The Equilibrium, a key to success!

Mad world


Hello dear subscribers,

The stock market world, as we know it, has not existed for a long time. When we think of Wall Street, we see brokers shout at each other and acting with each other. Stock exchange trading today takes place beyond the major stock exchanges, usually in large data centers of banks and institutions. While in the past traders were decisive factors in trade, they were long since replaced by physicists, mathematicians and programmers. At the heart of today's trading decisions are the algorithms that control highly complex trading bots. Over 10 years ago, the first high-frequency traders who penetrated the stock exchange markets in order to make life more difficult for banks, asset managers, life insurers, pension funds and investment funds became established. The three most common strategies used by high-frequency traders are the provision of liquidity, arbitrage, and the detection of liquidity. When providing liquidity, high-frequency traders behave like traditional market makers: they offer buying and selling prices, but without the commitment of traditional market makers to always be present on the market. In doing so, these dealers access a strategically sophisticated software environment.

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Interesting high-frequency trading algorithm that has taken place in the S & P 500 futures contract. In 7 seconds, there were over 7,000 trades (52,000 contracts). The video shows in 7 minutes what happened in the 7 seconds.


In 1,238 trading days, the largest high-frequency trader made a loss on only one day, at the same time Goldman Sachs came to 124 loss days. Goldman Sachs tops the charts with a 90% win rate, but the largest high-frequency trader Virtu is still significantly better. Scientists working on Virtu's trading activity found Virtu not taking much risk in trading. High frequency trading is a worthwhile business. The big players have long recognized this and made a counter-stroke. They work with the same tricks to compete in the market. As a result, three major banks were also fined millions of dollars for spoofing. Therefore, the market has become even more confusing and harder. And in the future it will be much harder to earn money in these markets.

Although there are many more private traders trading on the stock exchanges than big players, the turnover of big players is well above retailers at 90%. For the stock exchanges, the big players are therefore clearly more important, what that means, is clear for everyone. There are significant differences in data feeds and fees, as well as the speed of order execution. The big players are able to trade millions of shares within 2 minutes without overly large orders. This is made possible by the special algorithms that take over the trade.
While the traders continue to upgrade, the stock exchange supervision hardly comes after. Traders generate up to 1,000,000 data records per minute via Eurex alone. If you want to track down grievances, you can immediately get a container ship with printouts of trade data. Complete monitoring of market manipulation is therefore no longer possible. That an authority can do something with the complicated algorithms, is also difficult to imagine. This facilitates future market manipulation. Techniques were banned by the stock exchange, where an algorithm stops orders in the trading system that should not be executed at all. However, it is hard to imagine that Deutsche Börse voluntarily puts rules in its statutes that annoy high-frequency traders. Its ten largest customers generate 50% of sales and provide additional liquidity in many markets.

As retail traders, we do not have complicated algorithms, fast data cables, high-performance computers or the capital needed to move markets. That's why we need to look more closely at the big player approach. Between the high-frequency traders and big players, I would not like to differentiate at this point, since the big players have already begun to work with the tricks of high-frequency traders. It is crucial to know the way of working in order to draw insights that protect us from possible losses.

Spoofing
The practices often used in the past are called smoking or spoofing, which enables large market participants to gain trading advantages at the expense of slower acting business partners. This is because very short-term participants analyze the purchase and sale orders very precisely because they hope to obtain information about imminent price changes. For the big market participants, this offers the opportunity to simulate large orders, which in reality do not exist by the rapid adjustment. The other traders can not analyze these orders in the short term and are confused. Since they do not know which orders are correct and which are only fictitious orders, this gives the large market participants a time advantage, since they know their right orders. The big orders are then withdrawn at lightning speed as soon as the big player has executed its set counterorder in the market. Many high-frequency traders place their computers not so close to the exchange's main computer to trade faster, but to be able to cancel orders at lightning speed.



Many market participants are guided by the set limit orders in the Oderbuch, which represent the relationship between demand and supply. Some years ago, on the New York and German Stock Exchange more than 90% of orders were not executed. Therefore, I strongly recommend to pay less attention to these limit orders. While a good prop software can detect the deleted and added limit orders, in very volatile phases this is often useless. However, deleted limit orders help identify a new demand or offer. Certain algorithms use these phantom orders to try to get the opponent's algorithm to buy. It analyzes when the opposing algorithm begins to abandon its buy order. After that, exactly that number of limit orders that trigger the opposing algorithm are given up. For this reason, it will still continue to come to the known spoofing.

News Reader
It is a software that is able to read current business news into the marketplace by launching a specific algorithm that immediately places buy or sell orders in the market before the actual prices can react.

Arbitrage
Here, price differences are exploited on different stock exchanges. Thereby, papers are bought on one stock exchange and immediately resold on another stock exchange. The price differences are small, but the larger the number of pieces, the sooner the deal is worthwhile.

Pinging
An algorithm is programmed to send small orders to different exchanges to find out where liquidity exists and at the same time to look at the trading books.

Snipping
With small, quickly issued orders, the market is searched for hidden orders. The goal of finding large buy and sell limits of other traders. Just before these thresholds, which promise the release of large orders, then the own orders are placed. The limit orders of the other participants will be triggered much later and drive the course in the desired direction of the big player.

Scalping
The faster the respective system, the higher the decisive advantage. As soon as the systems detect large order volumes, they are on the market at lightning speed. So you can buy even cheaper than the other dealers. Even before you can govern, the dealers are already outside again and the course turns immediately in the other direction. The slower traders are virtually eaten by the market.

Quote Stuffing
This is a fight between HFT algorithms. Some of these companies have chosen to fool their fellow competitors by placing thousands of orders within a second and immediately deleting them. This can be up to 15,000 orders within a few seconds. The point is that other algorithms have to handle this flood of data and are thereby deceived. The algorithm that sends these data knows that they are wrong and need not be analyzed. This saves time and they can wait for opportunities in the market that the other algorithms fail to recognize due to their "preoccupation" with the fake orders.

Wash trades
I have already described this approach in previous posts and is particularly controversial. The trader deals with himself here. He hunts his buy order up to his sell limit order, which then pushes the price down immediately. Or, in a rising market, a turnaround is suggested in order to buy cheaper again before the market turns sharply upwards again. The goal is to push merchants out of the market or to induce them to make transactions that they probably would not have done in other circumstances.

Front Running
This procedure is particularly nasty. A player is to buy a specific currency pair at a specific price for his customer. The player buy for himself, before acting for his client. Since this procedure is forbidden, the trading is done by another company. This makes it harder to prove an offense.

Big buy, small sell
This is a procedure I have been able to observe myself in the last few months, that's why I called it that. On a high, suddenly a huge purchase order is placed in the market. This purchase order is not a bogus order but an order actually placed in the order book. Traders see this single order and start buying. After all, a big player does not invest such a large order for nothing. The big player is starting to sell up his big order in small pieces. As a result, the price does not go up. Then the big player pushes the course down. As many buyers enter the market there is enough liquidity available. Once the Trader's first stops are triggered, there is a chain reaction down. Already there the big player gets out again. On his big order, the big player loses maybe a few dollars, which he get back but immediately.

Fake resistance zones
Since many traders believe in resistance zones, the big players produce artificial resistance zones by bouncing off the course at certain price zones. These resistance zones are exploited to get high liquidity at this price level, which is detrimental to most retail traders. Since many traders work with the Fibonacci, this type of trading is also incorporated into your strategy. At the 50 retracement, the price is pushed up, which attracts many buyers in the market, the short time later all are stopped. It does not matter if you work with an MA, Fibonacci or Candle Patterns, what we see is really different. How else can you explain that over 90% of traders are wrong?


The tricks of the big players create a false truth about supply and demand. The only truth is the resulting candle, but the moment we see the candle, that's already the past. Individual papers can lose 20 or even 40% of their value within seconds without fundamental justification, only to recover a short time later. Once the algo trade has spied a strategy, it is outdated. This approach makes the entire fundamental analysis almost superfluous.

