pooh123 replies to: Hey…what about Volume?

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You poked the bear, so now I must chime in.

I want to start off by reiterating that for every buyer there is a seller, and for every seller there is a buyer. Anytime you hear statements like, “The market went UP because there were more buyers than sellers.”, or, ” The market went DOWN because there were more sellers than buyers.”, they are completely false. A transaction can not occur without both a buyer and a seller. What moves the market is determined by the AGGRESSION of one side versus the other.

Let’s take a closer look:

Suppose we have a Market of one car. We have a seller who is willing to sell the car for $100,000. The ASK price, is therefore $100,000. We have one buyer who is willing to buy the care for $50,000. The BID price, is therefore $50,000. Now in the real world, they might split the difference and settle on $75,000. But in this example, the car must sell for either $50,000 or $100,000. So if neither party is willing to transact at the other’s price, nothing happens.

Now suppose that the buyer believes that there are other buyers who are willing to pay the $100,000. In order to ensure that he gets the car, he must accept the ASK price of $100,000. This motivation, enthusiasm, or AGGRESSION, will cause the market to move UP to the seller’s price.

Conversely, suppose that the seller has knowledge that there are other cars available down the block. In order to sell his car before the buyer walks away and finds another car, the seller must accept the BID price of $50,000. Again, this motivation, fear of losing out, or AGGRESSION, will cause the market to move DOWN to the buyer’s price.

Thus, this market only moves when one side, either the buyer or the seller, is AGGRESSIVE. This is true of all markets, just on a larger scale. AGGRESSION moves the Markets.

Here’s a look at today’s EUR/USD on a 15 Min. chart. Not all AGGRESSION BARS (aka STRUCTURES) are labeled, but all are colored.

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