The Equilibrium, a key to success!

I would really like that Point H chart....Is that someting can be used without stockmarketdata ore do you need a datafeed for that also......I am sure you have said someting abaut it,but i can grasp all the info you give out even i am sure its very good for thoose who get it....

Your conspiracy theory isn't actually that far off the mark. Think about fibs. Fibs work. Why do they work? Because traders think that they work and so use them....which means fibs work.

Circular logic at its finest.

The same is true of 200 and 20 ma touches.

Stock exchange data or forex data?

Hello FXsniper,

Thank you for your kind words. The ideas and indicators of Charts A to I can be used without restriction for the Forex market. Stock market data is required for charts J to P.

Fast and furious

The dashboard and the chart Stophunting ,I posted can also only be used in the Forex market.

Currency strength dashboard and Stophunting chart

I wish you a nice weekend.

best regards
Micha

Conspiracy theory


Hello Lemercenaire,

you might even be right about that, although I'm not a fan of conspiracy theories. The big players want the money of the retail traders, but for that, they basically have to take an opposite position to most retail traders. The herd determines the initial market direction, but the big players are able to take the opposite position at the right moment because they need the stops of the retail traders to fill their limit orders.

The dangerous thing about MACD and MA is that the big players know these zones very well, because a high of volume (due to possible stops) is to be expected there. MACD and MA work if one set up his stop strategy accordingly. But that's a big challenge for me. As a retail trader, one have the highest chances if you are not predictable. Most indicators are unfortunately very predictable, as they are used by a large number of retail traders. It's like hiding in the woods at night, with a bright flashlight. The big players and market makers can be happy about that. That is the main reason for me to forego these indicators and to find my own way. The more unpredictable the strategy, the better.

I am currently preparing a detailed article on an unpredictable strategy that I will publish tomorrow.

I wish you a very nice weekend

Lovely wishes
Michael

On the trail of the iceberg orders


What we cannot see in the market (limit orders and iceberg orders) are the decisive reasons for price movements.
Bionics



Hello dear subscribers,


Today I want to show you a trade, that I have recorded on video and used the spoofing for my entry. "Spoofing" on the stock exchanges is a pretense of false facts. Many traders use the order book to recognize the level at which there is greater buying or selling interest. The market often runs to these larger limit orders, which signal a willingness to buy in the DoM. If a big player places a larger buy or sell order that is deleted shortly before it is executed, it pretends interests that actually do not exist in reality. Large limit orders at a price level can also signal a possible trend reversal, because if all market orders are absorbed at one price level, the price will not get through.

If there are suddenly large limit sell orders at a price level in the market with a steeply rising price, there are 3 options. The big player wants to get out of the euro there, another big player wants to buy the dollar or it is a fake. As a rule, the big players do not need large, visible limit orders in the DoM, to absorb large volumes at one price level. The actual project is much easier to obscure with iceberg orders. At this important price level, there are no more limit orders than in the other 9 price levels. At the crucial moment, when the limit orders have been used up, the iceberg orders push additional limit orders to the market and fill the important price level again and again.

The big players use the iceberg orders to absorb the stops of retail traders. If large limit orders appear in the market, this could warn retail traders early. For this reason, the specific absorptions of stops are only intercepted with iceberg orders. In most cases, large limit orders are only a diversion to create a wrong picture of supply and demand.



If you look closely, there are always two different areas of supply and demand in the market. At point A, the market sell orders run into limit buy orders and at point B, market buy orders run into limit buy orders. Since the order types from points A and B never meet, there are two different supply and demand zones. Different market participants act with different interests in the market.

Demand zone (Limit Buy Orders) = Buy Euros or Sell Dollars

Offer zone (Market Sell Orders) = buy dollars or sell euros

Demand zone (Market Buy Orders) = sell dollars or buy euros

Offer zone (Market Sell Orders) = sell euros or buy dollars

If the dollar is exited in a demand zone, this does not speak for rising rates and if the euro is exited in a supply zone, it does not speak for falling rates. Accordingly, there are two different equilibrium. The combination of market sell orders with the limit sell orders (offer) and the combination of market buy orders with the limit buy orders (demand) to create only an average supply or demand zone will fail. The reason is different interests and at the same time, the incalculable iceberg orders.



This creates some challenges!


1. Identification of whether the euro is currently being bought / sold or the dollar being bought / sold.

For this I use the heat map to show me a certain number of cumulative market orders that come into the market within 1/1000 second. I have described the advantages of the heat map here:

Identification of the big player algorithms




2.The respective strength of the limit orders and the market orders

With my 4D strength method, I get a graphical display of the strength of limit sell orders, limit buy orders, market buy orders and market sell orders. You can read about this procedure here:

Act in the eye of the tornado




3. Identification of Stophunting

The big players are constantly interested in the volume that is absorbed through the stops of retail traders. For this I work with a key candle to determine the stophunting. The downloadable chart with a detailed description can be found here:

Currency strength dashboard and Stophunting chart




4. Market analysis: what are the big players currently collecting?

The price moves because the market sell orders run in the limit buy orders and the market buy orders run in the limit sell orders. The fact that the big players primarily work with limit orders leads us to the conclusion that the limit orders are significantly stronger than the market orders. I would even go one step further and make the claim that the limit orders are really moving the market and not the market orders. You can find a detailed report here:

Which is stronger, market orders or limit orders?

The identification of the decisive limit orders shows us the future market direction. This results in more efficient trading decisions. Here you will find further information, please also look at the links in the report!

First results as a liquidity trader




5. The interplay between limit orders and market orders

Using algorithms, big players are able to completely remove sell limit orders from the market and at the same time push the price up with market buy orders. With this you manage to move the price strongly with few market buy orders. This process is a permanent interplay and the algorithms are programmed exactly on it. This process is very efficient and takes place permanently. Here is an example:

The interplay of algo




6.Our eyes deceive us

Our sense of hearing reacts 4 times faster and our sense of touch reacts 2 times faster than our eyes. However, we only act with our sense of sight. We can see three-dimensional charts with our eyes, but the response time will always be too slow. Here you can find out why and how to optimize it.

Fast and furious




7. How many iceberg orders are behind the limit orders?

This question is not so crucial at first, since basically only as many market orders can be absorbed as the market makes available. If only 100 Lot Market Buy Orders (triggered stops) are available at a price level, only 100 Lot can be absorbed by the Limit Sell Orders. Subsequent market buy orders would then also be absorbed at this price level, but the big players are more interested in stops than in current market entries. This is because stops are more concentrated than simultaneous market entries. The background to this is the stopping rule: above the last high and below the last low. This makes it more likely to find more volume in these stops. It is much more important to know where iceberg orders could be at certain price levels. Conclusions can be drawn from this, at which price level the big players expect larger stops.

For a few weeks now I have been working intensively on spoofing (adding and subtracting limit orders that are waiting to be executed). My software provides me with information about spoofing. Spoofing initially takes place in the area of visible limit orders. If 10 limit orders are deleted in the spoofing display and the number of visible limit orders in DoM does not change at the same time, it can be assumed that the change occurred in the area of the invisible limit orders (iceberg orders). However, we have to assume that these are only native iceberg orders that are managed by the CME itself. Synthetic iceberg orders are submitted by independent software providers whose infrastructure is physically separate from the exchange. These software providers split the original iceberg order, submit new tranches and track their execution. These tranches are indistinguishable from the usual limit orders of other participants, but they are difficult or impossible to identify as spoofing.

