The Equilibrium, a key to success!

Hello Michael

I agree with you 100% on this.

When you say your software you mean ATAS plaftorm?

I unfortunately have a few problems with my health lasts days but hope all be ok soon.

I want to contribute as much as I can with those projects here I really love order flow and combined with some things like PVSRA from Tah and all contributors of the project I really believe that sky is the "limit".

You can count with me any time and for any thing.
I started my studies into code C++, JAVA and Python.

Hope in the future can help me and others too.

Have a nice weekend buddy.

Cheers

Programming languages

[quote=Dcrs;12721164]{quote} Hello Michael I agree with you 100% on this. When you say your software you mean ATAS plaftorm?

Hello Dcrs,

First of all, I wish you to get fit again quickly. Health is an important aspect because illness often costs a lot of time and suffering. A healthy person often has 1000 wishes, but a sick person has only one wish to get well quickly.

My prop software is the manufacturer you named and I don't want to advertise a specific product or broker here. I can only share my experiences, although this is not representative. There are many very good platforms in the field of prop software, the important thing is to find the platform that offers you the most advantages. And for that you should try different platforms.

There are different rankings for programming languages, but Java, Python and JavaScript remain by far the most popular programming languages. The rapid rise of Kotlin catches the eye. Especially when you consider that the language was only released in version 1.0 in early 2016. The inclusion of Kotlin in the rank of officially supported programming languages for Android and the popularity among Java developers certainly contributed to this. C and its derivatives C and C # are also among the top 10 in the rankings. PHP, which is particularly suitable for web programming and can be embedded in HTML, should also be considered. PHP differs from client-side languages such as Javascript in that the code runs on the server and generates HTML output there that is sent to the client. The client only gets the result of the script execution, without being able to find out what the actual code looks like. Especially for newcomers, the use of PHP is extremely easy. With C , JAVA and Python you have made a good selection, but learning 3 programming languages at the same time is a very big challenge that takes a lot of time.

If you want to contribute to our projects, I can give you a good tip. First work through this blog and mark the positions you want to study more closely. In this blog there is no system, but ideas for your own setup. Every trader has to create his own setup and it takes many years. Therefore, focus only on your personal goals because you are the main character in this game. From this knowledge you will be able to gain experience, implement it and bring yourself success. With this success, you can contribute to our projects by sharing your experience. But first I would consume and then get creative. Our project No. 9 is just the beginning of a long road. The markets change daily and our projects will adapt accordingly. Note that for family, health, trading, sleeping, leisure and further education are only available 24 hours a day.

I keep my fingers crossed that you have a very good time management, to make youself and your family happy.

best regards
Michael

Liquidity versus volume


Hello dear subscribers,


First of all I would like to describe our project No. 9 and 10 in more detail. So that you have an idea of what to expect, we first go a little deeper into the market.

Due to the different languages here at FF, there may be misunderstandings when translating this article, which I would be happy to explain or correct in detail. I do not claim to be free of errors. Today's contribution should not be understood as instruction or correct market presentation, but should only reflect my view of the market. We are in a project that is only used to generate market advantages. Before we take a closer look at Stophunting, I would like to address an important point that we have noticed in the past few days.



As we know, price movements in the market result from the active market orders meeting the passive limit orders. On the left side we see the buy limit orders (point A) and on the right side the sell limit orders (point B). These orders represent liquidity in the market and are separated from each other by the spread ask and bid. Only through the limit orders alone will there be no market movement. The liquidity is in the market and is waiting for the market orders. As soon as a buy market orders comes into the market, it meets the sell limit orders (point B). You can read about how these market movements develop here.

Identification of the big players

The wrong truth?


Point C shows the cumulative sell market orders of the first ten levels in the DOM and Point D shows the cumulative buy market orders, which are each shown in lot. While there are 856 lots in the first ten stages of the sell market orders in the Euro FX market, this should be around 85,600 in the Forex market, since the Forex market is 100 times larger. However, this is only a rough estimate, since the actual Forex volume is only visible to the big players. At Point E we see spoofing in the area of the buy limit orders and at Point F the spoofing of the sell limit orders. This shows how many limit orders are added or subtracted. At Point G we see the total volume on the left and next to it the number of trades that were responsible for this volume. On the right side of the chart is the Times and Sales list, with the display of Level I + II. The individual market orders run in from top to bottom under the name "Vol". At Point H we recognize 11 and 21 lots that came onto the market. These are cumulative orders that are summarized within a thousandth of a second and disguise their actual size. At point I we see the strength of the liquidity at the time of execution.

First of all, I would like to take a closer look at the cumulative orders. A cumulative order is a large order that is divided into small pieces and is difficult to recognize in the DOM. It is broken down into smaller orders by an automated program to hide the actual orders amount. Another advantage that arises from this: By hiding their volume, this orders reduces possible strong price movements, as well as the change in supply and demand. This means that a big player with a large volume comes onto the market without the other participants noticing. In principle it is also a kind of iceberg orders, however the correct iceberg orders are placed in the limit.

Let's look at a specific example of the cumulative orders.



The advantage of the bid and ask display in a 1 tick chart (point A) is that each tick can be produced by a maximum of one market participant. First of all, I would like to clear up a general misunderstanding. In the lower chart we see a representation of bid and ask. At first glance, it looks like it's an indicator. However, the volume is not an indicator; like the price, it is a fixed part of trading and, unlike indicators, does not have to be offset. This representation is processed from the current real-time data of the exchange, so such a representation is not available for the MT4 in the Forex market. In the chart we see a 40 lot order, this 40 lot could only have been placed by one market participant. However, it is difficult to identify cumulative orders in a 1-tick chart.

At Point B we see the time and sales list at that time. If the individual orders are not displayed cumulatively, it is almost impossible to keep a close eye on the rapidly falling numbers. However, you have the option of accumulating the order within the time and sales list and sorting it within a thousandth of a second. This allows you to initially identify cumulative orders. For a rough overview, you can use a small trick by opening a 1 second chart. In the charts at Point C we can see that over 400 lot bids have entered the market within 2 seconds. Then I would have to look explicitly at the cumulative time and sales list to see exactly what happened there.



For the identification of the cumulative orders, I first put together my own presentation. At point A we see the non-cumulative market sell order, this is a market order that is visible to all participants in the market. Point B shows the cumulative orders between 10 and 20 lots, Point C the cumulative orders between 20 and 30 lot and Point D the cumulative orders from 31 lot. On the far left we see the spread tape showing the delta and on the far right the accumulated market orders divided by ask and bid. In the DOM we see the limit orders, the cumulative spoofing and the processed market orders. With the respective times, I am able to recognize whether cumulative orders come into the market one after the other in a certain rhythm. In addition, I work with acoustic tones that inform me immediately as soon as large, cumulative orders appear. The tones differ between bid and ask, which is a great help that I can recommend to everyone.



