The Equilibrium, a key to success!

Project No. 10

A completely new market view



Hello dear subscribers,


As promised, we are starting today with our new project No. 10. In this project we will see that the limit orders are more crucial for the long-term price trend than the market orders. And I will show you how to make limit orders visible. In the next few weeks we will deal with the future data in more detail. Our project no. 9 (Stophunting) will continue to accompany us. If you want to be successful in this market in the long term, you need to take a closer look, how big players work. A price does not change because a moving average has crossed, an RSI is overbought or a fibozone has been reached, but because there are more short traders than long traders in a downward movement and more long traders than short traders in an upward movement. The big players determine the market and they pursue a goal. This goal can only be recognized if you know what they are up to. Their plan can be identified by the limit orders. We want to start with that today.

In the past 10 years I was lucky enough to take the smaller movements up to 10 pip within one equilibrium and was therefore able to act profitably. However, I was unlucky enough to never know exactly what was happening in the market. FF motivated me to write down my thoughts on trading over 2 years ago. At first I tried to describe my approach exactly and quickly realized that this is not so easy. The more I wrote, the more questions I had. Every question I answered myself took me a step further, but more and more questions came up and prompted me to dig deeper into the subject. With the tick charts, a kind of breakthrough came into the world of stock market data. At first I wanted to know exactly how these tick charts are calculated in Forex and at the same time I recognized the incompleteness and limitation of this calculation. Many years ago I heard about the volume that was presented with footprint charts, volume profile and market profile. But all these chart representations make no sense in Forex, since no data feeds are provided for them. Why deal with something that is not feasible.

First of all, I wanted to know how a tick chart in Forex differs from a tick chart in Future. So I got futures data, but these pure futures data alone couldn't give me a clear answer. The MT5 was the worst alternative to optimally display futures data, as well as other trading platforms such as Ninja Trader, Multicharts, Sierra Chart or Jigsaw could not satisfy my requirements. I chose a professional proprietary trading platform. This enabled me to filter and display the pure stock market data in such a way that it made sense to me. I started to compare the tickchart in the forex with the tickchart in the future. It struck me that the course behaved almost exactly the same, but the prices were different due to the swaps. I am one of the 4% of professional Forex traders in Europe who can trade up to 400 with a lever and at the same time I have extremely good protection in the event of an uncontrolled breakout. Since the EURUSD has the highest liquidity in the Forex market with over $ 2 trillion in daily turnover and at the same time has the least drawdowns, I wanted to continue trading in the Forex market.

So I tried to find another way. I started organizing my forex trading based only on the futures data. Initially, this was a very daring version, especially since it was a matter of two different markets. It didn't work so well at first because I didn't pay attention to some things. However, it was an alternative that gave me the motivation to take a closer look at the volume. A big aspect benefited me. For years I have been dealing intensively with the approach of big players and high-frequency traders. If you want to be really successful in this market, you cannot avoid it. I started to deal more intensively with the footprint chart, volume chart and market profile. That didn't get me anywhere. The next step was the DOM and the Times and Sales list. This information was much more accurate, but I was still on the wrong track. I returned to the big players' way of working and started to deal with them in more detail. The big players move the market, that is undisputed, but how do they move the market? Let's start with that.



At point A the sell market orders come into the market, which meet the buy limit orders at point B. At point C the buy market orders come into the market that meet the sell limit orders point D. At Point E we see the monthly volume of buy market orders and at Point F the monthly volume of sell market orders. Point G shows the price, the daily volume and the number of trades at the respective price level. You can add other ads to this DOM, such as spoofing, which shows added or deleted limit orders. For our example, I did without it. The market orders eat their way into the limit orders and as soon as the liquidity is used up, it goes to the next price level. If many market orders come in, but the price does not change, the market orders are held up by the limit orders. This means that more and more limit orders are added at this price level, one speaks of an absorption.



A footprint chart is a concrete representation of the DOM in the area of market orders. The time frame is specified by the dealer. At Point A we see such a footprint representation. The ask or the market buy orders are on the right, the bid or the market sell orders are on the left. The white frame indicates the highest volume in the candle. 726 lots were traded on the ask side, while 85 lots were traded on the bid side.

At Point B, a beginner's first question comes to mind: how can it be that 125 lot market buy and only 0 lot market sell were traded at one price level? First of all, we need to know that the market buy orders and market sell orders can never meet eachother. The market sell orders meet the limit buy orders and the brand buy orders meet the limit sell orders. Therefore, a footprint chart is a bit confusing at first, because the market buy orders and market sell orders stand side by side. It is just a representation of how much lot was traded at a price level. The red and green numbers each show an imbalance of the individual market orders. Although this is an interesting note, I would not make any trading decisions with it.

At Point C we see the total volume that was traded at the upper price level. This is a total of 1766 lots. 1610 lots were traded in ask and 156 lots in bid. Ask minus Bid is delta, in our case a positive delta of 1454 Lot. These are exclusively market orders. So we can initially state that only the market orders are able to move the market, while the limit orders are able to stop the market. Since the big players move the market, one could conclude that the big players primarily deal with market orders. However, this is a false assumption, which I will discuss in more detail. The vast majority of price representations primarily refer to market orders, only in the DOM and in the heat map can limit orders be displayed at first glance.



As we have already established, the big players are not able to immediately get large orders in the market and then push the price in their direction. Therefore, they are sometimes forced to collect Ask or Bid over several days within certain price levels and then push the price towards them. For me, these are the so-called equilibrium phases, which are shown here with accumulation and distribution. During these phases, the big players have the task of collecting ask or bid and at the same time always keeping the price within this range. Before the breakout, you have to stop potential followers to avoid being delayed in your breakout.

The big question now is how a big player can best collect within an accumulation or distribution phase without most market participants noticing. We know that market orders are visible in the market, while limit orders cannot be identified. For this reason, iceberg orders are primarily used for these collection campaigns. Iceberg orders are nothing more than limit orders, which are controlled by algorithms and absorb market orders at certain price levels. We should know that absorption does not take place at one price level, but always at several.

Let's imagine a big player wants to push a price down, which means we are in a distribution phase. To do this, he first has to collect bids, so in the area of sell limit orders the algorithms are instructed to buy a certain number of market buy orders without giving themselves away. This means big players have to be careful not to absorb too much at one level, otherwise the market could quickly realize that this is a strong resistance level and many traders would take long positions. When a big player collects limit orders within an equilibrium, it is a lot of work at first. The price has to be kept within the range, stops have to be started because there is immediate volume available and if enough has been collected, a suitable time has to be selected at which the volatility may be somewhat higher.

In these actions, the employed traders of the big players must work together, to work towards a common goal. Different traders get the order to collect a predetermined number of limit orders at different price levels using different algorithms. As soon as they have completed their collection campaign and have initially pushed the course in an opposite direction to trigger the stops of the followers, the algorithms begin to push the course upwards. This takes the form of cumulative small market orders that the market initially does not notice. I have observed these algorithms in the last few months and it is relatively easy to read them. We will deal with this in more detail, however. Stophunting is also a crucial factor for big players. Possible stops are easiest to identify in the Forex market, since we have 5 times more accurate price positions there than in the Future market.



First of all, I divided the big players and retail traders according to supply and demand. The demand comes within an accumulation phase and the supply within a distribution phase. Let us first consider how the individual market participants behave in the individual phases.

Within an accumulation phase, a big player needs Ask, which he tries to collect with limit buy orders. For this he has to buy the euro and it is a passive order, as this does not move the market. Within an accumulation phase there is a so-called range in which the big player collects ask. As soon as the price moves extremely out of this range, the big player is forced to push the price back into this range. At the low of this range, he has to buy the euro with buy market orders in order to push the price up again. At the high of this range, he has to buy the dollar to push the price down again.

Once he has collected enough, the crucial question is whether the majority of the participants are short or long in the market. If many participants have taken a long position, there will be a stophunting. To do this, the big player must first buy the dollar heavily in order to push the price down. On the way down, the long trader's first stops begin to burst. He has to intercept these stops with buy limit orders. As soon as he suspects no further stops, he starts selling the dollar. This sale releases a high number of ask and pushes the price up. In addition, it will push the price up in the form of cumulative market buy orders. The price upwards in zigzags, the background to this is that the big player needs new volume again and again to bring the price up further. For this he uses the stops of the retail traders.

Because the price continues to rise, there are more and more retail traders joining a long trade. As soon as the volume has reached a corresponding size, the big player begins to exit the euro with limit sell orders. Since this is done with limit orders, most market participants do not notice that the big player is already getting out. If the price does not reach the limit orders of the big players, they can of course also exit the market with markets sell orders. However, this is perceived by the market and could immediately trigger a turnaround. Then the big player would have problems getting out of his position. During the distribution phase, the opposite is true, as you can see on the table.

Since a retail trader can enter the market directly but does not move the price, his trading activities are also restricted accordingly. In most cases, beginners focus exclusively on market orders for entry and exit, with a take profit belonging to the category of limit orders. As soon as a retail trader is stopped, a respective market order is released. In order for the big players to intercept these stops, they are forced to place limit orders in the market.



Here I have now compared the big players and the retail traders in the accumulation and distribution phase. If a big player wants to collect ask in an accumulation phase, he has to buy the euro. In return, he needs a retail trader who either buys the dollar or sells the euro. With its buy limit orders, the big player intercepts the market orders of the retail traders. In order to understand the market context exactly, I recommend that you first deal with these two tables in detail. It is also important to recognize in the market whether a big player is currently buying the dollar or selling the euro. In both cases, Bid come in the market, but there is a crucial difference.



In the picture we see two volume profiles from two different days in the Euro FX. The volume is the addition of bid and ask. There are many trainers who swear by this volume profile and use it to make concrete trading decisions. For me, this is only a representation to determine in which price ranges a stronger struggle between the different market participants has taken place. Deriving specific resistance zones for the future from this is more realistic than an RSI or MACD, but the decisive factor for me is who won in the individual price ranges. And this cannot be clearly determined in a volume profile. Of course, one could now say that the market tried to keep the price high and then failed and therefore the price went down. In my opinion, however, this is a vague statement that can usually only be made once the course has already been completed. As I said, this view is interesting to determine, in which area an increased volume took place, but not more.



In this picture we now see a delta of market orders. As we know, the delta is the result of ask and bid. If we see a green bar, more ask than bid was traded on the price level, if we see a red bar, more bid than ask was traded on the price level. If we only looked at the day candle at Point A and had to make a decision about where the price would go next, many would assume that the price would tend to go up. At point B, the price went down and we see that a lot of Ask was traded on the lower three levels. This could be an indication, that the price will now up again. The opposite was the case, however, because the price after go down sharply. So we find that the market orders that move the market do not appear to be an indicator of a long-term price trend.



Let us briefly recall our first slide, the DOM. If we launch a 1 Lot Sell Market Order and it is activated, a 1 Lot buy limit order must be activated at the same time. We now have a buyer and a seller in the market. First of all, it should not be relevant whether the euro was bought or sold or whether the dollar was bought or sold. When a market buy order comes into the market, a sell limit order has to be activated at the same time. This means that a buyer can only meet one seller. If the market is just starting and a market buy order triggers a sell limit order, it means that both a buyer and a seller are in the market at that moment. And this is exactly the point that gave me the idea.



If a market buy order simultaneously triggers a limit sell order and a market sell order simultaneously a limit buy order, it is automatically possible to display the limit orders in the market. First you just have to swap the colors. So if a market buy order that is green meets a limit sell order that is red, I just have to swap the colors of Bid and Ask to make the limit order visible.

With this in mind, let's take another look at the first day candle at Point A. We now see a strong delta in the sell limit area. One could conclude from this that the price continues to fall. Also in the second day candle in the upper area, a stronger sell limit delta was created, which pushed the price down. A stronger sell limit delta was also created in the lower area of this day candle, which could justify a further price slide downwards. We have already noticed that while market orders move the market, limit orders determine where the market will go in the long term. With this approach, we have already taken a small step forward, but in principle no rule can be created from it that always applies 100%. The consideration of limit orders is always a long-term one, in addition one must also consider the short and medium-term range. For this we need certain tools from the future area, which we will deal later with in more detail.