Here you can see a Nanex animation of the S & P 500 futures during the Flash crash on May 6, 2010.

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Market depth is a possible step to analyze demand and supply, but usually uses limit orders, which often give a false picture of demand and supply. Much more important seem to be the orders actually placed.



An important insight is that predicting a future course from the current track is wrong in most cases. The recommendation that we pay less attention to the current chart image and focus more on the Equilibrium. So on the small breaks in which the price is balanced.

First, we should deal with the reality that awaits us in the market.

There are 12 big players in the forex market that account for 85% of the total market. Essentially, these banks control the price performance of the EURUSD. However, the willingness of individual retail traders to invest is also highly dependent on this. As we know, the big players in an equilibrium or sideways market must raise ask or bid to then push the price in their desired direction. It is crucial in which amount the retail traders are willing to invest ask or bid. As a rule, the retail traders are encouraged by the big players to make certain investments at certain price levels. The big players are able to project typical resistance and support zones to deceive retail traders. But this approach does not always work as the big players imagine. Therefore, they are trying all tricks, to lure the dump money on a wrong track. Spoofing, fake resistance zones, Big buy, small sell and stophunting are just a few of the endless possibilities to get the money from retail traders. When a big player has collected a large amount of Ask, news, politics and currency strength are no longer important. Even if news or politics point to dollar strength, the big player will push the euro higher to realize its gains. Therefore, news or political circumstances are often not relevant. The decisive factor is what happens in the market right now. Will the dollar or the euro is bought, will the euro or the dollar is sold. This situation needs to be analyzed daily and can change at any time. Of course, the central banks play a decisive role.

The big players rarely buy the euro at the low and usually never sell it at high. Likewise, they rarely buy the dollar high and never sell it low. The background is that the big players are implementing a high amount of lot. A big player buys the euro and pushes up the price. More traders enter the market and ensure a further increase in prices. To get out of the euro, the player now has to bring a high number of bid into the market. But there must be traders who continue to believe in the euro and invest in the market so that the big player can sell his euro. To get a good price, the big player has to get out of the euro before the high. This way of working distinguishes the big players from the retail traders. The most successful big players are day traders who realize their main profits within a day. Even more successful are some high frequency traders.

So it's always about gathering in the sideways markets Bid or Ask to realize profits. This situation can change any time a big player leaves his position. For this reason, a long-term forecast of a price development is not possible. The key is to recognize whether Bid or Ask is being collected. Unfortunately, no indicator in the forex market is able to recognize this, as no bid and ask are published in the forex market.

A short-term forecast is also not possible because the big players first collect a certain number of bid or ask in order to move the price in the medium term. If you are able to find out what the big players are collecting, it is possible to anticipate the medium term movement. Unfortunately, the exact time of an outbreak is difficult to see ahead.

In the following video, I have set up a cluster search in which, using bid and ask, the market divides as follows: buy euro = green square, sell euro = red square, buy dollar = red circle and sell dollar = green circle. The filtering takes into account both a certain number of trades, an imbalance, an identification of the big players, and the delta between ask and bid. The setting is still incorrect, but should clarify the future goal.

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You can already see the individual relationships between bid and ask and the resulting results. The filtering has to be optimized and adapted to individual market situations. From this one can not fundamentally derive a future movement, as the big players often work with a time delay. You must first collect before pushing the course in a particular direction. This approach is interesting in the sideways markets or within an equilibrium. There you can implement the information faster.



Let's summarize the information briefly again

Point A
First, we realize that there is a stronger dollar sale, then the euro is bought on a larger scale, the price goes up.

Point B
Already here, a stronger euro sale takes place, which indicates that the price could not rise so much.

Point C
Already here, the first larger dollar purchases take place, the price goes down for a brief moment and is pushed up again.

Point D
Here comes a big dollar buyer in the market and pushes the price down a bit more.

Point E
In the smaller equilibrium you can see that the euro is bought very heavily at the end and the price goes up.

Point F
The euro sellers hold back first, when the course runs down the dollar is bought heavily.

Point G
Here, the euro is bought stronger and pushes the course again stronger. A short time later, a strong dollar buyer came into the market, pushing the price down.



If we look at an M1 in EURUSD at the same time, it quickly becomes clear that we can not read this information based on a candle. That is also clear, because the important information of Bid and Ask is missing.

Conclusion

Whether the price rises or falls more or less in the short and long term is unpredictable. Predictable is that the course moves in waves up and down. Trading is always in the direction that promises the most profit for the big players, and that may be identifying in a medium term area. The crucial zones are the sideways markets or an equilibrium. There is often collected in the second half, a larger number of bid or ask, which can anticipate a possible future price course.

With the optimal filtering of individual clusters, it is easiest to be able to recognize what is happening in the market right now. The way the big players work is not like a racing boat but rather a container ship. Sometimes collecting bid or ask can take days before a sharp price move up or down. And a big player does not always have to be active in the market. Often the smaller players are allowed to operate in the market and big players only intervene in certain regions to build certain fake resistance zones, which are then exploited at the crucial moment.

The real stock market data have clear advantages over the Forex data, this is undisputed. But the trick is to filter that stock market data. The information obtained from this must show a trader whether a bullish move is caused by a euro buy or dollar sale. That's a big difference. If the bullish movement comes about through a dollar sale, it is likely that an equilibrium will be created first, and the euro will have to be rebuilt before the price moves higher. If the bullish movement is created by buying more euros, there is a greater likelihood that the market will continue to move higher. In addition, you should also pay attention to Euro sales and dollar purchases.

With the correct filter setting, triggered stops can also be displayed. This is just before major outbreaks a crucial indicator of the future price performance. The challenge is the exact filtering of individual data. And that is the crucial point, which will take a lot of time. In my opinion a decisive strategy to survive in this tough market in the long term.

I wish you a successful trading week

best regards

Great stuff. Thanks for the information.

Trading is all about orders (passive and aggressive). The volume of orders move price. The sooner everyone understands this the better their trading outcome will be.

Hello corinthia,

First of all, welcome to our blog and thank you for your kind words. I agree with you absolutely, because the order volume with Bid and Ask is an important factor, which unfortunately is not available in the Forex market. Since I have traded very successfully in Forex for 10 years, I first wanted to find out why this worked without bid and ask. I found the solution for this in the futures market and through my extensive research of the big players. Since trading, I've realized that the big players are driving the market. Mad world (Tricks of the Big Player)

I have been studying their way of working for many years, but in the Forex market, there were no concrete approaches to more accurately analyzing their plans due to insufficient data. I've had a lot of conversations with friends and acquaintances who have traded in mutual funds and banks. First I could understand and implement this information only with a professional Prop software correctly.

In the past I have oriented myself to supply and demand and I have followed the equilibrium. I never bet on breakouts but I try to follow the short trends in the sideways markets. In this equilibrium or sideways markets, the big players collect bid or ask to push the market in their direction. For me, the sideways markets were first and foremost a safe haven as I could earn up to 10 pip in 5-10 minutes.

In doing so, I oriented myself to resistance zones that enabled me to get in and out well. These resistance zones are partially artificially created by the big players to collect a certain amount of bid or ask and prevent the traders from following them in the breakout. These fake resistance zones actually worked, but only in the sideways markets, as the big players there are as tame as a lion who has just eaten a gazelle. As soon as the big players have finished their collection, the theater starts, to stop as many traders as possible. So I had to trade where the big players were tame, in the equilibrium.



The EURUSD in the forex market is still the best choice for me to trade. The specific information, I get from the stock market. My entry-level decisions in the forex market, I meet only with the data from the stock market. As I've already said, the filter capabilities of Bid and Ask are infinitely large, so it will take many more years to get an optimal filter setting. On my chart I need the following information: Euro buy, Euro sell, Dollar buy, Dollar sell, Stop Loss buy and Stop loss sell. This information must be created for the big players and for the retail traders in three different time zones: Asia, Europe, USA. A crazy job because it requires analyzing and evaluating some 1000 candles in a 30 second footprint chart. Today's results so far show interesting aspects that could pay off in the long term.

