The Equilibrium, a key to success!
Welcome to our blog: Equilibrium (POC) is a key to success.
Hello dear trader,
Thirty years ago, I began my education in banking, equities and mutual funds in financial services. A few years later I bought my first shares over my bank by phone. After the FX charts in 2006, I made my first experiences with the MT4 and focused almost exclusively on the Forex market from 2010 onwards. Following the regulation of ESMA, I have become a professional trader with my broker. In Europe, only about 4% of all traders fulfill the requirements to register as a professional trader I focus exclusively on EURUSD and USDJPY, as these currencies are the best value for me while providing security. Although the futures market offers significantly better price positions than the interbank market, my security in CFD is incredibly high as my brokerage account can never go down. Regulation takes place in England and leverage up to 1: 400 is possible.
After many experiments with around 1000 indicators, the focus is on supply and demand. I have repeatedly reviewed my more than 10,000 trades as Swing Traders, Daytraders and Scalpers and tried to further optimize. Last year, the Bioniccandle and the insight that only in the tick chart, the number of traded lots can be seen. Today, I work exclusively as scalper and countertrend scalper because I predict short-term trends to be more likely than long-term trends. It is pure speculation to try to predict which way a market will move next. It is only important to know where interests meet and above all - where not. This can generate interesting profits. Small stops, low spread and higher lot numbers reduce my analyzed risk. The developed trading style is unconventional but promising.
In January 2018, I created a blog in FF to focus my thoughts on Equilibrium and share it with others. At the same time, I made the Oracle Certified Master within 2,000 hours in Java to learn the basics of programming. Meanwhile, the programming of MQL4 indicators works quite well. Thanks to the subscribers participating here, we have made significant progress together. I am happy to be able to help, and especially if this makes our subscribers more successful. Together you are always stronger.
This blog is built like a book, it shows a 10-year history of development, which is constantly evolving. When I started trading many years ago, the indicators were a guarantee for me to win. In principle, I needed an independent institution that told me to buy or sell because I did not trust myself. Indicators took control of me and I tried thousands of different indicators. There were three phases in the search for the Holy Grail. Enthusiasm and motivation when I discovered an interesting indicator. Then came doubt and disillusionment and finally the consequence that it is not the right one. And so it went for many years until I realized that due to the different market movements no indicator can function properly in the long term. The fastest indicator is the price chart, but with the closing price of the last candle, the price type was already past.
I focused exclusively on the price chart to determine resistance zones. Here, the identification of equilibrium helped me within supply and demand. This approach provided a breakthrough and profits were higher than losses. I had found my way and now it was about this system to optimize for me.
Supply, demand and market balance form the basis of microeconomics. Take only 20 minutes and watch two videos.
This example with apples shows our market situation. It's always about finding the best price, and the best price is always in balance. Here in the Forex market, there is a crucial difference to the example shown in the video.
Every trader can sometimes act as a seller and sometimes as a buyer. And that is a very special opportunity. But I have to understand the connection between supply and demand. If I can determine the equilibrium on the basis of the Kurtselle, I turned the future probability in my favor.
This blog provides information that helps you quickly identify trend reversals in all time units. You do not need any or only a few indicators. This approach is a bit of a hassle, but it's worth it. At the beginning I try to describe my trade with the help of the Equilibrium. In addition, you will find many general topics that can make life easier for you as a trader.
You will receive information about:
- Find your trading style
- Money Management / Effective Trading
- Supporting indicators
- Risk check of your trading style
- Currency pairs put to the test
- problem of dealers: carbon dioxide
- morning setup
- The hard, unvarnished truth
- Trades without a candle
- Why it is sometimes advantageous to be just a small trader
- The tricks of high frequency traders
- Commercial workstation with 5 screens under $ 2,000
Within these topics, 5 projects have been created so far
1. Trend of supply and demand
2. Bioniccandle-The effective new candle
3. Dashboard - The help in daily trading
4. supply and demand zones - strength outside the candle
5. Tickchart- The Lot, the only reason of price movement
At the moment we are working on our sixth and most elaborate project. It is about combining the advantages of the futures market with the advantages of the interbank market.
This blog is powered by active merchants willing to share their knowledge. If you want to join, please post only blogs on the subject and if you like an article, the participants are happy about a Like. We look forward to your visit and your membership.
First of all, take a look around this blog to see if you can identify with supply and demand. After that, it's best to work through this blog right from the start, as the projects work together. The blog has a volume of about 3 books. It may be a bit of work, but I am convinced that you will get many interesting tips. It sometimes took me many years to get specific insights. Overall, you can even save time.
We wish you every success in this blog and maybe we will hear from each other.
The Equilibrium, a key to success!
