The Equilibrium, a key to success!

Hi Michael

I am very pleased to be part of this blog that you started.
This week I should finishing all the reading here and probably will be 100% with the news coming from you.

I have passion for study special financial markets that as for you and me I guess are our jobs.

Never tierd to study and learn always open mind and keeping every day better.

Thank you and have a good week buddy.

Dcrs

Basics in Stophunting


Hello dear subscribers,

The big players have so much money that they can move the course massively within seconds. In the following article, I described why that doesn't make sense for the Big Boys.

Identification of the big players

For this reason, the big players rely on collecting ask or bid in the sideways phases that is made available by a wide variety of market participants. In an accumulation phase, Ask is collected (cause) in order to push the price up in the medium term. (Effect) while bid is being collected in the distribution phase (cause) to push the price down in the medium term. (Effect). Therefore, a trader should analyze what is bought within an equilibrium. Important: When exiting the market, the big players do not sell their ask or bid in one block. Ask can only be sold if many market participants continue to expect rising prices. Therefore, a big player in the rising market sells his ask in small quantities and tries not to slow the price up. The advantage: the course continues to rise and the big player receives even better prices when exiting.

Market orders are transactions that should be executed as quickly as possible at the current or market price. Conversely, a limit order specifies the maximum or minimum price at which you want to buy or sell. As we already know, limit orders represent liquidity in the market. However, since there is a bid and ask spread, these limit orders never meet to trigger a market movement. The market buy orders (demand) hits the sell limit orders (offer) and the market sell orders (offer) hits the buy limit orders (demand). If a price is pushed upwards, many market oders are usually traded, with absorption, additional limit orders are added to a price level to stop the market orders. Market orders can also be triggered by a TP or stops.

A crucial point is the identification of ask and bid. Ask comes into the market because someone buys the euro or sells the dollar. Bid comes into the market because someone buys the dollar or sells the euro. If a strong bullish candle unexpectedly emerges in a downward trend, this does not necessarily mean that someone is buying the euro and the price will continue to rise. It could also mean that a big player leaves his position and sells his dollars. Then the price would very likely not rise immediately, but rather run into a sideways range. How price movements occur and the spread changes can be read here:

The wrong truth?

Resistance zones

In the post: "The wrong truth?" I showed that randomly drawn resistance zones work amazingly well. However, this is a pure coincidence and has nothing to do with actual resistance zones. We traders often try to sort a random price trend using horizontal, vertical or trend lines to derive a future forecast. But what we draw there gives us a truth that does not really exist. The first question we have to ask ourselves: Do resistance zones only happen by chance and how should we deal with them?

Resistance zones actually exist and, as a rule, they do not arise accidentally. The big players know that traders like to work with Fibonacci zones, moving averages (EMA 200) as well as resistance and support zones. With the help of these zones, the retail traders make important trading decisions. When a price stops three times in a row at the same price level, many traders assume that it is a very strong resistance zone that cannot be broken. The opposite is true, however, because it would be no problem for the big players to break through this resistance zone. But they make us believe that it is a strong zone. The next time the price comes to this zone, a large number of traders may take short positions and place their stops above this supposedly strong resistance zone.

Even if some traders assume that this resistance zone has been initiated, speculate on a long position and put their stops below the resistance zone, it is no good idea. The big player initially pushes the price down sharply, where its buy limit orders intercept the triggered stops of the traders. Now the big player is able to buy Ask even cheaper before pushing the price up. As soon as the big players push the price above their fake resistance zone and catch the traders' stops, the price is pushed further upwards, because at this moment further ask comes into the market. In this case, the short and long traders were switched off before the big player implemented his strategy.

Resistance zones are therefore an important tool for quickly getting liquidity. Especially in the sideways markets, people like to work with these resistance zones to collect bid or ask unnoticed. When you identify a typical resistance zone, you should always ask yourself first what the big players are up to?

Trends

A trend is described as a particularly profound and sustainable course development. For me, a trend is just a price trend that can develop in the opposite direction at any time. There can be endless discussions about trends, although there will always be different views.





