The Holy Grail - Found

Thanks Norm for the info.Yea your right about the gpb/jpy it will shoot up or down like a rocket.Just like the eur/jpy the other day i was around 17 pips in profit just knowing i had the 20 in the bag but it came right back down.If i'm aroud close to my computer i'm going set my alarm at the line.I didn't trade at all today since it being friday.Have a good weekend everybody.

Tex

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Twoblink,

If your system really works why not program it into an EA and sell it? You will get money from the EA plus all the people trading around the same time you do will drive price in your favor and carry the trend farther. That is a well documented. Plus, the money from the EA is a never ending source and you will get it quicker if your method is truly valid. Remember a fast nickel beats a slow dime everytime. If you choose not to that is up to you but there are advantages that you will be missing out on. Your choice.

Wait a second, you do realize you are on a trading site and asking people to act rationally right?

Hey Norm.I have a sell stop at 108.53 on usd/jpy.Nothing moving much at this time.

Tex

bingo

nzd/jpy looks very good at 85.17.

you have 4reversals on that line on nzdjpy on 30 min chart and good trendline on the lower high.

12 pips out of the nzd/jpy..what a spread . tex

Holy ravioli, Batman! Five aces in 18 holes? That makes a 97% win rate trading seem like child's play.
_________________

Now I must plead ignorance, and ask how stop-hunting works. Here's my understanding - anybody, please confirm whatever is correct, and correct me where I'm wrong.

OK, let's assume that there's heavy resistance at price X, i.e. price has attempted to rise above X, but each time the bears keep pulling it back downward. When it's moved sufficiently far down, say 10-30 pips below X, traders anticipate a reversal and enter short, placing their stoplosses just above the swing high, X (like we've all been taught to do).

The stoplosses (if hit) will close the short trades, which are sell orders; hence the stoplosses are effectively buy orders. So the stop-hunters flood the market with sell orders just above X (i.e. to create a willing buyer/wiling seller situation, facilitating a trade). The result is that all of the "dumb money" traders who went short now have their positions stopped out, incurring a loss. (If I understand JohnW correctly, that is the 20 pip move that he is trying to catch...?)

As an aside, there may also have been traders who placed buy orders above X, andticipating a breakout. So their orders will also get triggered, leaving them net long.

OK, now the stop-hunters are net short, hence to to benefit they must now force price downward. But how do they achieve this? Is it by now anticipating that many other "dumb money" traders will try shorting again (if so, why?), and then the hunters will set their profit targets - effectively buy orders - (say) 10-30 pips below X?

One of the many ideas that forex brokers and system vendors use to promote forex over stocks is that "the forex market, with its $2 trillion worth of transactions per day, is too big to be manipulated by any one individual". Is stop-hunting not a form of manipulation? JohnW says (see post #241) "....who is going to break that resistance? Stronger traders, that's who..... (do you) think the large traders will run those stops? Yes, they will....." So it would seem that price movement can be manipulated by stronger or large traders - correct?

Sorry for being such a bonehead. I understand the math behind technical indicators. Now I'm trying to get a handle on who has the ability to drive prices, when, how they achieve it, and how they use it to their advantage. Perhaps someone would be kind enough to point me in the direction of a thread that answers these types of question. I did a quick search for "stop hunt" and couldn't find anything deatiled enough.

Many thanks
David

Hello there Hanover,
You may find this interesting:
http://www.forexfactory.com/showthread.php?t=7484

Thanks JohnW for generously sharing your system

TORAG

David, although sometimes controversial, I think everyone who wants to learn forex has to read some of the posts by Patrick_Rhodes, starting from this one:
http://www.forexfactory.com/showpost...07&postcount=8
They seem to show too extreme situations sometimes, but indeed for me it's more easy to imagine a single broker that trades against its customers than some imaginary not broker big player that decides to go against the whole $2 trillion market just to hunt some stop here and there.
Moreover, consider that the $2 trillion we refer to is related to the whole forex market, but any single broker has a lot more smaller market and those are more easy to manipulate, and some of Patrick_Rhodes' posts seem to explain enough well how this acting from single brokers rebounds and reflects to other brokers during every market day causing the markets to behave exactly as we experience them without so much spread arbitrage occasions showing up all the time.

Hi Tex,

Nice call on usd/jpy, keep em comin.

I played eur/usd at the 1.4819 level, breakout occured during London opening, went straight up 96 pips at 1.4915, I didn't set a TP and bailed
out at 1.4888.

Hey JohnW, Looks like I'll owe you a case of champagne if these wins
keep comin.

Holy High Win Ratio, Batman!

Hey Norm,Great call on the eur/usd and good profit. JohnW i'm doing well so for. Thanks a bunch.

Quoting TORAG

Disliked

Hello there Hanover,

Ignored

Quoting ubeee

Disliked

David, although sometimes controversial, I think everyone who wants to learn forex has to read some of the posts by Patrick_Rhodes, starting from this one:

Ignored

Thanks guys for the links.

So – if I understand correctly – unlike the equity markets, where the heavyweight ‘enemies’ are large speculators on the same tier, the forex market is a hierarchy, and hence the ‘large’ or ‘strong’ traders, i.e. stop-hunters, that JohnW talks about are actually brokers or banks that exist on a higher tier.

DarkStar points out that, despite the more complex, hierarchic al structure, there still needs to be a willing buyer and willing seller, for each transaction to be effected.

Is my logic about the buy and sell orders that are placed to stop-hunt correct?

David

Next play is: Nzd/Usd long breakout level on 30 min chart is 0.7913 +6 spread = 0.7919 trigger point. 10 pip tp, 30 pip stop.

Monday 1-14-08 at 10pm est.

Norm, Looks like you hit your target. Good call. tex

Thnx,Tex,

I had to change the TP to 10 pips after I put the trade on, I forgot nzd/usd trades are 1/2 of the normally 20 pip TP. I missed 3 good trades on nzd/jpy, usd/jpy and usd/chf, not paying attention.

Hey Norm,Didn't trade at all yesterday. The dow is down so maybe find a short for the usd/jpy.

Ok Norm, I have a sell stop on the gpb/usd 1.9606. TP1.9586 Sl. 1.9636 1.9612 line looks fairly good.