Selasa, 27 September 2011

the difficulty of being a successful big trader


if u want to buy a few bathing soaps
u would obviously go to the neighbourhood shop.
what if you need a few hundred soaps?
u would need to go to the wholeseller.
what if you need a few lac soaps?
(don't ask me why would you need so many. this is just an example)
in this case u need to go to the c&f agents or the company directly.
similarly,
if u want a hundred odd shares where would u go?
and where if u want a few thousands?
a few lacs?
stock market is a market
where retailer
wholesellers
as well as c& f agents
....all go to the same place to shop.
(nobdoubt, primary market, i.e. IPO's are there for mass buying
but there aren't many, especially for the same good stock!)
now, therein lies the trap.
if three types of customers are standing in a queue to buy
hundred, thousand and lac stocks respectively
how would they buy?
if all of them place the order of all they need
at the same time.
the "few lac shares for buying" order
would shoot the prices through the roof.
or the "few lac shares for selling" order
would crash the price through the floor!
this is the reason
why big buyers and sellers
play games.
they get into the garb of "retail trader"
and keep accumulating or distributing shares
slowly but surely
without making too much of a noise.
the moment they make some noise
(there "some" may be "hell of a noise")
markets get scared!
so, when the big c&f agents go shopping
they have to shop gradually
for a long period of time before their "shopping" is done.
not only that,
after their "belly" is full
they have to see their shares go up further (if they are long) or go down (if they are short)
without much of further buying or selling.
for this
all they do it
is not support adverse movement
and support pro-movement if required.
and once their target is achieved
they have to get out
from the same door that the retailers use for exit....
slowly and silently....
lest they should trigger a stampede.
this again explains the gradual down trend.
therefore, any up or down trend
generally continues for some time.
never take a trend to be over too soon.
think from the point of elephants
who have to use the same door as that for goats.
by the way, the fluctuations and volatility u experience on the way
is nothing but the shaking of the "jar"
by the operators
to accomodate more of their greed!
on a different note, just imagine the challenge that u will face the day u become a big trader
seeing an opportunity, wanting to trade fat but unable to slip your big fat order without making a noise!

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