[Discussion] Why buyers buy, and sellers sell - Psychology and Money Management | futures.io
futures.io futures trading
 

Go Back   futures.io

> Futures Trading, News, Charts and Platforms > Psychology and Money Management


[Discussion] Why buyers buy, and sellers sell
Started:April 19th, 2016 (04:52 PM) by SoftSoap Views / Replies:218 / 4
Last Reply:April 23rd, 2016 (09:55 AM) Attachments:0

Welcome to futures.io.

Welcome, Guest!

This forum was established to help traders (especially futures traders) by openly sharing indicators, strategies, methods, trading journals and discussing the psychology of trading.

We are fundamentally different than most other trading forums:
  • We work extremely hard to keep things positive on our forums.
  • We do not tolerate rude behavior, trolling, or vendor advertising in posts.
  • We firmly believe in openness and encourage sharing. The holy grail is within you, it is not something tangible you can download.
  • We expect our members to participate and become a part of the community. Help yourself by helping others.


You'll need to register in order to view the content of the threads and start contributing to our community. It's free and simple, and we will never resell your private information.

-- Big Mike
     

Reply
 
Thread Tools Search this Thread

[Discussion] Why buyers buy, and sellers sell

Old April 19th, 2016, 04:52 PM   #1 (permalink)
Elite Member
Canada
 
Futures Experience: Beginner
Platform: NinjaTrader
Broker/Data: InteractiveBrokers
Favorite Futures: NQ
 
SoftSoap's Avatar
 
Posts: 449 since Aug 2015
Thanks: 267 given, 811 received

[Discussion] Why buyers buy, and sellers sell

In my journey of trying to understand the market on a more strategic / high level standpoint, I find that I'm continuously asking myself the following questions.

Why are people selling right now? Why are people buying right now?

Of course as a speculator, I can do nothing but speculate and high five myself thinking that I'm right whenever I win a trade. This might help me make/lose money, but it doesn't do much in terms of understanding the philosophy behind why buyers buy and sellers sell.

I think at first glance you might think I'm an idiot for asking this question. But when you start to consider the different players in the market, long term high capital individuals, hedge funds, prop firms, short term intraday traders, technical traders, fundamental traders, etc. you start to see that different players have different reasons for buying and selling.

I want to compile a list of those reasons from experienced traders in hopes of being able to get a better understanding of this buying and selling activity. I think the more detailed we get around this, the more we will be able to understand different perspectives.

I'm hoping that this is something that would help all those who view this thread.

I'll start with why I think an intraday trader looking to capitalize on the biggest couple swings of the day would buy:

Why I would buy
  • I feel price is discounted as to where it should be and cannot continue going down for much longer, timewise and points wise
  • Anxiety that I might miss a bull wagon will get me to enter a long position (hurts me more than helps me, and it's something I need to change, but it's true)
  • I've hit my short stop
  • I've seen signs in the market that my stop position is not going the way I thought it was going to go
  • Price is nearing a key support zone that I think price will bounce back from, and I want to capitalize on the confidence that other traders have also set on that zone
  • I've hit my short target
  • I noticed a lot of volume at an area that I was already watching closely and I expect that this will turn the market

Of course the list is not comprehensive but this is what I could think about right now, I will add more in the future as the discussion grows.

Reply With Quote
     
The following 3 users say Thank You to SoftSoap for this post:
     

Old April 19th, 2016, 04:52 PM   #2 (permalink)
Quick Summary
Quick Summary Post

Quick Summary is created and edited by users like you... Add FAQ's, Links and other Relevant Information by clicking the edit button in the lower right hand corner of this message.

     

Old April 23rd, 2016, 02:09 AM   #3 (permalink)
Elite Member
Chicago, IL
 
Futures Experience: None
Platform: NinjaTrader, TWS, FXCM's
Broker/Data: InteractiveBrokers, NinjaTrader Brokerage FXCM, IQFeed
Favorite Futures: ZF, ZN, ZB, ES, FX pairs
 
Blash's Avatar
 
Posts: 1,045 since Nov 2011
Thanks: 2,717 given, 1,354 received



SoftSoap View Post
In my journey of trying to understand the market on a more strategic / high level standpoint, I find that I'm continuously asking myself the following questions.

Why are people selling right now? Why are people buying right now?

Of course as a speculator, I can do nothing but speculate and high five myself thinking that I'm right whenever I win a trade. This might help me make/lose money, but it doesn't do much in terms of understanding the philosophy behind why buyers buy and sellers sell.

I think at first glance you might think I'm an idiot for asking this question. But when you start to consider the different players in the market, long term high capital individuals, hedge funds, prop firms, short term intraday traders, technical traders, fundamental traders, etc. you start to see that different players have different reasons for buying and selling.

I want to compile a list of those reasons from experienced traders in hopes of being able to get a better understanding of this buying and selling activity. I think the more detailed we get around this, the more we will be able to understand different perspectives.

I'm hoping that this is something that would help all those who view this thread.