As a full-time trader I have enough time and motivation to devote myself to such a project, we can be curious what comes out of it.

Best regards

Deep in the market


Hello dear subscribers,


Like me in my last post: Mad World


over the Big Player tricks wrote, a long-term and short-term prediction of a price course is hardly possible, since the Big Player are rather medium-term oriented. The goal in our new Project No. 8 is to enable the identification of the following scenarios:

When will the euro be bought?
When will the Euro be sold?
When will the dollar be bought?
When will the dollar be sold?
When will stop loss buy be triggered?
When will stop loss sell be triggered?

I have already published a rough overview of this goal.





In addition I recommend to read the first half my contribution again.

Help for better trade




In the Asian market, the following scenario occurred on 5 November at 4:33 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. I first examined this candle in more detail.




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. 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 Lot 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 only 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.

The problem is that although the bid and ask options in the futures market are different, but the number of trades between bid and ask not exist. I first wanted to find out if such a distinction is important to understand this situation even better.




In order to be able to penetrate even deeper into the market, I first called up a 1-tickchart and analyzed these 30 seconds more closely. Since a 1-tick chart only consists of individual points in the chart, I have used the Heiken Ashi for a better representation, since he always includes the close of the last candle. This makes the course clearly visible. The deviation caused by the smoothing of Heiken Ashi is within acceptable limits. In the picture below you can see the split between Bid and Ask. In the 1 tickchart, each stroke is a trade made by a trader. In the 30 seconds we look at, the biggest buy order was 8 lots and the biggest sell order was 14 lots. Nevertheless, 1373 lots were traded in 30 seconds. In the 30 seconds, the price went through a total of 17 price levels. I first assigned the number of bid and ask to each price level to find out how many bids and ask trades have taken place. Overall, I had to assign 788 trades to the price level.





Here we have the result.

Point A
The total volume (addition of bid and ask) is already known and can be seen in the image.

Point B
Unfortunately, the number of trades quoted in the futures market always refers to the total volume.

Point C
Likewise, the number of bid is known on the individual price level and is shown in the picture.

Point D
Here you can see the number of trades that refer to the Bid. I have not yet found such a representation in the futures market.

Point E
The number of each Ask can be displayed individually at each price level.

Point F
Here you can see the number of trades that relate to the ask of the respective price level.

Point G
The volume delta results from the difference between Ask and Bid. If more Bid than Ask has been traded, a negative value will appear. This form of presentation is also known and used in the futures market.

Point H
The trades delta is the difference between the number of ask trades and the number of bid trades. Since there was no distinction between the number of trades between Ask and Bid, these values could not be used so far. Anomalies between the volume delta and the trades delta could be interesting.




The result of points C and D is given by points A and B. Here, in principle, the distribution or proportionality between Bid and Ask is shown. For the number of trades that was not possible. At first glance, the proportionality of points C and D seems to correspond to the proportionality of points G and H. Nevertheless, there are some anomalies that should be considered even closer.




From the data obtained, there are now three different factors.

Point A
Dividing the total volume by the number of trades gives you a number. The larger this number, the more likely the involvement of a big player in the price level. This is usually because a big player trades more Lot , than a small retail trader.

Point B
Here the value Bid / Trades was determined based on the new calculation basis.

Point C
Here the value Ask / Trades was determined based on the new calculation basis.

The average result volume/trades, Bid/trades and Ask/trades does not identify at first a big player. When this calculation was made in the Asian market, I assumed a value of at least 1.9 to identify a big player at the price level.




Here now a division was made. The yellow marked fields indicate a possible participation of a big player (> 1,9) within the respective price level.

Point A
When looking at the total volume, it seems at first that the big player has invested, in the upper range, 23 and 59 lot Bid, to trigger the price slide down. Likewise one recognizes in the lower third a participation of the Big Player.

Point B
After splitting the trades between bid and ask, we get a very interesting presentation. Initially, a higher number of Bid is invested at the top of Point C to push the price down. This triggers possible stops, which I marked in blue. You realize that the values are well below 1.9. In the lower part of the big player has invested another 61 Lot to even take out the last stops.

Point D
At the same time, it is possible that the big player has already bought Ask in the yellow marked boxes while the course goes down.

By the time the big player pushed the price down, there were participants who entered massively into the falling price. At the low of the candle, the big player sold his dollar in small numbers, so that the course went up again. There was enough liquidity, as most participants assumed that the price would continue to go down.

In the lower section you can see the overall result, divided into Big Player and Retail Trader. At point B we see the big player investing 363 lots to push the price down. He triggered a few stops. The value of 682 lots not only refers to stops being triggered, but also traders who entered the falling market and bought the dollar.

It is very clear that an accurate evaluation will never be possible. But I'm convinced that the division of trades by Bid and Ask can bring a clear lead. Similarly, the trades delta should bring another and very big advantage.




We recognize that we can extract interesting information from a normal footprint chart that can give us a clear edge over other market participants. And nothing else is so importend in the training business. We smaller retail traders do not have the money to move the market, but with the right information we can react much faster. Nowadays it's not the big ones who eat the little ones, but the fast ones the slow ones. If you want to have an information advantage, you first need meaningful information. I hope I could show you a way to get that information. The difficulty that arises then lies in the interpretation of the respective information.

And that's exactly what we will be dealing with in our new project number eight.


I wish you a successful week

best regards

The wrong truth?


Hello dear subscribers,


Some universities have studied the quality of decisions in recent years, depending on the amount of information available. The question was, is more information leading to better decisions? It turned out that more information is not crucial, but the quality of the information.

In Forex market, we rely on the information we receive from our broker. Because of this information, we risk more or less every day a small fortune. Too much information hinders our willingness to make decisions, so we need a small amount of accurate information. The first question we need to ask ourselves is, is the information we receive in the forex market correct and of high quality? I have already answered this question in my contribution Forex versus future for me.

Forex versus future


The fact is that the quality of the available data in the futures market is 200% better than in the Forex market. That is the reason why I base my trading decisions in the forex market exclusively on the data of the futures market. Why should one act with lower quality data, after all we risk a lot of money every day.

That was the reason that I first informed myself comprehensively in order to get a high-quality data source. This data source initially consists of genuine stock market data, which is identical for all market participants. The next step was to present these complex stock market data in such a way that they gave me a concrete insight into the market situation. The result is very satisfactory so far.

I would like to give you a short example.

A trader friend and I bought a MT4 tickchart a year ago that could be used in the forex market. Although we were at the same broker, our tick chart chart view was always different. No matter how we calibrated the data, we were simply not able to create the same chart image. Now that we are working with real stock market data and a professional prop software, this problem has been solved. Whether we are working in a 1-tickchart or with a volume chart, we always have the exact same chart image. This situation facilitates a joint analysis.



If you analyze my main screen, you will notice that there are no more typical candles there. Inevitably one will ask the question whether a profitable trade with this data is even possible. First of all, the quality of the data was a decisive factor for me. This data now has to be filtered in our project number eight so that concrete action decisions can be made. For this, it is first necessary to deal with these stock market data closer. I will show some examples from my trading screen at the end of the article.

One reason why I said goodbye to the typical Forex market price scale, because that view is a truth that does not really exist. For this we can do a very simple experiment. Take a transparent piece of paper the size of your screen and draw random horizontal lines. Then place this piece of paper over your screen. You will realize that your marked resistance zones work well. I made this experiment directly on the screen. First, I have arbitrarily plotted horizontal resistance lines in an empty chart. After that, I faded in the candles. In the following video you will see how my randomly drawn resistance zones work terribly well.



We recognize that randomly drawn resistance zones will always work in a market. However, this is pure coincidence and has nothing to do with actual resistance. You can do this experiment yourself and you'll be amazed how well the course reacts to your resistance zones.



