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The brutal truth of day trading

  • #601
  • May 6, 2021 11:08am May 6, 2021 11:08am
Quoting TraderTim125
{quote} How deep is deep? I would suggest the procedural approach that you are proposing for achieving profitable trading has a number of shortcomings. 1. The basics - Basic information is of course necessary but one problem recently mentioned in this thread was that so much of the information out there is just noise. Information that is irrelevant, misleading or downright wrong just frustrates and confuses rather than educates. You only need to spend a few hours on the Rookie Talk section of this forum to realise that confusion, even about simple...
Thanks for your sharing. Don’t get me wrong, I do believe succeeding in any skills like trading requires effort and learning.

Thinking is crucial. One should think of ways to obtain valid information. Thinking can be intense in developing various skills to handle trading strategically, operationally and emotionally. Practice and improvement is a loop that only works with active thinking.

What I saw along the way of discussion is WHAT to think being the major argument here.

You can read my posts and know I focus on execution and system development to approach trading. TBH I didn’t know there was a “red news” until I saw the big candle earlier on GU. My attention is to seize the opportunity to reap profit that lasts for minutes if not an hour or two. In my way of trading, it is really not that important to know world news.

I see posters here claiming some SPECIFIC deep knowledge must be learnt. However depending on the approaches to trading most if not all things are OPTIONAL. Looking at the opposite side, one may find my effort in applying statistics and learning coding “useless” and “unnecessary” because they do not apply these in their trading styles.

All I want to bring out is learning is a must and thinking is a required skill. Just that not interested in particular topics does not mean choosing to be stupid or not willing to learn, which is the message I (and others) can get quite clearly in previous posts.
  • #602
  • Edited 11:33am May 6, 2021 11:17am | Edited 11:33am
Hi GEfx,

Quote
I thought you were moving the discussion along pretty well with this line of questioning.

Thanks and my bad.

I have a little idea about market structure. What I understand is there are central banks, teir 1/2/3 banks, some other institutions, professionals and retails, this is the hierarchy (if one could call it that) of the financial markets. So, this is what market structure is.

Quote
Our job is to trade with the bankers as they run their trading business, with an eye on structure.
How to "know" that bankers are behind a move? And there are different pair with the same common currency like EU, GU, USD/CAD etc. Bankers can use any of these pair to balance the $ in their books. What footprints do they leave?

One way I can think of is congestion areas but small one's can be where banks take positions.
Suppose a bank wants to buy dollars but a price lower than what is available. For this he takes a pair whose value is low in terms of dollar (how can one determine this?). Why will a banker want to buy at lower price? This is because some people will definitely observe this area as undervalued and join the banker and suck out the liquidity. So, the banker will have to buy $ when price starts to move up. And this is how the banker will get his entire order filled, in multiple orders.
^^ is this how they operate?


If this is related to day trading then what kind of order size will a bank trade intraday.
This is why I found oanda different from other broker I traded with is when you buy a currency pair, it will give you an option to close both currencies of the pair separately.
A trade should be based on an assumption based on facts
  • #603
  • May 6, 2021 12:02pm May 6, 2021 12:02pm
Quoting maverick2017
Hi GEfx, {quote} What I understand is there are central banks, teir 1/2/3 banks, some other institutions, professionals and retails, this is the hierarchy (if one could call it that) of the financial markets. So, this is what market structure is. {quote}

How to "know" that bankers are behind a move? And there are different pair with the same common currency like EU, GU, USD/CAD etc. Bankers can use any of these pair to balance the $ in their books.
Hi Maverick,
I was about to head out for the day and saw your reply.

