[jonbig04]

Originally Posted by dla133 »

So I suppose what I am really asking is how do you know who is really moving the market, is it weak or strong holders.
Kind Regards
Lee

This is just my opinion, but who cares?

I've never really bought into the whole "smart money" thing. Not because I think it's invalid, but because I don't really see the reason for it. To me, the law of supply and demand that you mention and it's manifestation through the movement of price is all we need to focus on.

Once again though, just my opinion.

EDIT: just wanted to clarify, I'm not saying it's not and interesting or valid subject I just don't think it's possible to know whether the "smart" or "stupid" people are the ones buying and selling. To me the law of supply and demand and price's movement take care of all that for us. They sum up everyone's hopes, dreams and intentions so we don't have to worry about them.

[dla133]

If we forget about strong and weak holders. Can the price be manipulated so that traders are stoped out because all the stop orders are known? For example if the current price is 73 and there are a lot of traders with a stop order at 69. Can the market price be dropped so that the stops are hit. So many times I see price droped like in a shakeout which catches a lot of traders out just before the price then starts to move up. Its almost like somone is sat there, who can see all the orders and is manipulating the price to their advantage. Maybe I have been watching too many programmes like the X files and Fringe!

[wjrusnak]

Originally Posted by dla133 »

So I suppose what I am really asking is how do you know who is really moving the market, is it weak or strong holders.

For clarity I refer to weak holders as the general public who lose money and strong holders as the professionals who make money.

Kind Regards
Lee

I've had this discussion numerous times and have some advice for you. First, you're complicating this with theories. What you see on a live chart are thousands of transactions, occurring at the identical, increasing, or decreasing prices in respect to the last transaction, over time. You even know how many transactions have occurred via volume. Nothing more and nothing less. Now you're attempting to guess who's causing those transactions. Well I will admit to you that I don't know who is buying or selling. Honestly. Is it another guy like me? A girl? A rich guy? A hedge fund manager in charge of billions? Does it really matter? The point is that the majority moves the price and you want to speculate which way the majority of traders will move price next. Here's the kicker: in that majority are small guys, weak hands, strong hands, billionaires, etc. The answer to your question is everyone. Everyone moves the market and everyone generally splits into two categories: people who think the price is cheap and will buy and people who think the price is expensive and will sell.

The biggest fallacy in this strong/weak hand theory is the assumption that all the losers are the general public and all the winners are these sharks with billions of dollars at their hands. A big player selling needs a big player buying and one of them needs to be wrong and one of them needs to be right.

In conclusion, stay simple and go with what you can see, which in this case is the last price (on whatever time frame you choose) and the volume (some even choose not to look at this). If you notice that 1000 contracts (or shares) were exchanged during a particular time frame, know that someone bought 1000 and someone sold 1000. Maybe he/she was planning to jack the price up to spook someone else from selling... or maybe he/she/they were planning to snag some stop-losses... or maybe....

Stick to a set of rules and trade and theorize about the players later.

[dla133]

Thanks for your reply. The reason I like this forum so much is that you get people out there who can clear away the fog and put you back on the straight and narrow. Your right, I should stop worrying about who is doing the buying and selling and just concentrate on what I see and believe.

[srag&birdie2]

Interestingly, Wyckoff was very concerned about manipulation and studied it carefully. He saw large stock manipulators running up the market to unload their holdings and selling down the market in order to cover shorts and buy at favorable prices. This is seen nearly every day still in the markets. If you read the original Wykcoff material, you will see this in spades. He was always tracking who was doing what to whom.

[dla133]

Hi,

How did Wyckoff track and determine who was doing what to who?

Kind Regards
Lee

[srag&birdie2]

Read the orignal course. Also Studies in Tape Reading, and the course in Tape Reading. Then you will learn first hand how did Wyckoff tracked and detmined who was doing what to who (sic) (much better to say who was doing what to whom.

Originally Posted by dla133 »

If we forget about strong and weak holders. Can the price be manipulated so that traders are stoped out because all the stop orders are known? For example if the current price is 73 and there are a lot of traders with a stop order at 69. Can the market price be dropped so that the stops are hit. So many times I see price droped like in a shakeout which catches a lot of traders out just before the price then starts to move up. Its almost like somone is sat there, who can see all the orders and is manipulating the price to their advantage. Maybe I have been watching too many programmes like the X files and Fringe!

Hi Lee,

A while back I was following a software package with the initials TG. I followed their theories and even read a book they had. It seams you are using the same terminology they did. Knowing now what I did not know then, I'd have to say it was all just great marketing. Everyone loves a conspiracy. It simplifies things. No need to worry about your own actions because it’s someone else’s fault. IMHO conspiracies are for people who do not believe they can control their own lives. These marketing people take advantage of that to sell what they need to sell. I guess that’s a conspiracy too. LOL.

There was some value in what they were saying as regards to volume.

The simple fact is that "smart" people buy at the low and sell to the latecomers at the high. Then they can buy back what they sold at the high form the "dumb" money that bought at the high. It does not seam like a deep conspiracy to me.

Stop runs are some of my favorite things. They provide a great trade location. Its no secret where the stops are (2 points below low/high in ES), you just need to know where the buying or selling pressure is so you can get out of your position BEFOR your stop is hit. Then just get back in at a better price, as those "evil" stop runners can’t push prices any further.

If you day trade you can keep your pulse on the market by reading the order flow. That can give you an edge over the "dumb" money.

Good luck.
Art