What exactly is a markup/markdown?

bunny

Well-Known Member
#1
Hi guys,
I have just completed reading "Master The Markets" by Tom Williams which teach Volume Spread Analysis. In that concept, he frequently uses terms like "markup" and "markdown". I know that markup means prices is increased, and markdown means price decreases.

But what exactly is the psychology behind this? How does the professional operator (a.k.a. Smart Money ) exactly go about it?

Thanks,
-Bunny.
 
#2
Markingup: After accumulation smart money owns a high percentage of shares then they markup the price. They start selling at higher prices. There are no / very few sellers of the same. Since they own the majority of the shares they can sell at higher prices. Demand < Supply.

Markdown: After they are done with the this stage, they start short selling the same shares, with heavy volumes. This causes panic and the prices come down. Which is the markdown stage.

Check out the Volume spread analysis thread in Advance trading strategies section for more details.