The Equilibrium, a key to success!

The strategy of big players


Dear Subcribers,


the work of the big players is a big challenge every day for us as well as for the big players. As I've already said, it makes no sense for the big players just to push the price up, as they earn less. A concrete example can be found here:

Identification of the big players

Basically, it is important to understand the approach of the big players.



Here we see a chart in EURUSD H30. First, the price goes down, which means that a higher number of Bid will go into the market. To buy Ask, I need participants to sell the Bid. In this case, the big player starts to buy the first Ask already at point A. Starting at point B, the course is again higher. This arises partly because someone sells his dollars and partly because the big player buys the euro. Now many traders believe that the price continues to rise and start buying the euro. At point C, the big player buys a high number of dollars and pushes the price down sharply. Under point B are the stops of the traders. Once the stops are triggered, the downward trend accelerates. Professional big players are waiting at this point and are buying a large number of euros into this strong downtrend. At the same time the big player now sells his dollars, the price goes up again.

With the action of buying dollars and selling dollars right away, the big player does not make much money, but it stops many traders who think the price is now up. And that's how the big player secures its position upwards. Why does he do this?

If the big player at point C immediately pushes up the price, he would pull up many traders. In principle, that would not matter to the big player, but there is a problem. As the price moves higher, some retail traders start to step out to take their profits. For this they have to sell the euro and buy the dollar at the same time. This slows down the price trend. This would make the big player earn significantly less because he wants to push the price strongly up. So he has to make sure that these potential troublemakers are stopped out, before they can do any damage.

Now the price is going up to the point E. There, some traders get off to secure their profits. The big player is already waiting for it and buys in this downtrend again a high number of Ask. You can see that the price does not fall down sharply because someone absorbs this Bid under it. Then the course is pushed higher again. The game often runs on the same principle. The big player first pushes the price higher, many traders see a strong green candle and now enter. This is where the big player starts to get out of the euro. For this, initially little by little Bid is thrown in the market to sell the euro. Finally, the new buyers continue to believe that the price continues to go up. More retail traders enter the market and the big player gets its best out of its position. This happens exactly from point F. As a rule, I note the following, when the strong movement has gone up, I do not get in anymore. Because I do not want to be the one who helps the big players get out of their position cheaply. Because if the get off, a turnaround is likely.

The fac,t that the price is still up for a while is due to the retail traders, who believe that it is still going up. The big player sells its euro in small numbers so that the price does not fall too low. At point G many retail traders notice that there is no one who drives the price higher and a small panic sale begins, to get a good exit. At point H, a big player catches the course and pushes it up. Now the retail traders are getting back in and the big player is starting to buy the dollar sideways. A extreme stopfishing is omitted this time, because there were not many participants who would have expected falling course.

After that, the course was pushed to the point K and there was a re-distribution phase. Bid was collected there again and the course continued down. From point L, the big player has started to get out of the dollar. We recognize that the retail traders are basically used as cannon fodder to support the goals of big players. We have to keep in mind that the big banks sometimes make 60% of their total profits with the forex market. The forex market is for the big player a money printing machine. Anyone who believes that this described approach is always the same, is foolhardy. There are different market participants with different intentions. We also have to watch out for the high frequency traders, who are totally confused supply and demand. You can find some reports in this blog.

The tricks of high frequency traders

The hard unvarnished truth

Learning from high frequency dealers

Those who ignore these things will inevitably lose, lose and lose again. The whole strategies with market technology, indicators, trend trade, MACD, RSI are doomed in the long run, if one does not know, what happens in the market right now. If you know in more than 70% of the time whether the dollar is being bought or sold, or the euro is being bought or sold, you can take a look at the market and possibly guess what might happen next. Unfortunately, that does not work with the forex data because we just do not have enough information. Although the time and OHLC data are correct in the forex market, they lack the volume data (bid and ask) and the number of trades. Therefore you can not do without the stock market data. But also the pure stock market data are interesting only, if you use a Prop stock exchange software. This Prop software translates the stock exchange data for your requirements correctly. And now comes the biggest challenge. The setup and setting of the Prop Exchange Software. This takes the biggest time because the market never works equal.

There are many trainers who offer their strategies for volume trading. What they tell, is the biggest nonsense. The first time you see a footprint chart, the volume profile, or a DOM, you think this is the solution to all the problems. But you can not identify absorption with a footprint chart or the volume profile. At the beginning, the new stock market data is like a new indicator, one realizes that one eventually gets stuck and certainly can not find the holy grail. There is only one way to be profitable in the long term. You first have to know what's happening in the market right now.



For that, the sideways phases are a decisive clue. I like trading in the sideways markets, which dominate the market 70% of the time. Of course I occasionally take a strong move up or down, but that's just a small side income I never count on. The sideways markets are very interesting. Suppose the course comes from above and there is a sideways market. Why is a sideways market forming?

Because the big players first get out of their positions or sub-positions and then absorb Bid or Ask. This means that in the first half of the sideways market positions are closed and in the second half Bid or Ask are bought. Therefore, the first half of the sideways market is a safe channel for me. Because the big players are slowly emerging from their positions while the retail traders believe that it goes up or down. The course is slower but you can trade very safe in a range. Once the absorption starts, you have to interpret it correctly if you want to take the strong move afterwards. As soon as a stronger absorption begins, the previous range is left, where you have to pay attention to an increasing volatility. I like doing downward movements as they run 30-40% faster and I have a lower risk. There is a detailed report on this:

Who is faster the euro or the dollar?