Basically, I assume that the big players in the future market work with synthetic iceberg orders to disguise identification. But there is a glimmer of hope. We know that at CME, cumulative limit orders placed as native iceberg orders have priority in the queue. As far as I know, this does not apply to synthetic iceberg orders submitted by independent software providers. This could be related to the fact that a certain fee has to be paid for native iceberg orders. If a big player has to sell iceberg orders in the market within a short period of time, he will very likely fall back on native iceberg orders. If he has already occupied the individual limit levels, this is no longer necessary. We can therefore assume that part of the spoofing can also be attributed to the big player.



Last trading day on Friday, May 22, 2020 at 10:27 CET. Let us first look at the Forex M1 chart (Point H) at the blue arrow. Overall, the price was bearish in the medium and long term as it had been down 100 pip since Thursday. Now there was a pullback to Point H and suddenly there was a stronger breakout downwards. When looking at the M1 chart, hardly anyone would take a long position at this point, since we all know the term: reach into the falling knife. With the information from the M1 chart, I would have been rather cautious at this point. As a forex trader, we cannot look into the candle. In the past few weeks I have often been able to do without candles and concentrate more on the DoM, because you deal more with price levels. The Forex candles are much more volatile than the future market, so there are many movements within a candle that confuse more than help. I recommend reading the following article:

Why candles don't work properly in retail



First, let's look at the different modules that I used for my trade.

Point A
I have written about my heat map a few times so that I primarily identify cumulative market orders that come into the market in the form of stops. In addition, interesting limit levels are shown that are interesting for the big player. As soon as a big player makes liquidity available to himself, this can be seen immediately in the heat map.

Point B
Since the limit orders ultimately move the market, it is crucial what a big player collects at certain price levels. That is why I have created a limit chart where I can monitor the individual collection campaigns.

Point C
Here we see an ordinary time and sales list, which is only used as an overview. I usually don't work with this form of presentation.

Point D
The different times and sales lists help me to identify orders in the heat map. I also manage my different tones there. In the video I unfortunately forgot to activate the tones, how to achieve concrete trading advantages with tones, you can read in the article "Fast and furious". You can find the link under point 6.

Point E
On the left we see the strength of the limit buy orders, on the right we see the strength of the market sell orders that run into the limit buy orders.

Point F
On the right we see the strength of the limit sell orders, on the left we see the strength of the market buy orders that run into the limit sell orders.

Point G
A representation of short and medium-term spoofing within the different price levels. In combination with the points E & F, this representation has become an indispensable help for me.

Point H
Here you can see a chart from the Forex market in the M1 to recognize the entry and exit of my trade

Point I
Here we first see a DoM, on the right and left are the limit orders, as well as the incoming market orders. In the middle is the spoofing with an individual filter setting.

Point J
Here we see a graphical view of short-term spoofing.

Point K
Here we see a graphical view of a medium term spoofing.

Point L
The short-term and medium-term area in spoofing was combined here.



Point A
The price has been in a downward trend for the past few days and this downward movement has remained active. In the headmap we see that the price is in a downward movement after some short traders have been stopped before.

Point B
In my Forex chart I identified a key candle at point B. We can see that the price has dropped sharply, from which we can conclude that at Point C, many traders were long.

Point C
In the heat map we see that while some long traders have been stopped, ultimately much less than the big players assumed. It can be concluded from this that some retail traders have now also taken a short position. This would mean that the course is first pushed to point C and then the downward movement is continued. I have drawn this idea.

Point D
Here we see that the strength of limit buy orders increases significantly, even though the price was still in the downward movement. Based on the information from spoofing, I wanted to see if my idea actually worked.



Point A
That was when I start my entry, although I had hesitated a little and was a second late in the market.

Point B
In the area of sell limit orders, one noticed increased activity in spoofing, with some orders being subtracted.

Point C
In short-term spoofing we can clearly see that again.

Point D
The limit sell orders are clearly getting weaker.

Point E
The limit buy orders gain strength at the same time.



Point A
Now, the course jumps over my ask line.

Point B
At the same time, further limit sell orders are withdrawn

Point C
This can be clearly seen in the overview.

Point D
Here we see that the limit sell orders are getting a little stronger, which now speaks for a declining price.

Point E
The limit buy orders are getting a little weaker, which supports the previous statement.



Point A
The reaction to this, the course runs back, a bit. However, the return is not too dramatic.

Point B
We can see from the reaction of the algorithms in spoofing that relatively few orders are withdrawn.

Point C
Some orders are withdrawn, but you can see that almost no orders are withdrawn in the lower area.

Point D
In the overall overview, we see that there is significantly more movement in the area of limit sell orders, which speaks for further rising prices.

Point E
The limit sell orders are still a bit stronger, but there is already weakness.

Point F
The limit buy orders gain some strength.



Point A
Now there was a stronger upward movement.

Point B
You can clearly see how the limit sell orders are withdrawn.

Point C
At the same time, limit buy orders are added to secure the price down.

Point D
Here we see that an obstacle is already being built up in the area of limit sell orders.

Point E
At the same time, limit buy orders are becoming somewhat weaker.

Point F
In the heat map we see that there could be a strong absorption in the upper limit sell range. A big player is probably expecting some stops to be triggered. He wants to absorb these stops. That speaks for another push upwards.



Point A
Now the bigger push comes up, the price came into my determined zone and I ended my trade.

Point B
Some stops were triggered by short traders, but the price did not come within the range that the big players suspected. As a rule, they always set their limit sell orders a little higher, since it is never clear how many further stops there are.

Point C
This picture that we see here in the area of the sell limit order is a typical form just before a turnaround. However, no reliable assumption can be made from this.

Point D and E
We see a similar strength in the area of sell limit orders and buy limit orders, i.e. an uncertainty on both sides. With the image of the heat map and the display at Point C, there is a high probability of a trend reversal. That was the reason for my exit.



Point A
Now the course starts to run down

Point B and C
The limit sell orders are significantly stronger than the limit buy orders.

Point D
In the spoofing display, we see a stronger movement on the limit buy side, where orders are withdrawn.

Point E
In the overview we see that the retraction of limit buy orders is significantly stronger than in the area of limit sell orders. Then the price went down a total of 26 pip. This trade generated a net profit of 5.3 pip within four minutes. My stop was 1 pip, but the course did not run 1 pipette against me. At first I was in disadvantage by 0.5 pip due to the spread and my total risk was 1.5 pip. I gained 1.325 pip per minute, a good result overall

After I have tried to roughly describe my procedure, first watch my video. Pay attention to the points described, you will discover some interesting things.



Of course, there is always a bit of luck involved, because situations can change suddenly. But the deeper you are in the market, the faster you can predict and react to certain things.



If I trade longer timeframes of 1 hour, I usually reach 0.25 pip per minute. That's 15 pip in an hour, but I would need a much higher stop because of the higher ATR. Overall, my trade would be exposed to market risk for 1 hour, with my described trade I was only exposed to a risk for 4 minutes. Every trader should find out his best practice based on the probabilities, the different currency pairs, the ATR and the possible pip per minute. The following article could help you:

Probabilities of winning with stop loss



Conclusion:


My approach as a scalper is relatively simple. My optimal trading hours in the EURUSD are from 07: 30-11: 30 and from 13: 30-17: 30 CET. During this time, around 500 different M1 candles are created, which are larger on average than in the secondary trading hours. So I have 500 different chances in one day. Since I do 25-30 trades per day, I can choose the best opportunities from 500 candles (5%). In theory, I have a new chance every minute. However, this procedure requires a very high level of concentration and the ability to simultaneously identify and interpret many numbers that are constantly changing.

