[david111]

There is no law of supply and demand, its a fallacy.
Market movers act on "needs" and ES is used mostly for Hedging thus in essence when you trade ES the "law of supply and demand" is in reverse most of the time since the 9000 Hedge funds use the ES/SPY/SPX for Hedging against position Long/short on stocks or cross country arbing etc.

No offense, but trying to apply logical laws to Chaos is absurd, there are 1xxxxxxxxx variables that move the markets.
Its all a game of probabilities, Nothing is constant, and nothing is "law". Every day and every second in the market is unique.
Market movers don't scalp they arb...

Sorry for the harsh comment, but trading should never be your primary resource of income, you shopuld trade only what you can loose. Invest in Real estate and renovate/sell with leverage on non recourse bargains or foreclosures - let the bank take most of the risk...

Originally Posted by smwinc »

Let's take a step back. The first problem we are keeping it simple, and everyone is going to see the ES as something different. That's another inherent problem - As an intraday trader, a lot of how I trade is based on patterns.

In my view, each pattern throughout the day is a different product.

I will always Buy (Demand) certain pattern within the market depth, and I will always Sell (Supply) certain patterns in the depth.

Price is utterly irrelevant.

If I had to compare the ES to an item, I would compared it to Lego blocks (the plastic blocks that connect to each other for any poor soul who has never seen lego).

Throughout the day, it remains Lego. It is always $50 x S&P 500 . However, it constantly forms different objects, which I base decisions off - I demand / supply these objects. Once the object is 'created', imagine a corresponding D&S curve is created.

A 'double bottom' at 1300 after the market has fallen for a week, is a different object to a market which has rallied all week to hit 1300.

[firewalker]

Originally Posted by david111 »

There is no law of supply and demand, its a fallacy.
Market movers act on "needs" and ES is used mostly for Hedging thus in essence when you trade ES the "law of supply and demand" is in reverse most of the time since the 9000 Hedge funds use the ES/SPY/SPX for Hedging against position Long/short on stocks or cross country arbing etc.

No offense, but trying to apply logical laws to Chaos is absurd, there are 1xxxxxxxxx variables that move the markets.
Its all a game of probabilities, Nothing is constant, and nothing is "law". Every day and every second in the market is unique.
Market movers don't scalp they arb...

Sorry for the harsh comment, but trading should never be your primary resource of income, you shopuld trade only what you can loose. Invest in Real estate and renovate/sell with leverage on non recourse bargains or foreclosures - let the bank take most of the risk...

(1) There's not much I can say to that, as most of it is diametrically opposed to how I see things.

(2) I don't see the market as 'chaos', although there is a lot of irrationality in human behaviour, I consider some of the price action actually very logical.

(3) It wasn't me who said the markets moved according to supply and demand, it was Wyckoff and probably others before and after him as well.

(4) I think that it goes without saying that 'trading should never be your primary resource of income' is probably going against the purpose of what many on this trading forum want to achieve, which is trading for a living.

(5) As for risk, I'd rather take care of that myself any day, then let someone else do it for me.

[firewalker]

Originally Posted by smwinc »

For the record, I believe we were previously talking about different things here.

(A) That statement is assuming that the good remains the same.

(F) - Not realistic in the real world. They teach this one in Economics 101. The whole assumption of "participants will behave rationally" complicates it. We all should be able to think of at least 10 trades where we didn't behave rationally.

In addition, we are only ever guessing in the market - we take actions that we 'believe' will maximise benefit. After all, you wouldn't buy if you didn't think it would go up, while simultaneously someone is selling it to you, thinking it will go down. We are both striving towards utility maximization, however one of us will quite simply be wrong.

Clearly it gets more complex, I am keeping it simple here too.

Thanks for taking the time to reply smwinc. You clearly have a good understanding of all of this and you seem like a smart guy. Not to mention you make interesting analogies. But... keep in mind, you don't need to convince me that market participants don't act rationally. I'm with you on (almost) everything you said, but it wasn't me who stated the markets moved according to the law of supply and demand. In fact, it was I who questioned if that really was the case... so we might be more in agreement than we previously thought.

