The Equilibrium, a key to success!

Hi Michael,

I came across your blog today, and wow, very interesting !!!

What I like the most is your whole out the box approach, which I believe is the best way in any thing to make new breaks.

So tons of respect to you for tackling this.

I myself are working on something out the ordinary, and get ridiculed for it a lot, I guess it is tough being the outsider, so I handle it accordingly.

I am very interested in your reaction to sound theory. Reason being I am having a very hard time pulling the trigger on my trade setups. My strategy is scalping the M1 on GBPUSD, with multiple setups for entries & exits, more trading back to centre than away from it etc.

My problem is, I can sit relaxed and watch the screen, and call the trades, enrty points and very close to perfect exits as I enter, BUT, and here is the whole bottleneck :

I CAN NOT PUSH THE BUTTON !!!!

Not even on a demo account !!!!

Its like two north poles of a magnet , its just not happening.

Im asking you, since you are also approaching problems looking from outside in, maybe you can point me in a direction ? Maybe the sound activation or something can snap me out my stupor and execute my trades ???
i am desperate / depressed etc because of this shortfall

And please readers, its not a case of lot size or trust or whatever, I call them 100% whole day long, but that keyboard and my hands have a negative magnetic effect on each other.

My goal is not to highjack your awesome blog, I would rather think it ties in with your whole idea of sound as a trigger.
Thanks in advance for anyone who has a fix.
I have dedicated the past 16 months, 15hrs a day, doing nothing else than to learn, FX, get the candle junk out my head / the dumb money laws, and adopt the smart money principles, dealer traps etc mentality, tons and tons and tons of emotional barriers crossed etc, to a system that I can scalp GBPUSD whole day without stopping, just to in the end get stopped by a river I seem not to be able to cross : Pulling the trigger

There is an expert on MQL5 site that lets you enter the market with a constant SL and TP that you can set yourself, when you click "buy" the SL and TP are already set.
And im sure there is some way to enter the market with a hotkey.

Push the button for your life


Hello BitcoinBoff,

First of all, welcome to our blog and thank you very much for your kind words. First of all, today's outsiders are the future market shapers in trading. In the wildlife, outsiders often have the highest chance of survival because they don't follow the crowd. Screen time is an important factor in trading and gives a trader some basic experience. Of course, there are also traders who are more successful with less screen time than traders with significantly more screen time. That depends on your personal setup and that includes many aspects that you will find here.

The never ending story

Success begins with a screen time of 10-15,000 hours. The definition of success can have different meanings for everyone. In the beginning it is only about not losing any money and unfortunately over 90% of all traders do not achieve this goal. If you have achieved the goal of not losing any money in trading, you have to turn the fine screws (setup and money management) to achieve sustainable profits. You also don't lose any money because you don't act. But you have to act in order to gain experience. A baker who doesn't bake bread rolls will never run a successful bakery, and it is the same with trading. Incidentally, the baker also runs the risk that his rolls will not be bought and that he will suffer a loss as a result.

I strongly doubt that the tones I have developed will help you in your current situation, as the fear of trading seems to have other causes. There are only two types of traders for 95% of beginners: the greedy and the fearful. The remaining 5% have found their balance after many years, but these are the great exceptions.
There is no shame in being afraid, the art is to fight against that fear. Traders are very special because they take the risk of losing everything every day. 95% of them manage it too and stop. Perhaps you have no talent to be a trader, just as you might not have a talent to sing or play rugby. That's not a big deal, because there are many opportunities to find a job that makes you happy.

First, think about what you really want and what makes you really happy. Maybe your blockade of trade comes from not wanting it at all. Why do you want to force yourself to do it? Perhaps you may pay a trainer a few thousand dollars that he motivate you to do things that you basically don't want. Save your money. Successful trading is 90% psychology and 10% technology. It is not the indicator that makes you successful, just yourself.

It is not a failure when you realize that trading is not right for you. Have the courage and stop if you don't want to. You will save a lot of money that you will definitely need for other goals. Many traders then argue that they have been trading for so long and now want to pull through. But even that is no guarantee of future success.
If you still want to become a trader, expect to lose money or make too little money for the next 3 years. But only if you can afford it and you really want to go for it. But according to statistics, you will fail 95% of the time. If that doesn't stop you, even though you can't afford it, you are brave but also cracy. I'm not saying this to demotivate you, but to keep you safe from harm. As a beginner I was very lucky and lost little money, but for the first few years I brought money with me to trade, because the cost of living also costs money. I could afford it financially at the time, but very few traders have such a comfortable starting position.

No matter how far you've gone the wrong way, you can always turn around and find a better way. No matter which path you choose, I will keep my fingers crossed for you from the bottom of my heart.

Kind regards Michael

Hint! How you can save a lot of time in trading


Hello dear traders,

we all know that screen time is a critical factor in success. Let's assume that it would take a trader 15,000 hours of screen time to trade profitably. Now let's look at three different traders. The full-time trader spends 10 hours a day on the screen, the part-time trader 5 hours and the casual trader 2 hours a day. In five years, the full-time trader will have 15,000 hours of screen time. To get the same screen time, the part-time trader would need ten years and the casual trader 25 years. This would mean that the occasional trader would never have the opportunity to practice this profession full-time.

Today I would like to give you a little tip on how you can shorten these times significantly.

In EURUSD 1440 M1 candles are created daily. If one analyzes the last ten years, one finds that of these 1440-daily M1 candles only about 600 M1 candles are interesting for the trade. On the one hand, this is due to the fact that the price trend is in a sideways market or equilibrium in two thirds of the cases, and thus in a lower volatility. The interesting trading hours in the Euro EURUSD are between 7 a.m. and 19 p.m. This is exactly where Frankfurt, London and the USA act in the market. At around 2:30 p.m. are all participants are in the market.

A trader sits in front of his screen, waiting for the right opportunity to place his trade. Due to market movements, however, we know that relatively little happens over 50% of the time and that the volatility is often so low that it even makes no sense to place a corresponding trade.

Why are there more sideways movements than up or down movements in a price trend?

As we know, the big players in a sideways market have to collect a certain number of asks or bids before they can push the price in their profit direction. Once they have reached their goal, they have to get out of their position and collect a new position, which in many cases leads to a sideways market again. These collect action are often boring because they take place for many hours in a sideways market.

Every trader who works with indicators or stock market data knows that there are certain situations that are particularly interesting for him because he can learn crucial things from them. But he has to spend at least 50% of his screen time waiting in order to be able to analyze these decisive movements. Part-time or occasional traders are at a decisive disadvantage, as they usually have to practice their profession during main trading hours. In doing so, they dont see the decisive movement sequences that would help you to build up experience.

In order to take with you at least a small part of the experience, I recommend that you record your trading screen if you cannot observe the market yourself at this point. There is a free screen recording program that I've been using for some time.




First you have to download and set up the screen recording program. Then I recommend bringing all relevant charts together on one screen. Then you just start recording and let the charts run when you're doing your job or doing other things. I also found a small video for this video recording program, where everything is explained in detail.




For me, too, there are sometimes situations where I can't sit in front of my screens and that's exactly when this screen recording program comes into play. To record a 4K screen for 1 hour, approximately 1GB of storage capacity is required, with HDMI resolution only half. When you come home from work in the evening, you can pull out exactly the most interesting aspects in 2 hours and thus significantly increase your learning effect. The most interesting videos of the week can also be analyzed more closely at the weekend.

As a general rule, precautions should be taken if you leave a running computer in your home because of a possible fire hazard. You should also take into account an additional power consumption of around 1KW per hour. If the computer is running 10 hours a day, this is approximately € 2.30 electricity consumption. The learning effect that is gained from it is, however, worth significantly more.

I also created my last video with this program. I only have to optimize the recording of the sounds a bit.





I would be happy if the idea helps you and I wish you a successful trading week


Kind regards Michael

Bionics video with explanation


Hello dear subscribers,


After posting almost 1,000 posts at FF in just under 3 years, I wanted to start a new chapter. I discussed my first video over the weekend. In the last few months I have received many inquiries as to whether I could not even publish a video with an explanation. Two reasons have stopped me so far:

1. I have been able to improve my English skills considerably in recent years, but my home language is German. The crucial thing about a language is not just its grammar and syntax, but especially its rhetoric and semantics. In my opinion you can master a language excellently, but the success lies in the rhetoric to underpin certain terminology. Since I have not mastered the semantics and rhetoric in English as I think fit, that was the limit.

2. Producing a video with speech is very time-consuming if you have little experience with it. That has kept me from doing so so far.

What reasons changed my mind?

With the world language English, you can reach more people than with the language German. Nevertheless, the English language is in 3rd place with 360 million native speakers, ahead of Spanish (523 million) and Mandarin (1,000 million). 200 million people speak German, which is a reason for me to produce a German video. On Youtube you can have any language translated, which is sometimes difficult, but still better than no text at all. Plus, many English language videos are also being translated by people around the world, why not even have a video in German.

The last few days have been very exhausting as I produced a video for the first time that is almost 40 minutes long. My aim was to produce the video in 4K and also to achieve high quality sound. In addition, I didn't want to deliver a typical trader video. After producing it, I noticed a few bugs that I'll fix in the next video. So I beg your forbearance.

Conclusion:

I learned a lot and while I was producing the video I had some great ideas on how to identify the algorithms more efficiently. For that alone it was worth it. A video with speech is more complex to implement, but much more efficient for the viewer because he can hear and see. The more senses are addressed in humans, the better they are able to absorb and implement things faster.