With the help of the procedure I have described, I am able to look very deep into the market, which significantly increases my chances. Of course, the course is not always in my favor and I am stopped every now and then, that is part of the business. In order to work with small stops of one or two pip, I have to be able to get into the market in such a way that the price immediately moves in my favor, preferably as a small breakout. If I recognize from the different algorithms that certain limit orders are deleted, I will of course stay longer in the market. However, I often end my trade after 30 seconds. However, this always depends on the individual situation. Every now and then there are trades that I run for several hours, but for me these are pure luck trades. My main business is short-term trading, so I have already reached my daily goal by noon. I need the thrill, every new trade can be compared to an airplane takeoff and a landing. As a long-term trader, you switch on the autopilot at some point, that's not my thing. Broker costs are significantly higher as scalpers, but it's always a question of personal efficiency.

The tools I use that I use change every day because I constantly adapt my personal setup to the current market conditions. With a special template, I simultaneously save six screens on which my stock exchange software runs. Every change is saved and if my odds get worse, I just go back to the last change and start optimizing again. If I get stuck, I sit down and start writing. This gives me amazing solutions that have always brought me further.

A friend of mine absolutely wanted a special template from me in order to better analyze the market. Two weeks later I asked how he was getting on with it. He admitted that he no longer works with this representation because he does not receive any crucial information from it. This is also completely clear, because I have customized the template to meet my special requirements and I receive information that does not help another trader. It's like sharing my Formula 1 setup with another Formula 1 driver. That would be of no use to him because he has different driving characteristics than me. The setup in Formula 1 and in trading is nothing more than a compensation of certain weaknesses. Therefore, a stock exchange setup must always be created individually, everything else makes no sense. In this blog you will get exactly the important information that is crucial to create your own setup. Only in passing, when I asked my friend about the template after two weeks, my template has completely changed again. My stock exchange software is like a construction site, just look at the pictures in my blog, then it becomes clear. Konrad Adenauer (former German Chancellor) once said: "Nobody can prevent me from getting smarter every day". We should take this sentence to heart. What I think today can change completely tomorrow. I am a trader and a human who makes many mistakes every day and therefore I have the right to say: What do I care about my stupid chatter from yesterday. The greatest enemy of progress is not error, but inertia.

I am aware that I am still at the very beginning with my setup, but regular successes give me the motivation to get up every morning and look forward to the new trading day. I know the end goal is still a long way off, I'll probably never reach it, but I still firmly believe in it. The most important thing is to do your work with fun and passion and that is the most important point for me to be happy. I am not trading to make a lot of money, but to keep the maximum number of my winnings. Maybe that's why I can make a living from my trade. But it can all be over tomorrow, many people had to experience it through Corona. That is why I am grateful for every day that I can act successfully. It is still a lot of work to follow the big players exactly, but I am firmly convinced that the whole effort is worth it.

I wish you a successful start to the new week tomorrow.

best regards
Michael

If you search, you will find!


Hello dear subscribers,

First of all, I would like to thank you all for showing interest in this blog and for further developing this blog with your ideas and suggestions. There are different mentalities among our subscribers, who work on the side or on a full-time basis. Many trade in the forex market and some in the future market. Each retailer has specific areas of expertise on which to focus and for that, different strategies are required.

A beginner in the Forex market has other questions that interest him than a full-time trader who has been trading successfully for many years. I started over 10 years ago in the Forex market, tried different strategies and hundreds of indicators. I achieved my greatest success with trading in the Equilibrium, where I acted according to supply and demand. When I opened this blog 2.5 years ago, I started to describe this procedure in detail. This gave me a lot of suggestions and ideas that led to various projects. Within these 30 months we developed some interesting auxiliary indicators for the MT4 to better identify the market. With the help of the MT4 tickcharts I got to know the future market and I developed a strategy to combine the forex data with the futures data in order to generate trading advantages. That was a very complex and exhausting process, which you can read about in my almost 1000 articles. For the development of the indicators and strategies, I spent many 1000 hours and documented my approach with 1700 pictures and many videos.

If a beginner who only trades in the Forex market comes to this blog for example, he will come across topics such as how to identify the algorithms of the big players in the future market. See my last post:

On the trail of the iceberg orders

It would be the same, like a fourth-grade student suddenly being transferred to the final year of high school and having to deal with integral calculus, analytical geometry and stochastics. That wouldn't make sense. This blog is a development process and is structured chronologically, so I recommend everyone to first analyze this blog and start where it feeling comfortable. Then he can decide for himself what information is valuable and whether he also wants to use the futures data for trading in the forex market.

The topic "Equilibrium, is a key to success" accompanies the entire blog and is a key element in order to achieve trading advantages. The equilibrium is nothing more than an uncertainty in the market that is identified differently in the forex and futures markets. This is primarily due to the different data that are available in the individual markets.

Every trader is looking for his optimal setup, you have to imagine it like a puzzle in which many parts are still missing. These parts have to be put together in many years by combining theory (reading, videos, discussions) and practice (trade). But how do one get good information efficiently? Should one pay for information or look for free information? There is a saying: what costs nothing is not worth anything, but that is not true. At Forex Factory you will find information that even the best trainers in the world cannot give you.

Around 1,000 different trading topics can be found in over 65,000 threads. That's over 7 million posts in 9 forums. That means you will find almost 70,000 books at Forex Factory and it would take over 7 years to read them without a break. It would take a long time. If you know what to look for, you can get a possible answer through a targeted search. At FF you can use keywords to make your search easier and save a lot of time. Paid information is never better than free information, you just have to find it.

There are incredibly good contributions from excellent traders, almost 20% of all forex traders in the world are members of FF and there are over 1.5 million hits on the world's largest trading platform every day. There is an incredible amount of knowledge hidden here that can be found with the right strategy. Searching can also be dangerous, because sometimes you discover something you didn't want to find. So you need a good strategy to find the right things.

I wish you every success

Lovely wishes
Michael

Hello again and thank you so much for sharing your profiles and indis.....I have breaken down to what i need to be able to Miro scalp the EUR/USD i did a few on friday and had some 83% winrate and made 2.7% that day and i must say the stophunting chart and the levels it makes are really good and on Friday i marked out 5 trades i didnt take that where in small range,but would have given 4-7 pips each....I am only trading thoose levels in addition to my 5 min time chart that i use Vvap/Pivots and a coupple of SMA`S as dynamic supp/ress atleast when they are at levels on the stophunting chart as confluence.....I know you said use 2 pips Sl,but for the way i trade thoose levels i want to be out as soon as i see that the level doesnt hold,but i have to be brutal and close as soon as i see it doesnt hold....So my stop is now set to 1.5 pips,but i want to be out under 1 pips preferebly....I have struggeled with disipline moving my stop and "hoping"For it to turn,but that doesnt work so i really need to just let it hit the stop ore close out my self.....That way when traded this for a while and making some consistent profits i can leverage up a lot since i dont risk more than 1-1.5 pips on any given trade.....The only ting is that when having a stop that tight brokers can start to manip the price just a pip ore two to take me out so when confident to close losses i will have a wider stop,but still close out at once i see it doesnt work as i wanted.....Here is a picture of what i use and my setup,,,,Again thanks and have a nice Sunday still.....Sorry for my poor English...

Trading virtual stop loss



Hello FXsniper111,

First of all, thank you for your feedback, I am very happy if the Stophunting diagram helps you and hope that it will continue to provide you with important information in the future. Your stop strategy is perfectly fine if you achieve a win rate of over 80% and a risk-reward ratio of 1: 5 with this procedure.

