that you think is high compared to what you can later buy.

And now let's mentally look into the trading floor of the exchange. Let's see why prices move from the equilibrium point and how this characterizes the views of traders.

98.18: ask price: sellers trying to trade at a high price.

98.17: equilibrium: last price.

98.16: Ask price: buyers are trying to trade at a low price.

The sole purpose of traders is to make money. This means that a trader will not deliberately enter into a trade if he believes that he can lose. Meanwhile, for the transaction to take place, two parties are needed to agree on a given price. However с самого момента вступления в нее оба участника подвергают себя рыночному риску. ANDными словами, уже от следующего тикового хода один окажется в выигрыше, а второй - в проигрыше. But they both want to win. This means that they came to the contract with diametrically opposed ideas about its future value. However именно такие представления и нужны: иначе сделке не состояться. The buyer believes that he is buying cheap compared to how much he can then sell for. And the seller believes that he is selling dearly compared to how much he can then buy for.

But from the next tick move, one must lose. It turns out that everyone is sure that it does not threaten him. After all если бы продавец считал, что следующим будет тик вверх, то почему бы ему не подождать и продать подороже? The same касается покупателя. After all такова цель игры и единственный способ сделать деньги. In fact, trading is reduced to confrontation: each side believes only its own forecast is correct. However только одна сторона может выиграть, причем непосредственно за счет другой.

Let's say the last price of bond futures was 99.14. Why could it rise to 99.15? To do this, one simply has to find someone willing to offer and pay a price higher than the last one. So she doesn't suit him; he wants to do the opposite, that is, to buy expensive. The appearance of such a person or a group of persons wishing to buy high or sell low compared to the last fixed price is very important for several reasons.

First, if a trader is willing to buy high or sell low (instead of buying low or selling high), then he is more confident in his estimate of future value, even if his confidence is panicky. Secondly, aboutт его действий последняя цена становится минимальной. Thirdly, in his initiative, he acts offensively, beating all those who sold at the last price and deepening the loss of those who sold even cheaper. IN-четвертых, он создает ценовое движение, которое способно набрать затем темп, если другим трейдерам новая цена покажется низкой по сравнению с возможной в the future. The same касается и трейдера, который платит эту цену, чтобы ликвидировать позицию. On the other hand, the seller (that is, the second participant in the transaction) is involved in the market, pecking at the bait of a high price at which to sell. He is sure that he will win on this. AND он действительно продает по дорогой цене, но ни движения, ни ощутимой возможности перевеса в свою сторону не создает. He hits a high and waits for something to happen in the market and, fortunately for him, stop the rally.

So, now let's see how the actions of both participants in the transaction characterize the market as a whole. First, judging by the transaction, no one was completely sure of the future value and did not risk buying at or below the last price. Secondly, no one was particularly offensive and did not open a short position or liquidate an existing long position by offering to sell it at or below the last price. A completed trade at the next higher level creates a new equilibrium. Thanks to him, everyone who bought at the last price wins. But everyone who sells on it loses.

What is left for the losers who sold at or below the last price? If you keep the position, then you need to keep your faith in the future value. You can even add to the position - for greater persuasiveness of your rightness. In fact, with each new rise in the offer price, it becomes much more attractive to them. If they already considered it high even at lower levels, now, with each increase, the deal becomes even more profitable. However, every move the market makes against their position refutes their estimate of future value. After all каждый ход наглядно показывает: продавцы безынициативны, тон задают покупатели, и их шансы перетянуть рынок на свою сторону выше.

ANDтак, покупатели напористо поднимают цену предложения и платят все дороже. For an outside observer, this fact is very eloquent. This means that for trading at each new price, there are not enough people willing to sell for those who want to buy. But if the sellers are in short supply, then the buyers will have to fight for them among themselves.

ANDз простого наблюдения за ценовым движением видно, что на данный момент его сила - на стороне покупателей. But sellers for them are: if there were fewer of them, buyers would not raise prices. The higher the buyers raise the bar, the more the price moves away from the previous sellers. Eventually, their faith in future value will fade. One by one, they will join the resulting mass of buyers, fighting internecine battles for those who want to sell. But those are becoming less and less. AND пока соотношение покупателей и продавцов остается в указанных рамках, шансов на ценовой спад практически нет.

When же они могут появиться? Why the market, having lost its balance, will go back? Because, for example, the former buyers will eventually take the profits. After all тогда они начнут вливаться в компанию продавцов, пополняя собой число свободных для сделки. If this market move develops sufficient speed, then something similar to feeding a crazed shark will begin. As a result, the correspondence between prices and a number of economic factors will be broken, in which other traders will see a pattern, which is why they will start trading in the opposite direction. If the influx of these new entrants is great, it is possible that they will drive former buyers into a panic of joining the descending forces.

To imagine a picture of shying from side to side is not so difficult. The equilibrium is broken as soon as there are not enough buyers for sellers. Then the sellers begin to actively impose a sale at prices below the last one, feeling the limit of buyers for making a deal.

Любое ценовое движение зависит от группового behavior. The market goes one way, then the other, like a tightrope in which buyers and sellers compete. The first believe and expect that the market will go up, and therefore they buy. The second believe that it will go down, and therefore sell.

But if these two forces are not balanced, then one of them will take precedence over the other. More and more letting go of the market-rope, the yielding side will painfully realize its mistake. And such pain is a direct collision with the need to avoid loss. Eventually, one by one, the losers will lose faith in their positions and surrender (i.e., liquidate) them, which will only make the winning side stronger.

Its power will last until everyone sees that prices have gone too far and are already at odds with other confounding factors. Then, in order to eliminate positions, members of the dominant group will have to cross over to the other side, involuntarily strengthening it.

What is it like for an individual participant? Suppose he does not have the strength to really push prices in the direction that is most beneficial to him. What remains? The best thing is to see who wins and look up to this group. When же равновесие опять сместится, нужно равняться на новую группу, идущую к власти.

During all this swinging back and forth, price whirlpools and currents are formed, which are clearly visible on price or pip-figure charts. Before us is a graphical reflection of the mutual and counteraction of market forces. AND оно же визуально отражает то, как трейдеры оценивают будущее и насколько упорно они были готовы отстаивать свое мнение.

Let's say the market goes down. What is likely to happen next? Узнать это помогут ответы нbut inпросы, перечисленные далее.

1. What price action will buyers support if they think they can win even more?

2. When продавцы, вероятно, проявят свою силу на рынке?

3. At what stage are old buyers likely to take profits? At what stage are old sellers likely to lose faith in their positions and roll them back?

4. What could cause buyers to lose faith? What could attract new buyers to the market?

You can answer these questions by identifying certain significant reference points: these are the moments when the expectations of buyers or sellers are likely to increase or, conversely, weaken (if something does not work out for them).

In general, this scheme is quite good for well-known models of typical market behavior and price patterns. Let us therefore turn to the psychological structure of some of these standard models. But first I would like to clarify a number of market definitions.

ПОINЕДЕНANDЕ РЫНКА

What is "market behavior"? This is a group action of individual traders who participate in it, based on their own interest. What does it consist of? It's about taking advantage of future price movement while also creating that movement, because it reflects their assessment of the future.

Behavior patterns are made up of group actions of individual traders - or rather, one of three actions: they open