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Stop Hunting using Sentiment and Market Structure

  • #101
  • Edited 7:29am Sep 4, 2019 7:08am | Edited 7:29am
It would be helpful for all concerned to explain the points on a chart using drawing tools such as snagit, screenpresso etc.

Explanation using words cannot always be understood clearly, where diagrams would be more helpful.
It never gets easier, you just get better
  • #102
  • Sep 4, 2019 8:39am Sep 4, 2019 8:39am
Quoting SentiFX
{quote} You don't just enter short if retail is long. At some point during the week retail typically realizes they are wrong and because of FOMO, they pile in the opposite direction thinking they are now in line with order flow and that's when we strike with a vengeance to trade their stops for our profits.
I'd like to pick-up on this comment. I too trade a positive expectancy system with sentiment as its backbone. However, sentiment increases one way give me the signal to go the other. Do I understand correctly that you - first wait for sentiment to increase (lets say to buy side), watch, let it increase further, watch more - and then once retail finally see they're wrong (FOMO) and pile into sell side - that will be the time to strike?
  • #103
  • Sep 4, 2019 10:37am Sep 4, 2019 10:37am
Quoting Shabs19
It would be helpful for all concerned to explain the points on a chart using drawing tools such as snagit, screenpresso etc. Explanation using words cannot always be understood clearly, where diagrams would be more helpful.
Shabs19,

I was thinking the previous posts that I made tied into the recent comments made sense but I will try to do a better job of making it clearer going forward.

Thanks for the suggestion.
  • #104
  • Sep 4, 2019 10:41am Sep 4, 2019 10:41am
Dear SentiFX

Thanks for starting this thread. Am new to the game and rather intrigued by the concept of MM stop hunting.

Glad i found this early...subscribed.
  • #105
  • Sep 4, 2019 10:46am Sep 4, 2019 10:46am
I suggest all wanting to learn more about this, take a look at Sam Seidens videos on YouTube on supply and demand in forex trading.

Have a Great day
  • #106
  • Edited 12:15pm Sep 4, 2019 10:54am | Edited 12:15pm
Quoting pipmunk
{quote} I'd like to pick-up on this comment. I too trade a positive expectancy system with sentiment as its backbone. However, sentiment increases one way give me the signal to go the other. Do I understand correctly that you - first wait for sentiment to increase (lets say to buy side), watch, let it increase further, watch more - and then once retail finally see they're wrong (FOMO) and pile into sell side - that will be the time to strike?
Yes, there are a few ways to trade sentiment, at least from my experience.

One way is what you are mentioning - you see an increase in retail positioning over x timescale and you trade opposite when it hits extremes.

Then it's a matter of using whatever system you are comfortable with to take entries and exits. Bollinger Bands, Wycoff, Market Profile, S&R, Supply Demand, Penants, Flags, Line charts, Patterns with Candles, Heiken Ashi, Range Charts, Tick Charts, Renko, Stop Hunting, etc etc.- they will take you generally to the same result.

Even though I think some trading styles and ideas are BS and not very useful, when combined with sentiment and basic market structure concepts... they can have edge. So I will try not to down any system.

Over the last 14 - 15 years I've tried it all (p.s. I dont count the first few years though because I traded penny stocks lol - what a lesson haha) . Ive traded most ways you can think of ...on various timescales from 10sec to 4 hour charts - day trading and swing trading - and positional trading, and have been using my current way of trading for the last few years as I'm interested in the behavioral psychology of the patterns. I usually get entries within a few pips - exits are more challenging as most probably can relate to. But I systematized it.

