Formalising common approaches to trading - page 15
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You mean manipulating news, reports, rumors, publications?
No, just trading techniques.
// A long time ago, in the seventies, when the USSR was buying grain on the exchange, there was a funny situation. The volumes of grain were very large, and instead of making small purchases during the year, the USSR, obeying the bureaucracy of the state plan, poured out money every year in the same period,
The USSR, obeying the bureaucracy of the Gosplan, was piling into the exchange like a hungry elephant every year at the same time. Well first of all it was expected and the prices even before the purchases included the anticipation of the USSR's needs
and crawled upwards. Secondly, the volumes themselves moved the price even further. The same volume could have been technically purchased within a year at a lower price.
No, just trading methods.
// A long time ago, in the seventies, when the USSR was buying grain on the exchange, there was a funny situation. The volume of purchases was very large, and instead of making small purchases during the year, the USSR, obeying the bureaucracy of the State Planning Committee, poured out money every year in the same period,
The USSR, obeying the bureaucracy of the Gosplan, was piling into the exchange like a hungry elephant every year at the same time. Well first of all it was expected and the prices even before the purchases included the anticipation of the USSR's needs
and crawled upwards. Secondly, the volumes themselves drove the price even higher. The same volume could have been technically purchased within a year at a lower price.
i.e. is the division by manipulation purpose - to hide one's interest by getting a good entry/exit price or to lead others into losses? Roughly speaking, to protect one's own or to take away another's.
I.e. the division on the purpose of manipulation - to hide one's interest by getting a good entry/exit price or to lead others into losses? Roughly speaking - protect what's yours or take away what's not.
1) knowingly working with volumes, which do not affect the market
2 Working with volumes that might affect the market
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I would leave it as it is.
The next large section of trading can be accumulation/distribution strategies. Their essence is that a certain part of market participants may tend to accumulate a large aggregate position long or short, and then begin to close their positions en masse creating an opposite movement. Again, we are only talking about a part of market participants - the market is neutral and the volume of open longs equals the volume of open shorts, if someone bought then someone sold them exactly.
To these methods can be referred Elliottians, who essentially consider the dynamics of accumulation/distribution for traders of different investment horizons.
Sentiment methods, which try to play on deflating speculative bubbles.
Various methods of analyzing the aggregate position of traders united on some basis: for example, based on CFTC reports on positions of large speculators/hedgers/all others.
What they have in common is the oscillator, which is essentially the relative (and sometimes absolute) value of the cumulative position of the considered group. It is not always calculated from the price data. Sometimes data from other markets is used (options for example), various indicators from special agencies, etc.
Slava, define what you were going to study and analyse. This equality is only true for last. I think you started with the forces in the cup and the forces ready to cover the volumes in the cup.
Naturally, for any given period, you have sold exactly as much as you have bought, who would doubt it.
This is what he started with:
There are generally 4 forces: liquidity to sell, liquidity to buy, market buyers, market sellers.
You can abbreviate: LS, LB, MB, MS. You can think of them as functions of price and time, and the output is volume to buy or sell: LS(P,t)=V, etc.
He himself identified forces with volumes. I, on the other hand, asked him to explain how such a "p-n-p transition" works, what is the point of calling supply and demand differently and what is the difference for the market between MB and MS
By considering MB >> LS type inequalities, the author implicitly implies that the models are known to MB and hence fixes the fact of their execution. There is no MB in the stack, so market entry wishes can and should be accounted for by the fact of execution, not by the fact of conception. If any market order has not been executed, it has no effect on the market until it is executed at the relevant dp and dt. I understand what you are saying and what others are pointing out to me. On the desire to execute on the market at some point. Or to market orders that didn't fully execute the first time around. I stand for the fact that the unexecuted part should not enter the model until it executes, otherwise phantom accounting will result in you accounting for the wish first (MV wish) and then the execution (MV execute). This is no longer 4 forces, but more and moreover they are forces of different nature in relation to the market.
@Avals: as you can see, even those who seem to understand what you want to say do not fully understand you. I doubt anyone understands your transition from the 4 forces to the division of trading approaches. I'd like a more rigorous formalisation. What I see so far is that you have broken down supply and demand into market and limit order volumes, called them differently - the 4 forces, and cited commonly known opinions on trading approaches (TA, FA, speculation, investment, arbitrage). It looks like unrelated parts.
