Big players in the equity, currency and futures markets
Hello dear subscribers,
In today's post we talk about the biggest big players in the stocks forex and futures market. We look at the corresponding sales of the various assets and compare them with one another. Where are the biggest big players and why are they not so easy to identify in certain markets? Why is there a higher probability of winning in one market than in the other and how can you reduce your liability risk? Why do some big players avoid certain markets? These are just a few of the questions we are dealing with today.
I've spoken to a lot of traders over the past few months and I've noticed a few things that I'm going to talk about today. There is still a huge gap between forex CFDs and future traders. From the point of view of some future traders, CFD traders are pure indicator traders who have little idea of the actual market process. Even as a staunch Forex trader, I cannot share this assumption. As a rule, a beginner actually starts trading CFDs and develops into a future trader over the years. First of all, we should know that we only trade with probabilities in the stock futures and forex markets. Now we turn our attention to the profit probabilities in the individual markets. We discover some interesting aspects. In the stock market the loss rate is 91%, in the forex market 90% and in the future market 80%. What is striking here is that a clear, dramatic loss rate is evident in all three markets. In the stock market, the profit threshold quota is around 5%, these are participants who achieve neither losses nor profits in the long term. In the forex and futures market, the profit threshold rate is also 5%. The results are diffrent, when it comes to the profit ratio, in the stock market it is 4%, in the forex market 5% and in the futures market even 15%. This means that the profit rate in the futures market is three times higher than in the forex market and even four times higher than in the stock market. Where do these big differences come from?
The stock market is one of the most difficult markets in the world because it is where most high-frequency traders are up to mischief, there is little liquidity in the limit orders and this automatically results in higher volatility. In addition, you need very special knowledge, especially in the area of business figures such as balance sheets and much more. There are many unfair brokers in the forex market, and price manipulation is still taking place abroad. Likewise, high spreads prevent a reasonable profit ratio. The decisive factor, however, lies in the lack of volume, which does not give the trader any insight into the depth of the market. At first glance, this speaks absolutely in favor of trading in the futures market, but there are also decisive points that speak against it. First of all, there is a disproportionately high liability risk in the futures market. With a Black Swan, the risk per one lot is around € 25,000 with which you can run into the red. This minus must then be compensated. In the forex market, this liability is limited to the account balance. You can trade with microlot in the futures market, but this is not recommended for beginners as they can trade from 0.01 lot in the forex market. The account size in the futures market should also be at least € 20-30,000. In order to generate a deep market insight, professional software and a corresponding data feed are required. This may cost an additional 1000 € per year. In addition, the price movements in the futures market are not as finely tuned as in the forex market. This makes it difficult to identify crucial price ranges, especially when scalping. Likewise, there is no currency strength in the future market that we have often talked about in my videos.
The largest asset in the stock market is the Apple share, in the forex market the EURUSD is the leading player and in the future market the S&P. We compare the Apple share in the stock market and in the forex market, the S & P in the forex and future market and the EURUSD in the forex market with the euro FX in the future market. Apple shares a daily volume of 65 million, with a price of $ 121. That's equivalent to a daily turnover of $ 8 billion. With an average lot value of € 100,000, Apple shares would trade 80,000 lots per day. The S&P Future has a volume of 2 million per day with a contract value of 20,000. This corresponds to a daily turnover of $ 40 billion and the averaged lot value is 400,000. The S&P in the Forex market has a volume of 3 million with a contract value of 20,000, which corresponds to a turnover of 60 billion. The averaged lot value is 600,000. The Euro FX in the futures market has a volume of 200,000 with a contract value of $ 125,000. This corresponds to a daily turnover of $ 25 billion, the averaged lot value here is 250,000. The euro US dollar in the forex market reaches a volume of 23 million with a contract value of $ 100,000. This corresponds to a sales volume of $ 2.3 trillion or 23 million lots. Let's compare the number one in the Forex market with the number one in the futures market.
While 400,000 lots are traded daily in the S&P Future, the euro US dollar comes to 23 million lots. The total volume is almost 60 times larger. Now let's look at the distribution of the 100 largest big players in these markets. The 100 largest big players have a turnover share of over 80% in the euro US dollar. That means on average each of these big players trades 183,000 lots per day. The 20 largest big players achieve a 40% share of sales. On average, each of these big players trades 460,000 lots per day. This means that the remaining 80 big players still achieve an average turnover of 100,000 lots per day. In the S&P, the distribution rates are not quite as extreme as in the euro US dollar. On the one hand, this is due to the fact that the S&P predominantly has a large number of institutional traders who are more evenly distributed in their capital structure. Of course, for us retail traders, an institutional trader is big, who trades $ 360 million a day in the S&P. But these institutional traders are small compared to the real big players in the euro US dollar.