First, you have listed the primary players in the forex, not structure. Structure represents the long-run view of an orderly market, as directed by national treasuries and/or central banks. For example, if the Central Bank of Australia announces it believe the AUD is overpriced by 10%, market structure will soon begin to show an orderly move to reflect that announcement (it will take months to achieve, but structure will clearly show the change or adjustment is underway). Or, if Janet Yellen had not pulled back here observation yesterday that interest rates in the US may rise ahead of expectations, you would have seen an orderly adjustment to all US crosses to reflect this bullish move by the US. So, think of structure as the long-term view of a currency pair, and the long term PA that ensures that the long-term desires of central banks are being carried out. And, it is basically the Central Banks and Tier 1 banks that are responsible for bringing about structure.

As for how you "know" that bankers are behind a move: you should assume they are behind every move, because they are. And no, a bank will not use a different currency to square a move on, say, the E$.
  • #604
  • May 6, 2021 12:22pm May 6, 2021 12:22pm
Quoting GEfx
{quote} Hi Maverick, I was about to head out for the day and saw your reply. First, you have listed the primary players in the forex, not structure. Structure represents the long-run view of an orderly market, as directed by national treasuries and/or central banks. For example, if the Central Bank of Australia announces it believe the AUD is overpriced by 10%, market structure will soon begin to show an orderly move to reflect that announcement (it will take months to achieve, but structure will clearly show the change or adjustment is underway)....
.

So, the market structure doesn't change until a central bank or Tier 1 bank intervene. But complete advantage of these kind of announcements can be taken by using a big SL. Only chance we as intraday traders have is picking up the top or the bottom which are made by such announcements. Also, the volatility increases when such an announcement is about be made. How can we use a small SL and benefit?

Quote
Structure represents the long-run view of an orderly market, as directed by national treasuries and/or central banks.
By long term I understand that until the market theme changes i.e. the fundamental reason which is moving the market currently has changed. But with small SLs can it really be done? If, yes then for how long before getting caught in the other side of the market.

Quote
a bank will not use a different currency to square a move on, say, the E$
Why? Is it because of commissions?
How do they rebalance their books?


ENJOY YOUR OUTING!! have a nice day!!
A trade should be based on an assumption based on facts
  • #605
  • May 6, 2021 1:38pm May 6, 2021 1:38pm
Quoting maverick2017
{quote}. So, the market structure doesn't change until a central bank or Tier 1 bank intervene. But complete advantage of these kind of announcements can be taken by using a big SL. Only chance we as intraday traders have is picking up the top or the bottom which are made by such announcements. Also, the volatility increases when such an announcement is about be made. How can we use a small SL and benefit? {quote} By long term I understand that until the market theme changes i.e. the fundamental reason which is moving the market currently has changed....
Market structure changes as fundamental economic conditions change, relative to the comparison of the economic conditions of the corresponding currency pair. Central bankers are the arbiter of the final interpretation of economic data, for the most part. The idea is to trade structure, as TA dictates. FA sets structure, and TA helps discover the path forward in short-term trading.

As for managing their book, banks hold positions in various pairs and track performance in those pairs. They can't square up their sell E$ positions in G$ trading. The basic business that we are following, by in large, is move a currency pair, then square that move (to some degree) before moving farther ahead on the initial move. It happens on all pairs, and all time frames, all the time, often to the candle.

Okay, now I'm headed out. Good trading to you!
  • #606
  • May 6, 2021 3:23pm May 6, 2021 3:23pm
Quote
Central bankers are the arbiter of the final interpretation of economic data, for the most part. The idea is to trade structure, as TA dictates. FA sets structure

I understand that suppose if inflation is the most important concern for Central bankers then the inflation data will take precedence over all other data. After that let unemployment be the next biggest concern. So, price will make moves according to inflation first and then unemployment will be important.
Suppose at sometime in the day unemployment data is announced and it is not good and there is a swing which started because some inflation data released ,prior to unemployment data, which was -ve. In this case the unemployment data move will make a move but it won't be as large as the inflation swing but both will make the market move in the same direction. If unemployment data is positive then a corrective move may occur.
I still cannot understand what market structure is. :|
Ok, I have another idea about structure. Suppose price is moving downwards. On observing the price move one finds that a retracement begins with hammer and ends with engulfing and there is one other area of congestion within the hammer and engulfing. So, this sequence has to be maintained if the market theme is unchanged. And this maintenance is done very deliberately and very precisely.


