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Oppositional thinking on demand and supply

  • #1
  • First Post: May 16, 2014 10:32am May 16, 2014 10:32am
An idea that I adopted a while ago was that the forex market operates in a way that is in opposition to how traditional markets operate in relation to demand and supply.
My thinking was,and is, that the exchange market, unlike the stock market, can only survive if it always moves against the majority.Therefore ,the more buyers come into the market the lower price will fall until there becomes an imbalance. This obviously happens when stops are hit,turning those buys into sells, buyers can't stand the pain any longer ,relinquishing their buy orders which then become sells.This imbalance turns the market up which now attracts new sellers and we now have a new imbalance of more sellers than buyers and therefore price starts to move up.
The industry would have us believe that the exchange market moves purely on demand and supply, however as true as that may be , I suspect it may not be in the way many think it does.
Does anyone else share this view?
Where price is now, it has been before, and will be again.
  • #2
  • Nov 4, 2014 4:03am Nov 4, 2014 4:03am
Limited periods like that are WELL KNOWN and EVIDENT in any time scale.

It is called SHAKEOUT OF WEAKER PLAYERS

As I am typing this post, at this very moment - in AUDUSD this process is EXACTLY what has been going on for the last month+

One can't miss its symptoms there: every time the AUD has laboriously and GRADUALLY climbed up to break-out of the range (as price nearing for confirming the reversal of previous fall) - then ABRUPTLY, IN TIME-PERIOD OF MINUTES IT WOULD BE SHARPLY DUMPED in gigantic drops , erasing gains of week or more.

ANALYSIS: SMALL AND MEDIUM PLAYERS ARE BULLISH - AND THEY SLOWLY BUY AND RAISE THE PRICE (their "smallness" is confirmed by slow and small steps of price-rise)
THEN VERY BIG (AND OPENLY INTENTIONAL) SELLERS DUMP THE PRICE - their huge size is proved by the ability to drop week-sized increases in a matter of a few minutes. AND THEIR INTENTIONAL DUMPING IS proved by the timing of these INTENTIONAL DROPS : ONLY NEAR ATTEMPTED RANGE-BREAKOUT- THE PLEVEL WHEN IT MATTERS ! At range TOP the IMPACT OF DUMPING IS CRITICAL TO PREVENT fast further appreciation.
THE LARGE SPECS DO IT SO THEY CAN ACCUMULATE BEFORE THE BIG PRICE INCREASE (to buy LOW - they need the price to stay in range!)
You called it correctly - "accumulation range"
Siddhartha G
  • #3
  • Nov 4, 2014 4:55am Nov 4, 2014 4:55am
Quoting Jenx
An idea that I adopted a while ago was that the forex market operates in a way that is in opposition to how traditional markets operate in relation to demand and supply. My thinking was,and is, that the exchange market, unlike the stock market, can only survive if it always moves against the majority.Therefore ,the more buyers come into the market the lower price will fall until there becomes an imbalance. This obviously happens when stops are hit,turning those buys into sells, buyers can't stand the pain any longer ,relinquishing their buy orders...
I share your very same view, and in my opinion 90% of the market buy/sell power is in the hand of a few individuals, so even if 90% of market partecipants buy, it just need the sell of the very few powerful guys to bring price down, stop out most of the people, and buy back from them at their expenses.

The point here is that we live in a society where the 10% control more than half of the total wealth, and i'm sure this phenomenon is much amplified in the financial markets (maybe 10% control almost the total market?).

And who are those guys, there are simply a small number of hedgefunds across ny, london and maybe china, then there are the central banks.

This is their game we are only guests
  • #4
  • Nov 4, 2014 10:29am Nov 4, 2014 10:29am
Jenx , Hello again
I have posted a picture in your thread - about the monthly chart - following your suggestion to look at the Monthly TS - here is my first-look thoughts.

IMO these are rather CONSERVATIVE possibilities.

One has to keep in mind though -the eventuality of the further down (small) before the correction. Better stop-loss than sorry !
Attached Image (click to enlarge)
Click to Enlarge Name: MONTHLY CHART CORRECTION.jpg Size: 196 KB
Siddhartha G
  • #5
  • Nov 4, 2014 10:56am Nov 4, 2014 10:56am
Hello Isingh
We're bang on 50% retrace, THE most common area in an uptrend.It could obviously drop further.The next obvious level for me would be .855.
However ,I would be surprised. The 8655 level is so respected over the last couple of years, and now we are seeing clear accumulation at that level.That isn't to say the institutional money won't let it fall further should enough mugs come in but like I said I'd be surprised.
I'll be very interested in NFP this week.
Where price is now, it has been before, and will be again.
  • #6
  • Nov 4, 2014 11:04am Nov 4, 2014 11:04am
Aha...
Soo... you root for Much Bigger RETRACEMENT than indicated in the chart above....
Siddhartha G
  • #7
  • Nov 4, 2014 11:11am Nov 4, 2014 11:11am
Quoting Isingh
Aha... Soo... you root for Much Bigger RETRACEMENT than indicated in the chart above....
Sorry, I mean from .62 to 1.10
Where price is now, it has been before, and will be again.
  • #8
  • Nov 4, 2014 11:19am Nov 4, 2014 11:19am
You know,when I look for these long term trades I pay close attention to the swap.When you get prices at these levels and the swap is so attractive in the opposite direction you have to ask yourself what the funds will be thinking. This pair is currently paying $5 a day JUST for holding the trade. Is it any surprise that accumulation appears to be happening?
Where price is now, it has been before, and will be again.
  • #9
  • Nov 4, 2014 11:19am Nov 4, 2014 11:19am
Any sustained move up or down is caused by people losing money.
  • #10
  • Nov 4, 2014 11:24am Nov 4, 2014 11:24am
Quoting Mingary
Any sustained move up or down is caused by people losing money.
Absolutely correct
Where price is now, it has been before, and will be again.
  • #11
  • Nov 4, 2014 12:08pm Nov 4, 2014 12:08pm
There will always be traders who think the price is too high or too low depending on their timeframe.One side will provide the liquidity for the move.For instance I'm long on this pair but cautiously.Any excessive down moves I'll buy in to but not at any great rate.Keeping a close eye on the accumulation I believe is happening.If I'm wrong I won't be afraid to pull the plug.If and when it makes its move north I'll still scale in on the down moves but at that point I'll be looking for signs of losers who are convinced the down move has re-commenced
Where price is now, it has been before, and will be again.
  • #12
  • Nov 4, 2014 1:02pm Nov 4, 2014 1:02pm
please any one have idea for CL-DEC they how many touching down 76.00?
  • #13
  • Nov 4, 2014 1:05pm Nov 4, 2014 1:05pm
Quoting Jenx
{quote} Sorry, I mean from .62 to 1.10
Please clarify
do I understand correctly: Do you imply that AUD will first drop to 0.62 (Wow ) and only then strengthen to 1.1 ?

