WHAT MAKE MARKET TO DO UNCERTAIN MOVES – IS IT NEWS OR TECHNICAL ANYTHING ELSE??? KNOW MORE…….

As many of us are in market from long time, and every one having different system of trading, some one trade on NEWS some on one TECHNICAL ANALYSIS, but do we actually know that why market do uncertain move or wild moves sometime.

Do you think some times that news is positive about market but even after that market fall……..why????

Do you think that, i had given proper buy signal in particular stock but its not following my technical s and ever-time doing reverse move…….why???

what is the actual reason’s behind market movements??????

why market moves always opposite to your decision, do you ever think about it???

Market means trading, and when it comes to trading its a game of position’s, if net position’s are in buy then they will trap the sell’s if net potion’s are in sell then they will trap the buyers.

In a decent language we can say that its a game of LIQUIDITY in a market….

Now, What is LIQUIDITY????

Liquidity simply means the amount of money available to chase stocks. When the amount falls, markets fall; when it rises, stocks rise. If there are no changes in liquidity, the markets will not move.

some times we see that market is in panic fall, still some stock are trading 10-20% up for the day, why??

because people are more chasing in such stock they are more liquid stock in which they are ready to convert there cash into asset, so they keep on buying. when they think to convert this asset into cash they sell such stocks at higher level, till they got enough cash.

Classic example of liquidity is given below…

One of the worst things anyone can do in a crisis is to panic, but that appears to be the case today. Research has shown that many people just don’t get the importance and value of liquidity to the market. Primarily this is because of the popular pastime of banker bashing and a distinct lack of knowledge of how the financial markets work. But this is also the fault of a finance industry that continues to propagate greed and ignore the deep mistrust society currently has of the Financial Services Industry in general. Neither is really an excuse for not understanding the basics of what the financial markets need.

Any market will struggle if it doesn’t have sufficient products, buyers and sellers. For example; if there was only one producer of cars, then car prices would be higher, as the manufacturer could charge whatever it liked, until new competition emerged to create more choice and also liquidity in the market for purchasers.

Continuing this theme, if you wanted to buy a particular car but you only had access to one retailer but it did not have the car in stock, you couldn’t get that car. However, if you had access to multiple retailers and they had access to lots of different sources you would not only be able to acquire the car you wanted, but you would be able to buy at the best price.  This is liquidity, so liquidity in any market is all about choice and the ability to fulfill orders.

The alternative to liquidity is to try and match an order. For example, there are a limited number of retailers who have the model of car you want. You go to one of them but they cannot offer you a car at the price you want to pay but given time will try to acquire the car at this price for you. The problem is you will have to wait and indeed unless the retailer can find a car at a price to make a profit or at the very least cover their costs; you may not actually get your ordered fulfilled. This is called an illiquid market.

so all above this gives us a proof that most important thing in market is liquidity, means positions and according to this positions market gives its move, news and other factors are just trigger to trap the retail investors.

hope above thing will really help all small time and all retail investors.