Quote
They can't square up their sell E$ positions in G$ trading.

What if they have a enough euros and $ separately? then they can buy more $ and sell their euros from existing reserve. Would that be a E$ sell?
A trade should be based on an assumption based on facts
  • #607
  • May 6, 2021 5:26pm May 6, 2021 5:26pm
Quoting maverick2017
Hi GEfx, {quote} Thanks and my bad. I have a little idea about market structure. What I understand is there are central banks, teir 1/2/3 banks, some other institutions, professionals and retails, this is the hierarchy (if one could call it that) of the financial markets. So, this is what market structure is. {quote} How to "know" that bankers are behind a move? And there are different pair with the same common currency like EU, GU, USD/CAD etc. Bankers can use any of these pair to balance the $ in their books. What footprints do they leave? One...
How To “know” when bankers are behind a move. What footprints do the leave?

The first and most obvious footprint is simply the size and speed of the move. Retail traders and other smaller institutional traders don’t have the resources to drive these sorts of moves so when you see one, you can be almost certain that the big guys are behind it. For example you may see price slowly going up over a number of hours and then down by a similar amount in a few minutes.

The question then is why and what are they up to?

What they are always up to is trying to make money .

Another likely footprint therefore is when the market moves in a significant and unexpected way and traps a lot of players forcing them out of their positions at a loss. They have the resources and information needed to do this in the form of order books. Why wouldn’t they use it to their advantage?

These big guys often collaborate together to manipulate markets. Why use one sheep dog to round up the the sheep when you can do it faster and more efficiently with four or five? We know this sort of collaboration happens because from time to time they get caught in the act. It is of course illegal. They get fined a few million dollars which is effectively just a slap on the wrist for these guys. A couple of junior traders get the sack then its back to business as usual albeit with a bit more care to not get caught again. In my opinion it would be naive to think that this practice doesn’t happen on a regular basis.

Our task as retail Forex traders is to try and figure out what their current game plan is and either keep out of their way or trade with them. Try and think like a sheep dog, not a sheep.
Don't Guess Test
  • #608
  • May 6, 2021 6:23pm May 6, 2021 6:23pm
Quoting maverick2017
{quote} I understand that suppose if inflation is the most important concern for Central bankers then the inflation data will take precedence over all other data. After that let unemployment be the next biggest concern. So, price will make moves according to inflation first and then unemployment will be important. Suppose at sometime in the day unemployment data is announced and it is not good and there is a swing which started because some inflation data released ,prior to unemployment data, which was -ve. In this case the unemployment data move...
Hi Maverick,
Market structure is the representation of what banks are doing to organize, manage and shape price movement. In my trading, I analyze structure on the Day and 4H charts, mainly because banks trade the Day and 4H charts. Take a look at the 4H charts for the E$ and GA (both are among the pairs I analyze and trade). The most recent structure for the E$ is a corrective move of a ST up trend, with today's PA breaking out of the correction. The GA is a completely different structure, showing box trading and no trends within structure. Getting a good handle on structure requires understanding how FA moves structure.

Structure puts context on LT PA, but more importantly, give you context to what you see the market doing in the ST. It let's you formulate an explanation as to what the market is doing now and why. Our job as a retail trader is to anticipate the market, calculate the probabilities of anticipated PA, and formulate a trading plan with a view on risk. This is what I do every day. If today's opportunity runs against structure, or if structure indicates today's opportunity is likely short lived, I always pass. And targets are based on 4H structure, not 5M PA.

So, that's what structure is and why it's important to me. My TA is in the context of that definition of structure. TA is then used to formulate a plan, including contingencies, of how I will trade the most probably actions and behaviors of the banks. That's about as simple as I can explain it.