For some years now, I've stopped by at Forex Factory and was always excited about the great contributions. Interesting opinions, charts and indicators should help to support the private trader. In this shark tank the forex market is turbulent. The beginners have a hard time. Just think about football once. If you want to learn football, you can start in a youth team and play up to the NFL.
In the Forex market, there is no beginner market, because the beginner plays against the biggest professionals in the world. And how that ends, everyone can think.
Well, if there are such platforms as Forex Factory, where traders from all over the world come together to face the biggest traders in the world. Of course, every trader is the competitor to the other, but you help each other out.
When trading, there are many keys to success. In my first post I want to show you a key to success. I do not want to discuss with you the meaning or nonsense of this key, but about the implementation to success. If the post is of any use to you, use the information, otherwise forget it again.
I do not claim that this key is the master key that always works.
This key works without indicators for all traders (of course only those who want to) in all time units.
The key "Equilibrium"
1. The price is determined by supply and demand in each market.
2. Any influence on the price will be returned from the price
3. Before the price moves up or down, a balance between supply and demand creates a balance.
4. If this balance is disturbed, the price moves in the direction of supply or in the direction of demand.
5. The price moves as long as supply or demand until there is a balance again. Then the whole thing starts from the beginning.
Most candles are where there is a balance. We do not want to trade there, because the price is not moving very much. So we have to act when there is no balance.
There are 3 different states in the market.
1. Offer outweighs the demand = price drops
2. Demand outweighs the offer = price rises
3. Supply and demand are balanced
According to the sellers the offer (short) there, while the buyers represent the demand (long).
1. Offer = Seller (short)
2. Request = Buyer (long)
The quantity available on the market represents the supply, the demand is the quantity that the buyer would like to purchase.
If you shop at the weekly market, do you want to pay $ 6 or 4 $ for 4 lbs tomatoes? Of course, only $ 4. So, assuming the product has the same quality, you will buy from the dealer, who only charges $ 4 for the tomatoes. Thus, the demand will be greater at the cheaper dealer than at the expensive dealer.
So what does the trader who sells the tomatoes for $ 6 / lbs do? For now, he only needs to sell 66% as much as his competitor to earn the same. Or he waits until the competitor has no more tomatoes, then sells his tomatoes for $ 6 / lb and earns 50% more. In the worst case, he has to go down with the price. These competing factors (supply and demand) meet each other in all markets and regulate the price.
In the stock market environment, the price strives to find a so-called equilibrium. At that moment, buyers and sellers are equally satisfied until an imbalance rebalances in favor of supply or demand. Then the prices rise or fall again.
But even if you can accurately identify supply and demand, you will not get on with it. Decisive are the zones where the supply outweighs the demand or the demand the supply.
Known as resistance or support.
These reversal points, which often have an increased volume, must be recognized.
There are many ways to work with resistance and support lines, I myself work only with horizontal lines, because I have the best experience.
Option A: Confirmation of resistance or support
If you have drawn resistance and support lines in the chart, look how the price is there. A later entry will often save you from big losses, but you will get into a less favorable course and minimize your potential profit. Important: the highest possible risk-reward ratio.
Option B: Enter without confirmation
You are sure how the course will behave at your indicated resistance or support line and will board immediately without waiting for a confirmation. If your expectation works out, you are at a bargain price, improving the chance-risk ratio. If the trade unfolds to your disadvantage, you need to get out early to protect yourself from major losses.
Identification of the equilibrium
The big problem with the candles in the chart is the period in which they are formed. Surely you know the candlestick formations like hammer, doji, engulfing, etc. Sometimes you work, but often not. This is due to the temporal composition of the candles. Candle formations in a certain time frame are therefore just a mere random product of the time, the broker and the dealer. If you change the time frame in which the candles are formed, so would the candles and their formations change. The doji is now a normal candle with no indication of a course change.
Therefore one should work with different time units to identify a possible equilibrium. Many turning points can be identified by means of the Equilibrium, but not all. The price in the chart is always random and nobody can predict 100% of the turning points in the chart. It's not necessary with strategic money management either. Decisive is the payoff ratio and the expectancy.
You can often see these turning points in advance and use them to your advantage. You have to look at the past of the charts, because the big traders (elephants) leave their mark in the snow, which is easier to recognize than the tracks of the small traders (hares).
Another advantage is that you do not have to load your screen with unnecessary indicators. Although I work with a self-created dashboard, which tells me primarily the momentary strength of each currency pairs and, for example, the dollar index, but I'm interested in this just before the entry or exit.
My main charts are almost entirely made up of my own resistance and support lines. The Candle Strength indicator often helps me to identify the effective candle thickness, which is not always easy with the above points.
