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Why Is Price Doing What It's Doing?

  • #41
  • Aug 28, 2012 1:35am Aug 28, 2012 1:35am
Quoting DaGrizlyBull
The way I understood COT reports and the Commercials activity from Larry Williams and Stephen Briesse, is that the Commercials are the "Smart Money" in the futures business. Large Speculators and Small Speculators are on the other side of the Commercials' orders.

The idea they presented (as i understood) was that the Commercials have entire teams of researchers and the best idea of the real world supply/demand factors for their specific asset (cocoa, wheat, lumber, gas, currencies, etc). They are not in the markets to speculate, they are there...
I couldn't care less knowing that their are not there to profit unlike Large speculators and usually are late in the market. Like i've said before, these companies have different bussines profile and different profit sources. Hedge funds and bigger financial institutions place big ortders in the market hence they fall in the Large speculator category. Would you fallow someone big who buys something becouse he must or who buys something becouse he sees value in it. The idea of following commercials is pretty old right now but if you look at it its almost -100% correlated with Large speculators. I still don't have any idea about the contracts they are taking the data from... is it the closest calendar contract or is it summary of all the available contracts.

All the best!
gh
  • #42
  • Aug 28, 2012 1:42am Aug 28, 2012 1:42am
Why Is Price Doing What It's Doing?

The price will move to cause the maximum loss to the maximum number of positions.
  • #43
  • Edited 4:30pm Aug 28, 2012 1:52am | Edited 4:30pm
Quoting Greenhaze
I couldn't care less knowing that their are not there to profit unlike Large speculators and usually are late in the market. Like i've said before, these companies have different bussines profile and different profit sources. Hedge funds and bigger financial institutions place big ortders in the market hence they fall in the Large speculator category. Would you fallow someone big who buys something becouse he must or who buys something becouse he sees value in it. The idea of following commercials is pretty old right now but if you look at it...
Edited: Wrong
I don't need easy. I just need possible.
  • #44
  • Aug 28, 2012 2:26am Aug 28, 2012 2:26am
Quoting DaGrizlyBull
If you read my post carefully, you'd understand that basically Commercials give the same info as Large Specs, since Com_contracts = Large_contracts + Small_contracts and Small_Contracts are insignificant
Grizly, i don't know how did you come to that conclusion and i don't see you saying that in prevoius post... Commercials have nothing to do with Large and Small specs. These are three separated groups but by watching Large specs and commercials one can come to the same conclusion.

Commercials = importers/exporters, farmers, miners etc (like you said ,their trading is a side-effect of doing bussines)
Large specs = money managers, large investros, hedge funds, banks (SMART MONEY)
Small specs = non-reportable, smaller positions (might be speculative, retail, hedge)

For me the most important thing is the divergence between price and net-position. Lets not derail these thread.

Peace
gh
  • #45
  • Aug 28, 2012 2:16pm Aug 28, 2012 2:16pm
Quoting Greenhaze
Grizly, i don't know how did you come to that conclusion and i don't see you saying that in prevoius post... Commercials have nothing to do with Large and Small specs. These are three separated groups but by watching Large specs and commercials one can come to the same conclusion.

Commercials = importers/exporters, farmers, miners etc (like you said ,their trading is a side-effect of doing bussines)
Large specs = money managers, large investros, hedge funds, banks (SMART MONEY)
Small specs = non-reportable, smaller positions (might be speculative,...
Ok. I'm just saying what i read in Larry William's COT book. Good luck!
I don't need easy. I just need possible.
  • #46
  • Edited 4:11pm Aug 28, 2012 3:47pm | Edited 4:11pm
Quoting DaGrizlyBull
Ok. I'm just saying what i read in Larry William's COT book. Good luck!
Sorry if it sounded harsh but your statement "....Com_contracts = Large_contracts + Small_contracts..." or interpretation of the book doesn't make much sense to me ...but it will be my next position to read if you'll share the title. I don't know... maybe i've misread your posts ...anyway .... good luck and carry on
  • #47
  • Aug 28, 2012 4:27pm Aug 28, 2012 4:27pm
Quoting Greenhaze
Sorry if it sounded harsh but your statement "....Com_contracts = Large_contracts + Small_contracts..." or interpretation of the book doesn't make much sense to me ...but it will be my next position to read if you'll share the title. I don't know... maybe i've misread your posts ...anyway .... good luck and carry on
You are right...My bad. Don't know what i was thinking with that equation lol....So wrong.Need to get my sleep in order. I wanted to say that when Com are heavy net long, Large specs are heavy net short and viceversa (thats why i said that they offer the same info basically). Sorry for the confusion.