The two most popular tools in volume trading are the volume profile and the footprintchart, let's start with the volume profile. This representation is initially much better than a price chart in Forex, because it is not about indicators, but the volume that is a fixed part of trading and does not have to be calculated first. First, the volume shows the number of contacts traded in a certain period or at a certain price. In the charts we see three decisive factors: on the left the horizontal volume of the entire contract, in the M 30 candles the horizontal volume at each price level and at the bottom the volume delta, i.e. the net result from bid and ask. This allows you to determine within a candle where the highest volume has taken place. There are an infinite number of theories and approaches for deriving trading decisions from them, but these are too imprecise for me. The first point is that a volume contains both bid and ask. This shows me that at this moment a lot of buyers and sellers have met and that this price level could be an important zone. However, deriving further courses from this is a major challenge in my view, since I have to work with unclear information. If after a large volume, the price keeps going up, it doesn't necessarily mean that it will remain bullish. The much more crucial point is liquidity and we cannot see this liquidity in this presentation. Basically a very good alternative to forex data, but in my view much too imprecise and too slow.



The footprint charts have become more important in recent years because you have the opportunity to look into the individual price levels of a candle. However, we initially only see the executed market orders in this footprint chart. It is advantageous that you can filter the imbalance in bid and ask in orders to identify the more aggressive market participants. At point A, I once highlighted the more aggressive market participants, but this is not concrete help to derive a trade from it. Resistance zones are often drawn based on the imbalance, which I can only advise against.

We know that a purchase will only take place if there is a seller at the same time. A market order can only enter the market if it meets a limit order at the same time. The footprint chart shows the bid order on the left and the ask order on the right. If a number appears in the footprint chart, it also means that this market order has triggered a limit order. A buy market order can be the purchase of the euro or the sale of the dollar. When I go short in EURUSD, I buy the dollar first. I need Bid for that. Of course, I also sell the euro at the same time. When I get out of my position, I sell the dollar and need Ask. For this, however, someone has to be willing to take my ask from me. That means there must be market participants who believe that the dollar will continue to fall. If there is no buyer, the price goes up and reduces my profit.

I swapped the color of the Bid and Ask in the footprint chart below, as a sell market order (bid) meets a buy limit order (ask). At point B we see that a 14 lot sell market orders (bid) triggered a total of 14 lot ask in the buy limit orders. Point C shows an 18 lot buy market orders (ask) that triggered a total of 18 lots in the sell limit orders. And that's exactly the problem. We can see the market orders in the footprint chart, but not the triggered limit orders. And it is precisely this aspect that is an excellent opportunity for big players to enter the market unnoticed.

The footprint chart can be used well to optimally display the market orders coming into the market. This is a bit more complex in DOM, since the market orders always refer to at least one day. In order to have a good overview, you have to delete the old market orders in the DOM so that the new orders are clearly displayed again. So the footprint chart has a certain justification for me, but from a completely different perspective.


Absorption


Absorption is the magic word, but it is a fallacy to believe that absorption is always so strong that it slows down the price and keeps it at a price level for a long time. We'll look at a few examples in a moment. Let's stay with absorption. First of all, we know that the market orders eat into the limit orders. If the liquidity of the sell limit orders is low and the buyers of the buy market orders are very aggressive, the sell limit orders are literally eaten up and the price goes up. Suddenly the upward course is stopped. There are two options for this: either the active market orders become weaker or the passive limit orders become stronger. If the passive limit orders get stronger, you can not see that in the DOM in most cases. You can see that spoofing is counting up, but in principle only the maximum ask that the market orders provides can be absorbed. How does it work in practice? As soon as the price reaches a certain price level, the algorithms of the big players start to push new limit orders again and again. The total visible amount of the limit orders does not change. However, you can see that the executed market orders count up while the price is not moving up. What makes things more difficult, however, is that absorption rarely takes place at one price level, but at several. There are two reasons for this. If a price stayed at a price level even though buyers are very aggressive, buyers would eventually realize that something was wrong and might get out. This would end the absorption and the price would run down due to the many dropouts. In principle, the art is that buyers don't realize that they're being absorbed. This attracts other buyers, who can then be absorbed in peace. The more buyers come into the market, the better. If the price is then suddenly pushed down, the entire longtrader stops are triggered and the price continues to accelerate downwards.

The price is solely the result of liquidity, volume and time. This is a crucial point that is very important. This is proof that the price has nothing to do with the value of a currency. The problem in the forex market is that we don't get volume and liquidity data there. How should I solve this equation with the price and the time alone? This automatically means that price indicators don't work and actually don't help us. When I work with the price in Forex, I deal with the effect without knowing the cause. The high loss rates of retail traders show where this leads.

For me, time is an absolute side aspect, volume is decisive and liquidity is even more crucial. Resistance zones are only important for retail traders, they do not exist for big players. Absorption via passive liquidity creates resistance zones that the big players never pay attention to because they create them themself. In an accumulation and distribution phase, however, that's another story. There, the resistance zones have clear authorization to collect the required ask or bid. However, they are always created by the big players in order to present a wrong picture of supply and demand.

In order to be profitable within a sideways phase, one should be a scalper and at the same time accept higher fees from the broker. In these phases, the support and resistance zones work as long as you stay within this zone. If you try to trade in the outbreak, you will fail in most cases. This has been my great luck in recent years since I was tradingwith theprice in the equilibrium.

Retail traders usually enter the market with a limit or market order, and profitable exit usually takes place through an immediate closing of the position (market order) or with a take profit (buy / sell limit order). A stopploss is also a market order. The big players cannot buy their large positions immediately, so they collect their positions in the form of cumulative orders. Different order types and algorithms are used, such as MOC, LOC, OCA, MTL, FOK, IOC and many more. In order to push the price strongly in one direction, the big players also work with market orders, provided that there is sufficient liquidity on the market. However, you can create this liquidity yourself beforehand by pretending to the market that the price is going down. As a result, more traders position themselves on the sell limit side and the big players can buy into the strong liquidity with their market orders. I'll show you equal a specific example, from last Friday. As I have noticed, these movements are usually not so sustainable. It is interesting, however, that many sellers actually drive the price up because they provide the big players with enough ask.

In slide # 3 we can see a lot of cumulative market orders, but my guess is that most of these cumulative market orders do not come from the big players. I believe that most big players use limit orders to get in and out as this guarantees the best price. Now everyone will ask, how can you move the market with limit orders? Answer: Not at all, because that is not necessary at first. Let's take a closer look at the market first. The strong movements make up only about 25% of the market, while the market moves in a sideways phase in about 75% of the time. This means that the big players deal with getting in and out 75% of the time and use 25% of the time to push the course in a certain direction. However, this statement can only be made across the board, as there are different market situations.