The 20 largest big players in the euro US dollar are able to trade the entire turnover of the S&P per day. I believe that you can see that it would make no sense for such a big player to act in the S&P. This is roughly comparable to when we go to a casino to win at the ATM and have a few million with us. The machine would not be able to process that much money that day. Let's take a look at a graphical size comparison. The share of EURUSD in the total forex market is 29%. The USDJPY comes in at 14%, the GBPUSD at 9%, the AUDUSD at 6%, the USDCAD at 5% and the USDCHF at 4%. In 15th place comes the USDCNY with a share of 0.5%. And that is exactly the size of the S&P in the futures market. So far this was probably not so well known because there is no real volume in the forex market.
As we know, the foreign exchange market was founded many decades ago so that banks could operate independently of the stock market and at very low cost. The banks have not thought of opening up this market to private investors one day. Likewise, the origin of the futures markets did not actually lie in speculating on the market as a whole with greater leverage. Futures markets were only used, to secure a price today that could be bought or sold in a few weeks or months. This was particularly important in the area of raw materials and also for crop failures in wheat. This has changed significantly to this day, since with futures and derivatives, short-term speculation is increasingly in the foreground.
The question that arises: does the futures market influence the foreign exchange market or does the foreign exchange market influence the future market? If someone buys arithmetically massive DAX futures, the DAX is initially not automatically affected. Because the DAX is the arithmetical result from the prices of the 40 stocks listed in it. But what would happen if the DAX future rose by 100 points but the DAX itself did not? And it is precisely these differences that are permanently balanced out using what is known as arbitrage. Large arbitrage traders take advantage of these differences at lightning speed. And so the futures markets and the strike prices on which the futures contracts are denominated are inextricably linked. And it is precisely for this reason that S&P Future and Forex, for example, have almost tick-accurate, parallel courses. This makes it possible to use exchange data from the Euro FX to make clear predictions for the EURUSD currency market. But which market influences which one?
If we compare the Apple stock in the future market with the Apple stock in the forex market, the turnover in the cash market is less important. Therefore, the future market will clearly be the driving force here. The turnover in the S&P Future and Forex market is similar, so both markets will influence each other equally. The cash market is the clear leading factor in EURUSD. Of course there are also influences from the futures market, but this is immediately offset by the arbitrage. The fact is that the markets influence each other, which should also be taken into account in trading. The main reason why I only trade the EURUSD in the forex market is the clear distribution of sales among the 20 largest big players. These big players rarely get in each other's way because they know exactly what the other is up to. This inadvertently creates a joint consortium of big players who are thus heading in a common direction. That enables me to identify the big player even better.
In my charts I use specially programmed limits to show me exactly the limit orders that will be relevant in the future. We see that the big players collected bids on the high with larger limit sell orders. The price was pushed down a bit and the bid collection was continued within the new equilibrium. Now the price has been pushed down again and we can see that this time bids were still being collected in two different equilibrium zones. At first there was a little stop hunting, then the course was pushed down. There was once again a short post-buy in the limit sell area and then larger limit buy orders were used, with which the big players got out of their dollar position. In principle, the process is always the same.
A little tip, I know some market participants who basically filter the 1 lot of sales out of the Time in Sells list, because they are insignificant from their point of view. Interestingly, the big players are precisely those who use these 1 lot orders massively within their cumulative orders to push the market in a certain direction, or to include corresponding stops by retailers with their limit orders. Here we see a cumulative market buy order with 11 lots. In the individual display within the Times and Sales list, 75% of this order consists of 1 lot contracts. The cumulative market order with 15 lots consists of 50% 1 lot contacts. And last but not least, a market sell order with 22 lots, which contains nine individual 1 lot contacts. It is precisely these 1 lot of contacts that are used in the market order area in order to be more difficult to identify in the market. In this overview, 121 lot market buy and market sell orders came into the market within 3 minutes, all of which were of course also taken up by limit orders. The number of contacts in the limit area that was interesting for me was only 48 lots. This is important in order to find out what the big players are collecting more. We have talked about this many times in my videos.
For me, a very decisive advantage in the forex market is the higher volatility within the candles, as the futures market moves 7-10 times less in the same period. As a result, significantly more information is passed on within my Bionic candle that helps me in daily trading. Since the beginning of the corona crisis, the big players have started carrying out various experiments in the EURUSD. As we know, your biggest disadvantage is that you often have to collect Ask or Bid for hours or days that can only be made possible by very complex stophuntings. In the last few months, new and interesting strategies have been developed, which have been backed up with appropriate algorithms. We will take a closer look at the strategies they use to carry out their collection campaigns in one of my next videos.
I wish you a great and relaxing weekend, next week a lot of success in retail and I look forward to seeing you again soon.
