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The theory of Supply and Demand
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The theory of Supply and Demand

  #11 (permalink)
Market Wizard
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vegasfoster View Post
Similar idea based on an article by Lance Beggs, they color based upon where it closes in relation to the current and previous bar's range, with nine possible outcomes depending on whether it closes in the upper third, middle third, or lower third of the current bar's range and whether it closes above the previous bar's high, within the previous bar's range, or below the previous bar's low.

Is "BetterThanCandlesticks.zip" an indicator or a bar type?

Nevermind! I just tried opening the ".cs" file and Avast! Anitvirus told me it was a "suspicious" file. I've deleted it from my computer.

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  #12 (permalink)
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Great Chart - heres my take

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Hi Aargorn

I have a few thoughts about the market moving by pushing and absorbing in order to move a particular way.

The push are orders that hit the bid or offer. Absorbing occurs as limit orders are lifted to soak up counter moves.

A solid move in one direction occurs when, for example, buyers hit the offer and raise the price. Absorbtion then occurs as buyers lift their limit orders to cap the move down.

So in your chart buyers are hitting the market and moving it up combined with the use limit orders to absorb any down moves. Limit orders and hiting are used by aggressive parties to move the market.

What I have been struggling with is a clear way to see this on a chart. It can be seen on the time and sales and Blooms Tape is my shape thread covers alot of material about order flow (which side is moving, which is weakening).

Any chart ideas would be welcomed - and thanks for sharing your chart. Great topic and ideas.

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Auction Market Theory

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  #14 (permalink)
Trading Apprentice
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kulu View Post
Since there is a buyer/seller for each seller/buyer, the above highlighted and bold statement is incorrect in my opinion. There is never more buyers/seller than sellers/buyers, only more aggressive buyers/sellers. The difference lies in the hitting the bid/ask versus those that use the limit orders that are willing to wait to be filled at their own price.

Just my 2 cents

this is dead and gone but interesting none the less...

It is a simple misunderstanding really. There most certainly can be more buyers than sellers just as there can be more sellers than buyers. Example one seller with a thousand contracts as compared to 10 buyers seeking 100 contracts each or the other way around. It happens every day.

However, it is not the number of sellers that is relevant.

What is very relevant though is the number of contracts that are available to buy or for sell.

We can think this a little farther if you like as well it is not even more buy orders that causes price to rise nor is it more sell orders that causes price to decline.

What causes the price to move up or down is an imbalance in orders on a particular side. Meaning in order for price to rise there must be a precise price point where there is some amount of buy orders and zero sell orders with which to match those buys. At that precise price and moment in time price will then increase to the next level where there are in fact sell orders.

The same is true for a downward move in price. At some price point where there is some amount of orders to sell and there is zero orders to buy then and only then will price move down.

Neither case depends on the number of sellers or buyers but instead on the number of unfilled orders on the books.

The more important question though is where do we find these buy and sell orders and how do we then make some money off of them. Not how many people are selling and buying which ones.

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Aragorn View Post
Good evening my fellow traders! I wanted to send a shout out and see if anyone has any input. suggestions or ideas. So I'm looking at the Euro trading at my 1.2504 Resistance level as it's bouncing along it for over an hour. So I'm watching it on a one Range bar using Zondors Trade Size Analyzer and I see all of this Selling come in. But the market doesn't respond to it. I see more and more selling come in (I'm short the market by this point at 1.2502) and the market doesn't respond. I see what I want to see- reduced buying and A LOT of selling but the market doesn't go down. I mean during the day this would have been through the floor with the amount of selling I saw. Don't believe me? Throw up an 8 Range chart and compare the volume during the over night. The market moves up 8 ticks with a little over 900 contracts; moves up another 8 ticks with some 700 contracts traded; moves up another 8 ticks with around 1150 contracts and then my little gem- it moves down 8 ticks on almost 2,900 contracts! Does that seem odd to anyone other than me? I saw massive selling and it wasn't responding in kind. Does anyone have any suggestions that could explain this? Hey- let's face it- the market can do whatever it wants. I know that and I am not suggesting otherwise. But this, from a Supply and Demand standpoint makes no sense. But this, not to sound like an alarmist, is conspiracy theory kind of stuff. I always believed, according to theory that the market moves higher on increased buying and lower on increased selling. I have no explanation conceptually for this and wondered if anyone has a theory.

what you are seeing on the order books are limit orders. You are seeing one thing for sure and maybe a couple things at the same time. One thing you will not see on those books are large institutional market orders consuming those limit sell orders. The other thing you may be seeing at the same time is called an iceberg. An iceberg can be a limit or market order. Either way all that is ever shown is the initial order of an iceberg not subsequent orders.

If you subscribe to futures data and have access to a market DOM package you will witness for example on a blood red day where the maket is getting trampled, you will see like double or more the number of buy orders getting filled as you will sell orders. This is again because the institutions generally would not use limit orders but use market orders and again what we see on the order book and time and sales is those limit orders being filled by the invisible market orders of the larger institutions as well as the previously mentioned icebergs.

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