Bottom line: break down supply and demand in the market in terms of limit and market+stop order volumes. We have MS, MB, LS and LB. The ratio of these volumes allows us to predict the market movement. Suppose. There are different approaches to trading in the market. It is common knowledge. I would add: this whole approach with MS, MB, LS and LB is only applicable after the fact, on history, when MB and MS have become known. Usefulness?
I will say right away that I don't have a strict formalisation of this mathematically, nor do I need to. It is just for convenience. Certain ratios of these forces lead to certain events that are reflected on the chart. If, for example, liquidity is low at some point in the traded range compared to the market side, there will be high volatility, and the price increment The bottom line will depend on the ratio of buy and sell market orders.
They won't, imho, at least one serious topic in the last six months, who needs stats, I'll pour into the avalanche thread for the imagination.
as for the subtext: great! but I would remove FA from the way of earning, because it's not even the work of investment companies and others, but of government institutions (probably political games, i think seasonal trends, globalization and the global economy in general) - i think economists and politicians make money, while market participants use FA for news and insider information
And one more thing: I don't even know how to formulate it, but for trading there are only two physical quantities: price and time, so how to connect these two parameters in a common approach?
I think that last idea is only partly relevant to Forex. I think that volume is not less important in formalizing the approach.
Let me explain why: by and large, a trader trades with information. Trader types differ in types of information and their horizons (degree of influence of information as a function of time), which he takes into account. Trader's size (volume and horizon of trades), quantity and type of information he uses, determines optimal organizational structure of the Trader (hedge-fund, bank, private trader, etc.).
Modern Forex traders use deliberately scarce information, because there is no way to determine objectively the opinions of traders of different types at a given period of time. Partially, such information is provided by the volume of trades, more precisely by Time & Sales - a tape of current and past transactions, which contains information about the prices, where the transactions were made, their volume, time and market makers (ECNs), through which these deals were made. The popularity of forex is due to its accessibility (liquidity, hence leverage) but not to the quantity or quality of information that can be traded.
@Avals: as you can see, even those who seem to understand what you want to narrate don't fully understand you. I doubt anyone understands your move from the 4 forces to a division of trading approaches. I'd like a more rigorous formalisation. What I see so far is that you have broken down supply and demand into market and limit order volumes, called them differently - the 4 forces, and cited commonly known opinions on trading approaches (TA, FA, speculation, investment, arbitrage). It looks like unrelated parts.
Bottom line: break down supply and demand in the market in terms of limit and market+stop order volumes. We have MS, MB, LS and LB. The ratio of these volumes allows us to predict the market movement. Suppose. There are different approaches to trading in the market. It is common knowledge. I would add: this whole approach with MS, MB, LS and LB is only applicable after the fact, on history, when MB and MS have become known. Usefulness?
The point is not in their evaluation. The point is that it is a description of the infrastructure that underpins pricing. Almost every method, its challenges and problems can be described in terms of these forces. Whether it is the manipulation described above or the issue of formation of support and resistance levels, it is easy to describe in terms of these 4 forces. In general, this is a basis that is necessary especially for those who do not fully understand or are unfamiliar with these concepts. I am not suggesting to use them directly to design a trading system, but it helps to understand what to expect and where to look for entry/exit levels/measures. Of course, within the framework of a particular trading method.
Is it possible to make money directly from arithmetic? :) Probably only if you're a teacher and a bit. But you still need to know arithmetic - it's the basis. So it is with liquidity and market
I think that last point is only partly relevant to forex. I believe that volume is no less important in formalising the approach.
I am well aware that volumes move the price, but, imho, the liquidity of the markets today is enormous and volumes can only be seen on history. Maybe, equity or commodity markets provide less liquidity and you can calculate the volume that will move the price, but in the "paper markets" only a few bidders can have information not only about future volumes, but also about the current ones.
although volume and time and price and ... even "devils in striped swimming costumes", my purpose of the discussion is to learn to identify price movements in manipulation, and supply/demand
there are omissions in the "all transactions" table. This can be seen by the transaction numbers: 35508966, then 35508979 and so on. I don't know what kind of broker and software, but it looks like they are not all market deals