In fact, there are still a few brokers who mostly sit on small islands and like to manipulate the price. The broker you work with is an ECN broker, price manipulation is much more difficult there. I myself compared the price of this broker with the stock market data for more than half a year and I did not notice any irregularities. However, the total costs and the risk were too high for me. The total costs in EURUSD for me, per lot, must not be more than 0.4-0.5 pip. However, spreads have been somewhat higher in recent weeks due to lower liquidity. This was because there were fewer big players in the market that provided liquidity. At the same time, however, the volume was as high as ever. There were larger gaps in the limit orders and a high number of market orders could penetrate the smaller number of limit orders more quickly. This led to increased volatility and at the same time to a higher spread. However, that was not the broker's fault.

Market makers set their own prices for currency pairs because they do not execute orders on the interbank market, but internally bring buyers and sellers together or secure the position of the customer (hedging). In principle, price manipulation could only take place in the environment of the market maker, but never in the interbank market. The interbank market trades $ 2 trillion daily with an average of 92,000 ticks. To change the price by 1/10 pip, the broker would have to invest 217 Lot, that's over $ 21 million. If he wanted to catch stops from his customers that are 3 pip away, he would have to invest over $ 600 million. He doesn't have the money and the risk would be far too high.

I therefore recommend working with a virtual stop loss that the broker cannot see. However, he could use an algorithm to find out which stop sizes are used by customers. If there is a suspicion that a broker is manipulating, I would switch immediately. As a rule, stophunting can be explained by the clever approach of the big players.

I think it's great that you regularly optimize your setup, that's the only way to get ahead. A little tip at the end:

If you use the Toggle Borders indicator, your frames will be removed from the different charts and you will have a much larger display. You can find the indicator here under: "Indi Dashboard"

Currency strength dashboard and Stophunting chart

I wish you great success

Lovely wishes
Michael

Good morning,

as a swing trader i would like to know if there is any information available when the "big boys" take action...Or are they focused only taking scalps?

Best regards,
Renko

The strategy of the big players

Hello Renko,

There are relatively few high-frequency traders in the forex market at first, as they are restricted by the EBS with a minimum holding period for their trades. The big players tend to be medium-term oriented for 1-3 days, with most of them trying to do their business within a day. Goldman Sachs is a classic example of this. However, this does not always work because the volume available on the market fluctuates extremely. If a big player does not make volume available to himself, he must collect a certain number of ask or bid within an equilibrium. I monitor these collection campaigns with a special limit delta chart from the stock market. I can quickly see which way the big player choose. These collection campaigns usually take place at different price levels, whereby they are closer together. Here is some information:

Limit Delta gifts

As soon as the big player has finished his collection campaign, he turns off possible followers beforehand because they could stop his course course through profit realizations. Based on the limit orders, you can roughly estimate how much the big player has collected. If he now pushes the course in his corresponding direction, the heat map helps me to identify his exit from the position. The algorithms are the crucial clue as to when it starts with the corresponding breakout. However, I am just beginning to filter these algorithms more precisely based on the spoofing information. However, it will be a while before I can derive concrete trade advantages from it.

On the trail of the iceberg orders

In the Forex market, this works very well with my Stophunting chart that I posted here. There you will find links with further information.

Currency strength dashboard and Stophunting chart

A scalper also needs this information to find out where the market is at the moment. It makes a huge difference whether the big player is initiating a pullback to lead traders in the wrong direction or whether it is a breakout, to bring their previously collected limit orders to profit. Both courses are usually very fast, which I am looking for as a scalper.

For a swing trader in particular, it is crucial to know what the big player has collected in order to gain a trading advantage. This works best if you take a closer look at the limit orders. My main business is short-term scalps, but I also use my information to make longer-running trades. However, the profits from this, in my opinion, are more based on luck, since the big players always have to react to the retail traders. I can predict the short-term reactions more likely than the medium and long-term reactions. However, here every trader has his own view. As a swing trader, you shouldn't do without the stock market data.

I wish you a successful trading week

best regards
Michael

Thank you for reply, Grüße!
Renko

Thank you very much for the feedback i just wanted to say one ting abaut price/lot for the broker i use i guess you have seen who i use....I am signed up under a friend that are IB with them and he has reduced hes commision to 50 cents from the 2 dollars he gets from them so i pay 5.5 dollar/lot so i am not so far from your 4-5 dollar/lot because the spreads of my broker is usually 0 and sometimes 0.1 so maximum pay for me is abaut 5.6 dollar/lot roundtrip......And also as i dont have the funds to register as a pro trader so the 500:1 leverage is crutual for me to be able to trade this way.....I wish you many pips/dollars while you improve your system,we are all sudents for life nobody can say they know all that is inside the Forex world...

I will call it for today i was really not to do any trading today cause bankholliday in a lot of countrys so it moves faster on lower volume and does not react quite the same on levels also its been trading far from my Vvap and SMA`S "200/50 Applied to close"As i been told the banks use/used"So i had no confluence at the levels i traded,but still i only took two full losses.....I trade 0.28 lots many would say that is to much on my account,but if look at my drawdown is under 1% also since markets today are difficult i took only 0.6-2.2 pips profit....I will put some 8-900 dollars into the account at 19.June and then i will leverage up some more....And Bionics i have added this EA to a EUR/USD chart and set my stop to 1.2 pips its supposed to be hidden from broker,but i am not sure so if you have contact with a coder can have him/her to look at the code and see if it is so that it is hidden....Should be someting for you also trading with 1-2 pips SL even you can see on your DOM ore data feed if the price from broker is true i would feel safer with a hidden stop i will attach it under here...Green pips to you and other traders using this system...

In the labyrinth of informations



Hello dear subscribers,


Forex Factory is undoubtedly the largest website for traders with over 700,000 members, as evidenced by the 1.5 million daily hits. Almost 20% of global traders have an account here, although there are considerable differences in the activity of the members.



At Forex Factory we find nine different forums with over 70,683 threads. The total membership amounts to 706,550 of which there are 717 high impact, 1077 medium impact and 1795 low impact member. Interestingly, the number of commercial members is significantly higher than the total number of impact members. Over 98.8% of the members consist of no impact members. Assuming that a member started only one thread at a time, that would mean that only 10% of the total members would have created their own thread. However, this number will be significantly lower.

First of all, every member starts as a no impact member and if the information that this member posts is interesting, subscribers join the respective blog. It can therefore be assumed that 3,600 impact members are the most important sources of information. I would like to neglect the commercial members here because their information is related to a financial interest.

The 500 largest high impact members together have almost 100,000 subscribers who follow them, although of course one subscriber can also follow several high impact members. On average, 200 subscribers are followed by a high impact member, 56 subscribers by a medium impact member and 29 subscribers by a low impact member. First of all, the number of followers only shows the interest in a particular blog, but says nothing about the quality of the content. This is exactly the big challenge you have when looking for qualitative information.

Two years ago I opened a channel on YouTube to post my videos for Forex Factory. I do not actively maintain or advertise this channel. I've posted over 60 videos in the past 2 years. The most interesting videos for me are curiously in third and 18th place.


Here are the two videos where I tried to predict the price live.





We see, that the majority of viewers always see it differently. When I'm on YouTube, I also automatically check the number of hits, but these are not always the best videos.

