Dbrown101's Training Wheels

Hi dbrown101

Maybe these from our friend fti’s posts may help…

FTI posts.
1.
For dealers, its a different game, because when markets are going up in a BEAR market, customers keep making them short,
their book keeps getting bigger short, but their average cost of being short keeps going up.
all they have to do is to wait for the trend to enforce and
when the market returns to the point where the buying started ,
he would make nearly the amount of money that made him short in the first place.

For this to happen, he has to have a book big enough to accommadate the customer base.
AND as the market swings back towards the start point, he has to ascertain that his book of shorts, be kept constant.
This is because on the way down the customers will be making him long.
So by constantly covering back to back on the way down he maintains his book short.
So for the dealer, as long as he maintains his poise in the direction of the markets major trend,
he will always make "scalp money", guanranteed.

His modus operandi, is to "duck and move quickly"
so as to have a better average on the up swing towards stops to maximise his shorting near the top of the swing.
This scenerio is most effective if there are stop near levels where he las a large order to sell,
where he can help the customer sell OB and "kill the sitting duck stops" in the same blow.
Another senerio is where by the heavy selling is CB levels or specific sell zones,
where many teir 1 are ready to pounch on the buyers.
You must understand that only tier 1 and some big tier 2 will have this advantage.

This is the reason, why you have rubber band snap backs in the direction of trend directions,
and slow puffy moves counter trend.
Am I making any sense to anyone here?

So we use daily trend as the direction to build book size and short charts to make market for retraces.
Do discuss this on this trread, no questions are silly, just discuss until it becomes clear.
Don't understand !, argue until you understand.
Fight if you must, I will not complain.

YOU MUST GET THE CONCEPT OF MARKET STRUCTURE RIGHT TO UNDERSTAND THE CHARTS.

2.
So you would use the daily charts for trend and candle formations to indicate possible changes in movement. Do you use the hourly similarly? ..."

Yes I use Daily Chart studies to indicate trend,
I use short charts to indicate form.

Ponder this,
On the daily EUR/USD now we see possible topping formation, correct.

We may be right, So tell me where is it going?Should be Down, right?

When will we know if it is going down?
What if on the short charts, its going up?
So do we still want to go short?
So when should we go short?
When the short chart shows you that it topping out, right?


Me back now…

So to me t/a and p/a taken from the core masters is the foundation of what we need to use but we must know WHY the moves are happening this bring in the above from fti and the basics of fundy’s, what Eddy and Franco have shown is good to help you along the learning curve, it is just a shame the way things turned out, I believe they are both good people but life throws things at us and we all face the consequences in the end.

Here are today’ charts of the E/U, you can see what fti is saying within them about the moves and why/how they happen, I have changed the hourly to a line chart as this shows certain things that fti is talking about better, you will in the end find your own way of trading in the now, what you see in other’s journal’s and what is written where ever you look you can take parts that may help you but in the end you need to find your way of trading that suits you, I believe so long as you can use the core basics set out in fti’s training manual you will be on the correct path to succeed.

Regards

Phil.

Attached Image (click to enlarge)

Attached Image (click to enlarge)

Phil,

Its funny that you posted those two posts. I just started another read of Fti's training manual (realizing every time how much I missed through other reads) and spent a good 45 minutes digesting those two posts while taking notes.


This is something I glossed over...Fti saying you must understand the reasoning behind the moves. Which I just rely on basic TA to find direction... which is only half the picture. It seems most people glossed over this as well as there wasnt much discussion about it after.


Does he mean the dealers/ mmakers are trading in the direction of the daily trend(which part of the daily trend? major, intermediate , minor?). for example the last two weeks on euro have been going up.
Has the market maker absorbed those buy orders on the way up (building short size) as everyone is turning long. Maybe offloading some on those couple of down days in between? Or do I have this wrong...maybe they use the the daily trend trend like fti (most recent candles) to see if she's stalling and build book size accordingly (does this make sense?) example: price at your buyers area they are short until a couple bull candles appear and they turn long and build into longs for that last minor swing?

Im guessing this is why fti advocated for new traders to trade in the direction of the Daily trend.