Let us first look at the EURUSD in the monthly chart. We see here a price development of the past 588 months. The two green lines clearly indicate an upward trend since 1971, while the two red lines clearly indicate a downward trend from 2010. Is it a major upward trend and at the same time a minor downward trend? Is that really true and how does this information help us?





We switch to the EURUSD daily chart. We have been in a downward trend since February 2018, and we have been in an upward trend since September 2019. Another view is, that we are still in a downtrend and the new uptrend will be confirmed, when reached the last high of February 2018. But even if the high of Feb 2018 is overcome, it does not automatically mean that the price continues to go up. What is the benefit of looking at a trend for our future trading decisions? Due to different time units, the consideration of different trends is completely understandable, the main question is which trends apply to the individual trader and which future decision he will make with this knowledge.

An upward trend is identified if ever higher highs and higher lows are formed in the price trend. Downward trends are identified when steadily falling lows and constantly falling highs are formed in the price trend. Big players also know these rules very well and use them to obtain the necessary liquidity. Let's look at a simple example.





The case described here is only intended as an example. Depending on the trading style and strategy, there are different approaches.


Point A
The upward trend ends here, but this is not yet apparent to a trader at this point. First the course runs to point B.

Point B
When the price reached point B, it is still not clear whether it is already a downward trend because the price could go up again and form a new high. The price initially goes up a bit and then forms a new low at point C.

Point C
After a new low has been formed at point C, this is a confirmed downward trend for many traders and they first wait for the pullback to find a good start. This entry then takes place at point F and the stop comes via the last high at point D.

Point E
After the course has formed a new low and has run to point E, the stop is pulled to point F. In some cases, stops are pulled faster regardless of highs or lows.

Point G
After the course has formed a new low and has run to point G, the stop is moved to point H. Due to the stronger price trend at point H, some traders have already been kicked out of the market.

Point I
The course has now reached point I and the stop is dragged to point J.

Point K
From point I, the price is pushed into zone K and triggers some stops by the traders. After that, the price continues down to point L. Some traders believe, the price will go further down and starts a short position at point K. Some traders believe it is going up and starts a long position at point L.

Point M
Now the price is pushed to point M and stops further traders. On this occasion, the big players are able to purchase larger orders from bid to push the price further down to point N. At the same time, the long traders who entered the market at point L are stopped. The short traders from point F onwards must hand over winnings to the big players.

This example clearly shows that the big players are trying to stop all different trader groups or to reduce their profits. It is a great art to ensure that neither scalpers, day traders, swing traders nor position traders come to a noteworthy result at the same time. Of course, we have to take into account the different stops of the individual market participants.

Since the big players are unable to bring their positions directly into the market, they are forced to look for suitable liquidity. This liquidity is immediately released as soon as the traders' stops are triggered. For this reason, it is important to recognize where the individual stops of the traders are. As soon as you identify these stops, you can use it to estimate a further course of the course. As I wrote in my last post, stop identification is not a guarantee of successful trading. Based on future data, we can see what the big players buy or sell within these stops. But we will deal with this in more detail in our Project No. 10. First of all, it is important to identify possible stops in order to find out where the greatest liquidity is in the market. This shows us the direction in which the big players are building their trade. We have to keep in mind that stops are moved, which makes it easier for the big players to achieve this liquidity (stops) quickly with a counter trend (course of the point G to point H). For a better overview, the indicators that I published in my last post will help you. If you click on the link, you will come directly to the article and can download the associated indicators.

Supporting indicators for Project No.9

First, draws possible stops of the individual long and short traders and decides which liquidity could be the next target. First of all, this gives you a rough overview with which you already get a lot of information. The identification of different stops is a process that does not work straight away and requires experience. It is therefore completely normal for the first results take a little longer.

I wish you a successful trading week

best regards
Michael

Hi Bionics, reading about margin requirements for EURUSD futures and falled in this thread which I read every day and connected your stop hunting posts with my research and came to me the idea that big players should hunt margins, so what is your experience with.

