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

[Shakone]

you are still confused between the supply of an underlying quantity of something and the supply of futures contracts available to trade on that underlying something. until you get passed this point you cannot move forward.

Not confused at all. Are you confused?

 

[cablemonster]

hence why some come to the erroneous conclusion than more sellers(quantity of participants) than buyers(quantity of participants) will push the market down.

the selling volume is always equal to the buying volume.

if by sellers you mean (and I suspect you do) people who are willing to pay the market price to sell right now (aggressive sellers) then as a general rule the market price will go down when there are more of these than aggressive buyers. a plot of the cumulative delta tells us this. that doesn't mean price went down because there was more aggressive selling volume but generally this is what is observed when price goes down.

 

[cablemonster]

Not confused at all. Are you confused?

have you called eurex yet?

 

[Shakone]

have you called eurex yet?

Yeah, they have position limits. Bit of a bummer that...

Is your position that because you disagree with me, you automatically assume I'm confused? Wow.

There is the underlying, and there is the futures contract on the underlying. These are connected but distinct.

 

[cablemonster]

Yeah, they have position limits. Bit of a bummer that...

do they have position limits? first I heard, we are talking about availability of futures contracts not clip size anyway. If I can trade 50 contracts a clip what's to stop me buying and selling 1000 times.

Is your position that because you disagree with me, you automatically assume I'm confused? Wow.

nope not automatic It's clear to me from the way that you have presented your points that you are confused. Just because you don't feel confused doesn't mean you are not confused. anyways you posts are not clear, you are careful not to state specifically what you believe.

All I have tried to do is help you move along your understanding. We had the same thing before with Barjon who wouldnt accept being long and short was flat, at the end of the day he is going to believe what he believes, we cant change him - and I mean no disrespect to Barjon, good luck to him if that works for him.

I will let Toast take over the fight for the Asian session.

 

[Liquid validity]

Yeah, they have position limits. Bit of a bummer that...

Is your position that because you disagree with me, you automatically assume I'm confused? Wow.

There is the underlying, and there is the futures contract on the underlying. These are connected but distinct.

Shak, I answered the size limitation problem yesterday:
http://www.trade2win.com/boards/forex/178568-searching-holy-grail-theory-true-16.html#post2181352

Last sentence reminded me of this:
http://www.trade2win.com/boards/forex/178568-searching-holy-grail-theory-true-14.html#post2181308

 

[new_trader]

If I can trade 50 contracts a clip what's to stop me buying and selling 1000 times..

Your margin, surely? I have enough in my account to open only 1 ES contract. If I open a long position and the market moves against me enough, my margin is gone and I am out of the game. That is no different to if I only had US$5000 and used the lot to buy shares. To imply that I can just keep buying contracts an infinite number of times is wrong because it ignores the issue of initial margin.

 

[Shakone]

do they have position limits? first I heard, we are talking about availability of futures contracts not clip size anyway. If I can trade 50 contracts a clip what's to stop me buying and selling 1000 times.



nope not automatic It's clear to me from the way that you have presented your points that you are confused. Just because you don't feel confused doesn't mean you are not confused. anyways you posts are not clear, you are careful not to state specifically what you believe.

All I have tried to do is help you move along your understanding. We had the same thing before with Barjon who wouldnt accept being long and short was flat, at the end of the day he is going to believe what he believes, we cant change him - and I mean no disrespect to Barjon, good luck to him if that works for him.

I will let Toast take over the fight for the Asian session.

The first part was already answered only a few posts back. Are you talking about infinite supply, or theoretically infinite volume. They are not the same thing. I'll return to some quotes of from market wizards who are confused just like I am

"After the first serious price break below the base, there will usually be several pullback attempts. The prior base will now
provide an area of overhead supply, as all investors who bought in that zone will be losing money"- William O'Neil

"It is a case of supply and demand: Because
you have more supply, it takes a lot more money to move those stocks." -Ryan

"Demand got bigger and bigger, while at the same time, the supply was going down. You would have had a great bull market in gold in the 1970s, no matter what. Even if inflation was at zero percent, you still would have had a
big bull market in gold during the 1970s, because of supply and demand." - Jim Rogers

"So the markets today are basically the same as the markets in the 1970s, 1960s, and 1950s? The same as the markets in the nineteenth century. The same things make markets go up and down. They have not changed the rules of supply and demand."- Rogers

 

[Shakone]

Your margin, surely? I have enough in my account to open only 1 ES contract. If I open a long position and the market moves against me enough, my margin is gone and I am out of the game. That is no different to if I only had US$5000 and used the lot to buy shares. To imply that I can just keep buying contracts an infinite number of times is wrong because it ignores the issue of initial margin.