Here you can see the price history in EURUSD within the last 14 months in H4. We humans always have the habit of describing a random price trend with the help of horizontal, vertical or trend lines in order to create an order that can be traced for us. But this supposed order is a false truth. There is no top or bottom in a price because the price is not based on resistance zones, but exclusively on bid and ask. Of course, resistance zones work every now and then, but a reliable statement can not be derived in principle. Excluded are resistance zones that result from supply and demand. However, the creation of these zones requires many years of experience and is supported by the individual intuition of the individual trader.

Everything we see on the chart is nothing more than an indicator that at this moment represents a past price in the form of a candle. This means that everything we see has already happened and with it the past. One of the reasons why I chose stock market data was the opportunity to see part of the future. Now you'll be wondering how stock market data can put you in the future, and for that we need to first learn about the DOM (Deep of Market). A DOM, or Level2, is a source that we receive as a direct data feed from the stock market, providing insight into how other market participants are trading. For swing traders, the order book is often not as crucial as it is for day traders or scalpers.



Let's take a closer look at Point 1 at this DOM. At Point A we see the price leaders and see the spread of 1 tick between the Ask (green number) and the bid (red number). At Point B we see the sellers who placed their sell limit order on ask. The number 1 symbolizes one lot each on the Ask side. At Point C, we see the buyers placing their buy limit order on the bid. The number 1 symbolizes a lot on the bid side. Point D shows with 21 the number of buy limit orders on the bid side. Point E shows with 23 the number of sell limit orders on the ask side. So what we see in the DOM are the so-called limit orders, which were put into the market before and waiting to be executed. And exactly this view is a piece of the future. It shows the willingness of buyers or sellers to trade at a certain price level. Of course, limit orders are also added and deleted at any time, yet it is also a view for the future. Initially, these limit orders are at the respective price levels and await execution. These orders provide liquidity in the market and show the willingness to be picked up at a certain price level. This information is not available in the forex market and thus a serious disadvantage.

What you can not see in this order book are the buyers or sellers who spontaneously enter the market (market order) or possible stops from traders, which are in principle nothing more than a market order. The challenge now is to see if this picture of supply and demand is representative of the current market. Depending on the market situation, these numbers move quickly back and forth and it is often difficult to keep the right overview. However, these settings can be filtered to keep track even in volatile markets. The limit orders are only on the individual price levels and do not move the market initially. Only the aggressive market orders ensure a market movement. An advantage of trading a limit order is reducing the likelihood of slippage, the downside is that anyone in the market can see your order. The DOM is very flexible, you can see the individual volume of the last months at each price level, which saves the view in chart histories. Supply and demand can be seen at a glance. This saves time and is more effective.

Point F
At the price of 1,10050 a buyer gives up a 2 Lot Market Buy Order. The spread is 1 tick. This order absorbs the two sell limit orders on the ask side. (Point G)

Point G
The price jumps first to the 1,10055, (Point H) and the two sell limit orders are in the market. There is a bigger gap between supply and demand in the market, the spread opens (Point I), because there is no further buy limit order at the price level 1,10050. This situation is evidence of uncertainty. If a seller were to place 5 Lot Bid on the market, the price would drop to 1,10040. Gaps are dangerous for traders who work with stop-loss. If this is not guaranteed, it may end up losing more than the stop loss, because the position can not be closed until the next tradable price, that is, the price after the gap. Future price gaps can already be identified in the stock market.

At Point J, we see that the total number of the sell limit order has dropped to 21.

Point K
A buyer puts a buy limit order on the price level of 1,10050 in the market, thereby reducing the gap from 2 tick to 1 tick. (Point L). The total number of buy limit orders increases to 22 lots. (Point M) This information in the DOM is the fastest that can be obtained and is an indispensable tool for scalpers.



In the following example I would like to show how a price gap arises in the market.

At Point A we see the buy limit order on the bid side. There are 21 buy limit orders (Point B) on ten price levels. On the ask side we see the sell limit order.

Point C
At the price levels 1,10060 and 1,10065 there are no sell limit orders waiting for execution and there are a total of 20 sell limit orders in the market. (Point D)

Point E
At the price level 1,10050 comes a buy market order with 6 lots. First, two lots on the Ask side (1.10050) and then three lots on the 1.10055 price point are absorbed. Another lot of the buy market order has yet to be executed.

Point F
The small gap of 1,10060 and 1,10055 is now skipped and at the price level 1,10070 one lot is absorbed. This initially raises the price to 1,10070. The spread gap is initially 4 tick (Point G). The number of sell limit orders is reduced to 14. (Point H)

Point I
At the price levels 1,10050-1,10065, additional buy limit orders are added, and the spread gap closes (Point J). There are now 25 buy limit orders and 14 sell limit orders in the market. (Point K).

This process has created a positive gap. The market participant, who has given up a buy market order of 6 lot at the price level 1,10050, is already three ticks in the profit by this situation. Additional sell-limit orders were added, thus preventing a downward gap. Depending on the time unit you can see the gap in the chart. Often a gap takes place within the candles and is thus usually no longer identifiable. This means price gaps arise due to lack of liquidity on the ask or bid side.



We often see in the chart that a price is higher and immediately lower again. This can have different reasons, one reason I want to show you now, which has to do with a lack of liquidity.

Point A
At the price level 1,10050, a buy market order with 24 lots is traded. These 24 lots absorb the Sell Limit Order on the Ask side. The course jumps up to the price level 1,10095. (Point B) The spread between bid and ask increases to 10 ticks. (Point C). The total number of buy limit orders is initially at 21 lots (Point D), but new liquidity is added immediately (Point E). The number of buy limit orders rises to 26 (Point F) and the spread between ask and bid drops to 7 points. (Point G). At the price level 1,10095 a sell market order of 8 lot comes in now. (Point H) This order first goes through the price gap and absorbs 8 lot on the bid side. The price stops at 1,10045 (Point I). There is additional liquidity on the ask side, (Point J) which allows a further downward price trend. On the bid side there are now 18 lot and on the ask page 29 lot (Point K).

We recognize here an interesting phenomenon. 24 lot have pushed up the price by 10 ticks, while only 8 lot, the price by 11 ticks have driven down. They recognize the importance of existing liquidity in the market. And it is precisely this liquidity that can only be identified with stock market data in the order book. In very volatile markets, there is often a lack of liquidity, which ensures rapid price jumps. This often creates high risks, which are underestimated by the market participants.

Now let's look at why we are often not picked up on the market with our limit order. The submission of a limit order in the market is similar to a checkout in the supermarket. Anyone who wants to pay has to queue up in the queue.



At Point A the price is 1,10050. At the price 1,10055 you issue a sell limit order as you believe the price will now go down. At price level 1,10055 there are still three traders ahead of them waiting to be executed. They line up as number four in the queue. (Point B). First comes a buy market order of five lots in the market. (Point C). The participants in front of them are picked up and they are still the only one on the price level 1,10055 (Point D). The number of sell limit orders has been reduced to 20 (Point E). Now comes a Market Sell Order in the amount of 7 Lot in the market (Point F). The Market Sell Order first absorbs the bid and lowers the price to 1,10045 (Point G). The spread between supply and demand increases to three ticks (Point H). The total number of buy-limit orders has fallen to 14 and possibly additional liquidity on the bid side will reduce the spread between supply and demand.

If I give up a limit order in the futures market, I will see in the form of an approximation on which position I am in the queue. This is an extremely interesting tool. Unfortunately, I do not receive any information about this in the forex market.