The best indicator is the price chart and the orderbook. But the price chart is a trailing indicator, because only when the candle is completed, I get a meaningful information on the price level. But then it is often too late.
In my preliminary analysis, start with the day or 4H chart to determine the rough direction.
The 1H chart shows me the medium term bias and the 15min / 5 min chart the short term turning points in the market.
A very important instrument for me is the 15 second bar chart. In high phases of volatility you can recognize a structure faster.
A catchy example of equilibrium was in the EURUSD. After the price had risen from 1.03249 on 26.12.16 with a triple top to 1.20921 on 08.09.17 and slowly went into the correction phase, many traders wondered how far this correction would go.
The interesting thing is that the price of 1.15529 in the monthly chart was already reflected in a 2003 Equilibrium.
If you look at the monthly chart from 1994 to 2018, you could derive some trading possibilities from the Equilibrium. This usually works in every unit of time.
Example Equilibrium in the 15 min chart between 11th and 13th October 2017
Now you will wonder if that always works. The answer is NO!
Then all traders would be millionaires. If someone wins $ 100, another will lose $ 100. That's the system.
If you have lost $ 100 you should not be sad. The money is not gone, it has only one other. And he's sure to be happy.
The identification of the relevant equilibrium is difficult and only possible through many years of experience. But as you can see, this trading option is well worth it. It is interesting for swing traders, day traders and scalpers and can be used in all timeframes.
To better identify an equilibrium, one should zoom down from higher time units to smaller time units. This filters out inaccuracies.
Incidentally, it is often helpful in the chart to remove the shadows to better recognize the Equilibrium.
Equilibrium in the 15 min chart with and without shadow
With Buy Limit and Sell Limit Order you can work well in this trading system, but is rather less recommended when scalping.
Even an Equlibrium professional will reach its limits, because trading has changed enormously in recent years. The price is unpredictable and still random. Even if you work with an orderbook, you often have to realize that there are many pseudo orders that are deleted shortly before the target. Oderflow, Footprint and Cumulative Delta are still good help, but unfortunately they can not look to the future.
Trading and making music have something in common. You can learn to play both, but in the end it's the right feeling and flair that determines success and failure.
I wish you a lot of flair and feeling for the great success.
I think This aspect is hurting my journey in limiting drawdown goal with my automation. Any thoughts not on the strategy but more on the price behavior?
P.S. I don't believe in pending orders either so straddling is not an acceptable solution.
Edit: I don't watch charts either. If it cannot be quantified then I don't want to bother with it as i have met my consistency goals via automation and focus remains on max DD.
Edit1: Need more data analysis but feel these SR flips occur more frequently on crosses like AudNzd with USD as the hidden base. My automation runs across all 28 pairs so next obvious step is to filter out the pairs but don't want to go that route just yet.
Would you like to tell us more about the method to find this SR Flip Zone? Thanks in advanced!!
Sorry, I will stop here as this is quite involved.
I also use supply and demand. But I dont trade every consolidation. I only trade the ones that occur during london session because london is the financial center of the world the accounts for 40% of the Forex transactions. Then i use special volatility metrics to set proper SL that is not to close, and proper TP tha tis not to far. I never ask too much from the market. SHort moves, then i close 90% of the trade and let the rest run.
Bionics, Great post and promising great thread. how do you remove tails on MT4?
Many thanks for your high quality feedback. You realize that you are very deeply involved in the topic and have invaluable knowledge in this area. 20 years ago I bought my first shares through Deutsche Bank, from then on I was fascinated by the stock market. Linked to this, the probability calculus was a central life companion for me. I am only dealing with the forex topic for a few years, but the similarities to the stock trading are not so far away. The currencies are a central issue for me, because as Kostolany said so nicely: "The market price behaves to the economy like a dog to a walker: he often runs ahead or behind, but always comes back."
Your theory has charm and I would like to respond to it.
Since 1820, with the beginning of stock trading, they have been looking in vain for ways to eliminate chance. Whether the Turtle Traders or today's EA, it works at short notice. I hope you will never crack the stock market code, because that would be the end of the stock market. This is also impossible according to the theory of probability.
What is possible is to develop a system that improves the likelihood of the payoff ratio and the expectancy in my favor.
Probably it is almost impossible to quantify an equibribrium, so I have omitted in my post.
Let's take the music to the rescue again. There are many talented musicians who are not successful. Is it talent or diligence? No, sometimes it just lacks the feeling and luck to make the big breakthrough.
There is no room for luck and feeling in mathematics, but they are often crucial to success. How do you want to teach happiness or feeling a program? This is possible with the so-called biocomputers from synthetic biology, which use DNA as storage. But that will take another 20 years.
