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  • #21
  • Aug 31, 2014 7:56pm Aug 31, 2014 7:56pm
Quote
I have seen many explanations on this matter, many of them simply wrong,
one would be the ( if the market go down there is more sellers than buyers)
or if the market go up, there is more buyers than sellers, this is simply wrong!
if anyone is saying this to you, then you know he don't know what he is talking about.

Who said that? Number of buyers or sellers is irrelevant. It's about supply and demand.

Quote
f there is 2 million buyers on EURUSD and there is no one want to sell, there can be no trade at all, price will stand absolutely still,


Quote
it's because the buyer are prepared to buy the product at a higher price than it is right now, and he do so

So you think that buyers show the way? When price moves up, it means that SELLERS twist buyers arm in order to get a better price.

So when you say prices goes up because buyers are prepayed to buy (order at market), it's not false but the truth is sellers are getting the price they want in order to sell properly. It changes all about the way of analyzing the chart.
  • #22
  • Aug 31, 2014 11:21pm Aug 31, 2014 11:21pm
Quoting roughtrader
I have seen many explanations on this matter, many of them simply wrong, one would be the ( if the market go down there is more sellers than buyers) or if the market go up, there is more buyers than sellers, this is simply wrong! if anyone is saying this to you, then you know he don't know what he is talking about. there can never! be more sellers than buyers or vice versa, that is totally impossible! why? here is a small explanation why, if you buy 1 car then there needs to be a guy selling 1 car to you otherwice you couldn't buy it right? then...
I have to disagree with you that this is a misconception. At any given point in time the market is made up of a number of active and inactive participants. Active participants are currently in the trade (for the split second that it takes for the buyer and seller to execute the trade) and inactive participants have a stake in the currency pair (they either currently own the base currency or currently own the quote currency) and are looking to trade when price reaches a desirable point.

Every time a buyer places a buy market order, the execution system looks for the nearest seller who has currently placed a sell market order and executes the trade. Say at a point in time 100 buyers place a buy market order and there are only 90 sell market orders at the same price - the execution system will now look for a sell market (or limit) order at the next highest price for the last 10 buyers. This new price is higher than the original price and therefore price has moved up.

Consider a market with millions of traders buying and selling each day. Thousands of these transactions are occurring constantly throughout the day and is translated onto our price charts as price moving higher (looking to find inactive sellers willing to sell to equal the number of active buyers in the market) or as price moving lower (looking to find inactive buyers willing to buy to equal the number of active sellers in the market).

You are correct in saying that it takes two to tango (trade execution) however the price actually moves to make the execution possible, not the other way round. Therefore when buyers are consistently dominating a market the price moves up until it can find a consistent number of sellers to trade with the buyers at which point the currency pair will trend sideways/range.
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  • #23
  • Sep 1, 2014 12:38am Sep 1, 2014 12:38am
Quoting Unabletrader
{quote} Who said that? Number of buyers or sellers is irrelevant. It's about supply and demand. {quote} {quote} So you think that buyers show the way? When price moves up, it means that SELLERS twist buyers arm in order to get a better price. So when you say prices goes up because buyers are prepayed to buy (order at market), it's not false but the truth is sellers are getting the price they want in order to sell properly. It changes all about the way of analyzing the chart.

Right, it's like anything else. If you know the value of peanut butter is $1.00 a jar (value), and price is currently at $.80, you're more apt to purchase the medium, being peanut butter in this case. It adds a layer of context to managing a trade.
  • #24
  • Sep 1, 2014 5:07am Sep 1, 2014 5:07am
lets try to put it into the practice. below You can find the chart - could You please explain what happened at the first and the second point? did we have first more sellers so the price had to go up suddenly to find the sellers offers? or did we have much more buyers and this is why at the first circled point the price went up suddenly.
and what happened after almost 2 hours? why did the price went down so suddenly with such a huge volume?
regards
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  • #25
  • Sep 1, 2014 5:37am Sep 1, 2014 5:37am
Quote
did we have first more sellers so the price had to go up suddenly to find the sellers offers? or did we have much more buyers and this is why at the first circled point the price went up suddenly

No, it's not the good question.

