searching for holy-grail.. is this theory true?

[DionysusToast]

What do you mean Jon? There is a tangible product in futures markets where the underlying commodity is physically settled. Granted, not all futures are physically settled but that is beside the point. Supply and demand is a law that applies universally. Like people say about gravity, supply and demand isn't just a good idea, it's the law! :cheesy:

If it's a law, then some things should follow. Like ways so use this grand theory of market movements to actually pre-empt market/herd behaviour. I don't see anyone stepping up here and attempting to do that. It

As yet, we have yet to see anyone use this law to do anything but say that when it went up, it meant supply was greater than demand.

Now, in terms of actual trading, let's consider some things.

First this:
http://www.nytimes.com/2012/04/11/opinion/ban-pure-speculators-of-oil-futures.html?_r=0

According to Congressional testimony by the commodities specialist Michael W. Masters in 2009, the oil futures markets routinely trade more than one billion barrels of oil per day. Given that the entire world produces only around 85 million actual “wet” barrels a day, this means that more than 90 percent of trading involves speculators’ exchanging “paper” barrels with one another.

- Commercial hedgers represent 10% of the market
- Commercial hedgers will be both buyers and sellers, who want to secure a price
- Commercial hedgers, as well as being in the minority, don't really care which direction price moves after they enter

- Speculators represent 90% of the market
- Speculators will also be both buyers and sellers that think other speculators will pay higher/lower prices in the future
- Speculators are EXTREMELY sensitive to moves in price and this leads to more moves in price

So given that commercial hedgers are the minority AND are insensitive to price movement after entry - why bother trying to understand the dynamics of the oil market? UNLESS you suspect that is what other speculators are trying to do AND you are better at it...

This is the key. The overwhelming majority of trading is pure speculation. Understanding the dynamics and behaviour of speculators in the oil market is vastly more important than understanding the supply and demand of oil.

 

[DionysusToast]

And every price move can explained by others as liquidity consumption or lack of liquidity.

Well done - you are moving forward. The next leap is how to use where people entered to understand where people my be trapped as well as to understand when a market is directional and when not to worry about traps.

And by others as cycles, and by others as manipulation, news and others as random noise or statistical likelihood. Some of these concepts may have things in common with others, some may be useful.

This is the business of assigning cause to effect post move - which has no place in trading.

As I've said plenty of times, I see nothing new in what has been written about consumption of liquidity, nothing that isn't already contained in the ideas of supply and demand. I don't dismiss consumption of liquidity as 'fook all to do with it' because it is part of supply and demand. I don't dismiss what traders will do if price gets here or there, because it is part of supply and demand. Yes it can sound like a catch-all catchphrase, but it's about a way of understanding something, or a law as New_trader and many of the quotes I gave point out.

Then there is an assumption that supply and demand is just a curve-fit historical explanation, rather than something which is looked at in real time and used to trade on. And despite dismissing it as rubbish and assuming that there is nothing deeper to it as DT does, he now wants to complain because nobody will explain any nuance or deeper understanding to him.

Because they can't. Because "supply and demand" is as deep as they go. Let's face it, the effort you've put into these posts, if you could deliver a haymaker, you would. Certainly, it would take less effort than trawling for 90 year old quotes to support your position.

I guess the reason for using the new terminology and dismissing the old comes about because either it is not understood what supply and demand is, or because there is an agenda to sound like you're bringing something new to a very old table and to indicate that you have a better understanding - light years ahead of us I believe the quote was. Maybe you are, or maybe you've ran so far ahead of us, you've gone down the wrong street and got yourself lost. If you're happy with your understanding and your results, that's all that matters despite the semantic arguments we have.

Aaaaah - J'accuse. Congratulations Inspector Clueless.

If someone doesn't know what supply and demand are in an economic sense, I posted links to an MIT course on economics so one can find out. I doubt anybody bothered. If someone doesn't know how supply and demand might be applied to the markets, I quoted a number of 'traders' on supply and demand, and several of them have books which go into it, some in great detail. So one can find that out too if one wants. Or not.

We know - it just doesn't explain the way these 4 way auctions move.

90% of the activity is basically gambling.

Perhaps we can show how supply and demand applies to the game of poker. That would be an interesting discussion.

 

[robster970]

Aaaaah - J'accuse. Congratulations Inspector Clueless.

That's harsh Pete - he's made some good points dude.

 

[DionysusToast]

That's harsh Pete - he's made some good points dude.

Nope - the moment he brings up me having an agenda, he becomes absolutely fair game.

I state and back up my position without making it personal but if people want to mudsling...