If the big players with limit orders absorb the market orders of institutional and retail traders, no software can actually determine this. This is a classic iceberg order. We only see the market order, but we know that they activate a limit order at the same time. If the big players absorb the market orders with their limit orders, they must pay attention to the following. The limit orders in the DOM must not be noticeable, so algorithms always have to push new limit Orders unnoticed and at the same time make sure that the market does not stall. This means that the big players primarily need as many market orders as possible at one price level. And where can you find them? Answer: In triggered stops. That is exactly why the big players concentrate on Stophunting. There, large quantities of market orders are released within seconds, which you only have to collect. And it is exactly this collection that takes place in secret, so that most market participants do not even realize what is happening there.

Now there is only one challenge for the big players, that is the queue for order execution. In the market, all orders are executed according to the "first come, first served" principle. So you line up in a queue and wait for its execution. If you place a limit order shortly before a possible execution, there is a high probability that you will have to queue up. Due to the market conditions, the big players place their limit orders in the market early, sometimes an hour beforehand. As soon as other market participants delete limit orders at this price level, they immediately add new limits. This ensures in most cases that the big players are the first in the queue. This is even more dramatic in the forex market because 12 banks control 85% of the market. You can guess three times who is always the first in the queue. For us retail traders above an ECN broker, this is less of a problem, since enough liquidity or bid and ask are available to be executed immediately. Execution problems can only occasionally occur in very volatile phases.

The goal of a trader is to look at the order flow in the market to see how the price responds to it. This automatically results in a market advantage and this market advantage leads to a higher probability of winning. In my opinion, with order flow or volume, we are unable to learn the truth about the current situation in the market. In 75% of the time, the Big Player with Limit Orders come into play, which we cannot see properly with the best software. But there is still a way to see the order flow in the right context. I would like to refer to slide 3 again, where we can identify cumulative market orders. If these cumulative market orders were not initiated by a big player, there is only one possible explanation for it. Most of these cumulative market orders are triggered stops, by institutional and retail traders. This provides enough bit and ask so that the big players can fill their limit orders. We know that someone accepts this market order, but the total volume of an iceberg order is still hidden from us. To find out whether the cumulative orders are market orders from a big player or triggered stops, we need 5 important representations. The DOM, the time and sales list, an overview of the cumulative market orders, a heat map and a forex chart where we identify the possible stops.

Let's start with the stop identification and take a closer look at the last trading day on Friday.



The card shows the EURUSD in M5 from 07:00 to 19:00 CET from the last trading day on Friday. The price was in a downward trend to point A and then changed direction. The traders who managed to get into the price relatively early were spared from the first return to point B, but some have already been stopped here. The price reached a new high at point C and prompted many traders to put suit their stops at point B. From point C there was a stronger return to point D. Most short traders were only able to get in the middle of this movement. In the course of the price at point D, many traders who hoped for a long, at point C were stopped. First of all, we notice that price levels A and D are almost identical. It seems like a resistance zone that could not be broken. Added to this, the fact that the price had not formed a new low caused many traders to continue betting on a long trade. With the move to point F, these long traders were removed from the market. After, the price went to point G, trying to stop the short traders or reduce their profits. The price movements to point H were again a masterpiece of the stop hunting strategy. Point I clearly shows again that this zone is a strong resistance zone that cannot be broken. The course of zone J has also tried to catapult the last long traders out of the market.



Let us now consider the course of the euro FX in a slightly different way. This is a heat map, in combination with cumulative and non-cumulative market orders. A heat map is suitable for making liquidity changes from the Dom visible in the chat. The minimum and maximum liquidity can be individually filtered to make it easier to identify larger limits. If the volume is above the minimum or maximum volume, the price level is shown in proportion to the volume. In connection with the cluster search, you can, for example, filter how much of the touched limit orders were actually executed, in order to identify fake orders. I decided not to do this now, because we will go into more detail in our project 10.

At point A we see green lines that show the liquidity of the buy limit orders in this overview. The red lines at point B show the liquidity of the sell limit orders. The green circles at point C show the cumulative buy market orders and the green triangles are the cumulative buy market orders. At point D we see a large red circle, which represents an accumulated sell market orders, a red triangle is an unaccumulated sell market orders. In this overview of 12 hours in a 1 second chart, you can of course not exactly recognize the individual liquidity, so we zoom in a little closer to see the presentation a little better.



First of all we see how the price is pushed down a little more and at point A the triggered stops are absorbed by the liquidity. At point B we see that there is still strong liquidity in the market. In principle, this is a safeguard for the big players because they do not know exactly how many stops there are in the market. When stops are triggered, a kind of chain reaction occurs, with each stop (sell market orders) pushing the price further down.
This liquidity that we see here in the market should absorb further stops in an emergency. We can clearly see that even the big players cannot always accurately assess a market. After that, the market went up again and we can already see that liquidity is building up early to intercept the buy market orders (short trader stops) at point C. At point D, too, there was increased liquidity in the buy limit area, which ultimately pushed the price up.



First of all, at point A we see a strong zone in the area of liquidity in order to intercept possible stops of the short traders. At Point B, we see buy limit orders absorb the market sell orders, but this may have been a partial sale in dollars. However, this situation did not justify a strong upward price trend. At point C there were further exits from the dollar but no typical absorption to buy the euro. Finally, a very strong absorption took place at point D, the strong liquidity at point E was an additional security to absorb further bid. The price then went up and we see at Point F that the big players are absorbing the stops of the short traders and pushing the price up. In addition, some cumulative buy market orders also came in. From point G, there is greater liquidity on the sell limit side to realize partial sales. Between points G and H, more buyers enter the market, while the big players partially hold their positions. There was no clear indication of a stronger decline.



At Point A we see how the big players with strong sell limit orders buy into the stops of the short traders. The price initially runs down to Point B. We first recognize that the stops of the long traders are triggered, but very little of it is absorbed by the big players. For me that was a clear indication that the price could continue to go down. Of course there was a little stop run again and then the course was pushed down. Let us first look at point D, there was a lot of absorption and the zone had already been defined 15 minutes beforehand. The course jumped down a bit due to the stop run, but was well intercepted by the big players. First the price was pushed up again and there was another small stop run to point F. There we can clearly see that a large player with strong market orders came into the market. At the same time, there was a strong resistance zone in the form of strong liquidity on the sell limit side. This should show retail traders that the upward price will not get through. Many traders fell for it and entered into a short trade. When the course got to the strong limit orders, it was deleted and the course was pushed up sharply. The stops of the short traders (market ask) led to further upward movements.

