I realize the way we look at the market should be the same way as how we react to real life market. Bargain price, fair value, etc
While this is nothing new, i admit that it's heavily influenced by reading those concept of Wyckoff, Smartmoney concept, S&D, Market profile or ICT and if anything here looks like it - yes it is. This is not rebrand their concept or anything, just oversimplifying it to the core so anyone can grasp it.
When we're new to trading financial market, all of conventional techniques drive us far from "common sense". The advanced chart, many oscillator indicator, Candle stick patterns, chart pattern, etc.. These are not the way we react to everyday consumer market. You know a smartphone worth $500 to you and that is, you pay $500 or below.
Speculation market is slightly different, and this's why things start become messy. This pattern happens over and over again:
- People buy stufff for use -> become scarce -> Price up -> "Investors" see that potential demand, jump in early and hoard it -> More demand push price increase further -> Speculation see it and jump in with "borrowed money" -> to the point there's no real "buy to use" demand and the whole thing collapse.
The point here is how do we be in sync with early investors? Early investors perceive potential fair value and start accumulate inventory around this level. Knowing the level ourselve is difficult, market action can bring us a hint.
I separate market participant into 3:
- Dealer: people who don't make money on sell high, buy low but by making market, matching buy - sell order and making money on spread. They move price to places so they can match as many transaction as possible.
- Smarkt money: People who jump in market and later they see market goes in their favor. Often Early value investor buy below market price and distribute inventory above market price.
- Dumb money: People who jump in market and later they see market goes against their favor.
How those stuffs fit in markt chart?
This is EU fx future on weekly chart
Added the difference between German bund yield and UST note, 10yrs term in the chart
As we know in currency market, Price should chase yield. This is not fundamental topic, if you interested in intermarket correlation, this is my other thread https://www.forexfactory.com/thread/...ce-tells-story
Anyway, if for some reason that price disconnect with yield,
Price is over/under value. Later we know that because market moved away from these fake breakout. We can call whatever the market did above/below these break out as "Smart money accumulation" - Market went in their favor aftermath.
And who jumps in and buy market when it break to upside is "Dumb money" - Market went against their favor.
I put in the Volume profile to help clarifying thing
Ps: Not finished.
While this is nothing new, i admit that it's heavily influenced by reading those concept of Wyckoff, Smartmoney concept, S&D, Market profile or ICT and if anything here looks like it - yes it is. This is not rebrand their concept or anything, just oversimplifying it to the core so anyone can grasp it.
When we're new to trading financial market, all of conventional techniques drive us far from "common sense". The advanced chart, many oscillator indicator, Candle stick patterns, chart pattern, etc.. These are not the way we react to everyday consumer market. You know a smartphone worth $500 to you and that is, you pay $500 or below.
Speculation market is slightly different, and this's why things start become messy. This pattern happens over and over again:
- People buy stufff for use -> become scarce -> Price up -> "Investors" see that potential demand, jump in early and hoard it -> More demand push price increase further -> Speculation see it and jump in with "borrowed money" -> to the point there's no real "buy to use" demand and the whole thing collapse.
The point here is how do we be in sync with early investors? Early investors perceive potential fair value and start accumulate inventory around this level. Knowing the level ourselve is difficult, market action can bring us a hint.
I separate market participant into 3:
- Dealer: people who don't make money on sell high, buy low but by making market, matching buy - sell order and making money on spread. They move price to places so they can match as many transaction as possible.
- Smarkt money: People who jump in market and later they see market goes in their favor. Often Early value investor buy below market price and distribute inventory above market price.
- Dumb money: People who jump in market and later they see market goes against their favor.
How those stuffs fit in markt chart?
This is EU fx future on weekly chart
Added the difference between German bund yield and UST note, 10yrs term in the chart
As we know in currency market, Price should chase yield. This is not fundamental topic, if you interested in intermarket correlation, this is my other thread https://www.forexfactory.com/thread/...ce-tells-story
Anyway, if for some reason that price disconnect with yield,
Price is over/under value. Later we know that because market moved away from these fake breakout. We can call whatever the market did above/below these break out as "Smart money accumulation" - Market went in their favor aftermath.
And who jumps in and buy market when it break to upside is "Dumb money" - Market went against their favor.
I put in the Volume profile to help clarifying thing
Ps: Not finished.