A trader want to...trade. So when a buyer wants to buy no matther what, he's buying at the market. When a price is moving, are buysers or sellers satisfied? Sellers, because they'll get an expensive price to sell. Also from a market point of view, sellers drive the price where they want by a conscious or unconsious inactivity.

That's why we can say that sellers twist buyers arm BUT it also means that buyers are really confident about the future direction of the price.

Do you want to buy an Audi car for 10K or 1M? Ok but if you want to buy your car @10K, you need a supply which is mort important than demand in the first period. You, as a buyer, are demanding sellers to make price cheaper.

It's sth like that:

"Ok bro, you want to sell your car? I give 10K, it's my only offer so you have to "push down" your price if you want to make business"

Quote
​ why did the price went down so suddenly with such a huge volume?

Because some sellers were ready to sell no matter what. For which reason? Don't know and don't care.
  • #26
  • Sep 1, 2014 4:35pm Sep 1, 2014 4:35pm
Quoting tunera
{quote} One simpler way of say it would be:If price go up, it mean that traders are buying. If it go down, is because traders are selling. That's all
yep allmost but the most important thing to notice is that if price go up, the buyers are buying at a higher price, otherwice the price would not go up,
could be a hint they know something you don't
Bulls are stupid Animals!especially when Im short!
  • #27
  • Sep 1, 2014 4:42pm Sep 1, 2014 4:42pm
I am probably not smart enough but I still cant see any usefull conclusion...
taking a look at the chart I posted - what should we see? I mean in the meaning of trading decision?
regards
Mind is like a parachute - it is useful only if open
  • #28
  • Sep 1, 2014 4:55pm Sep 1, 2014 4:55pm
Quoting Unabletrader
{quote} Who said that? Number of buyers or sellers is irrelevant. It's about supply and demand. {quote} {quote} So you think that buyers show the way? When price moves up, it means that SELLERS twist buyers arm in order to get a better price. So when you say prices goes up because buyers are prepayed to buy (order at market), it's not false but the truth is sellers are getting the price they want in order to sell properly. It changes all about the way of analyzing the chart.
That IS supply and demand, if a great number of buyers or 1 buyer for that matter with incredible volume, suddenly are prepared to buy at a higher price, that is demand, they dont need to twist arms, both parties are of different opinion, the buyers buy because they think price will go up, they are eager to get in, and sellers sell to them because they think it will go down and that they got a good price, the difference in a demand situation is that a lot of volume are coming into the market simultaniously and fast, pressing price higher with market orders, because everyone buying higher then price was a second ago, and for every buy there must be a seller, so yes, the sellers get a better price so they sell to the buyers, and the oposit for supply ofcourse
Bulls are stupid Animals!especially when Im short!
  • #29
  • Sep 1, 2014 5:05pm Sep 1, 2014 5:05pm
Quoting Szymon
lets try to put it into the practice. below You can find the chart - could You please explain what happened at the first and the second point? did we have first more sellers so the price had to go up suddenly to find the sellers offers? or did we have much more buyers and this is why at the first circled point the price went up suddenly. and what happened after almost 2 hours? why did the price went down so suddenly with such a huge volume? regards {image}
i will tell you what happened:

at the very beginning of the chart, traders started to buy the market.
one buy, price go up, more traders see price going up, and buy too, looking to sell it back later, higher.
as more traders buy, price comtinue to go up.
on the first circle, some guy somewhere bought a good amount on just 1 trade, or probably a trader that was sellimg decided to take his loss (buying back his sell position), anyway the market has been bought again.
traders continued to buy untill the very top, at that point some big guy have taken his profits (selling his previously buy position).
at that point, price started going down, more traders decided to take profits (probably some trailing stop has been hitted too).
the traders that bought just at the top, decide then to take their loss, selling their positions.
in the mean time, when price was just at the top, some trader may have decided to try pick the top and sell looking to buy lower, more traders sold as price was goimg down, etc etc...

this is your second circle, all this selling (some buyers stopped out, some buyers taking profits, some sellers looking to sell high) let price fall very fast!
however, at the very bottom of that candle, profits has been taken already, top-sellers has sold already, top-buyers has been stopped out already.. what is left, is a cheap market to be bought again, and up we go again...