No need to bring practical concerns about margin into this discussion, this is all theoretical.

 

[cablemonster]

Your margin, surely? I have enough in my account to open only 1 ES contract. If I open a long position and the market moves against me enough, my margin is gone and I am out of the game. That is no different to if I only had US$5000 and used the lot to buy shares. To imply that I can just keep buying contracts an infinite number of times is wrong because it ignores the issue of initial margin.

I am speechless. in this context buying shares and futures is very different. just supposing we all agree that there is a finite limit of 100million contracts of ES available, in some parallel universe where the earth is flat. Let's just suppose that the CME issues a new rule and says we are going to limit the number of ES contracts to 100million per day, we are going to restrict the supply.

ok so where do you go with it now? the average volume is say 2m per day, are you honestly believing that even in this parallel universe that people will buy/sell futures contracts because they think they will run out.

not content with being wrong you want to argue about something that doesn't matter.

 

[new_trader]

I am speechless. in this context buying shares and futures is very different. just supposing we all agree that there is a finite limit of 100million contracts of ES available, in some parallel universe where the earth is flat. Let's just suppose that the CME issues a new rule and says we are going to limit the number of ES contracts to 100million per day, we are going to restrict the supply.

ok so where do you go with it now? the average volume is say 2m per day, are you honestly believing that even in this parallel universe that people will buy/sell futures contracts because they think they will run out.

not content with being wrong you want to argue about something that doesn't matter.

How have you addressed the issue of initial margin? I said, if I buy 1 contract on the ES and the market moves against me enough to wipe out my margin, how do I buy another contract? In your parallel universe, traders don't suffer losses and don't get emotional and reluctant to pull the trigger again....no they merrily click buy and sell a trillion times a day...

 

[cablemonster]

The first part was already answered only a few posts back. Are you talking about infinite supply, or theoretically infinite volume. They are not the same thing. I'll return to some quotes of from market wizards who are confused just like I am

"After the first serious price break below the base, there will usually be several pullback attempts. The prior base will now
provide an area of overhead supply, as all investors who bought in that zone will be losing money"- William O'Neil

"It is a case of supply and demand: Because
you have more supply, it takes a lot more money to move those stocks." -Ryan

"Demand got bigger and bigger, while at the same time, the supply was going down. You would have had a great bull market in gold in the 1970s, no matter what. Even if inflation was at zero percent, you still would have had a
big bull market in gold during the 1970s, because of supply and demand." - Jim Rogers

"So the markets today are basically the same as the markets in the 1970s, 1960s, and 1950s? The same as the markets in the nineteenth century. The same things make markets go up and down. They have not changed the rules of supply and demand."- Rogers

we are all talking about the amount of futures contracts available to trade, the rest is symantics.

quoting market wizards who have used the words supply and demand does not help you.

 

[Shakone]

we are all talking about the amount of futures contracts available to trade, the rest is symantics.

quoting market wizards who have used the words supply and demand does not help you.

It's not meant to help me, it's meant to help you, or others who don't think supply and demand is relevant.

If you think all of these highly successful traders are off their rocker, then that's up to you.

 

[cablemonster]

How have you addressed the issue of initial margin? I said, if I buy 1 contract on the ES and the market moves against me enough to wipe out my margin, how do I buy another contract? In your parallel universe, traders don't suffer losses and don't get emotional and reluctant to pull the trigger again....no they merrily click buy and sell a trillion times a day...

honestly I am embarassed for you. what about the guy who you sold to, he now has more margin doesn't he. He can now trade more contracts. put 10 traders in a room each with $10,000 margin ($100k total), they can only trade with each other and all must start flat and end flat. At the end of the session how much margin is left to trade with? dont even mention transaction costs or I am out.

 

[new_trader]

It's not meant to help me, it's meant to help you, or others who don't think supply and demand is relevant.

