Psychology and MM free zone...

So the question becomes: can we determine the players and their objectives, order flows, buyer and seller sentiment, etc solely from the price patterns that they create? Or do we need another data source? If so, how/where do we obtain it?

Nice to see your back on this boat Brent.

I totally agree with the Bold comment above.

In my book it is impossible for small retail traders to see the picture?it is like trying to find out what is somebodyelses mind,besides why would the big dogs want u to know what they r thinking ?

I very much doubt that the big dogs give a toss about what a handful of retail traders might be thinking. They will simply proceed with their agendas regardless.

Traders like Gaston apparently understand how these agendas operate. My question was to what extent, if any, the price movements generated by big dog orders form identifiable (and hence potentially exploitable) patterns or inefficiencies.

Hi there hanover like myself i seeyou are a chartist?

At a guess, Id say Gaston doesnt know quite as much the Bold above implies he does.

I think its much more likely that Gaston at a certain price and time, can make some assumptions about wich players will have an interest In certain outcomes.

Hanover,

You need to look from a businessman's perspective. I was formerly a financial journalist and retired as an entrepreneur .

As I have understood a market maker is simply interested in making profit. Whatever has been happening in FX markets (or for that matter any speculative markets) is not entirely based on fundamental or technical analysis. It never was. More so now it is so obvious. Tell me which currency is fetching you better interest rates or which country's economy is in really good shape? Then why are currencies going up and down? US, Europe and Uk all of them are printing money (expanding money volume) left and right. How can you differentiate which currency is strong and which is weak?

Last year around June/July everyone was talking about the failr value of dollar to be E/U 1.45 but within two months it was at 1.30. Market makers had to move swiftly to protect their interests in the mammoth options trade and the ferocious move to take it to that low level should be seen against that background. Damn the fundamentals or Purchasing Power of Parity. The carry trade had created a big monster that was going to put them out of business so the swift move to kill the monster had to be taken, even at the cost of upsetting the market for a long time. The market makers have think tanks (typical US big business model where think tanks or research institutions, financed by them, profess to be independent) as well as tech teams whose job is find ways to protect the interests of their masters.

I have seen you posting a lot of indicators based on the past. You are an intelligent coder and the best part is you do with a passion, which is reflected in your work.

For a change, start relating the chart tools to really what is happening in the market and what could possibly happen in the immediate future. You observe the market makers' games, the hours/days/weeks/months/quarters they choose for their movements then you will find such recurring patterns are not really so random and have been happening ever since the market makers were allowed to operate the fx market during the 70s.

In six months or so, and only by observing at bare figures or using statistics reporting tools on the chart (no oscillators or any other indicator which can be an distraction) you will be able to chart their patterns and develop an ability to forecast their movements.

You have to focus on the big picture and plot their possible moves. They would first create a zone (last week and following next week of each month) and accumulate positions, How do they buy their positions - slowly or rapidly? How do they create opportunities for short sell , short covering so that the traders can buy from them? How do they shift trading zones gradually and keep the trading orderly (range trading) and interesting enough for traders to speculate.

You treat each session (Asia, Europe, US) as individual market. Develop range indicator for each session hi-low and treat them like a 3- session cycle. And in each session there will be some 15-minute or 30-minute period where the stop-hunts/profit-taking will invariably happen. Frankfurt session, London session open and US session open and Sydney session open are ones to watch for stop-hunt during the first 30 minutes or an hour or so.

The pattern will be like this: One session will be earmarked Buy which will be indicated by the dip to the lower on the open of the session. During the session profit-taking will happen. And just prior to the second session starts, a stop hunt/profit taking will be done. If the market has not generated enough interest, the position-building by market maker continues in second session and rarely it will be done in third session, unless it's month beginning or month-ending. So third session will be SELL session which will be near the previous high. Short Sell session as well as upward stop hunt will be done during one session or 2 consecutive sessions ( same up or down move in 3 consecutive session is a rarity).


You develop some tools to compile statistics for each session divided in two hour borders and you will find the pattern that the maximum movements will be in the opening and closing hours. During the rest of time cross-currencies will be moving. It will be like a circus. Major currencies do their job during the opening and closing hours (revert to sideways) while the cross currencies play out their act in rest of the time.

Unless the market makers are in a major position-building exercise which they do just prior to major data releases like yesterday, today and tomorrow, the 3-cycle will turn into a consolidation cycle if the intention is to shift the trading range. Data releases provide them opportunities to create big noise to create fear, panic and ecstacy.

I learned about these tactics from Sniper Trading Workbook by George Angell. It is a step-by-step exercise and so it is easy to follow the technique.

It is hard work observing their movements away from all kind of market noise and documenting them because the study of time/hours they choose for their moves are very important. Back testing should be able to catch them once you understand their pattern and believe in the tactics.