The book is "Trade Stocks and Commodities with the Insiders" by Larry Williams. I'm not gonna discuss COT more here, cause it's kind of Off-topic . If you read it, PM me after with your impression.

Good luck!
I don't need easy. I just need possible.
  • #48
  • Aug 29, 2012 4:58am Aug 29, 2012 4:58am
Hi everyone,

I invite all of you to my thread (Follow the Smart Money / COT Analysis) where the topic is the Commitment of Traders report.

All the best,
Dunstan
  • #49
  • Edited 8:13am Sep 13, 2012 8:01am | Edited 8:13am
This may sound like a rather silly question, but let's say we have 3.000 buy orders and 3.000 sell orders at price A, how long would it take for those 6.000 to liquidate? Does it only one tick or is there a certain amount of orders that can be liquidated at a time? In other words: does it make a difference time-wise if there are 100 buy/100 sell orders at a certain price or 1.000.000 buy/1.000.000 sell orders?

I know this sounds really stupid as I still have a very static picture of what an order book looks like and how orders are liquidated but I just thought about how prices move over time and how the answer to my question would affect the appearance of a chart.

Thanks for your help, guys!
Thanks J16, Sam Seiden, Udine and Jacko
  • #50
  • Sep 14, 2012 1:30am Sep 14, 2012 1:30am
Here is another question for you. I just found this extraordinarily well-defined level on the weekly NZDUSD. Its opens and closes form a very tight and straight line at the bottom. What exactly is going on here? Why does price do that? Is it a very big stack of bullish orders desperately fighting against an already existing even bigger stack of sell orders? What may be the intention of the traders on both sides here?

I lately wonder what well-defined levels like this one tell us. I hope you guys and gals can help me out here.
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Thanks J16, Sam Seiden, Udine and Jacko
  • #51
  • Sep 15, 2012 4:26pm Sep 15, 2012 4:26pm
Quoting HanSolo
Here is another question for you. I just found this extraordinarily well-defined level on the weekly NZDUSD. Its opens and closes form a very tight and straight line at the bottom. What exactly is going on here? Why does price do that? Is it a very big stack of bullish orders desperately fighting against an already existing even bigger stack of sell orders? What may be the intention of the traders on both sides here?

I lately wonder what well-defined levels like this one tell us. I hope you guys and gals can help me out here.

In reality nothing is going on. The usual of the eternal tick per tick balance/ unbalance of unit demand/offer.

In this case it seems that is was well balanced for a while and the quotes did not change.

Have to understand one simple thing...what we "see" in our charts are "quoted" prices. If in 1 millisecond the orders (not the number or orders but the amount of units of the orders) are un-balance.. the whole world would move the "quotes" attempting to "fill" the difference.

In other words the present tick or move of the quotes is the consequence
of the orders of the previous tick. If was balnced.. quotes do not change..if UN-balance, quoted will move... how much? the greater the UN-balace the greater the move.

Volume is irrelevant, pending orders are irrelevant. The orders "received" is what move the quotes... nothing else.

Thats why is impossible to enter in a spike. The spike started because the un-balance was big ... and was not sufficiency "offer" units at the price quoted.... so... quotes start changing quite rapidly trying fill the unbalance.... if you try to enter your order (and perhaps many others) would worsen the situation and increase the UN-balance...

If anybody would get fill during the spike... most likely would be the orders that caused the spike.

That is a general answer to "why is price doing was is doing?"

Now... why people place market orders at any given millisecond or quoted price? That no ones knows. (too many of them and all for different reasons) For start, not everyone that exchange money is a trader..and those non-traders or non-speculative buyers don't even look charts.

The only thing that defined level tells . is that market order were quite balanced for a long time. Anything else is just theory or opinions

J.
.
  • #52
  • Sep 15, 2012 9:01pm Sep 15, 2012 9:01pm
because people are buying and selling.
The more interesting question is why these people (or programs in some cases) are buying or selling.
  • #53
  • Sep 16, 2012 12:54am Sep 16, 2012 12:54am
Quoting jeuro
In reality nothing is going on. The usual of the eternal tick per tick balance/ unbalance of unit demand/offer.

In this case it seems that is was well balanced for a while and the quotes did not change.