Let us now turn to the stock market data translated by a Prop software. Our project # 7 is about optimizing the settings in order to be able to detect possible absorption more quickly. This gives me the opportunity to determine the position on my navigation map.



In my Prop software there are unlimited possibilities to analyze and highlight different clusters. I can decide if I want to analyze Bid, Ask, Delta, Volume, Ticks or Time. Min Value, max value, Bid Ask imbalance and Delta filter can be set. You can filter between bullish and bearish candles, the price range and the average number of trades. If I want to highlight a certain range within the candle, this is very variable possible. The presentation of the ad is very flexible. I do not write that to advertise this prop software, (because there are significantly cheaper software) I write this to you to describe the next experimental setup more precisely. For me, a software was decisive, with which I can identify very different clusters very flexible.



On the left side I have filtered the clusters that have at least 50 lot Ask and at least 50 Lot Bid in a bullish candle. This will enable me to detect within an uptrend when the euro may be bought and sold again. The ask in a bullish candle is often the push up, while the bid can often signal the selloff. I deliberately emphasize the word "can", because a bid can also be a dollar bought.
On the right side I have filtered the clusters which have at least 50 lot Ask and at least 50 Lot Bid in a bearish candle. This will enable me to recognize within a downtrend when the dollar may be bought and sold again. The Bid in a bearish candle is often the push down, while the Ask can often signal the sale of the dollar. Now it's time to label the navigation map, to see if my settings help me. After that it's about the optimization. This should serve as a simple example, but you still have to pay attention to many more things. I recommend working with a footprintchart, as it allows you to identify the number of lots in the Bid and Ask. This can simplify the cluster search.



From the previously identified map can now determine certain zones. It is well known that the big players run certain zones over and over until they stop working. Then new zones are searched. However, this depends on the extent to which retail traders are willing to buy Bid or Ask.



The zone marked here is also interesting, after that, the price has gone down by 100 ticks or 50 pip in forex. Interestingly, I would have drawn this zone in the forex market wrong, even with a tick chart.



With the stock market data, I was able to identify two strong moves that were a strong resistance area for me. Although I was not able to predict which of these two zones would push the price down, it became apparent that the dollar was being bought more heavily in the lower zone. That was the crucial point to decide on another short. Of course, there could have been a Stopfishing, then you would have been stopped, but would have had the chance for another entry.

This should only be a simple example of ways to better identify the market. However, you need more information, such as the time and sales list and the DOM. Basically, this does not always work, because the market in my view is random and therefore can not be grouped. Nevertheless, certain information helps to make assumptions that increase our probability of winning. Every trader has to create this setup individually, so you don t need any coaches. A few good books and a lot of time in front of the screen bring the necessary success, with time being the deciding factor.

Unfortunately, there is little information on, how the big player works. Good, if you know some high frequency traders or big players. But also their ways of trading change with time. With today's computer technology, self-learning algorithms and today's market conditions, one has to assume that every day it will be more difficult to survive in this market.

We know, not the big ones eat the little ones, but the fast ones the slow ones. That's why even smaller traders have a realistic chance in this market. And we should use this opportunity.

I wish you a successful trading week

best regards

Euro buy or sell, dollar buy or sell?


Hello dear subscribers,

In the last article I tried to describe a few approaches of the big players. The problem that we have in the forex market, is that we do not receive any Ask or Bid that is importend to the price. For this reason, I use the stock market data to obtain this very important information. Anyone who has ever worked with stock market data will quickly find out that the information about Ask and Bid is not the holy grail. Ask stands for the purchase and Bid for the sale. If a price is going down and I see a high number of Ask in the footprint chart, it does not necessarily mean that someone buys the euro. Before the course can go up again, two things have to happen. The big player has to get out of the dollar first, so he has to sell it first. Ask is thrown into the market to sell the dollar. So, if a large number of Ask shows up after a downtrend, this could be a sale of the dollar. Once the big player is out of position, a sideways market may emerge. Within this sideways market Bid or Ask is collected again. Conclusion: A high number of Ask can mean two things: the dollar is sold or the euro is bought. A high number of Bid can mean: the euro is sold or the dollar is bought. I have already described this situation in detail in the article

Identification of the Big Player

In my cluster project, I have now tried to divide the different movements in the course.



A red circle in the chart means the dollar is being bought, a blue circle means the dollar is being sold. A green square means that the euro is bought and a yellow square that the euro is sold. The different size of the respective symbols depends on the number of the respective Bid or Ask. The settings I have made in the cluster search are, first of all, a rough approximation to a possible solution. The result is so interesting that I like to publish it.

Point A:
After a downtrend, we are initially in a smaller equilibrium. At first, smaller participants try to push down the course even further, but there seems to be resistance there. Then you see that a larger number of euros are bought. The course moves slowly upwards.

Point B:
The Euro Buy continues, with some blue dots now showing that the dollar has been sold. This shows that some participants who bought the dollar at Point A were stopped out. That's a good sign of another uptrend.

Point C:
The price is now higher and you can see that the Euro is selling heavily. As a result, the course goes down a bit and it creates an equilibrium.

Point D + E
Within the equilibrium, a larger number of dollars are purchased. The course will be pushed up again until the point E and then goes down sharply.

Point F:
At point F, the price initially stops, but you can see immediately that the dollar is now being bought heavily. After that, the price goes down.

Point G:
Here the dollar is bought again strongly and one recognizes that already the first participants get out of the the dollar.

Point H:
After the price has gone down even more, more participants get out of the the dollar.

Point I:
The first participants are already starting to buy the euro again and the price is going up.