If you think all of these highly successful traders are off their rocker, then that's up to you.

I get the impression that some people have never had a margin call and been locked out of trading because of insufficient funds...Maybe my broker didn't know futures contracts are infinite!?

 

[Liquid validity]

Are you talking about infinite supply, or theoretically infinite volume. They are not the same thing. I'll return to some quotes of from market wizards who are confused just like I am

As far as contracts are concerned, volume or number of participants is not the issue.
As discussed here, the contract issue is related purely to number of transactions
possible.

Look at these charts again:
http://www.trade2win.com/boards/forex/178568-searching-holy-grail-theory-true-14.html#post2181324
Pre 2007 anyone would have said there was a volume and quote ceiling.
That has been proved wrong.
Yes infinite quotes and volume are impossible.
Yet no one knows where or if there is a ceiling, apart from current peaks.
There is only a limit if proven, or already known about in advance.

These massive spikes in volume and quotes have come about purely by
HFT RT speed and quote stuffing.
Thats largely been facilitated by no cap on number of daily transactions.
The reason there is no cap on daily transactions is because contract supply is unlimited.

Unlimited contract supply does not mean:
Unlimited volume,
Unlimited participants,
Unlimited capital flows into markets,
Unlimited buying or selling at a certain price level.

It only applies to contracts, which are a simple transaction agreement
between two parties that agree to exchange at that price.
There is no limit on how often those same 2 or different parties can agree
an exchange at a mutually acceptable price within the same day.

The practical limits are transaction speed and liquidity, not transaction (contract) frequency.

 

[new_trader]

honestly I am embarassed for you. what about the guy who you sold to, he now has more margin doesn't he. He can now trade more contracts. put 10 traders in a room each with $10,000 margin ($100k total), they can only trade with each other and all must start flat and end flat. At the end of the session how much margin is left to trade with? dont even mention transaction costs or I am out.

Yes he does but I am out of the market now! Get it? I cannot contribute to any more supply or demand regardless of where the market goes. It makes no difference if contracts are infinite, I can no longer participate. If there are 100,000 people like me and only 200 with all the money, what use is it to them? There are now 100,000 fewer participants...

 

[cablemonster]

It's not meant to help me, it's meant to help you, or others who don't think supply and demand is relevant.

If you think all of these highly successful traders are off their rocker, then that's up to you.

mate you are now baiting and switching the argument. Toast said supply and demand had fook all to do with price movement. I merely said I found it unhelpful to think in terms of supply and demand as if there is a physical underlying shift in demand and supply. What I am saying is that if crude just went up 10 ticks I dont think that is because of a change in the physical supply and demand of crude I think it is because of short term speculators.

the way I think of supply and demand is say oil is at $109 p/barrel, if price drops to $108 and a ton of people are passively buying it there then that is my demand, if price increase to $110 and a ton of people are passively selling it there that is supply. For me I find it unhelpful to think of it as changes in the physical demand and supply of the underlying.

 

[cablemonster]

Yes he does but I am out of the market now! Get it? I cannot contribute to any more supply or demand regardless of where the market goes. It makes no difference if contracts are infinite, I can no longer participate. If there are 100,000 people like me and only 200 with all the money, what use is it to them? That are now 100,000 fewer participants...

I am speechless.

 

[Shakone]

mate you are now baiting and switching the argument. Toast said supply and demand had fook all to do with price movement. I merely said I found it unhelpful to think in terms of supply and demand as if there is a physical underlying shift in demand and supply. What I am saying is that if crude just went up 10 ticks I dont think that is because of a change in the physical supply and demand of crude I think it is because of short term speculators.

the way I think of supply and demand is say oil is at $109 p/barrel, if price drops to $108 and a ton of people are passively buying it there then that is my demand, if price increase to $110 and a ton of people are passively selling it there that is supply. For me I find it unhelpful to think of it as changes in the physical demand and supply of the underlying.

How is that baiting? Don't be such a softie, you and DT have been throwing around insults yet only NT has been called on it, and now apparently I'm baiting.

I understand your viewpoint, and I believe it stems from you thinking that supply is about some fixed quantity of things sitting in a warehouse that will become abundant or scarce. If that's all you think supply is, then it is no wonder.