Conclusion:

In combination with the Cluster Search, the heat map is ideal for finding out what is currently happening in the market. In addition, the DOM, the time and sales list, an overview of the cumulative market orders and a stop identification should be used. Of course, this approach is not a holy grail either, but in combination with the other information, you can already work out a small market advantage. Another interesting aspect is a kind of swing trading, where you trade with the big players from stop to stop. In the heat map you can see how strong these stops are in individual cases. This procedure is particularly interesting if you can identify the stops of the individual traders beforehand. And the Forex Chart is very suitable for this stop identification. I hope that with this detailed contribution I was able to describe Project Nos. 9 and 10 in a little more detail. First of all, it is important to familiarize yourself with stophunting in our project No. 9. As soon as we have extensive experience in this area, Project 10 will focus on what exactly happens in the market if these stops are caught. The big players will always run in zigzag lines from stop to stop to get the necessary liquidity. Those who are able to identify these stops beforehand can achieve significantly better profits in the Forex market without future data. That is the first step we will take.

I hope I was able to motivate you a little to participate in this project and I am very happy if you join.

I wish you a nice weekend and from tomorrow a successful trading week


best regards
Michael

Hey Bionics... This is for sure the most informative thread around..... I do like to read your detailed posts with high quality information...

All the best

Cheers

Hello, Bionics!

I've readed almost half of your thread and noticed that you have a deeply knowledge about your trading system and style. It would be grateful if you share some information about how successful this method and how much it brings to you in yearly/monthly perspective (%)?
I don't ask about strong proofs or etc. I'll believe of your words.

Thanks for your time,
Wish the best.

Patrician

Quality information

Hello Patje,

I am very pleased that you are following this blog so closely and have such a good opinion about it. It is crucial that this information also helps you to achieve your personal goals. For me, the last post was a big, time-consuming challenge and, in my opinion, is one of the most important statements in this blog. As I wrote, liquidity is the key and while writing this post over the weekend, I got an infinite amount of ideas on how to make this liquidity even clearer in the future. It will be a crucial factor for our future projects.

I wish you a successful trading week

best regards
Michael

Income and earnings

[quote=REPatrician;12722801]Hello, Bionics! I've readed almost half of your thread and noticed that you have a deeply knowledge about your trading system and style.

Hello Patrician,

First of all a warm welcome to our blog and I am very pleased that you are dealing with it in more detail. First of all, it's understandable that some traders would like to know what a long-standing trader deserves. No matter what the answer would be, it wouldn't help you. If the long-standing trader remained silent, it would be proof that he doesn't earn much. If he called a large sum, you wouldn't believe him and it would attract envy at the same time. The most traders lying, about their income in the trading business.. In reality, 90% of all traders lose their money and quit within 3-5 years. Even trade explorers or trading quotas are faked nowadays to advertise for a own system. I don't want to sell anything here, offer trainings, or trade with other capital. I only live from trading.

When I started trading, I also lost the first few years, but that was only a few $ 1,000 I could afford. I've been trading for over 10 years now and I'm doing fine. I have created my setup with which I trade in many years and unfortunately one cannot copy it. If one tried to copy it, the results would probably be sobering. For me, this blog was created solely as a kind of trader's diary to optimize my personal setup. The markets change daily and those who stop developing in this profession are quickly disappear by the market. Further development, together with like-minded people is my only intention in this blog.

I myself do not trade with any system and my setup changes regularly to adapt to current market changes. For this reason, you will not find a system in this blog, but only ideas with which you can create your own setup. Take what you think is good and leave out what you don't like. The information is free of charge. For this reason, it doesn't really matter whether I make a very lot of money every day or just make money.

I am convinced that you will find many good ideas for your personal development in this blog. In my last report you will find crucial key information that will significantly increase your chances of winning if you implement it.

Liquidity versus volume

I keep my fingers crossed that you will achieve the goals you want in the future.

Best regards
Michael

It's much appreciated all the time and effort you put in the thread and share this with the community... Everything you say makes perfect sense and your look at the market is brilliant.... I even come to a point where I am considering futures data... It's exactly how you said that everyone should take what they need from here and thats what I do.... Please keep on sharing your insights.. I will be around for sure...

Have a good...

Salut

Hello Bionics

I'm appreciated of your great responce, thank you. Waiting for new posts.

Wish you the best,
Patrician

View of the market

Hello Patje,

Basically, every market participant has their own views of how the market works. These views are often different, which is why the market is moving. I do not claim that my market views are always correct, but I am pleased that you share my opinion in many areas. It is crucial that you generate an advantage for yourself from this. Of course, I will continue to share my views. We will go into more detail about the effective stophunting of the big players this week. I already published a crucial example in my last post.

Liquidity versus volume


For the time being, futures data is not necessary.

I wish you continued success
Michael

@Bionics

Hello Michael,
I´m far away from having that much of expeience than you have. I`ve read most of your inside views on the market.
Please allow me to ask if I understood most things ok.
1. Market moves are almost driven by interest of the BIG Players. So..we should try to follow the money.(I have problems to see want theyy want)
2. There is no real support/resistance or supply/ demand we can rely on.
3. There is no such thing like oversold/overbought in the market.
4. Without enough volume there will be no reliable price moves.
5. Well known patterns/candlestick formations are seen by the big players as well and used to" hunt "our money.

I could contine by adding a lot more of wrong thinkings by us Retail Traders. That`s the reason why we often loose.
We need an excellent money management to survive in that business.

To be honest..I will have problems creating a system where I can put all your knowledge in.
Thanks.

Crucial market analysis

[quote=baxter01;12727589]@Bionics Hello Michael, I´m far away from having that much of expeience than you have. I`ve read most of your inside views on the market. Please allow me to ask if I understood most things ok.

Hello baxter01,

I warmly welcome you to us and I am pleased that this blog is of interest to you. My many years of experience are based solely on my own assumptions and are very likely not to represent the market as it actually is. Therefore, I can only answer your questions within the framework of my views, which may differ from other opinions. Every opinion about the market has its justification, because even a watch that has stopped shows the correct time twice a day. The aim of every retailer is to be able to read the right time on this watch as often as possible. I would like to comment on your questions.


1. Market movements are almost driven by the interest of the BIG players. So ... we should try to follow the money. (I'm having trouble seeing what they're up to.)

85% of the Forex market turnover is generated by 12 banks, so it is imperative that these big players move the market in their favor. It is therefore perfectly understandable that institutional traders and retail traders are trying to follow these movements. However, this is a very big challenge, since most of the big players' entries and exits occur through limit orders that cannot be identified in the market. These are the well-known iceberg orders, which are used to a large extent to hide the true intentions. To fill their limit orders, the big players need a large amount of market orders. The big players find the largest number of market orders in the area of stops, since these stops are usually at similar price levels. Of course, a distinction must be made between scalper, day trader and swing trader. The big players also work with market orders to push the price in their desired direction or trigger stops. If the stops of other market participants are caught, stops trigger a chain reaction first and the price moves strongly up or down. The big players either use this movement to steer the price in their direction or they absorb these stops (market orders) with their limit orders. The key is to always see this approach in the right context of the market and that is indeed the biggest challenge. This contribution will help you.

