Rookies need to realize what you're getting into before you start

000

hmm this is an interesting take and i kinda get what you mean

It is the real deal, not just a take.

In currencies, you job is to beat the market maker, not the market.

They hide behind the excuse that they are just creating a market, but these algos are being abused among other things and it's easy to pick up on if you know what to look for. Chances are the guy trading a few lots or micro lots in the case of forexfactory members is not going to move the market in his intended direction, yet the algos react to orders like they are. When the market is thin or no one is on your side at the wrong time and currency pair the effects can be devastating.

Your job is to position yourself every time to do this.

Some may never even have to deal with this, but I can guarantee they aren't profitable in the long-run. Some have given up on trading lower time frames and relegate to daily charts in hopes they catch a long-term trend.

Hmmm... maybe quitting my day job to trade forex full time wasn't such a good idea after all...

how do you beat them? where would you position yourself?

That's the million dollar question isn't it. For me to answer that in a complete way would take having to show you for months and then see if you last a year. It definitely isn't going to fit in one forum post.

Short and quick of it...areas of confluence with the catalyst for follow-through. Typically this is also where the real risk is. A dominant portion of the market moves are random in between point A and B's of every time frame. You can try to hop on a trend if there even is one and hope you don't get stopped out, but they know you're there. This is the difference from ten pips you see a lot of forexfactory members touting from the forty to two hundred pips you should be getting.

You want to position yourself where it would be more trouble for them to take price against you. Either way it would be rare you won't be tested in someway.

Technicals and fundamentals will meet at these areas. By technicals, I don't mean crazy oscillators, crab triangles and wave counting etc. The dominant forces in the market will agree and/or over take to move price from these levels.

That's the quick of it without getting too deep. There's too much to cover in a forum.

ah i see, so basically i’ve got to be where if they stop me it hurts them too?

When and where they can't for time being due to the strength or weakness of the currency. The algos will try.

So here's a good example with an interesting twist. Last night RBNZ announced its rate decision, the news outlets all saying that it was pretty much priced in etc.

If you look at NZD/USD you can pick up that it's on a down trend. So in the middle of it the market pauses and liquidity is hunted down, the market trades a bit sideways.

The news comes out and the numbers are announced with very little from the conference...usually that way with RBNZ and the RBA. Never-the-less price spikes up at least forty pips.

So the dumb money says wow I need to get in Long on the good news while the smart money is entering Short to set themselves for the continuation of the move down.

You'll see that price does retrace the spike to test, but doesn't fully...it doesn't happen perfectly each time.

So there is the real risk, but in actuality the best entry. You need to think fast and hindsight is always 20/20. To less experienced and seasoned it's always a bit of a nerve rack, especially if you're trading size. However you manage well and you'll come out nicely, place the right stop etc....you are a risk manager.

If you look at the amount of pips that were traveled by the NY session it's close to a hundred pips. So for examples sake say you place a measly 20,000 units and say a ten pip stop (just an example) that's two dollars a pip and you would've had two-hundred dollars before the US retail sales numbers...

Of course you need to develop experience to help you facilitate such a position to know when to hold and when to take the profit. You're gonna be tested the whole way. How you go about it is up to you.

All this is immensely easier spoken about, but That's trading.

Criteria:

Currency strength weakness:

Make sure your intended trade reflects the current state of the two currencies in your favorite pair.

If EUR is weak and USD is strong in absolute terms then strictly look for short opportunity visa-versa. (one currency being stronger than the other isn't the entire picture...there needs to be true volume/liquidity)

The pair you trade and how you trade it is one of the most important factors. There are utilities that you can purchase for your mt4 platform.

Oversold or Overbought:

Wait for the pair to become either overbought or oversold on your preferred time frame(s) - then wait some more before you sell or buy, don't get tricked by going in early. You can break the trade up in two or three pieces.

Do not underestimate how high or low they can take price. Exploit when it is trouble for them to take price any higher or lower in the session. Again, be mindful of the strength/weakness of the currencies in the pair.

Use RSI as an bellwether - This is one of the only tried and true indicators. It does not take away risk. You can adjust the settings of RSI.

Here in lies the risk. Learning and experience will help you judge from a trend being born or a move is exhausted - ex) the intraday range.

