Does PAST price action determines future price action?

[narafa]

Originally Posted by tommyfx

"Another fact, is that nobody will place a 1 billion buy order as a single block, he will probably break it down to small moderate pieces of say 200 millions an order. When you want to enter the market that large, you want to be as anonymous as possible, all professional traders do this, because if you picked up the phone and called your broker or bank to place a 1 billion order, the next 5 minutes after your order have been executed, half of the worlds' traders will know about it and know who is having this position now. In a sense for professional traders, you are losing an edge, because you are giving the market and the traders out there more information. Professional traders don't like this, because it can turn against them. For example, Warren Buffet banged the world by saying that he is bearish on the USD and Bullish on the GBP early this year. Other Pros who don't share him the same opinion, will try to spot when is he going to probably enter his positions, and they will consider these entries as huge pullbacks, in which they will be selling the GBP at and buying the USD at."
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I have traded at a "professional firm" i have traded alongside some of the best traders in the market that take money from the market at a level most of us only dream of and i can assure you they dont have any fancy indicators, holy grail systems or inside knowledge, they follow price action and trends. They also pay attention to order flow, institutions and banks protect certain levels being triggered for reasons. Take the following example: A bank that wrote an option that will be triggered if the price drops below 1.2000, its in the banks interest to not let this happen because they will have to pay out to all the customers that took the option to buy at this lower price, their potential exposure could be billlions. SO the bank will try to prevent this option being triggered or expiring below this price (depending on the type of option). The banks will protect levels below 1.2000 buy buying the market above 1.2000, therefore creating demand, therefore creating a support level which we can all profit from by being the right side of the market, just look at last weeks price action on eurodollar if you dont understand. I'll see if i can find you a report that shows this happens and what traders look at

I totally agree that big players do nothing with all these indicators, they use only price action, volume and from these 2 main factors they identify trends and the market conditions in general.

What I am saying is that the tip you just said that certain banks wrote options against themselves and sold them to clients which will be triggered below 1.2000 is a precious insider info. If I know this, I am sure that extreme support is always there for me and my positions at that level, I would like to be long the EUR/USD everytime it reaches this level. This is insider information which many people can't have access to. A big player who knows this tip can greatly make use of it and create himself an edge against everyone or at least against this bank, he is sure the bank will be on his side, he is increasing his odds, and thus he has got a very high probability of profiting along side with the bank.

The fact is that we already knew the tip by the end of the quarter, so all the money have been already taken off the table, and there is nothing left.

Thanks,

Nader

[tommyfx]

HI,


Regardless of if the information is insider or not, i am demonstrating a point that it is buying pressure that makes prices rise and selling pressure which makes prices fall which is a concept some people in this discussion dont seem to grasp and they feel all prices are artificially presented by banks to suit their own purpose, that is total nonsense, even central banks and billion dollar financial institutions place their orders and take their chance like the rest of us and it is these orders creating supply and demand that move prices, it really is school boy economics for some reason people want to make life harder on themselfs, just trade what you see and you wont go far wrong.

I admit occasionaly market makers run stops which is moving prices with artificial movement, however this is usually rip off scum brokers that move "their" prices, if you look at the interbank market (which i suggest all serious traders trade through) the prices havent moved at all and that is where the "real" market is. But when prices are moved artificially it is only to trigger stops and orders which gets us back to the supply and demand aspect of the market.

Tom

[TraderABC]

Originally Posted by tommyfx

HI,

Regardless of if the information is insider or not, i am demonstrating a point that it is buying pressure that makes prices rise and selling pressure which makes prices fall which is a concept some people in this discussion dont seem to grasp and they feel all prices are artificially presented by banks to suit their own purpose,

When the banks (and or brokers) know where all of our orders are, it makes sense to use that information for their own purposes. So in a sense selling/buying pressure works, just in reverse. Take euro rates for example.
The currency was artificially moved up and down at which points the banks made huge profits (since they know the approximate time when to start to move currency the other way).

that is total nonsense, even central banks and billion dollar financial institutions place their orders

Because they obviously know what to do.

and take their chance like the rest of us

No, no, no. Unlike us they KNOW where and what orders are placed. They may use their connections within the financial infrastructure the way we cannot.

and it is these orders creating supply and demand that move prices, it really is
school boy economics

School boy economics??? HA! Then why do economics professors make poor traders??? Trading proffesion is NOT connected with MacroEconomics to a large degree.... It is almost like comparing a Doctor and a Pharmacist, same field (Health) yet they are different.

There was a study done on GDP and the stock market, and guess what, it didn't effect the stocks.

for some reason people want to make life harder on themselfs, just trade what you see and you wont go far wrong.

I agree about simplicity being the key. I agree about being the master of the obvious. I agree that super duper math indicators may not work.... But there needs to be a specific plan to trade... Not like some guy Dr. Elder has mentioned who traded from his gut and lost 1/4 million in the stock market.

I admit occasionaly market makers run stops which is moving prices with artificial movement, however this is usually rip off scum brokers that move "their" prices, if you look at the interbank market (which i suggest all serious traders trade through) the prices havent moved at all and that is where the "real" market is. But when prices are moved artificially it is only to trigger stops and orders which gets us back to the supply and demand aspect of the market.