In April 2020, LauraT published the thread "Roadmap - A Way To Read Markets", which delighted around 200 followers within 6 weeks. On average, a high impact member needs around 4 to 6 years to reach such a number of followers, LauraT did it 43 times faster with her friendly manner. In addition, Hanover an excellent programmer, was programmed some indicators for the roadmap. Hanover has made a neutral statement about the roadmap, which sums it up:

https://www.forexfactory.com/showthr...2#post12913252

The secret of the roadmap lies in the simplicity of the strategy, I think it is a good idea that beginners get a chance to analyze the market. The problem is that the forex market unfortunately provides insufficient information and the market is unfortunately not that easy. However, this should in no way reduce the thread "Roadmap - A Way To Read Markets". For those who trade exclusively with Forex data, this is a possible alternative alongside many other great threads in FF. Regardless of whether you come to Forex Factory as a beginner or an advanced trader, it is always a great challenge to find what you really need. You always have to make the decision whether you want to stick to the tried and true or be open to new things.



A great advantage at Forex Factory is the keyword search. If you enter the term algorithms in the search bar (Point A), 1936 results appear in 76 threads (Point B). Then you can refine your search (Point C). But these results also do not help when asked whether the information contains a high quality content. You always have to decide that, for yourself, after reading.



Below I would like to give you some tips to help you reach your goal faster. Here are some points that are part of a successful trader setup. This is like a puzzle, only when it is complete you will be really successful. But you can also be successful if some parts are still missing. But you have to optimize your setup over time. All points are connected and build on each other. You can find more information here.

The never ending story




If a trader is not happy with his results, it is often because he is using the wrong strategy. There are many strategies, finding the right one is the challenge. Unfortunately, there is no standardized solution in trading. If you read somewhere "This strategy always works" or "Only this is the way", you should be skeptical. A strategy consists of various parameters such as setup, trading style, time units, money and risk management, etc. Here are some ideas:

How do I optimize my strategy?




If you've answered these questions, it's about the right currency pair. There are a few things to consider. Here I show you how to calculate an efficient currency pair to get the best win probability.

Bionic currency calculator

These points bring you closer to the goal, but you have to put the crucial puzzle pieces together yourself in the end. It is a task that will take many years. For me, trading success is a combination of proven modules with the simultaneous orientation to new things. I save my complete trading settings daily and as soon as my trading rates get worse, I return to the last successful setting. This enables me to permanently optimize my trading settings without changing my complete setup.



Here is an example. I posted my dashboard at the end of 2017. Thirty months later, my dashboard changed, but it was a slow process. After all, I still use 6 identical or similar modules. Take a look yourself if you don't pay attention to certain indicators or representations within a week or a month, simply replace them with something new. Then the process starts all over again. It's like clothes. Everything you haven't worn for 1 year can actually go away. We humans are attached to our past, but this limits our view of the future.

Unfortunately I cannot show you a strategy with which you can get rich quickly, since there is no such strategy. We should be guided by the most successful traders in the world who have a win rate of over 90%. These high-frequency traders and big players invest billions in technology, analysts and their traders. If there was a simple system, they would have chased their technology, analysts and traders to hell and would have saved many billions. Why don't they do that? Because there is no alternative in this absolutely complex market.

This blog: "The Equilibrium is the key to success!" is exactly the opposite of simple, this is about the complexity of the market and questions that only a few traders have asked themselves so far. This is exhausting and you need a lot of background information to understand some things. My success is based on the fact that I always went my own way and rarely let other people influence me. It is my money that I invest, that's why I determine the rules and no one else. Of course I listen to criticism or opinions and maybe change certain behaviors, but that's why I don't leave my path. Because at the end of the day I have to deal with my losses or profits. And nobody can help me with that.

If we as a trader want to make as much money as a doctor, notary or lawyer, we also have to be willing to learn as much as these professional groups. And it's a hell of a lot and takes at least 6-10 years. Most traders at Forex Factory know this and, interestingly, there isn't a thread that provides all of this compressed information. The largest high impact members at FF have approximately 1300-1500 subscribers. Measured by the total number of members, this is a share of 0.2% for everyone. This is not an absolute majority and clearly shows that traders want find different information to create their personal setup. In my eyes, the only right way to be successful in the long term.

Success is more permanent if you achieve it without undermining your own principles.

I wish you much success in reaching your goals

best regards
Michael

The Hidden SL/TP EA works perfect you can not see the SL/TP,but it works perfectly....SO enjoy traders....

Algorithms in the DoM



Hello dear subscribers,


In the past few weeks, I have spent many hours identifying the big player algorithms in the DoM. For this I had to create a new DoM with very complex filter settings. I would like to show you the first results of this today.

Every trader is interested in getting price information as quickly as possible. We get the slowest price information with indicators, because they essentially run after the price. The fastest price information in Forex is the price itself. Certain currency strength indicators are somewhat faster, as they sometimes lead the price. The visible limit orders in the DoM on the other hand, are a small look into the future with the exchange data, as they show the willingness, to buy on a certain price level. However, these limit orders can also be deleted at any time by Spoofing. Limit orders can also be increased by the iceberg orders and are thus able to absorb and stop the market orders. As I have already described in some articles, the limit orders are responsible for the main movements in the market.

Which is stronger, market orders or limit orders?

Limit orders that are already in the market and which have been activated by the market orders can of course no longer change, which is why I only use limit orders in the chart to monitor the big players' collection campaigns.

Iceberg orders of the big players

Definitely, with the limit orders in the DoM we have a look into the possible future of the market movement, with the restriction that they can be added or deleted at any time. The algorithms are responsible for adding or deleting limit orders. This is precisely why I have dealt with these algorithms in more detail. If you succeed in deciphering the algorithms of the big players, you can also take a clear look at the limit orders placed in the DoM and thus at the future price trend. And that is exactly the only reason why I am concentrating on it. If the algorithms indicate that a high number of limit orders has been deducted at a certain price level, it is automatically clear that the price will go through this price level. If the algorithms indicate that a high number of limit orders has been added at a certain price level, it is automatically clear that the price will be stopped for now. In order to identify a possible trend reversal from this, it is then crucial to recognize whether, for example, in an upward trend, the euro is sold or the dollar is bought. I've written about this a few times in this blog. So the goal is to identify the algorithms so that they allow a view of the net limit orders.



And to demonstrate the whole thing impressively, I recorded a video sequence that you can watch at the end. The video runs 6 minutes and starts shortly before Point A, then the course runs down to Point B and finally up to Point C. In the video you can see that these turning points can be clearly identified beforehand.



First, let's take a look at which modules and representations I use for this.

Point A
Here we see my heat map, the red and green circles are cumulative market orders, which are usually created by stops. The triangles symbolize larger market orders that have been placed by institutional traders. The red and green lines show the respective strength, of the waiting limit orders, at the individual price levels. If a big player supplies himself with volume, this can be seen immediately.

Point B
The exact size of the market orders is identified here (red and green circles in the heat map). The crucial point is to see at what price level how many different cumulative market orders have been absorbed.

Point C
Here we see an M1 chart from the Forex market, with my specially developed Bionic candle. It is relatively easy to identify the bullish and bearish movements. In daily business, I am getting used to working without candles and concentrating more on the DoM. Whoever achieves this has an enormous advantage over all other market participants.

Point D
Here we see my dashboard, in the area of currency strength from the Forex market, which I posted a few days ago. You can download this dashboard here.

Currency strength dashboard and Stophunting chart

Point E
A few weeks ago I developed an individual strength display for limit orders and market orders using the time and sales list. You can find the contribution here:

Act in the eye of the tornado

Point F
This is a spoofing overview of the individual price levels that I developed.

Point G
From spoofing the limit orders, I created an interesting strength indicator for the current bullish and bearish movements. Pay attention to this in the video.