Point J:
Now more participants are joining in, who buy the euro stronger. Although there are partial sales in the euro, the price is initially in a Equilibrium bring, but within this equilibrium, the euro is bought even more. The sluggish price trend suggests that few big players were involved in the uptrend. From this one can conclude that the downtrend is not over yet.

Point K:
After the price has gone down by a few euro sales, from the point K the euro is bought stronger again. The course now runs to the point L.

Point L:
At point L you can clearly see, that the euro is selling strong. This is an alarm signal that it may not go higher. At the same time the dollar is bought stronger. A sign of a pending downtrend.

Point M:
From here, the price is pushed down stronger again and you can see that in the course of the course again dollars are bought, which accelerates the price further down.



On the right side of the chart, you can see that after the downtrend, a stronger uptrend begins that goes to point 1. Then there is the typical stop fishing, where the price is pushed down sharply. With the green arrow, I started my video, because I assumed that the course is now going uphill again. The background was that until the point 1 strong Euro were bought. The blue line I have drawn in the video, as the course at the green arrow is slowly upwards. Next to the DOM I used the time and sales list and a spread tape. On the upper right side, I filtered the number of Lots from 1-20. Although the big players are also working with larger volumes thrown into the market, they prefer to work with algorithms that buy smaller quantities of Ask or Bid within the sideways markets. Here I noticed that the algorithms like to use 5 and 8 Lot. However, it is still too early to make concrete statements. Here is the video first



In the video you can clearly see how the number of euro purchases increases sharply. It is interesting that in the beginning a high number of Bid comes into the market, which are however absorbed immediately. This can be seen very well in the DOM. Then the course goes up.



Overall, the course went over the last high, as I had suspected. However, the course has been slow to run up and you can see at the high that the participants have dropped out of the euro. Thereafter, the dollar was bought heavily, which caused a strong downward trend.



At 14:30 CET most of the big players got out of the dollar, you can see that in the blue big circle. Then the course in wavy lines has gone up 18 pip.

Conclusion:

Of course, my settings are not 100% correct yet and I still need to make some improvements. Nevertheless, it is very clear how important it is to distinguish whether the euro is bought or the dollar is sold and whether the dollar is bought or the euro is sold. In combination with the DOM and the time and sales list you get a little bit closer to the solution. In principle, the price history tells a story and if one day I am able to break down this story more precisely, you can use it to optimize its profit probability. But there is still some time left to make concrete statements. The fact is that you do not get this information in the forex market. But exactly this information is important to make concrete action decisions. When you get specific information, the price history is not just a wild back and forth, but tells us a story we can follow. Maybe my current attitude is a pure coincidence and might not work so well in other situations. That's why I need some more time to optimize the settings and adapt to the respective market conditions.

But the result so far looks promising in any case.

Since we have a holiday tomorrow, I wish you a successful trading day tomorrow

best regards

Wow Bionic, This research is beyond fascinating and useful!
Is this data displayed generated by some code you created or is it something that the brokers software provides?

Hello boyzi,

Thank you for your kind compliment, I am pleased if the subscribers in this blog take advantage of my work. Basically, I only trade in the forex market, because the profits are highest there and the execution is guaranteed at any time due to the turnover size. (Exception in extremely high volatility phases). I trade in the forex market, but make the trading decisions only on the basis of real stock market data. The stock market data I receive from CQG and let them translate me from a prop software. The data from the Forex market, I only note in terms of currency strength.



For my special evaluation and representation there is no generated code. With a special software but you have the ability to individually filter the stock market data. You can make sure that 100 lot Ask in a bearish candle with an imbalance of 71% is then displayed in a colored quadrate if certain criteria are met. This is a crazy job that every trader has to individualize for himself. This allows unlimited filtering and there are several millions of different settings. For me it is crucial whether the market buys the euro, sells the euro, buys or sells the dollar. If, in a rising market, the market goes out of the euro and the dollar is bought at the same time, I will no look for way up rather look for a way down. When many retail traders buy the dollar, and the big players buy the euro at the same time, I'm looking I for way up.

These settings must be adapted to the respective market conditions, as the situations are always different. I am glad that I act exclusively in the EURUSD, so that I only have to concentrate on one market. With my attitude, I am also able to recognize when the stops of the traders are triggered. This is a good confirmation of a future strong trend. However I stand with my attitudes still at the beginning. It is good that I can adjust the different market conditions in the area of volatility with a time adjustment. The London open and the New York open are different in their conditions, that must be considered. In principle, the software is like a kit with many Lego bricks. You can build a house or a car and you are very flexible. However, you need a lot of time and patience.

If you look at the video from my last post, you'll see what data needs to be processed. Anyone who claims that trading is very simple, deserves nothing else than just losing. There are very few people who trade profitably. The reason is simple. These traders are doing an insane effort to find out what's happening in the market right now. The big players do not invest a few hundred million dollars for their analysts and traders for nothing. If trading was that easy, the big players would be stupid, as they spend so much money on analysts. The big players are actually smarter than anyone else. They win in 90% of the cases and their profits are twice as high as their losses. It is clear against whom we compete daily. That's why I'm working so hard.

I will never be a big player, but it is enough to follow them 10 times a day. The small profit they give to me does not stand out, but for me it is a confirmation that I'm on the right track. But I would like to emphasize once again that successfully trading in the long term is more than a challenge. You have to be highly concentrated every day and know the market 100%. Not in vain can just 2.5% of all traders live on it. I've spent almost 40,000 hours in front of the screen in over 10 years and still find trading a challenge, but it's a lot easier for me today than it was at the beginning. I'm convinced that some traders can make it on this blog as well and I'm keeping my fingers crossed that you too will one day be one of them. You already have the will to learn, you can be proud of that and that is the first and most important step.

