firewalker

sorry to go against you there foale DOW short 11995.

If all the effects and examples I've used doesn't help in illustrating why the law of supply & demand doesn't hold up, then I'm afraid perhaps somebody else might be better at explaining this than me. Take the endowment effect I mentioned. That's only one of the 'anomalies' or 'challenges' to neoclassical economists who's primary law is that of supply & demand. The assumption is that each agent in an economic system will act to maximise their utility/welfare. However, the endowment effect tells us that the value that we attribute to a good/product/service/... depends on whether we own it or not! This is an important thing to consider when thinking about those who hold stocks and those who want stocks. Why do most people sell when it's too late? I'm not sure why you keep referring to "practical" examples, and "real world", when all the examples where real world applications, with real persons (think of the students in post #1) and real concepts. Nothing abstract about it. Yes, but I don't see how any of the above paragraph relates to what we were saying here. Why is it that each time people talk about academic studies they are immediately discredited because the researchers haven't traded before? What's more important is that the study group are traders and what has been examined is trading behaviour. The researches used a scientific approach (starting with a hypothesis) to find an answer on their problem. Now, first, you're being pretty inconsistent yourself. First you talk about the short term (intraday) and now you talk about the longer term, being a bull market. Second, you apparently haven't taken the trouble to even look at the document, because it clearly states that the data under consideration are "all orders placed on the Australian stock exchange during the five-year period between July 1, 1998 and June 30, 2003." The rest of your post is fine, as far as the example goes, but it doesn't answer any of the questions raised. Assuming the law of supply & demand holds up under every circumstance, is assuming all the actors act rationally because that's implied within the definition. But in the stock market we all know this is not the case. Traders don't always base their decisions on reasoning, but a lot of people trade (or try to) on feeling. They feel "price is too high" and sell. For example: I've seen a lot of shorting on oil last couple of weeks... So how much meaning do we give to this "law", when in the end it seems to come down it's more of a "hypothesis" then an actual law? Soultrader just posted an interesting article for that matter: http://www.traderslaboratory.com/forums/40602-post1.html

Thanks for providing us interesting food for discussion ST. Those interested in the endowment effect, might also like to know it's been mentioned in another thread: http://www.traderslaboratory.com/forums/40475-post46.html

I understand erie's point of view, and to be honest I think forcing yourself to take more trades than necessary is putting pressure on yourself. I prefer to take only one or two trades per day, per instrument. If my first trade is a profitable one, I prefer to squeeze out as much as possible out of that instead of looking for another entry. Trade management is more relaxing than concentrating on getting the entry right. I've spent too much time in the past looking to find trades all day when most of them are not worth the risk. But again, it's personal and it's not because one considers himself 'done' that he can't observe price from a neutral point of view. Observing price without thinking of an entry has helped me a lot, so after I'm done I still like to do that to acquire a better understanding. Not sure what you mean by "the next level". I've been in some chatrooms and Skype trading rooms, but most of the time I found them to divert my concentration from what I should be looking at. I've also been in the one here several times and -from what I've seen- Jwhite is doing a very nice, and interesting job in analyzing price behaviour real time. But at the same time it can be distracting if you're seeing or looking at something else and you are focusing on your chart or your instrument while the other guys are talking about something which is (or can be) totally unrelated to what you're doing... I might give the chatroom another shot, the lock-ups I was experiencing might have been resolved by now.

Considering it was a late night scalp, and that the entry signal was actually an exit signal for me longs, exit @ 12050 means +50 and is much more than I had hoped for.

Actually, the majority of my trades seem to mirror a "lack of greed", if you want to put it that way. I'm still adjusting and tweaking my strategy as I go along, but today for instance I had sufficient reason to take some off at 1342. Resistance for me was - like you in the chart you posted - around 1349. Holding on for 4 hours might not be 'difficult' strategywise, but it requires a patient mindset, something that I lack from time to time... (but I'll stop now too, as this stuff is more appropriate for my blog).

Impressive

Well we just hit R... Edit: Taking some off at 1342 just seemed the safest thing to do (at the time)...

DOW short 12100.

Well perhaps from a contrarian point of view, too many people were looking for this to break lower, so the pro's picked up on that by buying into support...? Thanks for contributing 86834, very active too

Sorry this is not posted in real-time, but the confluence of several elements gave a high probability long signal imo (or several long signals depending on what you're looking for). The difficult part when trading these patterns, is determining the right exit imo. Around 1349 is resistance, but price has had trouble overcoming 1342 on two occasions already today.

I know they're not the same, that's why I asked if there was a difference in the way you draw trendlines as opposed to demand/supplylines. Perhaps I didn't formulate the question that well. Anyway, doesn't matter as you drew the line before price dropped through it, that answers it.

Your demand line crosses price (on the right)... Some posts ago you commented on a chart of mine where I had drawn trendline 'through' price, and you said it was not drawn correctly. Do you consider a channel to more important to guide when price is overbought/oversold, therefore ignoring these 'peaks', and just making sure the lines are parallel?

