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Zia asked in Business & FinanceInvesting · 1 decade ago

How it can be marked as “Seller pressure” or “buyer pressure”?

A stock has huge buyer or seller are higher, does it indicate in any chart, or in any indicator?

3 Answers

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  • Jerry
    Lv 7
    1 decade ago
    Favorite Answer

    This always seems a bit mysterious since the number of shares bought has to equal the number of shares sold.

    Read about an analytic called "money flow". The idea is to measure whether more shares are trading at the bid price (selling pressure) or at the ask price (buying pressure).

    Some charting ideas like Bollinger Bands might be worth a look too.

  • 1 decade ago

    Price movement is one way to gauge the ratio between buyers and sellers. Because the amount of shares available (supply) is generally close to a fixed amount, an increase in demand (buyer pressure) would result in an increase in price, and a decrease in demand (seller pressure) would result in a decrease in price. The magnitude of the price movement is relative to the volume of shares traded.

    One indicator that I use to predict the future movement based on "buyer/seller pressure" is volatility. I watch the VIX, which measures market volatility. If the VIX is low, then there is complacency in the market, and generally there are more buyers than sellers. If the VIX is high, then there is more fear in the market, and generally there are more sellers than buyers.

  • 1 decade ago

    You have plenty of indicators in technical analysis which you could use for determining if buyer or seller pressure is higher.

    1. Accumulation/Distribution

    When value of indicator is rising buyer pressure is higher (accumulation), when it is falling selling pressure is higher (distribution).

    2. Williams Accumulation/Distribution

    Indicator measures market pressures. Buying/Selling signals are calculated using divergence (value of indicator is moving in opposite direction of trend)

    3. Chaikin Money Flow

    Indicator's calculation is based on Accumulation/Distribution.

    You can also use candlestick chart for identifying buying/selling pressure: longer body for example means that buying or selling pressure is higher. More data could be gathered from candlesticks depending on body and shadow size. You can learn more here: http://www.ta-guru.com/Book/Charts/CandlestickChar...

    On this site you will also find online stock chart with large number of indicators.

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