When you get serious about your trading, you learn who your friends (and enemies) are. You friends are your candles or bars. Your enemies are…….(if you don’t know who they are then you are not trading to live).
What I like doing is picturing what is going on between the buyers and sellers and I can “see” this on a chart. I still picture this as a battle in the Pits where you have all the screaming shouting and arm waving by the Floor Traders.
Of course this is not true in Forex as it doesn’t have a central exchange like NYME or CME in Chicago and is instead traded worldwide from east to west, north to south and anywhere in between by millions of traders. However, it still has Market Makers and huge financial institutions (big boys) who really call the shots but instead of screaming, shouting and arm waving, they are in offices all over the world each looking at 35 to 40 monitors programmed with unique, proprietary software that we will never see. Very few of their monitors show charts as they no longer trade by charts and instead trade on buying and selling pressures and levels, bid and ask spreads in addition to knowing the forward loading of orders of all sizes above, below and at the current market price.
Their MO is no different to what Dr. Joe witnessed in Chicago all those years ago except now it is totally electronic trading. When the big boys are not driving the market for their own profit, they are “piggy backing” on orders in the pipeline and what their fancy algorithms tell them. Their software even alerts them to abnormalities, aberrations and out of balance in the markets and automatically puts them in a trade.
And they call that trading!
The closest I can get to “seeing” this interaction is to witness events during the news item which has the biggest impact which of course is NFP (Non Farm Payrolls).
So yesterday I decided I would watch (not trade!) today’s NFP action. To do this I watch the EURUSD Death Time Frame (M5), so there I was at 8:25am EST watching a static chart! The magnified market price in the top right hand corner of my screen was “frozen” so much so that I thought I had lost my connection and had to check to make sure it was “live”. Of course this is what always happens prior to a news release – nothing, no-one wants to jump in front of a rocket ship.
I had prepared my EURUSD chart with S&R levels in different colours from H1, H4 and the Daily plus 1.4012 from yesterday’s post # 4004 and 1.4147 which was yesterday’s EUR Futures contract price with the highest volume.
All the analysts were predicting a stronger USD from the NFP release which would mean EURUSD would fall. I had a little bet with myself that they would be wrong and EURUSD would rise. I also noticed that the last price was 1.4039, 27 pips above the line in the sand, 1.4012.
Shortly after 8:30am, a wild green bar started printing. “Bloody hell”, I thought, “this must look absolutely crazy on M1”, but resisted the temptation to look. So, with my imagination running wild, I pictured the buyers and sellers (still in the Pits (because that’s still my vision of trading)).
The bar opened at 1.4034, 5 pips below the prior close so I knew it would go up to fill the gap (Mind The Gap, London boys!). “Ah”, I thought, “so much for you analysts, it IS going up!”
So I “saw” the buyers watching their screens with smiles on their faces and then “Bang”, it went down faster than a hooker could drop her knickers! The buyers were all staring at the sellers wondering what the hell they were up to and decided to re-group. They came back with smiles on their faces and proceeded to drive prices up much to the dismay of the sellers. The sellers didn’t like this so they had a quick meeting and before you knew it, they were the ones smiling as prices started to drop again. This went on until the buyers hit H1 resistance at which point there were the sellers with big cheesy smiles on their faces. “Got you”, they said and took prices back down to where the bar opened. “Bollocks to you”, said the buyers, “we’re going up” and with smiles on their faces again, took price to 1.4052 where it closed the M5 bar.
“’Kin L”, I said to myself, as I wiped my sweaty brow, “all this for only 18 pips in what seemed like a life time!”.
Since it was obvious the sellers were sat at 1.4061 and the buyers smiling at 1.4012, this is going to be like a game.
The sellers had red faces and obviously didn’t like being taken for an 18 pipe ride and came back on the next bar and “Bang” another hooker lost her drawers and price was at 1.4019 staring the buyers in their faces. “Enough of this”, cried the Head Buyer, “go for it” and the buyers stared at the sellers with an ice cold expression and tried to drive the price right back up their throats (1.4061). However, the sellers were wise to this and dropped down a few rungs and sold again at 1.4056.
“Wait a minute”, I said, “this game is being played at Wimbledon not in Forex!”
Well with each to – ing and fro – ing from the sellers to the buyers, I was getting emotionally drained and we were only 10 minutes into the damned thing!
This 8:35am bar closed as an IB at 1.4026, 8 pips lower than when they started and I knew the buyers wouldn’t like it. As expected, the buyers re-grouped and came back with their plan. “Charge” the Head Buyer shouted and price rocketed back up to the open of the first bar. “Not so fast, smart arse”, said the Chief Seller, “you’re going down” and took price all the way back to the open of that bar. However, all his sellers were not on board as some had gone to get their bacon butties and the buyers took advantage and whacked the price back up to 1.4033 where it closed again as an IB of the first, now controlling bar.