the same process happening again and again, on every timeframe, people buy people sell, sometime somebody win sometime somebody loose...
welcome to the market.
  • #30
  • Edited 5:45pm Sep 1, 2014 5:26pm | Edited 5:45pm
thank You
though still trying to find useful conclusion. here is my guess: first we had several big volumes at the level 1.66 (green circles) - which means we had many sellers and buyers there. then a 'miracle' - at one moment the price went up through these levels with low climax volume (green small cirlce). and the price above suddenly blew up with a huge volume - probably the scenario written by tunera above is the explanation. and then the price went back at 1.66 'around' levels - but this time it is calm and long period of time at this levels (the green rectangle) which means that buyers and sellers agreed to buy and sell many transactions (long time) - again big volume but devided in time(?)

and the most important question: what now? what is the conclusion? in my opinion the level 1.66 is now a kind of a base - sellers and buyers agreed it is good for them. is it possible to figure out if the market continues the way up (for me it is more logical)? what is Your opinion?
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  • #31
  • Sep 1, 2014 5:28pm Sep 1, 2014 5:28pm
they dont need to twist arms, both parties are of different opinion, the buyers buy because they think price will go up, they are eager to get in, and sellers sell to them because they think it will go down and that they got a good price


Sure but as a trader you want to get the best price possible. Buyers want to buy, I agree, but they want to buy at which price? It's the problem: they have to buy at the market because of the lack of supply. And that's why I'm saying sellers order buyers when price is moving up in a very fast way ; who is satified? Buyer who needs to be aggressive or seller who's responsive?
  • #32
  • Sep 1, 2014 5:34pm Sep 1, 2014 5:34pm
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Price is just above a previous swing high on USDCHF.
  • #33
  • Sep 1, 2014 6:07pm Sep 1, 2014 6:07pm
Quoting Szymon
... and the most important question: what now? what is the conclusion? in my opinion the level 1.66 is now a kind of a base - sellers and buyers agreed it is good for them. is it possible to figure out if the market continues the way up (for me it is more logical)? what is Your opinion? {image}
That Szymon is the million dollar question. Supply and demand in foreign exchange is fleeting and can change on a whim depending on thousands of market participants' perception of what will happen to price. This is affected by fundamentals such as news releases as well as technicals such as support and resistance, trend lines, price action candles/patterns etc.

If you can tell me which way the market will go I will share my millions with you
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  • #34
  • Sep 1, 2014 6:18pm Sep 1, 2014 6:18pm
Quoting letaureau
{quote} If you can tell me which way the market will go I will share my millions with you
I look at the market as a matter of 2 things:
1. understading what is really happening at the moment
2. deciding which scenario is more probable - buyers will put higher orders to find sellers or sellers are going to low the offers to find buyers

I strongly believe that with such attitude one is able to earn on any market on daily basis.
Mind is like a parachute - it is useful only if open
  • #35
  • Sep 1, 2014 6:33pm Sep 1, 2014 6:33pm
Quoting Szymon
thank You though still trying to find useful conclusion. here is my guess: first we had several big volumes at the level 1.66 (green circles) - which means we had many sellers and buyers there. then a 'miracle' - at one moment the price went up through these levels with low climax volume (green small cirlce). and the price above suddenly blew up with a huge volume - probably the scenario written by tunera above is the explanation. and then the price went back at 1.66 'around' levels - but this time it is calm and long period of time at this levels...
my opinion on gu (im looking at it from some days) is that buyers have bought, the market is yet weak though, and soon (tomorrow?) we can see a drop, down to the friday lows as first target.
i will look to sell around london open if price will hold at current levels, seems good
  • #36
  • Sep 1, 2014 7:26pm Sep 1, 2014 7:26pm
Quoting letaureau
{quote} I have to disagree with you that this is a misconception. At any given point in time the market is made up of a number of active and inactive participants. Active participants are currently in the trade (for the split second that it takes for the buyer and seller to execute the trade) and inactive participants have a stake in the currency pair (they either currently own the base currency or currently own the quote currency) and are looking to trade when price reaches a desirable point. Every time a buyer places a buy market order, the execution...


