HIG finished up 100 percent on Friday. At one point HIG was up 120 percent. At up 50 percent I heard the chirping. And chirping by very good traders. Chirp is an old school term defined as a trader definitively predicting the proper price of a stock. Chirp. Old school traders recognize that anything can happen at anytime. Old school traders understand that order flow is more important than your opinion. Old school traders have learned that stocks trade higher for one reason: there are more buyers than sellers.
Back in the day we were mandated to attend MODs, teaching seminars. During one MOD our team leader asked, “What makes stocks trade higher?” The room was filled with bright, ambitious, Ivy League educated traders. Many gave it their best intellectual stab. Chirp. Then there was silence. Finally our team leader smirked and answered, “More buyers than sellers.”
Talking heads are ominipresent on CNBC offering their opinions. Many of which are helpful and well thought out. Most of us as traders are practiced in technical analysis. As you gain experience you develop a feel for the proper price of a stock. Remember that the talking heads are just offering an opinion. Your feel is just an opinion. And technical analysis often works. We use it. But it is just a theory. Utimately, stocks trade higher because there are more buyers than sellers.
I traded HIG on Friday. At 13.80 I heard, “This stock is overextended.” Chirp. At 14.50, I heard, “It’s now up 100 percent. This has got to be the top.” Chirp. At 15 I heard, “15 will be resistance.” Chirp. At 16 a trader exclaimed, “It’s gonna reverse now.” Chirp. Wait that might have been me. Stocks up 50 percent, can go up 75 percent, can go up 100 percent, can go up 150 percent intraday. As long as there are more buyers than sellers than your stock aint going down.
Best of luck with your trading!
12 Comments on “More Buyers than Sellers”
Great post, I couldnt agree more. I caught myself chirping today while trading T. Once I silenced my opinion/chirping and instead looked at the chart / box / market, I got long and made a good trade.
What chart package is that posted above? Thanks for the blog, I appreciate all the insights you guys post here.
Great post, I couldnt agree more. I caught myself chirping today while trading T. Once I silenced my opinion/chirping and instead looked at the chart / box / market, I got long and made a good trade.
What chart package is that posted above? Thanks for the blog, I appreciate all the insights you guys post here.
i dont agree, sellers and buyers are always equal
for example when i buy 500 stocks than there is a seller who sells me 500 stocks etc.
the buying “pressure” is the reason that makes stocks trade higher
your blog ist fantastic
best regards from berlin
i dont agree, sellers and buyers are always equal
for example when i buy 500 stocks than there is a seller who sells me 500 stocks etc.
the buying “pressure” is the reason that makes stocks trade higher
your blog ist fantastic
best regards from berlin
“More buyers than sellers” this is such an old cliche. For every buyer there MUST be a seller. Now are buyers willing to buy at higher levels, to pay up? Supply and demand, thats the difference. There is only a finite number of shares at each level.
“More buyers than sellers” this is such an old cliche. For every buyer there MUST be a seller. Now are buyers willing to buy at higher levels, to pay up? Supply and demand, thats the difference. There is only a finite number of shares at each level.
@2, @3 – The difference between buyers and sellers does exist. That’s why there are specialists and market makers. There is never an even amount of buyers and sellers. When you put in a buy order, your broker tries to find a natural seller. If they can’t, the firm will take on the risk of holding the position. So when prices rise like that, there ARE more buyers than sellers. The specialists and mkt makers move the price up to reduce the risk of holding the stock they just bought at a lower price. When those buyers disappear, the price comes back down.
@2, @3 – The difference between buyers and sellers does exist. That’s why there are specialists and market makers. There is never an even amount of buyers and sellers. When you put in a buy order, your broker tries to find a natural seller. If they can’t, the firm will take on the risk of holding the position. So when prices rise like that, there ARE more buyers than sellers. The specialists and mkt makers move the price up to reduce the risk of holding the stock they just bought at a lower price. When those buyers disappear, the price comes back down.
The correct answer is…
Stock prices rise when buyers are more aggressive than the sellers.
It has nothing to do with there being more buyers than sellers.
The correct answer is…
Stock prices rise when buyers are more aggressive than the sellers.
It has nothing to do with there being more buyers than sellers.
Adam – Please explain more . . .
You say that absent a natural seller to match to your buy order, the broker will “take on the risk of holding the position.” How? Where does the broker get the stock to sell to you?
What is the relationship between the broker and the specialist? Who regulates the price and how do they communicate?
I am a newbie. I want to understand the mechanism of how prices change. Thank you. Your explanation is helpful.
Adam – Please explain more . . .
You say that absent a natural seller to match to your buy order, the broker will “take on the risk of holding the position.” How? Where does the broker get the stock to sell to you?
What is the relationship between the broker and the specialist? Who regulates the price and how do they communicate?
I am a newbie. I want to understand the mechanism of how prices change. Thank you. Your explanation is helpful.