Summary

Let's first of all note that liquidity is provided by the limit order in the market, these show future interest on the ask and bid side and provide a rough overview of supply and demand within individual price levels. Spoofing can cause changes. The market order e.g. Sell and Buy Market, Stop loss and Take Profit move the market by limiting or absorbing. The volume of Bid and Ask is the result of these struggles and is responsible for the price changes. If the spread increases and at the same time few limit orders move up, this indicates an uncertainty in the market. Also, a high number of deleted limit orders indicate the intention to fake a wrong offer or an incorrect demand. This can be valuable information. Likewise, one can more quickly identify volatility, absorption, and strong resistance, thereby making better decisions. Therefore, this volume is a crucial factor in trading decisions. Of course, this is not the holy grail, trading will always be a challenge, the question is what data they base your decisions on. To be honest, if I had to drive against a fixed wall at 30 miles, I would rather risk it in a Mercedes S-Class than in a Mini Cooper. Of course, an S-Class costs much more than a Mini Cooper, but that's worth my life. In the stock market environment, we risk our dearly earned money, the question is what data we rely on.

With the DOM in the stock exchange market, I see with Ask and Bid the past, the present and the limit orders a little bit into the future. In the Forex market, I only see the past, because Ask and Bid do not exist. Everybody should think about that.

Let's go back to the information on my main screen and look at the volume of the last 71 seconds, last Friday, in Euro FX.



In the picture we can see the Smart Tape at point A. In addition to the exact time we see the price levels of ask and bid, as well as the traded volume. Right next to it I have created a 1 Tick Chart. At Point B we see the candles in the shape of a Heiken Ashi, as we normally do not get any candles in the 1 tickchart. Beneath Point C we can see the individual layout of Bid and ask. The Smart Tape provides us with the information from the 1 Tick Chart. Every number we see stands for a trading business that a maximum of one trader could give up. In the chart analysis, we can see exactly how far Bid and ask are changing course. At Point D, we see that a higher number of bid came into the market, but it did not manage to push the price down further. Then 18 lot ask came into the market, which brought the course completely up again. Opened on Sunday night, the price developed bullishly until Monday 9:00 am and managed to push the price below the last minute candle of Friday at 10:30.



On the left side (Point A) you can see a footprint chart of the last 71 seconds. At Point B, I have shown the ask, bid, delta, and volume. At Point C we see the total number of bid on the left and the total number of ask traded on the right. A total of 26 trading transactions were processed with 36 bid and 33 ask. On the right side we see the time and sales list with current information. Particularly interesting are the sizes at Point D, they show the remaining limit order on the ask and bid side with every tick change. Depending on the filtering, you are thus able to capture supply and demand even more efficiently.



With the right software you will be able to filter the number of bid and ask to give us important information. The last 71 seconds I have filtered out once for you. At Point A you can see the filtered bid and ask according to the respective volume. In the smart tape at Point B, I summarized the volume for a better view. This is particularly interesting in highly volatile markets. In the spread tape, at point C, you get an important view with the delta. This is the cumulative delta of Bid and Ask. So you can analyze trend reversals very well.
The featured tools are just a small selection of unlimited options to work with. Every trader has an individual view of the market and the opportunity to find his optimal tools to get a correct market view.



My main screen initially contains different representations of the market. As a scalper, I need up-to-date and very fast information which I would like to present in a clear way. Of course, this is a project that is improved and adapted daily. With a 100% chance, this screen will look completely different in half a year. The only constant in our lives is change and in the stock market the situations change daily. These changes must be met with an optimal overview to make his trading decisions. The basis of the data is already optimal, since it is stock market data. The challenge now is to find a view that increases the number of correct trade decisions. This is not an easy goal, but it's the only thing worth pursuing. The goal may never be 100%, but according to Pareto principle, 80% is enough to get the best results.

Since I've been working with supply and demand anyway in recent years, not much changes in principle. Only the quality of the data has become more extensive and high quality. The results so far are also promising and possibly worth this effort.

Due to the translation, misunderstandings may occur in some areas and I apologize for the inconvenience.

I wish you a successful trading week

best regards

Manipulation in the market


Hello dear subscribers,


In the market, there are many conspiracy theories that the big players manipulate the market in their favor is the most known and an undisputed fact. Some even argue that the markets are manipulated only by a certain force, because such extreme market movements can never be generated by a common acting group. We want to take a closer look at this assertion.

What exactly is the interbank market?

The interbank market is the market where money and credit business takes place only between banks. Banks and financial institutions trade with one another in the interbank market, lend each other money and can thus ensure that they remain liquid. Securities, money, foreign exchange, precious metals or derivatives are exchanged in the interbank market. The interbank market is assigned to the money market. The rates of currencies are not determined by a government as long as they are freely tradeable and not linked to another currency. They are based solely on supply and demand. Forex trading is usually OTC, i. E. it is not centrally organized, but takes place directly between the market participants or through a broker. This trade without a central marketplace is referred to as over-the-counter (OTC) trading.

Bank risks are to be spread across the interbank market. Through it, the banks can carry out liquidation of open positions that were previously established in the customer business. Or the banks operate proprietary trading on the interbank market. In addition, interbank trading should ensure sufficient liquidity at all times for the banks.

The interbank market was founded exclusively so that banks could trade with each other, a direct participation of private investors was not intended at the time of founding. At some point, the brokers found a goldmine in it, which is why the forex market came into being.

The biggest "players" in the forex market are governments and the central banks, which generally participate in foreign exchange trading in the interests of the government. Due to their financial capabilities, central banks are able to exert a noticeable influence on the foreign exchange market. In principle, however, they use currency trading only to adjust and hedge their foreign reserves. The next largest participants are banks and other credit institutions. The proportion of private speculators is very low here in comparison.

EBS (Electronic Broking Services) is the world's largest trading platform for foreign exchange in interbank trading. The price, which arises at EBS, is the reference for any FX derivatives. EBS Markets maintains an anonymized central limit order book. FX trading banks can trade on the market and via these hedge funds & CTAs (Prime Brokerage Arrangements). Although the data is collected anonymously, EBS Markets recognizes whether it is a human or an algorithmic interface (AI). In addition to the classification, the EBS regulations provide for a minimum quota life (MQL). This is to prevent the high-frequency traders from the fact that they have only by their speed advantage over the other market participants.

In addition, since there is no specific trade information in the interbank market, this market for high-frequency trading is not quite as interesting as the stock market environment. The big players therefore have sophisticated computer systems to detect inconsistencies in the currency pairs. These disagreements usually last only a few seconds. With so many market participants and the large volume of daily sales, it is more important to keep an eye on the trend and the flow of capital than to recognize an undervalued currency.

Over $ 5 trillion is being transacted daily in the forex market. 98 percent of the transactions are conducted in direct trading between banks rather than through a stock exchange. There is no regulatory authority. Only twelve banks control 85 percent of the market. This means that these 12 banks will invest $ 4.25 trillion per day. Banks do not trust each other and no one provides information about their trading activities. Therefore there is no real volume or an order book in the interbank market. The resulting volumes in MT4 are a pure estimate.

First let's make a comparison in EURUSD
The EURUSD trades daily at $ 1.7 trillion, the proportion of 12 banks is 85% = $ 1.445 trillion, the share of other institutional traders is 10% = $ 170 billion and the retail traders share is 5% = $ 85 billion. In addition to the 12 major dealers, there are an estimated approximately 10,000 institutional traders and 1 million retail traders.



Each of the banks trades an average of 1.2 million lots per day, every institutional trader 170 lots and every retail trader 0.85 lots. In proportion: 1 large bank deals around 1.4 million daily and every institutional trader 200 times more than the individual retail trader. 1 million retail traders invest less per day than a big player. Thus, the size relationships are clear and it is logical that the market is primarily driven by these big players. The big players act and the retail traders react.

With its trading volume in the interbank market, Deutsche Bank has so much experience that analysts and programmers are able to develop interesting strategies from the existing data. This brings clear advantages in the trade. Of course, every big player will try to influence the market in his favor, but having a force to control the hole market is completely impossible.

Why does it seem, that the market makes always the opposite of that, what you are doing right now, and why are not the big players getting in the way each other?