Here is my first video, have fun with it!





I wish you a successful trading week

Greetings Michael

More effective information on this blog!



Hello dear subscribers,


You have probably noticed that there have been fewer questions or communication on my blog lately. There are reasons that I would like to explain in more detail. This blog was initially launched as my personal trading diary to present complicated things in a simpler way and to show me my personal development process. If one explain his own approach to yourself, questions arise that require new solutions. In the past, these questions kept giving me new ideas, from which I could develop new concepts.

In the course of my blog there were interesting questions from my subscribers, that I was happy to answer and that helped us all. Unfortunately, questions within a blog are not only reserved for the subscribers of the blog, but practically every troll can post their thoughtless comments here. In the past there have also been some envious and haters who wanted to disrupt my blog while promoting their own under-trafficked blog. Here is a classic example of a pointless post from a trader who has more people on the ignore list than subscribers.

Nightmare

Basically, I can defend myself well against such types, as most of them cannot hold their own against intelligent communication. But that is always very exhausting and costs my valuable time. Every second I give to such people is wasted time that can be used far more sensibly. In addition, there were minor quarrels and vanities between individual subscribers, which in my opinion do not belong in this blog.

I found the questions very exhausting, which I have already answered in great detail or even several times. I can understand that too, though. A beginner reads my latest post and doesn't understand a particular statement. He would like an answer to that. At this point, he cannot know that his question has already been answered in detail several times. Since I spend 12-14 hours every day on my trading and projects, I no longer had the time to keep repeating the same questions. For this reason I have restricted questions within my blog to high impact members. I didn't do that to annoy my followers, but to make this blog even clearer for everyone.

Every subscriber has the opportunity to get in touch with me by sending me an email within FF. If this is a question, make sure they've read my blog. First of all, my blog is divided into 2 areas.

Article 1- Article 966 (up to page 49)

Here the Forex market is described, primarily the equilibrium, interesting indicators up to the tickchart.

Post 967- Today

Here the stock exchange data is described and how algorithms can be identified.


So that all subscribers benefit from it, I make the following suggestion. Anyone can reach me via FF Mail or PM. If it is a question that I have already answered several times, the person concerned will receive a link from this post. The questions that have not yet been asked and at the same time bring high added value for all subscribers, I will publish in this blog so that everyone can benefit from them.

This makes the blog a little more chronological and efficient.

Of course, I know that every new post automatically places this blog on the first place in the search overview, so that new members can also become aware of this blog. If less is posted here in the future, this blog will be in first place less often and therefore less noticed. It has never been my goal to win the most subscribers with this blog, so the ranking of my blog is not so important to me. I am proud to have found traders who have a goal similar to mine and therefore subscribe to me. And I would like to take this opportunity to thank these followers once again.

Interesting information or good things get around quickly, so I believe that interesting followers will continue to find this blog, even if this blog has less communication than other blogs. The greatest benefit, however, will lie in the future clarity and in the effective time savings for readers. As I have already written, I would also like to produce more videos in the future because they are more efficient and one can explain many complicated things more easily. The videos are in my native language, but thanks to YouTube, everyone can have the videos translated in their own language.

Here you can find my first video where I give an overview of the future content.



This new approach will establish itself in the interest of all followers. We traders don't have infinite time to deal with trivialities or vanities. We need facts and ideas that will help us advance in retail. And that is exactly what we will implement here in the future. I am convinced that this is in the interest of all followers.

I wish you a successful trading week

Greetings Michael

Such a shame, Michael but you get them everywhere. If it is any - small - consolation, the more successful your presence, the more you will attract the loons.

Totally understand your frustrations. Whenever I have made the mistake of feeding a troll, it very quickly becomes hugely exhausting and takes away a very large part of the enjoyment of the exercise.

Hopefully this will hasten the end of your hassles, as it would be such a shame if it became so bad as to drive you away.

All the best,

Lem.

Such a shame

Quoting lemercenaire

Disliked

{quote} Such a shame, Michael but you get them everywhere. If it is any - small - consolation, the more successful your presence, the more you will attract the loons. Totally understand your frustrations. Whenever I have made the mistake of feeding a troll, it very quickly becomes hugely exhausting and takes away a very large part of the enjoyment of the exercise. Hopefully this will hasten the end of your hassles, as it would be such a shame if it became so bad as to drive you away. All the best, Lem.

Ignored

Hello Lem,

Thank you very much for your kind words, I agree with you on all points. The example I published was just an extreme outlier that encourages laughing more than crying.

More effective information on this blog!

Of the 750,000 members at FF, there are few who follow a similar approach to mine, which is why a uniform basis for discussion is fundamentally difficult. The main reason I switched to more effective information on my blog is because of my available time. I've found that in the past, I've spent a lot of time doing ineffective things that could have been saved. While it is good to recognize that, but the key is to change this challenge immediately.

From 2009 it took me three years to break even. Break-even means no more money to lose. In total, I lost $ 1500 at the beginning, which I then regained over time. From 2012 to 2017, I then traded profitably in Equilibrium, always feeling that my winning trades were based more on chance than on predictable strategies. In 2017 I started at Forex Factory with my trader diary and started with different experiments to increase my efficiency. Starting in 2019, I started researching the stock market data and made some interesting discoveries that I described in detail on my blog.

For a year now I have been working very intensively with the big player algorithms and have been able to significantly reduce the randomness of my winning trades. Before a trader enters into a trade, the market is analyzed according to his specifications. Regardless of whether he is relying on price, indicators or stock market data, in most cases he will be right when submitting his market entry when it comes to the direction of trade. At first the price actually moves in its direction, then suddenly there is a change in trend. It is interesting that when placing their trade they could actually correctly predict the price direction. Once their are in the trade, they have to hope theye made the right decision. The longer they are in the market, the greater the factor of chance.

We know that the big players only react to the actions of the retail traders. Since they need the volume of the retail traders with their limit orders in order to start or end an accumulation or distribution phase, they have to stop the retail traders. For me it is easier to predict the reaction of a big player than the actions of a few thousand different retail traders. For this reason, I focused on the big players many years ago.

In the last 1.5 years I have found that with the identification of the big player algorithms I was able to see a longer period of time into the future. This made it possible for me to recognize a small breakout in an M1 candle beforehand and thus to get an optimal entry-level course. However, this is always a very short time frame, so I became a seconds scalper. The broker costs are significantly higher, but so is the profit rate. The risk / reward ratio can also be brought to a value of 1: 2 or 1: 3 if one are ready to reduce the stop to 1 pip. However, this is almost impossible without stock market data.

So I always use the few seconds that I can look into the future to place my corresponding trades. This also increases the number of trades I place each day. In addition, I am able to scale my risk and profit opportunities with the number of lots invested. With 20 trades that last an average of 30 seconds, I am actually only 10 minutes in the market of the most volatile 600 trading minutes. And that is exactly the time, that I can almost exactly foresee, by identifying the algorithms. If I were to enter into a 10 minute trade, I would only be able to predict the direction of trade for 30 seconds; I would have to rely on chance for the remaining 9.5 minutes. In recent years I have found that a high win rate also gives me great confirmation, with very small stops at the same time. Of course, every now and then I get stopped out due to higher volatility, then I just place the same trade again.

As I already showed in my last video, patterns are only possible in the DoM and the Times and Sales list, as they are independent of time and volume. That seems to be a crucial key. The more a trader can reduce the factor of chance, the greater the success.

In fact, the spread is what causes most traders to lose money. In EURUSD, the spread rises 6 times within a small breakout. When a strong bullish candle with 7 pips arises, many traders enter with a long trade. The spread is now 3 pips. The big player now pushes the price down 5 pips and the retail traders are already losing 8 pips. Before the breakout upwards, the spread is 0.5 pip. If one get into the market beforehand, one can quickly make 4.5 pip profit. After deducting the stop (1 pip) and the spread (0.5 pip), this is a risk / reward ratio of 1: 3. With the right scaling, this results in very interesting possibilities.

With the help of the algorithms a trader is able to reduce the chance and to increase the determinism significantly. This is a crucial point in increasing the odds. The biggest advantage, however, is the brokerage costs. Entry into the breakout usually costs 6 times the spread, before the breakout only 0.5 pip. Income minus costs = profit! Therefore one must only enter the market before a breakout. The crucial information for this can only be recognized by identifying the algorithms.

We will deal with this in more detail in the next few months.

Kind regards Michael

Increase in trading efficiency



Hello dear subscribers,



Every trader would like to make more money in the same amount of time without taking a higher risk. Today I want to show you a way how you can significantly improve your trading efficiency without changing your setup or your approach.

As I wrote in my last post, you have to deduct the costs from your income to get a profit. In trading, however, it is not enough to offset your losses against your profits. There is one more crucial factor that is often forgotten: the brokerage costs. Of course, there are different types of billing for the costs at the brokers. Some offer a fixed commission plus spread, others only charge a spread only. Even if you are trading with a pure spread, these costs must also be taken into account, as you always start in the minus at the beginning of the trade. Let's take a look at how the spread is created in the futures market.



Point A
Here we see a classic DoM, on the ask side are the limit sell orders and on the bid side the limit buy orders. There is a green number on the price ladder, this is Best Ask. The red number is the best bid. A purchase entry always begins on the best ask side, a sales entry always begins on the best bid side.

Point B
A 16 lot market buy order is now placed on the Best Ask page. The spread is one tick or 0.5 lot, since the best bid and best ask are close together.