Liquidity versus volume


2. There is no real support / resistance or supply / demand that we can rely on.

Basically, you have to know that the big players themselves do not consider any resistance zones because they create them themselves. If a price goes down and bounces two or three times at a certain resistance zone, the retail trader is signaled that this is a strong zone that cannot be broken. Many assume, that the big players in this zone have absorbed market orders in order to push the price up sharply. This causes many traders to build a long position (ask). This ask is now absorbed by the big players unnoticed and they push the price down. This triggers the stops of the long traders, creating a chain reaction and breaking the fake resistance zone. Most traders are out of the market and are now betting on a short position. These short positions are used by the big players to get out of their positions.

More sellers enter the market and the price continues to fall. In this phase, the big player starts collecting ask again and then pushes the price up. If the big players were unable to collect enough ask or bid, an equilibrium is created first. Within this equilibrium, the big player is as tame as a lion who has just eaten a gazelle. The course is driven back and forth within a range to collect ask or bid in peace. To trade this range successfully, you should be a scalper and get out of your position relatively quickly in order to trade the range. Since I have not worked earlier with future data before, this was a successful approach for me.


3. There is no overbought / oversold product on the market.

For example, the RSI is a standard indicator that was developed back in the 1970s. For the selected time horizon within different periods, the sum of the period rate winners and the period rate losses is calculated. The two sums are then compared to each other and thus measure the inner strength of a trend compared to itself. Values above 70 are classified as overbought and values below 30 are classified as oversold. This oscillator is calculated from the price. The price is solely the result of liquidity, volume and time. This is a crucial point that is very important. This is proof that the price has nothing to do with the value of a currency. The problem in the Forex market is that we don't get volume and liquidity data there. How do you want to be able to calculate volume and liquidity solely from the price? When I work with a price indicator, I deal with the effect without knowing the cause. In addition, a price indicator is always lagging behind the price itself. A lot of back tests have been carried out with the RSI, although the profit rates were not convincing due to the spreads and broker costs. Since the market is not based on price, but only on volume and liquidity, there can be no overbought or oversold for me. But that's just my opinion.


4. Without sufficient volume, there are no reliable price movements.

The market consists of only two factors. This is liquidity in the form of limit orders and bid and ask in the form of market orders. Both factors are needed to cause a market movement. A market order can only enter the market if there is liquidity in the form of a limit order. I described detailed examples in my blog.

Identification of the big players

The wrong truth?


5. Known patterns / candle formations are also seen and used by the big players to "chase" our money.

First of all, candle patterns like the Doji are a pure coincidence of the times. You can see this at the latest when you work with a tick chart. As soon as you change a few ticks, the doji suddenly disappears. It is the same with candle formations. The big players only run from stop to stop to collect their necessary bid and ask. This creates candle patterns or candle formations that big players like to use to mislead traders. In addition to the RSI, MACD, Fibonacci, the 200 EMA is also often used by the big players, as many traders orientate themselves to it.

You write that many retailers have wrong thoughts, but this is primarily because the industry and brokers, with their indicators, have just started these wrong thoughts. The retailer is not at fault here. Both the big players and many brokers win if we lose, so why should you tell the truth to retailers when an entire industry lives on it. It's the same as in the medical field. I am convinced that we could have put a cancer drug on the market long ago, but the industry is making billions from chemotherapy, why should they change it? It will only change when the pressure on the industry becomes so great that it has to move.

That a very good money management in the Forex market decides about long-term success is absolutely correct. You can find some good examples in my blog.

Easy increase in trading efficiency!


You write that you have problems creating a system from all this information. Unfortunately, I have to tell you that there will never be a long-term profitable system. This is simply because the limit orders of the big players are invisible. And that is exactly the decisive factor. How do you want to build a system with information that is not available at all? Here the human being has an advantage over the machine with his feelings. Based on his experience, he is able to cancel his trade immediately while the machine is running in the stop loss. Of course, the big players can be supported in the form of algorithms to bring the necessary limit orders or market orders to the market. They can also be given information about when the highest probability of winning can be expected. But the main decisions are still made by people. That is why billions are invested in analysts, market observers and traders. It is like in Formula 1 racing, you can build the best Formula 1 cars, but in the end the racer decides whether to succeed or not.

Many traders have a habit of closing a trade too soon or leaving it in the red for too long. However, this can be optimized with years of training. Trading is a profession like a doctor, notary or lawyer, that's why you can earn so much. However, you also need a lot of time to study and experience in practice. Time is a decisive factor here, which unfortunately can only be shortened with the right knowledge.

And that's exactly what we want to advance in this blog. A crucial point is the Stophunting, which we are currently dealing with. Perhaps these ideas and insights can provide you with interesting aspects. If the information helps you, read this blog. Any idea you get can help you move forward.

Michael Jordan was once asked why he enjoys defending the ball so well? Thereon he replied, that he cannot play basketball, when the other has the ball. Maybe we also have to develop such a passion for our profession.

I wish you all the best and I would be happy if this blog can help you in the future.

Lovely wishes
Michael

@Bionics

Hello Michael,

first of all I have to say a big big thank you for commenting all of my remarks.
I understood all of them (I hope..) and as a result of that we have the best explanation
why so many retail traders fail.
From my point of view a very interesting question came up to my mind.
You said that there are the 12 big players driving the market but they also fight each other.
The money they put into the ring is much more than that of the retailers.
So..how do we identify the winner(s) and how to follow them???
My experience is that of a trend-follower with let me say "medium" success.
I don`t use too thight stoplosss-settings and have a strict money management system.

Thak you very much ...and all the best!!

Big player

[quote=baxter01;12729490]@Bionics Hello Michael, first of all I have to say a big big thank you for commenting all of my remarks.

Hello baxter01,

The foreign exchange market is the largest financial market in the world with global daily sales of approximately $ 6.6 trillion in 2019. (BIS, Bank for International Settlements on September 19, 2019) Almost 2 trillion US dollars are traded daily in EURUSD alone, and and the big players in the markets also meet. Of course, large banks have already been fined billions in the past (participation in a foreign exchange cartel), which is precisely why the European Commission is watching the big players even more closely. EBS Markets maintains an anonymized central forex order book, which can be used in the event of suspicion to check irregularities. I do not believe that the European Commission alone is able to uncover all irregularities, but I do not want to follow a global cartel idea at this point. First of all, the banks act on behalf of their major customers and also cover themselves with their own business. The largest big players have had experience in the Forex market since 1978, which, besides their capital, is their greatest advantage over the smaller institutional traders and retail traders. In addition to currency transactions, there are endless other types of trading, such as swaps, metals, raw materials, stocks, indices, which the big banks take care of. There are rumors, that the market is only moved by one great power, but I see it completely differently. The big players immediately recognize through their experience in trading whether another big player is in the market and what he is up to. Either they act together now, or they look for other markets, but this often depends on the customer orders. First and foremost, the big players win around $ 400 million a day, which they take from the smaller institutional traders and retail traders. This means that the big players are more likely to struggle with the smaller institutional traders than with themselves. Due to the fact that the big players generally use limit orders for their entry and exit, the anonymity of their intentions is initially preserved. Another point are the different strategies that are used. When two big players fight with each other and the course goes down afterwards, that doesn't mean that you should bet on a downward trend. The winner might just want to push the course down for a Stophunting to get a better start for a long position. A price always consists of zigzag patterns because the big players need the necessary market orders for their liquidity. Therefore, the identification of the stops is a crucial key point in this market segment. With my software, I am currently checking the identification of limit orders using different filters and display options. The first ideas and partial successes have already been effected. This will be a central topic in our project No. 10. But first we will deal specifically with Stophunting, as this will be a decisive advantage for most of our subscribers who deal with Forex data.