This we discussed earlier in this thread about the stop/duck hunts at tops/bottoms. so I understand this part of it.


right now daily is stalled and short chart topped out a bit at sellers area on daily. wouldve been good to attempt longs at first green line. shorts after red line as she shows signs of topping? although is last minor swing broke the previous minor top so maybe new intermediate trend developing?


Also, on that nzd trade she was at daily sellers area in a down trend. 5min and 15 min showed signs of topping, although hourly hadnt shown it yet, but thats because the smaller moves make up the bigger moves thing...so maybe not a good spot to have attempted longs.


Thank you for your time and patience

Hi dbrown101

Quote’
Does he mean the dealers/ mmakers are trading in the direction of the daily trend(which part of the daily trend? major, intermediate , minor?). for example the last two weeks on euro have been going up.
Has the market maker absorbed those buy orders on the way up (building short size) as everyone is turning long. Maybe offloading some on those couple of down days in between?
End quote’

The answer is best put by fti himself and is in his post…

His modus operandi, is to "duck and move quickly"
so as to have a better average on the up swing towards stops to maximise his shorting near the top of the swing.

This is the reason, why you have rubber band snap backs in the direction of trend directions,

Me again now..

How I use the time frames (though a time frame as we know it does not exist in the market)..

Daily is to tell us where we are in the move, hourly is for direction, M15/5 is for trading and M1 is the closest (using standard charts) you can get to the NOW action due to all the detail of the move being shown.

When I eventually conclude that E/U trade I spoke of you will see I have altered my hourly and wrote the frame usage on them, this conversation helped me see that I needed to do this to explain myself better, so thank you my friend for your help too.

You may wish to note today’s E/U action with reference to your question as well.

Regards

Phil.

My question is ...which swing? the one at the daily chart that is happening as we speak? I was always confused as there are different swings on different time frames. the swings on the hourly? 5 min? i was always confused by this. but Im assuming the daily swing due to fti's statement of " we use daily trend to build book size, and short charts to make for retraces. Im guessing they use the retraces on the short charts are used to entice people into taking trades based on what they need...supply or demand.

So at the beginning of that swing up on daily (near buyers area a couple weeks ago) the Mmakers had been heavily short eur and long dollar due to all the selling (they would gone into the market and covered back to back on the way down). would they start buying back euros at that bottom to cover their position? thus causing the price increase? Thus starting the process all over again. or ...?


No worries. My brain is the type that dissects everything so if there aren't specifics i trail off into all the possibilities...sometimes this is beneficial...other times not so much...and often annoying. so I appreciate your patience in helping me understand. All of this makes sense but I get a little confused as not much is talked about mMakers tactics.

Hi dbrown101

Ahhh my friend you ask the question we all want to know, the key to the markets millions, if A then I do B or if not C, you will never find that key in a black box answer, the market is run on pure irrational emotions of the human mind, conquer that and maybe?? You may get near an answer or maybe not!!, believe me I wanted and searched for that answer for years.

Again fti…

Apologies
-no mentor, or course, or literiture can give anyone the holy grail to the secrets of success in trading in the markets.
-"and no one, sells the goose that lays golden eggs, probably the eggs, but never the goose"
Nevertheless, I will humbly attempt.

And now me back again…
What I have found is only a ‘best guess’ can be tested and so long as that ‘guess’ is not over stretched because of your belief in it then you will survive, this is where AOW is so important as a grounding in survival and enhancement of the ‘state’ (account), fti teaches there are 3 main disciplines we need to survive then learn to trade in a profitable way..

Fti again…

The problem with some people and some professional Technical Analyst today ( being a certified Technical Analyst myself ) is that they use the Technical studies as if, it were the "Holy Grail" of trading & their pathway to the millions.

How far that is from the truth.
Any person with a good brain on their shoulders, will ultimate come to the realisation that these are just tools. Tools that are built on historical and lagging databases. Moreover the rigidity of the parameters used in the studies imposes rigid responses to changing market conditions. Have we forgotten that the market is a live beast that learns and adapts to trader behaviours? Many have forgotten that the market is the sum total of the behaviour of the participants engaged in the market place. These tools are used for measuring the markets health, not so unlike the thermometer to a doctor, or the measuring tape to a carpenter, just a tool.