First of all, the world's 12 largest banks are trading to remain liquid and, of course, to optimize their profits. The big players know the markets and are able to see immediately if liquidity flows into or out of a market. Therefore, it is wiser to follow the liquidity than to oppose it. That's why many see it as if the big players are working together. By acting in the same direction, they do so in principle, but for their own account. The retail traders have little opportunity to follow the liquidity and therefore, most retail traders, against the big players, face the market and lose. Interestingly, some banks invest 20-30% of their available funds in the forex market, thereby earning up to 65% of their total profits.

Of course, many tricks and unfair means are used, most of them are in my report: Mad world


That banks are working with unfair means is nothing new and everyone is aware of it. In addition, the Big Boys spend billions on their analysts and traders. Anyone who places himself as a poker player at a poker table with a big player must be aware of the risks he is taking. Most traders are unaware of who they are dealing with daily. That is also understandable, because you only sit in front of your PC and do not see your opponent. I am convinced that if retail traders knew how these big players work, they would be distant from trading. We compete against the biggest world champions every day, it's presumptuous to believe that you can win against them.

Nevertheless, why do 2-5% of traders manage to live from trading in the long term?

In every odds calculation, by chance, a faction is created that survives. The stupid thing about it: A successful trader can never know if his success is based on skill or chance. Of course, good moneyman management, experience, diligence and strategies are crucial factors on the path to success. But we never know why we are successful. I believe that my success is based on pure coincidence, so I do not post strategies, just ideas, so that every trader can create his own setup. And I can only give this recommendation to every trader. Once you have found your way, deepen your knowledge and start optimizing your strategy. Do not let others get you away, but focus on your strategy. That's the only way to success. A proverb says: New brooms always sweep well, but the old ones know where the filth lies.

Do not start to tell of your strategy as the only optimal system. Every setup has to be created individually like a Formula One race car. It makes no sense to want to work with someone else's setup because it will not make you successful in the long run. The biggest enemy is not the big player but the broker. If you trade 10 x 1 lot a day as a scalper, the broker gets $ 100 of it. You have to earn that $ 100 first to avoid losing money. If you lost $ 2,000 after 500 trades, your broker earned $ 5,000 in the same period. If the broker would only charge half the fee, you would even have a $ 500 profit. That's the biggest problem.

I know many successful traders who have been successful with different systems, it does not matter which system you use, it is crucial that you know what you are doing. Claims that scare are often used in the forex market to arouse a need. This behavior is often seen in insurance agents. At first, they scare you that you will be poor in old age and after that they sell you a life insurance. In the forex market, the fear or greed is often exploited by fraudsters. Basically, you should know that you can find all the information for free on the Internet. The challenge is to find the right information. It takes some time, but not more.

The forex market is one of the biggest challenges and whoever gets into the shark tank should be aware of that. To make it, you have a realistic chance of about 5% here. In Europe, 10% are self-employed and 50% of them are successful. That's also 5%.

The only key to success is to try it out.

I wish you a successful trading week

best regards

It looks like a nice system , I will try it and share the results.

New Screen for our project no. 8

Hello dear subscribers,

Enclosed I would like to post briefly my new screen. With this screen, I was able to make very interesting discoveries this week. For this I have written a detailed report, which I will publish until tomorrow noon.

Inserted Video

The results are very valuable and I am convinced that they help us in the Forex market.

I wish you a nice evening

Greetings and see you tomorrow

Michael

The Matrix


Hello dear subscribers,

Just two years ago, I launched my blog: The Equilibrium, the key to success. At that time, I still got my data exclusively from the Forex market and derived my trading decisions. Looking closer at the forex tick chart, I first became aware of how the volume is calculated in the forex market and what serious drawbacks can arise from it. This finally gave me the idea to analyze the stock market data more closely in order to make more efficient trading decisions in the forex market. The resulting information is consistently positive and can help many traders optimize their trading decisions.

In the past, I have traded most successfully in the sideways markets or even Equilibrium. Now that I have studied the stock market data, it is clear to me today why trading in Equilibrium has worked so well. The sideways markets are used by the big players to collect a certain number of ask or bid and then push the course in the desired direction. During this collection phase, the big players are not so dangerous as the prices move within a range to get their shares together. Extreme price jumps are relatively rare in these phases. As a Scalper I am interested in doing my trade in the market within a short time. Basically, the prices in wavy lines move up and down, the longer you are in the market, the higher the probability of losing your profits again. As a Scalper, I would like to enter price courses that are relatively fast. At first, the breakouts up or down seem to be the fastest course, while trading in equilibrium seems to be very slow. First of all, I wanted to examine this comparison in more detail.




On the picture you can see a course in H1 over a period of two weeks. There are five equilibrium phases in the area of accumulation and distribution, as well as five strong moves up or down. These five equilibrium phases account for more than 70% of the total price. Therefore, the probability of trading in an Equilibrium is significantly higher and more efficient than waiting for a possible breakout and there acting correctly. In the individual movements of the accumulation and distribution phases, as well as in the respective strong movements up or down, I first analyzed the number of pip and the time. Within an equilibrium or sideways market, I have calculated small possible trends. The designations from point A to J are now needed for our calculation.




In the picture you can now see the individual movements that I have designated from point A to J. Here the hours were divided by the number of pips. At Point A you can see the pips per hour achieved within the strong movements. At Point B you can see the pips per hour achieved during the distribution or accumulation phases. At first, it seems that in Equilibrium, on average, the faster movements have taken place than in the breakouts. Of course, this calculation is not representative because I only looked at a period of two weeks.




We zoom in a little deeper into the analysis and let's look at the distribution phase at Point E (Picture # 1). This is where a zigzag indicator comes into play that calculates the average pipettes within a trend. Within the equilibrium, the average trend was 7.2 pips, while the strong downward movement averaged only 4.8 pips. Although the time factor was not taken into account here, you can see that some of the movement in the equilibrium has been considerably stronger. Since this is not a representative calculation, it is possible that we can expect slower movements in an equilibrium. Nevertheless, I am convinced that, on average, over a longer period of time, a breakout will not produce more pips per hour than movements within an equilibrium.


Conclusion:

In only 30% of the time, I am able to carry a trend trade up or down. Sideways movements take place in 70% of the time. Everyone will realize how difficult it is to catch a breakout. But if I focus only on these breakouts, I only have an average of three chances per week. Most movements take place in the sideways markets. There, the achieved Pip per hour are often significantly higher than within the trend movements. Add to that a crucial point: in the equilibrium phases, the big players are much more predictable than in the strong trend phases. Therefore my recommendation is to earn the main income in Equilibrium and realize a possible additional income with the trend trade.

Of course, it depends on the time unit in which you trade. In H1, a trader averages 5.4 pip / hour = 0.09 pip / minute. In the M1 it is already 0.25 pip / minute and in the 8 tick chart an average of 0.69 pip / minute. Why this is so, read in my article:

Scalper = self-destruction in small installments?

In this article, the trend curves M1 were compared with the trends of an 8-tickchart. The number of pip / minute can be increased again if they only bet on downtrends. Here's an explanation:

Who is faster the euro or the dollar?

With an 8-tick chart to bet only on downtrends, brings a possible speed of 1 pip / minute. This is up to 10 times faster than in H1, because a Scalper trading simultaneously 20 individual movements. Of course, the risk increases at the same time. Who drives his car 200 mph has a much greater risk than the one who is traveling at 20 mph. Every advantage often has disadvantages. Realizing when to seize an opportunity is the most important thing in life. But it is almost as important to know when to forego an advantage better.




When I made my trading decisions exclusively with the forex data, I analyzed supply and demand. I used different indicators that were able to show different trend strengths. In stronger movements, I paid attention to the stronger pullbacks that allowed me to identify the key candle. With the aid of this key candle, I was able to draw certain resistance zones in the chart that helped me with trading decisions. Basically, I could act profitably with this approach. Still, there were some situations where I was either not picked up or my stop was triggered. Of course, scaling could easily improve my profitable trading to earn more. But that would not have reduced my risk. That was the reason that I dealt more closely with the stock market data.