I wish you a successful trading day

Best regard
Michael

Follow Smart Money !!!

Stoprun, Stophunting, Stopfishing


Hello dear subscribers,

85% of turnover in the Forex market is generated by 12 banks, so it is essential that these big players move the market in their favor. It is also perfectly understandable that retail traders are trying to follow these big players. This is a big challenge at first, but it can be achieved with the right strategy. We'll see some examples of this today. In order to follow a big player, you first have to know exactly how it works and what happens. First of all, the way big players work differs from retail traders in almost all areas.


Let's take a closer look at the differences:

Big players move the market because they often work with a few hundred thousand lots in Forex. Retail traders can rarely move the price in Forex (EURUSD) by 1/10 pip, since an average of approximately 1,200 lots are required for this.

Retail traders can enter and exit the market immediately. Since the big players work with very large positions, they are unable to bring their positions directly into the market. You are forced to look for a suitable volume. 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 to push the price up in the medium term, while in the distribution phase bid is collected to push the price down in the medium term. Therefore, a trader should always analyze what happens within an equilibrium.

Market orders are transactions that should be executed as quickly as possible at the current market price, a limit order specifies the maximum or minimum price at which you want to buy or sell. Most retail traders work with market orders for their entries and exits, while the big players execute their entries and exits almost exclusively with limit orders, so they usually get the best price.

Most retail traders work with stops, while the big players do without them or at most work with hedge strategies.

Big players often let their big positions run up to 50 pip down before they push the price up or down again. Most retail traders are already in the stop loss.

Big players buy in a falling market and sell in a rising market. The retail trader buys in rising markets and sells in falling markets.

Retail traders are guided by resistance zones that are initiated by the big players.

The price arises from the volume, liquidity and time. Big players work with volume and liquidity, while the retail trader works with price and time.

Retail traders work with indicators to make a profit, the big players only work with indicators to see where you can take the most money from the retail trader.

Big players are more like day traders or swing traders and focus on the medium-term area, while many retail traders are more short-term oriented.

Big players have a professional technique with special algorithms, employ top analysts, traders and mainly deal with outside money. Retail traders own a PC with a mediocre internet connection and often trade with money that they need to live.

Retail traders are looking for inside information, big players are the insider because they know exactly what will happen next. It is not rumors, news or meetings that determine the market, but exclusively the strategies of the big players.


These are the major differences between big players and retail traders. You can only face an opponent if you know his weaknesses exactly. Than we can take a advantage of this. What is the biggest weakness of big players?

The big players are not able to bring their positions directly into the market, they are forced to collect large volumes in sideways phases (equilibrium). Since most of the big players' entries and exits occur through limit orders, they need market orders. This means that the big players primarily need as many market orders as possible at one price level. And where can you find them? Answer: In triggered stops. That is exactly why the big players concentrate on Stophunting. There, large quantities of market orders are released within seconds, which you only have to collect. And it is exactly this collection that takes place in secret, so that most market participants do not even realize what is happening there. These are the well-known iceberg orders that are used so that no big price jumps occur and to hide the true intentions.

If the stops of the other market participants are caught, the stops first trigger a chain reaction and the price moves strongly up or down. The big players either use this movement to steer the price in their direction or they absorb these stops (market orders) with their limit orders. In addition, the unpleasant market participants are removed from the market, which could disrupt the actual price development. The key is to always see this approach in the right context of the market and that is indeed the biggest challenge.

About 15% of the total turnover in the Forex market is secured with stops, which are almost exclusively institutional and retail traders. In the order book you can see the market order and the limit order, but not the stops and it is exactly these stops that exert a magical attraction on the big players. What many do not even know, this stophunting takes place permanently in the market. In principle, this is not bad will on the part of the big players when they shoot market players out of the market.

The big players are always looking for liquidity. The $ 400 million the big players earn every day is largely the result of stophunting. In addition to scalpers, there are also day traders and swing traders up to the very long-term position traders. It is clear that we have to start from different stop sizes. 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. With pure Forex data, it is theoretically possible to improve the probability of winning on the basis of identified stops.

First and foremost, a price always consists of Zigzag patterns because the big players need the necessary market orders for their liquidity. Therefore, the identification of the stops is a crucial key point in this market segment. We have to keep in mind that retail traders are following stops, making it easier for big players to achieve this liquidity (stops) faster with a counter trend.

Absorption via passive liquidity creates resistance zones that the big players never pay attention to because you create them yourself. If a price goes down and bounces two or three times at a certain resistance zone, the retail trader is signaled that this is a strong zone that cannot be broken. Most support and resistance zones have been initiated, so you always have to ask yourself why the big player created this zone.

A big advantage for the big players is the fact that retail traders follow trends, even though there are actually no 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. You can discuss trends forever, and there will always be different views. 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 know these rules very well and use them to obtain the necessary volume. In order to study this procedure in more detail, we first work with 3 auxiliary indicators, which you can find here with a template for the MT4.

Supporting indicators for Project No.9


Let's start with my interpretation of a course in the EURUSD M15. I would like to note that this is an interpretation. Interpretation (Latin interpretatio "interpretation, translation, explanation") means in the general sense the understanding or the subjectively regarded as plausible interpretation of something given or at least something existing. This is only my view of the market, so I do not claim that my assessment is correct in all respects. In addition, misunderstandings may arise due to the translation.



Point A
Initially, the price in the M15 went down sharply. The candles are displayed in the form of a dark gray bar chart, however in our example the bar charts cannot be recognized. Within the bar charts, I am only interested in the particularly strong candles. If a new trend suddenly arises from a strong movement, it is quite unlikely that many traders have trade into it. Therefore, there are no or few stops below or above these strong bar charts.

