How to trade and/or invest profitably --- without the Bullsh*t

[tech/a]

Hmm I seem to have deleted a database so will miss this week while I clean up my mess.

 

[Telamelo]

So If Holders of anything decide to keep their supply and not release it
to others then Buyers will offer more in the hope of purchase.

It's basically the market dynamics/market depth of buy vs sell ratio.. when seller's dissipate then the buyer's gain control (bullish meaning the bulls are in control so to speak) in paying up more for a given stock as demand increases and vice-versa.

 

[qldfrog]

Good luck for the data restore.can be a pain..

 

[tech/a]

It's basically the market dynamics/market depth of buy vs sell ratio.. when seller's dissipate then the buyer's gain control (bullish meaning the bulls are in control so to speak) in paying up more for a given stock as demand increases and vice-versa.

This is standard thinking —- not my own.

I personally choose to look only at supply.
Demand can be massive but if supply is overwhelming then you won’t see it in
price increases.
I personally don’t believe bulls control anything.
Supply however again I personally believe controls everything
if it withdraws then price rises
if it appears then it can turn a 100% increase back to where it started
in a session.

Look at gluts of ANYTHING —- Supply
plenty off supply overwhelming demand sometimes crushing any value.
shortages are exactly the opposite. Can’t get it then demand must pay more for the limited
availability.

I again personally find it easier to trade around supply.
I’ve seen massive demand crushed in 24 hrs by the emergence of supply at a price.

The constant fluctuations of supply develop visually on a chart. Leaving patterns and clues
that we can anticipate future price action. We can see opportunities develop and disappear in front
of us.
Extremes ( of various magnitudes ) move markets. Again they can often be seen clearly on a chart before
they are seen or heard of by the masses.

Back again when I get some charts.

 

[qldfrog]

This is standard thinking —- not my own.

I personally choose to look only at supply.
Demand can be massive but if supply is overwhelming then you won’t see it in
price increases.
I personally don’t believe bulls control anything.
Supply however again I personally believe controls everything
if it withdraws then price rises
if it appears then it can turn a 100% increase back to where it started
in a session.

Look at gluts of ANYTHING —- Supply
plenty off supply overwhelming demand sometimes crushing any value.
shortages are exactly the opposite. Can’t get it then demand must pay more for the limited
availability.

I again personally find it easier to trade around supply.
I’ve seen massive demand crushed in 24 hrs by the emergence of supply at a price.

The constant fluctuations of supply develop visually on a chart. Leaving patterns and clues
that we can anticipate future price action. We can see opportunities develop and disappear in front
of us.
Extremes ( of various magnitudes ) move markets. Again they can often be seen clearly on a chart before
they are seen or heard of by the masses.

Back again when I get some charts.

I understand that, but how do you get supply?
Volume is in a way representative but you could have millions of shares on offer, yet none exchanged and volume at 0
During the day, on bell direct, we can see figures of offers: nb of buy at different prices and sell at different prices, but nothing useable for system trading after the close.
Si my question is : do you use volume as a twisted shortcut to supply?

 

[tech/a]

Volume to me at least indicates the exchange of supply into demand.
If there is no movement yet buyers on one side and sellers on the other
and neither wish to meet in the middle then you won’t have anything that
indicates any opportunity.
That of course changes with new participants emerging or impatience taking
hold.
It’s when extremes appear Eg no one wants to sell Or everyone wants to sell
that opportunities arise.

***So in some cases NO or Very little volume can be a very powerful indicator.
Its about context .
No volume CAN be an extreme in a certain chart pattern ***

 

[jbocker]

The constant fluctuations of supply develop visually on a chart. Leaving patterns and clues

Hi Tech. A question from the Dept of Dumb. I am trying to think where I can see supply. Questions are on the graphic. I appreciate that many factors together would be needed to determine supply but I am thinking momentum may be of use. Apologies if I am off the mark I am not a trader.

 

[tech/a]

Fantastic thanks for the charts
a great question which I will explain
with your own chart example.

