I heard that during illiquid times banks do such things to hunt stops. But what about, for example the middle of NY session? How easy it is for a MM to move the price for example 20 pips when liquidity is normal? And does the market maker lose anything when they hunt for stops, moving the price against the trend? Does it cost them? thank you.
- Joined Feb 2006 | Status: Blah blah blah | 1,410 Posts
The breaking of a wave cannot explain the whole sea.
- | Joined May 2007 | Status: Seasoned Trader | 820 Posts
I wish I could attach an ebook I have about volume spread analysis, but it has advertising in it and that is not allowed here. Google Volume Spread Analysis and you will get plenty of info.
Basically, the market makers can see the number and size of the large orders at any given time. I'm talking about the real market, not retail chumps like us. That coupled with the fact that they and the large profesional traders control the overwhelming majority of real orders in the real market gives them the ability to time their orders so they get maximum bang for their buck. Even though our fun-time retail brokers can manipulate price somewhat they would risk exposure if they caused too many large spikes to run stops. The market is not random and our brokers know it is only a matter of time before most retail num-chuck traders will make a mistake which will set off a cycle of panic/fear based decisions and we will self implode.
Don't worry about the MMs, instead try to think and act like they do. That way you can catch a free ride occasionally. I've tried VSA on Metatrader and can vouch that the volumes are only for orders placed through that broker and they don't mean squat. Too bad. Otherwise we might have a fighting chance to make some real money in this make believe market. I hate to say this but retail trading is designed to take our money and feed it to the reptilian monsters from outer space. The only way to survive is to eliminate fear from your game. There in lies the key to the universe.
That's only bits and pieces so I hope it makes enough sense to strike some chords and help you point in the right direction at least. Effective communication with Earthlings is quite difficult at times.
Basically, the market makers can see the number and size of the large orders at any given time. I'm talking about the real market, not retail chumps like us. That coupled with the fact that they and the large profesional traders control the overwhelming majority of real orders in the real market gives them the ability to time their orders so they get maximum bang for their buck. Even though our fun-time retail brokers can manipulate price somewhat they would risk exposure if they caused too many large spikes to run stops. The market is not random and our brokers know it is only a matter of time before most retail num-chuck traders will make a mistake which will set off a cycle of panic/fear based decisions and we will self implode.
Don't worry about the MMs, instead try to think and act like they do. That way you can catch a free ride occasionally. I've tried VSA on Metatrader and can vouch that the volumes are only for orders placed through that broker and they don't mean squat. Too bad. Otherwise we might have a fighting chance to make some real money in this make believe market. I hate to say this but retail trading is designed to take our money and feed it to the reptilian monsters from outer space. The only way to survive is to eliminate fear from your game. There in lies the key to the universe.
That's only bits and pieces so I hope it makes enough sense to strike some chords and help you point in the right direction at least. Effective communication with Earthlings is quite difficult at times.