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Thread: Supply and Demand

  1. #1
    Join Date
    Mar 2008
    Posts
    41

    Default Supply and Demand

    What are we trading? "Price". What drives price, traders sentiment toward the value of that stock. Demand for the stock price goes up. Supply gets met and there are more sellers than buyers, price goes down. Trading stocks is a "Zero sum gain" just meaning for every buyer there is a seller and every for every seller there is a buyer. So trading stocks is a transfer of wealth, form one account to another. To the people who have the knowledge and can apply it, from the inexperienced and uninformed trader.

    So as an astute trader we need to identify those areas on a chart where supply and demand are out of balance. Where we are at some extreme. These extremes can be called a lot of things pivots, breakouts. We also need to know who is on the other side of your trade. You don't want to trade against the professional, (the guy who gets it right most of the time, like Ken) You want the newbie on the other side of your trade. So ask yourself as you place your trade. Who will take the other side of the trade from me at this time and place on the chart?

    Trading is a simple as identifying where supply and demand is most out of imbalance. And it is basic economics 101. Relating this information to a chart is key and this is where Ken can help you.

  2. #2
    Join Date
    Feb 2008
    Posts
    538

    Default

    Thanks, cash - great points, well said. The key is figuring out when the balance is tipping strong enough to continue in our favor after we get in... that's one reason I like playing a wide field of a lot of stocks on small shares initially, to avoid missing on strong moves, then scaling up once the winners are in the money by a bit, gradually working into a position.

    Good point about thinking a step ahead, re who's on the other side of the trade.

    To profits,

    -ken
    Good trading,

    Ken Calhoun, Pres.
    http://www.TradeMastery.com
    http://www.BreakoutMastery.com
    http://www.MomentumDoubler.com
    http://www.ETFMastery.com
    http://www.ADXMastery.com
    http://www.ChartScans.com (daily alerts)
    http://www.DaytradingUniversity.com
    http://www.ForexSuccessMastery.com (w/Peter Bain)
    http://www.StockTradingSuccess.com (w/Steve Nison)
    http://www.SwingScans.com (for stock swing traders)

    p.s. per sec/cftc/ftc regs, none of this is to be construed as trading recommendations, it's just for educational use only, so you can "peek over my shoulder" to see what I'm doing with some of my trades. See www.daytradinguniversity.com/disclaim.htm for full disclaimer. Past performance is not indicative of future performance.
    These pages contain excerpts of actual trades I've made; it's not a complete record of every single trade I make. Some days I'll take trading wins or losses that I do not take the time to screencap and post online; it's a partial record of some of my trades. Note that I am not making income nor profitability claims of any kind. Most traders lose regardless of what they do. The majority of my personal income comes from my training business. I try to capture the best highlights of successful days so you can see practical examples of what I'm trading. There are also days in which I incur losses (and wins) which are not shown. This is simply a partial record showing highlights of some of my successful trading days. No representation is being made that other traders, including customers, will be able to trade like I do. Generally expected (average/typical) trader results are that all traders incur trading losses and most do not become profitable, regardless of the training they get. Commodity Futures Trading Commission (CFTC) Rule 4.41 HYPOTHETICAL PERFORMANCE RESULTS HAVE MANY INHERENT LIMITATIONS, SOME OF WHICH ARE DESCRIBED BELOW. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN. IN FACT, THERE ARE FREQUENTLY SHARP DIFFERENCES BETWEEN HYPOTHETICAL PERFORMANCE RESULTS AND THE ACTUAL RESULTS SUBSEQUENTLY ACHIEVED BY ANY PARTICULAR TRADING PROGRAM. ONE OF THE LIMITATIONS OF HYPOTHETICAL PERFORMANCE RESULTS IS THAT THEY ARE GENERALLY PREPARED WITH THE BENEFIT OF HINDSIGHT. IN ADDITION, HYPOTHETICAL TRADING DOES NOT INVOLVE FINANCIAL RISK, AND NO HYPOTHETICAL TRADING RECORD CAN COMPLETELY ACCOUNT FOR THE IMPACT OF FINANCIAL RISK IN ACTUAL TRADING. FOR EXAMPLE, THE ABILITY TO WITHSTAND LOSSES OR ADHERE TO A PARTICULAR TRADING PROGRAM IN SPITE OF TRADING LOSSES ARE MATERIAL POINTS WHICH CAN ALSO ADVERSELY AFFECT ACTUAL TRADING RESULTS. THERE ARE NUMEROUS OTHER FACTORS RELATED TO THE MARKETS IN GENERAL OR TO THE IMPLEMENTATION OF ANY SPECIFIC TRADING PROGRAM WHICH CANNOT BE FULLY ACCOUNTED FOR IN THE PREPARATION OF HYPOTHETICAL PERFORMANCE RESULTS AND ALL OF WHICH CAN ADVERSELY AFFECT ACTUAL TRADING RESULTS. The information, services, products, claims, and materials on our sites are provided “as is” and without warranties of any kind, either expressed or implied. We disclaim all warranties, expressed or implied, related to strategies and content provided on this site as well as those that are presented in our products and services.Every visitor to this site, and subscriber (or prospective subscriber or customer) acknowledges and accepts the limitations of the services provided, and agrees, as a condition precedent to his/her/its access to our sites, to release and hold harmless Daytrading University, Trade Mastery, its officers, directors, owners, employees and agents from any and all liability of any kind (including but not limited to his/her viewing and/or implementation of this sites’ content, emails, webinars, videos, subscription to services and/or purchase of any trader training product or service herein). Trading is a speculative, high-risk activity. Trade smart.

