Food for Thought

Niranjanam

Niranjanam

Well-Known Member
#21
#21
Pradeep

Your example is not applicable in Markets, I am afraid.
Markets is a much more complex duel auction process where multiple buyers and sellers compete each other to buy and sell. And this process is very efficient in price discovery unless circute breakers are applied.Further the effect of Market and SL-M orders makes all the normal assumptions invalid
 
V

Vertigo_1985

Well-Known Member
#22
#22
Niranjanam said:
Pradeep
Price stop moving down due to two reasons
1.Buyers overwhelm sellers. That is Buyers dominate
2.Sellers get exhausted. A selling climax.
In this situation, there will be a lot of sell orders. BO orders+Stop triggering. So it is not because of the absence of sellers but because of buying below the level. But who is buying below a support and selling above resistance?
People buy at support and sell at resistance. But I have not so far come across a method or system that recommends buying just below support and selling just above resistance.
Click to expand...
How about the nifty constituents affecting its move ? we may have a situation where the constituents drive nifty to the point where short stops are triggered in NF(8440 then 8450).

2 times strong buying came from 8425 level so someone big was definitely interested and we cannot know the reason for their buying, maybe they were squaring their shorts, maybe building new longs and nearby resistance didnt matter to them, who knows the reason but like we may be proven wrong they were also proven wrong as price fell later.

Now some breakout traders also enter above 8450, some shorts will be looking for failed break, some booking profit, for some resistance may be till 8460 (plod) or even higher and for them they are selling near resistance.
So the break fails to find support from new buyers attracting more sellers, the shorts who were made to exit will look to short again after seeing failure.
 
Pradeep Narayan

Pradeep Narayan

Well-Known Member
#23
#23
Rajesh & Vertigo

You are correct in your interpretations. But you need to differentiate between why & how, between the strategic thinking & tactical thinking. My thoughts were on 'Why' and you are explaining the 'How' part.

It now depends on the reader who needs the answer - the answer to the 'How' or 'Why'.

Cheers!
 
J

jagankris

Well-Known Member
#24
#24
Who sold it there above open price - where Technically resistance is assumed to be converted in to support and why ?

There could be many TA reasons which can be attributed but unless and untill we have the exchange trade data - else all are just subjective assumptions.

Trend Down.
PDL - 8462.A major resistance.
So technically markets will turn bullish above this price level.
So bears didn't wanted the price to go above that level.
(People who believe in bull/bear theory).

Is it a crucial decision point/resistance where shorts from other Higher time (15m,30M,hourly etc) frame traders - No.

Is it a high volume reversal candle - no.The volume was less.

Is it a bull trap - all short - stop loss placed above open price which was till that point HOD.And fresh long orders placed assumption of reversal were absorbed.

And who sold there - Market Makers + others who were long from the BRN - 8400 - long liquidation and fresh shorts due to technical reasons like Intermediate RN.(8450 - levels),some other Moving average resistances 200EMA in 1Minute or 55EMA in 3 minutes or Oversold in stochastics..
 
Niranjanam

Niranjanam

Well-Known Member
#25
#25
Pradeep Narayan said:
Rajesh & Vertigo

You are correct in your interpretations. But you need to differentiate between why & how, between the strategic thinking & tactical thinking. My thoughts were on 'Why' and you are explaining the 'How' part.

It now depends on the reader who needs the answer - the answer to the 'How' or 'Why'.

Cheers!
Click to expand...
OK. Here is my take on the Why part.I have read tons of materials on trading. So far I have not seen any authors, bloggers or traders recommending to buy at the circled area.Then who bought here ?

The answer is Big Money not Smart Money.Big Money is not always Smart Money. On many occasions Big Money will end up as Dumb Money. There are specific reasons for BM to place their orders here.

BM trade big and they can be institutions, big funds or High net worth traders.Generally they are higher time frame traders and do not bother about ten or fifteen point moves like retail traders.They never chase price . They will place their limit orders and let the market come to them and fill their orders quietly at the right price.

