Why do people buy/sell?

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Why do people buy/sell?

Postby ivanlim » Thu Oct 28, 2010 12:49 am

I'm sorry to flood this forum with my seemingly endless questions,but i need to ask one more. Why do people buy or sell a currency pair? What is the criteria?

For example,a price action signal,such as a pin bar reversal,why does it usually lead to continuous buying or selling? What attracts these buyers or sellers for reversal?
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Re: Why do people buy/sell?

Postby shona123 » Thu Oct 28, 2010 12:14 pm

The types of individual technical candle or bar visuals are simply representations of trader behavior Ivan.

Hammers at prior areas of support, hanging man (inverted hammer) at a prior area of resistance, spinning tops & doji's at areas & zones of prior significance are all reflections of the differing views & opinions of trader activity.

The reasons they choose to trade at certain levels are usually as varied as the strategies & systems being employed by the different tiers of market players too.

Traders go long & short at the same level for a whole host of different reasons. Some will be attempting to position themselves in step with fundamental or event risk influences, some will be taking a purely technical view of a level or zone….

Important big figure (00's) levels harbour large option barrier defense orders, commercial order flow also casts a big shadow over the market, especially when companies are negotiating & closing large merger & acquisition deals. The 3 main fixing times on the daily calendar can exert a dominant influence as banks attempt to aggregate & obtain best price for their clients, which can cause short-term fluctuations in volatility & directional bias.

Institutional & retail order flow will be constantly active booking partial profits, exiting full positions, entering fresh orders etc etc.

All the differing orders will need to be absorbed, filtered & sorted by the market players before price moves away in the direction that is being influenced by the dominant order flow.
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Re: Why do people buy/sell?

Postby ivanlim » Thu Oct 28, 2010 6:17 pm

Thank you shona. And sometimes,you might hear the term "higher probability setups". How is the probability higher when the chances of people buying or selling are 50-50?
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Re: "higher probability set ups"

Postby shona123 » Fri Oct 29, 2010 1:28 am

That term usually refers to set ups that the trader has compiled & tested/traded to execute under very specific technical scenarios.

For instance a set up that triggers on & around a confluence of events that might include, but not be exclusive to:
1) Trend (determined by their usual parameters & criteria)
2) Round Number or big figure
3) Specific technical pattern (inside bar…123…tweezer top/bottom…etc etc)
4) Acceptable risk-reward odds.
5) Confirmatory fundamental or market influences.
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Re: Why do people buy/sell?

Postby Rom » Sat Oct 30, 2010 4:42 am

I'm sorry to flood this forum with my seemingly endless questions,but i need to ask one more. Why do people buy or sell a currency pair? What is the criteria?

Bond traders is the main actor in currencies. When investors or the chinese learn GNP is lower and CPI is higher they become worried. Why? Because that will affect the value of their assets (bonds mostly). They will take the necessary steps to protect future value of their assets. If they considere Euro or yen to be safer, they will buy Euro or yen assets and sell dollar assets. The bond traders will monitor all news for clues.

A main bond market is about sovereign states selling debt (to privates or suvereigns) or buying debt. Think of an island with some few farmers. When one farmer need to invest, and the only source of capital is neighboring farmers, that debt (money transfer) defines the relationsship (exchange) between these farmers. The one lending is the rich one.


.
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Re: Why do people buy/sell?

Postby whipcrack » Sat Oct 30, 2010 6:40 am

Rom wrote:Bond traders is the main actor in currencies. When investors or the chinese learn GNP is lower and CPI is higher they become worried. Why? Because that will affect the value of their assets (bonds mostly). They will take the necessary steps to protect future value of their assets. If they considere Euro or yen to be safer, they will buy Euro or yen assets and sell dollar assets. The bond traders will monitor all news for clues.

In light of ivanlim's second post on this thread & using the information you've contributed to the topic, would you now care to expand further & transfer them onto a technical chart of your choice, showing him a couple of high probability set ups, based on shona's criteria, indicating how he might have benefited financially last week or next week based on your information?