Then how is it possible that these studies themselves can be considered the "Holy Grail"?
It may be due to ignorance (being new and uniniatiated), lazyness, or just plain stubborness ( a little knowledge is a dangerous thing). Of course it is not nice for me, to tell you about those who have "a little knowledge", trying to scam those who know less than them. That's another story.
Some do so, because of a very new disease discovered recently, the sickness of "the chance".
If you use the Technical studies as your "Holy Grail", I have only one word for you, GAMBLER.

I put it to you, that, to consider your Technical Studies to be more than what they are is a "fallacy" in trading the markets, not so unlike martingale gamblers' fallacy. It can lead you to a very dark place.

What many traders do not know, or may fail to recognise, is that your success in taming the markets, is comprised of a mix of ingredients. Not so unlike in baking cakes.
I suggest three very important ingredients. One is " Market Structure ", the other is "YOU", then Capitalisation. Of course there are many more components, for the moment these seems of dominant importance, in my humble opinion.

I hope you will think about what I've said very carefully.
I shall try to push these doors ajar for you slowly to show you the light at the end of the tunnel (please hope its no on-coming train), God willing.

Me again…
Most people just look at this opening post as just that, but the information our friend has given here is the basis of what he tries make us understand in the coming pages to become successful traders for ourselves. It is hard to accept that you spent sooo much time on one thing to be told that is not all you need to be able to do this, I know I had to deal with this myself, you will come to understand that you did not waste time at all because you can and will develop strategies and tactics that use that knowledge and will make you be able to survive and even make a profit (maybe just not the way you thought you would at first), it is hard and that is an understatement, you need to understand that you/me, we do not control any outcome, all we can do is ‘manage’ things marked to the NOW, everything is like this, it changes you and your life when you break free of trying to ‘control’ things, why does fti say ‘flow’????, being wrong is taught to us as a bad thing from schooling to judgement from our peers all our life, is it? if we can still profit from it??? There is a saying most have heard of but few understand ‘there are no problems only solutions’. My friend, I am dyslexic which also means I am to some degree number blind as well, maybe this has helped me, it certainly has never held me back and does not bother me in the slightest, my friends cannot believe that I can do this and some of them are bankers and run big companies, what they do not know is I have become a very good guess-timater (my other senses have compensated for my other inabilities), trading is not about how accurate you are in things, it is about making money, scouts are your senses to the world of the market place (ment).

I have said and showed how I look at the market and its charts (but that is my way and may not be suitable for everyone), no one know for sure which time frame swing will give the best pips, just test and be willing to accept that at time you could be wrong, be happy with 1pip or 1000pips then if caught wrong the other management skills our friend fti has given lessons on should kick in to save your arse.

Regards

Phil.

You mean you don't have the key? or the goose? hahah. if only...
I just want to know how they (Mmakers) operate. I may ask fti about the statement of building book size in the direction of the daily trend. I've already asked him enough questions and I dont want to bother him too much.


I've definitely learned this. The first time I read through taf I thought..."oh, money management is the key". Then reading again I realized fti was a technical analyst and some examples he gave in the thread made me think..." oh, that's what I'm missing". Then I spent a bunch of time on learning that. Now im on to market structure. I am quickly learning that there is much required to make this happen. Now I know why so many fail.

although...I have found trend following the h1 has been a pretty good predictor of direction. although this seems to be a bias... but I figure if h1 trend is up even if you get caught in a run against the h1 you will most likely get a leg up to rescue out of it. .example (nzdusd) it was a failure push up and was pretty obvious it was going to turn down because it wasnt very impulsive/no momentum. So TA does work pretty well as a tool.


Its good to hear that this is something you have overcome. I've had vision issues (amongst other issues) that I sustained from a head injury 5 years ago in a car accident. Doctors said I wouldnt get much better after the 1 year mark and here I am seeing more/faster improvement now in my 5th year than I saw in my first. Like you said... sometimes we like to box ourselves in with the things we've been taught or told without realizing there are other possibilities. This is one of the reasons I like taf so much. It has taught me much about my situation and life in general. It's been good rehabilitation.

Hi dbrown101

Yes, sorry my friend no keys and golden goose unless you want count the one at xmas sometimes but that does not last long..lol.