Finally, as for managing the book. The book is not an income statement. It's more a balance sheet (that's a terrible analogy but the best I can come up with right now). The banks track positions, and track profits and losses. They have the ability to, but more to the point, have the willingness, to revisit price levels where they took a loss or still have open positions. This is the most reliable action in the forex, and if you can follow along with them, the bankers will rarely disappoint.

EDIT: I've bloviated enough here. Time to get back to work. NFP tomorrow!
  • #609
  • May 6, 2021 6:58pm May 6, 2021 6:58pm
Quoting GEfx
{quote} Hi Maverick, Market structure is the representation of what banks are doing to organize, manage and shape price movement. In my trading, I analyze structure on the Day and 4H charts, mainly because banks trade the Day and 4H charts. Take a look at the 4H charts for the E$ and GA (both are among the pairs I analyze and trade). The most recent structure for the E$ is a corrective move of a ST up trend, with today's PA breaking out of the correction. The GA is a completely different structure, showing box trading and no trends within structure....
????
All those unexplained acronyms. Maybe it is Forex Factory Forum Jargon (FFFJ) but I have been trading various financial markets for well over thirty years and I have No Idea Of What You Are Talking About (NIOWYATA). I am however interested in what you appear to be trying to communicate.
Don't Guess Test
  • #610
  • May 6, 2021 7:35pm May 6, 2021 7:35pm
Quoting TraderTim125
{quote} How To “know” when bankers are behind a move. What footprints do the leave? The first and most obvious footprint is simply the size and speed of the move. Retail traders and other smaller institutional traders don’t have the resources to drive these sorts of moves so when you see one, you can be almost certain that the big guys are behind it. For example you may see price slowly going up over a number of hours and then down by a similar amount in a few minutes. The question then is why and what are they up to? What they are always up to...
Hi TraderTim


The real reality of the market is the big players don’t trade much but hold 90% of liquidity for other financial purposes away from the trading market and therefore the liquidity does not sit on the chart.
They control the market by starving the market of liquidity - then releasing it when the need arises.
Most movement is caused by smaller institutional bankers, market makers taking advantage of this thin liquidity market to move the market and control the shorter term order books.

But the Big Players are watching, waiting for the need to release their massive size orders when required.
Trading thin liquidity at the boundary of the charts
  • #611
  • May 6, 2021 7:43pm May 6, 2021 7:43pm
If you ignore all interpretations then you will ultimately always be wrong. If you pick and choose between what you think is true and correct, then you are already wrong.

The financial markets are similar to one big spider web (with focus on the web part). If someone wants to learn about global finance and structure, stop isolating what you judge as unimportant and build a schematic of what you learn.

I love it when people try to convey opinion as a well rounded fact. It shows so much about what they DON'T know and understand.

So if you're the fool who follows the previous fool, who's the bigger fool?

Indeed, there are entities higher up in the food chain than the central banks that have more pulling power, IF someone actually knew anything about the world they live in.

You will never learn from people who treat their interpretations as fact and reality. Reality must start the conversation THEN the other pieces follow. It's funny how basic thinking would already tell you this, if it's present.

Opinions cannot backup the realistic basic truth of something. This thread, is a great example.

If you want to learn, you need to throw out the status quo.


Peter
Real Trading is not gambling.
  • #612
  • May 6, 2021 7:52pm May 6, 2021 7:52pm
If someone wants to learn how to day trade, you have only 2 choices.

1. Have you own mind and remove yourself from opinion makers
2. LEARN instead of chasing. Chasing will make you impatient and hasty in your learning. Millennia of Life and century upon century of human living is proof of this to true and real.

So often on this site and in the industry in general, I see people doing the same things other people do. Just look at the results of their learning. This will tell all.

I don't know who will read this but if you want to be better than you were yesterday, stop reliving it.