Now think about the above situation. Everybody knows a lot of sell orders exists below the previous support. There exists a "Liquidity Pool" .Where else can BM hide their buy orders ? Most of the retailers will end up providing liquidity to BM.

If we are able to identify these " Liquidity Pools" we can avoid many false breakouts and premature stop outs.Slight changes we make in Entry technicks and stop placement will make marked improvements in overall profitability
 
J

jagankris

Well-Known Member
#26
#26
Niranjanam said:
OK. Here is my take on the Why part.I have read tons of materials on trading. So far I have not seen any authors, bloggers or traders recommending to buy at the circled area.Then who bought here ?

The answer is Big Money not Smart Money.Big Money is not always Smart Money. On many occasions Big Money will end up as Dumb Money. There are specific reasons for BM to place their orders here.

BM trade big and they can be institutions, big funds or High net worth traders.Generally they are higher time frame traders and do not bother about ten or fifteen point moves like retail traders.They never chase price . They will place their limit orders and let the market come to them and fill their orders quietly at the right price.

Now think about the above situation. Everybody knows a lot of sell orders exists below the previous support. There exists a "Liquidity Pool" .Where else can BM hide their buy orders ? Most of the retailers will end up providing liquidity to BM.

If we are able to identify these " Liquidity Pools" we can avoid many false breakouts and premature stop outs.Slight changes we make in Entry technicks and stop placement will make marked improvements in overall profitability
Click to expand...
Just my views.

We cannot for sure say it is only big money that purchased there.Why not dumb money ?

Liquidity pools - Higher Time Frame Pivots/HOD/LOD/PDL/PDH/PDC/Opening Range/Trend line supports/Weekly Monthly/supports --- depends on that day and volume.

We can have assumptions but cannot identify prior in advance of the liquidity pools and which side the big orders are waiting for.
 
Pradeep Narayan

Pradeep Narayan

Well-Known Member
#27
#27
Rajesh

No trader will explain this elsewhere as it holds one of the keys to successful chart interpretation. You are correct about the Big Money and Smart Money - I would say that the Big Money is the Smart Money & we retailers are the liquidity pool.

If you look at any candle that has a long wick to a narrow body; you would notice that price moved from the start - went till the wick's extreme and closed near the start/open. In other words, "Selling" stopped at the wick's extreme. The 'Big Money' was selling from the beginning of the candle and stopped at a place where further sale would indicate a trend continuation.

At a resistance zone, the Big Money can flood sale orders at x% above the perceived resistance... this will cause all SL to get hit. Then the Big Money sale orders stop or continue at a lower price band. Likewise at a support level.

Hope this helps clarify my thought process.
 
Niranjanam

Niranjanam

Well-Known Member
#28
#28
jagankris said:
Just my views.

We cannot for sure say it is only big money that purchased there.Why not dumb money ?

Liquidity pools - Higher Time Frame Pivots/HOD/LOD/PDL/PDH/PDC/Opening Range/Trend line supports/Weekly Monthly/supports --- depends on that day and volume.

We can have assumptions but cannot identify prior in advance of the liquidity pools and which side the big orders are waiting for.
Click to expand...
Trading is almost always acting on assumptions and anticipations. That is why it is a probability game. Otherwise you are looking for certainty which does not exist in markets.
Why people buy at support. They assume and anticipate buy orders there. If not their trade fails that is all. How do we know the trend will continue? Our observations and reading favors such an assumption. So we anticipate a continuation and try to ride it.
Always there will be conflicting signals. Success of a trader depends on his ability to read and act on different signals contextually.
 
Niranjanam

Niranjanam

Well-Known Member
#29
#29
Just now accidentally found some statistics. I just cant believe this. Anything wrong with TJ ?

This thread has 6277556 views much more than popular threads like Zerodha and General trading chat. If this is true I am really disappointed with the response of just a dozen replies for a thought provoking question in a forum with two lakh registered members


No 1 in Technical analysis section. Ha ha ...
 
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wisp

wisp

Well-Known Member
#30
#30
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