  3. #3
    Join Date
    Mar 2008
    Posts
    41

    Default

    I have a hard time scaling in , maybe w/ experience it will come easier. I see it as taking on more risk, which is probably just the opposite. Hard time w/ my stops (1st in 1st out) thinking. I've given up profits to many times scaling in. but that the difference btw a pro and a newbie. That's for your advice, it's help me.

  4. #4
    Join Date
    Feb 2008
    Posts
    538

    Default

    Good points, Cash - I'll be doing more training on position sizing and scaling in and out, I'll be speaking at the 2011 February Traders' Expo on the topic.
    Good trading,

    Ken Calhoun, Pres.
    http://www.TradeMastery.com
    http://www.BreakoutMastery.com
    http://www.MomentumDoubler.com
    http://www.ETFMastery.com
    http://www.ADXMastery.com
    http://www.ChartScans.com (daily alerts)
    http://www.DaytradingUniversity.com
    http://www.ForexSuccessMastery.com (w/Peter Bain)
    http://www.StockTradingSuccess.com (w/Steve Nison)
    http://www.SwingScans.com (for stock swing traders)

    p.s. per sec/cftc/ftc regs, none of this is to be construed as trading recommendations, it's just for educational use only, so you can "peek over my shoulder" to see what I'm doing with some of my trades. See www.daytradinguniversity.com/disclaim.htm for full disclaimer. Past performance is not indicative of future performance.
    These pages contain excerpts of actual trades I've made; it's not a complete record of every single trade I make. Some days I'll take trading wins or losses that I do not take the time to screencap and post online; it's a partial record of some of my trades. Note that I am not making income nor profitability claims of any kind. Most traders lose regardless of what they do. The majority of my personal income comes from my training business. I try to capture the best highlights of successful days so you can see practical examples of what I'm trading. There are also days in which I incur losses (and wins) which are not shown. This is simply a partial record showing highlights of some of my successful trading days. No representation is being made that other traders, including customers, will be able to trade like I do. Generally expected (average/typical) trader results are that all traders incur trading losses and most do not become profitable, regardless of the training they get. Commodity Futures Trading Commission (CFTC) Rule 4.41 HYPOTHETICAL PERFORMANCE RESULTS HAVE MANY INHERENT LIMITATIONS, SOME OF WHICH ARE DESCRIBED BELOW. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN. IN FACT, THERE ARE FREQUENTLY SHARP DIFFERENCES BETWEEN HYPOTHETICAL PERFORMANCE RESULTS AND THE ACTUAL RESULTS SUBSEQUENTLY ACHIEVED BY ANY PARTICULAR TRADING PROGRAM. ONE OF THE LIMITATIONS OF HYPOTHETICAL PERFORMANCE RESULTS IS THAT THEY ARE GENERALLY PREPARED WITH THE BENEFIT OF HINDSIGHT. IN ADDITION, HYPOTHETICAL TRADING DOES NOT INVOLVE FINANCIAL RISK, AND NO HYPOTHETICAL TRADING RECORD CAN COMPLETELY ACCOUNT FOR THE IMPACT OF FINANCIAL RISK IN ACTUAL TRADING. FOR EXAMPLE, THE ABILITY TO WITHSTAND LOSSES OR ADHERE TO A PARTICULAR TRADING PROGRAM IN SPITE OF TRADING LOSSES ARE MATERIAL POINTS WHICH CAN ALSO ADVERSELY AFFECT ACTUAL TRADING RESULTS. THERE ARE NUMEROUS OTHER FACTORS RELATED TO THE MARKETS IN GENERAL OR TO THE IMPLEMENTATION OF ANY SPECIFIC TRADING PROGRAM WHICH CANNOT BE FULLY ACCOUNTED FOR IN THE PREPARATION OF HYPOTHETICAL PERFORMANCE RESULTS AND ALL OF WHICH CAN ADVERSELY AFFECT ACTUAL TRADING RESULTS. The information, services, products, claims, and materials on our sites are provided “as is” and without warranties of any kind, either expressed or implied. We disclaim all warranties, expressed or implied, related to strategies and content provided on this site as well as those that are presented in our products and services.Every visitor to this site, and subscriber (or prospective subscriber or customer) acknowledges and accepts the limitations of the services provided, and agrees, as a condition precedent to his/her/its access to our sites, to release and hold harmless Daytrading University, Trade Mastery, its officers, directors, owners, employees and agents from any and all liability of any kind (including but not limited to his/her viewing and/or implementation of this sites’ content, emails, webinars, videos, subscription to services and/or purchase of any trader training product or service herein). Trading is a speculative, high-risk activity. Trade smart.

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