He can of course visit the Combination Strategies thread to access plenty of solid, workable examples of plotting & preparing technical triggers based on current market views impacting the currency pairs, but I'm sure it would add value to his understanding if you could also show how your views & info translates simply to a chart where he can bet long or short based on the content of your post.
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Re: Why do people buy/sell?

Postby Rom » Sat Oct 30, 2010 4:40 pm

In light of ivanlim's second post on this thread & using the information you've contributed to the topic, would you now care to expand further & transfer them onto a technical chart of your choice, showing him a couple of high probability set ups, based on shona's criteria, indicating how he might have benefited financially last week or next week based on your information?

A short answer. Knowing the market is a valuable filter for not being on the wrong side of the trend. What you quote is not a trade system. I favor a long term trend riding approach. Will that work? It has worked for 100 years. In the September-fallout trendfollowers had good times. In the last two weeks dollar has been sideways and there would have been no gains for trendfollowers on USD-crosses. The smart trendfollower stayed out. There was however a good trend on EURCHF lately.

He can of course visit the Combination Strategies thread to access plenty of solid, workable examples of plotting & preparing technical triggers based on current market views impacting the currency pairs, but I'm sure it would add value to his understanding if you could also show how your views & info translates simply to a chart where he can bet long or short based on the content of your post.

Candlesticks, S/R/Pivot points and trade sessions are needed for timing. If Ivanlim tries to daytrade the statistics is against him. First he needs years of traning (cost 30.000?). When he has finished he has to use several hours each day on trading. It someone will sponsor him I have no objections. But I have to conclude daytrading is not for retail traders, myself is a prime example. It does not matter if one has 50 mill.on account, without years of training those 50 mill. will evaporate (a RL case). There is no such thing as easy daytrading (newstrading is a possible exception).

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Re: Why do people buy/sell?

Postby whipcrack » Sat Oct 30, 2010 5:50 pm

Rom wrote:What you quote is not a trade system.
I favor a long term trend riding approach.
In the September-fallout trendfollowers had good times.

I didn't ask you to comment on what I quoted.
Neither did I ask you what type of market conditions you favored.
In fact the types of market condition was neither mentioned nor requested at all.

I simply asked you to translate in simple terms how ivanlim's trading approach could benefit from your contribution to his request for feedback on why people buy & sell currencies & how he might take advantage of "high probability set ups" based around the propensity for prices to move between A & B.

His requests have absolutely nothing to do with whether trend traders or day traders or anyone else participated in Septembers activity.

Stick to the point & answer the questions posed to you instead of resorting to your usual habit of veering wildly off topic & steering the subject matter into the ditch.
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Re: Why do people buy/sell?

Postby ivanlim » Sun Oct 31, 2010 3:47 am

Back to a related question to the main topic,why are there usually follow thorugh selling or buying by the market?

What caused these sort of market action?
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Re: Why do people buy/sell?

Postby Rom » Sun Oct 31, 2010 4:18 am

whipcrack wrote:I didn't ask you to comment on what I quoted.

Right. I did somehing you did not ask me to do.

Rom wrote:Bond traders is the main actor in currencies. When investors or the chinese learn GNP is lower and CPI is higher they become worried. Why? Because that will affect the value of their assets (bonds mostly). They will take the necessary steps to protect future value of their assets. If they considere Euro or yen to be safer, they will buy Euro or yen assets and sell dollar assets. The bond traders will monitor all news for clues.


This reply is on topic, Why do people buy/sell?

To make this thread very updated, let me show a pure technical analysis of EURUSD
fofo 10-19-10.JPG

http://www.elliottwave.com/freeupdates/archives/2010/10/19/U.S.-Dollar-Gains-Big-A-Trend-Change,-Or-a-Temporary-Event.aspx
These guys are actually implying the latest uptrend in EURUSD is a "correction" (A-B-C waves = correction), the impulse move will be heading for 1.1870 level?.

This is about what makes the market move? Was the September fallout a "technical correction". or has there been a shift in perception about the future of dollar = the big players interpretation of latest data and news?

.
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