One and only definition for me.
  • #37
  • Sep 1, 2014 8:04pm Sep 1, 2014 8:04pm
Quoting Unabletrader
they dont need to twist arms, both parties are of different opinion, the buyers buy because they think price will go up, they are eager to get in, and sellers sell to them because they think it will go down and that they got a good price Sure but as a trader you want to get the best price possible. Buyers want to buy, I agree, but they want to buy at which price? It's the problem: they have to buy at the market because of the lack of supply. And that's why I'm saying sellers order buyers when price is moving up in a very fast way ; who is satified?...
there can only be extreem entusiasm or heavy orderflow in either direction, thats probably what you mean as supply and demand, and thats right, for every buy there is a seller, what do you define as a good price? obviously if buyers buy, they are thinking that they are buying at a good price, otherwice they wouldn't buy, and it's the same thing for the sellers, btw, there is never to high or low to buy or sell, when many buyers or sellers come in simultaniously and create volume orderflow they overwhelm the sellers by entusiasm by buying at higher prices constantly and pressing price up, so who is satisfied? the buyers are obviously satisfied in that moment because they are in on the right direction and price is going up, the sellers thought they got a good price at the precise moment they got filled and now when they se price moving up, they are ofcourse happy they sold in time, some of them would even become buyers and even more press price upwards, at some time there are harldy any sellers left because they have all panic liquidated their positions and now the price will stall, and note that when there isn't any sellers left, there is nobody selling to the buyers so the price don't go up more, it stalls, then what happends is new sellers begin coming in believing the market now will reverse because it's stalling, if the sellers now are more agressive than the buyers the price will reverse, the buyers are probably afraid now when they se price is stalling and are ready to bail out and even more add to the bearish orderflow, thats why we have highs and lows, first comes greed then comes fear and greed again
Bulls are stupid Animals!especially when Im short!
  • #38
  • Sep 1, 2014 8:43pm Sep 1, 2014 8:43pm
Love the ideas so far, keep it coming.
  • #39
  • Sep 2, 2014 2:40am Sep 2, 2014 2:40am
Quoting roughtrader
{quote} there can only be extreem entusiasm or heavy orderflow in either direction, thats probably what you mean as supply and demand, and thats right, for every buy there is a seller, what do you define as a good price? obviously if buyers buy, they are thinking that they are buying at a good price, otherwice they wouldn't buy, and it's the same thing for the sellers, btw, there is never to high or low to buy or sell, when many buyers or sellers come in simultaniously and create volume orderflow they overwhelm the sellers by entusiasm by buying...
Anyway it's impossible to extract this information from the price quote. It just shows current prices and chart build its lines according price changes. Technical analysis is all about finding a pattern which market is subject to most of the times..This pattern is wave..
  • #40
  • Sep 2, 2014 11:38am Sep 2, 2014 11:38am
Quoting Szymon
thank You though still trying to find useful conclusion. here is my guess: first we had several big volumes at the level 1.66 (green circles) - which means we had many sellers and buyers there. then a 'miracle' - at one moment the price went up through these levels with low climax volume (green small cirlce). and the price above suddenly blew up with a huge volume - probably the scenario written by tunera above is the explanation. and then the price went back at 1.66 'around' levels - but this time it is calm and long period of time at this levels...
Hi Szymon,Let's take a step back for a minute. One of the factors with FX liquidity is accepting the uncertainty of liquidity as a whole. Having said that, I want you to imagine the "game theory" involved with liquidity. We have both supply and demand from a macro (larger) perspective, as well as a micro perspective. From a micro standpoint, market orders are considered demand, due to the fact of immediacy related to these orders. Consequently, limit orders supply demand, meaning they are in no rush to be filled, and offer liquidity to market orders. Now, your picture you provided shows increased volume at a high. You can watch these kind of plays unfold on the tape all day, it's really all relative in terms of the timeframe. What happens is a larger player(s) needs to find enough liquidity to unload to (limit orders). Liquidity is probed until another large player(s) is found that can absorb the previous stated player('s) liquidity. Price will revisit this area until the limit orders pull, or there are no more market orders needing to be unloaded. Of course, retail stops get accumulated in this process, but it's more or less a reaction of the process. It's what you "can't see" that brings you a step closer to trading with the larger players. The question you need to ask yourself in this situation, is why did the limits pull? And of course the million dollar question is "how can I profit off of this game theory?"Hope this sheds some light!Best,Ryan
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