“ 6 pips in 15 minutes of Wimble - like play”, I said to myself, “ crazy, crazy, crazy”.
The sellers who had gone for bacon butties got a bollocking from the Chief Seller so, on the next bar, they came in and drove price back down to yes, you guessed it, 1.4012, right where the smiling buyers were waiting for them. Now the buyers had anticipated this and were loaded and ready and took price back up to the previous bar’s high where the Sellers had figured their game plan and were waiting for them. This continued for the remaining minutes and I thought, for a split second, the buyers would win out but the crafty sellers sneaked in at the very last second to start a sell off. “Buy”, screamed the Head Buyer as he saw through their game plan and managed to save price at 1.4032 to close the bar as a Bond hammer and another IB within the first 8:30am controlling bar.
This then produced a pattern similar to the BOSS pattern I have been discussing on the thread and had all the same reasoning so “let’s have a think about this”, I said. “Think, THINK, you don’t have time to think”, said the little man in my head, “you’re on the five minute time frame now, not your beloved Daily!”.
Well I did think! “What do we know so far?”, I asked myself. “Well it seems like the buyers are more organized and aggressive than the sellers who seem too laid back”, I told myself. “What is obvious is that there are a group of sellers ready to pounce at 1.4061 (H1 resistance)”, I said. “What I have noticed is that the buyers accelerate fast but slow down equally as fast as they approach that level. That tells me there are much more sellers there than there are buyers and maybe more sellers than there are at lower levels,” I mumbled swigging my orange juice.
“Right, if I was trading M5, I would be a buyer right now at 1.4040, so let’s pretend”, I said.
As I expected, the buyers opened the next bar and drove prices up past my imaginary fill of 1.4040. “Oooh, this is exciting”, I said, as prices went even higher. “Oh no, it’s not”, the little man in my head said as the sellers jumped in and drove the prices past the open and to the mid point of the previous bar. “Thank you buyers”, I said as they came in and pushed prices higher again. In my imaginary trade, I set a target at H1 resistance, 1.4061 and as prices approached it I felt a rush of blood thinking this IS fun after all. “You’re an idiot”, said the little man in my head, “look at what the sellers are doing” as they drove the price back down to the low again. “I can’t stand this”, I told myself, “just have your way with me and do what you want” I told price, and walked away for several minutes to find my senses. When I next looked, my imaginary target was hit and the sellers were trying to get prices back down again to close at 1.4056 on the 9:00am bar.
“I made 21 pips less spread in 15 minutes”, I told myself, “maybe I’m better at this than I think”. “Not on your life!”, said the little man, “you’re a nervous wreck!”.
“Bollocks, I’ll show you”, I said and placed another imaginary order to sell at 1.4056, the close of the last bar. Immediately after I did that I broke out into a hot sweat and said, “Why did you do that you dumb shit?” “Well”, I said, “I know, or think I know, there are more sellers than buyers at this level and price is just being hit back and forth like a tennis ball between support and resistance so I should get out at support around the “line in the sand” of 1.4012”.
“But you really don’t know, do you”, said the little man, “ you have no idea what the buyers and sellers are thinking”. “Bugger off”, I told the little man, “they’ve just gone up so now they’ve GOT to go down…………haven’t they?..... or maybe they can go up some more if the buyers are as strong as I think they are. But the analysts said USD stronger so it’s GOT to go down because they’re the experts and are always right…………………..but there again, the buyers are much more aggressive and seem to have a better game plan. Bloody hell, now I really don’t know! Oh no, what have I done?”
“No”, I screamed at the top of my voice to my screen as the buyers opened the next bar and went straight to resistance. “Sellers, get here right now and get these buyers the hell out of here, NOW”, I shouted as loud as I could. A glimmer of hope as price fell a little but, “Wait a minute”, I sighed, “it’s going up again!”.
“You’re not supposed to go up you stupid pillock”, I screamed and screamed, banging my head against the wall in my best John Cleese impersonation.
“What did I tell you”, said the little man, “you’re useless”. With that I walked away to try and regain what sense I had left and left my imaginary stop to do it’s work.
Well, 40 minutes later, my imaginary target was reached at 1.4012.
“44 pips in 40 minutes is pretty good”, I wanted to say, but by that time I felt like I had been through the wringer, spun in the tumble dryer and hung out to dry.
“Let me get back to my beloved Worker and BOSS!”, was the last thing I heard myself say.
