Oooh Yes, it can be seriously difficult detecting the difference between re-accumulation and distribution.
If you read David's nightly ES newsletter, even he speculates one way, then changes to the other, and back again, as the story on the chart unfolds.....
It wouldn't be so hard to work things out, except the professionals don't want you to follow in their footsteps, so they deliberately make it difficult for you to follow, and the only differences are subtle at best, and sometimes the groups involved groups are doing different things at the same time.
This doesn't cause too many problem for the momentum traders, who will buy the breakout, or sell a breakdown, and not worry about the sideways stuff.
But it does make it more of a problem for swing traders and medium/ longer term holders no doubt, but certain techniques can reduce the risk in an entry, or the risk they continue to carry at times (but this risk is rarely zero -, only a free carry holds no risk I guess).
And a lot of the time, it is not just one group of professionals involved in a particular instrument (listed stock, futures contract, currency etc) , but a number of them all trading against each other as well as the retailers (and all these different groups are all in really serious competition with each other, they usually do not like each other much at all, and are in the business of wrong footing each other (just as much as the retailers), if not more..... - so don't think they sit in a room, or the bar on a Friday night together & collude with each other against the retailers - in big liquid markets they generally see the opposition traders as the more serious enemy, not the retailers. I'm sure there are some exceptions to this (there always is....) but mostly, they do not like each other, and are more than happy if they can ruin the oppositions day somehow, as often as they can. However, all that said, if some group of opposition professionals are doing something which will benefit their own group, or that they happen to agree with.....they will join in, and briefly work together for sure....... but in the end, and push comes to shove, it is always "all about them" no doubt about it at all...).
And this is part of the problem, one group may be happy to start taking profits at a certain place on the chart, while other groups are not of the same opinion, so while one group starts to sell down their position, the other groups will have to absorb that supply (at the lowest price possible, without ruining the story overall....), if the rally is to continue.........
This is why the detail on the charts can appear blurred & sometimes be really very hard to interpret during certain periods of time.
So in a nutshell, not all of the trading is always totally clear cut, and not all of the price action is Professionals Vs Retailers, it is often Professional Vs Other Professionals Vs Retailers, and to make matters worse, sometimes the Pro's can even change their minds at the drop of a hat, and either start dumping when they had recently been re-accumulating, or vice versa, depending on their opinion of new announcements concerning the greater economy (Local or World), the sector the instrument is involved in, or the individual instrument itself, at any point in time.
Does this make sense ??
I hope so.....
Perhaps, I can add some more general detail and perhaps some charts on this subject a bit later........
cheers
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