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 Rhody Trader I do believe that you have to at least not trade contrary to your belief ...

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Old Aug 12, 2009, 11:27pm   #22
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Originally Posted by Rhody Trader View Post
I do believe that you have to at least not trade contrary to your belief system as doing so will probably end up in tears.

Beyond that, all of the above are potential belief systems, and not necessarily mutually exclusive.
Ditto.
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Old Aug 13, 2009, 11:34am   #23
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meanreversion started this thread I like the reply about mood driving the market. The market is, after all, a collection of individuals each responding to THEIR own belief system, whether that be a technical system, a hunch, a tip, a guess, whatever. But the underlying sentiment will drive the market unless there is compelling reason for sentiment to change.

Right now, people are bullish and ignoring bad news, focusing only on the good, and looking for chances to buy dips. This is a 180 degree turnaround from March, when equities were on their knees and people ignored all good news.

My belief is that at any given point in time, market participants are more inclined to either buy or sell, depending on sentiment. If you can identify the "mood", then the probability of profitable trading lies in going along with this sentiment - the trend is your friend. BUT not when it's at the end, i.e. be quick to get out and reverse the direction of trading as the sentiment changes.
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Old Aug 13, 2009, 11:54am   #24
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Originally Posted by meanreversion View Post
I like the reply about mood driving the market. The market is, after all, a collection of individuals each responding to THEIR own belief system, whether that be a technical system, a hunch, a tip, a guess, whatever. But the underlying sentiment will drive the market unless there is compelling reason for sentiment to change.

Right now, people are bullish and ignoring bad news, focusing only on the good, and looking for chances to buy dips. This is a 180 degree turnaround from March, when equities were on their knees and people ignored all good news.

My belief is that at any given point in time, market participants are more inclined to either buy or sell, depending on sentiment. If you can identify the "mood", then the probability of profitable trading lies in going along with this sentiment - the trend is your friend. BUT not when it's at the end, i.e. be quick to get out and reverse the direction of trading as the sentiment changes.
Sentiment ultimately means diddly-squat IMO. Execution = supply/demand.
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Old Aug 13, 2009, 11:57am   #25
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meanreversion started this thread Isn't supply and demand driven by sentiment? The ultimate end user will base his/her decisions not only on financial necessity, but also how they feel.
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Old Aug 13, 2009, 11:58am   #26
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meanreversion started this thread Or in other words, why do trends exist? Isn't a trend just the market manifestation of sentiment..?
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Old Aug 13, 2009, 12:07pm   #27
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Trend = supply:demand

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Originally Posted by meanreversion View Post
Isn't supply and demand driven by sentiment? The ultimate end user will base his/her decisions not only on financial necessity, but also how they feel.
Depends... What if they base on just PA. Or are contrarian. Or fade moves because they have the resources. Supply demand ftw!
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Old Aug 13, 2009, 12:32pm   #28
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Supply and demand depends on sentiment, if people feel positive they are willing to buy at a higher price cause they believe the price will move in the direction they want and sellers will hold out for a better price because they see the market moving in their direction. If the mood shifts negetive the buyers will want to try and pick up bargins/ pick the bottom and sellers become desperate and sell at any cost in fear of loosing to much of their profit or capital. So it is sentiment in the end that makes the market trend or consolidate at a certain price level in my opinion. And mind you it may not allways be rational as far as you could see and one can never really predict the market reaction to news.
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