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  #113  
Old Aug 29, 2009 8:21am
FUNDITUS INASNUM
 
Member Since Apr 2007
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When large orders come into the market and there are not enough counterparty orders to fill, price must go to the level where there’s enough to cover. What we do not know is the size (volume) of the market. In other markets there is an old adage that Volume confirms……….. off hour penetrations and breaks, in Forex should be held with some suspicion.

In the case of the H&S pattern, a neckline breech could result in an influx of sell orders as well as the remainder stops of those riding the trend positioned under the last low. If everyone is now short, price will fall until a balance point is found. Your broke r is buying your shorts if they are filled and unable to offset internally…. Think about what he needs to do to square his book if put in this position?

Know that large traders, commercials, banks do not trade using stops as you or I would, stop pools in the market are mainly the speculators. People are also creatures of habit, that’s why you see them place stops at large whole numbers, behind some Fib levels, the last major fractal, opposite side of ranges on breakouts, ect. Which gives some edge to those methods that try to exploit them.

Think like the MMaker, if you wanted to get a better price to fill a large order, how could you engineer a move that would give you a better fill plus the stops of those that were on the wrong side to propel your position? What would that look like on the charts? If you saw that in the markets ( on the chart)what would it tell you?

Great weekend everyone.
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  #470  
Old Sep 5, 2009 6:24pm
FUNDITUS INASNUM
 
Member Since Apr 2007
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Quote:
Originally Posted by capitalist88 View Post
I know this question wasn't directed to me, so I'll butt out if requested, but I want to see if I can add some clarity here. Keep in mind also that I'm kind of thinking this through as I type it...

The fact that price "quickly rebounds" from the demand area doesn't tell us anything about the orders that were waiting there. Here's why. There can only be two types of orders that were waiting down below the market; buy limits and sell stops.

The demand down at that level comes from the buy limit orders. (These may have originated from a bank...
Just my humble thoughts,

The market is always trying to reach a state of equilibrium. matching buyers and sellers. If an overload of orders comes in on either side, price has to move to an area where these can be matched, in doing so it has to cross the all levels in between as those are also used to balance or add to the imbalance.

What would happen if the final balance trips into a level where there's more counter orders than needed to fill the original move? You also need to take into consideration the fact that your b roker's book ( if he is filling you and unable to offset internally) is absorbing all the individual orders coming in as a move is underway, making them very long or short on the counter, they need to off load these without taking a hit.

Something else that needs to be taken into consideration, a MMakers ability to off quote prices, just because they offer a bid/ask at any price doesn't mean that the market has necessarily moved to that price.

The volatility of price's movement (angle or slope) should give you a clue to the amount of energy, size of orderflow (if you want to call it that)

regards
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  #473  
Old Sep 5, 2009 6:54pm
FUNDITUS INASNUM
 
Member Since Apr 2007
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Quote:
Originally Posted by capitalist88 View Post
It depends on whether the "counter orders" are market orders or limit orders....
Just using this as an example, if pair ABC/DEF moves to 1.0000 wouldn't all orders, limit stops & profit, market buy and sells sitting at that price be activated, not necessarily filled as price may have to move to find a match if not able to offset all at that level? Guess it would be better to say filled, as the b roker may be counterparty until it can be off loaded.
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  #476  
Old Sep 5, 2009 7:13pm
FUNDITUS INASNUM
 
Member Since Apr 2007
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Quote:
Originally Posted by LasVahGoose View Post
How does a broker offload the position? If Br_ker A is net short, does he look for a another Br_ker that is net long and they swap positions at set price?
B roker A deals through their liquidity providers, banks. Most small traders are left to their own demise, as they know most will lose, they take the counter to the traders position and let them hang themselves. They try to offset internally, but will bundle and off set with the bank, risk can be hedged, the risk is the biggest concern, it's a juggleing act.
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  #510  
Old Sep 6, 2009 4:37pm
FUNDITUS INASNUM
 
Member Since Apr 2007
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Quote:
Originally Posted by jpat1023 View Post
...that's why every 'indicator' ever get's you into the market after the smart money is already in...I'm not sure if this is just coincidence, but its almost as if they were designed that way, then disseminated to the public.
Indicators by their nature are lagging, mathematical averages and equations of historical data, some are quicker than others about telling you what just happened. If you understand the math behind an individual indicator you can train your eyes to see in the bare charts what an indicator shows, some folks it's just easier to see the histogram or cross.

All the above can show you is what has happened.

The market knows what the herd is looking at, and knows how to trigger them.

Price moves from consolidation to accumulation to consolidation to distribution. Understanding the price behavior during these phases will give you the necessary clues. As we cannot see the order books, we are left with following the markets lead as it shows it's hand. It's at these times/areas/levels where we can enter with minimal downside risk.

It boils down to the individual trader and discipline.

An adequate bankroll helps.

fwiw.
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