Have to understand one simple thing...what we "see" in our charts are "quoted" prices. If in 1 millisecond the orders (not the number or orders but the amount of units of the orders) are un-balance.. the whole world would move the "quotes" attempting to "fill" the difference.

In other words the present tick or move of the quotes is...
Hello, thanks for your answers. But in my opinion price was moving quite a bit in this NZDUSD example. It were the CLOSES that formend this straight line to the downside. So my question should rather have been: Why are closes lined up at nearly the same price week after week after week? There must have been some kind of interest that the close happened above this exact line.

Thanks again for your help
Hans
Thanks J16, Sam Seiden, Udine and Jacko
  • #54
  • Edited 12:16pm Sep 16, 2012 3:14am | Edited 12:16pm
Quoting tops&bottoms
because people are buying and selling.
The more interesting question is why these people (or programs in some cases) are buying or selling.
The buying and selling is eternal , it never stops.

It could be Little volume or big volume being trade, but again the volume does not matter. The only time change is when there is a difference in units.

Without going into details, in brief the participants are of 2 types.
a) Non-speculators buy because they would convert the currency into some asset or service. They do not care much if after purchase price goes up or down.

b)Speculators, buy with the intention to make money thinking the currency they purchased will go up in value.

Banks are not big speculators. They rather buy it to sell immediately for a small profit (the spread).

There is no more answer to the question "why".
If speculators are split equally in opinion.. they will buy the 2 currency in equal amounts and price will not change...more likely then, the no-speculative would take over and tilt the balance. .. and I think that is happening more time then what we speculator want to admit. We tend to think that all money exchange is done by speculators.

J.
.
  • #55
  • Sep 16, 2012 3:24am Sep 16, 2012 3:24am
Quoting HanSolo
Hello, thanks for your answers. But in my opinion price was moving quite a bit in this NZDUSD example. It were the CLOSES that formend this straight line to the downside. So my question should rather have been: Why are closes lined up at nearly the same price week after week after week? There must have been some kind of interest that the close happened above this exact line.

Thanks again for your help
Hans
I believe is just a coincidence.
But according to the chart you posted in reality the price did not close in the same line every week. It was rather a range of 9 weeks.

J.
  • #56
  • Sep 16, 2012 3:37am Sep 16, 2012 3:37am
Quoting jeuro
I believe is just a coincidence.
But according to the chart you posted in reality the price did not close in the same line every week. It was rather a range of 9 weeks.

J.

Thst is price equilibrium where sellers and buyers are in agreement. Some of you forget that price can move without any buying or selling....
  • #57
  • Sep 16, 2012 12:30pm Sep 16, 2012 12:30pm
Quoting Greenhaze
Thst is price equilibrium where sellers and buyers are in agreement. Some of you forget that price can move without any buying or selling....
I would be very interested to know how the prices quoted can move without orders?

To me, that is impossible. Can you give us an example?

J.
  • #58
  • Sep 16, 2012 12:34pm Sep 16, 2012 12:34pm
Quoting jeuro
I would be very interested to know how the prices quoted can move without orders?

To me, that is impossible. Can you give us an example?

J.
Okay, banks can increase and decrease their spreads, but that's not quite the same thing as price changing, but it does affect price.
  • #59
  • Sep 16, 2012 1:48pm Sep 16, 2012 1:48pm
Quoting tops&bottoms
Okay, banks can increase and decrease their spreads, but that's not quite the same thing as price changing, but it does affect price.

Banks do that all the time, those "are" price changes. I mean that is basic. They quote a bid price and ask price. (the difference is what we call the spread) Any of the 2 they change is a price change. .. the point is... they move their quotes because they are trying to fill orders. .. not just because.

If I don't personally buy anything, my broker will still moves the quotes... if my Broker does not received any orders at all, they will still move quotes like everybody else does...because they want to be right there "On" the money for when someone place an order and be able to fill it ...in the end, someone or many placed un-balance orders that triggered the change in quotes.

J..
  • #60
  • Sep 16, 2012 2:17pm Sep 16, 2012 2:17pm
Quoting jeuro
I would be very interested to know how the prices quoted can move without orders?

To me, that is impossible. Can you give us an example?

J.
I meant that prices can change without any trading having place on exchange. Passive orders like limit buy/sell constantly change as a result of supply/demand forces and sometimes can have impact on current bid/ask price without any real trading going on .... sorry if i wasn't clear in my post.


Cheers!
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