Margin hunting

Hello Js3mwtRc,

This is an interesting question that I can only answer emotionally, because I have not yet been confronted with it.

Let us first consider the Forex market. 85% of sales come from the big players, 10% from the smaller institutional traders and the remaining 5% from the retail traders. The big players and the majority of the institutional dealers work almost exclusively with their own funds, a margin does not apply here. It is different with most retail traders. Many work with levers and the broker demands a margin for this. This security is intended to ensure that the holder of a buy or sell position can fulfill his obligation if the development of the course should develop to his disadvantage. If the existing kontract cannot absorb a negative development of the trade and a margin call is ignored, the positions can be closed by the broker for security. However, a margin call is an extremely rare exception for most traders. I haven't had a margin call in the past 10 years. In addition, most positions are hedged with stops, and should there be a sharp fall in prices, 95% of traders in Europe are only liable with their account deposits. Therefore, I don't believe that big players target an account's entire margin if a stop comes into play beforehand. The big players earn $ 400 million a day in Forex, primarily through stop hunting. It's a very rewarding business, but it's wiser to keep retail traders going than to flatten them. Why should you slaughter a cow that gives 50 liters of milk every day?

I am glad that this blog helps you and I wish you continued success with our new project Nr.9.

Stophunting, Project No. 9 starts

best regards

Hello Michael.

Thx for the information, I ll have a proper watch when I return from my vacation trip at middle Feb.
Unfortunately I will have only a couple of weeks spare time until the projects start and screentime will be very rare later.

The vids and informations from your youtube channel are really helpful to figure out what I require.

In a couple of weeks I´ll come over with a couple of specific questions to liquidity and absorbtion in different marketphases.
I guess 50 contracts "6E or E7" in a liquid market time is nothing to move the market.

But more later when I´m back to screen.

Have a good time.

Guido

Thanks Bionics Indeed I had only one mrgin call when I was new to fx market and have Years that I don't margin too.

Sorry I forgot to mention that my question was regarded for the futures market only and for the Monthly E6 contracts and not entire forex market which doesn't expire.

[quote=Bionics;12710737]On the right way Ok, thanks Michael !
Lately I had not much time to read this thread further, I'm now at page 43, and until that page you did not use tickcharts yet, I already do. I already had been reading some parts of the tickchart pages before, but I will reread that part. Now I will understand it even better ...

Regards !
Wulong

Ha, ha, drawing equilibrium lines, bionic chart and the smbionics supply demand (is becoming my favorite) combined with my old system and using offline charts, brought my demo account 40% higher. I even did a stupid trade last Friday with 0.5 lot, I did a buy trade while price plummeted down afterwards without using stop loss. I just let the trade run and when I got back from work in the evening the trade was floating around 270 Euro minus, ha ha. A good lesson for me for not using stop loss. Of course I did not care, after all it was my demo account, but nevertheless you can learn a lot from it. I let the trade run all weekend. Today I won it all back by using 3 lots and even once 4 lots. The 'old' trade I closed at minus 170 Euro, but still I brought my account higher. Of course I'm not ready to apply those high lots for real, mostly I use 0.5 or 1.0, but using higher lots makes fast profit when your guess is right, of course if price goes against you the losses can go fast too, ha ha. Hmm, with the help of the equilibrium zones your guess could be right more often ...
I just did a nice buy countertrade in a down trend based on my T16 tickchart, 12 Euro in 10 minutes with 2 lots. A new world goes open for me ! Right now, price is in an equilibrium right on a demand zone which already rejected price going down three times, but now a big, sustainable supply zone is forming in both T64 and T16 tickcharts, I wonder what will happen....

Regards from Wulong

Margin hunting


Hello Js3mwtRc,

A futures margin is also a security deposit, that is required from the broker, when trading futures and or when using automatic futures trading systems. The sum of the margin minus netted gains and losses of all open futures positions held represents the equity of a margin account. There are two types of future margin, firstly the initial margin and secondly the maintenance margin. The initial margin is due when a position is entered. The maintenance margin can be called up by means of a margin call if the existing kontract cannot compensate for a negative development of the trade.