Everything else brings the experience.

Lovely wishes
Michael

I am very interested and appreciate this thread. I'm looking at and studying all the posts in this thread. Hoping to find more knowledge to consolidate my supply and demand knowledge. As well as price action when price return to those supply and demand zone.

Hi Bionics, what is your experience, or knowledge about CME Group Vol2Vol tool?

Hello sangnt0904,

First of all, welcome to our blog, I am very pleased that supply and demand arouse your interest. In this blog you will find many ideas about trading. In addition to great auxiliary indicators you will also find specially created auxiliary indicators of mine, which help you in many areas. These indicators are described in detail and there are extensive examples with many pictures and videos. Every trader has to find his own personal setup, for that this blog has been created. It is a kind of buffet, where each trader can use individually to create his optimal setup. I would be very happy if this blog helps you to be more successful.

I keep my fingers crossed for you and wish you much success.

All the best, Michael

Hello Js3mwtRc,

the Vol2Vol Expected Range Tool is an interesting way to show different volume and open interest values. However, you only get the Open Interest values in the Russian market and unfortunately not for the EuroFX. Unfortunately, I have no experience with this tool, because I work with a Prop software that translates the stock market data individually. What matters is what data you need to derive trading decisions from. Volume data is not required to trade successfully, there are many traders who can manage without volume. Many have discovered the volume because it represents a different view of the market. It is in principle like a new indicator in MT4. I traded successfully for 10 years without volume, which would have made no sense in forex. The volume (Bid and Ask) is useless in its pure form. Because if a large number of Ask comes into the market, that does not mean that the price has to rise. Only then, if the trader is able to filter this data for himself, he can derive an advantage from it. And this filter setting is an individual setup that takes a lot of time and patience. To this topic I will publish until the day after tomorrow an interesting article that sheds some light on this.

I wish you a nice weekend.

best regards

Help for better trade


Hello dear subscribers,


This post is about important information that makes trading in the forex market much easier. First, you will get some information from the futures market, which are essential for trading in the Forex market. It's about understanding the way big players work to avoid the mistakes of most traders. In addition, you will receive a detailed explanation of a trend strength indicator that gives you important information in daily trading.

In our project no. 6, we first checked whether the data from the futures market would bring potential advantages for trading in the forex market. This result was clearly positive. In our current project no. 7 we want to find out, how to set and filter the future data in order to obtain an informational advantage. In the forex market, I clearly get less information than in the futures market. This is primarily due to the volume that can not be displayed correctly in the forex market, as it is calculated from the tick volume. The reason for this can be read here:

Volume in forex




The volume in the futures market is calculated from the number of bid and ask. The delta volume is the result of ask and bid. In this example, the horizontal and vertical delta volume (ask-bid) was used. This information does not exist in the forex market, as no bid and ask is provided by the banks. Although there are indicators that supposedly map this information in the MT4, but this representation is wrong. When faced as a forex trader for the first time with a footprint chart presented here, one quickly believes that one can use this information to find the holy grail. But that is unfortunately a big mistake. However, you have to know that bid and ask are the only reason why a price moves. Therefore, this information from Bid and Ask is essential. In a footprint chart, the number of bid and ask is shown exactly. The big problem is the time in which it is formed. A H1 footprint chart shows the accumulated Bid on the left side and the accumulated Ask on the right side, which are traded at each price level. What you do not realize is how often the price has gone back and forth within this candle. This makes it difficult to determine certain resistance zones. Iceberg orders as well as absorption in accumulation and distribution phases are thus very difficult to identify.



In order to actually recognize what is happening in the market, it is important to work with a time and sales list, the DOM, a spread tape and a sorted volume. It is crucial to filter the data according to the respective volatility to get specific information. Anyone who has previously traded only in the forex market, for whom it is a great challenge. Many big players work exclusively with this information and usually do without a chart as we know it in Forex. I have only been working with this form of representation for six months and today I am able to derive important information that has often protected me from major damage. More information is not always an advantage, the right information is crucial. But unfortunately we do not get this crucial information in the forex market. I will deal with that again in a separate article.



To get a better impression of how this presentation works in practice I would like to show you another video. At the time of the video creation, my assessment was bullish. In the video, I predicted a share price, which was also achieved overall. Pay attention to the high number of Ask that has come to the market. This can be seen in the DOM and in the time and sales list. In addition, you will also find my sorted single volume there. It is noticeable that here relatively few large Ask Order come into the market, but the market with small orders is driven upwards. Since the time and sales list lists the order cumulatively, this can only be seen in the sorted single volume.



I would like to show you a concrete example. In the Asian market, the following scenario occurred on 5 November at 4:00 CET. In the downtrend that occurred before point A, the euro was bought heavily. At Point B, a big player pushed the price down sharply, causing Point C to trigger retail trader stops. Thereafter, from point D, the price was pushed up again. At Point E, I showed this strong candle once in the footprint chart. With this information you can start relatively little, so I have allowed myself to expand this information.



This 30 second candle consists of a total of 17 price levels (17 ticks in the futures market or 8.5 pips in the forex). Here I would like to outline what information is available in the futures market. First of all, we recognize the volume. The volume is the addition of bid and ask that came on the market at a certain price level. In addition, we see the individual division of Bid and Ask. The delta is the result of bid and ask. If more Bid than Ask was traded on a price level, the delta is negative. In addition to the delta, we find the number of trading transactions, but it can not be deduced from how many participants have completed these transactions. To filter that out more, you have to work with a 1 tick chart. In a 1 tickchart, only one trading transaction is shown.