It is indisputable that the big players are moving the market. To follow the big players, you have to be able to identify the Big Boys. In the following post I have already write about.

Deep in the market

With the ratio volume / trades you can easily identify the big players. You would also be able to do that in a 1-tick chart, but the data gets there so quickly that it's almost impossible to derive concrete trading decisions from it. In my example you see a bearish candle in the 30 second chart with 17 price levels. On the left side is the summarized volume, next Bid and Ask was divided individually. The yellow marked fields show a participation of a big player. With the help of the stock market data and an efficient filtering one is able to find this big player participation.




Here we see a H4 chart in Euro FX. The bright fields show a clear participation of the big players at the respective price levels. In order to derive concrete information from it, you first have to switch to smaller time units.




From this analysis one can find interesting forms of representation in smaller time units. On the left side (point A) we see a filtering which is exclusively designed to represent the big player. On the right side (point B) I tried to divide a M15 candle into different strengths. Red = weak, blue = medium and green = strong. However, this division still needs to be adjusted. If we deal with a 1 tick chart (point C) , we can see the lot of the ask / bid of a single participant. I have observed this representation more closely and I noticed that 10 to 200 lot are traded relatively rarely. When this large amount of lot entered the market, the price has not changed directly to move in a particular direction. This suggests that the big players bring a large amount of lot into the market. Higher bid in the accumulation phase and higher ask in the distribution phase. I've noticed, that for very strong price movements, rarely a high number of lots came in the market. From this one can conclude that in this case, the algorithms of the big players fire a kind of machine gun volley with small lot to push the course in their desired direction. To study these algorithms, I first made a matrix.




In the picture you can see this matrix on the right side. The red numbers indicate the individual number of bid traded and the green numbers show the individual number of traded ask. The subdivision runs from 1-10 each Lot, right and left next to it I have created the number from 11 lot to 200 lot with the associated time. How it works you can see in my video.

Inserted Video

In the video, we see how the ask pushes the price up a bit. These are only smaller market participants. Then the price is pressed down a bit more. After, the pressure down is triggered by a smaller number of solder. Starting at 2:30 minutes in the video, a big player starts with many 4 lots to press the price down. At the end you can see how the ask side is trying to take control.

I find this matrix particularly interesting because it brings me closer to the algorithms of big players. Over the past few trading days, I have already noticed interesting structures within this matrix. I would like to briefly summarize the previous findings that I could derive from this. When big lots enter the market, in most cases this is not immediately relevant to the price.

This means that when a large order of 50 Lot Ask enters the market, the price does not move up very sharply. The big players have long since recognized that big lots marks leave their mark on the market. However, if these high lots take place within an accumulation or distribution phase and do not immediately lead to a sharp change in price, this is not a disadvantage for the big player. A few minutes later, most of the traders have forgotten about this big order anyway, since the price did not move much through this big order. Some are making the mistake now and believe that this big order has been absorbed and the future price will go down sharply. The price will also goes down a lot, but this is a Stopfishing and most traders are quickly stopped, because the course is pressed up again after Stopfishing. This means that the actual market direction was long and not short.

Strong price moves up or down are usually triggered by the big players with small orders. One to four lots are fired like a machine gun volley and push the price in the desired direction. If a big player with 1,2,3 or 4 Lot trades in the market, it is no longer identifiable. With the created matrix one is immediately able to identify these machine gun blasts. Of course, I'll never be able to get in the market on the lowest low or the highest high.

The first thing I can tell is whether a big player collects more ask or bid within a sideways market. As a rule, after that a fake breakout takes place around the stops of the retail traders to triggers. By now I can identify this stop fishing quite well. I have already posted some contributions about this. Now, when I realize that a stop fishing is taking place and the retail trader stops, I only need to recognize in my matrix when a machine gun fire is fired. If this happens on the right side then I am able to enter the market immediately to be pulled up.

The future challenge is to filter this matrix a little more efficiently and to look for possible patterns. It is clear that the algorithms of big players do not always fire an equal number of bid or ask in the market. This number of the lot is usually random. But a machine gun salvo is always immediately visible. This allows me to get into the market relatively early and let the big player pull me up. With my filter setting, I am also able to recognize when the big player starts to get out of the euro. As soon as I see that, I let myself be driven up a bit by the retail traders who have just joined in and then I am also out of the market. With the pure data from the Forex market I was never able to realize these optimal entries and exits. Crucial to this approach is that the overall picture of the market must fit the reactions of the big players. If it then comes to anomalies, you should postpone its market entry.




In the past, I have been very happy to deal with the COT data (point 1) to find out how the individual investors were positioned. The problem was that this data was released only every two weeks to provide better market transparency for all participants. Here you can view COT data for free.

https://freecotdata.com/currencies-2/.

If you want to get more familiar with the COT data, you will find a lot of good information here at Forex Factory.


I searched the stock market for a faster alternative and discovered something interesting with the open interest (point 2). Open interest is the number of all outstanding (open) futures contracts on a given market at a given time. This is the total number of futures contracts that have not yet been closed by an offsetting transaction. The open interest increases with each stock exchange transaction, which creates a new open position with both the buyer and the seller, by one (A buys a contract for the first time, B empty for the first time a contract). The open interest remains unchanged in a transaction that opens one position and closes another (A sells his contract to C). Open interest declines when the transaction closes a position for both the buyer and the seller (C sells to B).

Simplified, we could say open interest is the number of open (long) contracts purchased. The number of purchased and sold contracts are always the same. Open interest shows us how committed the market participants are. Back off or build up positions. In the Russian market we have the only opportunity to access the open interest.

I got the euro / dollar data and made some experiments. At point A, you can see how the market participants withdraw from the euro, shortly afterwards, the price goes down. At point B, liquidity flows into the market and prices rise thereafter. First of all, it is still a bit early to make concrete statements about it, but I will stay tuned and report as soon as I have completed further test runs.




The information provided in the stock market is undoubtedly very accurate and detailed. With the pure raw data, however, little can be started. The right information is obtained by a creative filtering of the crucial data. First of all it is important how one interprets certain data and what data one needs to make decisions. There are countless possibilities to link and filter different data. On the one hand that requires a lot of time and a creative think "around the corner". The results so far that I have achieved within a short time, continue to motivate me to think in this direction. In my last article I wrote that a successful trader never knows if his success is based on chance or on his ability.

Most successful traders will always push their success on their skills. In my opinion, my previous success in the forex market is based on experience, but mostly on chance. The project number 8 is to ensure with the help of the stock exchange data that our success in the future is based exclusively on ability. Although this is a hard and long way, the goal is desirable in any case. I would be glad if some information could help you and I look forward to your feedback.

I wish you a great weekend and next week a successful trade balance

Best regards

hi bionics
If you do these things alone and there is no workgroup , It has to be said
You're an extraterrestrial

Hello shahed58,

Since there is no working group, I like to accept the friendly compliment, although I would rather call my actions more creative than extraterrestrial I use this blog to sort my thoughts, thereby many questions arise in the time, I am forced to myself answer. In the past, my trading decisions were based solely on forex data, and surprisingly, I was trading profitably. This is not really possible, because there is no specific data in the forex market (ask and bid), on which one can build a long-term and profitable trade. Some years ago my brother wanted to know how I manage to live off the trade. I could not explain it to him. That's why I believe my success to chance. Of course, experience in trading also has a share in the success, yet I wanted to exclude the factor of chance for my future trading as possible. When I first started creating this blog two years ago, the first thing was to explain to myself how my trade works. So I tried this in various posts. I never wanted to argue, that my assumptions about the market are correct. I just wanted to know why it works for me. As you write down your thoughts, new questions automatically arise. These questions you are trying to answer. This creates new ideas that you simply try out. And already a development takes place. The only constant in our lives is change, but those who resist them end up like dinosaurs. And the market is changing daily due to the algorithms. It was clear to me from the beginning that the big players will dominate the market, so I tried to follow you. However, this is only possible by chance in the forex market. However, I did not want to get out of the Forex market, since the profit opportunities here are significantly better than in the stock market. Developing and advancing new things is very time-consuming , but if it works, it will give you the edge over the market. In the environment of the stock market, a market advantage is the decisive factor for success. Some will now ask why I post my findings quite openly, because a possible market advantage could be reduced thereby. The answer is simple. Most market participants want a simple setup to trade with. My approach is very complex. In addition, I offer no specific setup, but a kind of buffet with different ideas. Since one can not copy a setup 1: 1, this blog is for some traders an excellent way to optimize their setup. Other traders will stand be controversial about my ideas or rely on their own proven system. This ensures at the present time that the circle of participants remains relatively small. I did not open this blog to be famous or to have the most subscribers, but to exchange myself with innovative people who like it. And I feel, that as a very worthwhile goal.