I can not truly answer you on how the MM’s operate, not having any actual true live experience of it myself, I only know what I read about them here on TAF, I know if I we are all buying E/U then that will make them short E/U, well of euro’s if they can not match orders in the market and sometimes they have go to the next tier to get/borrow some more if caught out by a move, their job is to keep their books balanced, that is why they have to entice us to sell back to them our E/U and why we see these sideways or retraces (often during the Asian sessions as that is quieter, just like London and US lunch times as well), the way I see it is they hold let us say 3 currencies, USD, EUR and GBP, if they sell us their EUR then price will go up until it finds a level that we just do not want to buy it at anymore, the move becomes ‘exhausted’, they can target trapped areas where they suspect previous euro holders are and just want to sell to them to get out of a trade they took, so that means until this point they will be left with lots of USD and GBP as that is what they took from us in exchange for the EUR, the other two prices will have gone down as they get loaded with too much for the buys/sells they could not match in the market move, when we buy E/U we are buying euro’s and selling usd’s, because we do not actually see the paper in front of us I think we forget this fact, your broker is holding it for you, when they start hitting big orders we start to see the ‘snap backs’ fti talked about as they scramble to re-balance their averages ready for the next move, this is why there are moves like I pointed out yesterday, note how yesterday’s E/U bar took out the tops and bottoms of the previous (2 in this case) bar on the daily, I personally call this a sweep as they hit major stops/orders on both sides, this means the MM’s are happy as they have likely balanced their books again. Please have a look for these bars in the daily and see what very often (not always) happens next, the smaller dealers/brokers do it in the lower frames and the top tiers of dealers do it on the larger frames, hence why we get the moves within moves the way we do.

This is what I have managed to piece together anyway from what I have read and seen in the charts during my own learning curve. As I said I have no actual personal experience to draw from so I may be wrong about all or some of what I say.

The building a position thing is I believe our friend leaves some in for the longer runs (days) and forages on the move daily to help enhance and/or sustain his left in trades/troops… is AOW.

So you are here for the same reason as me, having had an accident we had to find something else to do (sorry to hear about your accident my friend), I think this makes a difference as this is not our intended or chosen route in life and maybe like me you just needed to find something else to do as your options now become limited to some extent, I believe it made me personally more willing to put the time in to learn this and not try to rush through it all to gain that end ‘dream’ (that we did not have for this type of work). I had and continue to have a lot to do with doctors, my accident happened nearly 20years ago now, one thing I have learned about doctors is we put them up there on a pedestal thinking they can sort anything out that happens to us, I am not saying they do not do a great job here, but you soon realize after a while they do not quite know as much as you may of first thought they did, like you I was told all sorts which a lot of has turned out to not quite be so correct let us say! The best person I have found to help me is ME! They do not tell you this and I think they should. Well done my friend for making good on your recovery.

Regards

Phil.

Thank you for sharing your knowledge on Mmakers. There really isnt much out there on the subject as I am sure they try their hardest to keep their operations secret. Fti is our only resource to what goes on behind the scenes. sadly though I feel everyone passed that up when he made that post, mostly because it was over everyones head. It's taken me a while to wrap my head around it. I will give some thought to what you said

I've noted the outside bar key reversal on euro...curious as to what happens next. it seems bearish but given that the gbp minor swings are making higher highs and higher lows(daily), im wondering if the euro will find support and head up. best I can do is follow.

I understand fti leaves smaller positions after his attacks to ride the daily trend. what I was mentioning was trend following the h1 and if she moves against you build into position ie rescue on retrace then take profit when she swings back. but the trades take longer to materialize due to you technically trading the h1 timeframe using 5 min as entry. I think this is different from fti as he traded 5 min and zoomed out to hourly if in trouble or price became choppy. The thing is is volitility is so low these days I have a hard time dancing like that. It usually ends up as a hourly trend trading exercise.

