Article The Parable of Uncle Joe – How the Stock Market Really Works.

T2W Bot

Staff member
1,453 54
One day after a particularly spectacular trading debacle, my Uncle Joe took me aside and consoled me with some hard facts about how the stock market works. You see, Uncle Joe owns a very unique company and has an insider’s perspective on how stock price movement is managed.
His company, Widgets & Co., is the only company in the States that distributes widgets, and it does so under license from the government. It has been buying and selling its unique widgets for many years. Now imagine also that these widgets have an intrinsic value, they never break, and that the number in circulation at any one time is the same. So, Uncle Joe, being a clever man with many years of experience managing his business, realized early on that just buying and selling his widgets to customers was, in fact, rather dull. The amount of money he made each time he bought and sold was quite small, and the number of transactions per day was also low. In addition, he also had all the running expenses of his...
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twiggytwo

Active member
206 4
A follow up Article please, on how to know what the Market Makers are thinking / are there any Tech indicators to give us a clue to the M/M thoughts ?
 

ani

Newbie
7 3
Volume Spread Analysis

The best indicator to use for establishing market makers true intentions is volume spread analysis. Have a look on my website: www.making-bread.co.uk which explains this in more detail and am currently developing a separate site devoted to this topic.

In essence the only activity that market makers cannot hide is volume. If you understand how the markets work you can use this volume analysis coupled with the associated price movement in the candle bar to forecast future price movements.

A quick example if you see a wide spread upbar with little or no volume then clearly this is a trap up move by the market makers. Very simple, really.

Access to level 2 data is also contributing to greater transparency but in my opinion should not be used until the basics have been mastered.
 
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TheBramble

Legendary member
8,395 1,170
A quick example if you see a wide spread upbar with little or no volume then clearly this is a trap up move by the market makers. Very simple, really.
Possibly, but with respect, nothing is ever ' clearly' or 'simply' anything in the markets.

Your example doesn't mention the importance of where the Close sits on that up bar. If the Close it toward the low of the bar, then there is a strong possibility of a fake out. And it is little to no relative volume within the context of previous volume.

As you're in the chair, what could a wide spread upbar with Close toward the top of the bar on relatively little to no volume indicate?

I'll provide my answer by PM to anyone who wants to know, but I'd like to make sure Anna gets a crack.


edit: Nice looking site. And your t2w published article has a hint of Uncle Aleph about it...LOL
 
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*JDR*

Active member
183 22
Very lightweight article, not sure if that is what T2W tell you to write..... Felt a bit like reading the Sun compared to reading the Times.

Also, (and no offence intended) you need to do some reading on web site design. I'm sure you have some good information on your site, but it is not going to reach your audience without a better designed presence.
 

TheBramble

Legendary member
8,395 1,170
JDR - I believe Anna's site is designed specifically to appeal to women and more especially, to those who are not currently traders. I thought the aesthetic appeal was there.

As for the article, as I commented above, hints of Uncle Aleph - which I like very much.
 

*JDR*

Active member
183 22
JDR - I believe Anna's site is designed specifically to appeal to women and more especially, to those who are not currently traders. I thought the aesthetic appeal was there.
Each to their own I guess. Dont want to hi-jack this thread with web site design discussions.
 
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tafita

Guest
191 23
A good article for newbies. I like the analogy of Uncle Joe's business to that of market makers.
 

Hoggums

Senior member
2,176 877
JDR - I believe Anna's site is designed specifically to appeal to women and more especially, to those who are not currently traders. I thought the aesthetic appeal was there.

As for the article, as I commented above, hints of Uncle Aleph - which I like very much.
We should definitely welcome more women into trading - studies have shown they are more successful than men on average - mainly because they are more risk averse.

Saying that I could never get my wife into it - she can't even be bothered to move money out of one her old accounts that's earning about 1% interest a year.
 
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timsk

Legendary member
7,059 1,861
Your example doesn't mention the importance of where the Close sits on that up bar. If the Close it toward the low of the bar, then there is a strong possibility of a fake out. And it is little to no relative volume within the context of previous volume.
Hi ani,
I liked the article and the re-vamped site! However, I agree with Tony's comment (and trust me - we don't always agree ;) ). I would add, your example depends upon the liquidity of the stock. Illiquid stocks could easily have a 'genuine' wide range bar and highly liquid stocks are unlikely to have little or no volume.
Tim.
 

bewise

Newbie
3 0
Rumors, manipulation, speculation and rigging are necessary evils in the stock market. Without them, the market will be flat and nobody will be interested to participate.
You are either the hunter or the hunted.
Anna, your parable is interesting. I love it.
Regards.
 

sath1

Junior member
13 5
funny. this woman writes about something she doesn't understand . please do a better research next time you write an article about how the stock market relay works woman !!!
don't make a fool of yourself ...
 

astotes

Newbie
1 0
The article is interesting considering the market effect of demand and supply.I will agree with Anna that news place an important role in the stock markets.
 

pboyles

Legendary member
8,072 1,301
Crap website

links to a terrible website, looks like your typical trading scam, one long page, several gaudy colours, terrible.
 

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