Peter
Real Trading is not gambling.
  • #613
  • May 6, 2021 8:07pm May 6, 2021 8:07pm
Quoting TraderTim125
{quote} ???? All those unexplained acronyms. Maybe it is Forex Factory Forum Jargon (FFFJ) but I have been trading various financial markets for well over thirty years and I have No Idea Of What You Are Talking About (NIOWYATA). I am however interested in what you appear to be trying to communicate.
LOL...sorry, but I'd be happy to explain the acronyms!
  • #614
  • May 6, 2021 8:23pm May 6, 2021 8:23pm
Quoting PeterCaleb
If you ignore all interpretations then you will ultimately always be wrong. If you pick and choose between what you think is true and correct, then you are already wrong. The financial markets are similar to one big spider web (with focus on the web part). If someone wants to learn about global finance and structure, stop isolating what you judge as unimportant and build a schematic of what you learn. I love it when people try to convey opinion as a well rounded fact. It shows so much about what they DON'T know and understand. So if you're the fool...
Peter

The truth is secondary to developing a work strategy that is profitable from YOUR theory’s.
Whether your theory is correct and accurate is irrelevant -

You trade your beliefs of the market - just as long as it pays who cares.
Trading thin liquidity at the boundary of the charts
  • #615
  • May 6, 2021 8:36pm May 6, 2021 8:36pm
Quoting PeterCaleb
If someone wants to learn how to day trade, you have only 2 choices. 1. Have you own mind and remove yourself from opinion makers 2. LEARN instead of chasing. Chasing will make you impatient and hasty in your learning. Millennia of Life and century upon century of human living is proof of this to true and real. So often on this site and in the industry in general, I see people doing the same things other people do. Just look at the results of their learning. This will tell all. I don't know who will read this but if you want to be better than you...
Peter i follow Rick M every day in our group off traders and he posts screenshots showing us what is happening and why and i can say with total confidence that HE KNOWS WHAT HE IS TALKING ABAUT....But as said as long as profit doesnt matter as long as you know how to do it and most cant....
Insanityoing same ting over expecting different results..Einstein
  • #616
  • May 6, 2021 8:36pm May 6, 2021 8:36pm
Quoting TraderTim125
{quote} How To “know” when bankers are behind a move. What footprints do the leave? The first and most obvious footprint is simply the size and speed of the move. Retail traders and other smaller institutional traders don’t have the resources to drive these sorts of moves so when you see one, you can be almost certain that the big guys are behind it. For example you may see price slowly going up over a number of hours and then down by a similar amount in a few minutes. The question then is why and what are they up to? What they are always up to...
Hi Trader,
Don't the big guys trade for other big companies and the big guys are always sitting on a lot of liquidity? <-- this is only my view.
These people need to to fill the orders of big companies as soon as possible. So, they release the liquidity they have whenever there is a need to.

Is the order book same as level II data we have?

Quote
These big guys often collaborate together to manipulate markets.
There are laws against this practice, I guess. Another thing is these big institutions need to fill the orders from their clients and don't they compete to get the business?

Quote
Our task as retail Forex traders is to try and figure out what their current game plan is
Do the banks also trade their own money to profit from FX market?

P.S. - I don't think that these guys are their to trap the retail guys.
A trade should be based on an assumption based on facts
  • #617
  • May 6, 2021 8:59pm May 6, 2021 8:59pm
Quoting RickM
{quote} Peter The truth is secondary to developing a work strategy that is profitable from YOUR theory’s. Whether your theory is correct and accurate is irrelevant - You trade your beliefs of the market - just as long as it pays who cares.



Yes you're right, of course you are. I always generate profits on a long position when the market is going down down down. How silly of me. Oh, but why doesn't that sound familiar? Oh yes ---- because it DOESN'T happen that way. WOW !

I believe the market is really just a rainbow made of candy? So, Rick, can I get my candy now ???

Last time I checked - up is up and down is down.