Point B
Since the price has been going down for a while, the liquidity in the buy limit orders decreases. This is also completely logical, since many traders are short-oriented and tend to bring sell limit orders or sell market orders to the market. If the big player tried to push the price further down, a lack of liquidity in the buy limit orders leads to a limit. Therefore, there is a high level of liquidity in the sell limit orders at the time. The Big Player purchases shortly before point B because there is enough bid. From point B, he pushes the price up with strong buy market orders. Other participants who believe in a long, also join.

Point C
At point C, the stops of traders who still believed in a short at point B were triggered. These triggered stops are buy market orders, which the big player absorbs with sell limit orders. This gives the big player an even better short entry and pushes the price down again.

Point D
On the way from point C to point D, the stops of the long traders who got in near point B, are triggered and initially accelerate the price further down. When the price reached point D, the liquidity in the sell limit orders was again significantly higher than in the buy limit orders. For this reason, the price was pushed up again.

Point E
First of all, we notice a number of 105 that was reached at the top of Point E. This number is the average pip / 10 each candle has reached between points D and E. This value is higher than most values. First of all, this is an indication that the upward trend in the price has been strong and can possibly be identified as a pullback. In addition, it can be a sign that the price is slowly preparing for an upward trend.

Point F
After the pullback to point E, the course first runs to point F, where it reaches the lowest point. With a value of 40.2, it was an above-average trend that could continue in a medium period.

Point G
At first it looked as if it could be a pullback and many suspected that the downward trend was not yet complete. In the price trend at point H, the long traders from point G were stopped first. Already here you could see with future data that the big players absorbed this ask and did not use it to accelerate the price down. This already gave an indication that the price would no longer go down.

Point H
At Point H, many traders thought that the price was now going down and put more short positions in the market. These shorts were absorbed and the course pushed up. When the point H had not formed a new low compared to the point F and was slowly rising again, some traders went long.

Point I
The price was pushed to Point I above average, but no new high was formed. For some traders, this was a sign that the price would go lower, so they took a short position at Point I.

Point J
The return to Point J was weak above average. This was not a problem for long traders who started at point H, as their stops were below point H. At Point J, other short traders have entered the market.

Point K
At Point K, the price compared to Point I is build a new high. This was initiated by the big players so that the long traders from Point H could pull their stops to Point J. This ensured that there was sufficient liquidity available for price pressure downwards.

Point L
Shortly after the price at Point K hit a new high, there were many long traders hoping for a further upward trend. First, their stops were used to let the price run down. The long traders' stops below Point J were absorbed to collect further ask. We can see that the move to Point L was an above average weak movement. This initially spoke for a future, stronger upward trend. What is striking is that the stops that were under Point H and Point F were not picked up. Initially, this was not necessary as there weren't many traders there, and it took a few more stops to push the price down further in the long run. It is interesting to see that Point H and Point L showed an allegedly strong resistance zone that could not be broken at first glance. Here some traders were initially undecided and waited for a while.

Point M
The course of the course at point M initially stopped the short traders who had their stops above points G, I and K. Point M was a new high that brought many long traders into the market. They were stopped again when returning to Point N.

Point N
The long traders who entered the market from Point L had their stops below Point L and were waiting for another trend upwards.

Point O
The upward course of the price was above average and stopped approximately at the level of point M. Here a strong resistance zone was created, which could not be broken upwards. In addition, the short traders were not stopped via Point M because their volume was still needed.

Point P
The return to Point P was a smart move, initially an obvious upward trend was created because no new low was formed and the long traders from Point N were spared. This brought further long traders into the market that are betting on an upward trend.

Point Q
First, the short traders of Point M and O were stopped, which gave the big player enough volume in the bid. After another high was formed with Point Q, further long traders came onto the market. The big players used the stops of these long traders for the first sharp drop in prices to Point R.

Point R
The stops of the long traders at Point Q initially pushed the price down. The long traders' stops at Point N and P helped increase the downward pressure. In the end the stops of the long traders under point L, H and F were picked up. With the Point R, a new low was formed against Point F. Many were now convinced that the course would continue to go down.

Point S
The short traders from Point R gave the necessary volume to reach Point S. This was again an above-average strong pullback upwards.

Point T
Another smart move by the big players, no new low was formed and the suspicion arose that it could be another upward trend.

Point U
On the way to Point U there were again some long traders who gave the big players the volume they needed to push the price further down. The short traders who started at Point S were not triggered.

Point V
In the course of the course towards Point V, the long traders of Point R and T were initially removed from the game. This was an above-average downward trend. Against point R and T a new low was formed and was the reason for many traders to put on a short.

Point W
There was initially a pullback to Point W, whereby the short traders from Point S and U were spared.

Point X
Here the stops of the long traders from point V were triggered. Based on the above-average strong downward movement, you can see that the big players have worked with strong market orders. Some short traders who started at Point S and U moved their stops to Point W. Point X was another low compared to Point V, which brought further short traders onto the market. These short traders were absorbed by the big players to push the price up again.

Point Y
Now a new high against point W was formed, but was not yet a confirmed upward trend. The stops at Point W have been picked up. Many thought it could go lower and took short positions.

Point Z
First, the course ran down a little to Point Z. Why didn't the course go further down? There were no more stops to be expected. From point X to point Y, the first candle was a strong movement that ran to the height of point Z. Few people expected this movement and therefore there were few long traders. So there was no interest from the big players to push the price further down because there were few stops from long traders to be expected. More ask was absorbed and collected in the movements from point R to point Z, so one could expect a further upward trend. In addition, there were more short traders in the market at the time and if a big player has collected enough ask, he tries to push the price up. The stops of the short traders help him. As soon as these stops are triggered, you immediately release Ask, which pushes the price up.

Point 1
The big players use this fact to bring the course to Point 1. At Point S, U, W and Y there were still enough stops from the short traders that were used for this upward swing. We now want to take a closer look at this upward trend.



The first candle that was created between the points X and Y was very strong, which nobody expected (red arrow). That was the reason why the pullback to Point Z didn't go any further down. Since very few had expected the strong red movement, there also have been few stops. The prospect of further Ask would have been relatively small. The pullback from point Y to Z had only one goal. They wanted to pull the long traders who got inside the strong red candle out of circulation. This ensured that there were hardly any long traders in the game.

The first candle in the movement from point Z to point 1 was again very strong. After some long traders had already been taken out of the game in the movement from point y to z, many were not sure whether it was actually going up. After the yellow candle crossed Point Y, many considered it to be a confirmed upward trend. Most of them only entered the market above Point Y, so there was little chance that there would be many stops below Point Y. From point 1 to point 2 there was initially a small pullback, which gave hope to the remaining long traders. Now the Big Playen use a well-known trick. With point 3 a new high was formed, which caused many long traders to pull their stops to point 2. Some short traders that had set a downward trend at Point 1 were also stopped.

With the move from Point 3 to Point 4, further long traders were withdrawn from the market. Here you can clearly see that the big players under Point 4 did not expect any further stops. At Point 4, many believed that the price was now going down and took a short position.