Mister ed, thanks for the curves. A small note though, supply and demand curves need not have straight lines, they can be non-linear (curved) as well. This is the case when the elasticity of the good is a constant, but let's leave elasticity to discuss another time. But you're right that a rise in the population can increase the demand, but I don't see how any of this explains how a rise in price can (your emphasis) attract a rise in demand. There are several factors which can cause a shift in the demand (or supply) curve, and you mentioned one of them. Consumer preference, income, and a change in the expectations of price are some of the other elements. Let's also not forget that constrained supply can cause a rise in price. Perhaps expectation of a price rise comes closest to explaining why people would want to buy "on the way up", or why a stock seems more attractive after a good report. It seems acceptable that those who are attracted by higher prices, except even higher prices and buy for that reason. But I can't see how the rise itself can lead to an increased demand (as I think it was zdo said), as this is seems hard to compromise with economic theory of supply and demand. (Of course there are a lot of buyers out there who buy in the way down far too early as well...)

It's not because it looks or is random, that it cannot be predicted. Most will accept Pi as a random number, but that doesn't mean we can't tell what the next digit is going to be...

Well I think that's actually the case, it seems like you need to pay for both separately... http://www.livewithoscar.com/index.php?pa=membership You need to have the Gold membership ($99.95/month), if you want detailed daily recommendations... Come to think of it, I should've asked money for some of the daily targets I posted in the past. Obviously, some were wrong as well

I hope I'm not violating any copyright rules here... the ASX study article has been published in an academic journal (Journal of Behavioural Science, Vol. 7, Issue 3, 2006) and digital access to these publications is restricted to registered, paying members. It states that users may "download, print and email these articles for individual use", so if you intend to use this for something else than individual study, do not click the attached PDF document The second article can easily be googled for, but I've saved you the trouble...

As a further reply to smwinc's request for practical examples, I've made a separate post to illustrate some interesting concepts: (1) the endowment effect: "The value of a good increases when it becomes a part of a persons endowment. The person demands more to give up an object then they would be willing to pay to acquire it." There has not been much study about the endowment effects in the stock market, but simply put investors put more value on something they "own" (although there's no obvious physical delivery taking place), then something they want to acquire. In a study from traders on the Australian Stock Exchange, researched found that "sellers appear to value their own shares higher than buyers independent of current market price, by consistently placing sell orders on average "further from the market" (i.e., from the best quote) than buy orders." A very pertinent of the endowment effect is playing out in the housing market imo. In normal market circumstances, people will value their property slightly above the actual value, but when the market is heading for a downturn, the owners will still try to sell their houses for much more than the market is willing to pay. So it would seem that we attribute higher value to what we "own" than to what we "want to own". Are there some emotional elements at work here? Is the fear of losing something we have greater then the greed of acquiring something we want to have? Those who want to sell their real estate will often wait a long time before dropping their price tag, even if nobody is interested. (2) the bandwagon effect: it's typical that near the end of a great bull market, a lot of people are drawn into the market because as prices take a parabolic rise, everyone wants to jump aboard and profit. However, standard theory of supply and demand says that price is a result of our individual preferences and as a consequence people strive towards utility maximization. Obviously price of a stock or commodity jumps because the demand increases enormously. What's interesting about all of this, is that the interaction of 'external' elements seem to influence people's (otherwise?) rational behaviour processes. It seems that, similar to the Vebblen effect, people are assessing "value" on the basis of what others think, even though this does not add any real, objective information (note). (3) Think also about supply-induced demand (not implied): sometimes a new good, product or service is brought into the market where consumers previously had no need for. But now that it is publicly available, suddenly a whole group of people want to buy it. Relating to the stock market, you could think of an IPO. Of course, this is one example that is perfectly consistent with standard economic theory. Note: More of this in a very interesting study called 'Auction Fever: the effect of opponents and quasi-endowment on product valuations'.

Very nice, I was thinking what was keeping people so long to mention this Check out the final paragraphs of the first post, and subsequently posts #20, #21 and #22.

Apart from the free vids on YouTube, I don't know him very well, so I don't feel it's my place to condemn anybody. However, he looks like a decent knowledgeable guy and from what I've seen some of his analysis is pretty good (apart from the indicators which I personally dislike). However, I must say that some elements of the video posted by forsearch have a tendency to sound like the typical "I want to sell you something and you better pick the most expensive service because ... etc etc". Personally, I'd ask some good questions what those $50 per roundtrip cover, because that's a full 1 ES point you need to make up on each trade. And that still doesn't cover the spread, inherent to any instrument. Starting from minute 42 up to 43 or so is also interesting. The other guy says "I rather have an expert tell me what to do and where to buy... that's all you need to know" :hmmmm:

The only reason I referenced to him was because he mentioned trading (or not trading) on specific days... $50 is definitely a lot, but as I'm not sure about what his services include or not, I'll refrain from giving any comments. Besides, this is hardly the thread to do so... I only know of him because of the free videos he puts out, but some parts of the videos smell like pushing people into buying something. He says the reason why he stopped offering some things for free, is because too many people were acting on the signals he gave out...

and final third out at 65 for +8 the YM has fallen much more in relative terms than the NQ...

Thanks Lee. Bit of luck there in the beginning though. Are you trading the YM right now, any idea about 12030? sharp V reversal, but I didn't see anything special about 12030...

byebye luck... stopped out by the exact tick. other half only +25

out half at 12030 for +70 stop moved to 75.