If you try and trade these markets with a consumer mentality, what you just said is justified. Small space, small thinking. Unless you eat, sleep, shit and work inside a trading room 24/5, then at some point you have to interact with the real world. This is where fantasy land crashes into real life.

Here's an example of the type of thinking that you're suggesting ....

https://www.forexfactory.com/thread/...ose-my-account

That's what happens when silly small thinking crashes into reality.

I'll give you a minute now to look in the mirror and stop bullshitting to yourself.

From FxSniper111 to me to RickM - I see you've got a lollypop sucking follower there. Nice leash. But doesn't impress upon me anything worthwhile. Sorry.

Everything I contribute is for people who still have some brain cells left. The only person you can blame for having small thinking is you.


Peter
Real Trading is not gambling.
  • #618
  • May 6, 2021 9:31pm May 6, 2021 9:31pm
Let's try this another way....

If you have some knowledge to the value of X and this represents 10%. Then the basic conclusion is that you possess 90% ignorance.

And so, if what you think you know is 'worth' 90% knowledge, how do you qualify and quantify this? You can't do it on opinion alone. So you'll have to go the extra mile and do some proper, mature, intelligible research.

Sooner or later, you will find, that you are not the smartest person in the room, nor are you the most experienced or competent. This puts a real damper on your thinking because now the false view you have of yourself has surfaced.

So, you have three simple choices ...

1. Give up
2. Go back to what you were doing KNOWING what you found out
3. Learn

What people don't usually quantify, is ... what is the list of and forms of Risk that will come as the consequences of what you do and do not know.

For eg. to suggest to an aspiring trader to view risk as the final step in your preparation and trade plans, is suicide. Only the naive or gullible will just accept this as real.

So how do you realistically quantify what OTHER people know and understand and can do?

Mmmmmm, we'll all wait a minute and let the answer come.

Yes. Learning.

So in a field where opinions do not generate consistent profits and where most people assume they have a knowledge value of 90%, at some point, that assumption matures and bears fruit.

What you don't know or understand always bear fruit. Only someone who wants to uphold the status quo or is just plain lazy, will ignore this basic principle.

If you're not here on this planet to add value, then what's the point in you being here? Something to think about.


Peter
Real Trading is not gambling.
  • #619
  • May 6, 2021 9:41pm May 6, 2021 9:41pm
Quoting PeterCaleb
{quote} Yes you're right, of course you are. I always generate profits on a long position when the market is going down down down. How silly of me. Oh, but why doesn't that sound familiar? Oh yes ---- because it DOESN'T happen that way. WOW ! I believe the market is really just a rainbow made of candy? So, Rick, can I get my candy now ??? Last time I checked - up is up and down is down. If you try and trade these markets with a consumer mentality, what you just said is justified. Small space, small thinking. Unless you eat, sleep, shit and work...
Peter

I offered you the chance to trade with me to show you have I can trade against the small institutional traders and beat them at their own game.
By waiting until they get cornered at the edge of thin liquidity cluster.

But no you didn’t have the guts - just another retired guru who trades demo and thinks they know it all.

Peter, I trade in what I believe and win every single night. If you want proof, get off your high horse and show some courage and meet me in the CAVE.

I bet you will make some excuse like all the other experts here who wouldn’t even know how to spot an imbalance of longs that’s being absorbed by a large order selling order.

You wouldn’t have a clue how to trade it.

Tick Tick
Trading thin liquidity at the boundary of the charts
  • #620
  • May 6, 2021 9:44pm May 6, 2021 9:44pm
A basic truth about day trading and any other activity - the rules are the same for all of us, but some people see the whole situation just enough, so they can learn how to do things better and with more maturity and intelligence. But at the heart of it all the main ingredient has always been - foresight. You cannot consistently and productively anticipate or "predict" anything without foresight. Facts and figures etc are not foresight. At best they are indicative.

So to me, no amount of candy-wrapping can hide a person's silly attitude. The problem with most people is they assume we're all as daft as each other.


Peter
Real Trading is not gambling.
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