Avoid the middle RSI ranges - This is were their odds of flushing you out is greatly in their favor.

Time of session:

Most retail traders are unaware a large portion of fx intraday movement occurs due to currency market equilibrium.

Be mindful you aren't entering in these ghost moves, you need true volume with other traders' liquidity in the market - do not confuse this with broker liquidity. Think safety in numbers.

Trading loose during low liquidity times with even what might be liquid pairs can easily lead to strings of loss. This is often overlooked. EURUSD should always remain your staple currency pair in this respect.



Conclusion:

This is a very abbreviated list. There's so many more facets that I cannot type. You need to have a this basic fundamental ground work to succeed. The head game among many other things is also something to be practiced.

Cut your losses short unless your trade is broken in several pieces and you're scaling in. Do not wait for the market to turn, they have you. Yes, you may see the market turn after you exit...this is how the algo works. This is why you need to enter at the most advantageous points and plan for the market to go against you - to an extent...there is a difference and it is a skill.

If you hone these simple fundamentals you will not have to worry as there is always another trade soon. The market is not going to disappear. You will be good enough that your worries will be concentrated on choosing the better trades. You will expand upon your knowledge and separate yourself from people in forums like this. Keep things simple.

Stay in touch with the fundamental picture. Subscribe to cheap live economic number releases. Newsimpact, formerly Dataflash is very cheap, but don't get caught up in the propaganda and filler headlines. The moves don't always happen due to fundamentals. This has always perplexed retail traders.

During the trading sessions much can be very subjective, but you do not want to lose the objectivity of these Rules. Once you get better you'll will be able to vary your risk, but don't astray from the fundamental rule-set. It will be the difference from being relegated to scalping ten pips because you don't have a technique to capturing forty to a hundred because you have rules that will set you on a path of true profitability as a trader. The algo is there, do not forget this no matter what you read or people say. If and when you become profitable you will be able to pick up on its action - more evident in thinner pairs. You may even embrace it as a indicator of how strong of a trade you're in.

The above applies to all levels. If you are a true rookie, you need to get out of Demo as soon as you understand margin, leverage and your brokers platform. Start off small, five - ten thousand units. You need to get out of demo and learn how the market reacts to your entry price - even your average price. As mentioned before, you may never notice the algo if you aren't consistently profitable and withdrawing profit.

If you want to make this happen you need to realize it requires your never-ending vigilance. I hope this helps some genuinely good people that deserve to succeed.

H13, this is simultaneously wonderful and terrible information. As I understand it, this algo manipulation is so rife within the markets that it goes beyond the known malice of stop loss hunting, spoofing, or any other tricks the whales play. As you describe the markets, it seems impossible(or atleast daft) to trade under a certain time frame which itself is correlated with a certain style of trading we all know is scalping. I am currently refining a scalping strategy in demo but your illumination of the vast difference between demo and live makes me anxious that it will be back to the drawing board. I have traded different types of markets before and noticed algos drastically widening the spreads of low liquidity markets by systematically buying and selling before human traders effectively taking away the edge needed to be profitable. You're saying that this exist in even the high volume sessions of high liquidity markets like EUR/USD? Is high freq trading(10-15 a day for me) a fool's errand? Is this why the "vets" trade hourly and daily TFs? Also, thank you for the brutal truth btw. This is the type of knowledge that actually helps a trader evolve.

Scalping or high frequency trading on retail platforms is hard. You are heavily disadvantaged as even if you trade via VPS there is additional delay because the broker should handle your order first. That's why choosing higher timeframes is reasonable way to get out of this competition where you are bound to fail.

Interesting. So lower time frames entail strategy crushing latency in relation to Broker system bandwidth and not algos? or both? Doesn't even matter, really, I've seen too many people say its untenable to ignore it at this point. Its fascinating that, on paper, the notion that markets are fractals and the mechanisms of price action action apply to all TFs is true, but, in practice, trading different TFs is far from identical. Its a shame because I liked the ability to end the day with all positions closed and not exposing one's self to market entropy over longer periods of time. Do you mind me asking what TF you trade, pizd0s? And how do you deal with missed opportunities over a much longer time scale when you inevitably sleep through the perfect setup? Just ironclad patience?