I wish you a successful Monday

best regards
Michael

Michael, truly amazing work shared here. Thanks.

Overview in the blog

Hello corinthia,

First of all, welcome to our blog and thank you for your kind words. I am very happy if the information in our blog helps you, and you can create your own setup from it. A rough overview of interesting contributions (Project 1-6) can be found here: The best chance to win

Project 7 starts here: New project no. 7

Right now we're starting project # 8, but the projects are built on each other, so you can calmly choose the things that are relevant and interesting to you.

I wish you a lot of fun in this blog and especially much success

best regards
Michael

Greatest thread ever seen in FF

Hi Bionics,
I mainly concern is forex market, one thing: the charts or tick charts don't contain all the infomoration, I guess mainly part of the currency trading liquidity is outside of our charts, we just see the projection! Market Maker or big player make decision by many reasons, for example, the banks policy, or Market Maker's risk management issures, or execute sell/buy for VIPs at some price.... As I understand, forex broker's quotes(charts) are for retailers only, luring retailers into the wrong direction is the only purpose.

Base on the above, only trade with the "strongest signal" from the charts is very important.

Good Luck

[quote=wiserltz;12646150]{quote} Hi Bionics, I mainly

Forex Broker

Hello wiserltz,

a warm welcome on our blog and thank you for your very kind words. Like you, I trade in the forex market, because the liquidity is much better, which affects my execution times. However, this depends individually on the individual broker. Basically you have to be careful with brokers, because after all, they live not only on the spreads and fees. Every broker has to protect himself in the market in some way. As a rule, ECN brokers pass on the positions immediately, others work with their own hedging systems. If the positions of the different customers balance, there is no need for action. If this is not the case, the broker secures by corresponding counter positions in the forex market. Therefore, it can happen that many trades do not take place in the forex market, but only at the broker. If you act only with the broker and the broker does not pass on the position to the forex market, he would make another profit in case of your loss, besides the spreads and the fees. Of course there have been brokers in the past who have manipulated their prices to make further profits.

Personally, I've gotten used to working with virtual stops that the broker can not see. However, he could guess the approximate stops based on my past trades. It takes some time and experience to find an optimal broker. So far, I am very satisfied, because my broker meets the requirements set by me. One of the main reasons for my broker choice: As a professional trader I can trade in Europe up to 1: 400 and in the extreme case of a drawdown I am liable only with my balance in the account. So I would never have to make an additional payment. Basically all traders in Europe have this advantage, but they can only trade 1:30. Once a trader is classified as a professional trader, he is liable with his entire fortune. And in the case of the franc shock EURCHF, the price went down in seconds by 2,200 pip. With 1 lot, that would be a $ 22,000 loss the trader would need to settle immediately. That's a crucial point for me.

As you have already said, the information in the forex market is very limited. This has led me to go other ways to get better information. At the moment I am very busy with the DOM, the Time & Sales List and the Spread Tape. I filter Ask and Bid in different sizes to gain insights. This makes it easier to identify and analyze the different strengths in the market. The stock market information has so far made for significantly faster and more accurate entries and exits. Certain patterns can be recognized, which I still have to analyze in detail.

In this blog you will find some ideas on how to determine the trend or candle strength even easier in the Forex market. Maybe it will help you.

I wish you a lot of success

best regards

Maybe I missed something.

A question about DOM ask/bid:

For EURUSD,
Ask up, by comparing the DOM you can tell how many lots of EUR buy order(for retailers side) injected into the market, the lots is STOP BUY only right？ Market order is invisible, am I right?
Bid down , doing the same calc, I can tell the STOP SELL lots(USD)

Edit: you can see EUR buy and sell, USD buy and sell, right?

Can we get the limits order size?

Identification of the big players

[quote=wiserltz;12647267]{quote}{quote} Maybe I missed something. A question about DOM ask/bid:


Hello wiserltz,

In the DOM you can only see the limit orders that provide liquidity in the market. Initially, the market orders are invisible, but once they have been executed, they can be seen in the market. In a 1-tickchart you can see in the Bid and Ask overview 1 market participant each who places an individual order. However, one can not say if, e.g. a 4 Lot Ask Order has been placed by a Big Player or by a Retail Trader. That's why I work with a special software that allows me endless filtering options. Currently I am analyzing the different Ask and Bid which I sort by volume. This results in interesting patterns that are, however, strongly dependent on the market. A retail trader may give up a 4-lot order, but not 20 times in a row in a given period of time. It's also hard to tell if this 4 Lot Ask is a euro buy or dollar sale.

That's why I work with a special software that theoretically allows infinite filter options. First of all, a few weeks ago, I came up with the idea of distinguishing the Euro / Dollar buying and selling from each other. Such an approach is not yet known to me, so this is an idea that I find very interesting.

Basically, it makes a difference whether in the Low the dollar is sold or the euro is bought. In both cases, this is a bullish sign, but when the dollar is sold, a big player can step out of his position and leave the market. If the euro is bought, that does not necessarily mean that the price rises immediately. Maybe a sideways market will be created to collect more ask. With this approach also one would theoretically be able to identify triggered stops. This is very helpful to identify stopfishing.

Larger numbers of lots, placed on the market, usually indicate a collection action within an accumulation or distribution. There you can identify the big players well. To push the courses or push even in certain price regions, the algorithms also like to work with smaller lots to make identification difficult. However, these algorithms can be recognized in the chart and made visible. The decisive factor is the correct filter setting.

However, I am currently implementing this idea in our project No. 8. First of all, some 100 footprint charts have to be examined in different time units (tick charts) in order to analyze certain patterns. Thereafter, the filters must be adjusted accordingly and adjusted to different market conditions (Europe, USA, Asia). After that we will know if this idea will help us. In my post you can find an example.

Deep in the market

If we know the formulas, we can theoretically make everything visible what we need. Whether the results are always correct, I dare to doubt, so it will probably be a longer project. The short-term results are impressive, but it is still too early to make specific statements. I'll stay you tuned and of course publish the results regularly.

best regards

Hi,

I have been doing similar analyse for 4 months, only forex market. I got severl points:
1) EURUSD is the only pair that quite suit this theory, other pairs like GBPUSD, crazy, sometime total opposite.
I guess the resaon maybe big players' hedging, they sell usd on EURUSD, and buy usd on GBPUSD, to make things worst, they act like big players on EURUSD, and as retailers on GBPUSD, cheating....
2) Asia session is the best（not the pips, but the win ratio), with no news and low liquidity, difficult for them to hide and reverse trade
3) London session, the time period of accumulation tend to increase, and more liable to coordinate with HTF trend
4) Single direction, clear signal with the trend, no signal for retracement.

Good Luck

[quote=wiserltz;12648394]{quote}{quote} Hi, I have been doing similar analyse for 4 months,

Hello wiserltz,

I agree with you, I also find the Asian meetings very efficient and the winning rate is top. Unfortunately, the volatility is very limited and my broker requires in this time the 3-4 times spread as few participants from Europe are involved. The Asian sessions are indeed very interesting and should be tried out by everyone.

best regards