It is timely to undertake this exercie now because the summer has ended. It is first week of this month and the market makers are trying to push the market into a higher range zone. July and August normally set the tone for next five-to six months trade zone. So by next June-end you will have documented their yearly moves. Multi-year trend reversal moves can also be understood with the help of this knowledge.

I hope you or anyone interested in this method develop some good indicators to fathom the intentions of the operators. The idea is not to forecast the price levels but what the operators want to do: buy, sell or short sell and which areas have they marked as bull/bear traps and where will they swing and how. And they do the trading confidently and without fear.

Attached is an intro to 3-day cycle method.

I am also attaching a graph made by me to plot their intention (a few days) and published on this forum somewhere else to shift the trading zone during this and next week to a new level.

PJ

Wow...... PJ the idea presented in your post and the PDF is what I have spent 4 years searching to find. I am now starting to see the forest and the trees.... amazing.

By the lack of comments I'd say your post went over the heads of most, but I guess that is just the way it will be.... at least until they are ready for the idea.

Many many thanks

Dean.

The ability to be very, very thorough, patient & consistent.

There are 1001 ways to make money out of the markets, but without the above successful trading will never be sustained.

Being unwilling to accept a psychological answer suggests an unwillingnesss to be thorough...

I like your posts LL - the opening salvo of this thead with Craig is hysterical.

Fortunately, I have my own supply of Toblerone...

This was quite an interesting post until I found out the author of the method you've attached in a pdf, and of the book you learned from, is just another system seller/non-trader who was selling his system based on hypothetical performance who settled with the CFTC before he could be totally exposed...

http://www.cftc.gov/files/enf/02orde...gell-order.pdf

Not saying the ideas have no merit, but if they do, why wasn't the guy making money trading it instead of creating fraudulent claims?

reading the settlement quickly....

he supposedly sold approx. 375 clients the right to use his "system"
at $3400 each

he paid his "independent auditor" 30% of sales

375 x $3400 = $1,275,000 minus 30% => $892,500.

minus his CFTC settlement $50,000

He netted $842,500. Pre-tax of course, but still ridiculous.

Well I for one buy into this idea, the market maker knows the sentiment of the market because he/she/they are taking the other side of it. I have a strong suspicion the Market Maker is also an opportunist hunter, if most want to sell they buy, then they paint the chart to look weak so even more of the crowd sell, and when their stomach is full, or the crowd becomes unsure, or time is up or.....etc etc..... they reverse the price.

I was looking at the EUR/USD on wednesday and watched price being pushed up to 1.2300 for the first time, going by tick volume, non believers should stop reading now, the Market Maker didn't find many sellers, never mind ADP numbers will be out soon and they all ready know the numbers, non believers should also stop reading now, or maybe check out Tom Williams, I have heard him say such things many times and I believe him, he even said the syndicate he traded for used to have copies of important speeches before they were spoken. But believe what you will.

ADP came out at 13K verses an expected 57K, and the crowd appeared to be selling, who knows why, every man and his dog will have an OPINION and most of them are just BS, anyway the Market Maker was taking the other side of it all. The Market Maker let price fall until tick volume started to slow a bit, then they started buying it up to just nick the pre-news release price, tick volume dropped noticeably and to not invalidate that level they let price fall once more. This is as I understand it actually one trading system Felix from over at forexpeacearmy.com recommends, to look for a trade on the pullback on News releases. Felix.... by the way, is the most trustworthy and successful trader I know of, (and Darkstar being the second). To top it off I believe Felix gives half of his before tax profits away to charity. Unfortunately I find it hard to follow someones system as deep down I actually want to know WHY price moves as it does, (so hurry up and finish your book Darkstar... ha ha) this is one of my many downfalls lol, although I'd be much better off just following a successful system blindly.

So price visited close to 1.2300 level twice more that day, are you starting to believe 1.2300 is a strong resistance level ? well you should, cause the Market Maker was painting it nicely. The following day when price revisited it for a forth time, and going by the high tick volume the crowd thought it looked like an easy Sell opportunity, well..... they were wrong.

The ADP number was the first News release I realized, afterwards, that I might just understand what was going on at that small moment in time. Of course I never know if what I think I see is correct, and price moving up the next day 340 odd pips from that days low only means I could be 50% correct, but I guess that's better than price falling and me being 100% wrong.


Something to think about...........

.

do you believe in pivot points.... Well it looks like someone does. This is daily pivots and yesterdays high low and close all based on 5pm New York Close. What I noticed was, and it isn't hugely obvious, is that price spent very little time at support levels, and a lot longer at resistance levels. What I take from this is someone let price hesitate at resistance, where they were hoping to find sellers...... so they could buy up some more, and price was not allowed to stay at support for long, if at all, because I suspect someone didn't want others buying.

I have never read anyone describe what they saw in a chart in this manner, if you have then I would love you to post a link to it.

anyway... something else to think about... or not... ha ha

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