This immediately shows how much solder a single trader has given up. In addition to the trades you can see how long the price has been in the individual price levels. Unfortunately, the time here is a bit inaccurate because it is not calculated in milliseconds. However, you can see that in the time and sales list. Right next to it, I once listed the imbalance in bid and ask, which of course you can set individually. On the right side you will find a value: Volume / Trades. The larger this value, the fewer trading transactions were involved in the volume. This is an interesting way for me to identify the big players. Of all this information, in the forex market, one could just calculate the time in seconds a price spent in a particular price level. (However, such an indicator is not known to me) All other information can not be displayed in Forex. In this example we see at point A how a big player drove the price down. The value volume / trade is above average. Thereafter, the course runs to the point B. There, the stops of retail traders are triggered, who have previously bought the euro. It can be seen that an above-average high number of Bid traded on 4 price levels. These stops seem like a chain reaction. As soon as a stop is triggered, the course jumps down, triggering the next stop. So the big player only has to push the course down once until the first stop, then there is a fireworks display down. Now the price is accelerating downwards and you can see at point D how the big player starts to buy the euro in the downtrend. Then the course is pushed up.


Please read my article:


Euro buy or sell, dollar buy or sell?


It is crucial to know whether a bullish candle is the result of buying the euro or selling the dollar, and whether a bearish candle is the result of a dollar buy or a sale of the euro. These factors are a crucial element for a possible probability calculation. If a bullish candle is caused by a strong euro buying, it is more likely that the price will rise in the medium term than if this candle comes through a strong dollar sale. The background for this. If a big player leaves the dollar in a falling price, there could be several reasons. He no longer believes in the dollar or he has reached his goal. As a rule, big players never sell the dollar low as they hold larger positions. If a big player sells the dollar he has to bring Ask into the market. Either slowing down a falling course or the course starts to rise. In order to get off the dollar well, the big player needs participants who continue to believe in a falling price and bring a higher number of bid into the market. Precisely for this reason, a big player gets out of the dollar even before the low with its main positions. However, there are still other participants in the dollar at this time and these participants must get out of this dollar. This increases the likelihood that the price may fall further. That's why I have to differentiate between buying and selling.

A trend upwards usually proceeds as follows. An accumulation phase arises, the big player is already out of the dollar with its main position. Within the first half of this accumulation phase, the remaining dollars will be sold. In the second half, the big player starts to buy the euro. Often it then comes to Stopfishing, the price is pushed down strongly, as in our example. The strong upside comes from the fact that the big player is selling his dollar (which he bought for stopfishing before buying the euro). The upside now runs to the point where the stopfishing started down. Most traders are cautious as they believe the price could go down sharply again. Now the big player pushes the price strongly upwards, the fewest market participants are in this push with it. Now many traders see a strong green candle and massively enter the euro. This situation is often used by the big player to get out of his position now. After the big player is out of position, he uses the on-going course to buy the dollar. At some point, the retail traders notice that there is no longer anyone who buys the euro. Now everyone wants to get out of his euro position. The price is going down and a small panic sale is starting. This accelerates the downtrend and the big player starts selling his dollar. If you see a strong bullish candle after a slight uptrend, you must be aware that the big player is already starting to exit the euro. This means that the subsequent uptrend is much slower than the previous breakout. However, the subsequent uptrend could be a safe bet if you have the right information. The big players have a major disadvantage over the retail trader. They can not just press the button to buy in the Euro FX 1000 Lot Ask on a price level. And just as little are they quickly out of the market. They must take a high risk by starting to collect ask or bid. In many situations, they often go down a lot until they have the chance to drive the course in their desired direction. It is often said that the big players work together. I'm less convinced of that. Rather, I believe that the other big player recognizes what's going on in the market right now and follow the other. The win of the two big players will be a little smaller, but it's still better than fighting each other. Therefore, it often seems like the big players work each other. No matter what, the loser is always the retail trader.



To distinguish these different purchases and sales, I use an individual algorithm that helps me to differentiate between the different positions. These filter settings are adjusted and changed daily by me. The individual volatility in different market situations must also be taken into account. This is a crazy job, as there are several million different filtering options. My filter settings currently only refer to the EURUSD otherwise such an approach would not be possible in terms of time.
With these filter settings, I am still in the initial stage. I got the idea while creating a post for FF. As you know, this blog is a kind of diary for me, which adds to my English skills. Writing down your thoughts often results in the best ideas. This set-up is the biggest challenge of my trading career so far, and I'm convinced that it may take years to find the optimal setup for me. Therefore, initial mistakes are unavoidable.

At Point A, the course opens with a bearish gap and initially goes up. At Point B, you can see how smart money buys heavily the dollar. At Point C it is noticeable that the euro is bought heavily. At first the price goes down and there is a pullback upwards. At Point D, retail traders are starting to buy more euros, while smart money is rising out of the dollar. Basically, this is a good starting point for a possible upward price trend. If the big player pushed the price higher at point D, there would be too many retail traders who would eventually start selling the euro again. That would slow down the course massively and the big player would not be able to get away with his position. For this reason, the big player initially drives the price down to trigger the stops of retail traders. After that, the way up is free. From point E the course is pushed down. It starts a chain reaction. The first stops of the retail traders are triggered and drive the course now more down. Starting at point G, the big player begins to buy into the falling price by selling his previously purchased dollar and buying the euro. He will no longer get many euro positions in the price development, he has already acquired his big Euro purchase at point C anyway. At Point H we can see that the first retail traders are already leaving the euro. This filter setting includes both the big players and the retail traders.