Kind regards Michael
Hello dear subscribers,
In today's post we talk about the biggest big players in the stocks forex and futures market. We look at the corresponding sales of the various assets and compare them with one another. Where are the biggest big players and why are they not so easy to identify in certain markets? Why is there a higher probability of winning in one market than in the other and how can you reduce your liability risk? Why do some big players avoid certain markets? These are just a few of the questions we are dealing with today.
I've spoken to a lot of traders over the past few months and I've noticed a few things that I'm going to talk about today. There is still a huge gap between forex CFDs and future traders. From the point of view of some future traders, CFD traders are pure indicator traders who have little idea of the actual market process. Even as a staunch Forex trader, I cannot share this assumption. As a rule, a beginner actually starts trading CFDs and develops into a future trader over the years. First of all, we should know that we only trade with probabilities in the stock futures and forex markets. Now we turn our attention to the profit probabilities in the individual markets. We discover some interesting aspects. In the stock market the loss rate is 91%, in the forex market 90% and in the future market 80%. What is striking here is that a clear, dramatic loss rate is evident in all three markets. In the stock market, the profit threshold quota is around 5%, these are participants who achieve neither losses nor profits in the long term. In the forex and futures market, the profit threshold rate is also 5%. The results are diffrent, when it comes to the profit ratio, in the stock market it is 4%, in the forex market 5% and in the futures market even 15%. This means that the profit rate in the futures market is three times higher than in the forex market and even four times higher than in the stock market. Where do these big differences come from?
The stock market is one of the most difficult markets in the world because it is where most high-frequency traders are up to mischief, there is little liquidity in the limit orders and this automatically results in higher volatility. In addition, you need very special knowledge, especially in the area of business figures such as balance sheets and much more. There are many unfair brokers in the forex market, and price manipulation is still taking place abroad. Likewise, high spreads prevent a reasonable profit ratio. The decisive factor, however, lies in the lack of volume, which does not give the trader any insight into the depth of the market. At first glance, this speaks absolutely in favor of trading in the futures market, but there are also decisive points that speak against it. First of all, there is a disproportionately high liability risk in the futures market. With a Black Swan, the risk per one lot is around € 25,000 with which you can run into the red. This minus must then be compensated. In the forex market, this liability is limited to the account balance. You can trade with microlot in the futures market, but this is not recommended for beginners as they can trade from 0.01 lot in the forex market. The account size in the futures market should also be at least € 20-30,000. In order to generate a deep market insight, professional software and a corresponding data feed are required. This may cost an additional 1000 € per year. In addition, the price movements in the futures market are not as finely tuned as in the forex market. This makes it difficult to identify crucial price ranges, especially when scalping. Likewise, there is no currency strength in the future market that we have often talked about in my videos.
The largest asset in the stock market is the Apple share, in the forex market the EURUSD is the leading player and in the future market the S&P. We compare the Apple share in the stock market and in the forex market, the S & P in the forex and future market and the EURUSD in the forex market with the euro FX in the future market. Apple shares a daily volume of 65 million, with a price of $ 121. That's equivalent to a daily turnover of $ 8 billion. With an average lot value of € 100,000, Apple shares would trade 80,000 lots per day. The S&P Future has a volume of 2 million per day with a contract value of 20,000. This corresponds to a daily turnover of $ 40 billion and the averaged lot value is 400,000. The S&P in the Forex market has a volume of 3 million with a contract value of 20,000, which corresponds to a turnover of 60 billion. The averaged lot value is 600,000. The Euro FX in the futures market has a volume of 200,000 with a contract value of $ 125,000. This corresponds to a daily turnover of $ 25 billion, the averaged lot value here is 250,000. The euro US dollar in the forex market reaches a volume of 23 million with a contract value of $ 100,000. This corresponds to a sales volume of $ 2.3 trillion or 23 million lots. Let's compare the number one in the Forex market with the number one in the futures market.
While 400,000 lots are traded daily in the S&P Future, the euro US dollar comes to 23 million lots. The total volume is almost 60 times larger. Now let's look at the distribution of the 100 largest big players in these markets. The 100 largest big players have a turnover share of over 80% in the euro US dollar. That means on average each of these big players trades 183,000 lots per day. The 20 largest big players achieve a 40% share of sales. On average, each of these big players trades 460,000 lots per day. This means that the remaining 80 big players still achieve an average turnover of 100,000 lots per day. In the S&P, the distribution rates are not quite as extreme as in the euro US dollar. On the one hand, this is due to the fact that the S&P predominantly has a large number of institutional traders who are more evenly distributed in their capital structure. Of course, for us retail traders, an institutional trader is big, who trades $ 360 million a day in the S&P. But these institutional traders are small compared to the real big players in the euro US dollar.