There are basically two assumptions we make when we are talking about the laws of micro-economics. One is that the goods being offered are all the same. And you've already pointed out that is not necessarily always the case.

The other one hasn't been mentioned yet. Or at least not explicitly. The law of supply and the law of demand requires a market of 'perfect competition'. This basically means that no single buyer or seller can influence the market price... well we know this is not the case in the short term. Otherwise we wouldn't be talking about the smart money, or the professional money, versus the herd, etc.

[zdo]

Originally Posted by david111 »

There is no law of supply and demand, its a fallacy.
Market movers act on "needs" and ES is used mostly for Hedging thus in essence when you trade ES the "law of supply and demand" is in reverse most of the time since the 9000 Hedge funds use the ES/SPY/SPX for Hedging against position Long/short on stocks or cross country arbing etc.

No offense, but trying to apply logical laws to Chaos is absurd, there are 1xxxxxxxxx variables that move the markets.
Its all a game of probabilities, Nothing is constant, and nothing is "law". Every day and every second in the market is unique.
Market movers don't scalp they arb...

Thanks.
Harsh!
Radical!?
Out of the box??
What do you mean by "Market Makers" ??

Originally Posted by david111 »

let the bank take most of the risk...

In trading...just let the yen take most of the risk

[DbPhoenix]

Originally Posted by firewalker »

(3) It wasn't me who said the markets moved according to supply and demand, it was Wyckoff and probably others before and after him as well.

Not exactly. As I tried to point out dozens of posts ago, the law of supply and demand as it relates to economics is not the same as the law of supply and demand as it relates to the markets no matter how much one may believe otherwise.

It was to avoid this source of confusion that I stopped referring to "supply and demand" years ago and began using "buying pressure and selling pressure" instead, which is what Wyckoff means. Unfortunately, I had to pick up the supply and demand terminology again when nic and I started the Wyckoff Forum. That, as it turns out, may have been a mistake.

The market does not sell goods and services. It sells hopes and dreams, and the "law of supply and demand" that operates in the markets is not very different from that which operates in other "tangibles" that have little or no intrinsic value such as fine art, collectibles (depending), gems, and, in certain circumstances, real estate, among other things. Anyone who doesn't understand this is in for a hard time.

[smwinc]

Originally Posted by david111 »

There is no law of supply and demand, its a fallacy.
Market movers act on "needs" and ES is used mostly for Hedging thus in essence when you trade ES the "law of supply and demand" is in reverse most of the time since the 9000 Hedge funds use the ES/SPY/SPX for Hedging against position Long/short on stocks or cross country arbing etc.

No offense, but trying to apply logical laws to Chaos is absurd, there are 1xxxxxxxxx variables that move the markets.
Its all a game of probabilities, Nothing is constant, and nothing is "law". Every day and every second in the market is unique.
Market movers don't scalp they arb...

Sorry for the harsh comment, but trading should never be your primary resource of income, you shopuld trade only what you can loose. Invest in Real estate and renovate/sell with leverage on non recourse bargains or foreclosures - let the bank take most of the risk...

Fantastic post .. you're right even though trading has been my income for 6 years, clearly I should go and take up a job in real-estate. I can see the logic there.

[mister ed]

Originally Posted by zdo »

What do you mean by "Market Makers" ??

zdo - David actually said Market "movers".

[BlowFish]

Originally Posted by DbPhoenix »

___

The market does not sell goods and services. It sells hopes and dreams,
___

I rather liked that quote for some reason, though some instruments (commodities for example) are more 'tangible' than others.

David111 you mention 'needs' and hedging, aren't the needs of those hedgers the epitome of supply and demand? If you are a utilitarian trader (i.e. not profit motivated) you need to buy/sell at the best price, but buy/sell you must. There is real demand in the markets from some the many types of participant.