In the following filter setting I tried to emphasize the big players a bit more. The larger euro purchase at Point A has an interesting resistance effect. It can be seen after the course has gone through this resistance zone that it runs more strongly upwards. After that, the big player starts to get out of the euro in small units. It is a mistake to assume that the big players always bring a high number of lot in the market. The opposite is the case, because with a high number of lots, the big player can be quickly identified. The big players work with algorithms that make sure to buy 100 times 4 lots in seconds, than once 400 lots. Of course, the number of lots is different, because 100 × 4 lots can also be identified.

Ten years ago, the action in the Dom was still a comprehensible matter. In the DOM you will find the limit orders waiting to be executed. If there was a many of lots on the Ask side at that time, it could be assumed that the price would go up as soon as it reached that price level. But it is clear that if every market participant can assume that the price will go up there, this approach is no longer worthwhile. Then the first big players started spoofing. High limit orders were issued to signal interest in the DOM and deleted shortly before execution. After that, the price was pushed in the opposite direction. Spoofing still takes place in the Future Market, but does not have the same effect as it did many years ago. I do not pay any attention to the limit order in the DOM. Much more decisive for me are the orders that are deleted or added shortly before the execution. For some years there has been a very interesting trick with which the big players gain advantages in the market.

A course goes up and on the highest point, 80 lot Ask come into the market. The retail traders see this big order and start buying the euro. After all, this order was actually abandoned and the big player seems to have thought something of it. With its algorithms, the big player manages to sell this large order immediately in small pieces and then push the price down sharply. That means a big order can do exactly the opposite. Therefore, it is crucial for me to know the difference between Dollar / Euro - buy / sell.

In the forex market, the big players have sophisticated computer systems to detect inconsistencies in the currency pairs. These inconsistencies usually last only a few seconds. With so many market participants and the large daily volume of sales, it is more important to keep an eye on the development and cash flow than to recognize an undervalued currency. This advantage does not have the retail traders in Forex market.
Basically, I recommend working with stock market data and studying the habits of big players closely. Big players dominate the market and the only chance to win is to follow them. For that, I have to know exactly what is happening in the market right now. If you do not have sophisticated computer systems available, you have to work with stock market data to have a higher chance.

If these stock market data are not available to you, I would now like to show you an idea that I had for many years and realized in the last year. Please take a look at the following article in this context. Below I will explain this indicator exactly.

Determine trend strength in any period

The indicator can be found here for download

Update smZigZag-Bionics and smZigZag-Bionics Osc

A ZigZag indicator is completely unsuitable for accurately predicting future market movements. The last zig-zag line will not be completed until the market direction has changed. This means that the last line will not be set until after the course has changed direction. Zag Zag lines should not be confused with trend lines. The presumed accuracy results from the subsequent adaptation. This means that a supposedly completed line can also be extended. The last line is always reserved and has no bearing on where the market is next. Thus, to work with the indicator for a future price forecast is completely unsuitable. Nevertheless, the ZigZag indicator provides a visually highly visible picture of the direction of the market and the extent of trend and correction movements. The length ratio of individual lines can give indications of the expected extent of market impulses. I wanted to implement this advantage for a trend strength calculation. As a rule, a ZigZag indicator shows the length of a trend line and the number of candles within that trend line. I have modified this information. Dividing the trend length by the number of candles gives you the average candle size of each candle. From this one can derive a trend strength. For the example below, I have modified an existing indicator, the numbers above or below the candles indicate the average candle size in pipettes. You can download the indicator at the end of my article. Basically, I recommend to use the indicator in a tick chart because it gives significantly better results there.



Let's start with our example with stopfishing in the Asian market on 5 November. The chart was created with a 128 tick chart in the forex market.

Point A

The downtrend had a magnitude of 14 (each candle averaged 1.4 pips). This value was already significantly higher on average than the other trends. That showed me that there was a strong downward pressure. At point A, I drew a line that was a possible future destination for me. But initially the course went up again.

Point B

Here the uptrend reached a magnitude of 4.3 which signaled to me that the uptrend had become very weak. I drew a finish line again. At first the course went down again.

Point C

The downtrend reached 4, indicating a possible equilibrium. This downtrend was initially not strong.

Point D

Now we have a stronger pullback upwards with a value of 20. Again, I drew a finish line. After that course went down.

Point E

The downtrend had a magnitude of 11.3 and went above the point C. This means that the downtrend had now gained significantly in strength. Since a strength of 20 was achieved at point D, this line was now my new target. The course went up again.

Point F

My finish line was not reached and the uptrend had a magnitude of 7.3. This shows that the upward movement has dropped significantly and the downtrend with 11.3 was much stronger. The course went down and reached my finish line at point E. Thereafter the course accelerated and continued to run down. The new target zone was now at point A with a strength of 14.

Point G

The price did not reach the target zone of point A and had a value of 5.7. This means that the downtrend had eased a bit. My target zone was still at point A. The course went up again.

Point H

The strength of the trend was 5.2. This showed that the uptrend was weaker than the last downtrend. The assumption was now obvious that the course could reach my goal of point A. Then the course went down.

Point I

The price went very well through my goal at point A. In such a case, you have the opportunity to pull the stop down to hedge a partial profit. Then you can continue the course or you can get off the finish line from point A. The strength of the trend was 17.9. Here too I drew a finish line which later became interesting. The following upward trend had the goal point H and then point D.