It’s amazing what happens when you let your imagination free!
What I like doing is picturing what is going on between the buyers and sellers and I can “see” this on a chart. I still picture this as a battle in the Pits where you have all the screaming shouting and arm waving by the Floor Traders.
Of course this is not true in Forex as it doesn’t have a central exchange like NYME or CME in Chicago and is instead traded worldwide from east to west, north to south and anywhere in between by millions of traders. However, it still has Market Makers and huge financial institutions (big boys) who really call the shots but instead of screaming, shouting and arm waving, they are in offices all over the world each looking at 35 to 40 monitors programmed with unique, proprietary software that we will never see. Very few of their monitors show charts as they no longer trade by charts and instead trade on buying and selling pressures and levels, bid and ask spreads in addition to knowing the forward loading of orders of all sizes above, below and at the current market price.
Their MO is no different to what Dr. Joe witnessed in Chicago all those years ago except now it is totally electronic trading. When the big boys are not driving the market for their own profit, they are “piggy backing” on orders in the pipeline and what their fancy algorithms tell them. Their software even alerts them to abnormalities, aberrations and out of balance in the markets and automatically puts them in a trade.
And they call that trading!
The closest I can get to “seeing” this interaction is to witness events during the news item which has the biggest impact which of course is NFP (Non Farm Payrolls).
So yesterday I decided I would watch (not trade!) today’s NFP action. To do this I watch the EURUSD Death Time Frame (M5), so there I was at 8:25am EST watching a static chart! The magnified market price in the top right hand corner of my screen was “frozen” so much so that I thought I had lost my connection and had to check to make sure it was “live”. Of course this is what always happens prior to a news release – nothing, no-one wants to jump in front of a rocket ship.
I had prepared my EURUSD chart with S&R levels in different colours from H1, H4 and the Daily plus 1.4012 from yesterday’s post # 4004 and 1.4147 which was yesterday’s EUR Futures contract price with the highest volume.
All the analysts were predicting a stronger USD from the NFP release which would mean EURUSD would fall. I had a little bet with myself that they would be wrong and EURUSD would rise. I also noticed that the last price was 1.4039, 27 pips above the line in the sand, 1.4012.
Shortly after 8:30am, a wild green bar started printing. “Bloody hell”, I thought, “this must look absolutely crazy on M1”, but resisted the temptation to look. So, with my imagination running wild, I pictured the buyers and sellers (still in the Pits (because that’s still my vision of trading)).
The bar opened at 1.4034, 5 pips below the prior close so I knew it would go up to fill the gap (Mind The Gap, London boys!). “Ah”, I thought, “so much for you analysts, it IS going up!”
So I “saw” the buyers watching their screens with smiles on their faces and then “Bang”, it went down faster than a hooker could drop her knickers! The buyers were all staring at the sellers wondering what the hell they were up to and decided to re-group. They came back with smiles on their faces and proceeded to drive prices up much to the dismay of the sellers. The sellers didn’t like this so they had a quick meeting and before you knew it, they were the ones smiling as prices started to drop again. This went on until the buyers hit H1 resistance at which point there were the sellers with big cheesy smiles on their faces. “Got you”, they said and took prices back down to where the bar opened. “Bollocks to you”, said the buyers, “we’re going up” and with smiles on their faces again, took price to 1.4052 where it closed the M5 bar.
“’Kin L”, I said to myself, as I wiped my sweaty brow, “all this for only 18 pips in what seemed like a life time!”.
Since it was obvious the sellers were sat at 1.4061 and the buyers smiling at 1.4012, this is going to be like a game.
The sellers had red faces and obviously didn’t like being taken for an 18 pipe ride and came back on the next bar and “Bang” another hooker lost her drawers and price was at 1.4019 staring the buyers in their faces. “Enough of this”, cried the Head Buyer, “go for it” and the buyers stared at the sellers with an ice cold expression and tried to drive the price right back up their throats (1.4061). However, the sellers were wise to this and dropped down a few rungs and sold again at 1.4056.
“Wait a minute”, I said, “this game is being played at Wimbledon not in Forex!”
Well with each to – ing and fro – ing from the sellers to the buyers, I was getting emotionally drained and we were only 10 minutes into the damned thing!
This 8:35am bar closed as an IB at 1.4026, 8 pips lower than when they started and I knew the buyers wouldn’t like it. As expected, the buyers re-grouped and came back with their plan. “Charge” the Head Buyer shouted and price rocketed back up to the open of the first bar. “Not so fast, smart arse”, said the Chief Seller, “you’re going down” and took price all the way back to the open of that bar. However, all his sellers were not on board as some had gone to get their bacon butties and the buyers took advantage and whacked the price back up to 1.4033 where it closed again as an IB of the first, now controlling bar.