In the footprint chat at Point A we see the total volume on the left and on the right the number of trades that were entered into this price range. At Point B we see a volume chart that shows a filtered total volume. At Point C we see a total daily volume divided by bid and ask and at Point D the division of bid and ask within a single candle. In many trainers' seminars, the presentation of market orders is trained in order to make trading decisions. In the short and medium term this may be correct to a certain extent, but the market is primarily determined by the limits order. And exactly these limit orders are ignored.

In my last report, “Own liquidity for the big players”, I talked about two striking points, where the big players have provided themselves with liquidity. Here you can read the articles again.

Own liquidity for the big players

The Big Player bag of tricks


For all forex traders, at this point the price has only reached a resistance zone twice, nothing more. What is decisive, however, is what happened in the market at that moment and this information can only be obtained from the future market. So if you want to have comprehensive information in the future about what is currently happening in the market, you will inevitably have to deal with the future data. This does not mean that you cannot trade profitably with pure Forex data, but the probability is significantly less than with comprehensive information. But even the information from the future market does not help if you do not filter it properly and present it in such a way that it brings a concrete trading advantage. In our project number 10, in addition to the forex data, we will also deal intensively with the future data and combine them with one another. And exactly this combination will bring you a decisive trading advantage.


I wish you a great weekend

best regards
Michael

How to follow big players with Forex data.



Hello dear subscribers,


In my last article: "A completely new market view" I pointed out a new way of looking at things in order to better follow the big players. The big players focus primarily on limit orders, while most of our chart alignments focus exclusively on market orders. With that, it is initially impossible to identify the big players. Here you can find the article:

A completely new market view

This new way of looking at things takes some getting used to and is unfortunately only possible with real stock market data. Nevertheless, there is also a possibility for pure Forex traders to recognize the short-term strategy changes of the big players. I myself also work with a combination of futures and forex data, because in comparison a price change in the futures market triggers five times as many price changes in the forex market. 2 ticks in the future market correspond to 10 pippettes in the forex market. This means that the Forex market has a clear advantage in the area of price changes and changes can be recorded more quickly.



In EURUSD H4 we see from point A to B that the price has moved down towards the open gap. Then there was an equilibrium of over a week (point C) and then the price went up to point D. Let us now take a closer look at this downward trend, the equilibrium and the upward trend.



First of all, we see green and red arrows with a number. The numbers show the average pip / 10 of each candle, within an up or down trend. The larger the number, the stronger the pressure up or down. What creates a stronger upward or downward movement? At point 1 we see that in this upward trend each H4 candle has an average of 6.7 pip. Then the course in motion (Point A) ran to Point 2. In this movement, each H4 candle reached an average of 24.7 pip. So this movement was almost 4 times as strong as the previous movement. In the point 0 to point 1 movement, traders were long-oriented. A big player will always take a counter position to realize his winnings. At point A, he pushed the price down and triggered the long trader's stops. When a long trader's stop is triggered, a bid comes into the market, this bid drives the market further down. The large number of 247.5 (at point 2) means that at point 1 most traders were more long-oriented and at the same time on the way down, the stops of these long traders were triggered. We can see in this picture that from the movement A to the movement E, the numbers of the downward trends were significantly larger than the numbers of the upward trends. In this area there were therefore more long-oriented traders than short-oriented traders.

From point 4 to point 5 we see a number of 11.3 pip in the upward movement. This gives an indication that many traders have taken a short position at Point 4, which is why the price was pushed up a little more. First a small equilibrium was created and we can see that a large number of traders have taken a long position at Point 6. Therefore, the course was pushed down more strongly in movement F. The Bionic Zigzag Oscillator (Point G) shows exactly these strong movements. In the downward movement, we can see that the price as a whole was pushed down more than it was pushed up because the majority of traders took a long position in this area. Of course, the retail traders were not permanently in long positions, but most wherever the green arrows were drawn. The big player then pushed the price down and triggered the stops of the long traders.



The course initially ran into the open gap and there was again an equilibrium. At point A there was initially a stronger downward movement, since at point 0 the majority of traders were long-oriented. At Point A, most retail traders thought the price could close the gap. For this reason, the price was pushed up very strongly by the big players to Point B. Then there was another strong downward movement to Point C and then the course went up. In the Bionic oscillator at Point E we can see how strongly traders were oriented short at Point A short.



In the now easier upward trend, you can see that points A, B and C achieved significantly stronger values than points D, E and F. This clearly shows again that at this point the majority of traders were oriented in the opposite direction. The oscillator at Point G also shows an overall stronger pressure upwards, which clearly proves that at this point most were short-oriented.



Then the course went to Point A, based on the strength we can see that it was a sustainable upward trend. The strong downward movement to Point B clearly shows that the majority of traders at Point A were still long-oriented. With the Bionic Zigzag Oscillator we can see exactly that at point 2, where the yellow arrows can also be seen, the downward trend has turned into an upward trend.

Of course, the display in the H4, is a long-term presentation, with the bionic zigzag indicator we naturally have the option of breaking the display down to the M1 or in a tick chart down to 8 seconds. This enables us to grasp the smaller trend strengths faster.


In fact, the big players intended to keep driving the price into the gap, but this can be seen better in the future market. Let's first take a closer look at the Delta Limit Orders (yellow frame) in the Future Market.



The respective green and red bars in Euro FX show the respective delta of limit orders. First, the price was pushed down sharply on February 13 and we can see on the low that the big players had already collected stronger sell limit orders.


Also on February 14th and 17th, further sell limit orders were collected in a kind of equilibrium. In the yellow box at point A we can see the stronger sell limit orders. On February 18, the price was finally pushed down and on the low the big players started to collect stronger sell limit orders again. February 19 was also dominated by sell limit orders. The yellow box at points B and C clearly shows a high volume in the sell limit area. At this point, I also assumed a further downward trend.

Then on February 20, a situation arose that the big players had not expected. The majority of traders positioned themselves short because the retail traders hoped that the gap would now be closed. So, the big players had to change their strategy. At Point D you can guess that they have given up previously collected positions to the short-willing retail traders and at the same time started to collect Ask with buy limit orders. The strong bullish candle on February 21 could only arise because many short traders were stopped and the big players pushed the price up to bring their buy limit orders to profit. If the big players had pushed the price down on February 20, there would have been too many retail traders and would have significantly reduced the big players' profits. The decision they made was absolutely right. It is precisely for this reason that it is crucial to monitor the limit orders regularly in order to immediately recognize when the market behavior of the big players changes.

On February 18 and 19, the Big Boys collected sell limit orders to push the price down further, and then on February 20 made the decision to exit their position and collect buy limit orders. On February 19, I myself assumed that the price would continue to decline and was somewhat confused on February 20, when suddenly buy limit orders were collected. Big players are chasing retail traders' stops, so sometimes you have to make quick decisions when the overall situation changes. And it is precisely these changes that we have to watch out for and follow.

Let's take another look at the exact tools in the different markets

Forex market

With the zigzag indicator you get the respective trend strength, with which you should always pay attention to the different time units. The bionic zigzag oscillator gives us a good overview of where the course is pushed up or down. In addition, I recommend identifying the key candles in the area of Stophunting. You can find some reports on this blog.

Future market

In the last report in the future market I showed you the display of limit orders. However, this is only a small part of the information necessary to look deeper into the market. We will talk more specifically about these tools in the next few weeks.

I hope that I was able to give you a brief overview and wish you a relaxing weekend and a good start to the new week.

Greetings Michael

An important clue!!



Hello dear traders,


I have been approached by outside traders who are not subscribers to our blog, why they cannot post on this blog. I would like to give a clear answer to that.

First, I opened this blog to write an trader's diary and answer the question, why I was able to trade profitably in the past 6 years. After I started working with the tick charts in Forex a year ago, it developed into an extreme development towards stock market data. This further development now takes up a considerable amount of time, which I would like to dedicate exclusively to this blog. In recent times, requests that have less to do with the current topics and content in this blog have been piling up. All subscribers in this blog have the opportunity to ask their questions about current topics at any time and I help my subscribers whenever I can. However, please accept that I am not available to outside traders who do not want to join this blog. This has nothing to do with the fact that I don't want to help you, but only with our current projects, which take a lot of time. I am a full-time trader and earn my money with daily trading. At the same time, the current project takes up a large part of my time. Therefore I ask for your understanding in this case.

In the past few weeks I have received many letters from long-term future traders who describe this project as a future milestone. I am also convinced that this new market view will be an exciting project in order to grasp faster, the way big players work. Some traders have also offered me money to help them understand my trading style. I don't want and need money because I only earn my money with trades. The information I share here is free and I voluntarily share it. In return, I expect like-minded traders to accompany this path positively and constructively. If you want the free information, you have to be willing to invest 20 hours to work through this blog. After that, many things become clearer.

I am not interested in attracting 1000 subscribers to follow me, but to find people who are willing to go the same way with us. And the trading style that we are currently practicing is not a mass business. I have repeatedly pointed out in the past few months that Forex Trading is the hardest business in the stock market. Those who believe that this business can be done simply and easily will not feel comfortable in this blog. The big players invest billions of dollars each year for their analysts, traders, algorithms and technology. If this business were that simple, the big players could save those billions of dollars. On the contrary, they invest more and more billions of dollars every year to ensure their success. Why does Goldman Sachs have almost 30% less daily income than 5 years ago because the market has become easier? This market is a shark tank and only the bigger or faster one will survive. We small traders do not have the money to influence the markets, but we have found our creativity and with a new market view a way to follow these market makers faster.



For those who claim that the market is very easy, I recommend spending a day with a high frequency trader at his place of work. I think then this view will change quickly. It was pure luck that I was able to trade profitably in the past 6 years, nothing more. I traded the movements within the range in the Equilibrium, where the big players were tame, like a full eaten lion, because they collected their bid and ask in these accumulation or distribution phases. However, I only became aware of this many years later. Nowadays, big players start to make themselves volume available within minutes, which they absorb with their own liquidity. This saves them from having to spend a lot of time collecting in the equilibrium, which means that the markets can be moved immediately without having to do any complicated stophunting. Anyone who does not respond appropriately will disappear from the market in the long term.

This is why this blog is also developing in the direction of continuing to exist profitably in the market in the long term. This automatically means investments in technology and software. An entrepreneur who is unwilling to invest will eventually be overtaken by the future. Of course you can make a profit with a laptop and the MT4 if you have been doing it for over 10 years. But very few have been doing this for over 10 years. Why are there so many traders here, who have been making losses for years and are stuck? Are they incapable or not intelligent enough? On the contrary, these are often very intelligent and strategic people, some of whom have a lot of experience. But very few will have a chance against the market makers. And this chance will decrease significantly in the next few years. In this market, approx 2% of all retail traders are really successful and can make a living from it. Any why is this the case? Because they were willing to invest and worked 10-12 hours a day. Anyone who wants to become a doctor, lawyer or notary has to learn a lot, study and then work hard. It always looks nice when a doctor arrives in a Porsche, but nobody sees the 350 hours that he works per month. As a trader, we have exactly the same situation, but nobody tells us this truth. The brokers and trainers make us believe that every trader can be a millionaire tomorrow. They just want our money, but the truth is sobering.

I’m not saying that you can’t achieve it as a trader, but many lack the right attitude towards the entrepreneur. It is now 7pm on Saturday night, many of my friends are now celebrating and enjoying life. I am sitting here at my evaluation and preparing for the coming week. This week I traded over 70 hours again, continued my education, wrote my trader diary and spent in front of the screen. But my friends don't see all these things, they only see that I'm financially well. I don't have to do that, but I'm passionate about this business and I'm proud to be able to practice this profession. To do this, you have to be willing to train yourself every day. I don't want to say that my way of trade anything comes closest to the Holy Grail, but it shows me what's going on in the market. And I don't want to look at the candles and wonder where the course could go next. A trader should know it beforehand. And that only works if he has the right information.

This is exactly what our thread is about and I am proud to go this way together with successful traders in our blog.

I wish you a nice Weekend

Lovely wishes
Michael

Experiment own liquidity continues!



Hello dear subscribers,


As I wrote a few days ago, there were some experiments by the big players to provide themselves with liquidity. You can find the contributions here:

36 pip move in EURUSD

Own liquidity for the big players

Big player experiment "own liquidity"

The Big Player bag of tricks


As a result, the big players try to compensate for their disadvantage so that they do not have to spend hours to collecting Bid or Ask in the equilibrium . Yesterday it was time again.