Point H
Here we see the limit orders in the M15 chart. This makes it relatively easy to identify the absorption in the DoM.

Point I
Here we see the limit orders in the daily chart. This makes it relatively easy for me, to tell when a big player is collecting or getting out of position.

Point J
These are newly opened positions by retail traders that took place outside of Stophunting. Pay attention to this in the video, as a rule, retail traders always take the opposite position of the big players. This ad often helps me identify trend changes. For example, if a price goes up and more and more retail traders take a long position, you can assume, that there will start a pullback in the opposite direction.

Point K
Here you can see my new DoM, which I have created very elaborately in the past few weeks. We now go into more detail on the individual points.



A DoM usually consists of 6-8 rows, which convey different information to a trader. My developed DoM consists of 140 different rows, each row has been filtered very elaborately and it is mainly about the identification of the algorithms in the area of spoofing. However, this is only a snapshot, as I regularly adjust and change the filter setting.

Point A
Here we see the price level, but I have not shown the price with numbers, because the price is completely irrelevant to me. The numbers to the right and left of it are the accumulated spoofing at each price level.

Point B
Here we see the limit buy orders that are in the DoM and are waiting to be executed.

Point C
Here we see the limit sell orders that are in the DoM and are waiting to be executed.

Point D
Here we see a rather complex, filtered strength display of the market buy orders, which was created by spoofing the limit orders. The fields marked in yellow show the current strength of the market buy orders, which was compared with the limit sell orders.

Point E
Here we see a very elaborately filtered strength display of the market sell orders, which was created via the spoofing of the limit orders. The yellow marked fields show the current strength of the market sell orders, which was compared with the limit buy orders.

Point F
In the red fields we see the incoming market sell orders, in the blue fields we see the current spoofing, in the area of limit buy orders.

Point G
In the green fields we see the incoming market buy orders, in the blue fields we see the current spoofing, in the area of limit sell orders.

Point H
Here we see the cumulative and current spoofing in a 2-D representation, in the area of limit sell orders. The display has been equipped with individual time values and thus enables a clearer display.

Point I
The small red bars show the short-term reaction, the current spoofing of the limit sell orders, within the different price levels

Point J
Here we see the accumulated and current spoofing in a 2-D representation, in the area of limit buy orders. The display was also equipped with individual time values and also enables a clearer display.

Point K
The small green bars show the short-term reaction, the current spoofing of the limit buy orders, within the different price levels.

My next project is to make the strength of the different limit orders at individual price levels visible in 2-D. So I could do without part of the spoofing display in the future. However, this will still take a considerable amount of time.




The visual stimuli such as images, colors or shapes are the most important for human sensory perception. The sense of sight provides around 80 percent of all information from the environment that we process in the brain. You see a lot of numbers in my charts, this is because the brain detects neutral numbers faster than colors. Let's do a little test.

Point A
Here the color name of the word matches the color of the balloon.

Point B
Now try to name the color of the word and not to read the word.

The Stroop interference test is a method for measuring the individual interference tendency in color-word interference. It has been proven that the naming of the color of a visually presented word is slowed down if the content of the word contradicts the color (eg word "blue" in the color red, see illustration). If the content of the word matches the color, however, it is quicker to name the color. Reading is a much more automated cognitive activity than naming colors; This initially leads to the contradictory brain reactions just mentioned when the test person encounters the discrepancy between the color name and the color of the word. Reading is such an automated activity that it is often impossible to suppress reading, although this is required in the instructions (interference).

The different reaction rates to different stimuli is also interesting. People react fastest to tactile and acoustic stimuli, followed by visual stimuli. This means that our sense of sight is the slowest to react to external stimuli. The sense of sight, from the point of view of the speed of reaction, is therefore rather disadvantageous for action. Our sense of hearing reacts 4 times faster than our eyes. However, we only act with our sense of sight. That's why I started to focus on my hearing. Two different tones filtered out of ASK, BID, best BID and best ASK affect my hearing. In my published video, which you can watch at the end of the article, we only hear BID and ASK.

You can find my contribution to different reaction speeds to different stimuli here:

Fast and furious



The probability that another market participant has developed and presented a comparable DoM tends towards zero. Therefore, the results that I have derived from this are, first of all, pure speculation, since such a DoM has never existed before. The task now is to monitor these algorithms over the next few months and to relate them to the actual price trend. My advantage is that I have a photographic memory and can immediately recognize when certain formations appear again and again. From this, possible probabilities develop in order to realize better opportunities for entry and exit. For this reason, I would like to refer only to my assumptions in the following analysis.


The video starts in a small upward trend (pullback)

Point A
In the heat map we can see that stronger limit sell orders were placed in the market 4 minutes beforehand in order to intercept possible stops of the short traders. These limit sell orders are always created at several price levels because the big players can never estimate the chain reaction of the triggered stops.

Point B
The currency strength indicator in the forex market shows that the euro is significantly stronger than the dollar.

Point C
In the Times and Sales list, on the Limit Sell Orders side, we see an increase in strength.

Point D
The spoofing strength indicator already shows a greater bearish strength.

Point E
In the limit profile we can see that strong sell limit orders have already been collected at this price level.

Point F
In the daily limit profile we can see that in the downward course, only little position exits were realized by the big players.

Point G
In the area of spoofing, a kind of resistance builds up on the side of limit sell orders.

Point H
In the area of market orders strength, we recognize an equilibrium. Then the price went down.



The course has now run down 3 minutes and now came into a key candle zone, which cannot be seen here.

Point A
In the heat map we see isolated limit buy zones to intercept the price trend.

Point B
The currency strength indicator from the Forex market continues to show a bearish trend.

Point C
The limit sell orders and the market sell orders are clearly superior.

Point D
Here too we see that the strength of the market sell orders dominate the market.

Point E
The first thing we notice is that the number of market sell orders, the retail traders, is significantly higher than the market buy orders. As mentioned earlier, these are not long trader stops. If the number of short traders increases in an running down price, the big player must take a countermeasure.

Point F
We see a kind of an obstacle on the side of the limit buy orders to stop the price.

Point G
Here we already see a strength in the area of the market buy orders, although no market buy orders can be seen in the time and sales list.

In fact, a lot of retail traders short came into the market at that point and the big player had to react. Almost all scoreboards showed a bearish trend, so it could be assumed that this bearish trend was still active. But at first, there was a small stop run of 13 pip to take out the short traders.



The stop ran goes upwards and the course is close to the turning point. At the red arrow we are already in a key candle.

Point A
In the heat map we can already see that market sell orders want to intercept the price. The crucial point is in the past, here it can be assumed that some iceberg orders are still waiting at higher price levels in the area of limit sell orders.

Point B
Even the short-term currency strength indicator cannot react quickly enough and shows more of a bullish trend.

Point C
We see increasing strength in the area of sell limit orders

Point D
The strength display of the market orders via spoofing shows a kind of equilibrium, with the market buy orders still having an advantage.

Point E
In the limit profile we can see that stronger sell limit orders were activated when the price started up.

Point F
There are a large number of retail traders who are now taking a long position.

Point G
The crucial point is the algorithms in the area of spoofing. Here we see that a strong wall is built to intercept the price upwards. At this moment it is not advisable to take a long position.

Point H
The market buy orders still have a clear advantage, the price went up a bit and was then intercepted by the limit sell orders. Then the price went down a total of 28 pip. After that, a large number of asks were collected in the subsequent equilibrium and the price was then pushed upwards by 150 pip.


Now watch my video and pay attention to the information I have described.