No worries about my accident. It's just a part of life I have to accept. This is why I am glad I found fti's thread. So many life lessons. You can't control every outcome. You can only choose how you react to it. The other lesson fti taught me was the its up to YOU and your mindset. Dont get me wrong...doctors are useful and necessary at times. But you have to realize you are putting your life in the hands of another person. These people may or may not have other agendas. Furthermore their minds also have conditioned biases just like you and me. they arent infallible. They are people too. It's ok to seek their help but in the end ... its up to YOU

This is what I mean by pacing the hourly. the euro's atr is 45 pips so volatility is too low I think to trade 5 min trends most of the time. otherwise you are scalping for 10 pips/ and It makes it hard to attack so a lot of the time im just trading the hourly with 5 min as my entry. also note the flag and pennant patterns on eur and gbp daily. so I think being cautious is best stance.

Im not very good at knowing when to attack. markets are very thin today so no worries about attacking.

spoke too soon market cracks. lets see if they get these stops on bottom

squared +10pips

Hi dbrown101

Ok, I see what you mean, I think.. sometimes things have to be explained to me a few times over before I completely understand especially if it is in written form, that is why I post mainly charts, I have tried to trade the hourly swings but you need to stay up for far to long or wake up every hour (which I have done) for it to be effective and catch most of the run, it is just not a feasible way of trading unless like fti you had a team under you doing rotations around the clock to constantly watch the moves. this is why I say I use hourly’s for direction. Btw.. BOJ are manipulating their currency so it is not a true reading in the 3K’s atm, actually it has not been for a while now due to that.

Let me show you something that may help, we really need to understand where the buyers and sellers may be, I have covered this in the longer term chart at the major point but the action also give off some good clues… chart below of why today has reacted as it has.

Regards

Phil.

No worries. I have trouble understanding market concepts unless there is a picture to show. There's just too many ways of viewing the market and too many generic/ambiguous terms that mean different things to different people. But I think you get my point about the hourly

The area you showed in the box on your 15 min and my 5 min...sellers getting in on trendline. buyers getting out at break even caused price to drop again

as far as the buyers at the level I indicated in the green circle. doesnt seem like much are there. that bull run up in green circle is just sweeping I think. In chat logs with fti and leigh, fti mentions small alternating bars are signs of stop sweep. so my guess was there wasn't going to be too much buying... maybe trapped shorts looking to get out? but why if its trending in their direction longer term? they are gunning those stops as we speak




also I get confused about which moves to trade other than the h1 swings in the direction of its trend. I guess I havent figured out what my MO is for trading 5 min dance. i just dont know what move Im going for , when to attack , when to take profit if Im not pacing the 1h swing.

Hi dbrown101

Quote..
maybe trapped shorts looking to get out? but why if its trending in their direction longer term? they are gunning those stops as we speak
end quote..

short answer the majority of people are trading on their emotions, they make an entry and they are immediately ‘scared’. Being scared = easy bait for MM’s.

MM’s.. they have three choices, match orders (make the spread), fool people into selling their euros back to them (they make real money) or supply the money themselves ( this is not what they want to do really as they may have to borrow more), they need stock like any business does if they want to make money.

For me when I look at the trading charts H1 and M15 I try to find where the buyers and sellers may be and watch the action unfold there, you can often see the gaps that have little resistance in-between them and so can often get an idea of where the move may be going too, but we must follow the action as it unfolds and not set these up as rigid targets.

Anyway price is there now and it is Friday late into the whole trading session so not expecting to much as we enter into a generally quieter time soon.

Enjoy the weekend my friend.

Regards

Phil.

Shorted euro...

for some reason my broker or mt4 logged me out of my live account and I was logged into a demo account and I hadnt realized it when I placed my trades. My original entries were scout at the first arrow on the left and my attack (3) was at the second red arrow. after realizing it wasnt my live account I closed those trades and tried to get in as quickly as possible but ended up chasing price. so not an advantageous position atm. I missed 5-7 pips with that mistake and now my positions are in the negative as market retraces

not too happy about that mistake but things happen and mistakes are a part of the learning curve.

squared for a loss. not liking what I'm seeing. Not looking like she wants to dance atm and I am on a time schedule today

not trading atm. just wanted to note the bullish flag on Eur daily and the Bullish pennant on the Gbp . Eur found a double bottom on the hourly and Gbp found a double/triple bottom as well.... looks like we may see bullish moves in the days to come. No prediction...things change...constantly in flux

I might open up to buy eur if she retests the resistance turned support on hourly . provided theres bullish momentum

flow like water