However I’m off to lunch so will do later.

it’s all there —- the answers —- my take on the answers!
my aim is to make it as clear to everyone who is interested.

ponder this when looking at any chart

let’s say 150000 people own a Ford car
let’s say for any number of reasons the average price of a Ford
increases 35%
lots of those people will sell their fords and you’ll see lots of fords
come on the market
at sometime all those who think 35% is a good increase will hold
their fords along with the new buyers.
supply will dry up and if most of the buyers of fords have bought
then those left who wish to sell may accept less.

let’s say all of a sudden Holden’s become potentially more valuable
than Fords. Supply mat we’ll return with a vengeance as new holders and old exit at
lower prices to liquidate into cash to buy Holden’s!

both will be seen on a chart
supply during buying and supply during selling —-

 

[ducati916]

Hi Tech. A question from the Dept of Dumb. I am trying to think where I can see supply. Questions are on the graphic. I appreciate that many factors together would be needed to determine supply but I am thinking momentum may be of use. Apologies if I am off the mark I am not a trader.
View attachment 120042

The answer is: units are more important. Think of it as total buying dollars as opposed to total selling dollars.

The problem is that market depth is variable. In the US you can have hidden orders, partial orders showing, partial hidden etc. You could potentially have on that chart, a holder of 1M shares, wanting to sell, but not wanting to tip his hand, and not displaying any shares at all, but he may hit the bid of the 150K and exit 15% of his position, holding back the rest.

Now 'VOLUME' is something totally different.

Volume is a completed transaction. For every buyer there has been a seller. What does that tell you? Only in the context of the additional information of price, do you receive that further information.

Average volume will give you some liquidity information, but even that has to be taken with a grain of salt. Liquidity dries up in market crashes.

I personally, don't look at volume at all. If I was, I'd be more interested in this type of volume, which at least conveys additional information:



jog on
duc

 

[jbocker]

Thanks Duc @ducati916. I am not familiar with the side bars on the chart I would guess they show proportion between buy (green) and Sell (red) against the price at that bracket. But I cannot figure the magnitude - what drives the length of the bar.
I see you mention hidden orders in US. Does that exist on ASX orders , I am wondering if conditional orders are visible

Hope lunch is / was great @tech/a

Thanks for sharing guys. Enjoying the discussion .

 

[Telamelo]

Sorry to ask/labour on about supply but how do you tell then from any given stock chart - is it where the biggest volume occurs say at a level of resistance? that share price retraces from etc.

 

[ducati916]

Thanks Duc @ducati916. I am not familiar with the side bars on the chart I would guess they show proportion between buy (green) and Sell (red) against the price at that bracket. But I cannot figure the magnitude - what drives the length of the bar.
I see you mention hidden orders in US. Does that exist on ASX orders , I am wondering if conditional orders are visible

Hope lunch is / was great @tech/a

Thanks for sharing guys. Enjoying the discussion .

So it is defined as:





jog on
duc

 

[qldfrog]

So it is defined as:

View attachment 120056

View attachment 120054View attachment 120055

jog on
duc

But that supply demand is also twisted by conditional orders so you might have huge demand or supply appearing within ms of a price threshold, especially so in the age of bots and qants
That conditional order ussue might be related to your realms micro, asx 100 i assume will have different behaviour?
I like Mr @tech/a and understand how to do it when live trading, but hitting a wall when looking at a systematic daily approach running at 8pm in the evening...
And by the way, very interesting inputs from all here many thanks

 

[over9k]

I'll see if I can simplify it for you guys (not trying to take over duck's thread or anything):

Think of volume like a yardstick/measure of the aggregate market's INTEREST in a stock (how interested people are in it, not interest as a yield). So if volume spikes (meaning lots of people are buying & selling it), you want to be thinking about what has happened to get the market interested in that particular stock. Remember, people might have gotten very interested in buying it, very interested in selling it, or both simultaneously. Again, it's the cause of said interest in buying and/or selling that you want to be thinking about when deciding if the market's responding "correctly" or not. To put it another way, look at what's happening and ask yourself WHY it's occurring. There's no shortage of traders on this forum (myself included) that have jumped the gun (acted too quickly) on a hype train and gotten stung for it for example.