Tom

Question: How do you know that interbank quotes are not tightly controlled rates designed to satisfy macro-economic needs of countries, banks, etc?

THE FX is not a stock market. If some XYZ stock crashes, then so be it. If USD crashes than what will happen to the world? It will go to hell in a handbasket.... Your average Joe/Jane order never leave your broker!!! Very few people can use Million Dollar plus orders. Plus all of those millions will not amount to much against interbank machines!!!

[Nonpiker]

thanks for the kind words bobnat. My apologize to traderabc and nader. I was in a foul mood when i posted. However, corporations do not consider interest rate differentials when considering acquisitions. It does not make sense from a strategic stand point. I can not defend that point anymore then that. In addition, by buying a Japanese corporation you are not just investing in the japanese economy. The last time I took a look Japan was a large exporting nation no? And where do they export to?



I am not arguing with you nadar regarding interest rate differentials but from and m&a perspective your logic is flawed.

tommyfx is dead on here and you all are entitled to your opinion but it is just not the case from an insiders perspective.

TraderABC do you think every bank trader makes money because they know what they have one their books? While the info is helpful it is by no means a way to print money.

Also, stocks in what sector do no typically appreciate in expanding economy's? TraderABC I am not trying to be a jerk but where are you getting your information from?

[narafa]

Originally Posted by tommyfx

HI,


Regardless of if the information is insider or not, i am demonstrating a point that it is buying pressure that makes prices rise and selling pressure which makes prices fall which is a concept some people in this discussion dont seem to grasp and they feel all prices are artificially presented by banks to suit their own purpose, that is total nonsense, even central banks and billion dollar financial institutions place their orders and take their chance like the rest of us and it is these orders creating supply and demand that move prices, it really is school boy economics for some reason people want to make life harder on themselfs, just trade what you see and you wont go far wrong.

I admit occasionaly market makers run stops which is moving prices with artificial movement, however this is usually rip off scum brokers that move "their" prices, if you look at the interbank market (which i suggest all serious traders trade through) the prices havent moved at all and that is where the "real" market is. But when prices are moved artificially it is only to trigger stops and orders which gets us back to the supply and demand aspect of the market.

Tom

Well, I always believed that prices only move due to Supply and Demand and that's it, just no other forces. We share the same opinion but from different prespectives I am totally with you.

Thanks,

Nader

[narafa]

Originally Posted by TraderABC

There was a study done on GDP and the stock market, and guess what, it didn't effect the stocks.

Can you please give more information about this study?? I understand that the stock market is a leading indicator of the overall economy, because more than 70% of stock investors actually buy the future and are not interested in the history of the companies. The GDP however is a historic measure, and it is revised, so it only tells the investors if they were correct in judging the prices of stocks correctly 6 months ago or not. The GDP estimates for the future are non-sense, nobody take this into consideration unless there is a huge increase or decrease in the estimated GDP figures.

So as you can see, the GDP should not actually affect the stocks. People only take the numbers when they are released inline with expectations to assure that they are to somehow correct about their future view.

Thanks,

Nader

[narafa]

Originally Posted by Nonpiker

thanks for the kind words bobnat. My apologize to traderabc and nader. I was in a foul mood when i posted. However, corporations do not consider interest rate differentials when considering acquisitions. It does not make sense from a strategic stand point. I can not defend that point anymore then that. In addition, by buying a Japanese corporation you are not just investing in the japanese economy. The last time I took a look Japan was a large exporting nation no? And where do they export to?

That's ok my friend and thanks for your apology. You should have been over-stressed. Anyway, I hope that your mood is fine now to be able to trade calmly

Originally Posted by Nonpiker

I am not arguing with you nadar regarding interest rate differentials but from and m&a perspective your logic is flawed.

I agree with you that there are lots of reasons behind a M&A deal other than the value of the currencies or the interest rates differential. This is a strategic decision and should be approached with great care and might take months to study before actually applying it and going for.

What I meant is that usually when interest rates favor the USD, American corporations would be more sketical in investing money in the Japanese economy unless they have other strong strategic objectives to make them go for it.

Anyway, let's close the point at this point. I can understand your point and agree with it, but I am convinced that a company making a M&A deal in Japan would only affect the USD/JPY currency rate for a very short time, thus we can't judge the trend through such transactions only.

Thanks,

Nader

[TraderABC]

Originally Posted by narafa

Can you please give more information about this study?? I understand that the stock market is a leading indicator of the overall economy, because more than 70% of stock investors actually buy the future and are not interested in the history of the companies. The GDP however is a historic measure, and it is revised, so it only tells the investors if they were correct in judging the prices of stocks correctly 6 months ago or not. The GDP estimates for the future are non-sense, nobody take this into consideration unless there is a huge increase or decrease in the estimated GDP figures.

So as you can see, the GDP should not actually affect the stocks. People only take the numbers when they are released inline with expectations to assure that they are to somehow correct about their future view.

Thanks,

Nader

when I'll find it in english (or similiar studies), i'll post it.