If you finance your contract in the future from your own funds, there is no margin. Futures are also leverage instruments because investors only purchase them on a margin and initially require little capital. The margin in the future is therefore also a security deposit that a broker requires when you enter a trading position. This affects the areas of futures and CFDs, because you do not buy or sell a security, but enter into a contract, i.e. an obligation. And it starts exactly the moment you go long or short with the future or CFD, at the price that is then available in the underlying. There is no actual purchase price and no transfer of a security to your portfolio. However, there is always the risk, that only a small amount of liquidity will be invested, but in the event of a loss, due to the additional margin requirements, more liquidity will flow away than the trader can handle.

If you go long with a contract in the Euro FX Future, the book value of your portfolio increases by $ 6.25 for every tick that the Euro FX gains. If the Euro FX suddenly fell 100 ticks, you would lose $ 625. By doing this, the broker protects itself against losses that it would otherwise have to bear. If the big player was targeting the margin, it would have to be ensured that you didn't use a stop. But also in the futures market, stops are usually used and if you place a 10-tick stop on 1 lot, the risk is limited to $ 62.50. The only way the big player would have is to motivate you to extend your stop. However, shortly before your stop, he would have to steer the course in the opposite direction again. So I cannot imagine that margin hunting could be a sensible strategy.

I recommend you first deal with the Stophunting in our project No. 9. The knowledge gained from this will help you to be less stopped in the future.

Stophunting, Project No. 9 starts

Supporting indicators for Project No.9

Basics in Stophunting


I wish you a successful trading week
best regards

Best good compared ever lol.

Why kill the "cows", otherwise they "give" "food" and then they took what they gave and more then that also the "milk" that the cows produce. ..

And all this with 99% of the cows have no ideia that this is happening.

I know you are right, no one can move the market against its position, but can move it in its favor; ... I still believe that hunting these areas can be profitable and also there is a chance that after the price (that I don't think that it can be exactly manipulated by anyone) hit a margin requirement area then it will return in a range again, or at least stay in a range.

How someone can calculate the margin maintenance reuirement of the E6?

Price manipulation

[quote=Js3mwtRc;12714467]{quote} I know you are right, no one can move the market against its position,

Hello Js3mwtRc,

In the area of price manipulation, the first step is always the decisive liquidity in the market. In addition to Stophunting, our new project sheds light on precisely this liquidity, which initiates interesting turnarounds. The hunt for liquidity continues until it is exhausted, after which a counter-trend begins. We will talk about these manipulations in more detail and see some examples.

To your question:

You do not need to perform cumbersome arithmetic operations with the calculator to see if you can afford a position from the margin or when that security will expire. All of this is done for you. Your order mask in the future, shows how high the margin must be for a particular position when you enter the order. If your free stock in the brokerage account is not sufficient, such an order will not be implemented at all. With a margin of $ 5,000 and equity of 10,000 euros, you would have $ 5,000 leeway, after which your broker would ask you to add capital to the account to replenish the margin. But a stop loss should always be used to protect the margin.

If you do not have a future account, you may be able to download an analysis tool from the Internet. It is a system for calculating the margin requirements for futures and options. Just look for "Span file" and make sure that there are no costs for this tool.

I hope that this will help you.
best regards

Hi Bionics, one question please, within the universe of forex instruments, futures, etc., with what criteria do you choose which one to trade? thanks

Thanks Bionics I will look for this tool.

I am waiting for the next blog, until then I wan't to leave a link here with the article I was reading, you may find it interesting and may help you in your future endeavours.

I have no intention to sell anything here, you can move this link anytime.

Link

Hi Folks

This blog just keeping getting better and better congrats to Michael for start the project and all mates that joined here on this very nice trip.

Good day to all

EURUSD

Hello Jusiur,

As I wrote to you on October 13th, I only trade EURUSD in the Forex market. I only use the futures data for my trading decisions.