Point C
The 16 lot market buy order now literally eats its way into the limit sell orders and at the same time drives the best ask price up.

Point D
We can see that the best bid price has still not left its position. This is because there are no limit buy orders on the left. The spread has now widened to 8 ticks or 4 pips.

Point E
Now more limit buy orders come into the market and the spread is reduced to one tick or 0.5 lot.



Now let's look at an example that has happened to every trader before.

Point A
A big player brings a larger number of market buy orders into the market.

Point B
This literally shoots the price upwards, creating a strong bullish candle. A trader now believes that the price will continue to rise and positions a 1 lot market buy order on the best ask side. The spread is 4 pips or 8 ticks, which many traders only notice when they are already in position.

Point C
Since the price has risen very quickly, the limit buy orders are not able to fill the gap quickly enough. The big player takes advantage of the situation and pushes the price down with relatively few sell market orders.

Point D
The spread now widened to 16 ticks or 8 pips. Our trader is still standing with a market buy order at position 1.10085. Since the price has already gone down by 8 pip, there is a high probability that the stop has already triggered. This stop provides another push down.



If you want to place a buy order, you basically go to the Best Ask page. As soon as you want to get out of this position, this is only possible via the best bid page. If you want to place a sell order, you basically go to the best bid page. As soon as you want to get out of this position, this is only possible via the Best Ask page. The closer the best ask and best bid side are together, the smaller the spread.

You can enter the market immediately with a market order, but you run the risk of paying a higher spread. A limit order usually ensures that you get the smallest spread of a tick. Unfortunately for most of them this only applies to the futures market, but not to the forex market. In the forex market, it makes no difference to me whether I enter the market with a market order or a limit order, I always have to pay the spread specified by the broker. Of course, with a limit order, the spread is only due if the limit order is filled. Nevertheless, this is a significant disadvantage compared to the futures market.

These were all points why I took a closer look at the spread in the forex market. First of all, each of you is able to visualize the best ask and best bid line in the chart in your MT4. This may give you a better overview. In order to effectively monitor the spread over the day, I got hold of a few different indicators. At the weekend I did the evaluation and I noticed something interesting in the last few weeks.



First I carried out my spread evaluation in a tick chart, as an M1 would not have made any sense. The difficulty was that most spread indicators do not run on a tick chat. But this is crucial, because so much different spread information comes in within 1 minute that it cannot be evaluated within an M1 candle. You can see a 32 tick chart in EURUSD here. I once tried to mark the different movements with lines. This is not that easy, because within an upward movement there are also smaller downward trends and vice versa. The yellow dots show the average spreads in the different movements. I already noticed there that my spread was significantly higher in an upward movement than in a downward movement.



I wanted to investigate that more closely and took a closer look at a 2 tick chart. Interestingly, this is where the highest spreads often emerged in an upward movement.



I evaluated different charts and found that the spreads are on average 40% higher in an upward movement. However, no fundamental deduction can be made from this, as it can look different for every broker and trader. For this reason I can only rely on my own evaluation. This may also have been a coincidence and is therefore not representative.



Interestingly, the largest spread peaks often lead to a trend reversal, but I would recommend not to trade on them. In principle, one cannot always assume that the spread is higher in an upward movement than in a downward movement, but on average this resulted in a difference of around 40%. One reason for this could be that limit sell orders are pushed into the market faster in a downward movement than limit buy orders in a strong upward movement. According to my broker, he passes on the current spreads of the forex market directly to his customers with a small premium. This also explains why the costs for market and limit orders are the same. I recommend a spread indicator for scalpers in particular, which provides information about the current spread at all times. Since I usually enter the market before a breakout, the spread in this area is within a normal range.



Exactly one year ago I compared the speed of the upward and downward movements in the EURUSD. For this I used the data of the EURUSD from 1971-2019. In this comparison it was found that the downward movements are about 40% faster than the upward movements. This is an important finding because I believe that the longer you are in the market with your position, the greater the risk of being stopped out by an unexpected strong movement. If, based on my analysis, I only bet on a downward trend in the future, I could reduce my time in the market by 40%. Provided that the price movement would also behave to the same extent in the future. You can find the full report here:

Who is faster the euro or the dollar?



A very important factor for me is the pip per minute that I get with my trades. An M1 candle reached averages 1.54 pips per minute. Of course, that changes in extreme, volatile phases. You can also find the interesting article about this. Here is the link:

Increase our hourly dare?

From the now different results we want to find out whether this information can be used to generate a trading advantage.



We will now compare a long trade with a short trade.

Point A
For a long trade, we calculate a spread of 1.4 pip, for a short trade 40% less, i.e. 1 pip. An investment of 1 lot incurs costs of $ 14 for a long trade and $ 10 for a schort trade. We estimate the stop at 2 pips, or $ 20. A long trade reaches an average of 1.5 pips per minute and thus 7.5 pips after 5 minutes. A short trade averages 2.1 pips per minute and thus 10.5 pips after 5 minutes.

Point B
Let's start with a 1 lot long trade that runs for 5 minutes. The cost is $ 14 and the profit is $ 75, for a total of $ 61. The risk / reward ratio is 1: 2 as the stop would have resulted in a loss of $ 34.

Point C
Now let's look at a short trade that runs with 1 lot, 5 minutes. The cost is $ 10 and the total profit is $ 105 that is $ 95. The risk / reward ratio is already over 1: 3 here, as the stop would have resulted in a loss of $ 30. In this case, not only would we have made 50% more money, but we would have made 10% less losses if the trade had gone into the stop.

Point D
The second option would be to significantly reduce the time it takes to act. In this case, we would have made $ 64 after 3.5 minutes. The fact, this is a time saving of 30% and, in the event of a loss, we would have saved 10%.


Conclusion:

If you as a scalper were to concentrate only on short trades, the probability would be high that you could achieve a considerable trading advantage. Whether this advantage is actually 50% is pure speculation and everyone should try it for themselves. A trader who only makes short trades has another advantage.

Certainly each of you can still remember the Swiss franc shock in 2015, when the price went down by 2200 pip within seconds. For those of the traders who would only have bet on a downtrend, this breakdown would not have been a problem. The curious thing is that there has never been such a move up. However, that does not mean that this cannot happen in the future. As we know, we traders only have to use the probability to optimize our trading results. A concentration on exclusively short trades could not only bring more profits, but also a significantly higher level of security. Everyone has to analyze whether this actually applies to each individual using their individual trade evaluation. Perhaps I was still able to provide you with a good approach to act even more effectively and successfully in the future.

I wish you a successful trading week

Kind regards Micha

Liquidity gives us crucial information


Hello dear subscribers,

Anyone who trades in the forex market and only uses forex data has a decisive disadvantage. He is able to see the result of a price war, but he cannot identify the cause. The result of the price war is always the price movement, but what triggered it remains hidden in the forex market. Due to the fixed time (M1, M5 ...), the candles always arise within a random formation. By chance it is never possible to identify a clear pattern sequence that supports a sustainable winning strategy. This means that the chance of winning is well below 50% and makes long-term profit optimization difficult for us.



As I have already written in many posts, the actual reason for the price movements is exclusively in the market orders that run into the limit orders. The market sell orders (Point A) initially run into the limit buy orders (Point B). The larger the number of market sell orders, the higher the probability that they can break the limit buy orders. The higher the number of limit buy orders, the higher the probability that they will be able to absorb the market sell orders. This gives the result of whether or not the price is going down another tick. It is the same with the market buy orders (Point C), which run into the limit sell orders (Point D).

While the limit orders represent the liquidity, the volume results from the market orders. The amount of liquidity and volume is always the same during an order execution, since a market order must always be accepted by a limit order. A market sell order is placed by a seller, which is placed by a buyer of a limit buy order. This is exactly how a market buy orders are placed by a buyer, which is accepted by a seller of a limit sell order. A market sell order will never meet a market buy order as they always have to run into a limit order. Interestingly, they are still next to each other in a footprint chart, although they have nothing to do with each other. In a volume chart, the market sell orders are now added together with the market buy orders. From this one can deduce that an increased battle took place within this price level, but that was all.

A price movement therefore only arises because the number of market orders was so large that they could completely buy up the limit orders at one price level. But already here the danger lurks in the form of iceberg orders. If there are 20 limit buy orders in the DoM, this does not mean that you can move the price down by one tick with 21 market sell orders. There may be an iceberg order of 100 lots at this price level, although only 20 lots can be seen in the DoM. In principle, it is almost impossible to identify iceberg orders, but with the help of spoofing algorithms and a corresponding filter setting, the probability is high that certain iceberg zones can be identified beforehand. This usually results in interesting resistance zones that you can use to your advantage.


Basically, the price movement always arises from the market orders that run into the limit orders. However, there is still a crucial psychology that is based on the waiting limit orders in the DoM.

Point A
Here we see the limit buy orders that are waiting in the DoM to be activated by the market sell orders.

Point B
Here we see the limit sell orders that are waiting in the DoM to be activated by the market buy orders.

These limit orders represent the liquidity in the market and are at the same time a prospect of the future. Liquidity is the basis for executing a market order. If there was no liquidity, the market order would have no chance of being executed. By placing a limit order, the participant declares their willingness to be executed at a certain price level in the future. Thus, the limit orders in the DoM are, so to speak, an outlook into the future. Unfortunately, these limit orders can also be withdrawn again, resulting in a changed relationship between demand and supply.