The price was pushed up until 18:00 CET during the day. Shortly before, there were also some exits from the euro by some big players. At Point A we see that the course reached just under 135 pip above the open. Then a small equilibrium forms at point B. At that point, market participants were unsure of where the price would go next. A big player wanted to push the price down, but had the problem of getting enough volume around the bid. To do this, he provided himself with liquidity that he took up simultaneously with market orders. Then course 65 pip was pushed down to point C. Over the course of the night, the price recovered somewhat and pushed 35 pip up. Let's take a look at how the big player once again made liquidity available to itself.



Yesterday around 17:50 CET, the price was initially pushed up and we see massive sell market orders entering the market that were intercepted at the same time with strong buy limit orders. From point B the course was briefly pressed down again and then went up again more strongly. At Point D, many thought that the price would go up and the big player had the opportunity to place another large sell market order here. After that, the price went down 65 pip. The large market sell order at point D could either mean an exit from the euro (sell the buy limit orders, which the big player had previously started his market sell order) or another purchase of the dollar. However, that would mean that he is still invested in the euro. If this were the case, it would speak for a further price increase in the medium term.



At Point A we can see once again how the Big Player with its algorithms pushes the price up sharply. At the same time at Point B, we see the Sell Market Orders of the Big Player that came into the market at the same time as buy limit orders.



Point A shows yesterday's high at around 6:00 p.m. CET, then the course to Close Point B ran. The open was again a little bullish and the course was initially pushed from point C to point D. Then the course went up again. If the big player really had open ask positions at point A, the price could be pushed further up. But it is now crucial to pay attention to the limit orders that come in during the morning. It will be decisive in which direction the course is pushed by the big players.


If you want to take a closer look at limit orders, you will find the start of our new project No. 10 here:


A completely new market view



I wish you a successful trading day today

best regards
Michael

Volume versus liquidity



Hello dear subscribers,


As we already know, the only reason for price changes is that market orders (volume) meet limit orders (liquidity). While the retail traders primarily work with market orders, the big player collect limit orders in accumulation and distribution phases, pushing the price up or down with market orders. As a rule, they exit their positions with limit orders. In addition, in the past few weeks we have seen in EURUSD how they are able to provide liquidity for themselves. If this approach is successful, it would reduce the number of equilibrium in the future. The EURUSD is best used for experiments because it is the most liquid currency pair with over $ 2 trillion in daily sales.

Almost all trading platforms that are able to read future data concentrate on the market orders. First we have to split the market orders of the big players into cumulative and non-cumulative market orders. A non-cumulative market order is, for example, a 50 lot buy market order that is placed on the market. Let us assume that there are 50 lots on the sell limit side. Now the big, non-cumulative 50 lot buy market order of the big player meets the 50 lot sell limit orders from different market participants, eats up the limit orders and jumps to the next price level. The disadvantage of this approach: All market participants can see this large order. Let's stick to the same example. The big player can now use algorithms to split his 50 lot orders into smaller orders, 5 times 1, 2, 3, and 4 lots. This now creates a cumulative buy market order, which also eats into the sell limit orders and increases the price by one level. However, it now looks as if 20 different market participants are responsible for these orders and not a big player.

Only if the trading software can divide the incoming orders into thousandths of a second and filter the orders accordingly, are you able to assign these cumulative orders to a single market participant. Of course, the big players also know that the cumulative orders are not easy to identify. So when a large buy market order comes into the market, many believe that a big player wants to push the market up. Then many buyers jump into the market with buy market orders, the big player absorbs the market orders with his sell limit orders and then pushes the market down. So if you see a large, non-cumulative order in the market, you should always be careful. With the right trading software, it is first of all quite easy to differentiate these cumulative and non-cumulative market orders. But be careful, a big player does not always have to be responsible when a large cumulative market orders appears in the market.



Here we see a situation on the Euro FX 30 Sec Chart. At point A, the price is pushed down and the first stops (cumulative market orders) of the long traders are triggered. At Point B, many are hoping for an upward trend, but the price will be pushed down again. Now strong cumulative market orders come in, which are intercepted by buy limit orders from the big player. The big player then pushes the price up with buy market orders. These cumulative market orders were not invested by the big player, but show that the stops of the long traders were close to each other. The big players need this liquidity because the retail trailers are rarely willing to deliver so much volume at the same price level. For this reason, stophunting is a crucial factor for the big players. The orders we see in this picture are only market orders.



The information about limit orders is very sparse or not available in most trading platforms. Basically, you can display ten price levels in the sell limit and buy limit range in most trading platforms. For a lot of money, it is possible on some exchanges to display more price levels in the limit area. Anyone who has ever dealt with limit orders in the DOM knows that this view is of little use. Depending on the volatility, the price changes are so fast that added or subtracted limit orders cannot be recognized. With the right algorithms you are able to represent spoofing more precisely. In this example we see an average of 50 lots at each price level, but it happens that 200 lots are sometimes traded at a price level. This means that 150 lots have been added to the limit area. And this can only be seen in the running DOM with a spoofing algorithm. Even if you can see absorption, it doesn't help at first. The big players collect in the accumulation and distribution phases and absorption does not necessarily mean that the price has to move more in the opposite direction afterwards. This will happen after the big players have collected enough. Another option to make the limit order visible is the heat map, whereby the subdivision of the individual limit orders is shown in color. Again, there are some restrictions to be aware of.



In one of my last posts I showed a possibility to show the exact values of the limit orders in the chat.

A completely new market view


It should be noted that this presentation is a medium-term to long-term orientation and that no short-term price changes can be derived from it. But if you have this information, you can derive a history from the price trend and use it to forecast a further price trend more precisely. However, only if you are able to see exactly what the big players are aiming for with this procedure. First of all, it is necessary to compare the trading strategies of the big players with the trading strategies of the retail traders. You can find also this information in this post.

A completely new market view




Let us first take a closer look at volume and liquidity. The market orders move the market by meeting the limit orders. Here it is crucial how strong the market orders are on the one hand and how strong the limit orders are. First, I assigned three different values to the market orders and limit orders. The value 3 shows a strong tendency, the value 2 a medium tendency and the value 1 a weak tendency.

Now let's look at the first three examples above.

Buy 1
If the buy market orders show a strong tendency and at the same time the sell limit orders also, a preliminary equilibrium results. The volatility would be weak as there would be no major price changes in this case.

Buy 2
If the buy market orders have a strong tendency and the sell limit orders have a medium strength, this results in a preliminary bullish trend. The volatility would be medium, since in this case there will be medium price changes.

Buy 3
If the buy market orders have a strong trend and the sell limit orders have a weak strength, this results in a provisionally strong bullish trend. The volatility would be high, because in this case there will be strong price changes.

The volatility is always the result of the strength or weakness of the limit and market orders. The market orders can move the market, but they cannot stop it. The limit orders cannot move the market, but they can stop it. Both factors therefore determine volatility and future price changes.



By assigning three values to the market orders and the limit orders, there would be 6 bullish and 6 bearish tendencies if there were an equal distribution. 6 situations would take place in the equilibrium.



I once listed these course trends graphically. The strength of the limit orders is indicated by the gray bars, the strength of the market orders by green bars. As a result, an equal distribution takes place here first.



There are no negative results in the area of volatility, volatility is either weak, medium or strong. The result in the area of volatility therefore changes in our presentation.



As a result, there is initially a strong volatility in 12.5% of the cases, a medium volatility in 50% of the cases and a weak volatility in 37.5% of the cases. Since breakouts are primarily associated with high volatility, we recognize that these breakouts rarely occur in this market. In over 70% of cases, a market is in equilibrium or in a sideways phase. In order to find out exactly how a trend or volatility could develop in the future, it is crucial to identify the strength of the market orders and at the same time the strength of the limit orders. The strength of the market orders is relatively easy to see. However, since there is little information about limit orders in the market, we are concentrating on these limit orders starting with project number 10. This is exactly our missing piece of the puzzle in this game.



Here I would like to show you an interesting presentation. On the left we see the market buy orders in H2, on the right the market sell orders in H2 and in the middle the result of the delta limit orders in H2. However, this representation does not show how many limit orders a single market participant has taken. And that is exactly what will be a crucial point in the next few weeks, which we will look into more closely.



There are different approaches to identifying limit orders that we are currently dealing with.

Point A
In this representation we see a combination of market and limit orders that enter the market. The problem here, the fine subdivision of the limit orders is not possible in this representation, but the Stophunting can be optimally read and displayed.

Point B
The representation of the limit delta in combination with the volume is a decisive medium to long-term representation of the future course of the price. However, short-term price changes cannot be represented with this.

Point C
Another important factor is the cumulative delta in combination with the open interest. It shows how open positions behave when stops are triggered.

Point D
Another interesting experiment is currently taking place with the imbalance within the limit sell and limit buy orders. I cannot yet publish a concrete result on this, but this presentation brings some interesting information.

Point E and F
The most interesting alternative at the moment is the identification of the big player algorithms. At the time of presentation, the price was down more and we can see on the left at Point E how the big player is pushing the market down. The light red presentation indicate the stops that have been triggered. At Point F, we see that there were some market participants who are defending themselves, however due to the lack of buy market orders, they have lost the fight. I have now taken another step. With sounds I let indicate the bullish and bearish algorithms acoustically. I had to make sure that these tones have a very short display time of 0.05 seconds. This makes it possible to record the market oders acoustically and to concentrate on limit orders at the same time. If the algorithms have been filtered correctly, a breakout can be identified beforehand. However, it is still too early to make any concrete statements. It will now be crucial to identify the limit orders more precisely in order to determine the specific strength. In combination with the market orders, a future market trend can then be derived more easily.

As it looks, we will have to identify the limit orders with our own algorithms, which could result in indicators that tell us the respective strength in the limit area. This strength in the limit area must then be compared with the strength in the market area in order to project a result. This would enable us to specifically determine the result of supply and demand. However, it will take some time until then and we may have to settle for alternative forms of representation for the time being.


I wish you a successful trading week

Lovely wishes
Michael

Good morning Michael.

-- Excellent explanation, and excellent settings.

Shows clearly how to fish the market.


Nice one.

Optimal settings

Hello Guido,

First of all, thank you for your great compliment, I am particularly pleased, because you work with the same prop software and future data as I do. Since some members on this blog already work with these modules, this facilitates a mutual exchange and creative ideas can be realized even faster. I was able to successfully program the first experimental indicators with C # and have also got them working in the software, but the C # language is still somewhat new and somewhat unfamiliar as a Java programmer. If you progress a little bit every day, it is also a small success. The more you deal with the stock market data, the more you realize how wrong you have been in the past. When I consider the foundations on which I built my past trades in Forex years ago, I can only be glad that I only traded in equilibrium. But since the big players have been carrying out experiments, making themselves available liquidity, commercial success in equilibrium should no longer bring any advantages in the future. In addition, I feel very dizzy when I consider that I have viewed the market as very simple in the past. I believe that most traders make this mistake, which is why so much money is lost. A good approach is to say goodbye to the candles and the volume and to focus solely on liquidity. I will post an interesting article on this today. I am glad to have found the jump early because what is happening in the market will revolutionize the way big players work. You no longer have to laboriously collect equilibrium, but can move the market immediately with your own liquidity. And the interesting thing is that supply and demand are neutral. Also with the open interest, you will no longer be able to make any concrete statements in the future. This will further increase the losses of retail traders and institutional traders, and Goldman Sachs will again achieve its successful daily profits of 10 years ago. Well for those, who start to rethink and stop believing in the fairy tale of the indicators or in a simple market. We are on the right track, but it is new and has yet to be built. It takes time, is tiring and uncomfortable. But in the end it will pay off for those who are ready to rethink now.

I wish you a nice weekend

best regards
Michael

Why volume trading doesn't work



Hello dear subscribers,


In my last post I tried to identify volume and liquidity. We have found that liquidity determines the market.

Volume versus liquidity


An idea first emerged from this:

As it looks, we will have to identify the limit orders with our own algorithms, which could result in indicators that tell us the respective strength in the limit area. This strength in the limit area must then be compared with the strength in the market area in order to project a result. This would enable us to specifically determine the result of supply and demand. I would like to take a closer look at this today and formulate my idea a little more precisely.



As we know, the Sell Market Order (Point A) is an active order that moves the market and meets the passive Buy Limit Order (Point B). The limit order is only able to stop the market. For this reason, this area is referred to as the offer market. The buy market order (point C) is an active order that moves the market and meets the passive sell limit order (point D). The sell limit order is only able to stop the market. For this reason, this area of the market is called the demand market. Since only the market orders can move the market, the description of supply and demand is initially correct, but if we note that the limit orders are able to stop the market orders, this results in another possibility of determining supply and demand.



Let us first take a closer look at the different zones of supply and demand.

Point A
In the offer area there is a 20 Lot Market Sell Order that meets the Limit buy order. For a better overview I have marked the 20 lots with a minus sign.

Point B
The 20 Lot Market Sell Order now meets a 70 Lot Limit buy order. The limit buy order is so large that it completely absorbs the market sell order and if no further market sell orders come into the market, no price change will take place downwards. That's why Limit Sell is a demand market for me.


Point C
In order for another price change to take place, another 50 Lot Market Sell Orders would have to run into the Limit buy order. Since the limit buy order has the ability to stop the market sell order, I have called the limit buy order a demand. In this case, the bearish result is rather bullish as the market sell order failed to penetrate the limit buy order.

Point D
A market buy orders of 60 lots runs into a sell limit orders of 50 lots.

Point E
First, the market buy orders eats 50 lots in the limit sell orders and after it is used up, the price changes by a tick upwards. If the limit sell orders above this is greater than ten lots and no further market buy orders enter the market, the market buy order is also initially held there. That's why Limit Sell is an offer market for me.

Point F
The bullish result would initially be 10 lots bigger, since the market buy order has completely eaten up the limit sell order and has slid into the next price level.

Point G
We initially have two offer markets, one that is the market sell order, which is able to eat up the limit buy order and at the same time the limit sell order, which is able to hold up the market buy order. Together, these two types of orders would have a strength of 70 lots. If we add the two demand markets together, we come to a strength in the demand area of 130 lots.

Point H
The result of supply and demand would be 60 lots and therefore bullish overall. The demand market is therefore stronger overall.

My idea is based on the fact that although a market orders can move the market, it is not able to stop it. A limit orders cannot move the market, but it can stop it. Each different Market- or Limit orders has a strength and a weakness. For this reason, the idea arose to give each different order the name supply or demand. A total strength of supply and demand can be determined from the offsetting.

This approach is actually quite logical, because if strong market buy orders come in to push the market up, the limit buy orders would also have to form more strongly to hedge the price down. Because if there was a breakout upwards and the limit buy side would not slide up with a stronger liquidity, some lots in the market sell area would ensure that the price would go completely down again. The limit buy area is therefore a clear indicator of a demand market. That would mean that supply and demand cannot be determined solely with market orders. Given that the big players work almost exclusively with limit orders, this conclusion is clearly logical.



Point A
As I have already written, the information passed on in the area of active market orders is absolutely precise and sufficient to precisely calculate strength, volatility and many other factors.

Point B
In the area of market orders, it is very easy to identify cumulative orders from the big players. This is done with algorithms that are able to summarize orders that were placed within 1/1000 second and display them as a large order. The big players like to use these cumulative market orders to push the market upwards and not to be recognized at the same time. These cumulative orders are not easy to identify, but with the right tools it is possible.

Point C
Orders that are not accumulated are often used by big players to mislead the market, or at the same time, provide yourself with liquidity. When a large market order comes in that is not absorbed at the same time, it is often a market deception. Many market participants see this large order and at the same time invest in the same market direction. This enables the big player to sell his large order to retail traders in small quantities and then push the market down.

Point D
There are sufficient tools and algorithms to identify cumulative and non-cumulative market orders and to assign them to individual market participants.

Point E
In the area of passive orders (limit sell or limit buy orders), identification is significantly more difficult. Of course, we know that a buy market order automatically activates a sell limit order, but at first it is not clear who accepted the sell limit order.

Point F
Cumulative ticks in the area of passive limit orders are also called iceberg orders. Big players often rightly fear that simply displaying their limit orders could move the price and that other market participants could use the large order volume to their advantage. This is why big players are able to bring a large order to the limit page, although only a small part of this order is always shown in the order book. The total volume remains invisible. If a peak is executed, the next peak appears in the system and so on. The algorithms are responsible for the fact that new peaks are constantly being added and that the apparently small limit order is able to strongly absorb market oders.

Point G
As soon as there is more liquidity in the DOM on the limit side, this should be viewed with great caution. The big player knows that this large limit order can be seen by every market participant. If a large limit sell order suddenly appears in the market, many assume that the market cannot continue to move upwards because the market cannot break through this strong order. Shortly before execution, the big order is deleted by the big players and the price continues to rise sharply. This is also a way to eliminate long traders.

Point H
Iceberg orders are generally not identifiable, but the big players reveal themselves as soon as they activate the algorithms that prepare an iceberg order. These algorithms can be identified in the headmap and indicate a possible iceberg order. With my spoofing tool I am able to recognize added or subtracted limit orders within the DOM. However, most market participants will not be able to see the limit orders. And that is exactly why the big players work almost exclusively with these limit orders.



In order to determine whether the big player is making its own liquidity available, you have to work with a headmap. The strong green bars at Point A are large buy limit orders that simultaneously absorb strong market sell orders (red circles and triangles). To work with this view, you need special algorithms that show you cumulative and non-cumulative market orders. With this view you already have clear advantages over most market participants



Point A and B
Here we see the possibility to identify spoofing within the DOM. It is possible to keep an eye on the current spoofing and at the same time the accumulated spoofing. Point A shows spoofing in the buy limit area and Point B shows spoofing in the sell limit area.

Point C
Another interesting possibility is to show the current liquidity on the sell limit orders and buy limit orders page with a special time and sales list. This enables you to determine whether liquidity is increasing or decreasing on a certain side.

Point D
Another good option is to look at the cumulative volume with the associated delta. Since every market order runs into a limit order, you are able to enter the delta in the limit area relatively quickly.

Point E
Another very helpful point is to look at the market orders as soon as a big player pushes the price in a certain direction. To do this, you have to commission algorithms to filter out certain cumulative order groups, which can also be made audible with tones. This can also be used to identify stops by retail traders.



Here we see the last 3 hours in Euro FX, from Friday in the limit delta area. The green lines show the delta in the buy limit area, while the red lines show the delta in the sell limit area. The blue background shows the total volume. At this point the following recommendation can be made: If you are working with a volume profile, leave it in the future. The volume is an interesting piece of information to see in which area there have been strong price wars, but the volume is only the total result of bid and ask. Many now think that if the volume on the ask side has gained, the price will continue to go up. However, this is a big mistake, because the limit orders are decisive, because the big players use them to collect bid or ask and exit the market with limit orders. At point A and B we see a strong sell limit delta that was formed. As of 9:15 p.m. CET, the price dropped 40 pip.



The same currency pair, in the same time unit, with a slightly more precise representation. The green bars show the buy limit orders, the red bars the sell limit orders in the delta. The numbers on the left show the number in seconds how long the price stayed within the respective price level. The total volume can also be easily derived from this.

Volume trading has grown significantly in importance in recent years and there are many statements on how to trade volume. But in my opinion, this path is completely wrong. The big players collect and sell only in the limit area, they only use the volume to push the price in a certain direction. Retail traders primarily work with volume and less with liquidity. Therefore, only liquidity decides on the medium-term and long-term course. Of course, short-term price movements can also be derived from the volume, but if you want to make profits in the long term, you should therefore be guided by liquidity. And that is exactly why I am a liquidity trader and not a volume trader.

If you want to follow the big players, you should therefore concentrate more on liquidity than volume. However, since we receive very little information in the liquidity area, we can determine the liquidity by volume. But you should never act according to volume, because then you are on the wrong side.

This automatically leads to a truth that should make retail traders think. The retail traders primarily deal with the volume that can be identified by everyone in the market. The big players primarily deal with liquidity that no one in the market can identify. So the big players see what we do, but we don't see how the big players act. I leave it to your imagination whether this is just a coincidence.


I hope that I was able to clarify a few things, wish you a great weekend and a great trading success in the next week.

Lovely wishes
Michael

The Truth of successful Liquidity Traders



Hello dear subscribers,


In my post yesterday I showed why a volume trader is in most cases wrong and volume trading cannot work in the long run.

Why volume trading doesn't work

Of course, it is generally better to get a volume from the exchange market than a tick volume from the forex market. I have specifically described the differences here.

Volume in forex

First of all, the volume from the stock market is nothing more, as the total of Bid and Ask. With the volume, we can see how many market buy orders and market sell orders came into the market at one price level, but only total. Even if we differentiate the volume by color, it only tells us which market orders were outnumbered. The only important information from a high volume is the fact that a price war has taken place there. No more and no less. Deriving a possible winner from this is pure speculation and does not help us. As we already know, the market orders move the price in the short term, but the limit orders actually determine the long-term price trend. I have created two examples for you.



Here we see a price trend in the Euro FX M15 with a delta liquidity. The green bars show the buy limit orders, the red bars the sell limit orders. First the course ran from top to bottom and an equilibrium formed. Within this equilibrium there were two zones in which strong buy limit orders were activated. Prize question: What do you think, where the course will go in the medium term?



You probably already guessed it, the course went up clearly. Of course, the price broke out of the zone a few times within the equilibrium, but take a look at zones A to E to see what type of limit orders were activated and how the price reacted to them. This is crucial information that will give you a significant market advantage.



We remain in the Euro FX M15 and see that the price initially rose and an equilibrium forms again. Within this equilibrium there were again two zones, in which mainly sell limit orders were activated. Question: What do you think where the course could go in the medium term?



Your answer was probably correct again, the price went down. However, there was a small breakout at point B and many would have bet that the course would rise sharply there. However, the only attempt here was to catch the short traders' stops to switch them off. Now we look at the same price trend, from the perspective of a volume trader.



First the price goes up and an equilibrium is formed as in our slide number 3. Let us now consider the delta volume, i.e. the difference between market buy orders and market sell orders. Again, two zones form at point A and B, which however predict a strong bullish trend. The representation in this volume profile is absolutely correct, because in these areas more market buy orders than market sell orders have actually entered the market. Since we know that the big players collect almost exclusively in the limit orders area, we can assume that these market buy orders were absorbed by the limit sell orders. The volume trader sees in this overview that the market buy orders were clearly outnumbered. Of course, you could now say that the market buy orders in Zone B tried to push the price up a lot, but failed. For this reason, one could assume that the market buy orders were absorbed. The decisive factor, however, is the fact that looking at market buy orders leads you in the wrong direction.

When looking at limit orders, we use a kind of mirror strategy, by looking indirectly the liquidity over the volume. Almost 1.5 years ago I also presented a mirror strategy by simply swapping the entry orders Market Buy and Market Sell. Theoretically, this could reduce loss rates. You can find the report here:

What happened if ...? The mirror strategy!

Big players primarily use market orders to push a price in a certain direction. In most cases, the aim is to catch stops in order to obtain further and decisive liquidity.
Basically, one can assume that not every situation is clearly recognizable at first glance. However, each course of the course conveys a kind of story, we have to learn to interpret this story, then in most cases we will quickly find out how this story ends. Because of the liquidity alone, I would not make any trading decisions, there is more information and tools that I have already described in my last posts. In principle, a course of the course can be compared to the search for the truth. If you want to find out the truth, you need to collect facts and evidence. The more information you get that fits, the more likely you are to find out the truth.

Therefore, as a successful trader, you should make sure that you only work with tools that provide the best facts and evidence. This makes it easier to discover the truth of a possible course in the long term.

Within this block you will find a lot of information to get a little closer to the truth. I wish you lots of fun and success.

best regards
Michael

How a big player turns his position



Hello dear subscribers,



Already in mid-February I noticed that the big players are increasingly making their own liquidity available. I was initially unable to classify this because a hedge, apart from double costs, does not offer any advantage at first. But if you are more concerned with the way big players work, you quickly understand that this approach has interesting aspects for big players.



On February 19, 2020, I reported for the first time on a situation where the big players made themselves available liquidity. A few days later, at the same price level, a few hours apart, there were two situations in which two big players each provided over 1,000 lots of their own liquidity.

On the trail of the big players

Own liquidity for the big players

In the past, the big players had to collect ask or bid within an equilibrium, very elaborately in different price levels. The big effort is to keep the course within this range. If Ask is collected in an accumulation phase and the price then rises sharply, it must be pushed down again by the big players. To do this, the dollar must first be bought. As soon as the price has reached the lower range, the dollar has to be sold. ASK is required for this. However, this ASK cannot be collected because it is needed to exit the dollar. The big player only has the chance to collect the necessary ASK within a downward movement with buy limit orders. In an upward movement it is much harder to get ASK, unless the big player manages to trigger the short trader's stops. Collecting within an equilibrium is a very time-consuming and expensive effort to get the necessary Bid or Ask. A report on Goldman Sachs, who have reduced their daily income by 30% in the past five years, shows that this approach has become increasingly difficult in recent years.

Problems for the big players?

The big players have the power to move the markets in their given direction, the only disadvantage they have had so far is the fact that they were not able to immediately buy 2000 Lot Ask or Bid and then move the price in their direction. In the following article you can read again the advantages and disadvantages of retail traders / big players.

Follow Smart Money !!!

With the experiment: own liquidity, you have tried to eliminate this disadvantage in recent weeks. The way it looks, it seems to be paying off for the big players, as their own liquidity has been provided very often in recent weeks. In terms of cost, this should not be a major disadvantage, because if you collect within an equilibrium, the course must be kept within a range over a certain period of time. On the one hand this is very time consuming and on the other hand it is very risky because e.g. 2000 Lot Ask will be invested, for several days in the market . If, due to a special market situation, a price slump occurs, it is questionable whether the big player will be able to push the price up again. This could result in significant losses.

If a big player brings a market buy order of 2000 lots into the market, which he picks up at the same time as a 2000 lot sell limit order, he initially only has twice the cost. There is no loss in a price movement because it is a hedge. First he can analyze the market and find out in which direction the dump money is heading. The big player can then take the opposite position and push the course strongly in one direction through the triggered stops. At some point he has to make a decision and get out of a position. At this moment, the big player still has no profit since the second position is now in the minus. Now the course has to be pushed back in the opposite direction and got out of position at the given time.

If a big player has collected for a long time, this resulted in a larger equilibrium and then there was a stronger price movement up or down. If he provides himself with liquidity, e.g. this resulted in a strong upward trend and after in a strong downward trend. This creates a significantly higher volatility than in the first case. Of course, once a big player has provided himself with liquidity, he can get out of a position as quickly as possible and then push the price in the opposite direction. In my opinion, these different experiments are currently running in EURUSD. The big players are trying to find out which strategy is cheaper and more efficient. If this strategy were to succeed, the equilibrium in the EURUSD would be drastically reduced. The big players would be able to buy a large number of ask or bid more quickly and could push the price up or down faster.



I analyzed the range of the last 28 trading days in EURUSD. Point A shows the time when I noticed that the big players started their experiment. For this reason, I have examined the 14 trading days before and the 14 trading days after.



The red fields show the range of 14 trading days before the start of the experiment and the green fields show the range of 14 trading days after the start of the experiment. It is striking that the range has more than doubled. It can also be seen that less equilibrium developed in the second period.

Now you have to consider fairly, of course, that we have had a special market situation in the past 14 days, not least because of the scaremongering of the corona virus. Due to the resulting economic restrictions in many areas, the markets are currently very volatile and unpredictable. Therefore, the price of the course in EURUSD cannot be assigned exclusively to this experiment.


First of all, it remains to be seen whether this approach will be confirmed by the big players in the future, and then we will do another calculation. However, the fact is that an equilibrium significantly reduces volatility. If the number of equilibrium in EURUSD is reduced, this could result in significantly higher volatility. But it is too early for this speculation, we should wait and see how the market develops in the future. So far, the EURUSD was one of the safest currency pairs, the volatility was in the middle and had very little drawdowns. Should the number of equilibrium decrease significantly, future drawdowns could increase significantly.

There is another point that has been a major disadvantage for big players in the past. When the big player had collected a certain number of bids within the equilibrium, there was initially a small breakout to eliminate possible short traders. Then the course was pushed down. The long trader's stops were triggered and used to accelerate the price down faster. You also have to pay attention if a price movement has gone down sharply in a downward trend. Then the big player pushes the price up sharply to trigger the stops of the short traders. He also intercepts these with his sell limit orders in order to obtain further liquidity. As soon as he pushes the price down again, the stops of the long traders are triggered, which push the price further down. This is how the big player manages to push the course down over a long distance.

The problem with the big players in the past was that they had to step out of their 2,000 lot position at some point to realize their winnings. To sell the dollar they need Ask. They can only get ASK, if other market participants are willing to buy BID, because they believe that the market will continue to slide. In the past, this means that the big players usually had to exit their positions well before the low. If they go out of their position on the low, they might not found any market participants to buy the dollar from them.

This is actually very ineffective when a price goes down 100 pip, but a big player has to get out at 65 pip. The big players have come up with another experiment for this. I would like to describe this procedure as: turn position. This situation arose yesterday and I would like to briefly describe it.



First of all, we see the course of yesterday's price. From the daily open it went down to -105 pip, then 70 pip up, 70 pip down, 60 pip up, and then 100 pip down. This time, a big player tried to took this 100 pip completely.



Around 5:45 p.m., there were already massive exits by some big players out of the dollar. We can see that large limit buy orders have already entered the market, that have absorbed the sell market orders. This initially ensured that the market went up again. The big player that was still in the market with its big Lot position, pushed the market down again. At Point B, no participant was willing to place additional sell market orders on the market. The big player placed several cumulative buy market orders totaling 2000 lots, which he simultaneously absorbed with his own 2000 lot sell limit order. This move was absolutely smart because it sold its 2,000 lot position to itself. At that point, I was in front of a screen with a friend and told him that the price would now like to go up a lot, but it won't go up because the big player has to get out of his euro. It was the same way.


Because the big player at point B brought a total of 2000 lots of cumulative buy market orders to the market, a lot of traders with a long position jumped on this move. It looked like a lot of different traders took a long position. This created a herd instinct. Everyone wants to be there. The green circles at Point C are all market orders that have entered this equilibrium. Interestingly, they didn't move the price up much. That was also clear, because the big player with his sell limit orders ensured that he came out of his upside-down euro position. That initially held up the price.



In this situation, we took a closer look at the bid and ask. We noticed that the delta was positive in the beginning. This means that the big player initially absorbed fewer market buy orders and allowed the price to rise slightly. Had he brutally tried to get out of his position, he would have stop the market up. That would have prevented further buyers from entering the market and the price could have gone down again.

Thus, the big player managed to get out of his euro position little by little and overall he was able to realize a greater profit, than if he had exit the dollar at the range of 70%.

Of course, this situation could have happened completely differently, this representation is only my own interpretation. However, my own interpretation speaks for a significantly higher profit on the part of the big players. And since the big players are only profit-oriented in the market, there is a high probability that my interpretation could contain a great deal of truth. When this situation arose, it was clear to me that I would not be entering into a long trade at this point because I could assume that the big player wanted to get out of its euro position. Why should I use a long position to help the big player get out of his position?

If this approach accumulated in the future, an equilibrium at the end of the day could be identified as a possible exit for the big players. This strategy would accelerate the EURUSD and we would no longer have to wait for the breakout in the Equilibrium for days. That means more potential profits in less time. This will also increase the number of breakouts. But it doesn't make the market any easier, quite the opposite.

At some point, the big player will make liquidity available again. In order to find out in which direction the price will be pushed next, it is crucial to find out the direction of the retail traders. For this I have developed a Zigzag indicator that gives us very interesting information in the Forex market. We'll talk more about that in the next few days.

I wish you a successful trading day today

Lovely wishes
Michael

The truth about the volume profile



Hello dear subscribers,


As we know, there has been a huge increase in volume trading in recent years. Many trainers have specialized in this and give their students absolutely wrong information about the volume profile. In my last articles I already pointed out that the volume profile does not provide any specific information in order to obtain concrete trading advantages. Today I want to show you what information you get from a volume profile and why you should rather do without it.



Here we see a volume profile in the Euro FX H1 over a period of 20 hours. First of all, a volume profile is nothing more than the addition of ask and bid at the respective price level. There are price levels where there is an increased volume and price levels where there is only a small volume. This allows you to determine the price level at which an increased price war has taken place. It is not clear who won the price war and why. There are many different interpretations within this volume profile, which in my opinion represent pure speculation. Anyone working in this market should not rely on speculation, but rather rely solely on facts. Of course, the backward interpretation of a volume profile is simple, but the goal should be to derive a future price trend from a current volume profile. And that is only possible with interpretation. So the volume profile is no concrete help.



Here we see a colored volume profile, the red bars show that the bid and the green bars show that the ask were outnumbered. However, you can also do relatively little with this information. If 1000 Lot Ask and 1001 Lot Bid were traded at one price level, a large red bar with 2001 Lot volume is displayed. This view gives us completely wrong information at the moment, in fact the number of market buy orders and market sell orders was almost identical.

At Point A, a volume of over 3300 lots was achieved, the ask side had the upper hand. Now, of course, one could say that these ask were absorbed and the price has therefore gone down. It's always easy to explain in the past perspective, but why didn't the course at Point B go down? In addition, it is strange that such a large absorption took place at precisely one price level. The probability tends towards zero that two different big players take an opposite position at the same price level.



We now go one step further and look at the delta volume. This delta volume is calculated by the market orders by displaying ask minus bid. So it shows the result of the respective winner. At points A and B there was a surplus of 2800 and 2400 lots on the ask side. At Point C we also find a surplus on the ask page of over 2000 lots. First of all, this information does not help us, because every market order runs into a limit order.

Either the market buy order manages to eat its way through the limit sell order and further increase the price, or the brand buy order is absorbed by the limit sell order. This representation here shows only the delta of the market orders. The market orders move the market, but are unable to hold a price. As I have already written in many articles, the big players primarily work with limit orders because within one equilibrium they collect a certain number of Bid or Ask .



For this reason, I only show the liquidity in my delta chart. This liquidity is calculated by the limit orders, whereby ask minus bid is also calculated here. Liquidity is the optimal indicator of a long-term price movement. In my view, the yellow arrow absorbed 2800 lots in the sell limit area. It is crucial to find out first of all how this absorption could take place at all.



It is necessary to work with the DOM and the time and sales list. There I get all the information about the different market orders received. A distinction can be made between cumulative market orders (point A) and non-cumulative market orders (point B). It is crucial to identify a possible algorithm.



In the footprint chart we see that in the buy market area 2681 lots were absorbed at one price level. In contrast, the number of market sell orders was very small in the same period. The number of market sell orders at this moment indicates the more realistic market. This means that something special must have happened at this price level.



For this we first need an individually configured heat map that shows us the limit orders and the market orders at the same time. I already reported in mid-February that the big players, in a kind of experiment, are providing themselves with liquidity in order to eliminate the disadvantage of tedious collecting in the equilibrium. If 2000 lot market buy orders are simultaneously absorbed by 2000 lot limit sell orders at a the same price level, it cannot be a coincidence. No big player can know that another big player brings a certain number of market orders into the market at precisely one price level. Even if he could guess that, this absorption would take place over several price levels. In this way, the specific coincidence can be excluded and it is quite obvious that this is a matter of obtaining liquidity in-house.



Let's first look at what exactly happened. At Point A, the big player made himself available volume in the form of 2000 lot market buy orders, which he also absorbed with 2000 lot limit sell orders. Many participants saw that strong buy market orders entered the market and entered into a long trade. When the price was pushed down, the stops of these long traders helped accelerate the price down. Then the price was pushed to point B. There the big player got out of his 2000 lot dollar position. At Point C he bought another 500 Lot Limit buy orders and pushed the price to Point D. The same game was played there again. The traders now believed that the price could go up and were stopped because the price was running back. The course ran to Point E and there the big player sold his 4500 Lot Euro position. Now there was only a 2000 lot dollar position open, which was in the red. The price was pushed down to point F where the big player closed his dollar position. Since this strategy took place in the Forex market, the profit was approximately $ 200 million, which probably shared two big players.



I believe that it becomes clear relatively quickly that a volume chart cannot convey this information. Therefore I recommend not using a pure volume chart. The limit orders determine the medium and long-term market development, so the concentration should be limited to it. In the next few weeks, we will deal more with limit orders and in particular with the Big Players own liquidity. In the past few days we have seen that Asians are strong invest in the euro, this situation is being exploited by the big players, who are making themselves available liquidity in order, to fish the asians profits. The increased volatility that we currently see in EURUSD is therefore based on two factors. On the one hand the fear of the Corona Virus and on the other hand the self-provided liquidity. Only when the panic about the Corona Virus has reduced significantly will we be able to record the specifically increased volatility through the liquidity they have made available. In the future this means less equilibrium and significantly more movements within an increased volatility. Many traders have noticed in the past few days that the markets have changed significantly. It will be a while before the markets normalize again, but if the experiment "own liquidity" go on, it will be much more difficult for most Forex traders to make constant profits. I therefore recommend that you deal with the new situation right now.

Precise information about this begins with this post:

On the trail of the big players


I wish you a successful trading week

Lovely wishes
Michael

Limit Delta gifts


Hello dear subscribers,


As I have already written, there are two ways of looking at the deltas. We can represent the volume delta and the liquidity delta. For the volume delta, ask minus bid is calculated in the area of the market orders and for the liquidity delta, ask minus bid is shown in the area of the limit orders. A volume analysis is usually carried out with market orders, whereby the ask and bid are added together. It shows us where a price war has taken place, but the consequences of this cannot be deduced.



First the price went up to point A. The volume was relatively low and suddenly I saw a sell limit delta of 279 lots forming at one price level, the price went down again and took a second attempt at point B. The total volume was again very small and increased slightly when the course came to Point B. A sell limit delta of 84 lots was now formed at the same price level. Although this was significantly lower than the previous Sell Limit Delta, it was already above average in relation to the deltas within the candle. Here a clear absorption could be identified, which then pushed the price down by 30 pip.

The price ran into Zone C, where strong buy limit orders entered the market two hours earlier. For this reason, I have drawn this zone as a possible purchase zone. What was decisive for me, however, was how the buy limit delta would behave within this zone. At first an equilibrium was formed and it was found that further buy limits were collected within this zone. Then the course from point D to point E was pushed up. Interestingly, there was a stronger absorption at point E, which pushed the price down another 20 pip. But the stronger buy limit orders from zone C had to be brought into profit, so the price was pushed further up.

Then the course ran to Point F and we see that at Point F & G there was again a stronger absorption which pushed the course down another 25 pip. I marked zones A, B and E as the exit. The price actually went up again afterwards.



A special variant is the consideration of the limit delta within a certain zone. When the price went up to point A, a strong sell limit delta zone was formed at point B and a strong buy limit delta zone at point C. We can then determine that the subsequent equilibrium moved exactly within this zone. Only with a strong penetration at Point D did the course accelerate downwards.

Looking at the delta in the sell limit and buy limit area is very interesting information that helps us traders in many areas. However, we have to be careful with this information, as the limit area is always long-term. This means that the price does not react immediately to the sell limit orders, but often with a slight delay. It can also happen that a stop running takes place in order to eliminate possible short or long traders. This presentation is a very good overview to understand what is currently happening in the market.



The medium-term consideration can be optimally recorded with a limit delta chart in M5 (point A) and a heat map (point B). This allows you to identify the stophunting as well as exceptional situations when a big player makes his own liquidity available. Point C shows the exact situation again, how the market orders run into the limit order.

I make my actual trading decisions based on short-term information. With point D and E I find the individual algorithms of the market orders on the buy and sell side. I have these algorithms displayed by two different tones that come in in milliseconds. The data is also shown to me, but since I concentrate on limit orders, the tones help me as a third dimension. So I can very quickly determine whether a buy algorithm is absorbed by the sell limit or eats up the sell limit orders.

As additional information, a footprint in the range chart (point F) helps me, where I have hidden the imbalance in the market orders area. This enables me to quickly identify the relevant market orders. Point G shows me the cumulative delta of the day in connection with the open interest, i.e. all open long positions.



In parallel, I keep an eye on the currency strength from the Forex market, the ATR, the Stophunting in the H4 and all relevant meetings of the day that can lead to increased volatility. However, the information from the forex market is significantly slower than the identified algorithms in the future market.

At first glance, my 8 trading screens seem very confusing for a beginner. My big advantage is that I only represent one currency pair there and save a lot of time because I don't have to constantly switch to other time units. 67% of the screen area gives me information from the future market, while the remaining 33% are reserved for the forex market. However, it also took me many years to find the optimal display and changes take place every day because the market is constantly changing. I can always use two screens for these experiments and still do my trading. Our fiber optic cable is already in the house, I hope that the connection will be made soon in order to achieve a significantly better ping time. Another advantage will be the download / upload of 1000/500 Mbit, since the amount of data can be better distributed to my different workstations via a LAN cable. A professional workplace costs some money, but saves a lot of time in the long term. Because time is money. With a Porsche, you can also achieve better lap times at the Nürburgring than with a conventional vehicle. But you have to be ready to invest.

From this long-term and medium-term information, I first have to present a story that I compare with the Stophunting from the Forex market. From this, I first identify buy and sell zones, which I draw on the chart. Once the course comes into my created zones, the response of the algorithms is the deciding factor. After that, I decide relatively quickly whether I want to enter the market or not. My exit is also shaped by the short-term information, whereby I also consider the medium-term information to let profits run. I work with very small stops of 2.5 pip, which requires a 100% entry shortly before a small breakout up or down. In extremely volatile phases, I let the price come back again because this is to stop the traders who are right. As soon as this area has been cleaned up by the big players, you can easily be dragged up or down. Therefore, it is rarely advisable to get in after a strong movement. Of course, I am also stopped if I have worked too imprecisely. But thanks to my future data, this rate has halved. While I used to trade in equilibrium, today I tend to take the more volatile side. This generates more pip per minute and drastically reduces the time spent in the market. However, due to my financial situation, I am not forced to make daily profits. This takes a lot of pressure out and promotes the fun of trading. I prefer a loss that I can understand than a gain that is inexplicable to me. In any case, you should only trade with money that you could easily do without.

Trading successfully in Forex is one of the biggest challenges. The opponents that stand in our way are the best traders in the world. It is perfectly clear that you will pay your tuition fees in the first few years with losts. If you keep your losses small, are willing to learn, question your setup every day and stick it out, you have the best chance of living on it in the long term. In this blog you will find many ideas that can save you a lot of time so as not to repeat the mistakes we long-time traders have all made.

I sincerely wish you to achieve your goals

best regards
Michael

With speed of sound, fly into the fog



Hello dear subscribers,




Yesterday evening, the FED carried out massive interventions in various markets, including the EURUSD. Interestingly, this intervention could not be identified in the Forex EURUSD. Today I would like to show you the concrete differences and the resulting consequences.

In one of my last posts, two days ago, I already pointed out that the daily range in EURUSD has more than doubled.

You can find the article here:

How a big player turns his position

Asian markets have had significantly higher volatility in recent days and many Asians have switched to the euro. Among other things, this ensured that the courses went up sharply. That was, of course, a feast for the big big players, some of whom gave themselves massive liquidity to push the price down sharply.



The last similarly large movement in EURUSD was on June 14, 2018. The course ran from 1,255 (point A) to point B 10,000 pip down. There was a massive upward movement again. Point C had a lot of long traders in the market, which was a clear invitation for the big players to push the price down sharply.



The daily range that was created on June 14, 2018 was a total of 290 pip. There were some major movements before and after, but the market quickly calmed down afterwards. 16 days ago, many traders were still convinced that the price would continue to go down to close the open gap. The big players started pushing the price up to take the short traders out of the market. As of point D, Asians started to invest more in the euro and there were further stronger moves upwards. Due to the current overall situation of all markets, there was no reassurance in the EURUSD. We can clearly see from the range that the situation has become more dramatic. Yesterday the range first peaked, when the price went down almost 280 pip.



Around 5:55 p.m. the FED also intervened in the EURUSD. A total of 6000 lots were traded at Point A, the candles before and after were around 1000 lots. Within the 6000 lots there was roughly an even distribution of bid and ask. It is particularly interesting to see that the price remained within this range 15 hours after the intervention of the FED (Point B).



Let's first look at what the situation in the Forex market looked like. With the blue arrow, a total of 600,000 lots entered the market in 5 minutes (100 times more than in the Future Market), with the volume previously being around 100,000 lots in every 5 minutes of candle. Of course, the market orders that came into the market were balanced, but we can see that this has not even been noticed in the Forex market. Even with the volume display in the Forex market, one could not recognize this high volume.



Here we see a representation in the Euro FX in the 1 tick chart. We recognize that massive market orders have entered both on the bid and on the ask side. These market orders were cumulative market orders, which means that these orders were placed in small quantities, which however were combined in a thousandth of a second to identify them as a cumulative market order. When I saw this presentation, it was clear to me that there was a major intervention to regulate the markets. The large and small market participants in the future market also saw these different market orders and gradually shut down their trading activities.



At Point A we can still see that in addition to high volatility and volume, the market fluctuated widely. At Point B came the massive intervention of the FED and we see that the market calmed down somewhat in the area of volume (Point C) and later in the area of volatility.



In the Forex EURUSD M1, we can again see from the blue arrow where the FED has intervened in the market. The markets were slowdown, had calmed down somewhat and an equilibrium was initially created. We will find out in the next few days and weeks whether the markets have actually calmed down. Of course, the EURUSD depends on many different factors that cannot be predicted in detail.

After working very intensively with the stock market data, I am happy today to be able to look a little deeper into the market in order to gain trading advantages. When I received my information exclusively from the Forex market, I was unable to identify crucial information.

I wrote an article about volume a few months ago. The ask can be compared to a right-handed propeller that moves the ship forward, the bid can be compared to a left-handed propeller that moves the ship backward. The limit orders in the market represent the current in the sea. When I pull the throttle forward, the ship begins to accelerate. Even if I pull the throttle back now, the ship will continue to move forward. But due to the current, it will stop at some point and be pushed back by the current.

In the Forex market I see green candles that are going up. But at some point there are only a few participants willing to push the course upwards. Nevertheless, the course continues to go up. Then suddenly there is a turnaround and the price goes down sharply.

In the Forex market I can not see when a big player pulls his throttle back and gets out of the market. But this information is crucial to identify a possible turnaround. For this reason, I can only recommend each participant to take a closer look at the stock exchange data.

You can find the article about the volume here.

How important is the volume?

If a candle is going up, I would like to know how much ask was responsible to justify another move up. And I want to know how strong the counterflow of limit sell orders is at the same time. With this information, I am able to realize a market advantage. We can't move the markets, but we can find out where the market is going. This is our only chance. But for that we need the right tools and information. Unfortunately, this information is not available to us in Forex. Nevertheless, with a small willingness to invest, we are able to get this important information. For this I need a data feed from the exchange and good prop software that optimally translates this data feed. If you act strategically, this creates an additional effort of up to $ 50 a month. I am convinced that this additional information can easily justify the additional effort.

I wish you a successful Friday.

best regards
Michael

You have done quite a laborious study of volume and liquidity.

1. You are not only a scholar but also an action person. I salute you.

2. My focus since 2008 has been on using knowledge of Speed and shifting of price levels to trade. I only use study tools or quantitative studies to study patterns.
I just trade based on High Low of the day and percentage from Open Price of the day.

3. Actually I lost and regained in a day 100% in a roller coaster kind of ride during 2008. Luckily, I did not lose substantial equity. Because when I made 100% I put breakeven stop loss at a wider stop. I did not resort to trailing profit because of the wild fluctuations. Wider stop losses did not save me. I totally lost my faith in Stop Loss and since 2008 I have never used stop loss.

4. The disaster of 2008 did hit me not so much financially that I can't trade again. I was not in stocks but it left a lot of lessons for me and affected my pschology in a big way. Disasters have a way of leaving debris and when you dig those you find gold. I found mine share of lessons on what not to do and what to do.

5. The kind of psychological pain I went though losing 3 times 100% and giving back all of it in spite of me taking precautions like using Stop Loss did shake me up but at the same time forced me to take the bulls by the horn. I was determined never ever to go through this pain. The result was I started trading for Outliers and chose pending orders to mark the probable Outlier entry. In each year after that I have been able to hit Outliers giving me 500 pips each time (maximum 3 chances in one year).I did trade but only during high momentum times only.

6. Measuring speed of the price level movements (by intuition not by using any indicator) and finding alternatives to stop loss has worked for me well. I use Bought Options as stop loss. Buy Put options when I expect prices to fall. Buy Call options when I expect Prices to increase. Options repaired my psychological scars.

For measurement of speed Ticks is my choice. A friendly generously coden an EA for me but now he has no spare time now. I have used that EA to study how effectively I can trade with a single entry criteria. Ticks used through an EA for wild random trading with currency strength as an entry filter has generated up to 70% return on GBPJPY in less than 4 months And an equal amount of Drawdown in subsequent 4 months. Which means either I live with the drawdown for next 4 months or take an exit and stop trading or look for an alternative symbol which can alternatively generate similar kind of returns during the paused period of first symbol to ensure yearly consistent rate of return to at least 100%. I failed to find such a symbol and now I have moved away from Forex to Stock Indexes. Forex has lost volatility.

The experience is captured here: https://www.forexfactory.com/simnz#acct.09-tab.report

GBPJPY had an ADR of 250 pips trading 24 hours. (active trading based on 2-hour active session - 6 hours a day)
German Index CFD has 350 pips trading less than 24 hours (active trading time 2-3 hours). So I have moved closer to this symbol.

I will soon set up an TE with DAX trading once market settles down.

7. You are the only person who talks about ticks and I will appreciate if you can share your links specifically relating to Ticks based indicators and Expert Advisors.

I am 71 and have no particular skills of Excel or coding. If you have time to code a simple EA that shoots entries purely based on distance of Pips touching previous high lows .

Inputs:

1. Time for lookback :From: Start Time (Date: HH: MM: SS, Day) to End Time (Date: HH: MM: SS, Day). Day is automatically generated in output. No need for inputting this field. Knowing Days is important to know which DAY is very volatile.

2. Direction: Up or Down or Both. Random Trading will generate both buy and sells. I will mostly be using this.
Only when incidents like Brexit and Corona virus crisis happen you are quite clear about the direction, then I will select Direction of Up or Down based on my discretionary thinking.

3. Start entry when Pips Distance of XXXXXXXXXXXX ( number of pips) touches any of following levels

(a) Yesterday's high : Yes or No
(b) Yesterday's Low: Yes or No
(c) Today's defined Price level (any or current) : Yes for my own price level or No For current Price level
(d) Today's Open Price: Yes or No .

4. Maximum no of trades: xxxxxxxxxxx lots

5. Use blocks of ticks to print bars histogram on chart ...........(no of ticks)

6. Magic No:

Output:
1. Enter Trades
2. Print histogram of ticks in sub-window in Bars (mini candles)

I will use mainly as a reasearch tool and use another indicator or Trade Manager to Take Profit, Set up Trail Stop, Slippage control etc.

Thank you.

Tick charts versus volume and liquidity


[quote=simnz;12813284]You have done quite a laborious study of volume and liquidity. 1. You are not only a scholar but also an action person. I salute you.


Hello simnz,

First of all, many thanks for the honest statement, which clearly shows that the markets are constantly changing and that traders are forced to make regular adjustments. I initially acted within the equilibrium for many years, with supply and demand. Since the big players first had to collect in the equilibrium, I was able to calmly traded the sideways movements. The range was only 10-20 pip, but it was easier for me to calculate. As a result, I lost only a few thousand dollars at the beginning, after which I reached a permanent increase in profits without any significant drawdowns. It was more of a slowly rising, linear movement with no large swings up or down. After the big players have started to provide themselves with liquidity in the past few months, future trading in the Equilibrium no longer seems to be quite as interesting and secure. I was lucky enough to jump to the stock market data early on. By calculating the tick charts in Forex, I made a simple transition to the stock market data. Today I only use the tick charts to identify the key candle for the stophunting of the big players. As you wrote correctly, the speed of the courses plays a crucial role for a calculation in Forex. If a price moves down quickly, this is primarily due to a lack of liquidity in limit buy orders and at the same time to a higher volume of market sell orders. You can often identify this situation in the future market beforehand, which is a clear market advantage. Unfortunately, I am currently focusing more on my prop software, which only runs with stock market data, because it gives me a deeper insight into the market. The tick charts in the forex market run in parallel since I only use the forex for trading. An absolute professional in the field of EA and speed from tick charts is MathTrader7, with whom you should exchange ideas. He has developed great indicators and ideas that could help you.

In this blog you will also find a lot of information about the volume. Here is the description of how a tick chart is calculated in Forex and Future.

Volume in forex

Here I compared live a tickchart in Forex with a tickchart in Future.

Project 6 Forex & Future

I hope that I could help you a little and keep my fingers crossed for a successful trade.

Lovely wishes
Michael

Video: Big player algorithms



Hello dear subscribers,


For today's post, I created a video that I will first explain in detail. If you then watch this video, you have the crucial information to achieve a decisive learning effect. You could then focus on the important things to see how the big players are working.



After the Fed tried on Thursday (Point A) to slow the markets down a bit, a range of 166 pip was reached on Friday. It was still the second largest range in the past three weeks. The range could have been much larger if the Fed had not intervened. The volatility has been above average in the last few days at + 100%, which has caused some high-frequency traders to enter the future market more often. This resulted in movements that could not have been foreseen even with future data, as the relationship between supply and demand was sometimes completely turned upside down. Sometimes the spreads increased until they reached +100% and because of the volatility it often took significantly longer to entry or exit a position. This increased the risk factor enormously, because one can jump on a slow-moving train much more safely, than on a fast-moving ICE. I prefer the EURUSD with normal, average volatility, because it gives me more efficient signals that I can implement much better. But we always have to be aware that due to the currently difficult market situation, all markets are in a state of emergency. I also hope in the interest of all traders that we can return to this normal state as soon as possible. Then the high-frequency carriers will turn to the more volatile markets and relieve the EURUSD. Then the misrepresentation of supply and demand is reduced.

Nevertheless, there were some interesting situations on Friday that you as a trader could simply trade. Now we start with my recorded example.



First of all, let's take a closer look at the period in which the video was recorded. The starting time was on Friday, March 13th, 2020 from 18:34 - 18:39 CET. A total of 26 pip was reached in 5 minutes, which in this case was twice as much as the EURUSD would normally achieve in a downward movement.



For the video I have put together a hybrid screen, at Point A we see a Forex M1 chart with my developed Bionic candle. This new type of candle display is a development of its own that has never existed worldwide. This enables you to record the candle information faster and more accurately. You can find the exact explanation here:

The bionic chart

You can download the indicator here for free:

Bionic Home Screen Project 3

Point B
Here we see a representation from the future market in 1 tick chart. On the left we see the accumulated limit delta from the day. The circles are cumulative market buy orders and market sell orders. The triangles represent non-cumulative market orders that have entered the market from a size defined by me. First and foremost, it can be used to identify the stops of long and short traders. At Point B we see a big red circle, this is a larger cumulative sell market orders, that shows us that someone bought the dollar or got out of the euro. In this case the dollar was bought. The smaller green circles (at point B) are stops of the short traders. The course initially went down and there was another small pullback.

Point C
Here we see a representation of the limit orders on the buy and sell side in M5. The total volume is also displayed within the candle. At Point C we see that the Limit Sell page was used more. Here the green circles from point B (stops the schort trader) were absorbed. After that, the price initially went down.

Point D
Here is the last candle from the representation Point C, enlarged in the M5.

Point E
Here we see a bar delta representation of bid and ask. The respective green and red lines show the respective range of ask and bid. We clearly see that the bid side currently has an advantage.

Point F
The day's cumulative delta is shown in the chart. The cumulative ask and bid is settled. At 17:39 CET there was a stronger increase in the area of the cumulative delta. There is now a slight downward trend at the top, which means that more bid than ask is entering the market at this point.

Point G
This is the open interest in the EURUSD market. This shows all open long positions in the market, which is the number of trades and not the number of volumes. We can see that the number of open long positions is falling more sharply.

Point H
This is a range chart that issues different trading signals based on certain algorithms. These trading signals no longer change after being issued i.e. they are not deleted afterwards. At Point H we can see that it is currently a stronger trading signal upwards.

Point I
This involves identifying different algorithms that are calculated in the form of cumulative sell market orders. The display at Point I shows a stronger cumulative sell market orders, which we find as a red circle at Point B.

Point J
The cumulative sell market orders with a size of three or more lots are displayed here.

Point K
Only the cumulative buy market orders with a size of 3 lot or more are displayed here. In addition, I have this algorithm displayed by two different tones. Once for the area of market sell orders and once for the area of market buy orders. This allows me to focus on limit orders with my eyes, while at the same time perceiving the market orders acoustically. This algorithm can also be used to display the individual orders placed by retail traders, for example 1 and 2 lots. It can be seen that in most cases the big players take the exact opposite position.

Point L
This involves identifying different algorithms that are filtered and calculated in the form of cumulative market buy orders. As soon as lighter colors appear in this algorithm, they are usually larger stops that have been caught. In combination with the limit orders, this is a very interesting representation to identify absorption.

This representation shows us the beginning of our video sequence, let us now consider what exactly happened in the course of the next 5 minutes.



The price initially went up again in a small pullback and we see at point A that the sell limit orders in the DOM are coming into the market more strongly on several levels. Of course you can often see so-called fake limit zones in the DOM, which you can identify relatively quickly with experience .

Point B
We see that the big players in this area are beginning to absorb the market buy orders. In addition, they have put their sell limit orders above them more strongly in order to intercept a possible breakout. Because if short trader stops are triggered now, the price could jump up briefly and would then be absorbed by the waiting sell limit orders of the big players. So you can clearly see that the big players were still expecting further stops at this time.

Point C
We see that some market buy orders still came into the market, but these were absorbed by the limit sell orders of the big players.

Point D
We are already getting a sell signal in the range chart. Based on these signals, I would never trade, but it is an additional interesting help for orientation.



Point A
In the Forex Chart we see that the price has now gone down a little more.

Point B
Here we see a typical fake limit buy order in the DOM, which should signal to the market that the price are going up again at this point. For me, the price was still bearish at this point, but one should expect a short upward movement here so that the short traders fly out of the market.

Point C
First of all, at point C we see that the sell signals have strengthened and the price then went down. At Point D there are initially some buy signals, which should be viewed critically due to the fake limit zone. First of all, the price in this area must first be stopped in order to bring long traders into the market. Another point is the fact that there were many short traders in the market at the time. These short traders must first be stopped to push the price further down.



With a short move up, the short traders are kicked out of the market.

Point A
We see in the Forex Chart that the price was pushed up again over 10 pip.

Point B
A green circle is created that shows accumulated market buy orders. These market buy orders are the stops of the short traders that have been removed from the market. The big player was able to receive further sell limit orders and is now pushing the price further down.

Point C
Here we see these stops simultaneously in our filtered time and sales list. The light color shows us that these are larger cumulative market buy orders.

Point D
We know on the Sell Limit page in the DOM that the big players are doing everything possible to intercept further possible stops. These are not fake limit orders. This situation shows us that the market will now continue to decline.

Point E
Here we see that stronger orders have come in on the ask side, which are, however, only the stops of the short traders. Many traders at this point believe that this stronger ask is buying the euro, but in fact the dollar was sold because stops were triggered.

Point F
We can see that some buy signals entered the market, but the sell signals at Point G are much stronger.



Point A
Now the price has gone down more, to the blue arrow my key zone, since the candle to the left was a key candle. This is an optimal exit point for the scalpers, the day traders must now expect a possible price increase or an equilibrium.

Point B
We see that the big players are already making every effort to absorb future market sell orders. This is an indication that the price could not go down that far anymore.

Point C
Here we already see some efforts to push the course up again.

A small equilibrium actually emerged after that, the price went down another 14 pip. In this downward run, the big players absorbed the market sell orders with limit buy orders and pushed the price up again by 45 pip at 18:53 CET.

This was roughly the sequence of my 5 minute video. A better representation could be achieved in the 1- Tick chart or 1 -seconds chart, but this should be enough for a first overview. First, watch the video and pay attention to the different representations. You can pause or rewind the video at any time to better recognize individual sequences.



Using this example, the procedure of the big players is relatively easy to understand. As I wrote in my last posts, limit orders are a very important factor. The art is to create an overall story from the different information. From this you can quickly guess what the big players are planning in detail. In combination with the key candles from the Forex market, it is very easily able to fully trade the individual movements. Of course, you will be stopped with this procedure from time to time if the big players suddenly perform a strong Stophunt. No trader is prepared for this. I have been stopped a few times in such situations, but then I acted in the same direction a second time and was correct in most cases.

Only with the information and data from the Forex market, you are unable to see what the big players are up to. As a rule, they are always on the hunt for market orders that they absorb with their limit orders. And the most volume in a small space is always released with the stops. Anyone who deals with precisely these factors in the future market will significantly increase their probability of winning. The first time you work with such a view, as in my example, it looks very complicated at first glance. But after a while it is anything but complicated, it is even a lot of fun to act with the individual movements, almost exactly. You can see exactly when you have to get in and see when the big players get out of the market. As a retail trader, we have the advantage that we can let ourselves be pulled a little further up or down after the big players exit before the market direction changes. With the right tools, we are able to grasp the truth of the market. And only those who know what's going on are able to act accordingly.

I wish you a nice weekend and a successful trading week

best regards
Michael

Extreme market situation in EURUSD = positive or negative?


Hello dear subscribers,


In the last 3 weeks the markets have changed a lot and in many areas there is a state of emergency. In the area of ATR and volatility, there have been significant increases in EURUSD in recent weeks. In this article, we want to investigate whether these increases have a positive effect on our probability of winning or not.



The average daily ATR has quintupled in the past 3 weeks.



At the same time, the daily range peaked to five times. The bars show the following daily range: Blue = Europe, Red = USA and Green = Asia.



If we determine the hourly ATR, we see that the extreme peaks are still very strong even with the intervention of the FED on Friday. Now we want to find out whether this changed market situation is more likely to bring opportunities or risks.



Point A
The average ATR in the M1 within the last 100,000 candles was just 1.35 pip / 1 min, today around 10:00 CET the ATR was 7.3 pip / 1 min.

Point B
The average ATR in the M5 within the last 100,000 candles was just 3.01 pip / 5 min, today around 10:00 CET the ATR was 15.1 pip / 5 min.

Point C
The average ATR in the M15 within the last 100,000 candles was just 6.75 pip / 15 min, today around 10:00 CET the ATR was 28.0 pip / 15 min.

So that you have the ATR in view, I post this very interesting indicator from cja, a very creative and professional programmer who developed this indicator. The indicator is very flexible and can be customized.



You should only make sure that your historical candle data is also available to calculate the required number of candles. If there are only 50,000 candles in your history database and you use the indicator to calculate 100,000 candles, the result is of course not correct. You can see the number of candles in your history database. To expand your candle history, watch this video.



If you have downloaded the additional data, you have to perform a refresh in each time unit so that the data can be taken over by your broker. Try it first with a completely new MT4, then nothing can go wrong.

The average ATR is currently 5 times higher than under normal conditions. On the one hand, however, this also brings opportunities. If we compare the opportunities with the risks, we will find out whether the current situation is an advantage for us.

On February 18th I published a currency calculator, with which everyone is able to calculate their optimal currency pair.

Bionic currency calculator

There I have already calculated the EURUSD, with a spread of 0.5 and an ATR of 1.2. Spreads have increased significantly in recent days and at the same time the ATR has increased to 7.3. This results in a new calculation for the EURUSD.



Point A
Here we see the changed spread from 0.5 to 0.8 to 1.0.

Point B
Here we see the changed ATR from 1.2 to the extreme value of 7.3.

Point C
This results in the time until breakeven, provided the trade develops in the profit direction. We recognize that the breakeven can be reached 3-4 times faster due to the higher ATR.

Point D
Here are the gains and losses that can be achieved in 3 minutes, depending on whether you act in the direction of profit or loss.

Point E
This gives you the probability of winning. Basically, we can see that the increased ATR has a positive effect on the probability of winning in EURUSD.

Point F
Here are the gains and losses that are achieved with 5 winning and 5 losing trades. The calculation of point D is taken into account.

Overall, we find that after 10 random trades, the loss is double that of an ATR of 1.2. There is also a crucial point: Due to the high volatility, some brokers are unable to enable retail traders to enter or exit immediately. There can be considerable delays when entering or exiting, which lead to greater losses.

Overall, a high ATR therefore has a rather negative effect on the probability of winning. This means that a possible win is left to chance. If you work with the stock market data, an increased ATR can have positive aspects, if you work with the pure Forex data, a lower ATR seems to have a clear advantage. But this approach always depends on the respective strategy of the individual traders.

In my last post, I explained exactly how you can still act profitably in these markets by identifying algorithms.

Video: Big player algorithms

I wish you every success

best regards
Michael

EURUSD gap closed


Hello dear subscribers,




At 13:13 CET the open gap in the EURUSD was closed, almost exactly to the pip.



In the futures market, 32 ticks are missing to close the gap.

After the open gap of 40 pip was half reached on February 20, 2020, the EURUSD went up 720 pip in the following 15 trading days. Within 9 trading days, the EURUSD has now dropped 770 pip again and closed the open gap. The first reaction was a strong move of 113 pip upwards. However, I am always very critical of such reactions, because this movement was more of a pullback for me and not a sustainable movement. A lot of big players have been invested short in the last 9 trading days, some of which are not out of their positions yet. That speaks for a possible equilibrium.



What is striking is the willingness to push the course higher. The circles outlined in yellow show this strong bullish readiness. However, I am not a clairvoyant and unable to predict a course. There are, of course, important zones that should be observed, but it is then important to recognize the strength of the sell limit order or buy limit order entering the market. We are currently in a state of emergency in the area of volatility and the daily range anyway. The escape of the Asian market into the euro was used by the big players to push the market down so strongly again. This open gap could now be used to get out of the short positions and possibly acquire new Ask. This could potentially result in an equilibrium initially in this zone. It is crucial to observe the limit orders and to recognize when the big players use their algorithms to order the market orders to push the price up or down.

I wish you a successful trading day

Lovely wishes
Michael

Corona virus SARS-CoV-2 / COVID 19

Hello dear traders,




it is currently a very oppressive feeling to trade, while many people die or struggle with their lives due to the coronavirus. Almost 10,000 people have already lost their lives and some 100,000 people have lost a valuable person at the same time. I am in my thoughts with these people who have lost a loved one and hope that those who are struggling with this virus will recover.


The data is from: 19.03.2020 15:00 CET

At first, this virus was downplayed, since every year over 500,000 people worldwide probably die from respiratory diseases as a result of an influenza infection. My wife is a teacher in a large heart clinic and also helps in these difficult times by supporting the doctors in the intensive care unit. Many people risk their own lives in these times by supporting other people. I don't take this for granted and would like to thank these people at this point. Even though my wife's job gives us a high chance that we will both catch the virus, we are not afraid, but we also have the necessary respect for this virus. This state of emergency limits life and freedom enormously, but I am convinced that the world will also create this challenge together. I just hope that in the end we humans will learn a lesson and change certain behaviors in the future.

Here you get current information about COVID 19

https://gisanddata.maps.arcgis.com/a...23467b48e9ecf6

I wish you all that you stay healthy and survive these difficult times without losing anyone.

I keep my fingers crossed for you

Lovely wishes
Michael

EURUSD Trader positioning in MT4



Hello dear subscribers,


After a short or long position has been opened, every trader keeps asking himself why the price is going in exactly the opposite direction. As soon as you were stopped, the course runs strongly in the direction in which you opened your position. Every trader knows this phenomenon and is part of the basic principle of big players.

If someone loses $ 1 in the Forex market, there is someone who wins that $ 1 at the same time. The market is always balanced, like a balance sheet. If a big player drives the price up and a retail trader gets out of his long position to realize his profits, it costs the big player return. That's why a big player is interested in taking as few traders as possible on their way up or down. In addition, a big player regularly needs volume to fill his limit orders. He finds this volume in large quantities at narrow price levels in the form of stops. The retail traders work in the herd instinct due to incorrect information about HH, HL, LH, LL, stop setting and indicators. This makes it easy for the big players to see how most traders are positioned. In order to trade successfully, the big player must always take the opposite position of the retail trader.



There is a lot of information on the Internet about how the majority of retail traders are positioned. Actually, it is not wise to reveal how you are positioned, because this information could benefit the big players. Interestingly enough, the big players do not need this information to know where the retail traders are positioned. They know exactly how the retail traders work, the stop setting, which indicators used and the zones where most stops are located. The big players also work with algorithms that scan the market for hidden stops in the form of market orders. As soon as the algorithms encounter hidden stops, the big player knows, that it is worth, to buying more into the stops, with further market orders. He intercepts these stops simultaneously with his limit orders and then pushes the price in the opposite direction. So if a trader is stopped regularly, he can be sure that he belongs to the general herd and should do something about it. Many traders regularly find out where their colleagues are positioned, but in the short term, this not help much.

Today I would like to show you a strategy how you can find out the positioning of the retail traders and thus also the big players very quickly and efficiently. You will receive 5 auxiliary indicators from me with a template.



The blue box shows the period 19.03.2020, 09: 30-13: 00 CET, which we will take a closer look at in the M30, M15, M5 and M1. Let's start with the EURUSD M30. The course was pushed up from point A to B with a force of 77 pip per candle and then pushed down from point B to C with a force of 23.4 pip per candle. This means that at point A, many traders were short-oriented, who were initially stopped with the stronger movement to point B. Then the course ran comfortably to Point C. At Point C, many traders were short-oriented. With a force of 113 pip per candle, the price was pushed up. At point A, fewer traders were oriented short than at point C. In my oscillator you can see the strength of the two movements. The stronger the green bar, the more the retail traders were short-oriented. The green bar shows the reaction of the big players to the positioning of the retail traders. Since more retail traders were short-oriented at point C, the big player had to push the price up more bullishly than at point A. Therefore the green bar at point F is larger than at point E. Please note: The bars show only the average pip/candle and not the length of a movement.

Slide 3

The EURUSD in the M15. Point A and C show the strength of the upward movement (38.4 and 24.8 pip), Point B and D show the strength of the downward movement (27.5 and 12.1 pip). Average upward movement 31.7 pip, average upward movement 19.6 pip. We can see that the upward movements were stronger than the downward movements. This means that the majority of the traders there were short-oriented, the big player had to pull them out of the market first in order, to make a profit with a move down.

Slide 4

Now the zones are shown a little more precisely and you can see the individual strengths of the up and down movements. We'll take a closer look at these in a table.



In the M1 we have significantly more information than in the M5 and you can also see the individual strengths of the up and down movements. We will now take a closer look at these in a table.



At points A to D I first noted the strength of the up and down movements and at point E I calculated an average of them. At Point F I created a graphical representation of all 4 time units. We see that the upward movements were stronger in all 4 time units, although the price was in a downward movement. At point G and H we see the up and down movements in the M5 and M1. We now want to compare the movement of Point H with the Bionic Oscillator.



The representation at point A was created with Excel, I rounded the numbers, so there are deviations. I used an even spacing in Excel, so there are shifts. With the Bionic Oscillator we can easily visualize the strength of the movements in the chart. We will often see that when the price goes down, the strength of the bullish moves is higher because many traders also want to trade down, but are stopped by the strong moves up.



The Bionic Zig Zag Oscillator is very flexible, here you can see 4 different representations to identify the respective movements. It is also possible to show the numbers of the strength, but they are displayed in Pip.



I have created a template with 5 auxiliary indicators for you. I have already described and presented these indicators in detail in many articles, so I will not go into them any more today. The main thing is to use the Bionic Oscillator to find out the strength of the individual movements in order to identify a possible main movement. You should also consider a possible Stophunting, I have already written about this themes a few posts in this blog. The smallest setting in the ZigZag for me is: 2/1/0 or 2/2/1. Take a look at both of them and decide for yourself which setting you can work with best.

I hope that this information will help you and I would be happy if you can use it to find better entrances and be less stopped in the future.

I wish you a successful trading day

best regards
Michael