Reply to Jusiur

The reason for this is that I have identified the EURUSD as the optimal currency pair for me. Here are some of my reasons:

The most efficient currency pair

I work with a total of 8 screens that are exclusively tailored to the EURUSD.



The video is already 3 months old, the settings have already been changed completely. On 5 screens I get the essential information from the futures market Euro FX 6E and on 3 screens I get the information from the forex market EURUSD. The settings are very individual and tailored to my needs, so it would be too complex to adapt these settings to other currency pairs. Usually a successful trader doesn't need 8 screens, but I find it convenient to get all the important information at a glance without having to switch screens. Since I started working with future data and a special software for it, the existing screens seem to be no longer sufficient for me. In principle this is pure luxury, but once you have worked with it, you don't want to give it up. As a full-time trader, you should design your workplace so that you look forward to it every morning. And I am trading body and soul and I look forward to trading against the best traders in the world every day.

It is a very special profession that we can all be proud of.

I wish you a successful trading week
Michael

By all respect, do you need really such setup? I think this would my nightmare do trading as you post in the video.

My setup is like this and i am happy to reduce the information to a core, that give me a desicion point. Look here.

Nightmare

Hi Michael,

First of all, thank you for your very constructive contribution in our blog, so I would like to answer you in detail here. I am very pleased that you have reduced your trading decisions in the Forex market to the price after you yourself have refrained from your charts here.





You once worked with these charts, what you probably today cannot understand yourself. So I was initially amazed that you posted such a statement on our blog. Incidentally, I have never worked with such forex charts, because my charts always only referred to supply and demand. It is perfectly fine and I am very happy if you have improved your setup over the years and are successful with it. On the other hand, what I don't think is okay is that you ridicule many FF traders, who work with indicators, on your blog and post their chart images, even though you yourself used such charts. That does not speak for a firm character, a fair together and is not exactly intelligent. You come to our blog and at the same time try to advertise your blog. This is completely understandable since 60% of your subscribers are on the ignore list. That would be a very important reason to think about why. You only can give yourself, this answer.





In our blog, no setup is posted, it is a project that we are currently working on and the charts that you call a nightmare relate to prop software that translates real stock market data. This stock market data is not comparable to forex data and is much more complicated to use. If you had dealt with the background of the stock market data, it would you also be clear.

Your comment reminds me of someone who knew everything better in the gym.





Please don't get me wrong, I don't want to insult you and don't want to get too close to you. I am very happy if you can handle your way of trading. But please don't be so presumptuous to believe that only your way of trading is the only right way. In our blog we trade just like you, but we also see what happens inside a candle. Bid and Ask that hit the liquidity in the order book are the only reason for price movements and nothing else. And exactly this information is not available in your trade. Each trader has their own point of view on how the market works and I accept and appreciate your opinion, but I kindly ask you to accept other points of view without making them ridiculous. I may now be the No 44 candidate you ignore.

One can always have different opinions, but you should always treat each other fairly and respectfully. Maybe that could help you in your future life.


I wish you all the best from the bottom of my heart

best regards
Michael

Hi guys

As far as i am keeping reading the blog and get much familiar with the topics here(not full update yet with all topics(reading yet).

There are some points I would like to *try* to give some help as my experience allows me or not.

First Bionics and all mates here, sorry if this subject already was approach here... I did not get it there yet.

First I would like to congrats again Michael for the good work and all others that are here participating.

PS: Does not matter how many screens do you work with or how many data and info\intel do you use or need - In my experience IS HOW YOU USE AND HOW FAST CAN YOU PROCESS AND ACT WITH THE INFORMATION. (Just my opinion and experience).

My point is about DOM \ BID x ASK \ HETMAP (HEATMAP IS WHERE YOU CAN ''SEE'' THE MORE LIQUIDITY LEVEL ARE in resume words (DOM = Death of Market \ BID price = Is what the buyers are willing to pay for it at some level and the ASK price = is what the sellers are willing to take it( pay for it at some level).

I see these i can say almost every day people doing this: ''If the BID is higher then ASK they just buy because the price will up and if the contrary is going on they sell''...