This then dovetails into the concept of liquidity, which I presume duck is planning to cover at some point so will obviously let him do that on account of this being his thread

 

[Smurf1976]

I see you mention hidden orders in US. Does that exist on ASX orders

Don't want to tread on Tech's toes in his thread but from personal experience, I've certainly placed orders on less liquid stocks at a price where there's no order visible on the other side (buy / sell) and had them immediately filled.

How that works in a technical (computing) detail I've no idea, Tech can probably explain that one far better than me, but I've seen it happen too many times to be coincidental indeed in some cases I've actively tried to work out exactly where those orders are in terms of price limits.

 

[tech/a]

When reading volume we are interested in the momentum of the trade.
we need 4 components

RANGE
POSITION OF CLOSE AND OPENS
PATTERN
VOLUME TRADED

most things on their own have little value

reading all 4 changes the face of a chart from a graphical representation of
market constituents to a short story on the relationship those constituents have
with the ticker being traded —- at all timeframes.

I take very little notice of market depth trades can and are withdrawn or added at the click
of a mouse. The real trading is at Market and a tick above and below it.The story develops
Often told in chapters in smaller timeframes.

The more liquid the trading the shorter the timeframe that can be used to build the story.

Smurf
the answer to your question is pretty clear
your bid or ask is seen by a trader not placing an order in the market but at your offer.

 

[qldfrog]

Don't want to tread on Tech's toes in his thread but from personal experience, I've certainly placed orders on less liquid stocks at a price where there's no order visible on the other side (buy / sell) and had them immediately filled.

How that works in a technical (computing) detail I've no idea, Tech can probably explain that one far better than me, but I've seen it happen too many times to be coincidental indeed in some cases I've actively tried to work out exactly where those orders are in terms of price limits.

And also related is the presence of orders as scaling up or down levels
Very small amounts at levels just below /above current price that are ramping up/down price to i assume trigger conditional orders or even trigger margin loan "calls"

 

[ducati916]

When reading volume we are interested in the momentum of the trade.
we need 4 components

RANGE
POSITION OF CLOSE AND OPENS
PATTERN
VOLUME TRADED

most things on their own have little value

reading all 4 changes the face of a chart from a graphical representation of
market constituents to a short story on the relationship those constituents have
with the ticker being traded —- at all timeframes.



The more liquid the trading the shorter the timeframe that can be used to build the story.

So TSLA: 15M-30M shares/day traded



Enough bars?

jog on
duc

 

[tech/a]

So TSLA: 15M-30M shares/day traded

View attachment 120082

Enough bars?

jog on
duc

In the context of the day —-yes
Third last bar seems exhaustive
Wide range and high volume saw the very common inside bar occur
Then a test of the low which was rejected

that’s about all I can tell from what you’ve posted

 

[tech/a]

Hi Tech. A question from the Dept of Dumb. I am trying to think where I can see supply. Questions are on the graphic. I appreciate that many factors together would be needed to determine supply but I am thinking momentum may be of use. Apologies if I am off the mark I am not a trader.
View attachment 120042

JB

I want to use your chart as an example.

For me its ALL about momentum. Im constantly looking for it.
I want to be able to see the potential in build up and I want to be
able to recognize it as soon as I can. (The potential anyway).
I can and do have false starts and Ill sacrifice a bit in doing so.

Ive marked up your chart with the important markers on the chart.
Then A chart of the Trades I would have taken if trading it based on
my own Discretionary Methodology.

Firstly to the buy and sell ladder.
I dont look at pre loaded depth as any indicator as to Demand OR Supply
OTHER than the open and Closing Auction.

The real action plays out at Market. Which answers Smurphies Question

I've certainly placed orders on less liquid stocks at a price where there's no order visible on the other side (buy / sell) and had them immediately filled.

I often do the same thing Bid 22 c Sell 28 c Ill place a bid at 23 c and often be filled.

But while doing this and trading it I'm forever looking at ways of minimizing risk.
Constantly shuffling Initial stops whether its rising OR falling (Only ever UP) with
my number one Goal to get to Break even (B/E) and when momentum bites
Shuffling Trailing stops to lock in profit.

More about this later as its its own topic.

I dont know what the ticker was JB but Id still be on it at the last Bar and be looking to
increase my position on that day.






Here is how I would trade and be trading this chart.



The Supply conundrum is Answered in the next post.