Sentiment for me gives me the first clue to directional bias and it isn't until I see something is changing or has changed - that I even look at the charts. 9 times out of 10, I have a good idea what the charts will look like depending on what the sentiment feedback is saying.
  • #107
  • Sep 4, 2019 11:56am Sep 4, 2019 11:56am
Quoting SentiFX
{quote} JS3, Im not sure I full understand the question.
O.k I will try to be more specific. For an uptrend we need sellers to feed the momentum, smart money will eat the selling positions easier, the thing I don't understand exactly and ask, if you know is do we need faster increase of selling orders from the decrease of buyers positions for a good uptrend, or it is not so mandatory. I hope you understand what I am trying to explain, if not then its ok.
Looking for profitable short term trades ...|
  • #108
  • Sep 4, 2019 12:06pm Sep 4, 2019 12:06pm
Quoting SentiFX
Those who called the liquidity gap fill were right on target. A combination of retail stops grabbed .. retail unloading from the big pile in (big bubble shrunk drastically) and intermediate order flow was the clue. If you had the courage to start scaling in after the impulse move to the downside, you would have got in at wholesale and add as price showed you were right. I also want you to think at this point, if smart money were to believe EURUSD is a sell over the next week are two, would they drive price up? Why? This was a high probability trade....
I can think only two reasons, to load more money from sellers so when the price start falling to fall faster and the second is risk, they can take more stops from the upswings of price and space for more pips, what else?
Looking for profitable short term trades ...|
  • #109
  • Sep 4, 2019 12:20pm Sep 4, 2019 12:20pm
Quoting Js3mwtRc
{quote} O.k I will try to be more specific. For an uptrend we need sellers to feed the momentum, smart money will eat the selling positions easier, the thing I don't understand exactly and ask, if you know is do we need faster increase of selling orders from the decrease of buyers positions for a good uptrend, or it is not so mandatory. I hope you understand what I am trying to explain, if not then its ok.
I understand, I'll explain later w a graphic
  • #110
  • Sep 4, 2019 12:22pm Sep 4, 2019 12:22pm
Liquidity Gap Fill to... the... tick...

Look at the horizontal line on the cross hairs. Will mark up later.

Scalpers could have grabbed quick pips on the fill. Swing traders would have caught most of the move.
Attached Image (click to enlarge)
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  • #111
  • Sep 4, 2019 12:25pm Sep 4, 2019 12:25pm
Surely this must be some sort of magic or luck.

Called way before it happened as the most likely path.

All through sentiment analysis and understanding market structure.
  • #112
  • Sep 4, 2019 12:41pm Sep 4, 2019 12:41pm
Quoting SentiFX
Surely this must be some sort of magic or luck. Called way before it happened as the most likely path. All through sentiment analysis and understanding market structure.
right to the 200 EMA on 1 hr chart
  • #113
  • Sep 4, 2019 12:46pm Sep 4, 2019 12:46pm
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  • #114
  • Sep 5, 2019 6:23am Sep 5, 2019 6:23am
Above the red line is where seller liquidiy was (i.e. Future. Buyers), why didn't price move down after the gap fill?

Notice it did shortly to get more sellers on board.

Path of least resistance was to push to liquidity pool above.
Attached Image (click to enlarge)
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  • #115
  • Sep 5, 2019 10:26am Sep 5, 2019 10:26am
Quoting SentiFX
...why didn't price move down after the gap fill? Notice it did shortly to get more sellers on board. Path of least resistance was to push to liquidity pool above. {image}
How about: Because the market is enjoying the current sentimental shift (Risk On!). The Majors are aligned AGAINST the USD and the JPY at the moment in a concerted Bullish move. *See the Basket chart below and the same move reflected on the EURUSD.

My take is that great care should be taken by traders so as not to become TRAPPED in a faux-bullish move or a misguided sell move. Patience is required to read the "handwriting" of the MMs (or whomever) before embarking on a full scale attack in any direction.

Scaling in should be the watch word (IMHO) - this is not the time to waste ammo.

I may be totally wrong though - this is just my thinking. (*Just as an aside: I've banked +758 pips so far on that UP move trading the basket.)

Regards and Stay fluid,

Ty
Attached Image(s) (click to enlarge)
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My job: I speculate and manage risk.
  • #116
  • Sep 6, 2019 6:48am Sep 6, 2019 6:48am
Good Morning Traders,

NFP day - Where are retail stops?
Attached Image (click to enlarge)
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  • #117
  • Edited 9:41am Sep 6, 2019 7:07am | Edited 9:41am
Quoting SentiFX
Good Morning Traders, NFP day - Where are retail stops? {image}
As marked (below red zone and above magenta line)
Attached Image (click to enlarge)
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  • #118
  • Sep 6, 2019 7:38am Sep 6, 2019 7:38am
Quoting Merka
{quote} As marked {image}
What about above? Always consider both sides long and short. Otherwise bias comes in.
  • #119
  • Sep 6, 2019 6:13pm Sep 6, 2019 6:13pm
Something for you to think about this weekend:

Today was a rather uneventful NFP. If you trade the news, you must know what you're doing. Then you would know how to trade it - either directional for momentum or scalping stops.

When News is non-eventful - trade the stops!!!!! Think - how would you trade stops to profit in today's situation?
Attached Image (click to enlarge)
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  • #120
  • Sep 6, 2019 6:24pm Sep 6, 2019 6:24pm
If there is enough interest, I'll put together a weekly animation of how sentiment changed from Sunday to today.

Let me know if interested.
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