The 20 largest big players in the euro US dollar are able to trade the entire turnover of the S&P per day. I believe that you can see that it would make no sense for such a big player to act in the S&P. This is roughly comparable to when we go to a casino to win at the ATM and have a few million with us. The machine would not be able to process that much money that day. Let's take a look at a graphical size comparison. The share of EURUSD in the total forex market is 29%. The USDJPY comes in at 14%, the GBPUSD at 9%, the AUDUSD at 6%, the USDCAD at 5% and the USDCHF at 4%. In 15th place comes the USDCNY with a share of 0.5%. And that is exactly the size of the S&P in the futures market. So far this was probably not so well known because there is no real volume in the forex market.
As we know, the foreign exchange market was founded many decades ago so that banks could operate independently of the stock market and at very low cost. The banks have not thought of opening up this market to private investors one day. Likewise, the origin of the futures markets did not actually lie in speculating on the market as a whole with greater leverage. Futures markets were only used, to secure a price today that could be bought or sold in a few weeks or months. This was particularly important in the area of raw materials and also for crop failures in wheat. This has changed significantly to this day, since with futures and derivatives, short-term speculation is increasingly in the foreground.
The question that arises: does the futures market influence the foreign exchange market or does the foreign exchange market influence the future market? If someone buys arithmetically massive DAX futures, the DAX is initially not automatically affected. Because the DAX is the arithmetical result from the prices of the 40 stocks listed in it. But what would happen if the DAX future rose by 100 points but the DAX itself did not? And it is precisely these differences that are permanently balanced out using what is known as arbitrage. Large arbitrage traders take advantage of these differences at lightning speed. And so the futures markets and the strike prices on which the futures contracts are denominated are inextricably linked. And it is precisely for this reason that S&P Future and Forex, for example, have almost tick-accurate, parallel courses. This makes it possible to use exchange data from the Euro FX to make clear predictions for the EURUSD currency market. But which market influences which one?
If we compare the Apple stock in the future market with the Apple stock in the forex market, the turnover in the cash market is less important. Therefore, the future market will clearly be the driving force here. The turnover in the S&P Future and Forex market is similar, so both markets will influence each other equally. The cash market is the clear leading factor in EURUSD. Of course there are also influences from the futures market, but this is immediately offset by the arbitrage. The fact is that the markets influence each other, which should also be taken into account in trading. The main reason why I only trade the EURUSD in the forex market is the clear distribution of sales among the 20 largest big players. These big players rarely get in each other's way because they know exactly what the other is up to. This inadvertently creates a joint consortium of big players who are thus heading in a common direction. That enables me to identify the big player even better.
In my charts I use specially programmed limits to show me exactly the limit orders that will be relevant in the future. We see that the big players collected bids on the high with larger limit sell orders. The price was pushed down a bit and the bid collection was continued within the new equilibrium. Now the price has been pushed down again and we can see that this time bids were still being collected in two different equilibrium zones. At first there was a little stop hunting, then the course was pushed down. There was once again a short post-buy in the limit sell area and then larger limit buy orders were used, with which the big players got out of their dollar position. In principle, the process is always the same.
A little tip, I know some market participants who basically filter the 1 lot of sales out of the Time in Sells list, because they are insignificant from their point of view. Interestingly, the big players are precisely those who use these 1 lot orders massively within their cumulative orders to push the market in a certain direction, or to include corresponding stops by retailers with their limit orders. Here we see a cumulative market buy order with 11 lots. In the individual display within the Times and Sales list, 75% of this order consists of 1 lot contracts. The cumulative market order with 15 lots consists of 50% 1 lot contacts. And last but not least, a market sell order with 22 lots, which contains nine individual 1 lot contacts. It is precisely these 1 lot of contacts that are used in the market order area in order to be more difficult to identify in the market. In this overview, 121 lot market buy and market sell orders came into the market within 3 minutes, all of which were of course also taken up by limit orders. The number of contacts in the limit area that was interesting for me was only 48 lots. This is important in order to find out what the big players are collecting more. We have talked about this many times in my videos.
For me, a very decisive advantage in the forex market is the higher volatility within the candles, as the futures market moves 7-10 times less in the same period. As a result, significantly more information is passed on within my Bionic candle that helps me in daily trading. Since the beginning of the corona crisis, the big players have started carrying out various experiments in the EURUSD. As we know, your biggest disadvantage is that you often have to collect Ask or Bid for hours or days that can only be made possible by very complex stophuntings. In the last few months, new and interesting strategies have been developed, which have been backed up with appropriate algorithms. We will take a closer look at the strategies they use to carry out their collection campaigns in one of my next videos.
Inserted Video
I wish you a great and relaxing weekend, next week a lot of success in retail and I look forward to seeing you again soon.
Kind regards Michael
Forget:That does not work, amateurs build the ark, pros the Titanic!
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