 

[robster970]

Nope - the moment he brings up me having an agenda, he becomes absolutely fair game.

I state and back up my position without making it personal but if people want to mudsling...

The discussion degenerates as soon as the mudslinging becomes bilateral though. Whilst the mudslinging is unilateral and the mudslinging liquidity remains unconsumed, mudslinging remains unrealised. Just like a limit order placed at the wrong price.

 

[Shakone]

You see DT, you've dismissed cycles, manipulation, news, randomness, statistical properties as well now. Nobody has ever traded on any of these profitably, have they? All losers like the supply and demand minority.

And you continue to insult and attempt to belittle. Getting a bit frustrated are you? It is pretty boring when the US is on holiday. You remind me of a stroppy student who comes to a teacher and says this maths (or whatever subject) has got f all to do with anything in the real world, who cares about algebra and triangles and bloody stats, teach me something useful. Then later begs for help. I am not interested in teaching you DT, providing haymakers or anything else that you wish to be provided. There is enough in this thread to go on if you're interested in doing the hard work of understanding these things and how they can be applied.

 

[Shakone]

Nope - the moment he brings up me having an agenda, he becomes absolutely fair game.

I state and back up my position without making it personal but if people want to mudsling...

I don't mind the insults, you can continue. Everyone has an agenda, not just you. It's about what your statements/actions reveal about your agenda and intent that is interesting.

 

[tar]

And every price move can explained by others as liquidity consumption or lack of liquidity. And by others as cycles, and by others as manipulation, news and others as random noise or statistical likelihood. Some of these concepts may have things in common with others, some may be useful.

As I've said plenty of times, I see nothing new in what has been written about consumption of liquidity, nothing that isn't already contained in the ideas of supply and demand. I don't dismiss consumption of liquidity as 'fook all to do with it' because it is part of supply and demand. I don't dismiss what traders will do if price gets here or there, because it is part of supply and demand. Yes it can sound like a catch-all catchphrase, but it's about a way of understanding something, or a law as New_trader and many of the quotes I gave point out.

Then there is an assumption that supply and demand is just a curve-fit historical explanation, rather than something which is looked at in real time and used to trade on. And despite dismissing it as rubbish and assuming that there is nothing deeper to it as DT does, he now wants to complain because nobody will explain any nuance or deeper understanding to him.

I guess the reason for using the new terminology and dismissing the old comes about because either it is not understood what supply and demand is, or because there is an agenda to sound like you're bringing something new to a very old table and to indicate that you have a better understanding - light years ahead of us I believe the quote was. Maybe you are, or maybe you've ran so far ahead of us, you've gone down the wrong street and got yourself lost. If you're happy with your understanding and your results, that's all that matters despite the semantic arguments we have.

If someone doesn't know what supply and demand are in an economic sense, I posted links to an MIT course on economics so one can find out. I doubt anybody bothered. If someone doesn't know how supply and demand might be applied to the markets, I quoted a number of 'traders' on supply and demand, and several of them have books which go into it, some in great detail. So one can find that out too if one wants. Or not.

Agree same thinking , great post .

Smart money doesn't give a sh** about such semantic discussions , they even don't get engaged into discussion boards at all , trading forums is a place to start and learn but not a place to master the markets and make real money - sincere comment - .

 

[barjon]

..............Perhaps we can show how supply and demand applies to the game of poker. That would be an interesting discussion........

lol, probably just as difficult to show how the speculative model fits as well.

At the end of the day, so what as to what you're calling it, it's still got to be traded.

What are you going to do when you arrive at the point your offside speculators puke (or supply/demand comes in from them if you're looking at it from that perspective). Are you going to go with them because they are adding to the pressure for that direction - or go against it on the basis that with them out of the way it will go back?

 

[DionysusToast]

The discussion degenerates as soon as the mudslinging becomes bilateral though. Whilst the mudslinging is unilateral and the mudslinging liquidity remains unconsumed, mudslinging remains unrealised. Just like a limit order placed at the wrong price.

But if the supply and demand of mudslinging is equal, then we have balance.

Otherwise, what happens is other people see that mudslinging has become directional and they jump on board too.

 

[DionysusToast]

You see DT, you've dismissed cycles, manipulation, news, randomness, statistical properties as well now. Nobody has ever traded on any of these profitably, have they? All losers like the supply and demand minority.

I dismiss any attempts to ascribe cause to effect after the event.

