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Stop Hunting using Sentiment and Market Structure

  • #281
  • Sep 16, 2019 7:29am Sep 16, 2019 7:29am
Quoting SentiFX
{quote} I will be working on the Gap Fill blog post tomorrow. In the meantime - I have some questions. There are no right or wrong answers - I just want you to think about them and respond. 1. What do you think a Liquidity Gap is? 2. Why do you think a Liquidity Gap should be filled? 3. How do you know if a Liquidity Gap will cause a continuation or reversal? 4. How does sentiment play a role in the Liquidity Gap Trade? Those who participate will get rewarded with a link to my thorough analysis and explanation of the trade as soon as it is complete....
Hi SentiFX

I use Liquidity Gaps to trade all night long, here is how I see it and with NO losing trading days for 3 months, trading Liquidity Gaps work.

1.. Its worth looking first on how a Liquidity Gap is created and why. It is the speed of the Algo driving the market. When the Algo reaches our to clear Pools of Liquidity, this manic movement fractures the market creating micro gaps.
This causes an inbalance to the market structure which are filled 90% of the time.
The Algo always fills SIDE A seen in a long ranging candle and often SIDE B provided News isn't the reason for the move.

2.. Gaps create an inbalance to the market which are both unfilled orders and SPACE. Space is good for the Algo because it can move the price onto other Liquidity pools with no effort. They are created on purpose by the Algo.

3.. For a Reversal, we look for two conditions. A- No interlocking of M1 Candles before a spike B- Visible Gaps between candles with no or little wicks.

4.. Sentiment is just herd behaviour which the Algo is coded to encourage traders to place trades and stop losses into groups or clusters of Liquidity.


This is my opinion based on real life trading results.
Trading thin liquidity at the boundary of the charts
  • #282
  • Sep 16, 2019 7:58am Sep 16, 2019 7:58am
Quoting RickM
{quote} Hi SentiFX I use Liquidity Gaps to trade all night long, here is how I see it and with NO losing trading days for 3 months, trading Liquidity Gaps work. 1.. Its worth looking first on how a Liquidity Gap is created and why. It is the speed of the Algo driving the market. When the Algo reaches our to clear Pools of Liquidity, this manic movement fractures the market creating micro gaps. This causes an inbalance to the market structure which are filled 90% of the time. The Algo always fills SIDE A seen in a long ranging candle and often SIDE...
HI Rick, interesting stuff. without wishing to mess with SentiFX's thread, do u have any illustrations either for here if SentiFX doesnt mind or elsewhere?
  • #283
  • Sep 16, 2019 8:37am Sep 16, 2019 8:37am
Quoting pamc
{quote} HI Rick, interesting stuff. without wishing to mess with SentiFX's thread, do u have any illustrations either for here if SentiFX doesnt mind or elsewhere?
It would be rude of me to comment further. Let SentiFX shows us his methods, I will keep my stuff away till later.

Cheers Rick
Trading thin liquidity at the boundary of the charts
  • #284
  • Sep 16, 2019 8:44am Sep 16, 2019 8:44am
Quoting RickM
{quote} It would be rude of me to comment further. Let SentiFX shows us his methods, I will keep my stuff away till later. Cheers Rick
fair enough with me.thanks for the reply
  • #285
  • Sep 16, 2019 9:55am Sep 16, 2019 9:55am
Quoting Pip-Miner
{quote} Nzdusd
4 hours latter, they still at it.
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  • #286
  • Edited 8:24pm Sep 16, 2019 6:11pm | Edited 8:24pm
Good Afternoon Traders -

There has been some really good discussions.

A lot of good points and discoveries have been made by you.

I will be sending out the blog post to you all shortly.

Thanks for being patient. This stuff takes a lot of time to put together.
  • #287
  • Sep 16, 2019 6:34pm Sep 16, 2019 6:34pm
Please some sentiment charts for tomorrow if you can.
Thanks
  • #288
  • Sep 16, 2019 6:40pm Sep 16, 2019 6:40pm
Ugh. Forex Factory has limited my messages to 1 message every 24 hours.

So people who haven't participated will get lucky here since I'll go ahead and post it here for now. All future blog posts will be sent via the Newsletter on my site.