Conclusion:

First of all, we can see that even the fastest information (currency strength display) from the Forex market has no chance compared to the exchange data. Even my developed strength display in the area of limit orders and market orders does not manage to predict the short-term pullback. For this reason, I started to identify the algorithms that are responsible for managing limit orders. This primarily controls the iceberg orders that are hidden behind the limit orders. Overall, this is a cautious approach to identifying the algorithms. I am aware that the settings still have to be significantly optimized in order to identify the possible turning points even better. Still, it seems to be a step in the right direction and the next few months will be crucial. The identification of the key candle for Stophunting is still a decisive advantage that can only be achieved in the Forex market. This gives me the crucial overview to draw out possible zones where a trend reversal can take place. I then use the stock exchange data and the identification of the algorithms to check whether the individual zones are activated or not. The candles from the Forex market are ideal for long and medium-term planning. The fastest information for short-term price changes, I only get from the stock market with the DoM I have created. For the entry and exit, you should completely forget the candles and concentrate only on the pricerange in the DoM.

Overall, we can see that a combination of the Forex and Future data significantly improves the probability of winning. IIt is crucial that the data are coordinated so that they work optimally. What we saw here is far from the end product, but it is a decisive step in the right direction.

I wish you a successful trading week

Best regards, Michael

Combine Forex and Future data!



Hello dear subscribers,


About 18 months ago I started comparing the futures and forex data to get trading advantages. Half a year later I published a tick chart comparison with the futures and forex data. A 4 tick chart was created in the future market and a 16 tick chart was recorded in the forex market. Here you can see the result again.



The Forex market is of course much more volatile, since 1 pip in the future market corresponds to 2 ticks. If the price is 2 pip up, 20 limit order levels must be broken in the Forex market and only 4 limit order levels in the future market. The price movements run almost parallel to each other, the price differences arise from the swaps. Since the swaps change regularly, the proportionality of the price differences can also vary. Since I do not pay attention to prices anyway, this is not a disadvantage for me. If I am asked where the EURUSD is at the end of a trading day, I often cannot answer that.

In the Forex market we see the candles, but we cannot see what is happening inside a candle. In the future market we receive all information via the stock exchange data. First of all, the forex market is the lead wolf, the future market follows, in simplified terms, these movements. Of course, in reality this is much more complex, since there are many different factors responsible for it, which we do not want to go into in detail now.

With a daily trading volume of over $ 2 trillion, the EURUSD in the Forex market is the most important and safest currency pair in trading. There have been the lowest drawdowns in the past 50 years and the high number of big players who trade there every day ensures very high liquidity at all times. The higher the liquidity in a currency pair, the less there are uncontrolled and extreme price fluctuations, such as in Bitcoin. However, this also reduces volatility and sometimes makes the EURUSD a slow and boring currency pair. With the GPBUSD you can get rich faster, but also lose your money faster. I described why I only trade EURUSD in the following article:

The most efficient currency pair

My basic approach to combine the Forex data with the Future data was relatively simple. The probability of winning in the future market is three times higher than in the forex market. This is only because a future trader has much better information than a forex trader. 95% of traders lose in the Forex market and 85% in the Future market. At first glance, this doesn't seem to make much difference, but the opposite is the case. The probability of winning is 1:19 in the Forex market and 1: 6 in the Future market. But unfortunately there is a small catch. The profit level in the future market is significantly lower than in the forex market. Because in the forex market the winner receives the losses of 19 market participants, while the winner in the future market only receives the losses of 6 losers. In addition, the forex market is approximately 100 times larger than the future market. This means that you should only trade in the forex market, but with the data from the future market. In the Forex market you have no closer insight into what exactly is happening in the candles, but if the price trends in the Forex market and the Future market run parallel, the following logic results.

If the future data is responsible that a future trader is three times more likely to win, you could also use the future data to trade in the more attractive forex market. It is completely irrelevant whether the volume data of the future market is congruent with the actual volume data of the forex market. It is crucial that with the future data you are able to get a very deep market insight that you can use in the Forex market. To show you these similarities of the parallel price trends, I first developed my Bionic candle for the future market, because it works without wicks and you can identify the differences more quickly.



Here you can see the last 54 hours of the last trading week. On the left is the course of the Euro FX H1 from the future market and on the right is the course of the EURUSD from the forex market. With the help of my Bionic candle you can clearly see that the courses are clearly parallel to each other. There are minimal deviations, which can be explained by the different price movements and the swaps.

In the next step I made a comparison that is relevant to me, with the Forex and Future data.



Point A
Here I have analyzed the different opportunities and risks in the EURUSD Forex. This gives me an advantage of 61.1%.

Point B
Here I have analyzed the different opportunities and risks in the Euro FX Future. This gives me an advantage of 38.9%. My approach, which I have been pursuing for over a year, is to combine the advantages of the future and forex markets in such a way that a greater overall advantage is created.

Point C
When I use the future data to trade in the Forex market, I achieve an advantage of 72.2%. This is not a big advantage at first, but it is due to the fact that a forex broker does not offer as good price positions as a stock broker and I need a higher quality technology due to the stock market data. But my risk in the Forex market, especially as a professional trader, is 1000 times less than in the stock market. My overall advantage is twice as high as if I were only trading in the stock market.

Point D
Here I have analyzed the different market views of the EURUSD in the Forex market. Due to the insufficient data, there is only an advantage of 27.2%.

Point E
Here I have analyzed the different market views of the Euro FX in the future market. Due to the deeper view of the market, there is an advantage of 72.3%.

Point F
When I combine the future data with the forex data, there is a 100% advantage. This is primarily because there is no currency strength in the future market. In addition, with my self-developed limit profile, my specially created DoM, the strength of market orders and limit orders, and my key candle, I have an advantage that no other future trader has. You can find an interesting contribution here:

Algorithms in the DoM

If we add the total advantages of the three different options together, we get the following result:

Forex 88.8%
Future 111.2%
Forex & Future 172.2%

Trading in the future market brings an overall advantage of 30% over the forex market. With the combination of the future and forex data I achieve almost an improvement of 100% compared to the pure forex data. That was exactly the crucial point why I chose this path. At first glance, this looks very advantageous, but there is unfortunately a small catch.



First of all, you need a corresponding stock exchange data feed that transmits stock exchange data as real-time as possible. In addition, you need appropriate trading software that translates this stock market data and gives a trader the opportunity to penetrate even deeper into the market. It is important that the exchange data feed is precisely tailored to this trading software. Next, you need in-depth knowledge of the stock market, which takes a few thousand hours. Programming skills are not a requirement, but a great help. In addition to a high level of creativity, you should have the appropriate time to develop, analyze and optimize your personal ideas. Finally, you need the appropriate technology from fast workstations and a corresponding internet connection via fiber. Overall, that takes a lot of time and money. Anyone who has had a closer look at the big players or high-frequency traders knows what technology and procedure these professional traders use. In order to have a possible chance as a small retail trader, you have to be willing to invest accordingly. I was very lucky in the Forex market for 10 years because I traded the small movements within an equilibrium, but if I had to start all over again today, I would observe the following rules.

Trading in the Forex market is smart, but only with real stock market data. Concentrate on the DoM and the time and sales list and neglect the candles when getting in and out. Work with a professional technique and learn at least 2 hours of dry theory every day and be 8 hours of trading. If you can do this for 6 years, you have a realistic chance of keeping your winnings. If someone promises you something else, chase them to hell. Of course you will be able to make profits faster, but the trick is to keep these profits long-term and that is exactly what takes a lot of time.