For example, if a price goes up and suddenly an above-average limit sell order is placed in the DoM, many participants believe that the price on these limit sell orders will be held up. Some are now exiting their long position, other traders are opening a short position. Suddenly the big player withdraws his large limit sell order and pushes the price through strongly upwards. With the spoofing algorithms, it is possible to find out beforehand whether this is a possible fake order or not.



We have three important pieces of information that we have to pay attention to. The limit orders in the DoM are in a way a possible glimpse into the future, whereby you always have to include the possible iceberg orders. The executed market orders show the short-term price direction, while the executed limit orders show the long-term price direction. First and foremost, I concentrate on the executed limit orders, which I analyze with the help of my special limit delta. These limit orders are the key to success, as the big players within an equilibrium collect a certain number of limit orders in order to then bring them to a profit. If you can find out at which price levels the big players have collected a certain number of limit orders, this also increases the probability of winning.


As we know, the EURUSD is not one of the most volatile currency pairs. I measure the strength of the dollar using the seven different currency pairs shown here. The figures here show the percentage change compared to the previous day. The EURUSD reach a medium volatility. Volatility is a critical factor for any trader, but it too depends entirely on volume and liquidity.


Point A
If we have a large number of market orders that run into low liquidity, this results in high volatility. At the same time, the spread increases, but so does our chance of winning.

Point B and C
When the volume and liquidity are balanced, a standard situation arises within which normal trading is possible.

Point D
If the volume is low but the liquidity is high, this results in low volatility. The spread is small, but at the same time the risk of a loss increases as you have to stay longer in the market and uncontrolled breakouts can destroy the profit.


I achieve my highest probability of winning within normal volatility, because then, with the help of my selected algorithms, I have the highest chances. The highest volatility in EURUSD arises with the entry of London and the USA. Interestingly, my probability of winning before and after is significantly higher. I recommend every trader to make such an individual evaluation to find out when trading is particularly worthwhile. In the last few months I have concentrated more on the liquidity of the limit order. As we know, it is primarily the larger market participants that provide the liquidity, as they can use the iceberg order to collect a certain number of ask or bids unnoticed. Iceberg orders are only available within limit orders. Since the iceberg orders in EURUSD account for more than 60% of sales, it is logical that this strategy should be attributed to the larger market participants.


The liquidity in the market is a decisive factor for me in order to find out whether there are big players in the market and to what extent they control the market. From this I created a table for the Euro FX / EURUSD that shows us the current situation.

Point A
The number of limit orders refers to the ask and bid side. Between 300-400 limit orders on the ask and bid side it is easier to get through with the market orders than if there are twice the number of limit orders in the market. That shows me that the big players are not really interested in the current market. We also had this situation briefly at the beginning of the Corona crisis, but that was due to the fact that many bank employees were unable to work because of the crisis.

Point B
For me, the market situation is average between 400-600 lots on the ask and bid side. The big players are in the market and are collecting their predetermined orders.

Point C
Between 600-800 lots on the ask and bid side, there is already greater interest from the big players. It is possible that the specified orders have already been collected and must now be turned into a profit. Therefore, increased liquidity ensures that no large price jumps can take place. The big players clearly control the market.

Point D
Between 800-1000 lots on the ask and bid side, the interest is already above average. The big players not only control the market, they dominate it. Anyone who knows exactly what the big players have already collected in this situation has a clear market advantage.

From this information alone it should be clear to everyone why I pay no attention to news and would never act on it. Let us assume that Deutsche Bank collected a large number of asks at different price levels within one day. Now comes an important economic news item that means extreme strength for the dollar. Normally, EURUSD would have to move down now to justify the strength of the dollar. Interestingly, the opposite happens. Deutsche Bank would like to bring the collected Ask into profit and for this reason will push the price up massively. The overall situation is even positive, because since many traders are buying the dollar, it is even easier for Deutsche Bank to push the price upwards. For this reason we have to remember: It is not the news that determines the market, but the market that determines the news.



Here you can see a video from the last trading day on Friday in EURUSD from 16: 37-16: 43 CET. First there was a small upward pullback to eliminate the short traders and then a larger downward movement. I've tweaked my main screen a little over the past few weeks and added new modules. I have also improved and adjusted the tones. As soon as I have optimized my filter settings, we will look into that in more detail. Pay attention to the different representations in connection with the tones. From this, certain actions can be recognized in advance.

Conclusion:

Based on the limit orders in the DoM, you can see the interest of the big players in current market events. I am currently working on a representation to set the waiting limit orders in relation to the current market orders. The goal is to predict future volatility from this information. In connection with deleted or added limit orders, smaller breakout candles can be identified more quickly before they arise. That could increase the probability of winning again. So far I have been able to make an equilibrium visible within Best Ask and Best Bid, which you can see in the video under my Forex trading screen. The blue fields represent an equilibrium, the sizes without equilibrium show the respective strength within the bid and ask. As I have already established, I get the fastest information from a time and volume independent representation. This is the time and sales list and the DoM. It is possible that my filter settings will be limited to this in the future.

Every trader's dream is a chart that shows future movements a few minutes before they occur. Unfortunately, this will remain an impossible dream. But you can identify the tracks of the big players more precisely with the help of the algorithms and my tones. This allows you to see into the future for a few 1/10 seconds, which will bring decisive trading advantages. The challenge is to get the most out of these 1/10 seconds.

I wish you a good start into the new trading week.

Kind regards Michael

Testing the algorithms



Hello dear subscribers,


As we know, the big players collect their ask or bid within an accumulation or distribution phase with the help of smaller iceberg orders, which are hidden behind the limit orders. These iceberg orders are difficult to identify. As soon as the collection campaign has been concluded, the current market situation will decide whether to stopfishing. If, after a completed accumulation phase, the majority of retail traders take a short position, there is no reason for a stophunting and the price can be pushed up. For this purpose, limit sell orders previously placed on the market are deleted and, at the same time, smaller, cumulative market buy orders are shot into the market with the help of the algorithms. As soon as the stops of the short traders are triggered, a chain reaction occurs and the price literally explodes upwards.

In principle, order book trading in conjunction with the Times & Sales list is very advantageous for short-term trading. First of all, every trade from the Times & Sales list is displayed in a tick chart, regardless of the number of orders placed. These time-independent ticks are now connected with a line and our well-known candles (OHLC) are created from this. In the forex market you can also create tick charts, but one essential aspect is missing: the number of orders. It is therefore not possible to display the respective sizes of the limit orders in the DoM in the Forex market. These quantities are a crucial aspect when reading out algorithms.



At 16:50: 41.472 the price dropped 1 tick from 1.17935 to 1.17930. At this point there were 12 lot limit buy orders and 11 lot limit sell orders in the market. This number of limit orders is a crucial point for deriving strong resistance and identifying iceberg orders. The larger the number on the right (limit sell orders), the more difficult it is for the market buy orders to get through. The larger the number on the left (limit buy orders), the more difficult it is for the market sell orders to get through.


Here you can see a representation of the respective sizes within the limit orders. This makes it even easier to identify supply and demand in the market. If one side is particularly strong, it gives an indication of possible absorption or a zone of resistance that cannot be breached.


I have highlighted the strongest sizes in my Times & Sales list. The green color shows above-average limit buy orders and the red color shows above-average limit sell orders. It is clear, that the course respond accordingly. This makes it even easier to identify possible turning points.


I have created a video for you. Let's first look at the essential information for the turning point.

Point A
We see that limit sell orders have been collected.

Point B
This is clearly identifiable in my limit purchase display.

Point C
In a special limit footprint chart, we also recognize the collected limit sell orders.

Point D
The strength of the limit sell order is increasing.

Point E
Limit sell orders were added 8 ticks above the last high, to stop a possible price.

In addition, my 8 different tones give further information that heralds a beginning downward movement.

Inserted Video

Overall, the price ran 35 pip down until it started a trend reversal again around 16:08.


In the chart I have developed a new representation that I would like to introduce to you briefly.

Point A
This is a bar graph that ranges from 0-100%. It shows the amount of market sell orders coming in in the times & sales list .

Point B
This bar graph shows the amount of branded buy orders coming in the times & sales list. Both displays are coordinated and together always result in 100%. However, based on the incoming market orders, one cannot infer a possible further course of the price. As we know, the limit orders are so strong that they can hold up a price.

Point C
Here we can see the strength of the limit buy orders that I created with special filter settings from the best bid.

Point D
Here we can see the strength of the limit sell orders that I created with special filter settings from the Best Ask.

Point E&F
This filter setting cost me a few weeks because I calculated the current strength of the course from the best ask and the best bid. This display gives the clear direction in the current market. For example, if Point C, F & B show a clear strength, the course will go up. As soon as there are deviations in this area, one should be careful. You can see that clearly in the video.

Point G
This representation basically shows the current Times & Sales list. The blue zones mark the equilibrium within this Times & Sales list. The visible numbers are outside the equilibrium and thus give me a clear statement about supply and demand.

Point H
I represented points C, D, E and F with two tones (loud and soft). In the video you can hear the market sell orders on the left channel, which are intercepted by the limit buy orders. You can also hear the market buy orders on the right channel, which are intercepted by the limit sell orders. Interestingly, I don't calculate the tones of the market orders from bid and ask, but from best bid and best ask. The illustration H shows the strength of the respective channel. This representation is still a little too imprecise for me, so next week I'll switch the limit sell orders with the market sell orders to the left channel and the limit buy orders with the market buy orders to the right channel. This should result in a better representation of Point H.

Possibly I will assign the four different order types (market buy, market sell, limit buy, and limit sell) to a respective bar chart and display them in the chart.