Point J

The finish line at point H was reached and had a strength of 11.1. In addition, the line of Point H was overcome. My new goal was initially at point I, but based on the price history, one could already guess that it could be a Stopfishing. Thus, the first target point was at point A and the second target point at point I.

Point K

Interestingly enough, the course is right up where the stops were triggered. The strength was 6.9 and the downtrend has decreased significantly. My new goal was now at point J.

Point L

The price continued to climb, reaching my goal of Point J, closing at 5.1. This strength was relatively low and the new target was at point K, as it had a magnitude of 6.9.

Point M

The goal at Point K was not reached and the strength was 6.2 well above the last uptrend. So you could guess that the course could run again in this area.

Point N

The trend strength increased to 18 and showed now another strength upwards. My first target was at point M and the second target at point K.

Point O

The strength of the downtrend was 12, which was significantly stronger than the last downtrend but at point N was a magnitude of 18 and above at point D a strength of 20. So there were more reasons to run up than down. The goal of point N and D has been reached.

Basically, a course always moves in undulations up and down. Of course, the zigzag indicator only gives out its information relatively late and you have to know that the current number can still change. Nevertheless, this indicator gives an interesting overview of the existing strength in the market. It is important to correlate the strength of the upward and downward movements in a trend. From this, possible goals can be derived, which of course are not always achieved. It is always only about probabilities, that we must never lose sight of. In addition, you still have the option to switch to a smaller time unit to read smaller movements. Please note that the 128 Tickchart average is a 2 minute chart. Up to 16 Tickchart you can get interesting information. This gives you the opportunity to react much faster to possible trends.

Let's look at another recent example from the EURUSD from last Friday 10:00 to 13:00 CET.



Point A

The downtrend had a magnitude of 8.1, which was a relatively low value during this volatility phase. The course initially went up.

Point B

The following upward trend had a strength of 13.9. The assumption was that the price could move higher. Initially, my goal was at point A.

Point C

The subsequent downtrend had a strength of 21, the goal of point A was not reached. The strength of 21 indicated a more imminent downtrend.

Point D

The following uptrend had a magnitude of 20.5. The previous downtrend was a bit stronger. With the two equally strong trends, my assumption was that it could be a kind of equilibrium, the new target was now at point C.

Point E

The goal of Point C has been reached. The strength was 10 and so the downward trend was significantly weaker. At point D was a magnitude of 20.5. Since this goal was not reached yet this was my new goal.

Point F

The new uptrend had a magnitude of 6.2, well below the recent downtrend. My goal was now at point E.

Point G

The goal Point E was reached, then accelerated the course down. The strength at 12.0 was stronger than the last downtrend. As before, for the uptrend, my goal was at point D.

Point H

At 20.0, the upward trend became much stronger.

Point I

The subsequent downward trend of 12.3 was well below the last uptrend. The goal of Point G was not reached.

Point J

With 13.0, the uptrend was significantly weaker, the goal of point H was reached.

Point K

The strength of 29 at point K was an interesting aspect. The downtrend has increased significantly and may have been facing a major downtrend. As before, my goal has been the uptrend at point D. With this indicator you will often find that a strong pullback up or down announces an imminent strong trend.

Point L

At 13.5, the uptrend has increased little over the recent uptrend. The underlying downward trend was significantly higher at 29.0. The goal of point D with a value of 20 was not reached. The downtrend of 29 was significantly larger than the target at point D. The first downtrend target was at point K, then point I and then point G. With a good stop strategy, one could have optimized his profits here as well. In the lower area at point M to P, an equilibrium was initially formed.



Here I once presented an example in EURUSD in four different time units. The setting of the zigzag indicator is 4/2/1. The advantage of this presentation is that we have a nice overview of the individual trend strengths in the long term as well as in the short term. Nevertheless I recommend you to use a tickchart. I work very successfully with the following four time units: Tickchart 64, 256, 1024 and 4096. This corresponds approximately to the M1, M5, M15 and H1. However, the representation in the tick chart is much more accurate. The big advantage of a tick chart lies in the presentation of the price development. If the volatility is small, a tick chart forms fewer candles. If volatility increases, many candles are formed. This makes it possible to define its resistance zones more precisely in periods of strong volatility. If there is nothing going on in the market, there are only a few candles, and when it burnes around, there are many candles. A breakout in the M1 is often just a big candle. In the tickchart 10 candles are formed in the same time. Thus, the advantage should be obvious.

You have two options for working with the two different indicators. The bionic zigzag indicator, which you can download in the upper link, has a few flexible options in the setting. However, it indicates the trend strength in Pip. The modified zigzag Easy 1,2 is only displayed in one color, but has the advantage that it provides up-to-date information relatively quickly. It's best to try both to find the best one for you.

Making short-term trade decisions with these indicators is not recommended. Since I myself worked with resistance zones in the area of supply and demand, this indicator regularly provides me with good information about the currently existing trend strength in the market. This gives you interesting information and a small information advantage over other market participants. In order to obtain concrete information, one must inevitably resort to stock market data. If this is not possible in the short term, this indicator gives you another chance to see what is happening in the market right now. I hope that this information will help you a bit and I look forward to the feedback.

I wish you a great weekend

best regards

Hi
i have on chart ZigZag Easy 1.2: only one, yellow colour.

1. where is indicator as on your picture with 4 colours , as per time frame?

2. what are those numbers before and after . (point)?

3. in very plain English explain how to interpret those numbers, please.

