more then 1linesniffer said:How many participants does it take to make a market?
superfly said:more then 1
Controls?!linesniffer said:Ok. Which player or participant controls the market?
A) The one with most 'intelligence'.
B) The one with most money.
andycan said:depends what point of reference you are using
superfly said:Controls?!
Which player is better equipped to facillitate the market: A.
My answers:linesniffer said:With all this in mind:
1] can 2 or more large institutions have the same interests in the same market without working together?
2] Do large institutions go head to head within the same markets?
3] Let's say two institutions have employed the best 'intelligence' they can get thier hands on who would come off
better,...the one with more money?
4] Which institution controls the pattern?
:cheesy:counter_violent said:Yes exactly.
We can all use different terminology to describe either the same or similar things....and in the same way we can look at charts and see the same or similar things....but the essence... the interpretation...the knowing what the price action is telling us.....this is the difference between who knows what and who is who in the jungle...so to speak.
So an example might be ...turning points in price action as points of reference, to an untrained eye they mean nothing....it's like saying ...well price goes up ...price goes down ...so what !......it means nothing to the newb...
To the semi skilled trader who has done some work they are studied to a greater degree and some worthy progress is made ...but still they fail to see the relevance in the big picture....the question then becomes ....is it a turn in trend , or is it a retracement.....with all the usual hesitations ....shall I close ...shall I open .....guesswork.
This is enough for now ...for I know that You know what I'm saying ....the fact that you use the term "blow offs" tells me this![]()
So lets see how this develops and more importantly , who uses what words and in what context and what interpretation.
cv
linesniffer said:Ok. Which player or participant controls the market?
A) The one with most 'intelligence'.
B) The one with most money.
superfly said:Controls?!
Let's say I have a setup based on the head and shoulders pattern. Let's say that setup is a "h n' s" on the 30minute, price has moved up 100 ticks in 2 days and there's a full moon. This setup tells me to short a break of the neckline. This setup gives you 45 pips of profit 65% of the time. This setup has a 15 pip stop. WOW, an edge!!!! Let me just automate this and watch my bank account grow. Now, if that's a perfect scenario for you, knock yourself out, but me, I want to know why that setup didn't work the other 35% of the time.trendie said:mr. marcus
I have the utmost respect for your posts, as your previous posts show a depth of understanding that is quite incredible, but most of us play the statistics game, to make up for a lack of deeper knowledge.
The question whether the deeper knowledge is even necessary to trade is a moot point.
I dont need an understanding of latent heat capacity of water to make a cup of tea.
rainman2 said:trendie said:mr. marcus
I have the utmost respect for your posts, as your previous posts show a depth of understanding that is quite incredible, but most of us play the statistics game, to make up for a lack of deeper knowledge.
The question whether the deeper knowledge is even necessary to trade is a moot point.
I dont need an understanding of latent heat capacity of water to make a cup of tea.
Let's say I have a setup based on the head and shoulders pattern. Let's say that setup is a "h n' s" on the 30minute, price has moved up 100 ticks in 2 days and there's a full moon. This setup tells me to short a break of the neckline. This setup gives you 45 pips of profit 65% of the time. This setup has a 15 pip stop. WOW, an edge!!!! Let me just automate this and watch my bank account grow. Now, if that's a perfect scenario for you, knock yourself out, but me, I want to know why that setup didn't work the other 35% of the time.
Enter mr. marcus.
What I think he is trying to say,imo, is that you can't just look at the pattern itself, but you must also look at the professional and weak hand involvement that created that pattern. And if you can understand that professional and weak hand involvement, then you can anticipate what price will do next( be it a breakout or failed breakout).
Now, going back to the head and shoulders setup armed with the knowledge of what the market participants are feeling about current price, I may or may not short that break of the neckline based on what the intent of the pros is. This may do 2 things: 1) increase my winning percentage on that setup and 2) anticipate a failed breakout and now define a new setup to go long.
End of the day, whether I realize it or not, I am learning how price moves and that is the GAME.
The head-and-shoulders top is a tenet of classical charting theory. It suggests that buying in a bull move is composed of three waves - smart money, dumb money and dumber money. Underneath each of these waves is drawn a 'neck-line', which represents the approximate points at which prices fade off the peak of each wave.
Wave 1 consists of smart money and forms the left shoulder. It represents the activity of a syndicate of buyers operating 'in secret', quietly accumulating shares. These buyers have a 'real reason' to pick up shares, one derived from research. These buyers are not momentum investors (as at this point there has not been enough momentum to attract their attention).
Wave 2 consists of dumb money and forms the head. These buyers missed the first big move up, the strength of which attracted their attention in the first place. They take advantage of the fade in prices off the peak of the left shoulder and use it to aggressively accumulate shares.
It is during the fade off the top of wave 2 that the syndicates responsible for the first leg up start to unload shares. Since they have been vested in the stock from the beginning, they recognize when things are getting 'frothy' and are scared by the frantic buying of the momentum crowd (who are more concerned with missing 'the next big thing'). It's sort of like the end of a party where all the suits have gone home and you are left with a bunch of milling drunks. Prices fade back to the neckline.
Wave 3 consists of dumber money and forms the right shoulder. This last group of buyers missed both waves 1 and 2 and looked at the fade in prices as yet another buying opportunity. These investors consist of both new money and those who entered positions late in the second wave and are thus sitting on paper losses. The volume in wave 3 is typically weaker than that forming the head and the left shoulder. So the rise in prices here is short lived due to the fact that it is even less grounded that the rise that formed the head. Once prices fade off the right shoulder, the formation is confirmed when prices break below the neckline.
linesniffer said:![]()
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Whenever i see a head and shoulders pattern in the future i will always remember:
Smart
Dumb
Dumber
You would think people would learn? Seeing as though H&S is a common re-occurring pattern...people obviously don't.
Thanks, Db.
dbphoenix said:Yes, you'd think people would learn. But, on the whole, they don't. Which is why these (behavior) patterns occur over and over again. And not just in the financial markets. Look, for example, at real estate.
Anybody want to play, Smart, Dumb, Dumber?linesniffer said:![]()
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Whenever i see a head and shoulders pattern in the future i will always remember:
Smart
Dumb
Dumber
You would think people would learn? Seeing as though H&S is a common re-occurring pattern...people obviously don't.
Thanks, Db.
jacinto said:DB,
If I may ask, how can this be related to a 1-2-3 pattern or lower top or lower high, however you want to call it (some traders tend to see this as the head and only the head + the right shoulder, and thus I have probably answered my question in a simplistic way) . Furthermore, if it is not a problem, to what extent can the answer address the following:
1) market intent
2) support-resistance
3) emotion of "dumber money" vs "smart money"
j
rainman2 said:Anybody want to play, Smart, Dumb, Dumber?