This includes pretty much everything on CNBC

And you continue to insult and attempt to belittle. Getting a bit frustrated are you? It is pretty boring when the US is on holiday. You remind me of a stroppy student who comes to a teacher and says this maths (or whatever subject) has got f all to do with anything in the real world, who cares about algebra and triangles and bloody stats, teach me something useful. Then later begs for help. I am not interested in teaching you DT, providing haymakers or anything else that you wish to be provided. There is enough in this thread to go on if you're interested in doing the hard work of understanding these things and how they can be applied.

Yes - I am frustrated - hence my rambling 4 word retorts as opposed to your 200 word meltdowns.

 

[DionysusToast]

Agree same thinking , great post .

Smart money doesn't give a sh** about such semantic discussions , they even don't get engaged into discussion boards at all , trading forums is a place to start and learn but not a place to master the markets and make real money - sincere comment - .

The smart money is gambling and hedging.

Just that 90% of them are gambling and 10% are hedging.

 

[DionysusToast]

lol, probably just as difficult to show how the speculative model fits as well.

Not really. Study the attached image.

 

[Shakone]

I dismiss any attempts to ascribe cause to effect after the event.

But this is what you do when you say

"The reason price moves in futures markets it (sic) because of consumption of liquidity."

 

[cablemonster]

And every price move can explained by others as liquidity consumption or lack of liquidity. And by others as cycles, and by others as manipulation, news and others as random noise or statistical likelihood. Some of these concepts may have things in common with others, some may be useful.

As I've said plenty of times, I see nothing new in what has been written about consumption of liquidity, nothing that isn't already contained in the ideas of supply and demand. I don't dismiss consumption of liquidity as 'fook all to do with it' because it is part of supply and demand. I don't dismiss what traders will do if price gets here or there, because it is part of supply and demand. Yes it can sound like a catch-all catchphrase, but it's about a way of understanding something, or a law as New_trader and many of the quotes I gave point out.

Then there is an assumption that supply and demand is just a curve-fit historical explanation, rather than something which is looked at in real time and used to trade on. And despite dismissing it as rubbish and assuming that there is nothing deeper to it as DT does, he now wants to complain because nobody will explain any nuance or deeper understanding to him.

I guess the reason for using the new terminology and dismissing the old comes about because either it is not understood what supply and demand is, or because there is an agenda to sound like you're bringing something new to a very old table and to indicate that you have a better understanding - light years ahead of us I believe the quote was. Maybe you are, or maybe you've ran so far ahead of us, you've gone down the wrong street and got yourself lost. If you're happy with your understanding and your results, that's all that matters despite the semantic arguments we have.

If someone doesn't know what supply and demand are in an economic sense, I posted links to an MIT course on economics so one can find out. I doubt anybody bothered. If someone doesn't know how supply and demand might be applied to the markets, I quoted a number of 'traders' on supply and demand, and several of them have books which go into it, some in great detail. So one can find that out too if one wants. Or not.

I am very busy in the markets this week so unlike last week I will refrain to get caught up in arguing about things that don't matter where there is precisely no upside for me.

I did say judging by people's posts DT was light years ahead but I only had what was written to go on. At least DT's posts show some insight into why price moves. Your posts just say it's all demand and supply and some other bunk about price moving when the market is shut without consuming liquidity. Feel free to reply I will read but I will not be replying for the reasons mentioned above. :smart:

PS - if you do happen to write about why price moves I may respond as this is what I am interested in.

 

[robster970]

But if the supply and demand of mudslinging is equal, then we have balance.

Otherwise, what happens is other people see that mudslinging has become directional and they jump on board too.

:clap:

 

[robster970]

I am very busy in the markets this week so unlike last week I will refrain to get caught up in arguing about things that don't matter where there is precisely no upside for me.

You're not trading, you're busy on Grindr looking for someone to hold your rod for you....

Can you tell it's a US holiday today?

 

[Joules MM1]

But if the supply and demand of mudslinging is equal, then we have balance.

Otherwise, what happens is other people see that mudslinging has become directional and they jump on board too.

beautiful .....so few appreciate the art of herding

 

[DionysusToast]

But this is what you do when you say

The difference is, I do this before the event.

You can use the speculative model (90% of actual trading) to determine areas where there are lines in the sand where speculative traders will act in a certain way.

These are specific places where you believe price will do a certain thing with good probability & with good cause. Whilst not being perfect because you never know with certainty, you do know where you will be wrong.

Knowing where you are wrong enables you to control your downside and get into positions where the upside looks better than the downside.

Without worrying about what the 10% are doing.

 

[cablemonster]

You're not trading, you're busy on Grindr looking for someone to hold your rod for you....

Can you tell it's a US holiday today?

yeah not tarding today m8. just googled Grindr, that's bad dude.bad man.