Teach a Dumb-Fool Student of Mkt.

oxusmorouz · #31 19th September 2007, 05:42 PM

Quote:

Originally Posted by uasish

http://www.traderji.com/112869-post1.html

Except hand few of are we really trying ? Still nobody can teach me WHY it gains/losses.
Most of the Boarders here are Smart / Intelligent / Logical still nobody can take an effort to teach me.

We will pm to collect for s/w's giving Buy/Sell ,hanker to gather ALL Tips,as if those are our going to make us Rich overnight,why cant we try to learn ourselves at least 0.001% ,Trust me no S/W ,no Tips can make us Rich,let us plz try,any proffessional qualification needs dedicated Time to learn,then why dont we try this proffession,our laziness & mental blockade is just making "Sly by Night Operators Rich".

I think a logical explanation is possible by splitting durations.
Stock market returns in the long run (L) is a function of return on gilt (G) and a risk premium which the investors demand for undertaking risk (P). Markets in the long run are devoid of excessive noise and tend to move along with expected returns.
Thus, we can express the same mathematically as:
L = G + P

Stock market returns in the short run (S) is a funtion of noise (which includes news trading, raw technical analysis [popularly called momentum trading], accounting manipulations, and any other factor which creates a delusion that active trading is profitable). Let this be called N.
S = Summation of N

Returns in the long run are nothing but summation of short run returns. (L = Summation of S)

Thus,
Average N (or n) = G + P.
Here, Gilt returns are fairly constant over time.
Thus, the premium expected on stock varies directly to the amount of positive noise but since G is always positive, the long run return too is positive, unless the noise is exceptionally negetive over a long period of time. A scattar diagram above and below n indicates market upmoves and downmoves.
Hope this served as a good explanation. It's my own understanding ofcourse.

jdm · #32 20th September 2007, 12:50 PM

Quote:

Originally Posted by SimpleStuff

Hello JDM

I am completely lost

Plz enlighten me, I agree my fundas are dicy. Thanks for your Help.

Best Wishes
Rakesh

the answer lies in your earlier post itself.

Quote:

Originally Posted by SimpleStuff

Current Price = 100, 1 seller willing to Sell at 100, 10 buyers willing to buy at 100. only 1 gets at 100, out of the rest of 9, few willing to buy at 101 so bid at 101, new seller willing to sell at 101, still more buyers, so bid keeps going up. Now seller start expecting more, buyers also compete to get the script.............. u get the picture.

the 9 buyers shift their order say at 100.5 from 100. see price goes up not because of buying, but because of a shift in price in order book due to lack of supply. no actual trade takes place.

but still they find no sellers. so price will continue to rise untill their is adequate supply to meet all the demand.

adilsaleem · #33 20th September 2007, 01:48 PM

Hi JDM
What happens when there are lack of sellers and absolutely no buyers , does the market still go up ?

jdm · #34 20th September 2007, 08:06 PM

Quote:

Originally Posted by adilsaleem

Hi JDM
What happens when there are lack of sellers and absolutely no buyers , does the market still go up ?

well nothing happens. everybody shut their shop and try their luck in another profession

jdm · #35 20th September 2007, 08:17 PM

Quote:

Originally Posted by SimpleStuff

Hello JDM

Well buying did take place at 100, infact all that was offered at 100 was bot up, hence the price HAD TO Shift, so as per my understanding price increased because of buying at 100.

Anyway I give up, for now. Need not agree, but i am sure we both wouldn't want to argue. Will try some other time maybe if we meet in chat.

Meanwhile just hope this lack of understanding dose not effect my trading.

Thanks a lot for your backfill tool.

Happy Trading

Best Wishes
Rakesh

ohh never mind, it took me four years to understand these simple basics. hope you are not that dull as i

thanks for your appreciation for the tool.

cheers,
jdm.

uasish · #36 20th September 2007, 08:35 PM

Ajay,

Presently tied down with some 'Fat Tails' will be able to understand & revert back in couple of days.

Asish

uasish · #37 21st September 2007, 11:14 PM

Long time back in my teens,when like all kolkatans i also read few books on communism.

A famous strategy once narrated by Lenin ( can be found in collection volumes) was

"Two step forward & One step backwards"

This may have some relevance here.

beginner_av · #38 24th September 2007, 02:37 PM

Why are you guys talking about the same things from different perspectives? Buyer = demand and sellers = supply et al.
Why do trades happen? simple. if its a diplomatic table with US and China, and both sides dont budge, no trade happens
Here you see buyer puts 102, seller asks 103. When you see that trades happen at 102.5 etc ots not that there is a shift/comedown/climbdown/match ets but most likely another trader in the sideline who thinks if I dont buy now at 103, it may go and then I'll have to pay 103.5. Another seller thinks the reverse that let me take at 102 or it may go. In between someone comes and offers 102.5 and see what happens. And presto it goes!
You are always on the edge as there are other traders who can always coma and take the trade away.
WHy do you think smart ones have ToS and MarketMaker screens on all the time!

by the way Rakesh, saw your PM that you sent on the 9th. Dont PM as I dont come here now. Check my reply!

uasish · #39 26th September 2007, 04:40 PM

The task in hand ,hopefully will be over by this week end.Probably found out a simple method with reference to the basics of this thread.

uasish · #40 28th September 2007, 10:49 PM

Probably my communication was faulty,becoz i wanted to be taught about the ''Kinesics'' of the movement or in other words the paralanguage of the Chart.
We have mostly diverted to the "Dynamics" or the effects of forces on the motion of Price.

A simple thing :=
With say almost equal No of Black or White candle ,in 1000 bars sample , we find the Price has Gained or Lost Substantially.

How ? Plz teach me.

We tend to Read lots of Books on Trading,in India if one who has read more books or can talk in Lingo,he is Gr8.

In the Ojective type question one can score A +++ ,but a big zero Conceptually.

Hence i have not learnt any thing plz help me understanding the basics.

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