resistance to you (so you can't understand why anyone would want to buy or sell in to it), that is just your perception. That's what makes the market. One persons high price to sell at, is another persons low price to buy at. Pick a point of "obvious" support or resistance on your chart, and I guarantee someone else in the world will not see it or completely disagree with you.....and the market keeps moving.

Obviously I'm no expert and this is a very basic view, but I hope it helps answer your question at least in part.

First of all you probably trade in small enough size that you don't really affect available liquidity. Secondly if you trade with a retail dealer then you're not really taking up "the market's" liquidity, since the dealer can just offset your trade to someone taking a trade in the opposite direction, or against inventory he wants rid of, or at least you're paying a bigger spread so he can unload his inventory (of which your trade is a tiny part) elsewhere without taking a meaningful (or any) loss. Thirdly what is resistance to some isn't to others, i.e. depends on timeframes and also the conditions that allowed an area to be resistance before may have changed and price charges right through etc. If resistance were really that obvious and everyone always sold at resistance and no one bought, it would stop working. If everyone decided to sell (at market) when price was at a "resistance point" and NO ONE bought, the market would plunge down immediately and none of the sellers would get filled until the market reaches buyers. Sellers would consume all the bids and price would keep going down until there was a balance between buyers and sellers. So you would probably get mega slipped, sell at a low price, then price might rise again due to an influx of buyers at lower prices and boom you realise that actually you've just been providing cheap liquidity to the buyers. Anyways drastic scenario but yeah. If your dealer fills your order then price goes way down and they can't offload their position then you're taking the dealer's money. I don't know about other retail dealers but with Oanda, you'll often find that during very volatile times (and I'm not talking about news releases either) the spread can widen considerably, for this very reason.

"everybody" is pretty vague, there never is a second when everyone is buying or selling.

We look at the market differently... I may be a position trader and you may be a day trader.

I'm looking to unload my position as you are looking to make 50 pips or more.

Also trading and money moving strategies play a part of what creates buyers and sellers.


-Mike

LOL Buyers and sellers...yeah right. Suppose for a moment that where not retail....We place an order lets say long ,guess who goes short???The bank. Now they only have so much liquidity there willing to let go at that price. Now too much is bought up....price goes up. Simple. It doesn't matter one way or the other to the bank if price goes up or down they could care less. There in the middle.

You give me 100 usd for 75 eur, I go to the bank exchange it get 75 eur , tomorrow eur goes up you give me 75 eur back, I go back to the bank exchange it get 125 usd. Ive lost nothing, You have more usd here but in europe you have the exact same amount you had yesterday.
This is why the banks could care less..

When everybody is buying indicates that herd is buying, so it could be the end of an upward trend. At the other side there is 'someone' who bought from the herd in better price and are now offloading and building short positions to drop the market next...

Best regards,
Pico.

Exactly. Experts and successful traders always identify when the market is going to change its direction and they always get ready to make the first move in that situation in order to get some good profit.

Don't think that's going to happen, at least, not for the near future. If one party sells, then there's someone at the other end of the world who buys..

Banks or financial institutions?!

Primarily banks, for obvious reasons.

I haven't seen anyone point out this is a commercial market. There are a vast number of transactions which are purely currency exchanges for exporters, importers, financial institutions, stock buyers and sellers, bond buyers and sellers. Retail traders and trading desks are only a part of it. I would be interested to know the rough percentages if anyone knows.