“ 6 pips in 15 minutes of Wimble - like play”, I said to myself, “ crazy, crazy, crazy”.
The sellers who had gone for bacon butties got a bollocking from the Chief Seller so, on the next bar, they came in and drove price back down to yes, you guessed it, 1.4012, right where the smiling buyers were waiting for them. Now the buyers had anticipated this and were loaded and ready and took price back up to the previous bar’s high where the Sellers had figured their game plan and were waiting for them. This continued for the remaining minutes and I thought, for a split second, the buyers would win out but the crafty sellers sneaked in at the very last second to start a sell off. “Buy”, screamed the Head Buyer as he saw through their game plan and managed to save price at 1.4032 to close the bar as a Bond hammer and another IB within the first 8:30am controlling bar.
This then produced a pattern similar to the BOSS pattern I have been discussing on the thread and had all the same reasoning so “let’s have a think about this”, I said. “Think, THINK, you don’t have time to think”, said the little man in my head, “you’re on the five minute time frame now, not your beloved Daily!”.
Well I did think! “What do we know so far?”, I asked myself. “Well it seems like the buyers are more organized and aggressive than the sellers who seem too laid back”, I told myself. “What is obvious is that there are a group of sellers ready to pounce at 1.4061 (H1 resistance)”, I said. “What I have noticed is that the buyers accelerate fast but slow down equally as fast as they approach that level. That tells me there are much more sellers there than there are buyers and maybe more sellers than there are at lower levels,” I mumbled swigging my orange juice.
“Right, if I was trading M5, I would be a buyer right now at 1.4040, so let’s pretend”, I said.
As I expected, the buyers opened the next bar and drove prices up past my imaginary fill of 1.4040. “Oooh, this is exciting”, I said, as prices went even higher. “Oh no, it’s not”, the little man in my head said as the sellers jumped in and drove the prices past the open and to the mid point of the previous bar. “Thank you buyers”, I said as they came in and pushed prices higher again. In my imaginary trade, I set a target at H1 resistance, 1.4061 and as prices approached it I felt a rush of blood thinking this IS fun after all. “You’re an idiot”, said the little man in my head, “look at what the sellers are doing” as they drove the price back down to the low again. “I can’t stand this”, I told myself, “just have your way with me and do what you want” I told price, and walked away for several minutes to find my senses. When I next looked, my imaginary target was hit and the sellers were trying to get prices back down again to close at 1.4056 on the 9:00am bar.
“I made 21 pips less spread in 15 minutes”, I told myself, “maybe I’m better at this than I think”. “Not on your life!”, said the little man, “you’re a nervous wreck!”.
“Bollocks, I’ll show you”, I said and placed another imaginary order to sell at 1.4056, the close of the last bar. Immediately after I did that I broke out into a hot sweat and said, “Why did you do that you dumb shit?” “Well”, I said, “I know, or think I know, there are more sellers than buyers at this level and price is just being hit back and forth like a tennis ball between support and resistance so I should get out at support around the “line in the sand” of 1.4012”.
“But you really don’t know, do you”, said the little man, “ you have no idea what the buyers and sellers are thinking”. “Bugger off”, I told the little man, “they’ve just gone up so now they’ve GOT to go down…………haven’t they?..... or maybe they can go up some more if the buyers are as strong as I think they are. But the analysts said USD stronger so it’s GOT to go down because they’re the experts and are always right…………………..but there again, the buyers are much more aggressive and seem to have a better game plan. Bloody hell, now I really don’t know! Oh no, what have I done?”
“No”, I screamed at the top of my voice to my screen as the buyers opened the next bar and went straight to resistance. “Sellers, get here right now and get these buyers the hell out of here, NOW”, I shouted as loud as I could. A glimmer of hope as price fell a little but, “Wait a minute”, I sighed, “it’s going up again!”.
“You’re not supposed to go up you stupid pillock”, I screamed and screamed, banging my head against the wall in my best John Cleese impersonation.
“What did I tell you”, said the little man, “you’re useless”. With that I walked away to try and regain what sense I had left and left my imaginary stop to do it’s work.
Well, 40 minutes later, my imaginary target was reached at 1.4012.
“44 pips in 40 minutes is pretty good”, I wanted to say, but by that time I felt like I had been through the wringer, spun in the tumble dryer and hung out to dry.
“Let me get back to my beloved Worker and BOSS!”, was the last thing I heard myself say.
It’s amazing what happens when you let your imagination free!
15 YEARS OF PASR ON FOREX FACTORY!
3
... 