The difficulty is that we have four different strengths in the area of the four different order types. You have to put these in relation to each other at any time to find out whether, for example, in an upward movement, the market buy orders are able to break through the limit sell orders. This is basically a four-dimensional representation that is not easy to identify.

Conclusion:

The representations I have shown within my software are not standard settings, so they are unique and there is no comparable view. The development time took a few 1000 hours and gives me the opportunity to identify movements and turning points beforehand. The advantage is only in the millisecond range, but that is enough to achieve significantly better entries and exits. Unfortunately, there are still unclear market situations in which I simply do not understand what is happening. But I am convinced that with the appropriate filter settings, these unclear market situations can also be identified in the future. Unfortunately, there are an infinite number of filter options, so it's only a matter of time.

I wish you a good start into the new trading week

Kind regards Michael

The 3 strategies of the big players



Hello dear subscribers,


12 banks dominate the Forex market to 85%, for this reason I have been trying to identify the tracks of the big players for over 10 years. Perhaps that was the main reason that I reached breakeven relatively quickly at the beginning. First, I had to use the available forex data; it was not possible to identify algorithms because the software I work with today did not yet exist.



Starting in 2008, I started looking more closely at the EURUSD as it was on the way to hitting the all-time high of over 1.60. Since then we have been in a classic downward trend. Interestingly, this was when the volatility was greatest.



The highest volatility was in March 2020, after which the gap (188 pip) from April 2018 was closed and the price went up again. In the past there were also gaps of 500 pip, which repeatedly formed interesting resistance zones and were active for many years. You can see from this that the market also has a memory for price levels that still work decades later. But deriving trading decisions from this is more than speculative. For many years I only traded the sinus curve within an equilibrium, since the big players carried out their collection campaigns there. That was relatively predictable and that was where the probability was highest for me to achieve sustainable profits. I made my biggest breakthrough 2 years ago when I came to the stock market data through the tick charts in the Forex market and started reading out the algorithms of the big players with very complex filter settings.

I would like to briefly summarize my experience from over 40,000 screen hours. Please note that this is only my personal opinion. Discussions about this are inefficient as my opinion has solidified through my experiences over the past few years.


40 important theses for my personal success.

1 There are no typical trends, only movements that result from the current market situation.
2. Downward movements are on average 40% faster than upward movements.
3. Acoustic signals can be perceived 20 times faster than optical signals
4. Although market orders move the market, limit orders dominate the market.
5. Volume and liquidity determine the volatility, the spread and the risk.
6. My deciding factor are the pips per minute.
7. Volume trading is ineffective in both the forex and futures markets
8. The spread is higher in upward movements than in downward movements.
9. The overall risk in the forex market is significantly lower than in the future market.
10. Virtual stops help in Forex to reduce the manipulation of the broker.
11. Currency strengths are more reliable in the forex market.
12. Best of the information is obtained from time and volume independent charts.
13. The equilibrium between best ask and best bid is crucial.
14. If you want to be successful in this market, you need the right technical equipment. (Internet, workstation, screens and software)
15. A successful trader needs to know exactly how the market works. (DoM, Times & Sales List)
16. Every trader should determine his optimal currency pair in order to achieve the highest profit probability.
17. Money management is an important fine-tuning to optimize profits, but it is more crucial to get in and out at the right time.
18. News and price are completely irrelevant to profits.
19. An indicator in Forex primarily only translates the price with a different representation, but has the disadvantage of being lagging.
20. With the identification of the algorithms, one can see into the future for a few milliseconds.
21. The shorter the length of stay in the market, the lower the risk of being stopped out by smaller breakouts.
22. There are no patterns in the price, the candles or the display of indicators.
23. The market makes the news and not the other way around.
24. In 30% of the time there is movement, 70% of the time the market is in an equilibrium.
25. Forex and stock market data must be combined in order to achieve the highest probability of winning.
26. Concentrating on one currency pair is most efficient.
27. Success in trading depends on the effective screen time.
28. It is easier to focus on the 12 biggest big players than on 1 million retail traders.
29. Due to the different algorithms, market technology is now out of date.
30. Smaller iceberg orders dominate the markets today.
31. The retail trader's stops are the most important point to fill the liquidity of the big players.
32. The horizontal and vertical delta limit are a decisive factor in the stock market.
33. Bid and Ask do not decide on the future course of the price, only the Limit orders reach that.
34. There are 2 different bulls and bears fighting each other in the market.
35. The probability of winning in the forex market is 3 times greater with stock market data, than only with forex data.
36. Candles do not give any information about the future price development.
37. There is no top or bottom in the market, so the price is unimportant.
38. Since we retail traders cannot influence the price, we have to let the big players pull us in the right direction.
39. One should trade in the market, where the most sales are made.
40. The big players always work with a similar approach.

In my blog you will find detailed information on all points from post 967 till today.

Forex versus future

The big players can move the markets, but they have a decisive disadvantage compared to us retail traders. A retail trader in the forex market can press Buy or Sell at any time and is in the market with 1 lot. This is because our broker provides the necessary liquidity. A big player in the Forex market trades with a few 100,000 lots and unfortunately these are not immediately available in the market. Therefore, he must first collect this 100,000 lots in order to then bring it to profit. This is one of the reasons why the markets have a 70% sideways movement. There are 3 different ways that the big player uses to realize profits. Let's take a closer look at this now.

Collecting in an accumulation or distribution phase

In 80% of the cases, a collection campaign takes place within an accumulation or distribution phase. The price is kept within a range and the required ask or bid is collected with the help of iceberg orders. The stops of the retail trader are a kind of turbo in order to reach the necessary quantities faster. As soon as the goal is reached, the current market situation decides whether or not to stophunting. If the collection action is completed within an accumulation phase and there are still more buyers in the market at this point, stophunting will take place downwards. Then the course is pushed up. On the way up, the big player has to invest another significant number of asks. Now you have to know that it is much easier for a big player to get into positions than to get out again. The reason for this is very simple. The longer a price goes up, the higher the likelihood that the market will assume a major pullback will occur. If the big player wants to get out of his ask position, he has to find traders who believe that the price will keep going up. The further up a course has gone, the more difficult this situation becomes.

For this reason, the big player uses the pullbacks within the upward movement to sell the ask that helped him push the price up. After all, at a lower price level, he has collected a certain number of asks, which he now wants to bring into profit. If he were to collect the entire ask in the upward movement as well, he might have massive problems near the high to get out of all positions. However, he will only sell the short-term asked ask (to push the price up) if he was able to collect his optimal amount within the accumulation phase. Collecting in an accumulation or distribution phase takes place when the market is in a normal situation. This is 80% the case and is therefore a known practice.

Course push through

In certain market situations it can happen that the big player does not have the time or opportunity to carry out a lengthy collection campaign. Then the course is simply pushed upwards. The algorithms now shoot market buy orders into the market and at the same time withdraw the limit sell orders that were previously placed on the market. The price shoots up and the short trader's stops help accelerate the price upwards. At some point the price slows down because retail traders are no longer willing to place further buy orders. The price is slowing down and the first sellers are entering the market. The big player now intercepts these sellers with his limit buy orders and can buy further Ask. Then the algorithms start pushing the price up again and the stops of the short traders accelerate the movement upwards. This strategy includes what is known as an average calculation. Let us assume that the price moves up by 100 ticks and in this way the big player invests 1000 lots. If he manages to get out of his ask position after 100 ticks, it is exactly as if he had collected 1000 lots at a certain price level and then pushed the price up by 50 ticks. This approach is often used in somewhat uncertain market conditions or in situations where the big player has little time.

Buy up your own volume

A somewhat more risky option that a big player can use arises in times when there is hardly any volume in the market. Since a big player collects ask or bids via his iceberg orders in most cases, he is automatically dependent on volume (market orders). In order to collect this volume more quickly, in most cases he uses the stops of the retail traders. However, if the current market situation is so weak that a below-average number of market orders come into the market, this can lead to the big player making volume available to itself. To do this, he first selects a certain price level, which he places an extremely large limit sell order on. Then he pushes the price to this price level, and his algorithms shoot an extremely high number of market buy orders into the market. These market buy orders are now absorbed by their own limit sell orders. At this price level he has now acquired 1000 Lot Ask and 1000 Lot Bid. The retail traders can now see that a large position of market buy orders has entered the market. They are all trying to take a buy position right away. The big player is now pushing the price down and the long trader's stops help him to accelerate the price down. At the low, an equilibrium arises, where the big player exits his short position and at the same time builds a new ask position. Then he pushes the price ten ticks above the price level where he has made liquidity available to himself. Retail traders know that 10 ticks below this price level is an extremely large ask position and are now expecting a stronger upward movement. The big player uses the fact that an extremely large number of buyers are now entering the market to get out of his ask position. Then the big player is out of the market.

These are the three main ways a big player uses to realize their winnings. First and foremost, he will use the accumulation or distribution phases to collect his orders in peace. However, he needs an average market situation and enough time for this. If one of these things is not given, he has the opportunity to push through the course or to provide liquidity himself. These two alternatives have the advantage that they require significantly less time, but they involve a significantly higher risk potential. Now one could assume that a big player in an uncertain market situation has the possibility of not entering into any trade. However, this is not an option for the big player. We all know that the money the big players own is not their property, but belongs to different investors who expect a certain return. Money that is not invested in the market can therefore not yield any returns. The largest banks generate up to 60% of their balance sheet profits from the Forex market. Money that is not invested in the market is dead capital and that's why it needs to be invested. However, the big players think carefully about the possibilities with which they can achieve the highest probability of winning.

