Conan the Farmer
Posted 6/4/2019 22:44 (#7541881 - in reply to #7541785)
Subject: RE: hate this market
South Central Iowa
No. I don’t care to play the little who is “they” game. They is a pronoun used to refer to a plural grouping. It’s shorthand so I don’t have to explain a thought in 500+ words. In this case, “the Trade” is used in the same context. It doesn’t look clever to ask the “who is they” question.
There are people in markets who look to sell through points. Sometimes those people are large funds. When points are broken, it can trigger additional buying or selling. Sometimes large investors will push a point, this is known as a squeeze. When the point is broken, those who made the push can buy or sell their positions to the new influx of buyers or sellers, whichever the case may be.
Sometimes, this strategy goes a step further. A large institutional investor may push a point because they wish to actually take the opposite position. When the additional action is triggered, it allows the group who pushed to unload their positions profitably and wait until their counter entry point. Sometimes they will hold the positions through to the entry point of the counter position. The trade typically carries on when an important target is achieved because it is following trend; trying to make money off of a directional movement. These positions may lack conviction and are merely a function of momentum. When the trend reaches the desired entry point, the large investor will buy or sell with force; sometimes liquidating the held position and taking the counter position at one moment. This overcomes the trend and other momentum seekers will join in and create a bottom or top. The trend following traders who lack conviction will have stops triggered or panic sell and this accelerates the counter move. There will be those who possess ownership of that trend after the point break earlier who may attempt to up there positions, often referred to as “defending”, and try to continue trend from this retraced point that the counter move investors and follow on traders bought or sold it to. If the counter move investor/s fail to halt those trend defenders, the move will continue. When the counter investors succeed in holding their entry point, a pivot is created. New buyers or sellers will be atttacted to the price action and aid the counter mover in overcoming the defenders. They do this for a litany of reasons, but the accomplishment is the same nonetheless. Now a new counter trend is established. The “they” who sold or bought to break a point now succeeded in gaining their desired entry and establishing the counter trend.
That is how “trade” works Bob. You can see it
from time to time when we are outside a major point. Sometimes, in the space of a minute or two, the volume will spike and 10x the number of contracts or stocks, relative to recent hours or days, will be traded and we will break through the point. There are large players who can move the market. These are not individuals typically, but institutional investors (funds). They don’t coordinate with each other, they don’t need to. Many watch similar signals and those without strong convictions will come to trend and aid in creating momentum. They don’t do it to literally aid, they do it to make money off early entry into a move.
That’s what “they” and “trade” refers to. I don’t want to type a giant explanation every time.
Edited by Conan the Farmer 6/4/2019 22:57