As traders, we have the convenient option of slowly starting a process. A Setup, that work, I would initially keep and gradually add individual modules. This may take a little longer, but may bring more success. You should only choose a new path if you have a good feeling about it. With logic, you can provide evidence, but you cannot gain new knowledge, only with intuition.

I wish you always make the right decisions.

Lovely wishes
Michael

Striking the right note



Hello dear subscribers,

Our sensory stimuli are so limited by our brain that we are only able to perceive optical stimulations that do not follow each other for more than 20-40 ms as a single stimulus. This is depressing because the sense of sight provides us with around 80 percent of all information from the environment. We trade 100% through optical stimulation, which means that we are clearly at a disadvantage in terms of time.



Our sense of hearing cannot temporally resolve two acoustic stimuli that are 3-5ms apart, these are experienced as one sound event. If you output the tones in one ear, via headphones, from a difference of approx 2ms they are no longer felt in the middle of the head, but laterally offset. If you base your trading decision on acoustic signals in the future, you will be able to make decisions 4 times faster than with your eyes. I wrote a very detailed article about this finding, which you can find here:

Fast and furious

The resulting idea is based on the assumption that a trader is unable to identify quickly coming in market orders, to make an advantageous trading decision. As we already know, limit orders determine long-term market movements and not market orders. You can find a detailed report here.

Which is stronger, market orders or limit orders?

Nevertheless, the Big Player also use market orders, to steer the price in a certain direction. The main thing is to get the appropriate volume, in the form of stops, to fill your limit orders. The big players are so precise that it is almost impossible for retail traders to make effective profits. In this context, I managed to make their approach visually visible. I will report in detail on this big player strategy in my next post.

It has been scientifically proven that the brain can record and implement acoustic signals faster than optical signals. For this reason, I took a closer look at the acoustic signals. My first goal was to identify the incoming market orders in the Times and Sales list with two different tones.

Around 90,000 trades (ticks) are processed in Euro FX per trading day. An average of 150,000 lots have been traded in the last 40 trading days, 75% of which between 07:00 and 19:00 CET. Between 09:00 and 11:00 CET and from 14:30 to 16:30 CET, 60% of the total lots are traded. This means that approximately 90,000 lots are traded in about 4 hours. That is an average of 6 lots per second, although 100 lots per second can be traded at peak times. If these market sell orders and market buy orders run down the Times and Sales list at lightning speed, no trader will be able to see these orders with their eyes. Future traders are happy to use only cumulative market orders to keep an overview. All market orders that come in within 1/1000 second are summarized.

There are only two different forms of cumulative market orders that are decisive for me. On the one hand, these are the stops of retail traders and, on the other hand, the cumulative market orders that the big player places in order to push the price in a certain direction. These two cumulative market orders are completely different and should therefore be specifically identified. I will write about this point in detail in my next post.

Theoretically you would be able to identify 20 -25 market orders per second. Unfortunately there is a big challenge. In the Times and Sales list, market sell orders and brand buy orders appear, which apparently run down in a random order. The brain must now divide and differentiate these different market orders. And this division takes a lot of time.

If you put on headphones and acoustically display the market sell orders on the left and the market buy orders on the right, you would theoretically be able to identify 500 lots per second. That is 20 times faster than with the eyes. Due to the reaction time to enter into a trade, the advantage is reduced to four times. But before entering into a trade, you first have to correctly assess the current situation. With two different tones you can do it 20 times faster than with your eyes.

First of all I used two different Windows tones, which take about 100ms to play a sound once. I assigned the lighter tone to the market buy orders, the lower tone to the market sell orders. The output first came from two high-quality speakers that were placed next to my screens. It was clear to me that I could only identify a maximum of 250 lots per second via the loudspeakers, but that was still ten times faster than with my eyes. In the past eight weeks I have been able to optimize my trading decisions considerably. However, there was also a clear disadvantage. In the extremely high volatile phases, a concrete identification was no longer possible and I noticed that my workstation slowed down significantly. I started to study the tones to find out why. The tones I installed took about 100ms to play. I was able to perceive a maximum of 10 tones per second. If 30 different market orders came in per second in high volatile phases, my tones were also activated 30 times, but due to the 100 ms, could only emit a signal 10 times per second. At that moment there was a small jam of sound, 30 tones should be emitted, but technically it was only possible to play ten tones. So 20 tones were swallowed and at the same time slowed down my CPU. I also made a video where you can hear these 100ms Windows tones with an average volatility.



At the beginning the volatility is not high and the different tones can be distinguished from one another, from 45 seconds in the video the tones overlap and identification is no longer possible. The tones I used initially are based on a WAV file that was 5000 bytes in size and was stereo compatible. As a result, different signals are distributed over two channels, which require more memory in a high repetition frequency.

In order to better distinguish the tones from each other and at the same time to relieve my CPU, I looked for faster tones. MP3 files are unsuitable for this because they require too long a playing time and are mostly stereo-compatible. I found a database that made 3,400,000 different tones available free of charge in WAV format. The selection of tones that reached a maximum playing time of 2ms to 5ms was very small. I found a total of 30 different tones that came into question. If a sound is 2ms long, this does not necessarily mean that the total recording time of the WAV file corresponds to 2ms. Here it depends on the recording technology used by the developer. Another challenge is the clear distinction between the two tones when they occur at a high frequency. So I had to combine different tones to get the best result.

The tones that I am currently using are based on a WAV file with a size of 250 bytes, 44,100 Hz, 16 bit mono. Mono is more of an advantage if you later redirect this tone to the left or right headphone channel. The tone duration is 2ms and is over 50 times faster than my Windows tones. In the video below I used the new tones with approximately the same volatility as in the first video.



One can clearly perceive that the tones can be distinguished even more clearly. Now let's have a look at how the tones react when the volatility increases significantly.



From 26 seconds in the video, a small firework of tones starts because a large number of different market orders come in. The tones never roll over and are clearly identifiable even in higher volatility phases. Of course, this is a real mess for an inexperienced listener, but after some time you are able to clearly identify the different tones. Practice creates masters.

These two faster tones also relieved the CPU considerably and has held up well even in extreme volatility phases. One thing caught my eye very positively. In extremely volatile periods, the tones react faster than the Times and Sales list. Before the Times and Sales list was able to display the corresponding orders on the screen, I was able to identify them based on the tones. This could potentially be a significant market advantage. I initially limited this experiment to market orders. For a few weeks now I have started using the tones to indicate the strength of the limit orders. This should result in further insights in order to achieve my ultimate goal. Maybe at some point I will identify the limit orders via the tones and at the same time the market orders via my sense of touch. But that is still very far away.

Conclusion:

The identification of the market orders by means of tones has a 20 times higher advantage than the identification with the eyes. The total response time to make a trade decision improves fourfold. In high volatile phases, the tones are used to identify the market orders before they can be seen in the Times and Sales list. During the entire trading day, the eyes are relieved because you can always hear with your ears what is happening in the market. With the tones you always have the volatility in your ear. If you deal with other things and the volatility increases, you immediately notice this and can react faster. Refraining from the candles and at the same time concentrating more on the price leader in the DoM and the identification of the market orders by the tones has contributed to a significant improvement in my trading decisions. Therefore, I can recommend every trader to take a closer look at these things. Next, I have to filter the corresponding market orders and limit orders so that the tones show me the most important decision points in trading. This is the most time-consuming job. I will of course keep you up to date regularly.

I wish you a nice weekend and a good start to the new trading week.

Best regards, Michael

Sorry for being a bit off-topic, what's the name of the platform that you use?

Hi, check post 1467, and it was answered many many times...