Big players experience the greatest stress when they exit their positions, because after all, this exit decides on the daily return on their capital. After an accumulation phase, the course is pushed up. If you take a closer look at the high of a price trend in the futures market, you will find that it is not possible for a big player to get out of his position with 1000 lots. For this very reason, the big player gets out of his position shortly before the high. Most of the time, we can then see that the price continues to move up for a while before it finally changes into a downward movement.

Of the twelve big players who control 85% of the market, only the first three have extremely high capital. Smaller big players who are active in the market must have an emergency plan for their exit. A smaller big player collected 1000 Lot Ask in an accumulation phase and then pushed the price higher. Now he begins to exit his position with his limit sell orders within the upward movement. Now suddenly a bigger big player comes into the market, who pushing the price down. The smaller big player who wants to get out of his ask position would now be left behind and give up massive profits. For this reason, an equilibrium is first created where the smaller big player tries to get out of his position. In the extreme case, he has to give back a large part of his winnings, especially when a bigger player comes and uses a "course through strategy".

Many traders have suspected for years that the big players form a kind of consortium and therefore work together. However, this is a fallacy because if you work together you have to share the profit. The real reason why the big players so rarely compete is the fact that they see exactly what the other big players are investing. So if a big player collects massive ask within an accumulation phase, there will hardly be another big player who collects bids in the same period. Of course, this inevitably leads to an involuntary collaboration, but this has the disadvantage of sharing the profit. Since every big player wants to achieve the highest possible profits, everyone tries to implement their own strategy as far as possible. Since around 20,000,000 lots are invested in Forex EURUSD per day, there are enough opportunities for many big players. Since we retail traders are unable to influence the market, we first have to find out which of the three strategies is currently being used in the market. Of course, it is also extremely important whether this is an accumulation or a distribution phase.

Conclusion:

As we can see, it is not easy for the big players to make their daily profits either. While they can influence the market in their favor at any time, they may have massive exit problems and need at least a few hours to collect their required contracts. Even though you collect your contracts with the help of iceberg orders, you still leave interesting traces that we retail traders can identify in our favor. The main part of the strategies take up the accumulation and distribution phases. This strategy is the easiest to identify. As soon as a big player makes liquidity available to himself, it is initially unclear in which direction he will push the course first. However, we then have a clear certainty that at some point he will have to return to the price level where he made liquidity available to himself. The most unclear situation is when a big player just starts pushing the course. If you couldn't make out a clear accumulation or distribution phase beforehand, you can be picked up.

As a scalper, I'm on the move at very short notice, but it is also extremely helpful there when you know exactly what is happening in the market. But even with accumulation or distribution phases you can very quickly make mistakes. I still remember February 2020 in EURUSD very well. The price went down and was in the process of closing the April 2018 gap. The big players had already collected a large number of limit sell orders within a distribution phase. So all traffic lights were on green in order to close the gap completely. However, the majority of all retail traders also assumed it and took a short position. The big players simply sold their short positions to the retail traders and then pushed the price 740 pips upwards. Nobody would have expected that.

Only then did the course run down and close the gap completely. Then the price went up 1400 pips. This shows that the big players are able to react very quickly to current situations. Those who are able to recognize this situation with the help of their software have a considerable market advantage over all other market participants. In order to trade profitably in the long term, one has to use the market advantages for oneself. These market advantages cannot be identified on the basis of news, the price or indicators, but only with a special instinct and software that shows you exactly what is happening in the market. Only those who are willing to train themselves daily in this market will one day have the chance to be a profitable trader. The chance of becoming a successful trader in the long term is 1 in 50. Incidentally, you need the same probability to reach three right numbers in the german lottery (6 out of 49). It's difficult, but not impossible.

Good luck this week.

Greetings Michael

Outstanding post as always, Michael. Thank you for your time.

40 important theses

Hello Lem,

I thank you for your kind words. I thought for a long time whether I should publish my last post at all, because my 40 important theses contain some factors that are not easy to digest. If I had read these theses as a beginner back then, I don't know whether that would have motivated me to continue on this path in the Forex market. On the other hand, my theses could also help some traders develop new ideas from them in order to advance in the forex market.

The 3 strategies of the big players

In the next few days I will publish a post where I will show how one can significantly increase his probability of winning with scalping. In addition, we will talk about the market of the future. We currently have a very special situation in the market that brings a lot of uncertainty. The US elections are just around the corner, the Corona numbers are rising again extremely, in Germany there is already the next lockdown and other countries will follow. This could lead to a reduction in liquidity in many markets, as many banks cannot participate in trading with their entire team. The volume could increase as many retail traders are at home due to the lockdowns. That would increase the volatility extremely and thus affect the probability of winning. We may even see some exchanges shut down their servers to briefly suspend trading, I hope not that this will happen. After a storm there is always calmer waters, I hope that we can reach this situation quickly.

Take care of yourself.

Kind regards Michael

Scalping with algorithms



Hello dear subscribers,


When I started trading, I never thought it could be this difficult. If one read the posts of brokers or the self-proclaimed trader coaches, one u think trading is as easy to learn as driving a car. I got my driver's license 37 years ago, during this time I drove 2,000,000 km, was able to complete some driving safety trainings and drove around 300 times over the Nürburgring (race track) to improve my driving skills. At the time I thought I am a good driver, until one day I drove as a passenger, with a Porsche Cup racing driver, across the Nürburgring. It was then that I realized that I could move my car, but that I was far from being a professional driver. It was similar when I got to know the way a high-frequency trader works 1.5 years ago. Here is the full report:

Learning from high frequency dealers

According to the testimony of professional traders, there are very few traders who become successful without a DoM or Times & Sales list. That motivated me because I was trading profitably without a DoM or Times & Sales List and expected an above-average increase in my success if I managed to use these instruments correctly. Switching from the Forex market to the DoM and the Times & Sales List in the Future Market is roughly comparable to getting out of a car and enter in the cockpit of an airplane. You sit there, stare at the DoM and T&S, wondering whether you've picked the right job. In the car you have to consider 2 dimensions, in the airplane 3 dimensions and in the stock market 4 dimensions in order to be successful. This is a special challenge that requires certain cognitive skills. In addition, one has to deal with dry theory about the formation of stock prices in order to understand how the markets work. At the beginning of my trading career, I had imagined it completely differently than I trusted the statements of brokers and the self-appointed trader coaches.

Anyone who claims, trading is very easy, has no feeling about the business, or he just don't like learning the enormous amount of dry stock market theory. Yes, I was lucky to lose little money right from the start and to reach my breakeven point after 2-3 years in order to trade profitably afterwards. But I never had the feeling that I was trading profitably based on my knowledge or experience, but attributed it solely to chance or luck. In the search for the big player algorithms I have recognized in the last 12 months that only the time and volume-independent charts are able to make visual and acoustic patterns visible with the help of certain filter settings. Interestingly, these patterns keep cropping up regularly in certain situations. In the DoM you can see how the limit buy orders on the best bid side and the limit sell orders on the best ask side are being eaten up by the market orders. Two numbers appear at the top of the Times and Sales list (Best Bid and Best Ask) that change so quickly that you can hardly read them. This is the eye of the tornado and that's the closest to the market. My software that I work with is effective and the best for my type of trading, but it too is already reaching its limits for my requirements. However, with the help of my own programming knowledge, I can break these limits. This is very complex and time-consuming, but the results speak for themselves.



Here we see a time frame of 6 hours in the EURUSD M1. The individual lines show a distance of 1 pip, which must also be factored in as a spread. A retail trader who works without indicators is trying to place a trade.

Point A
First of all, a small equilibrium occurs over a few minutes and an artificially created resistance zone forms.

Point B
Suddenly there is a stophunting down and the course quickly returns to the starting point.

Point C
The trader suspects that the long traders should be switched off with stop hunting and now waits to see whether the price overcomes the small resistance zone. Exactly there he opens his trade with the following options. It is a market buy order of 1 lot with a stop of 5 pip. The risk / reward ratio should be 1: 2, regardless of the spread. He expects to make a profit of $ 100 and is ready to make a loss of $ 50.

Point D
Since he has placed a market buy order at Point C, he only enters the market at Point D due to the spread of 1 pip.

Point E
The next 20 minutes are going very well for him, with the high at $ 58.

Point F
For the next 62 minutes the price slowly declined and at the low his position was in the red at $ 29. The trader suspects another pullback here, within an upward movement.

Point G
In fact, the price is now rising more strongly and the trader hits the high 29 minutes later with a possible profit of $ 87. Since he knows that a movement runs in waves, he now expects a pullback again.

Point H
The minor pullback comes and 17 minutes later he's still up at $ 20.

Point I
In the next 17 minutes the price rises again and is now ahead at $ 68.

Point J
At first there is a small equilibrium at Point I, then the course slowly descends. The trader suspects that there will now be a larger pullback before the price accelerates sharply upwards. Shortly before his breakeven, the price drops a little more and he briefly considers whether he should perhaps get out of the position after all. He decides against it because he suspects that the course will turn up again near Point F. Unfortunately, the course continues to run down and shortly before it is stopped, he briefly considers whether he should give the course a little more air and extend the stop. Since he has had bad experiences with it in the past, he leaves the stop there. After a total of 3 hours he is stopped with 5 pips and has a loss of $ 50.

I don't care whether the beginner's approach is right or wrong. Of course, you can always find out afterwards what could have been done better. In theory, you can't make a mistake, because in the Forex market you can't know in which direction the price will move in the future. One can at most guess it and thus the profit or loss lies within a certain probability.

