Most of the threads about this topic have died. I converted these articles to PDF so they are easy to read and store. Written by James B Stanley a trainer for Daily FX, they are less highbrow than many of the discussions become on forums and therefore easier to understand by beginning traders. Read "The forces of Supply and Demand" first.
BM. If this is not the place for these stick them somewhere else.
Be warned, if you ask questions about this topic, I will respond using BIG, ENORMOUS words to hide the fact that I can still not work out what the difference is between S&D and S&R except you mark the first with a rectangle and the second with a line
Last edited by dee50; August 31st, 2012 at 10:16 AM.
The following 6 users say Thank You to dee50 for this post:
Reads like an excerpt from a beginner's tutorial for undergraduate students in economy. The approach helps to understand an order book.
However, it is not really applicable to trading for a simply reason .. It assumes that there is a negative feedback which creates demand at lower and supply at higher prices. Limit orders tend to create negative feedback, but market orders do not always follow that logic.
Market prices of stocks and commodities actually often behave in the opposite way. If price moves up, this increases demand, as more traders jump on board the train when it takes off. That principle is what trend following is based upon.
The following 3 users say Thank You to Fat Tails for this post: