The Equilibrium, a key to success!

Project 11 started
Big player algorithms


Hello dear subscribers,


we still remember earlier stock market times, when traders shouted at each other to announce their prices and a thousand pieces of paper were lying on the floor. The stock exchanges have gradually changed from an analogue world to a digital world. Everything happens today in large central computers. The amount of data that is produced is so huge that tracking certain activities can be compared to a spacecraft search in space. With the arrival of memory-intensive data centers, ever more complex programs could be developed, which brought an advantage in retail. The high-frequency traders began to use the speed of trading for their purposes in 2004. But you can't act faster than the light and so there are natural limits to the speed at some point. Theoretically, it is only possible to reach these limits with microwaves, but this technique requires a great deal of money. The proximity to the stock exchange is also a crucial point. The next decisive factor is the computing power of the high-performance computers used. Big players like to grab use processors that are not yet available on the market and that will be extremely overclocked and cooled. But the next generation is quantum computers, which are 1000 times faster than conventional data centers. IBM developed the first quantum computer that costs 650 million euros. For some big players, this shouldn't be an obstacle, considering that Goldman Sachs has returned to $ 50-60 million daily profits since they made themselves available liquidity in EURUSD.

In the video that I have provided you with some things are described how the manipulation on the stock exchange works.

The money robot

Not only the high-frequency traders manipulate, but also the big players and the stock exchanges. Everyone wants the biggest piece of the cake. The manipulations described in the video are only the tip of the iceberg, we can assume that there are significantly more cases that cannot be uncovered at the moment because there is no technology for this. Exchange supervision is also overwhelmed because there are too few specialists on the “good side”. It is clear that a good lawyer will always earn more than a public prosecutor. A a quant from a high frequency trader, will earn 10 times more than if he work for the stock exchange regulator. Money is not always the decisive factor, but unfortunately too often. At the latest now, a retail trader would have to realize that with a MACD, RSI or moving average, you only have one firework rocket in your hand while the big players are working with a space shuttle rocket. The outcome of this is shown by the loss figures of retail traders, which every broker must state on their website. (But these figures are also positively optimized by the broker).

The stock market is a billion dollar business, in the Forex market alone the big players win $ 400 million a day, in the calculation there are no stock exchanges included. There are simply too many conflicts of interest in this market that prevent this market from being fair and honest. A trader who is trading here should be aware of this. It is interesting to know that big players are given preferential treatment in limit orders and market orders. When a retail trader places a limit order, he has to queue, the one who queues first is served first. This is the nice theory that looks completely different in practice. If you trade a lot, you automatically ensure that the exchanges earn more spread, three times you can guess who is given preferential treatment. The big players founded dark pools to exclude the high-frequency traders from trading, but a few years later the high-frequency traders also were be able to trade in these dark pools because they achieved huge sales that generated high spreads for the operator. According to the motto: Everyone thinks of themselves, only I think of myself.

I do not want to scare the reader here or show that it is impossible to win in the stock market. But whoever gets involved in the stock exchange world should know exactly who he is actually trading against. As a retail trader, we first trade against our broker, our broker acts against the bank and the stock exchange is on the side that generates the most turnover. The stock exchange supervisory authority watches and work together with the exchange. Because if the stock exchange supervisory authority destroyed the stock exchange, the stock exchange supervisory authority would no longer have a right to exist. Of course, every now and then a little culprit is arrested and released to the press, but the crucial culprits ensure the necessary turnover every day so that everyone can make a good living from it. You should never hit the hand that feeds you. This world is a shark tank, there are sharks (BigPlayer) that eat the small fish (Retail Trader). And there are the cleaner fish (3-5% of retail traders) that clean the teeth of the sharks after their meal. These cleaner fish are not eaten, but cleaning teeth also gives the cleaner fish their meal (profits).

We have now highlighted two important points, the speed of trading and the hardware with which the big players gain an advantage in the market. Now we come to the third and decisive point: the algorithms.



Algorithmic trading is an automated strategy that refers to the identification or execution of trades. It is not just about entering orders in trading, but the entire research and order process is considerably simplified by the algorithms.

On the slide, I first listed different variants for identifying algorithms. Of course, no trader would work with such a view, it is only meant to illustrate that there are many ways to get there. We'll be looking at different views over the next few weeks to find the most effective way to identify the algorithms.

In principle, algorithmic trading is a black box that contains different instructions as to when a trade is to be made or should be dissolved. A simple example of this are two moving moving averages in EURUSD. If the shorter moving average crosses the longer moving average from top to bottom, the dollar is bought and if the shorter moving average crosses the longer moving average from bottom to top the euro is bought. Most trading systems are far more complex, however, they follow a systematic, rules-based approach that is stored in a black box. The algorithm then monitors the market to see when all the necessary conditions have been met. The orders are then generated automatically and transmitted to the exchange. As soon as a trade is executed, the black box receives a message to update the position and order management tools.

Many traders also use algorithmic trading. Platforms such as MetaTrader enable traders with very little programming knowledge to easily set up automated systems. These are very popular in the foreign exchange market because they can run around the clock.

An EA can identify opportunities that match the terms of a particular strategy and execute trades much faster than a human trader without thinking. Opportunities that only exist for a fraction of a second are seized, and no trade is missed that meets the specified criteria. Algorithmic trading is less prone to human error. On the one hand, this applies to research, the identification of opportunities and the execution of trades. Although these EA's offer some advantages, one should also consider the disadvantages and risks.

Algorithmic trading systems cannot adapt to changing market conditions like human traders can. It is very difficult to find out in the short term whether these trading systems are still working profitably or have already passed their zenith. Large volatility phases and crashes are a great challenge for EA's, as this creates the risk of higher spreads or over night gaps. Systematic trading strategies do not develop indefinitely, since the competition also creates corresponding trading systems that work with similar patterns. The more you work according to a similar strategy, the sooner the advantage of a system is undermined. The lower the margins achieved within a trading system, the higher the chance that transaction costs can quickly eat up profits.

So far, there is no EA worldwide that has achieved consistent and secure profits over a longer period of time, within different market phases. If that worked, the big players would have chased all analysts and traders to hell and would only work with such EA's. What has kept me from working with EA's so far is the fact that EA's, needs indicators link together as a condition, to generate entries or exits. In my view, because indicators run after price, they are unsuitable for creating trading strategies. In addition, you should be aware that an EA only runs in the market of the respective broker and not actually on the stock exchange.

It looks very different in the real stock market, provided you refer to limit orders and market orders. These are not indicators, but rather crucial orders that actually move or stop the price. Algorithmic trading systems have a completely different meaning here.

If you create an algorithm and combine 10 different indicators as conditions, there could be problems in performance and the data information could be watered down. In the equity area, algorithmic trading systems can bring enormous advantages because they can directly take into account information from company balance sheets, data from news and social media platforms, company values, current growth, dividend yield and momentum. A human being is not able to do this at the same time.

There are different strategies in the area of rule-based algorithms: trend-following strategies, mean reversion strategies, arbitrage trading strategies, VWAP and TWAP algorithms, quantitative investment strategies, quantitative trading strategies and index strategies to name just a few. We are primarily interested only in the strategies of the big players, since they move 85% of the market in their direction. In contrast to the big players, the institutional traders work more with algorithmic trading systems, which, however, are less relevant for me, since they do not have great market power with a 10% market share.

First of all, it is interesting to know that 33% of fund managers, 25% of hedge funds and 11% of big players use algorithms. The big players are among the most successful traders in the world and only use algorithms to 11%, which should initially make us think. The answer is very simple: a fully automated trading system is inferior to the experience of the big players. But they use algorithms, much like we do when driving. We use ABS and EPS but we still drive ourselves and don't let the computer drive.

Let's take a closer look at the big player algorithms. There are three different types of algorithms that big players work with: information algorithms, analysis algorithms and trading algorithms. The information algorithms help the big players to read and analyze news feeds in order to obtain correspondingly faster information. The analysis algorithms run on special computers that scan the market and look for hidden orders and stops. Among other things, they work with the tricks already described that we know from high-frequency retailers: wash trades, quote stuffing, spoofing and sniping. The losses that arise are in principle only a small collateral damage. The information from these special computers runs into a main computer, which internally gives information about possible larger stop accumulations. After that, the big players decide whether it is worth taking these stops or not.

For trading, the big players use simple programs of the first and second generation that only break down large buy / sell orders into pieces in order to limit the effects of large orders on the market. The algorithms are primarily used to create the iceberg orders, since the big players are mainly in the limit orders area. An iceberg order is used in the limit area to absorb the volume of the triggered stops. The iceberg orders are limit orders, where further limit orders are gradually added. If a big player placed a large limit order in the market, many traders could see this and would assume that the price trend would change at this point. To disguise this, the fragmented iceberg order is used. For a few months now, further algorithms have been programmed that enable the big players to provide themselves with liquidity. In the process, a few 1000 Lot Buy Market Orders are placed in the market within seconds, which are simultaneously taken up by Sell Limit Orders.

The market is only registering a sharp increase in buy market orders at this moment and the majority of traders are positioning themselves long. However, the market is slowly moving upwards as the big player begins to sell his euro positions to the willing long traders. As soon as the big player is out of his euro position, there is only one 2000 Lot Sell Market Order left in the market. First he lets the market run up a little to take out the short traders, then he pushes the market down with cumulative sell market orders until he triggers the first stops of the long traders. Then a chain reaction begins, the stops of the long traders move the price lower and trigger further stops. Now many new market participants are starting to position themselves short. This is a good opportunity for the big player to push the market again up to get more liquidity. And then the same game repeats itself over and over again.

Conclusion:

Algorithmic trading has changed the financial markets, but the big players only work with algorithms in the most efficient areas to disguise their plans. Whoever concentrates on the volume has no chance of identifying this procedure. The big players use the algorithms sparingly and are therefore easier for us to identify. The most successful traders in the world still mostly trades manual, whereby they have trades controlled by algorithms. However, it clearly shows that fully automated trading systems are significantly inferior to the experience of analysts and traders of the big players. The big players use the latest technology in the form of ABS and EPS, but they still control the vehicle themselves and that will not change in the next few years. Good for us, because using larger algorithms would make our identification considerably more difficult. First of all, I recommend all traders to deal with stophunting again.



We have to think of the big players' workplace as a large swimming pool that is 1 mile long. A tall player cannot fully dive this mile because he runs out of air in between. On the bottom of the large swimming pool there are small and large oxygen bottles on the right and left, which the big player tries to reach to take a breath and to continue swimming afterwards. So he dives the 1 mile in the Zig Zag by always swimming to the areas where he may get the most oxygen. And this oxygen is comparable to the volume provided by the stops. He takes up this volume with his limit orders or uses the triggering of the stops to run the price in his direction. So we should always ask ourselves where the largest volume, in the form of stops, is currently on the market. These are exactly the zones that the big player is heading for next. And that's exactly what we can identify with Stophunting.

The algorithms help us to recognize whether a big player is currently moving the market with market orders or is holding up the market with his limit orders. We will talk about this in more detail in the next few weeks and look at concrete explanations in practice.

I wish you a successful trading week.

best regards
Michael

Identification of the big player algorithms



Hello dear subscribers,

In my last post I showed which big player algorithms are interesting for us retail traders.

Big player algorithms

First of all, it is clear to me that this topic is very complex and that many traders prefer to make it very simple. Unfortunately, the market is very complicated, otherwise not so many retail traders would lose permanently. It is indisputable that the 12 largest big players influence 85% of the Forex market in their favor. With over $ 2 trillion in daily sales, the EURUSD is the largest currency pair in the Forex market, accounting for 30%. Two weeks ago, the share in EURUSD peaked at 50% of the total forex market as many traders focused on the euro and dollar. That is why there is a very high chance in EURUSD that there are always big players there. As a retail trader, we cannot move the market, so we only have one chance, we have to let the big players take us away. To do this, however, we need to know where the big players are and what they are up to. Our project 11 focuses on finding out what the big players are currently trading in the market. We know that they use algorithms to bring their orders to the market unnoticed. There are now different ways of identifying these orders, some of which we'll look at today.



Point A
The last 30 trading days in the daily range were on average 3 times higher than in the last 30 trading days before. These effects have a lot to do with Covid19, as it is an exceptional situation that brings about massive changes in many parts of our lives. On Friday, with a daily range of 82 pip, we once again reached the daily range of January 31, 2020.

Point B
Here we see the daily volume in EURUSD of the last 77 trading days. At its peak, this volume was 400,000 lots, 3 times higher than the average volume of 130,000 lots. We can see that the volume has now returned to the average. But it also shows that big player participation has declined significantly. This was to be expected due to quarantine regulations. The big players are currently having massive problems because their traders usually sit together in rooms and are coordinated by their office boss. This office boss is networked with the office management and so common strategies can be carried out. Many big players are currently considering how to organize these strategies for traders through a home office. But it is not that simple, as it requires the appropriate technology. But preparations are already underway.

Point C
As we know, the participation of big players is highest in the area of limit orders. The number of limit orders in the DOM shows that significantly fewer big players were involved in the market. The average number of limit orders in the DOM of the Euro FX has dropped to a third in the past few weeks. While in January you still needed 75 lots to move the price by one tick, you only needed an average of 25 lots in the last 30 trading days. This also explains the high volatility within one trading day. It can also be used to understand a higher daily range.

Point E
As I showed in my last posts, the limit orders are a crucial point to identify the big players. Here we see all limit orders from the last trading day on Friday. Basically, one can assume that the big players and institutional traders divide the limit orders among themselves. However, this also includes a proportion of retail traders.

Slide F
Here we only see cumulative limit orders that have entered the market. These are the well-known iceberg orders, which primarily intercept the stops of retail traders. We can already see here that the picture of limit orders is changing significantly. Since the big player's win rate of 90% is significantly higher, than that of institutional traders at 60%, the next challenge is to differentiate the iceberg orders of big players from institutional traders. However, this will take some time.



Here we see a representation of the iceberg orders in the market profile, whereby we must note that these are orders from the big players as well as the larger institutional traders. Larger institutional traders often have a significantly higher profit rate than 60%. Thus, a certain watering-down takes place in this representation, which, however, comes very close to reality. It is interesting to see that the basic processes in retail are always the same.

Point A
In the equilibrium in front of Point A, the dollar was bought stronger and the price was finally pushed down. The light green areas usually show an exit from the dollar and the light red areas show an exit from the euro. Many traders assume that the big players have formed a consortium and regularly coordinate where the course is going. In principle, this is not necessary at all, because the big players immediately recognize what the other is doing, because they all use similar strategies. When a big player buys the dollar, the others see it immediately and naturally try to join in immediately. Fighting against each other would be unproductive because you never know how much the other person is willing to invest to implement his strategy. So you just hang onto it and try to pull together the strategy. This also increases the likelihood that the strategy will work. Because if two big players act in the same direction, twice as much money is in the game.

Point B
We now see an example of a course from last Friday, from Point A to Point E. First, the dollar was bought stronger at Point A and we can already see that at Point B, partial sales from the dollar begin. At Point C & D we can also see further exits from the dollar. In addition to Point B, we see two stronger buy limit orders. At first I thought that an institutional trader had miscalculated, but afterwards I realized that this was a big player who had given himself liquidity.

Point C
After exiting the dollar (point C), the price was initially pushed further down and the euro was bought. This euro purchase ensured that the rate went up again for the next 3 hours. There were several reasons for this upward movement. On the one hand, the short traders were to be stopped and, on the other hand, the big players wanted to buy the dollar again and then push the price down again.

Point D
At Point D was the last exit from the dollar, since massive euros had been bought an hour earlier. First there was a downward stuffing, where the euro was again massively bought in the Point E area.

Point E
Via Point E we see a strong exit from the euro (light red bars). First of all, this is a good sign that the trend is upwards. Of course there was another downward price trend where the euro was bought very strongly. Then the price was pushed up more.

First of all, it is importent to choose a filter setting in the area of the iceberg orders. Then I recommend analyzing a daily routine and naming it as I did. Over time, you will find that the process is always the same. This procedure is particularly interesting for day traders who trade in the medium term. As I have already described, the overall picture is always decisive and the story must make sense.



Here we see a heat map in the 1 second chart. The red lines represent the sell limit orders, the green lines the buy limit orders. The lighter the color, the higher the number of limit orders. The representation of the heat map is not about actually executed limit orders, but about the willingness to absorb market orders at a certain price level. So if a big player places a large number of limit orders in the DOM, this will be shown in the heat map. With this willingness on the part of the big players, excellent resistance zones can be drawn. The larger red circles are stops of the long traders, the larger green circles are stops of the short traders. When a large red circle emerges in an upward trend, it is usually an exit from the euro or a dollar purchase. When a large green circle emerges in a downward trend, it is usually an exit from the dollar or a euro purchase.

Point A
Around 14:30 CET, there was a high level of willingness on the part of the big players who wanted to absorb sell market orders at this price level.

Point B
The price went down again and at Point B there was again a high willingness to absorb sell market orders at the same price level.

Point C
The same game was repeated here.

Point D
At Point D the time had come, sell market orders were absorbed and at the same time strong buy market orders were brought into the market. As I have already written in a few articles, the algorithms of the big players often begin to be active half an hour before the turnaround. In this case it was the same again. Let's look at what happened afterwards.



The big players started collecting ask in the previous downtrend and used the strong resistance zone to push the price higher afterwards.



Let's take a look at a typical example of Stophunting.

Point A
We see a strong resistance zone again, where triggered stops in the form of sell market orders have been absorbed by the buy limit orders of the big players.

Point B
The course was pushed to point B, during which additional Ask were collected.

Point C
There was a small stophunting down, then the price was pushed sharply to point D.

Point D
The green circles that appear shortly before Point D are stops for the short traders, but the number was not so large because many were long. Now the big players are using a nasty trick. The price was pushed up sharply from point C to point D, which led many traders to suspect that it was a pullback. From point D, the course was slowly and sustainably pushed down to point E.

Point E
At Point E, more traders were positioned short, otherwise large red circles would have formed at Point E, which would have shown the stops of the long traders.

Point F
From Point E there was another quick strong movement up and then down. For many traders, this was a possible sign of a strong downward price trend. Instead, the price was pushed up sharply and we can see from the large green circles that many short trader stops were triggered. From the limit orders in the DOM, as well as in my filtered market profile, you could see that these stops were absorbed by the big players. Within 15 minutes, a large number of buy market orders were absorbed within the yellow rectangle. Where does the course go when someone has bought a lot of bid? Answer: Down.



We can see the result very well in this example.



Now let's take a look at how the big player algorithms help us in the heat map.

Point A
Around 11:00 CET, the big players were strong willing to use sell limit orders to absorb the price at a certain price level.

Point B
Around 14:30 CET, the big players were strong willing to use buy limit orders to absorb the price at a certain price level.



I have drawn these two lines in the course of the day.

Point A
Here we see the red line where the big players were ready to place large sell limit orders in the market to absorb all buy market orders.

Point B
Here we see the green line where the big players were ready to place large buy limit orders in order to absorb all sell market orders. First of all, we can see that the course went over the line. There is a simple explanation for this.

Point C
Here the price was pushed up, triggering the stops of the short traders. This creates a chain reaction. As soon as stops are triggered by short traders, many buy market orders come into the market. These buy market orders push the price up and trigger further stops.

Point D
Exactly the same thing happened here, although a big player never knows exactly how far this chain reaction goes. The only thing he can do is absorbed all these triggered stops with his sell limit orders. Of course, he could also slow down the price by increasing the limit orders, but that would not be an advantage for him. It is better to let the chain reaction continue and to take all market orders that he can get. Since he then pushes the price down, he's happy about every dollar bought.

Point E
Here, too, the price passed a little above the resistance zone, as too many traders long were positioned at Point F. Therefore, the price was pushed down again to eliminate these long traders. So you can see how beautifully the big players with their algorithms give themselves away and have already put a comprehensible price trend on the market many hours beforehand.



I would like to deepen this again. Over the course of a day, there are certain price levels at which the big players repeatedly instruct their algorithms to place certain limits on the market. The reason for this is that they want to be the first to queue up to absorb possible stops. I have now drawn five red lines and two green lines from these algorithms.

Point A
The red lines show a high willingness to absorb buy market orders from this price level.

Point B
The green lines show a high willingness to absorb sell market orders from this price level.

Point C
Here I carried out an interesting experiment in which I only made smaller, non-cumulative market orders visible. These are the orders of the retail traders. Since the retail traders are wrong in most cases, you can see in the example that most of them are short oriented, even though the price is going up.



Here we now see the course of the day and how it behaves on the drawn lines. So we find that the algorithms of the big players are able to give us a small overview of the future market trend. The big players are unable to switch off the algorithms, otherwise they will not be the first in the queue. This willingness shows us a clear tendency. But also here we should always pay attention to the current situation and how the limit orders of the big players in the DOM behave.

Point A
Of course, the big players try to mislead the retail traders using the limit orders in the DOM. When a price goes up, there is sometimes a very strong sell limit order in the DOM. Many believe when the price comes to this point that the trend is changing. Instead, the orders are deleted and the price is pushed up sharply. As an experienced trader you can recognize these tricks immediately and can use these fake limit orders for your favor.

Conclusion:

The algorithms help big players to place hidden orders in the market, to split large orders into smaller orders in order to reduce stronger market movements and to lead retail traders on the wrong track. Anyone who takes a closer look at them is able to recognize and identify these algorithms with simple tools. The big players thus automatically draw resistance zones into the market, which you can easily trade. So far there has been no need to hide these resistance zones, since very few traders could use this information to their advantage. It could change from now on. If the big players tried to hide these resistance zones, you would also have to forego the queue at the same time. In principle, there is a somewhat complicated way to hide these resistance zones, but I'm not going to reveal my idea to the big players. This disadvantage of big players is clearly our advantage and I can only advise everyone to take advantage of it. Of course, this is not possible with pure Forex data, so I recommend everyone to additionally use stock market data. The algorithms are a clear advantage for the big players, but in this case, they are also a clear advantage for the person who deals with them.

I wish you a great weekend

best regards
Michael

Hello Michael.

Since a week I´m back to my home office after my 5 Weeks project in Bavaria.



I ve been reading the last couple of pages again to spot out how you manage your SL´s to minus 2 max.




Here is a example how I look for manipulation in the markets without the Software.
Easy liquidity fishing.

But my SL is for that case 4 pips, managed it only to 4 pips neth this time.

By the way, I´m asking .. why no Dax?
Liquidity also on a CFD base is given and the spreads are tight.

Stockmarket data is also available.

By the way.. really awesome how you figure out the BP algos, I also use the software,
but I couldn t spot these levels with such an accuracy yet.

Advantage through algorithms

[quote=Sesamstrasse;12860305]Hello Michael. Since a week I´m back to my home office after my 5 Weeks project in Bavaria.


Hello Guido,

I hope that you have arrived safely in Frankfurt and that you are in good health. I owe my SL administration of 2 pip to the last 10 years, where I acted as a scalper exclusively in the equilibrium. I don't use an indicator for this, it is simply an empirical value. I identify the stophunting like you do, using my Bionic candle.



The Dax costs me almost 3 times as much spread, but it has a much higher volatility, so that I would be break even 5 seconds faster if I correctly assessed the course. The ATR is 3 times as high in the Dax, which means I would have to significantly expand my SL. A better alternative in the area of profitability would be the USA 500, but an expansion of the SL is also a requirement here. But for me it would be the only alternative to the EURUSD. The decisive factor for me is where you lose the least and not where you can win the most. The EURUSD is therefore the best choice for me.

You can download the calculator here:

Bionic currency calculator

In addition, there is a small drawdown in EURUSD and a high level of liquidity even in times of crisis, as is currently the case. In addition, I have had exchange rate data in the EURUSD since 1971, can work with currency strengths (euro and dollar strength) and can fall back on open interest, which I would lack in the Dax and USA 500. Another point is the comparison between future and forex data. These are most accurate in EURUSD to Euro FX. When the Dax hits a new high, I am missing reference data from the past, while I can use reference data between 0.58 and 1.60 in EURUSD. With the EURUSD, I am able to keep my drawdown in a very small area, which is important so that you can keep the profits you have made in the past.

With my experiment of the algorithms I was below 1% with my drawdown, here is the complete financial evaluation:

Experiment limit orders and algorithms

Thank you for your great compliment on identifying the algorithms. This is a very big challenge at the moment because you first have to determine how the big players use their algorithms. I have also made an inquiry to the manufacturer as to whether he can make certain modifications to determine algorithms. I am curious. The identification of iceberg orders is also a procedure that I have never seen anywhere else. The first crucial point is that you have to completely think new this first, because many futures traders concentrate exclusively on market orders. This is also clear, since all platforms only represent the market orders. The task is to make the iceberg orders visible in a very complicated filtering process. Only these iceberg orders show us traders the future course of the price. Using the right algorithms, you can filter out these iceberg orders, I will try that in our current project. I am very confident, but it all takes time. So don't give up and stay tuned, because it will give you information that no one else has. And that is an enormous market advantage that pays off.

I wish you a successful trading week.

Best regards
Michael

The big players are back



Hello dear subscribers,


In the past few weeks, the big players in the market have withdrawn somewhat due to the Corona crisis, which could be seen in the form of lower liquidity. In the euro US dollar, the big players returned to their jobs, because on April 8th there was another major campaign where a big player made himself available liquidity. Let us first look at the specific process



Point A
Around 8:30 p.m. on April 8, a major big player absorbed 1000 lot buy market orders with its own sell limit order. Most market participants could only see the large buy market orders and therefore went long. The big player used this situation to push the price down sharply.

Point B
The trade continued to be looked after overnight and the job of the big player traders was to keep the price within the blue square area.

Point C
On the morning of April 9th around 8:00 a.m. there was a small breakout and then the price was pushed up. The key candle shown in yellow formed over point C.

Point D
At around 12:00 CET on April 9, the price returned to the strong resistance zone, where it had previously been rejected twice. Many traders assumed that the price would now break through this zone and took a long position. The big player used this to push the course down again.

Point E
The course ran in the area of the key candle shown and was then pushed up sharply. Around 14:30 CET, the high volatility on the basis of economic news was used to push the price higher.

Point F
The big player used the following equilibrium to get out of his position. Let's take a closer look at how that worked out in detail.



Let's start with the situation where the big player has made liquidity available to himself. On April 8th at 3:30 p.m. CET we see in the heat map at Point A that larger market orders are entering the market that were simultaneously absorbed with their own sell limit orders. At first, a kind of equilibrium developed below this zone and we first thought that the big player would get out of his dollar position and then push the price up. It looked like that was the big player's plan at first, but there wasn't enough liquidity within the equilibrium to get out of his dollar position. Therefore the course was pushed down from point B.



How can you tell that a big player is making liquidity available to itself? On the one hand I recommend working with a heat map, on the other hand you can clearly see that from the previous average volume. In the M15 chart at Point A we see that the average volume is around 500-700 lots per 15 minutes. At point B we see a tenfold increase in volume. The probability is relatively low that a big player knows exactly the price level and the time at which another big player places a large number of market orders in the market in order to then absorb them with sell limit orders. In the heat map it was half an hour before this action to recognize that the big player had filled the limit levels with their own sell limit orders in order to be the first in the queue at 15:30 CET. These are all clear signs to find out that this is a separate liquidity position.



Here we see again in the heat map how the course has developed. First, on April 9, 12:00 noon CET, the price was rejected downwards and from point D, the price was pushed up strongly. From point E to point F the big player got out of his euro position and realized his winnings. Now let's take a look at how the big player did it based on the market profile.



Point A
On April 8, around 3:30 p.m. CET, the big player first launched 1000 Lot buy markets, which he simultaneously absorbed with 1000 Lot Sell Limit orders. I have already described a similar case in the following article:

Experiment own liquidity continues!

It is possible that the big player at Point A had 1000 Lot Ask and 1000 Lot Bid. In the example I described, he initially pushed the price down and dissolved his dollar position there. Then he pushed the price back up and got out of his euro position. First of all, the two different positions are neutral because they represent a kind of hedge. It only becomes dangerous from the moment he gets out of a position. As soon as he is out of position, he has to push the price back up to realize his profit. I think the big player wanted to take a different path this time and tried to get out of his dollar position at point B and then push the price up. At Point A, he has brought a very large number of market orders to the market and is betting that many traders will also take a long position with which he would have been able to get out of his dollar position. However, due to insufficient liquidity, this plan did not work and so he had to decide to stay in his dollar position and push the price down.

Point C
On the downward trend, the big player seems to have left his dollar position with 500 lots.

Point D
First the price was pushed up again to win more buyers and then, 1 hour later, got out of the dollar position at Point D with another 500 lots. The dollar position was closed and there was still a position of 1000 lots in the euro. This also explains why the price was not pushed down more afterwards.

Point E
With the beginning of the Asian market, the big player at Point E was able to collect 500 lot buy limit orders, since he had to push the price up anyway, since a 1000 lot buy market position was still open on the blue line.

Point F
Around 4:30 CET another 500 lot buy limit orders were collected. After a stophunting the course then went to Point G.

Point G
In the equilibrium, the big player gradually dissolved his 2,000 lot euro position. He acquired 1000 lots on April 8 at 3:30 p.m. and 500 lots in the Asian market.

Point H
In the future market I once added up the profits that would amount to approximately $ 1.8 million. However, we must not forget that this promotion was carried out in the Forex market, which is approximately 100 times as large.

Overall, the profit would be $ 180 million, but we should note, that the big player causes some costs. In the Asian market, he had to keep the price in a range and there were two strong breakouts after the Asian market. These course corrections cost a lot of money, so we can expect a total profit of at least $ 130 million. If we consider that the big players have made few profits in the past few days, this is only a small limitation of damage.

Conclusion:

On April 8, around 3:30 p.m. CET, I drew the blue line and knew that the big player had to push the course over this line in order to get out of his position reasonably well. This information enabled me to make some profitable trades during April 9th. So it is absolutely crucial to focus more on the limit orders in the market than to run after the market orders. You can read about how to work with limit orders in my project no.10.

A completely new market view

The moment a big player makes himself available liquidity, it is initially unclear in which direction he will start his next action. First of all, I would recommend anyone who identifies such a situation to wait and see. There are only two possible situations. Either he stays in both positions and first tries to bring one position to profit. As soon as he has brought the first position to profit, the next course of the course is logically understandable. The second possibility is that he tries to get out of a position, which you can see immediately in my limit market profile. As soon as he is out of the first position, the next course is clearly foreseeable.

However, I was not entirely satisfied with this situation and was looking for a way to immediately see in which direction the big player could start his next action. I have developed a strategy for this that has not yet existed on the market. I call it the Bionic 4D Strength Method, in which only four decisive strengths are measured and compared. They clearly belong to our current topic of algorithm identification and I hope that I can publish them in the next few days. I am convinced that this approach will be another milestone on our way to success.

I wish you a nice friday

Greetings Michael

Act in the eye of the tornado

Bionics 4D strength method



Hello dear subscriber,


As we know, big players use algorithms to achieve different goals. You can read that again in this post:

Big player algorithms



To identify the algorithms, one can use the limit orders or the heat map. I have already written extensively about both options in my blog. Both in the consideration of limit orders and in the heat map, own algorithms are used to make identification possible. This procedure requires real stock market data with appropriate software. The data is not generated on the basis of an indicator, but from bid and ask, which enables an exact representation. Today I want to go one step further and publish a perspective that has not yet existed. I only came across it by accident and the first attempts were promising.



Almost all traders refer to market orders in their predictions and evaluations. The reason for this is relatively simple, the stock exchange only provides market orders and the market orders move the market. In many articles I have tried to explain why market orders are not the decisive factor in the market. The big players primarily work with limit orders to collect their bid or ask by absorbing the volume of retail traders in the form of stops. Of course, the big players also use the market orders, but primarily to push the price into the first stops to provoke a chain reaction. Retail traders use market orders, big players use limit orders. In order to follow the big players, one should therefore rather not analyze market orders. Therefore, the accumulated limit orders are an optimal representation to forecast a future price trend. The only way to look into the future so far was the limit orders in the DOM which are not meaningful enough due to spoofing. The big players generally use the visible limit orders to mislead retail traders and institutional traders. Nobody can see the actual iceberg orders and identification is difficult because the big players always absorb the volume at different price levels.

When I started in the Forex market 10 years ago, I tried to get as close to current price information as possible so I could react quickly. The fastest price information in Forex is the price change. The smaller the time unit, the greater the price change in relation to the candle. But there is a catch, the smaller the time unit, the less precise and volatile the price change will be. An H4 candle consists of 240 different M1 pieces of information and is therefore more precise than an M1 candle. Many traders therefore use different time units to combine different price information. Indicators are a different form of price display, although they are generally slower than the price because they run after the price. But the price is always the result of volume and liquidity and volume and liquidity is unfortunately not shown in the Forex. As a Forex trader we look at a ship (price) on the sea and see that it moves forward (long) or backwards (short) and that is solely the result. What we don't see is how strong the propulsion is (volume) and how strong the current is (liquidity). So if you do not know the strength of the propulsion or the strength of the current, how do you use this to calculate a calculation for the progress of a ship? One could now calculate an average speed, which however becomes more precise the longer the measured time. And the longer the measured time, the sooner the trend (long or short) is over. As a forex trader, I am forced to work with probabilities that, due to the way the big players work, make my profit more random than predictable.



The only way to get closer to volume and liquidity is to work with the DOM and the Times & Sales list.

Point A
Here we see the DOM consisting of the daily volume of bid and ask, the pending liquidity, the volume processed, spoofing (deleted limit orders) and the price.

Point B
In the Times & Sales list we see the time in 1/1000 seconds, bid and ask prices, the number of lots, trend algorithms, price changes, sizes of bid and ask accordingly after a trade and the average volume of a trade.

Point C
The spread tape is a tool for visualizing the volumes during each spread value. This method of band display is useful because it shows the balance between buyers and sellers more precisely and which side is currently more aggressive. The cumulative delta for all data in the meter is also interesting.

Point D
Bid and Ask can now be filtered and assigned in individual areas to identify potential big players more precisely. The filter settings are very individual and applicable to different situations.

Traders who work with the DOM and the Times & Sales list are 3 times more likely to win than traders who work without this information. And in the stock market, these are worlds, like a 1/10 second in Formula 1, is an incredibly big advantage. When I first worked with the DOM and the Times & Sales list, I was completely overwhelmed because an incredible amount of information came in within seconds that had to be processed at the same time. But in principle it is nothing more than an extremely fast video game, which you cannot master at the beginning. The reason why a lot of traders don't work with the DOM and the Times & Sales list is because it seems too complex at first glance. And everything that is new and unknown is initially viewed critically by humans. But look at the screens of the most successful traders in the world, they all work with the DOM and the Times & Sales list. And there is a very specific reason for this. Volume and liquidity are the only reason for price changes and the DOM and Times & Sales list are the fastest way to identify volume and liquidity.



Let us first look at why a price changes in the market. I first created a simple representation of a DOM here.

Point A
Here we see a 75 lot sell market order that runs into a 70 lot buy limit order.

Point B
First, the 70 Lot buy limit orders are literally eaten up by the 75 Lot Sell Market orders and the price goes down 1 tick. Of the 45 lot buy limit orders below, 5 lot are eaten, then the price comes to a standstill. At this price level there are still 40 lot buy limit orders.

Point C
Behind the visible buy limit orders in the DOM are the algorithms of the big players, who postpone further limit orders as soon as the price has reached a certain price level. These are the described iceberg orders that you cannot see in the DOM.

Point D
As soon as the sell market orders reach the price level at point D, the algorithms of the big players ensure that more and more buy limit orders are added to absorb the further incoming sell market orders. The algorithms of the big players sometimes work so well that the number of visible buy limit orders does not change significantly. It could well be that 500 lot sell market orders are absorbed at the price level 1.100 without the number of 87 lots in the area of buy limit orders changing significantly. The task of the algorithms is: As soon as the number of buy limit orders falls below a certain value, replenish them immediately. So we have an invisible resistance zone in this area that most traders in the market cannot see. If you work with a special heat map, the identification of zone D is completely possible. You can find more information here.

Identification of the big player algorithms

Point E
Here we see an 80 lot buy market order that runs into a 78 lot sell limit order.

Point F
First, the 78 Lot Sell Limit orders are literally eaten up by the 80 Lot Sell Market order and the price goes up 1 tick. Of the 54 lot sell limit orders above, 2 lots are eaten, after which the price comes to a standstill. At this price level there are still 52 lot sell limit orders.

Point G
Behind the visible sell limit orders in the DOM are the algorithms of the big players, who add further limit orders as soon as the price has reached a certain price level. These are the described iceberg orders that you cannot see in the DOM.

Point H
As soon as the buy market orders reach the price level at point H, the algorithms of the big players ensure that more and more sell limit orders are added to absorb the further incoming buy market orders. In this case, another 200 lot sell limit orders are already available in the background, which are gradually being pushed into the market by the algorithms of the big players. So we are already in a strong resistance zone, but most traders are not aware of it at this moment. How should a trader react to a particular situation that he cannot predict? If you as a trader knew that there were another 200 lot sell limit orders in the queue behind the 54 lot sell limit orders, no trader would take a long position at this time. However, the specific situation now matters. If the big player's sell limit orders are an exit from the euro, there is a high probability that the price will continue to rise afterwards. However, if the sell limit orders are a dollar buy, I would rather not take a long position at this point. It is therefore important to recognize whether sell limit orders sell the euro or buy the dollar. I have already written about this in great detail in my blog.



As a scalper, I want to know exactly when a course is going up or down. And this information I need as soon as possible.

Downward movement

The market sell orders (point A) run into the limit buy orders (point B). If you compare this to a boat, it is crucial for me to know how strong the drive of the boat is (volume) and at the same time how strong the current (liquidity) is. From this I can calculate whether the boat is moving further down or whether it is being braked.

Upward movement

The market buy orders (point C) run into the limit sell orders (point D). If you compare this to a boat, it is crucial for me to know how strong the drive of the boat is (volume) and at the same time how strong the current (liquidity) is. From this I can calculate whether the boat continues to move upwards or whether it is being braked. To do this, I need to know how strong points A to D are. The Bionics 4D strength method was born from this idea.



To illustrate this, I first developed three different cases. The downward trend is on the left and the upward trend on the right. I divided the strength of the respective orders from 1-10, whereby the value 10 is strong and the value 1 is weak.

Point 1
The buy limit orders have a strength of 10 while the sell market orders have a strength of 2. The buy market orders have a strength of 8, while the sell limit orders have a strength of 5.

First of all, we notice that the strength of buy markets orders is significantly greater than the strength of sell limit orders. This means that the buy market orders are able to eat up the sell limit orders to justify an upward trend. At the same time, the sell market orders are significantly weaker than the buy limit orders. That would mean that if the price changes to go down, the strength of the buy limit orders will hold the sell market orders. In this case, the overall strength is so great that it would justify another upward trend.

Point 2
In this case, the strength of the buy limit orders and the sell market orders is the same. So it is an equilibrium that balances itself. The buy market orders have a strength of 8, while the sell limit orders have a strength of 2. This initially speaks for a stronger upward trend, although the equilibrium downwards does not secure the upward trend.

Point 3
In this case we see that the sell market orders are significantly stronger than the buy limit orders. This initially speaks for a downward trend. At the same time, the strong sell limit orders secure a possible price change. The buy market orders are significantly weaker than the sell market orders, so it is not expected that the price will turn at this time.

Perhaps you have already noticed that there are four dimensions in this case. Keeping an eye on the strength of these four dimensions at the same time requires a high level of concentration and is in fact not easy. You need two dimensions when driving, three dimensions when flying and in our case we need to be able to keep an eye on four dimensions at the same time. This is a big challenge at first, but it gets easier over time.



I first thought about how I could be able to measure the different strengths. First of all, the market orders are relatively easy to identify because they are shown in the time and sales list. However, in the area of market orders I am only interested in cumulative orders. The strength of the liquidity was initially a bit more of a challenge because it is not shown in the chart or in the DOM. Here I orient myself in the time and sales list to the sizes that show me the respective liquidity within a BID or ASK change. From this I created a filter with which I can show the individual strength.



Here we see the experimental screen, which I set up to show the different strengths.

Point A and B
These are two footprint charts in different time units to show the relevant limit orders.

Point C
The heat map, often described, with the display of cumulative and non-cumulative orders to decide whether the dollar is bought or the euro is sold and whether the euro is bought or the dollar is sold. This allows you to immediately see whether Stophunting is taking place or whether a big player provides himself liquidity.

Point D and E
These are exclusively BID and ASK from retail traders. In the video below you can clearly see that retail traders take an opposite position to big players in over 90% of cases.

Point F and G
This is the average volume that occurred within a BID or ASK change.

Point H
Here we see the strength of the buy limit orders, where light green means strength and dark green indicates weakness.

Point I
Here we see the sell market orders that run into the buy limit orders. The lighter the color, the stronger the number of market orders.

Point J
Here we see the strength of the sell limit orders, where light red means strength and dark red shows weakness.

Point K
Here we see the buy market orders that run into the sell limit orders. The lighter the color, the stronger the number of market orders.

Point L
All the information we see comes from the future market, so I have once again explicitly shown a price trend in the M1 from the forex market with my bionic candle.

Point M
Here we see a limit order display in the M15 to determine an absorption more specifically.

First we see on the chart that the price has been in a downward movement in the last 4 minutes (point L). At Point J we see that the sell limit orders have become significantly weaker and the buy limit orders have gained strength. Buy market orders are still small, but sell market orders have lost strength. This initially speaks for a possible upward trend change. I created a video that starts right here and runs for 5 minutes. First the price goes up and then comes into a small resistance zone, which is broken shortly afterwards. Pay attention to the points H, I, L, K & J during the video view.



First of all, it is very surprising that you can immediately guess how the future price trend will develop based on the four different strengths of market buy / sell and limit buy / sell. Of course, I still have to optimize my filter setting significantly and at the same time adapt it to the current volatility and market conditions.

Conclusion

Based on the four different strengths of market orders and limit orders, the future price trend can be forecast with a very high probability. When strong market buy orders push the price up, the big players often secure the price down with buy limit orders. The limit orders are decisive here. With the right filtering, they immediately show when a price is held up. It is then important to use the heat map to identify exactly what is happening within the course stop. That then decides on the future course of the course. With this representation, we are right in the center of the tornado and can immediately see whether a trend is increasing or changing. Market sell orders that run in the limit buy orders and market buy orders that run in the limit sell orders are the only reason for price movements in the market. With the correct identification of the respective strength and at the same time looking at the possible stophunting, the probability of winning can be increased disproportionately. It can also be used to generate better entries and exits. The strength of the limit orders shows me when a possible equilibrium is created. Supply and demand can be identified immediately and help a trader to make the right decisions. However, there are still some challenges that we will solve in the coming months. As a result of the experiments so far, I can say that I have never entered and exited a trade as optimally. However, you have to be able to immediately grasp the four strengths and immediately relate them to one another. It's a very big challenge that I initially underestimated a little. First of all, I will take a closer look at the other filter settings and optimize the display even further. Then a test run with further corrections takes place. We will see in future results whether this approach pays off in concrete terms. I will definitely keep you up to date.

In my eyes, this approach could establish itself in the future, since we act directly in the eye of the tornado. In my opinion, this is the fastest information a trader can get. This view is rather uninteresting for the big player, since he knows what he is currently investing. However, he could use a trick to capture the retail traders specifically in the market. That would enable even more efficient stophunting while saving him a lot of money. However, we retail traders derive the greatest advantage from this because we can only win if we let the big players pull us along. And my approach could be a crucial key to this.


I wish you a great Easter

best regards
Michael

Clever idea ! Interesting
Have a nice Easter also
ps: which program are you using ?

Act in the eye of the tornado


Hello rosalieone,

first of all thank you very much I am glad, that you like this idea.

Act in the eye of the tornado

This procedure only works with real stock market data. I use a stock market data feed from CQG and have the stock market data translated by the ATAS platform. You can find more information here.

Project 6 first interim conclusion

I would like to emphasize once again that there are many good data feeds and stock exchange software and that my selection must be viewed critically and should not be understood as a recommendation. I only earn my money from trading and not from advertising. If someone is interested in stock exchange software or a data feed, I would first compare different providers to find the best price-performance ratio. I compared different providers in over 6 months and put together the best package for me. I can justify my choice for myself, but I would switch providers at any time if the platform no longer met my requirements. However, every trader has different requirements, so I strongly recommend making this selection yourself and not following my personal selection.

I hope that I could help you and wish you a nice Easter.

best regards
Michael

Michael, post 1406 is simply superb. I have been following your thread and continue to be amazed with the quality of information and depth of research you share.
Your explanation of the DOM is excellent. It's my belief that the only way to truly see volume is to understand and study the DOM. Aggressive (large market orders) move price. The flow/volume of orders move price! Thanks for your your great work here.

Happy Easter!

Its not difficult to understand that you know what you are talking abaut.And thank you for all the info and Bionics template i been doing some scalping with renkos lately on EN,GJ and GU,but Wednesday i tried out DAX and DOW with 1000 points boxes and where able to catch some of the bigger moves....I added your Bionics template to thoose two and after messuring i changed to 600 points boxes because that setting gave the nice strings that i look for...I have one Bionics osillator at settings 2,1,0 and the other to 12,5,3 so one shows bars at turn and one lines like osillator i have not seen this live yet,but the numbers on chart will help me to confirm if the turn will be more ore less boxes because using renkos i enter on second box after a turn and use a 1000 points stoploss(10pips/10 dollar/1lot) i guess.....I have no backround from working in any financial job so i just try to absorb what you are writing here....I do think i can catch some more pips(Money)than on my 3 forex pairs trading DAX at the first hours of Frankfurt and DOW at the first hours of U.S open....Because trading renkos i like some faster movements because then i dont have the time to move stoploss and faster gains if go my way....But again i dont know if it even will work with offline chart,but i think so because the numbers are on chart so again thanks for sharing and i look forward testing this out Tuesday morning.....Have a nice easter whats rest of it...(I hope i didnt missunderstand everyting abaut Bionics...lol)

PM:I did very well for 12 days trying to compaund a smaller account as fast as possible(Part of a challenge) and had no loosing days,then i lost my head and trew the rules out the window moving stops and adding to loosers so i lost my 150% profit and ended down 24% from deposit so i will put money in so i come to amount i was at when my head went mush and try again...Much better for me with a tight stop so i can learn to take some losses and not get angry and mess up....Even been trading for 6 years now i must concentrate on being disiplined all the time one glitch and make wrong move and as you said in a post:"Chainreaction" of loosing....I am sure many here PROBEBLY recognize my problem......lolz(A little humor now in theese Corona times with a picture.)

Equilibrium, is a key to success

[quote=FXsniper111;12870984]{quote} Its not difficult to understand that you know what you are talking abaut.And thank you for all the info and Bionics template i

Hello FXsniper111,

Thank you for your kind words and welcome to our blog. I would like to pass on your compliments to all subscribers because they were also involved in the development of this blog. I am very happy that the ideas in this blog help you, that is exactly our goal. The crucial thing for every trader is to create an individual setup with which he can trade profitably. This setup is like a fingerprint and can never be copied. I keep my fingers crossed that your expectations will be fulfilled from Tuesday.

Lovely wishes
Michael

Act in the eye of the tornado


Hello corinthia,

Thank you for the great compliment. Indeed, a high quality of information is always associated with a lot of work, but I am tempted to take paths that no one else has taken before. I'm always looking for solutions that allow a trader to get information a few milliseconds before everyone else. These milliseconds can be critical to get a huge market advantage. I believe that this idea can bring such a market advantage.

Act in the eye of the tornado

Of course, this is just the beginning, because just like an instrument needs to be properly tuned, I will filter the 4D strength method optimally in order to get even more precise and faster results. This method is the fastest information flow that I have been able to generate from the stock market data. If you consider the algorithms of the big players as a tornado, we manage to be in the eye of the tornado with the 4D method. There it is windless and we can compare the strength of the market. This gives rise to unimagined possibilities. The most interesting thing is that the big players can make their algorithms even more complicated, we will be able to decode these algorithms before anyone else. It's not about being the fastest, it's just about being faster than the others. And maybe we could do it with this method.

I wish you a happy Easter.

best regards
Michael

Hi Bionics,
I was rereading your post 1380 on your oscillator indicator.
I have a question, when you mention ''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.''
does it mean in fact that because often a majority is on the wrong side of a move we can observe green line higher than red line in a descending price (and opposite when price is ascending)?
Best

Bionic ZigZag indicator


[quote=rosalieone;12871455]Hi Bionics, I was rereading your post 1380 on your oscillator indicator. I have a question,


Hello rosalieone,

Your question can be answered as follows: It depends. We traders are always looking for patterns that appear again and again in certain situations. Unfortunately, there are no always valid patterns in the Forex market, as there is no liquidity or volume in the form of bid and ask. We only find such patterns in the algorithms on the stock exchange market, which are, however, very difficult to read. I described that in my last post.

The big players only react to the trading activity of retail traders in order to obtain the necessary volume in the form of market orders with targeted stophunting. If a price goes down, the majority is long oriented anyway. If nothing changes in the further course down, the big player has no reason to push the price up sharply. If, on the other hand, more retail traders take a short position in the course of the downward trend, things look different. That is why it always depends on the individual situation.

Now you will probably want to know how to find out how the majority of retail traders are oriented. Unfortunately, this only works with a special filtering of bid and ask, which is not available in the forex market. However, the Bionic Oscillator can be used very well within an equilibrium or a pullback can be identified with above-average high numbers. However, the last figures are always decisive in order to generate an average from them. Here you will find two more examples, starting from picture no.8.

Help for better trade

This auxiliary indicator is an excellent way to measure the current strength in the market in order to make better decisions. However, I would never derive a trade from it. You should always use stock market data for this.

I hope I could help you and wish you a nice Easter.

best regards
Michael

Easter 2020


Hello dear subscribers,


I would like to take the opportunity today to write about a few things that are close to my heart. First of all I would like to thank everyone who has decided to follow this blog. Exactly 830 days ago, I opened this blog to write a trader's diary and document my development in detail. As a Forex trader, I was trading profitably in the equilibrium at the time, but I thought that my success was based more on chance than on professional practice. Most traders sit at home, alone in front of their screens, and have little opportunity for professional exchange. In Germany there are 40,000 traders with 80 million inhabitants, which is a ratio of 1: 2000. I live in an idyllic village with 6000 inhabitants, which is strongly influenced by agriculture. Statistically speaking, here lives 3 traders. And I already know 2 traders, who, however, as a part-time trader, pursue different strategies than I do. There are probably over 4 million traders worldwide and almost 18% of all traders have gathered at Forex Factory. It was very likely that I could find some like-minded people there. In my blog, I started to explain to myself, how I trade and about this, were many suggestions and questions. This accelerated my development so much that I couldn't keep up with the learning.

On January 4th, 2018, I wrote my first post in very bad English. Some statements about the randomness of courses I see today completely differently today. In this post I have already written about the big players, the DOM, footprintchart, Oderflow and the cumulative delta, but at this time, I just started to take a closer look at them.

Equilibrium, is a key to success

Exactly 830 days later, my best article was created, which deals with an idea that is so far unique. I call it: Bionics 4D strength method. This involves identifying the big player algorithms in order to achieve an incredible market advantage.

Act in the eye of the tornado

I still trade in the Forex market and it will always remain that way because I, as a professional Forex trader, have a security that the futures market could never offer me. Nevertheless, I make my trading decisions based solely on the stock market data. Over the past 2 years, with my creativity and with your help have resulted in some crucial projects.

1. The Bioniccandle
2. ZigZag indicator with a strength indicator
3. Currency strength in the forex market
4. Combination of forex and futures data
5. Key candle for Stophunting
6. Identification of the best currency pairs
7. How Big Players Work
8. Identification of algorithms

I am convinced that these 8 crucial points can significantly influence the probability of winning for many traders. The long way from Post 1 "Equilibrium, is a key to success" to my last post: "Act in the eye of the tornado" was very exhausting with over 10,000 hours. Today I'm a little annoyed that I opened my thread so late at Forex Factory.

Forex Factory is a separate, special world in its own right, there are other platforms in the trading area that I don't think are as professionally managed as FF. I find it remarkable that many successful traders share their knowledge with others for free. You will hardly find the same knowledge in books or by trainers. First and foremost, this is about the Forex market, as it is clearly the No. 1 but we could possibly also ensure that the futures market gets a higher acceptance. After all, the stock market data is a guarantee that as a trader you can look into the candle to see the real reason for the price movement.

Unfortunately there are many scammers on the Forex market who also like to post in FF. But you can only prevent this by immediately reporting such incidents. If more traders worked with real stock market data, the fraudsters would have much less chance. Stay away from expensive indicators, because here on FF you can usually find much better indicators. Here is an example. Very expensive currency strength indicators are available on the market, Hanover (member of FF and one of the best programmers of MT4) has programmed very professional currency strength indicators that everyone can download for free. Its indicators are programmed a thousand times more efficiently and precisely than all the currency strength indicators to be paid. And if you have an idea for a new indicator, many great programmers will help you free of charge.

I will code your EAs and indicators for no charge

Beware of EA scammers who supposedly offer highly efficient EA's that are supposed to generate a few thousand percent return. We should think about that for a moment. Imagine someone developing a lottery generator that could accurately predict the lottery numbers every week. The only motivation to offer this lottery generator for sale is at the same time a proof that it does not work. Because if it worked, the inventor would be a millionaire within a short time. To do this, however, he would also have to believe in his own invention.

In the beginning, trading is only about one question. How can I act to keep my money or lose as little money as possible. Anyone who has mastered this will have no problems in making long-term profits and keeping them.

The world has been in a state of emergency for 2-3 months and there seems to be a major upheaval that could have a positive impact on the "After Corona" period. Some traders who spend many hours in front of the screen every day are more comfortable with isolation than many other people. I have already anticipated that this situation will continue for a while. When we have got through the worst, there could be a big recession and after that we could experience a real economic miracle. In the future, people will work more in the home office, fewer cars will pollute the environment because meetings via Skype are much more efficient. Online markets will boom and a new generation will emerge that will save our resources. Stinginess is cool is exchanged for quality and hopefully people will treat each other fairer again. We may spend more time together and treat each other with more respect. We will appreciate the new freedom to be able to move around freely and hopefully we will take the time to do the important things in life. Bad crises are tragic, but they help us to improve our future lives. I hope that we learn from it and that the world moves closer together.

That is the nice thing about FF, here religion, gender or origin does not matter, the decisive factor is the willingness to exchange ideas and to help each other. Mutual acceptance and respect are always a prerequisite for moving forward together.

At this point I would like to thank everyone who has accompanied this blog and who in the past few years has provided questions, comments, praise, criticism, ideas, recommendations, respect and fairness to ensure, that we could all get ahead.

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I am proud to develop further ideas with you over the next few years and I sincerely wish you all to stay healthy.

Lovely wishes
Michael

Hello Michael.

Here is a live example how the stockmarket data was combined with FX trading.

I implemented in to my chart and saw a good long chance..

The reason for exit was the wash out of higher high "liquidity", executed badly so it looks like I got it almost on top.

Thx for your very detailed posting..

Definetly not a easy read, everytime I read it,
I find something new.. awesome.

stay tuned
Guido

Future and Forex


Hello Guido,

I am happy to hear that you are making progress with future and stock market data and that you can always find new things in this blog that will take you further. In the beginning it took me a little longer to find a good set-up. I recommend saving every change in a stock exchange template, then you can also access your stock exchange settings months later. The most important thing is to neglect the volume a bit and focus more on liquidity. I am aware that my ideas is anything but easy, but if you look at the on-screen displays and the tricks of the high-frequency traders, it becomes clear why those of 250 trading days lose only 1 trading day. Here is the post.

Mad world

At first glance, my approach is very complicated, but from the perspective of the high-frequency traders it is rather Stone Age. In principle, as a scalper, you have to work just like the high-frequency traders, but with a much poorer technique and a much more unprofessional approach. But even with a much worse approach, you can stand out from the crowd, which can result in a decisive market advantage. The key is not to be better than the big players, it is enough to be better than the majority of retail traders. Since the beginning of the Forex market, an infinite number of indicators, setups and strategies have been tested. The fewest approaches were successful and brought a sustainable profit over the years. Therefore one should avoid these strategies and break new ground.
Innovation takes a lot of time, but in my eyes it is the only way to survive in this very complex market. Especially since the market changes every day, for example: “Big player give hisself own liquidity”. It is crucial to know how the market orders behave compared to the limit orders, and this can only be seen if you receive liquidity data and volume data. For this reason, I try to develop modules that show me the strength of market sell orders, market buy orders, limit sell orders and limit buy orders. So I can see immediately when the market changes.

You are on the right track, take your time to develop your own modules, which will show you the fastest turning point in the market. And then a strategic money management must be coordinated to precisely this setup.

I wish you a successful trading week.

best regards
Michael

First of all thanks a lot Michael for your blog and topics.
Always a pleasure to read it.
My salute to you and all folks here for their views, insights and contributions.

Read your posts is like "dejavu" (for me) I mean in the best way possible since I started in financial markets.
I see you here sharing so much information and for free.
I remember when I started (alone, excited but no one to point me any direction) and expended so much money in courses, indis etc...

And besides all that you are here sharing your HUGE knowledge and all that come with it for free this is REALLY HUGE and AMAZING and so NOBLE from you.

Really sorry for not be able to contribute more here at FF and with this blog since the PANDEMIC I already had health issues in family back there, and now at quarantine here I barely can open a platform but tried to follow and read FF always that I can.

Very happy here to see that there is people willing to share, help and etc...

I guess Hope is not lost for the world.

Congratulations to you dear Michael and to all good friends here and that I made here at FF.

Take care and stay all safe buddies
Best regards
Dcrs

Déjà-vu in trading

[quote=Dcrs;12879863]{quote} First of all thanks a lot Michael for your blog and topics. Always a pleasure to read it. My salute to you and all folks here for their views, insights and contributions.

Hello Dcrs,

the fact that you were unable to contribute to the blog due to the pandemic is not important, what is more important at this moment is your health and the health of your family. There are a thousand diseases, but only one health. Therefore, we should do something for our health every day, so as not to sacrifice a lot of time for our illness one day.

Thank you for your great praise, which makes me very embarrassed, but a successful blog is not dependent on the author, but only on the people and subscribers who bring this blog to life. If this blog helps some traders lose less money, the long hours of work will definitely have paid off.

As you know, this blog was created accidentally, in which I only wanted to create a trader diary two years ago. It is not because of me that this blog is so popular, but rather because, with creative ideas, this blog closes a gap in retail that has not existed before. My professional success has always been based on presenting complicated issues as simply as possible. This property developed out of necessity. I first had to visualize many complicated issues in order to understand them in concrete terms. From this pictorial representation then creative ideas developed, which led to a successful further development and gave me a market advantage. And successful trading is only based on a market advantage or a head start. Those who first know what is happening in this market can use it to generate the fastest entries and exits. And that is my only aim.

I wish you a lot of strength, health and hope that we will soon be through this pandemic.

best regards
Michael

Moin Michael.

I really like to see your examples on live trades.

I m playing since weeks with the stockmarket data but I m still not keen with it.

There was clearly a strong buy at a 1M or 30 Seconds chart on a upper small range what should give a BO for a couple of pips.

Price started hesitating and went down for some pips.

Meanwhile I use a keyboard and hotkeys for faster trading what gave me the advantage to close my long order within seconds and open a short order.

My question is:

How to filter out in Bid/Ask Delta the fake outs or better said the long trigger because I haven t seen lome limit sell orders claced there before.

Regards
Guido