You would have had chances in this chart image, because there is a range of 15 pips between the high and the low. I just want to show that it is not that easy for most traders to trade profitably. Of course, this is an equilibrium in the chart, but this can only be determined when it has already arisen. This situation that we see here is an everyday situation, because 70% of price movements take place within an equilibrium.



At the beginning of my trading career, I made similar mistakes and hoped for stronger moves in the market with my money management. When I discovered that the markets were 70% sideways, I aligned my strategies with that. I would like to describe three different situations in which the risk and the possible profit are identical in each case.

Situation 1

I have already described the following situation in detail. The stop is 5 pips and the TP is 10 pips. The decisive factor is the equilibrium, with the yellow arrow and the subsequent stophunting in order to eliminate the long traders. This gives you the opportunity to enter the market at Point A. Of course, there is also the possibility of entering the market at Point C, but this involves certain dangers. As we know, a so-called chain reaction occurs when stophunting. The big player pushes the price down and the first stops of the long traders are triggered. Depending on how many traders have come into the market at that time, the further down the chain reaction can run. This is also called the typical handle in a falling knife. That's why I would rather get into the running movement within a stophunting than in the opposite direction.

Situation 2

As before, our starting point is the yellow arrow followed by stophunting. At point A, I enter the market with a market buy order of 2.5 lots. The stop is 2 pip, the TP is 4 pip, which also corresponds to a risk-reward ratio of 1: 2. Depending on the entry point, my position can go down by up to $ 40, but the goal of $ 100 would be reached after just 16 minutes.


Situation 3

Here we even wait until the price has risen another pip and only then start trading. Here, too, the position could go down by up to $ 40 but after 13 minutes the target of $ 100 would be reached. The greatest risk with this approach lies in the ATR, which is able to reach a small stop faster. For this reason, back when I was trading exclusively in the Forex market, I focused on the key candles that gave me a good market insight. Of course, those key candles didn't protect me from being stopped out regularly. In my first example, the trader could have exited after 2 hours with a TP of $ 87. This waiting time was far too long for me, which is why I decided at the time to reach my profit after 15 minutes. My focus was primarily on reducing my stops in order to reach the TP faster. With the help of scaling, I was able to determine the level of risk and profit.

Today my stop is 1 to 2 pip and that means that after I enter, the price has to move in my direction immediately. Of course, I am sometimes wrong or get stopped out, but my approach creates many opportunities that I can use every day. In principle, I concentrate on the small outbreaks within an M1 candle, although I do not trade with M1 candles, as I only have the algorithms from the DoM and the Times and Sales list in view. The new tones that I have programmed also help me to get important information about the current market.

Here is a trading example from today, with my current main screen. I completely changed the tones for it. On the left loudspeaker you can now hear the market sell orders and the limit sell orders. On the right channel you can hear the market buy orders and the limit buy orders. Since I arranged the limit orders on the opposite side beforehand, the tone sequence was a bit strange for me. I have precisely adjusted the volume of the 8 different tones on the ask and bid side. In the middle you can see a decibel knife that shows the exact strength of the ask and bid side.



Price was just about 16 pip down and I was straightening my chart when I saw some buying information. I initially waited for the first small upward surge and a brief market calm in order to be able to enter with a small spread. I only had a stop of 2 pip and was happy to enter the market at 13:42:07 with a spread of 0.5 pip. This gave me a stop of 1.5 pip. You can see that more bids than ask came into the market at this point, but the limit buy orders were designed to absorb the bid. Since we were in a major downward movement, I knew that the upward movement would only reach a few pips. I stayed in the trade for 85 seconds and got out when the sell limit orders increased massively in strength. I could have achieved 25% more pip, but I'm rather conservative. After 85 seconds I was in the profit with 2.8 pip. Since the M1 averages 1.5 pip / min, I achieved 33% more with 2 pip / min. My risk was $ 180 and the profit was $ 252. That's an RRR of 1.4. A short time later, the downward movement would have overrun me and I would have been stopped. A few minutes later I took once again a small upward movement of 3 pips with me and almost got out of the trade with pinpoint accuracy. As a day trader, I would have suffered massive losses in this situation. I recommend every trader to reduce the stop to a minimum, as this allows smaller sideways markets to be traded more efficiently. 70% of the time the market will be sideways, that's what I would focus on. But without the appropriate software and stock market data, trading in the Forex market is a pure game of chance.

My development towards a seconds scalper, with the help of stock market data, has brought decisive advantages for me. Since there are more small breakouts in the market than larger upward or downward movements, this creates a lot of opportunities for me every day. Additionally, I don't have to wait long to realize my winnings. Within 1 minute it is clear whether I was right or wrong. Because of my ability to scale, I theoretically don't have to place more trades than a day trader. The most important benefit, however, lies in the fact that I no longer have the feeling that my winnings are entirely due to luck. With the help of my programmed tones and the identification of the big player algorithms, I am often able to look a few milliseconds into the future. I can use this situation to my advantage to place an appropriate trade. As soon as I'm in the trade and the small breakout reaches my profit target, that's no reason to get out. If the algorithms tell me that the course is still going in my direction, I will stay in the market until I get contrary information. This also sometimes makes it possible to achieve a RRR of 1:10 or more and even within an equilibrium or a sideways phase.

In fact, I am actually trading for 10-20 minutes a day. Many years ago that was a few hours. I can use the free time to further optimize the identification of the algorithms. In the background I hear my programmed tones and I immediately hear when things get interesting. Because of this, I don't have to stare at my screen all day. The approach of the big players is also a decisive factor. In my last post, I described the three effective entrances for the big players. You can find the article here:

The 3 strategies of the big players



The market of the future

The markets have changed dramatically in the past five years, as has been clearly felt by Goldman Sachs, for example, as they halved their daily profits. In order to be at the top again, however, they will have to upgrade significantly over the next few years. This upgrade can only be done with the help of algorithms. Everyone can work out for themselves where that leads. Market technology has already reached its limits and volume traders now have fewer opportunities. Next, the DoM and time and sales traders will have problems, because the algorithms are able to change supply and demand so extremely that the advantage in the DoM is significantly reduced. In my opinion, in a few years, algorithms will completely dominate the markets. The future will belong to those who are able to read these algorithms. There will be a new form of algorithm traders that completely overturns today's understanding of the markets. It should be perfectly clear that this will massively reduce the probability of winning. Since I still want to be active in this market ten years from now, I have already decided today to decipher the algorithms. We will know in ten years at the latest whether this decision was the right one or not. But no matter how it ends, learning and acquiring knowledge has never been a bad decision.

I wish you a successful trading week

Kind regards Michael

Election in America



Hello dear subscribers,

An exciting election night is behind us and at this point in time the winner has not yet been determined. If you compare the price development from Nov 2016 with the price development last night, from the trader's perspective it looks as if Biden could win the election. We'll see which candidate the voters chose. In addition to the exciting question of who will win the election, the course in the euro USD was much more decisive for me.


Here we see the course of the last trading day in EURUSD (Point A) and the course of the election night (Point B)


With a range of 170 pip in the Asian market, election night 2020 is a long way off from election night 2016 (over 500 pip). The last major movement within the Asian market took place in March 2020, when the price rose sharply after the gap was closed (from April 2018).


It is noticeable that the liquidity has been massively reduced, at 05:22 CET the limit orders on the ask and bid side were around 140 lots. This shows that the big players have withdrawn almost entirely from the market. Yesterday the liquidity of the limit orders was 450 lots, which is also relatively little. If the big players have collected their orders within an accumulation or distribution phase, the liquidity values are between 600-1000 lots on the ask and bid side. The greater the amount of liquidity, the greater the willingness to defend certain price levels. Many big players seem to have left their positions yesterday. But that doesn't have to mean that certain swing trades that were placed at lower price levels are now completely defenseless. I believe that at these lower price levels, there could be higher limits buy orders that would intercept the price in the event of a massive price drop. Due to the low liquidity, there was higher volatility during the night.


Let's take a closer look at this in an M5 chart.

Point A
During the day there was normal volatility that lasted until 10:00 p.m.

Point B
At around 10:00 p.m. you could already see that the volatility increased somewhat in places. From there on, the liquidity also decreased massively.

Point C
You can clearly see that by the daily close of the last trading day, most of the big players had withdrawn from trading.

Point D
At the same time, the volume of market buy orders increased tenfold during this period. Because there was relatively little liquidity in the market, there were now larger price movements.

Point E
The effects of these price movements can be seen very well on the chart.

This situation is a nice representation of the forecast I made a few days ago. If, due to the individual shutdowns of the corona crisis, all of the big players can no longer be in the market, liquidity will suffer. At the same time, the shutdown will allow more retail traders to participate in market events, which could have a similar effect. Here you can see a short video excerpt.



In the video you can see the effects of the lack of liquidity very well. There is hardly any equilibrium in the high values in the Best Ask and Best Bid area, as there is too little liquidity. Therefore, there are also few tones. The price fluctuations are therefore more difficult to predict. Perhaps the big players could draw some insights from such a situation that they could use later for further strategy. Removing liquidity from the market could absorb stops from retail traders even faster. This can significantly reduce the time of collecting campaigns.


Of course, in such a situation there are extremely good chances of taking quick profits, but at the same time the risk increases enormously. The big players remaining in the market can no longer collect their orders at tight price levels due to the high volatility. The strategy used here may be to simply push the course through. I have already described this strategy and you can find the article here.

The 3 strategies of the big players

A high volume and at the same time low liquidity also attract some high-frequency traders who withdraw massive profits from the market within seconds. The less liquidity there is in the market, the less predictable the situation is. It is possible that the situation will calm down significantly in the next few days, but one should always pay attention to the level of liquidity in the market. The greater this liquidity, the greater the security in the market. However, this always depends on the current volume.

I wish everyone a good choice exit and good trading success

Kind regards Michael

New video is online


Hello dear algorithms traders,


on September 20th I published my first detailed video in German. Even though I shortened this video significantly, it was still 38 minutes long. In this video I give a brief overview of my approach and the future content that a trader can expect.


What content you can expect on this channel in the future!

Since I had a lot of work in the area of algorithms in the last few weeks, I was unfortunately only able to publish my second video 6 weeks later. This video is about the differences between the Forex and Future markets and how I strategically proceeded to double my chance of winning in the Forex market.


How to double the probability of winning in the Forex market!

Again, I tried to reduce the content to the essentials, and this time I managed to get under 30 minutes. I know that people are short on time, so I'll be working on making the videos even more efficient in the future. Nevertheless, I hope that you will take some important information with you and I would be happy if my videos help you further. If you do not speak German, you can have the videos translated into your language on YouTube. Many of the pictures in the video are in English, this is an additional help.

I wish you a lot of fun

Kind regards Michael

Moin Michael.
Gut gemacht/ Excellent work.

Ich wünsche dir viel Erfolg.
Guido

3 bad trades


Hello dear subscribers,


As promised, I am posting 3 trades today, which I gave very bad marks in the end. A profit was made and no trade went into the stop, but the timing was catastrophic. In the last few weeks I have had the opportunity to equip a main chart with other interesting charts that help me in daily trading. On my main screen there are 70 different charts with over 1000 different filter settings. Over 90% of the charts are not a standard view because I have changed the structures considerably. The actual goal is to identify the algorithms that are ultimately responsible for each course.

The last trading day on Friday had a range of around 40 pip and was in an upward movement during the day. With around 500 lots on the ask and bid side, the liquidity was more in the average range; the daily volume of just under 86,000 lots was well below the average of 150,000 lots. The liquidity was thus significantly greater than the volume. As a result, the daily volatility only reached a below-average range.



Here you can see the trading screen 5 seconds before my first long trade.

Point A
To the left of Point A you can see a blue resistance zone that I drew in earlier. At first it looks like the price has not reached this resistance zone, but that is not entirely correct. The chart is a cumulative chart from 10 lots. To the right of Point A is a market delta chart in the M5. Here you can clearly see that the course has run into my resistance zone. I will explain again in another video why I work with these different chart views.

Point B
In the heat map I marked two green zones with the yellow arrow that had a decisive influence. The big players have already placed their iceberg orders in the market 20 minutes before the price entered this zone in order to catch the price in this price zone.

Point C
Here we can see that a large number of limit orders came into the market. With this, the big players simultaneously place their iceberg orders in the front waiting position of the limit orders. The fictional iceberg orders we see here were only used to intercept a strong bearish movement. This would have happened if further stops had been triggered by long traders under my yellow arrow. Since the course was already below the yellow arrow, I assumed that there were no more decisive stops there.

Point D
Here we see a representation of the strengths of best bid and best ask. In principle, the best bid and best ask are still in a kind of equilibrium, with the limit buy orders being somewhat stronger.

Point E
Here we can see that the limit buy side is increasing significantly, which suggests an upward movement.

Point F
In the DoM, there are already more market buy orders than market sell orders.

Point G
Unfortunately, at this point in time, the limit sell orders, hold up the market buy orders.

If an equilibrium arises within the algorithms, it is not exactly advantageous to enter, but 5 seconds later I made the decision to enter a long trade.



The course moved within equilibrium for another 2 minutes and then went up more strongly. Because once again I couldn't wait, I entered the market 2 minutes early.

Point A
During the upward movement I was able to determine that larger limit sell orders tried to intercept the price with the help of the iceberg orders. For me that was a clear signal to leave.

Point B
In the area of best ask and best bid, it still looked positive for a further upward movement.

Point C
My movement strength indicator was bullish.

Point D and E
I also recognized a balance between the best bid and best ask that prompted me to quit.

Point F
Here I could see that the big players withdrew some limit buy orders, which is often a sign that the price is being pushed down for a short time. So after 3:30 minutes I was out of my trade again, unfortunately for 2 minutes I took an incalculable risk.



Here we can see that my exit was optimally chosen, as a small equilibrium had formed afterwards. Now the course continued towards high.

Point A
I had already drawn the rough resistance zone beforehand, but what happened at Point B was much more important.

Point B
11 minutes before the price reached the point B zone, further iceberg orders were placed on the market with above-average limit orders. The goal was: to intercept market buy orders in order to then push the price down again.

Point C
I initially marked this price line as a target, as the price should be intercepted there again.

Point D
Here we see the market delta in the 5 minute range, we see that suddenly strong market sell orders are coming into the market.

Point E
While the strength of the limit buy orders decreases, the strength of the limit sell orders increases.

Point F
We can see a clear increase in limit sell orders.

Point G
In the DoM, the number of market sell orders increases and so does the strength.

Point H
At the same time I could see that the limit sell orders intercept the market buy orders.

First of all, I assumed that the big players would bring the price above the high again to stop the short traders. But since we were in an upward movement, this was not necessary at this point. That was the reason I decided to do a short trade here.



Point A
At first the course went down and at 15:53:07 I had my finger on the trigger to get out.

Point B and C
My goal was at Point C, but Point B showed me that there could be another upward movement.

Point D E F
Basically, the downward direction looked very positive.

Point G and H
There was already a slight upward movement, but I was ready to take the risk.



Point A
At first the price went up again and in the forex market we can see that the currency strength showed an advantage in the bullish area.

Point B
Here we can see that suddenly strong market sell orders have entered the market.

Point C
At the same time, the chart showed me an increase in limit sell orders. That was a clear sign that the upward course would be caught. For this reason I decided to take another short trade.

Point D
Here, too, we can see that the limit sell orders are gaining strength.

Point E
At the same time I could see that the big players had removed their limit buy orders from the market. You only do that to push a course down.

Point F
The strength in the bearish area increased massively.

Point G
My latest exit was at Point G.




The course was now slowly going down and at 15:57:54 we came to a crucial point where I had to make a decision.

Point A
I made a decisive mistake here, because at first I wondered why there are still iceberg orders at this price level. However, that was still the past, because a few seconds before I realized that the big player limit buy orders had withdrawn. Still, I got out and didn't reach my goal at Point B. At points C, D, E, F, and G it gave clear signs for a further downward run, but at this moment I let point A confuse me.



In fact, I could have achieved two more pips, but you can see from the course of the course that the course was pushed up again very quickly. The target of Point B was reached.

Let us now come to the evaluation of my three trades



Point A
I completed my three trades with a spread of 0.8, 0.7 and 0.5. That means that I had a stop of 1.2 pip in the first trade, a stop of 1.3 pip in the second trade and a stop of 1.5 pip in the last trade. Given that we had an ATR of 2.6 at that point, the stop was below average. My basic assessment was therefore correct.

Point B
Each trade had a maximum risk of $ 140. The gross risk / reward ratio relates to the profit and the stop. The spread is included in the net risk / reward ratio.

Point C
One of my main goals is to get 1.5 pip per minute. I missed this goal. All three trades ran for a total of 15:46 minutes and in that time I was able to hit 10.2 pips. 0.65 pip per minute is a bad result.

Point D
In the first trade, I hit a bad spread, entered too early, and didn't hit my pip per minute target. In the second trade the entry was too early and there I did not reach my pip target per minute. In the last trade I did not reach my goal in the following points: total pip, pip per minute and risk / reward ratio. Out of 21 points I was only able to achieve 13 points, which corresponds to a grade of D- in America or a grade of 5 in Germany. That would have failed me in the exam.



As I wrote earlier, I wanted to get out of my trade at 15:53:07, but I took the risk anyway. I learned from this that I will follow my intuition in the future.



If I had followed my intuition, the result would have been different:

Point A
Initially, I would only have placed two trades and not three.

Point B
With the two trades I would have achieved 50% more in the pip / minute range. Of course, instead of $ 714, I would only have made $ 462. As stupid as it sounds, I would have much preferred that, since I would have worked with a higher level of efficiency. If I made $ 462 in 7:45 minutes, I should have made over $ 900 in 15:46 minutes. But I only got $ 714. From my point of view, I took an unnecessary risk.

Point D
The rating of the first trade would not have changed, but the second trade would have. However, my overall result would have been significantly better. Overall, I would have achieved grade C or, in Germany, grade 3. While I won $ 714 on my three trades, I failed my exam. For this reason, I would have preferred to make only $ 462 and get a clean trade with less risk.

Here I recorded my three trades on video




So it's not about earning as much as possible, but rather getting the most out of it with the least risk. And that is exactly what I did not succeed in doing with my three trades this time. But that's not a big deal if one learn from it and implement this knowledge in the future. I learned from this to continue to listen to my intuition in the future and to pay attention to the charts more effectively and more precisely. It is precisely for this reason that it is important to check your trading daily and to evaluate yourself critically. This is the only way to improve in the future in order to achieve even more efficient goals.

I wish you a successful trading week

Kind regards Michael

Hi

Thanks for your time and effort to share your findings.

Trade well / Mos