Unfortunately this still happen and i guess will remains that way special in cases wich the person is start to into Financial Markets...

Just because the bid is higher then ask does not mean the price will go up if nobody buy or sell or even if they are buying AND selling the market can move sides and ''nothing'' happen.

Supply and Demand are very important as liquidity is, and yet a lot of things can happen or not....

''What do you mean by that?''

I mean if you are watching the DOM and HEATMAP for example you can lets say ''see'' where are big orders more liquidity and etc...
So if the market goes at some point that you believe is good Price/orders/liquidity etc... when goes there maybe can not be what you thought was lets say ''good'' cause the orders, liquidity etc... can be taken off from there... So What you are going to do ?

Once i heard a trader say: '' If you don't know why you are ''clicking to buy or sell'' then DON'T DO IT'' - Why ? Because the fact that you are putting your money at risk it is already a win.
Think if you are doing something that you don't know why and PUTTING YOUR MONEY at RISK, If you dont lost money it is alredy a win isn't?

For me it is.

Even If and when you have most chance that you are doing the right think and have all working ok, probability/chances etc... are with you, you can lost money right ? So imagine if you have no idea of why you are doing something? What are the chances of win this ? well i guess all know that answer right?

Just a few thoughts of my own. hope can help a few mates here.

About your tradestation Michael real cool. Liked.

I intend to work with more screens then you very soon lol.

Good work and great trades to all.
A lot of green to all

Dcrs

Future data

Hello Dcrs, hello dear subscriber,

First of all, thank you for your contribution and your views on the market. At first glance, the stock market data in the futures market are very simple, we have the price, the time, the volume and the liquidity. From this you can create bid and ask, the volume delta, footprint charts, the heat map, a volume profile, the DOM, the time and sales list and many more views. We have been dealing with these different representations for over a year and tried to implement the information available about them. The trick is to filter the data, compare it with each other and present it in such a way that it shows you exactly what is currently happening in the market. With my software, I am able to read this data very explicitly and present it effectively, but there is still a great challenge to see the market as I would like it to be. Since the market orders move the market, I initially thought that these orders are the decisive factor in the market. The opposite is true, however, because liquidity is the much more crucial factor. And strangely, we get the least information about it. I will write a detailed report on this at the weekend, so please be patient.

I only use the futures data passively because the forex market provides 100 times the liquidity, my security is highest in this market and the price movements are 5 times better graded. In the Forex market you can better recognize the currency strength, read out the price strength better and identify possible stops more precisely. The cash market is the lead wolf, however, apart from the price and the time, it does not provide the crucial information about what happens within a candle. And this information is the key to being more likely to get a competitive edge. And it is precisely this market advantage that decides between profit and loss.

Many traders believe that the market is very simple, but that is a big mistake. If this were the case, EA's would make above-average profits in all market phases in the long term and the big players would not invest billions of dollars in analysts, their IT technology, algorithms and their traders. In addition, not over 90% of all retail traders would lose their money in the long term. These are clear facts that should not be overlooked. Of course you can make money with a price chart, which I have practiced myself for over 10 years, but primarily because I acted during the accumulation and distribution phase, where the big players first had to collect their bid or ask. This strategy requires an experience of at least 5-7 years and and very few traders have this time. If you add the futures data in parallel, you can achieve your profitable trading much faster. The participants in the futures market have a 1: 6 chance, the participants in the forex market have a 1: 19 chance. This is primarily due to the existing data that is available.

The Forexcharts are ideal for identifying possible stops. Stops mean liquidity, which is the decisive factor for the Big Player.





For this reason, I launched Project No.9 to identify this liquidity.

Stophunting, Project No. 9 starts

First of all, the idea was that the subscribers who want to participate in this project should look at these charts and first observe how the market reacts to these stops. We will then analyze individual charts to see what is happening in the market. When we have completed this project, we combine the information from the futures market with our knowledge in order to obtain an even better market advantage.

Thank you again for your kind words, I wish you and of course all subscribers a successful trade today.
best regards

Michael