I'll start with why I think an intraday trader looking to capitalize on the biggest couple swings of the day would buy:

Why I would buy
  • I feel price is discounted as to where it should be and cannot continue going down for much longer, timewise and points wise
  • Anxiety that I might miss a bull wagon will get me to enter a long position (hurts me more than helps me, and it's something I need to change, but it's true)
  • I've hit my short stop
  • I've seen signs in the market that my stop position is not going the way I thought it was going to go
  • Price is nearing a key support zone that I think price will bounce back from, and I want to capitalize on the confidence that other traders have also set on that zone
  • I've hit my short target
  • I noticed a lot of volume at an area that I was already watching closely and I expect that this will turn the market

Of course the list is not comprehensive but this is what I could think about right now, I will add more in the future as the discussion grows.

I don't think thinking like this and asking these questions is idiotic at all. I think it's a sign of mature contemplation. As I understand from my readings about 5% of traders are consistently profitable in a big way. So approximately 5 million traders world wide.

All buy limit orders executed have corresponding sell market orders that paired with it. Same for sell limit orders and buy market orders. So all buys are met with sells and all sells are met with buys. It takes two to tango. But since most are supplying the winnings in this zero sum game it might be better to ask where will traders dump there position, puke from pain? Where is the aggression? The support and resistance? Where are we compared to yesterday's range last week's last month's etc etc?

Short on time now but will be long it next week. Continue then........

Ron

Doubt kills more dreams than failure ever will. Perfect: the enemy of Done. per·fec·tion·ist: ultimately one lacking self-confidence

Quoting 
The steed of this Valley is patience; without patience the wayfarer on this journey will reach nowhere and attain no goal.

Buy Low And Sell High (read left to right or right to left....lol)
Reply With Quote
     
The following user says Thank You to Blash for this post:
     

Old April 23rd, 2016, 09:35 AM   #4 (permalink)
Market Wizard
Switzerland
 
Futures Experience: Intermediate
Platform: Investor/RT
Broker/Data: IB / DTN
Favorite Futures: Futures
 
Posts: 3,552 since Feb 2012
Thanks: 3,086 given, 6,187 received

Risk observation

Look at the money flows from a risk view:

Traders are risk takers. Those risks can be calculated and in some sort being avoided.
Taking a trade means going into a market with uncertainty.
During many times that risk is on the lower side of the scale - especially looking at setting stop loss levels.
But on certain times this risk is getting much higher - sometimes only for seconds:
Example a FED or ECB decision.
Knowing your risk means for a responsive trader (speaking here of short time traded futures) to stay at the sidelines
during known "hard and uncertain moments".

So...
Money flows INTO the markets when risk is easier to calculate. And flowing OUT when risk
is getting higher or is NOT to calculate.
Such is the case
a) Over night
b) over weekends
c) over holidays
d) short time on announcements
e) after a long rally to take profits
f) start and end of session
g) others
All those moments are avoided by some bigger players too and one can see it from the volumes
in the markets - especially before and after mentioned events.

To make it short: Money is flowing in when "normality of markets is assumed" and flowing out
when uncertain / or long pause moments are to be seen.

GFIs1

Reply With Quote
     
The following 3 users say Thank You to GFIs1 for this post:
     

Old April 23rd, 2016, 09:55 AM   #5 (permalink)
Market Wizard
Switzerland
 
Futures Experience: Intermediate
Platform: Investor/RT
Broker/Data: IB / DTN
Favorite Futures: Futures
 
Posts: 3,552 since Feb 2012
Thanks: 3,086 given, 6,187 received

Using money flow

Futures Edge on FIO

Are you a NinjaTrader user?

 
I am using described "money flow" as the first rule for my systems to stay in the markets...
My two journals are to find here exactly with this background.

GFIs1

Reply With Quote
     
The following user says Thank You to GFIs1 for this post:
     

Reply



futures.io > Futures Trading, News, Charts and Platforms > Psychology and Money Management > [Discussion] Why buyers buy, and sellers sell

Thread Tools Search this Thread
Search this Thread:

Advanced Search



Upcoming Webinars and Events (4:30PM ET unless noted)
 

NinjaTrader 8: Features and Enhancements, Tips and Tricks

Dec 6
 

Al Brooks: Stop Losing when a Good Trade goes Bad, Correcting Mistakes

Elite only
 

Trading Technologies: Algo Design Lab hands-on

Dec 13
     

Similar Threads
Thread Thread Starter Forum Replies Last Post
Orderflow: Best Chart to Display Waves of Buyers/Sellers? Croni Index Futures Trading 3 July 1st, 2014 11:41 AM
Buy Sell Volume disintegrate Traders Hideout 1 October 1st, 2013 12:56 AM
Best US Housing Markets for Buyers and Sellers Quick Summary News and Current Events 0 December 12th, 2012 06:10 PM
Bunds Fall; Recent Sell-Off Could Attract Buyers Quick Summary News and Current Events 0 November 24th, 2011 08:00 AM
Buy/Sell in an indicator Mindset NinjaTrader Programming 11 October 8th, 2009 10:16 AM


All times are GMT -4. The time now is 04:08 AM.

Copyright © 2016 by futures.io. All information is for educational use only and is not investment advice.
There is a substantial risk of loss in trading commodity futures, stocks, options and foreign exchange products. Past performance is not indicative of future results.
 
no new posts

Page generated 2016-12-06 in 0.11 seconds with 19 queries on phoenix via your IP 54.163.147.69