We now have the following situation, the big players are in the market with their ask positions and are already in the plus. How do they get out of their position best? Answer: By finding as much bid as possible in the form of stops. And for this you need the stops of the short traders. Let's take a closer look at the situation There was a long downward trend from point 1 to point 2 and from point 3 to point 4. During this time, a large number of traders positioned themselves short, placing their stops above points 1 or 3. The big players could therefore assume that enough stopps are available via points 1 and 3 to push the price up sharply and at the same time get out of their positions. The strong green candle clearly shows that the stops of the short traders were picked up from points 1 and 3.

At point 5, a strong resistance zone developed because the course ran twice to this zone. Many short traders have entered the market there. The pullback to Point 6 ended in the area where the big players no longer expected further stops. And this zone ends within the strong green candle.

Most big players have left their euro positions in the course of the green candle and have already started buying the dollar. When the course to Point 6 was over, the big players got the necessary Ask, to push the course up again. There the short trader stops from point 5 and the blue arrow were triggered and bid was absorbed in the blue candle. Then the price went down.



If we ask ourselves why the course went down again from point 7, the answer is relatively simple. When the price reached Point 7, there was no short-term stop liquidity that was worth collecting. This is also evident from the green lines in the chart, which show the possible stops of the short traders or where there is enough bid. In the lower area there was strong liquidity in the ask, so the big players were able to get out of their dollar positions and at the same time buy the euro and then push the price up again.

So we can see that the course is not random, but is always the result where the big players find the most liquidity in the form of stops. However, it is always a question of whether you use the stops to push the price up or down, or whether you absorb the stops. This essentially decides on the further price of the course. We have found, that the market does not provide the big player, with infinite volumes and therefore they have to collect them. We can take advantage of this weak point of the big players by trying to find out where the next volume point is that they are approaching. This could help many retail traders to make their decisions a little more concrete in the future and make more profit at the same time. One could also participate in the big player's stop chase and earn money when the colleagues are stopped. Although this is not collegial but due to the anonymity in the market, nobody notices that. In my eyes, the procedure of stop identification is the only way to trade price data in the forex market a little more successfully. However, the crucial data is missing on what the big players do with the triggered stops. And we only get this information with the future data.

First of all, I recommend that you look at the market from the perspective of the stops and differentiate between long and short traders. There will give you crucial information that will take you further.

I wish you a successful trading week

best regards

Hey, Michael, quite interesting the way you describe it, this stophunting. I always wondered why it was that difficult to search for a 'perfect' stop loss. When my SL was too small, I got stopped a lot, when I used a big SL, not that much, but eventually price got me after all resulting in a big loss. All that effort and winning many small trades and one big loss ate all my profit. It was already better than losing like most retail traders, mostly I won my loss back to get at break even, but that did not get me one step ahead. So I thought, it might be better not using stop loss, and since I have been doing that my wins outnumber my losses resulting in at last some profit. Of course it's dangerous without SL, but if you do not stay in the market very long, are a scalper, and have the nerve to close a trade going too much against you, it's not that risky anymore. Mostly my trades last only a few minutes anymore now, in the past I did trades that went 30 Euro in loss and then I closed at 1 Euro profit, that were sometimes trades of 2 hours, really a loss of time ...

Now I'm learning using equilibrium resistance lines, but still I do not use SL, but of course to reduce my risk, I would like to use SL again. So when I think about it, wouldn't it be wise to set a stop loss above a very strong course up initiated by a big player in order to collect liquidity and then going short for a short time ? And the inverse for going long. In your example going short at point E when the downward course had an upward spike of 105 strenght, simply meaning a big fish is practising stophunting. This would mean going along with the big player and then get out at a previous equilibrium line ...

Here are also some tools that could be helpful, one to find an equilibrium (squeeze ma) and the other one to identify big players, that volatility meter can reach very extreme levels and when that happens, it's certain a big player is involved. The only drawback is that you only 'see' it in real time, when you're watching it.

Best regards from Wulong

Stop loss

[quote=Wulong;12735259]Hey, Michael, quite interesting the way you describe it, this stophunting.

Hello Wulong,

I agree with you that an entry into Stophunting without volume and liquidity information, a grip in the falling knife can mean. Yesterday at 16:00 CET there was also a stophunting of almost 12 pip in EURUSD. In this area I had also calculated a stop of 5 pip, whereby the course only ran 1 pip into my stop. I could see how big players' liquidity absorbed the stops. Under this absorption, they had placed other strong limits, which explained my larger stop of 5 pip. This is always a bit of luck because you never know if more stops will trigger another chain reaction. Even the big players can never estimate that exactly. Such a situation, is much easier to see with with the futures data. It is also interesting to trade in the stops, whereby in volatile phases you have problems getting out of your position quickly. In normal Stophunting phases, this is an interesting alternative.

Follow Smart Money !!!

My contribution: “Follow Smart Money !!!” should first of all give a feeling for the way big players work and motivation to take a closer look at Stophunting. For me, if you only work with forex data, this is the most effective way to assess price movements. When we have completed this project, we will bring it together with the future data. In the area of liquidity, I have already made decisive progress and have found a way, to make the iceberg orders visible in the chart. We will talk about that in Project 10.

First of all, thank you for the indicators you posted. However, we must note that these indicators are calculated from the price and the time, while the essential information such as liquidity and volume are not available. The less information you get about liquidity and volume, the more you have to leave your trading decisions to chance. Achieving a higher return on investment is difficult without these crucial factors.

With the stop loss and the probability of winning, you address a very important topic that is an important point for all traders. Many believe that a high probability of winning is the decisive factor in trading, but this false perfectionism is a mistake. I'm trying to write a detailed post on this important topic this week. We can then take a closer look at the probability of return, return on investment, profit factor and risk-reward ratio. There are some interesting aspects to consider.

What makes me very happy is the fact that you are making progress in your personal development. Of course, in the beginning, not everything works as you imagine. Development always means change, and that requires patience, time and nerves.

I wish you a successful trading week

best regards
Michael

Hi,Bionics.Thank you for your hard work.What tool indicators to use about Liquidity versus volume?Please share.

Liquidity and volume

Hello flashlj2008,

Thank you for your compliment to our blog. In the forex market, indicators are primarily created from price and time, which has considerable disadvantages, since the price is basically the result of liquidity, volume and time. There is a tick volume in Forex, but it has nothing to do with Bid and Ask. Likewise, liquidity cannot be represented in forex. Therefore, there are no indicators that could be used. To do this, you have to use stock market data. First of all, you have optimal chances in Forex if you deal with the topic "Stophunting" of my last post. You only need 3 auxiliary indicators for this, but these are only used for identification. In our next project, I will then go into more detail about the stock market data.

Best regards
Michael

can you use stock market data while trading forex?