I want people to participate - think - learn - and grow as traders. I'm not interested in the lurkers, leeches, and trolls.

Blog post link coming shortly.
  • #289
  • Sep 16, 2019 6:40pm Sep 16, 2019 6:40pm
Quoting Merka
Please some sentiment charts for tomorrow if you can. Thanks
I can do that, give me a moment.
  • #290
  • Sep 16, 2019 6:43pm Sep 16, 2019 6:43pm
Quoting Merka
Please some sentiment charts for tomorrow if you can. Thanks
Current Sentiment Snapshot.
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  • #291
  • Sep 16, 2019 6:56pm Sep 16, 2019 6:56pm
Without Further Ado -

Here is the Liquidity Gap Fill Trade broken down with examples. I intended to send the link to just participants but FF will not allow me.

So again, future blog posts like this will be sent via Free Newsletter.

This is the tip of the iceberg but there is enough info to understand it and trade it profitably.

https://sentifx.com/liquidity-gap-fill-trade/

Feedback is welcome.
  • #292
  • Sep 16, 2019 7:04pm Sep 16, 2019 7:04pm
Your snapshot contradicts MyFXBook. Look at USDJPY and USDCAD for example. Why?
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  • #293
  • Sep 16, 2019 7:08pm Sep 16, 2019 7:08pm
Quoting nonameatall
Your snapshot contradicts MyFXBook. Look at USDJPY and USDCAD for example. Why? {image}
You are trading the opposite way to the retail sentiment.
  • #294
  • Sep 16, 2019 7:13pm Sep 16, 2019 7:13pm
Quoting nonameatall
Your snapshot contradicts MyFXBook. Look at USDJPY and USDCAD for example. Why? {image}
Read post 198 please
  • #295
  • Sep 16, 2019 7:17pm Sep 16, 2019 7:17pm
Quoting nonameatall
Your snapshot contradicts MyFXBook. Look at USDJPY and USDCAD for example. Why? {image}
I already aligned the Sentiment Analysis Tool to be the inverse of sentiment data providers. Also I track change over time of retail piling in and getting squeezed out of positions and also can scrub through the timeline to see how it is changing. You can't get any of that by looking at Sentiment Data alone.
  • #296
  • Sep 16, 2019 8:31pm Sep 16, 2019 8:31pm
Well, still strange. Right now FXBook is showing that 94% or retail is short USDJPY. Your USDJPY is neutral, no matter you reverse or not 94% cannot be neutral. Obviously I am missing something.
  • #297
  • Sep 16, 2019 8:42pm Sep 16, 2019 8:42pm
It is correct,

The Y axis is from 100% long at top to 100% short at bottom.

The x axis and bubble size relate to change in positioning over time.

Also I am using multiple data sources that are weighted by algorithms.
  • #298
  • Sep 16, 2019 9:01pm Sep 16, 2019 9:01pm
So, in this case we should be looking for a sell on EURUSD, and , surprise, it has a liquidity gap just under the present level.?
  • #299
  • Sep 16, 2019 9:12pm Sep 16, 2019 9:12pm
Quoting SentiFX
It is correct, The Y axis is from 100% long at top to 100% short at bottom. The x axis and bubble size relate to change in positioning over time. Also I am using multiple data sources that are weighted by algorithms.
OK, I get that, thanks - the lower is the bubble the more the retail is bearish. So, what about the horizontal axis then? The more to the right the more of what? and the larger the bubble is the more of what then?
  • #300
  • Sep 16, 2019 9:16pm Sep 16, 2019 9:16pm
Quoting Profitgrowth
So, in this case we should be looking for a sell on EURUSD, and , surprise, it has a liquidity gap just under the present level.?
These are the types of scenarios that I envision playing out. Direct sell off - or a bounce to structure to get longs reeled in more then dive to liquidity pool.

EURUSD low went to the tick of prior stops without removing that pool. Retail usually sees double bottom.

Our indicator bubble is showing a HUGE strong sell for EURUSD and the recent Order Flow downward has created a sell side bias. I have short entry orders at the bounce.

Let's see what happens.
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