What are your beliefs? What do you think drives markets?

This is a discussion on What are your beliefs? What do you think drives markets? within the General Trading Chat forums, part of the Reception category; Originally Posted by meanreversion Or in other words, why do trends exist? Isn't a trend just the market manifestation of ...

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Old Aug 13, 2009, 1:10pm   #31
 
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Originally Posted by meanreversion View Post
Or in other words, why do trends exist? Isn't a trend just the market manifestation of sentiment..?

Markets, just like the weather, are driven by Chaos Theory. Initial conditions spark things off and pre-determine what comes later, and when - The Butterfly Effect. It all appears random but it's not.
This is how I have traded for years. It's hard work and difficult and can't be automated, but it's also totally spooky.
Indicators are useless most of the time. When you can see the next turn coming and look what indicators are saying, you realise that they mostly have no meaning other than being a rear-view mirror.
What people call sentiment, supply and demand, MM behaviour etc are just responses, not causes. The cause for a rally, reversal, gap, acceleration, or consolidation was determined way before it ever started, as was the actual time when it would start and end.
OK I'm sure this sounds like balony, and especially because I'm not about to explain how to do it. You'll just have to believe me and save yourself the effort of looking elsewhere..... or not :-)
I'm not saying this is the only way to trade, of course it isn't, and for those who have a successful method, stick to it, because this way is hard graft and ideally you need two people to do it, but it is what moves the markets.
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Old Aug 13, 2009, 1:18pm   #32
 
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Originally Posted by cr6196 View Post
waste of time with you isn't it, read the whole thing first, the bit where i say it is obvious is supply and demand, whats the difference between demand and buying? I mean would you rather be right than have a clue what your talking about?
Ummm... I'm sorry but the difference between buying and demand is absolutely massive.
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Old Aug 13, 2009, 1:20pm   #33
 
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Originally Posted by Glenn View Post
What people call sentiment, supply and demand, MM behaviour etc are just responses, not causes. The cause for a rally, reversal, gap, acceleration, or consolidation was determined way before it ever started, as was the actual time when it would start and end.
Agree.
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Old Aug 13, 2009, 1:25pm   #34
 
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Originally Posted by cr6196 View Post
well explain then...
also i didn't say they were different...
Yeah... Exactly, you said they were the same pretty much.

If you don't know the difference between demand and buying, then you clearly have no idea how the market actually moves... You probably think the market moves up because of more stock has been bought than sold

Buying and selling always matches - Demand and supply doesn't.
It would take me a while to explain and i am busy, maybe private message me and i will get back to you when i can.... Just start trying to learn what actually causes an up or down-tick.
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Old Aug 13, 2009, 1:38pm   #35
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Originally Posted by cr6196 View Post
waste of time with you isn't it, read the whole thing first, the bit where i say it is obvious is supply and demand, whats the difference between demand and buying? I mean would you rather be right than have a clue what your talking about?

How is an export supply? How? makes no sense. How is destocking supply? I mean you've completely ignored the point of the example, that something can only go down so far, yes that is demand and supply, but again i was referring to another point about the recent equities rally, suggesting why it happened possibly in the first place, but also how it continued for questionable reasons, ie confidence multiplier.

i was responding mainly to the bit where you said it wasn't sentiment. Whats the point as you seem to choose to make an easy argument that couldn't possibly be wrong rather than saying anything useful...
There's no need for all this "you want to be right" or how I'm a "waste of time" talk. I just approach things differently and prefer to think in terms of supply and demand. There's no need to start moaning because I have my own views and am not coming around to your way of thinking. Anyway you only have to look at how OPEC operate to know I'm talking sense. IMO in the long term sentiment is negligible because fundamentals can change on a daily basis. A trend could end right now on some really bad news and the only thing that would be affecting the market would be how many buyers who have been holding are willing to offload right now.
In regards to imports and exports... Imports are demand for produce of another country and the inverse is true of supply no? It's my thinking that as these both affect GDP, sector performance, and the performance of individual companies and possibly even the supply of an instrument as investment it will in turn have an affect on the market.

What's happening here is you're saying supply and demand should be used to gauge sentiment and I'm saying sentiment should be used as an indicator in likely supply and demand no need to hate each other bro.
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Old Aug 13, 2009, 1:39pm   #36
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Originally Posted by Glenn View Post
Markets, just like the weather, are driven by Chaos Theory. Initial conditions spark things off and pre-determine what comes later, and when - The Butterfly Effect. It all appears random but it's not.
This is how I have traded for years. It's hard work and difficult and can't be automated, but it's also totally spooky.
Indicators are useless most of the time. When you can see the next turn coming and look what indicators are saying, you realise that they mostly have no meaning other than being a rear-view mirror.
What people call sentiment, supply and demand, MM behaviour etc are just responses, not causes. The cause for a rally, reversal, gap, acceleration, or consolidation was determined way before it ever started, as was the actual time when it would start and end.
OK I'm sure this sounds like balony, and especially because I'm not about to explain how to do it. You'll just have to believe me and save yourself the effort of looking elsewhere..... or not :-)
I'm not saying this is the only way to trade, of course it isn't, and for those who have a successful method, stick to it, because this way is hard graft and ideally you need two people to do it, but it is what moves the markets.
Glenn
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Old Aug 13, 2009, 1:47pm   #37
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Originally Posted by Glenn View Post
Markets, just like the weather, are driven by Chaos Theory. Initial conditions spark things off and pre-determine what comes later, and when - The Butterfly Effect. It all appears random but it's not.
While I agree that markets are probably best explained by Chaos Theory (among those that I'm aware of currently) you can't actually say the markets are "driven" by Chaos Theory. To quote a professor friend of mine:

"Chaos theory can be used to model and potentially explain markets and market participants, but a theory cannot drive anything -- only replicate and hence explain reality."
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Old Aug 13, 2009, 1:49pm   #38
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Originally Posted by Rhody Trader View Post
While I agree that markets are probably best explained by Chaos Theory (among those that I'm aware of currently) you can't actually say the markets are "driven" by Chaos Theory. To quote a professor friend of mine:

"Chaos theory can be used to model and potentially explain markets and market participants, but a theory cannot drive anything -- only replicate and hence explain reality."
But wouldn't that come full circle when said models are used by institutions?
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Old Aug 13, 2009, 1:58pm   #39
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I think the discussion what drives markets rather than how to interpret the markets? So what drives the markets supply and demand, yes, but also sentiment, trust etc. Pointless tho.
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Old Aug 13, 2009, 2:25pm   #40
 
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what drives markets? Money flow
what drives money flow? Perceived monetary gain/loss.
what drives perceived monetary gain/loss? Sentiment
what drives sentiment? Forecast economic conditions
what drives forecast economic conditions? Economic conditions
what drives economic conditions? Money flow
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