If there were a quantifiable way to identify an equation that many traders use to trade, after a period of time in the SR flip zones, the opposite would happen to the trader.
Your SR flips are a high-quality approach to identifying SR levels. Your million-dollar question: The systematic determination of the equilibrium is a challenge. There has to be an individual, changing pricing that is based on different levels. The normal price type is time-based, Heiken Ashi smoothed and Renko is primarily the price value observed, secondarily the time period within which a price movement has taken place. There could be a so-called three-dimensional 3D chart, which takes into account other price-relevant factors. It is possible to generate a new price scale from this, but who determines these factors, which then lead to a new price determination. And that's exactly the problem.
It would have been easier with the Oderbook. One would have to look at the different price levels in which the price is within a certain period of time and observe how it behaves. From this it would be possible to identify the equilibrium zones more easily, but not in principle. For this purpose, further data would be decisive, such as COT and more
I find your approach remarkably remarkable, with which commitment you research and experiment. On the other hand, it is also fascinating to see traders who succeed with the simplest means. The fact is, only 2% earn real money on the stock market, which is in contrast to the Power Ball Jackpot but still 3,500,000 times better.
I am pleased that we have found a common ground with Equlibrium, which optimizes our payoff ratio and our expectancy.
Good work Bio, subscribed
It reminds me a bit the Abonacci's system : https://www.forexfactory.com/showthread.php?t=449489 and https://www.forexfactory.com/showthread.php?t=255974
Anyway, good luck Bionics.
Hello dear traders,
First of all thank you for your feedback and opinions. The question I was asked: How do I identify an Equilibrium?
The answer: with experience from the gut. If you spent 10,000 hours in front of the screen, you know how it works. At the beginning of the trader's career tried over 1,000 indicators, starting with the RSI, Stochastic, MACD and so on.
I could not do anything with that because these indicators are not ahead of the market, just like the price charts, they are just a thing of the past. So the fastest indicator is the candle, theoretically a 1 second candle, but there is too much inaccuracy to derive a future course.
After many 1,000 hours, I finally cleared most of the indicators on the screen. There had to be another way. If you have watched at least 10,000 hours of candles, you will notice recurring formations over time. I really like the shoulder-and-shoulders-shoulder-formation, but sometimes it only appears in different time-units and does not always behave like you expect.
You have to think and act as the big players. Many of them do not even have a bar chart, but sit in front of 8 screens where the orderbook plays thousands of numbers in seconds. If you refer this big player to the Metatrader, he will look at you questioningly.
In EURUSD, it often happens at 14:30 CET. The price suddenly drops 20 pips, then shoots and shoots up 60 pips. Often it is one and the same player. He pushes the price down first, stops the traders and has 20 pip below the price a big buy limit order. This chases the course upwards. Sure, you could put a buy stop order on the last resistance, the question is what price you come into the market. If you come in too late and the market is in the correction phase, you are outnumbered faster than you think.
It is easier to trade with small money than with big money. So the big player has to come up with something to make a profit. The small traders are not his problem, but the other big players. If two elephants fight with each other you should stay out of it. But you can wait until the fight is over and run with the winner. But that is easier said than done.
This brings us to Equilibrium. I can only write to you how I personally act. My opinion does not have to be right, because every trader has his own opinion and that's a good thing. Also, I do not want to be in the right, I want to trade because it makes me fun and you can also earn money on the side. But for me that is really secondary, because if you have to make money with it, it will be problematic because you have pressure. And printing is not good at trading.
First I search in a chart (the time unit does not matter) for an equibribrium where the price rises or falls sharply thereafter. Here is an example from today's EURUSD between 9:30 am and 2:00 pm CET.
At 10:10 (dot1) and 10:15 (dot2) there was an equibribrium that I drew in the 1 minute chart. The price dropped by 14 pip and then went up again (point 3). Where did the course turn again? In the Equilibrium where afterwards the price fell stronger (point 2). At point 3 there was a bigger equilibrium and you see what happened when the course plunged into my marked area. The course was not so strong. Only at point 6 he went down a bit more. At point 6, a new equilibrium was formed, causing another slide. Point 5 signaled to me that the price would not continue to fall at the moment, but would rather rise.
You see (point 3 + 4) is a larger Equilibruim, the price is not strong. Points 1, 2, 5, 6 are smaller and more informative.
But that is no guarantee.
That was a small example in the 1 min chart. This works in the 4H chart and in all time units, but not always.
Addendum: As I suspected, the price at 14:30 CET has increased by 35 pip within one minute. But as I said, that does not always work.
I wish you a lot of success
Hello redoktober, thank you very much for the info, I'll read through it in peace. I really enjoy learning.
You also a lot of success
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