searching for holy-grail.. is this theory true?

[cablemonster]

The first part was already answered only a few posts back. Are you talking about infinite supply, or theoretically infinite volume. They are not the same thing. I'll return to some quotes of from market wizards who are confused just like I am

"After the first serious price break below the base, there will usually be several pullback attempts. The prior base will now
provide an area of overhead supply, as all investors who bought in that zone will be losing money"- William O'Neil

"It is a case of supply and demand: Because
you have more supply, it takes a lot more money to move those stocks." -Ryan

"Demand got bigger and bigger, while at the same time, the supply was going down. You would have had a great bull market in gold in the 1970s, no matter what. Even if inflation was at zero percent, you still would have had a
big bull market in gold during the 1970s, because of supply and demand." - Jim Rogers

"So the markets today are basically the same as the markets in the 1970s, 1960s, and 1950s? The same as the markets in the nineteenth century. The same things make markets go up and down. They have not changed the rules of supply and demand."- Rogers

Why don't you explain why you think price moves?

 

[new_trader]

I am speechless.

So, you are saying that initial margin doesn't factor into anything?

 

[new_trader]

How is that baiting? Don't be such a softie, you and DT have been throwing around insults yet only NT has been called on it, and now apparently I'm baiting.

I understand your viewpoint, and I believe it stems from you thinking that supply is about some fixed quantity of things sitting in a warehouse that will become abundant or scarce. If that's all you think supply is, then it is no wonder.

No talk about margin, just magic parallel universes.

 

[cablemonster]

How is that baiting? Don't be such a softie, you and DT have been throwing around insults yet only NT has been called on it, and now apparently I'm baiting.

I understand your viewpoint, and I believe it stems from you thinking that supply is about some fixed quantity of things sitting in a warehouse that will become abundant or scarce. If that's all you think supply is, then it is no wonder.

Why don't you explain what you think supply is? I have explained how I think about it.

 

[Liquid validity]

I give up. I'm like the f**kin invisible man
Think I'll just dig some popcorn out :cheesy:

 

[cablemonster]

No talk about margin, just magic parallel universes.

the parallel universe was only needed to accommodate your views on the amount of futures contracts available to trade. Down here on planet earth everyone knows there is no limit to the number of future contracts that can trade. I give up as this is more than retarded.

 

[Shakone]

Why don't you explain why you think price moves?

When demand exceeds supply, prices rise. When supply exceeds demand, prices fall.

The best indicator of future price moves is how supply and demand relate, what you can read into this and the intentions of traders.

I believe this in every market I can think of, the apple market the stock market, the futures market etc.

 

[Liquid validity]

When demand exceeds supply, prices rise. When supply exceeds demand, prices fall.

The best indicator of future price moves is how supply and demand relate, what you can read into this and the intentions of traders.

I believe this in every market I can think of, the apple market the stock market, the futures market etc.

Next NFP day, look how much volume accompanies the initial spike (if there is one that gets faded).
Also look at how many ticks there are in the 1st 2 mins compared to the next
5 mins.

I guarantee that if there is an initial spike bang on 1330 that gets faded,
your observations will surprise you...
Price does not always need volume and transactions to move.
If you want I can post a graphical example.

 

[Shakone]

I give up. I'm like the f**kin invisible man
Think I'll just dig some popcorn out :cheesy:

Several terms have been interchanged and it has caused arguments. While of course Barjon knows what he meant, he was talking about buys being matched to sells and wrote supply=demand. These terms are not interchangeable. It wasn't that because there was a buy and a sell matched that demand must equal supply.

Now we moved on from there. Are the terms transactions, or volume being used interchangeably with supply? Because of course they're not the same thing. Is what is hypothetically producable being used interchangeably with supply? Because again, they're not the same thing.

I took issue with two things. One was DT saying supply and demand has got fook all to do with it, and the other was DT saying supply is infinite.

 

[Shakone]

Next NFP day, look how much volume accompanies the initial spike (if there is one that gets faded).
Also look at how many ticks there are in the 1st 2 mins compared to the next
5 mins.

I guarantee that if there is an initial spike bang on 1330 that gets faded,
your observations will surprise you...
Price does not always need volume and transactions to move.

Back on page 2 when DT said it's consumption of liquidity that moves price, I asked if it was only that, and furthermore, what liquidity was consumed over the weekend where price moved significantly over such a weekend, and he still hasn't answered.

 

[Liquid validity]

Are the terms transactions, or volume being used interchangeable with supply? Because of course they're not the same thing. Is what is hypothetically producable being used interchangeably with supply? Because again, they're not the same thing.