Or did you mean smt. completely different ?
Siddhartha G
  • #14
  • Nov 4, 2014 1:09pm Nov 4, 2014 1:09pm
Quoting Isingh
{quote} Please clarify do I understand correctly: Do you imply that AUD will first drop to 0.62 (Wow ) and only then strengthen to 1.1 ? Or did you mean smt. completely different ?
Shit! I hope not! LOL. No, what I mean is that the significant swing low on the monthly chart is 0.62 and the obvious high is the 1.10 (where I closed last time I traded this pair ) .We're now at 50% retrace in the uptrend.Thats where I get interested.Seeing accumulation on the dailys in a tight channel has gotten me interested again
Where price is now, it has been before, and will be again.
  • #15
  • Nov 4, 2014 1:24pm Nov 4, 2014 1:24pm
Cables my next target.Early days yet but swap has just switched positive to the long side.Not by a lot but enough to get me interested.Last two trades I had on that pair was long from 1.58.Closed at 1.71 when swap turned flat.Swap turned positive to the downside at 1.70. Thats where I started my short.Dropped a bollock though and got greedy.Took 300 pips profit at 1.67 even though it would clearly always floor sub 1.60.Won't make that mistake again
Where price is now, it has been before, and will be again.
  • #16
  • Nov 4, 2014 1:47pm Nov 4, 2014 1:47pm
Quoting adeem
please any one have idea for CL-DEC they how many touching down 76.00?
Buying Oil will definitely be on the cards, just not yet.Let it form a daily range first
Where price is now, it has been before, and will be again.
  • #17
  • Nov 4, 2014 2:15pm Nov 4, 2014 2:15pm
Quoting Jenx
Cables my next target.Early days yet but swap has just switched positive to the long side.Not by a lot but enough to get me interested.Last two trades I had on that pair was long from 1.58.Closed at 1.71 when swap turned flat.Swap turned positive to the downside at 1.70. Thats where I started my short.Dropped a bollock though and got greedy.Took 300 pips profit at 1.67 even though it would clearly always floor sub 1.60.Won't make that mistake again
Where does one follow swap charts ? Gratis - obviously, like in Free Beer
Siddhartha G
  • #18
  • Nov 4, 2014 2:21pm Nov 4, 2014 2:21pm
Quoting Isingh
{quote} Where does one follow swap charts ? Gratis - obviously, like in Free Beer
Your broker should provide them although most try to be shady over it.Heres mine and they're pretty open
http://www.fxdd.com/mt/en/forex-reso...ollover-rates/
Remember though that most brokers triple their rates on a Wednesday to allow for weekend except Oanda who pay every day 7 days a week.
Where price is now, it has been before, and will be again.
  • #19
  • Nov 4, 2014 2:25pm Nov 4, 2014 2:25pm
Quoting Jenx
{quote} Your broker should provide them although most try to be shady over it.Heres mine and they're pretty open http://www.fxdd.com/mt/en/forex-reso...ollover-rates/ Remember though that most brokers triple their rates on a Wednesday to allow for weekend except Oanda who pay every day 7 days a week.
Thanks !
Now that you showed me - I've found a ton of other places - yet what is the
policy differences of various brokers behind those DIFFERENCE in their rolloverR. ?

BTW, you smoothly escaped from answering my question - If aud goes north - whats ur target?? (of course on daily or even weekly TF)
Siddhartha G
  • #20
  • Nov 4, 2014 2:34pm Nov 4, 2014 2:34pm
Quoting Isingh
{quote} Thanks ! Now that you showed me - I've found a ton of other places - yet what is the policy differences of various brokers behind those DIFFERENCE in their rolloverR. ? BTW, you smoothly escaped from answering my question - If aud goes north - whats ur target?? (meaning daily or weekly TF)
All brokers try and screw you but the plus/minus to the Long/short side is pretty universal.
Aud/Usd target? Like I said 1.10/12. I'd be surprised if it got there before spring though.More likely this time next year.
Where price is now, it has been before, and will be again.
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