Has anybody had any thoughts about creating an artificial market? I was thinking of trying to simulate basic market behaviors and mechanics to better understand them. The reason i would create this is to be the "market maker" and learn how to manipulate currencies. by better understanding how the MM control market flow we can learn to be in sync with their motives.
Example if a MM or institution's true intention is to buy or (accumulate) they actually wont dump all the buy orders onto the market that would cause a climatic break out with could reverse beyond their contol not to mention be a waste of time and too risky. The MM would rather gather contracts through disguising it as selling (buying the contracts we might be selling in a bear). Once a MM has acquired their goal they then become net buyers (they overwhelm the bid with volume)
Here is the order flow time line (the volume sizes are hypothetical also im leaving out price for simplicity)
1. 100 X 1000 < Bid X Ask > Institutions are heavy on the offer because they want to make the bid look weak and they keep bears coming because they sense weakness.
2. 50 X 2000 < Bid X Ask > Price has dropped several teirs as old bulls liquidate and new bears keep entering because no one is believed to be supporting. Instituitions has been buying on the bid sucking up everything it possible can at great prices lower and lower (because remember the Institutions need contracts because its their goal)
3. 1 X 200 Just as it seems like prices will never stop falling and the institutions know everyone will be short. Remember everyone thinks it will never stop. Everyone is short.
3. 1000 x 100 The institutions take all of the contracts its gathered and has heavily supported the bid. All the late comers (late bear entry), Old bears who sold short at step 1 & 2 will now see strength and exit in mass (buying to cover) Some will exit at a profit and some will exit at a loss.
The main thing to get a grip on is that panic is what moves markets.
Institutions make money by using these patterns. We cannot every learn these because we can never be in the "cockpit" like an institutional trader.
I believe that if a artificial programmed market could be created We could better learn to anticipate and use this knowledge and learn from it to succed.
I did not invent these theories they have been around forever and acutally are relativly hard to find in literature and are definatly not taught.
I started research into price action analysis and market mechanics beacause it think indicators are worthless. i have done so much back testing and began to realize its all bull shyt. I really started to make good progress when i JUST SIMPLY started looking at the bars in relation to S/R and previous price action.
I have learned alot of this from research and great books and i think this is a extremely logical view of markets. I know Level II is a little harder to get for small forex traders with lower capital but i think mapping and experimenting with this artificial market might really gain some great insight.
Wow this really became a long post.
Any thoughts on this project would be appreciated. I think im going to keep the program really simple and write it in C++.
Example if a MM or institution's true intention is to buy or (accumulate) they actually wont dump all the buy orders onto the market that would cause a climatic break out with could reverse beyond their contol not to mention be a waste of time and too risky. The MM would rather gather contracts through disguising it as selling (buying the contracts we might be selling in a bear). Once a MM has acquired their goal they then become net buyers (they overwhelm the bid with volume)
Here is the order flow time line (the volume sizes are hypothetical also im leaving out price for simplicity)
1. 100 X 1000 < Bid X Ask > Institutions are heavy on the offer because they want to make the bid look weak and they keep bears coming because they sense weakness.
2. 50 X 2000 < Bid X Ask > Price has dropped several teirs as old bulls liquidate and new bears keep entering because no one is believed to be supporting. Instituitions has been buying on the bid sucking up everything it possible can at great prices lower and lower (because remember the Institutions need contracts because its their goal)
3. 1 X 200 Just as it seems like prices will never stop falling and the institutions know everyone will be short. Remember everyone thinks it will never stop. Everyone is short.
3. 1000 x 100 The institutions take all of the contracts its gathered and has heavily supported the bid. All the late comers (late bear entry), Old bears who sold short at step 1 & 2 will now see strength and exit in mass (buying to cover) Some will exit at a profit and some will exit at a loss.
The main thing to get a grip on is that panic is what moves markets.
Institutions make money by using these patterns. We cannot every learn these because we can never be in the "cockpit" like an institutional trader.
I believe that if a artificial programmed market could be created We could better learn to anticipate and use this knowledge and learn from it to succed.
I did not invent these theories they have been around forever and acutally are relativly hard to find in literature and are definatly not taught.
I started research into price action analysis and market mechanics beacause it think indicators are worthless. i have done so much back testing and began to realize its all bull shyt. I really started to make good progress when i JUST SIMPLY started looking at the bars in relation to S/R and previous price action.
I have learned alot of this from research and great books and i think this is a extremely logical view of markets. I know Level II is a little harder to get for small forex traders with lower capital but i think mapping and experimenting with this artificial market might really gain some great insight.
Wow this really became a long post.
Any thoughts on this project would be appreciated. I think im going to keep the program really simple and write it in C++.