Thank you

yeah I found a indicator or something similar a while ago on a futures forum, but was expensive and wasn't sure if it was worth the investment or not, always seemed logical to measure the move in that way ...well to me anyway

[quote=YYZ;12609351]Hi i have on chart ZigZag Easy 1.2:

Hello YYZ,

First of all, welcome to this blog. As desired, I'll try to answer your questions very easily.

To Question 1: The indicator has been modified, so the color is white.
To question 2: It is the same indicator, the line colors can be set individually.
To question 3: The numbers result from: Length of a line divided by the number of candles.
To question 4: In my contribution: Help for better trade I have created two concrete examples to describe the indicator in detail.

More information can be found here:

Determine trend strength in any period
Please click on the link

I hope that I could help you
best regards

Help for better trade

Hello mikeeating,

First of all, welcome to our blog and thank you for your kind words. I am very happy if this contribution helps you: Help for better trade

Price formation is very similar in the forex and futures market, so the indicator also gives you specific information in the forex market. I do not work with the ZigZag indicator in the futures market because it does not give me the information that matters to me. Maybe I take the time to reprogram the indicator in the futures market, but at the moment the indicator in the forex market is enough for me.



Unfortunately, the delta and a volume display in the Forex market is not possible, since this requires the specific number of Bid and Ask. The volume in the forex market is calculated on the ticks and is therefore inaccurate or wrong. The other 3 data ticks (pips), bars and time can also be displayed in the forex market. By dividing the total traced pips of a line by the number of candles, this results in an interesting strength calculation, which can be used well in some areas. I like to work with it because this auxiliary indicator tells me the current trend strength in different time units. Medium-term trend changes can be see early on.

I wish you every success and look forward to your feedback.

best regards

Hey bionics
going back at opening your thread it shows prediction for 2018 and now is end of 2019( 300 pips below opening on 01-01-2019)

In meanwhile you developed many indicators, The way you used past data how it fit in 2018 and 2019 outcome....
Thank you.

Hello YYZ,

The background to my contribution was primarily to highlight the EURUSD's price appreciation, which has taken place in the past 40 years and less to make a serious forecast. In the contribution EURUSD from 01.Jan 2018 I have used the following sentences:

Of course, this conclusion is purely hypothetical, since nobody knows the future. Please do not take this vision seriously, but ... closing your eyes to the past will blind you to the present.

Tell me the past, and I want to know the future. Confucius Post in Thread EURUSD

Link of my post


In a similar post from 06.Jan 2018 I have used the following sentences:

Of course, this conclusion is purely hypothetical, since nobody knows the future. It's also not about being right, it will certainly be different, but it's also interesting to look at the probability calculation.

Tell me the past, and I want to know the future. Confucius Post in Thread The Equilibrium, a key to success!

Link of my post

In my post on 23.Jan 2018 I have in the blog: EURCHF made aware of the situation in the Frankenschock and wrote:

The course has still not made it into the POC zone after 940 days. Now we are approaching a decisive phase. I think we will reach the zone relatively quickly. And then? Now I recommend that you watch this zone as you enter the course. It seems like the zone could push the course down and give us some good shorts.

The key "Equilibrium"

Link of my post




From my marked zone, the course has gone down 1,100 pip so far, but this view of me was pure luck and has nothing to do with knowledge or experience. Basically, every trader makes a forecast when he starts or ends a trade. The intentions for such predictions are different and often involve luck in a random market.
The probability to make a correct prognosis is 50%. That's why I've tried to formulate my opinion about a future price course very carefully.

In the past, I had insufficient information in the forex market, which I could now optimize with real stock market data. The best indicators are only useful to a trader if the data in the MT4 are correct. Unfortunately, in the forex market we can only rely on the time and price data. But Bid and Ask are the only reason for a price change and we do not get exactly this data in the forex market. So it's clear that most indicators do not provide the information we need.

It is not possible to forecast a course over a long-term period. In my next post, I will discuss this in detail and describe a possible solution.

I wish you a successful trading week

Best regards

@Bionics

Thank you for your excessive respond...Also from past I saw you have EURUSD on chart going back to 1971...I tried to increase history on my chart Tools=> Options => charts and I increased numbers but no effect at all , still showing only to 1995...
Is that broker issue or I have to do something else to get 1971 like you have on your charts?

In that case analyzing yearly chart maybe possible to get idea at least of initial intention of market makers...

Again thank you for your time.

[quote=YYZ;12620309]@Bionics Thank you for your excessive respond...

Dear YYZ,

Extensive answers often help to avoid misunderstandings while expanding the knowledge. It is important to me to formulate prognoses or possible price developments very carefully in order to avoid possible losses for others. This blog is an opportunity to bring together traders who do not need fixed and pre-set setup rules but want to create their own custom setup. That, in my view, is the only way to succeed in the long term.

Most brokers provide data in the EURUSD since 1995. This data can be expanded for free and easy. Here you will find a video.

The data update of the history database

After you have downloaded the data, you have to refresh in the chart from M1, M5 ... to MN, so that the data in MT4 is updated with the data of your broker. Then you have the course dates starting from 1971. I can not guarantee if the data are all correct. In addition, I recommend you create a backup copy (template or profile) of your M4.

I hope this helps you further.

best regards

hello Bionics,

I noticed that the indicator zz easy, marked in yellow, then in white the label of the number of pips of the zz.
Could you modify it to have the color red instead of yellow.
for ease of reading

Thank,s

Hello mchl13,

I hope you are fine and everything is working. I'll see what I can do.

best regards

Hello mchl13,

It went faster than expected, you can now choose the color yourself. The final number is still yellow, however.

best regards