Formalising common approaches to trading - page 2
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yes, the interconnection of markets is an interesting topic and a very influential part of the market trading different variants of spread trading. Much of the volume is generated by them
It is interesting to ponder what underlies the links between markets and instruments. Probably in the beginning it was a connection through a single production or financial cycle, but now it is mostly in the minds of investors rather than rationally focusing on any fundamentals. There is an orientation to them, but through the prism of stereotypes existing in the market now. That is, it is based on methods of calculating the over/undervaluation of an asset based on comparison with the prices of other assets, or some combination of assets. Investors look for undervalued assets compared to peers (as they see it). Speculators pick up on these trends and try to enter and exit before investors, reducing their potential profit or even increasing their loss. Thus they reinforce the connection.
Another question is whether and how to try to profit from investors or even from mistakes of speculators-spreaders. Or how to "clear" prices from spread traders' trades. There's a lot to discuss.))
Institutional investment and speculation are based on "free money". The purpose of free money is to generate a return greater than the % of the deposit. Some free money goes to work in the real sector.
The other is in the stock market. When money finds a "hot spot", either in the real sector or in the stock market, it rushes to it and saturates it to the extent that it is ready to saturate until, as a result, this place is as hot as the market average. If for example an industry turns out to be a cool place, then money boldly looks at the example of the first one and rushes to fill all the industry. In general, arbitrage is one of the cornerstones of investment, speculation and life in general.)
Institutional investment and speculation are based on "free money". The purpose of free money is to generate a return greater than the % of the deposit. Some free money goes to work in the real sector.
Avals:
...
In general, there are 4 forces: liquidity to sell, liquidity to buy, market buyers, market sellers. You can abbreviate: LS, LB, MB, MS....
But what about the phantom (fake) applications that have been abounding in the glass lately? They will very much distort the real picture of the balance of power and as a result the whole theory may be doomed to failure ((.
The theoretical base is well explained:
But what about the phantom (fake) applications that have been abounding in the glass lately? They greatly distort the real picture of the power balance and as a result the whole theory may be doomed to failure (((.
yes, there are fake bids, there are the opposite - dark pools of liquidity. Described these forces not to directly start counting them from the cup for example. It's just a basis for market movements in principle - the confrontation of liquidity and market activity. On this basis we can systematise and explain the existence of certain effects on the market. For example, for example, the market opened with a gap up or there was a sharp movement. It means that
1. There was a sudden fill of buy orders in the market (opening of longs or closing of shorts). This is for a sharp move. Gap on the opening is formed differently
2. the sell liquidity on some price range has been absorbed
3. the liquidity to buy is the pending buy-limit orders. The wide audience needs time to place them (as well as the stop ones, though). And it turns out that inside a gap or a sharp movement, the buy-limit orders often do not have enough time to be placed (there is not enough time). Due to this there are such trends as a return to the momentum start or a gap closing. To put it simply, we need liquidity and time to form a support
I.e. it's to think about the basics - the organisation of trading, what comes out of it.
Of course, things are more complicated now. Software trading, various arbitrage machines, means of hiding intentions are also developed. But the basis of these methods is also in the organisation of trading. For example, the problem of a large trader is to ensure his entry/exit with minimal losses on slippage, eliminating speculators trying to run in front of them. It's all the same clear basics - you need others to give them enough liquidity. There are a number of common algorithms for this (at least for stock markets) like Volume Weighted Average Price or Time Weighted Average Price.
The market microstructure is based on these elementary 4 interacting forces. Knowing the problems that are faced by quite influential participants, their source and methods of solution - you can try to use it.
And in principle, you can figure out what, for example, influences the formation of support/resistance levels. Although here the specifics of the market will be imposed, but there is a common basis for all markets.
4 . Ran away (deleted) limiters on sale and moved to higher shelves )
agree, it's already a crowd reaction.
Here you can look at the historical interaction of these forces http://fxtrade.oanda.com/lang/ru/analysis/historical-open-orders
P.S. purely as an example for those who have not seen it, as I do not believe the aonde data is representative of the entire FX market (it is more of a noise trader data)
Yes, it's already a crowd reaction.
In fact, we should revive the thread somehow. Maybe say something about the intrigues of DTs, martin, aliens. But not all at once. Not me.)
We have to enliven this forum. We may blurt out something about intrigues of dealers, martin, aliens. But not all at once. Not me).
On this forum, most people look at the market through the prism of DCs and a lot of things are out of sight. Therefore it seems incomprehensible and unimportant.
But maybe a few more people will join in :)