No transactions and volume are separate and distinct.
Example:

3B daily volume could be:
10m or 100m transactions (figs are illustrative only).

BTW - not having a pop, I've always thought you were OK and still do

 

[cablemonster]

When demand exceeds supply, prices rise. When supply exceeds demand, prices fall.

The best indicator of future price moves is how supply and demand relate, what you can read into this and the intentions of traders.

I believe this in every market I can think of, the apple market the stock market, the futures market etc.

well I cant see any issue with that, the issue will always be the why. so how do you go about finding a place where demand exceeds supply and you can get long? for me I wouldn't want to get long where there has been a ton of demand previously, there may be too many people long.

 

[new_trader]

the parallel universe was only needed to accommodate your views on the amount of futures contracts available to trade. Down here on planet earth everyone knows there is no limit to the number of future contracts that can trade. I give up as this is more than retarded.

I never said that the number of futures contracts is limited, YOU are saying I am saying that. I am NOT.

 

[Liquid validity]

Back on page 2 when DT said it's consumption of liquidity that moves price, I asked if it was only that, and furthermore, what liquidity was consumed over the weekend where price moved significantly over such a weekend, and he still hasn't answered.

Fair enough, although I think he may mean that liquidity being removed
can have similar effects to liquidity consumption at certain times.
Only he can answer that.

 

[Shakone]

Next NFP day, look how much volume accompanies the initial spike (if there is one that gets faded).
Also look at how many ticks there are in the 1st 2 mins compared to the next
5 mins.

I guarantee that if there is an initial spike bang on 1330 that gets faded,
your observations will surprise you...
Price does not always need volume and transactions to move.

oops. double posted

 

[Liquid validity]

Back on page 2 when DT said it's consumption of liquidity that moves price, I asked if it was only that, and furthermore, what liquidity was consumed over the weekend where price moved significantly over such a weekend, or when a market is closed and reopens, and he still hasn't answered.

Well no demand either way and a liquidity imbalance can cause price to move,
thats what I was getting at with my NFP example.
Thats usually the cause of a very low volume spike, as with NFP.
Gaps are due to pre-open resting orders - liquidity imbalance.

I think you agree with that yes?
I can't answer for DT.
To be fair, I'm pretty sure I have seen him mention that in the past though (not this thread).

 

[timsk]

What I am saying is that if crude just went up 10 ticks I dont think that is because of a change in the physical supply and demand of crude I think it is because of short term speculators.

This comment reminded me of the days when Grey1 was around and ran his Technical Trader forum. I know DT was a member for a while and perhaps he will help me out here if I don't get this quite right. Broadly speaking, Grey1 used to advise members to assess whether or not prices are moving for technical reasons or for fundamental reasons (i.e. driven by news).

So, in cablemonster's scenario quoted, if the price move coincided with a terrorist attack on a pipeline or major oil installation, then some traders might (note emphasis please!) conclude that physical supply is indeed affected and that the subsequent price rise is for purely fundamental reasons. On an 'ordinary' day, i.e. there's no evidence to suggest any major changes to the physical supply or demand, then the trader might conclude that the subsequent price rise is for purely technical reasons. And by 'technical', I mean market participants speculating according to who knows what - phases of the moon, tea leaves or a breach of a resistance level or a 200 day moving average etc. As I think most of us are aware, DT lumps the whole lot together under the umbrella term 'casino'.

Those able to make the distinction as to whether prices are moving for technical or fundamental reasons are then able to adjust their game plan accordingly. A useful trick if you're able to pull it off on a consistent basis. Personally, I've never been any good at it. So, my solution is to ignore the whole lot and just try and figure out the prevailing sentiment on the day and then 'go with the flow'.
Tim.

 

[cablemonster]

I never said that the number of futures contracts is limited, YOU are saying I am saying that. I am NOT.

I call u-turn. You were clearly arguing against me that there is a limit to the amount of futures contracts that can trade. You were even coming up with crap about margin saying that limits it.

 

[new_trader]

I have read through and I don't get the impression that the terms buyers and sellers is interchangeable with supply and demand. But, I am not going to argue anymore on that point.

I do find it strange that some people think futures contracts are infinite. Technically speaking, yes. But what limits them in reality is the margin accounts people use to trade them. Once your margin is wiped out, no more contracts for you my friend! Then there is the 'pain' threshold of traders who get whipsawed out of the game. The markets are very nasty

This is what I said.

 

[cablemonster]

This is what I said.

and I explained to you that is bo77ox as margin is not the limiting factor, margin is neither created or destroyed in the ZSG. the reason more contracts didnt trade on a given day is people didnt want to take the risk.