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Following the big money

  • #1
  • First Post: Edited Jan 3, 2015 2:43am May 26, 2011 7:34am | Edited Jan 3, 2015 2:43am
I start this thread with the intention to share my 15-years trading experience. Actually I already did this but my books are in Bulgarian and this could be a little hurdle to most of the FF readers. Let me explain the logic behind my trading style. After all these years trading forex and futures I understand one thing - if you want to make profits just follow the big money. That is what the trading is all about. The point is that the big guys never tell you in advance what they intend to do and you have to learn to think they way they think. The good thing is that all the majors players in the FX market are managed by people like us and we successfully can try to find out how they trade.
I can't tell you exact rules of my system because it is based on my 12-years experience and I have realized the only constant characteristic of the market is that it is changing all the time. Of course I don't open my positions in the middle of nowhere and my basic rules are:

1. Positions are opened only near strong support or resistance (MA, swing hi/lo, pivots, trend lines, etc.)
2. Entries are identified at 1 minute charts and the quotes are used as a filter.
3. Correlations are a good confirmation of the market direction.
4. Almost all of the positions are in the direction of the prevailing trend.
5. I'm looking for entries prior or just after a major market center open.
6. The initial stop of the position is 5-6 pips in most cases, while the first target is 20 pips. The stop is moved to BE after 5-6 pips profit.

For the actual entries I used a technique that a friend of mine named STE (Svetlin's Trick Entry). This is similar to the Joe Ross' TTE (Traders Trick Entry), but I'm trying to open the position earlier. With a few real examples I'll try to make my point clearer.
  • #2
  • May 26, 2011 7:38am May 26, 2011 7:38am
This is the first example. The set up was a flag on the 1 minute chart of EUR/USD. The entry was before the open of the NYSE, because this day EUR and the stock showed strong correlation. The initial stop was 5 pips and the target was 40 pips. Half of the position was closed at BE but for the rest the limit was hit.
http://forexstrategybuilder.com/foru...bat=853&inline
  • #3
  • Edited May 27, 2011 3:09am May 26, 2011 11:13am | Edited May 27, 2011 3:09am
The result of a trade depends on the position management rather than the set up we use for entry. This fact is difficult to be understood for most of the traders and that is why they lose money. In this example you can see how I use my STE set up for scalping. Today the market was going nowhere and tha is why I prefered to take small profits with very little risk. This position was with 4 pips initial stop and was closed for 5 pips profit after 3 minutes.
Attached Image (click to enlarge)
Click to Enlarge Name: eur.JPG Size: 101 KB
  • #4
  • Edited 3:10am May 27, 2011 1:10am | Edited 3:10am
On a 15-minutes chart a clear support at 1.4242 is visible. This is e pretty good level to enter in the direction of the previous price move with a very small stop. I bought at 1.42438 with 5 pips initial stop. The first part was closed at 1.42506, the second at 1.42582. The rest of the position is left with stop at 1 pip profit.
Attached Image (click to enlarge)
Click to Enlarge Name: eur supp.png Size: 44 KB
  • #5
  • May 27, 2011 1:19am May 27, 2011 1:19am
Let me explain why the last trade is posted in a thread titled "Following the big money". Large market participants don't scalp. They open positions aiming for a few big figures and lasting a few days. We don't know what they intend to do but by analyzing the price action we can have a very good guess about what's going on. When you see the price bounces off a certain price level you can be pretty sure that someone is buying in big volume there. A say pretty sure, not absolutely sure. That is why I always use a stop loss order. That fact that I have an exact number for the support or resistance gives me the advantage to have very small initial stop up to 5-6 pips. If I'm wrong the loss is not that big, but if I'm right I will participate in a big price move and following the big money can make huuuuge profits.
  • #6
  • May 27, 2011 1:41am May 27, 2011 1:41am
The third part of the position was stopped at 1 pip profit.
  • #7
  • Edited 3:11am May 27, 2011 2:27am | Edited 3:11am
This is my favorite set up and I call it STE. The idea is to enter the movement following the big money after a correction towards EMA. First and second part of the position were closed for 5-6 pips profit after the position stayed opened for more than 5 minutes. I always have time stop or limit because when you trade signals from 1 minute chart or tape reading the position should develop quickly. This time unfortunately the third part was stopped at BE.
Attached Image (click to enlarge)
Click to Enlarge Name: eur ste.png Size: 41 KB
  • #8
  • May 27, 2011 2:32am May 27, 2011 2:32am
Hi srmfx

Your charts are not displaying.

12 years is nothing to sneeze at,I might have much to learn from you especialy cuz I have very similar style, I will be following your thread with interest.

  • #9
  • Edited 3:15am May 27, 2011 3:01am | Edited 3:15am
Quoting Tilt
Hi srmfx

Your charts are not displaying.

12 years is nothing to sneeze at,I might have much to learn from you especialy cuz I have very similar style, I will be following your thread with interest.

Hi Tilt,
The problem with the charts should ne solved now. I will upload them as attachements.
The forex market is all 'bout the money these days and the only way to make profits is to go with the flow.
  • #10
  • May 27, 2011 6:06am May 27, 2011 6:06am
Not all of my positions are profitable. Sometimes the stop loss is reminding why I should use it. My last trade was stoped out but 5 pips loss is not a big deal.
Attached Image
  • #11
  • May 28, 2011 2:41am May 28, 2011 2:41am
I've missed this one because I don't trade usually after 10:00 London time. This was a sell opportunity below 1.4300. Round numbers are one of the best support or resistance levels because large orders are placed above or below them. This provides a nice opportunity to make some pips with the help of the big money. I wait for exhaustion of the previous price move and buy/sell 2-3 pips above/below the round number with initial stop placed 2 pips above/below that level. I use also some tape reading to improve my entry. First part of the position is closed for 5-6 pips profit, the second for 10-12 pips profit. With the last part I follow the price move by placing the stop above/below every new swing hi/lo at 1 minute chart.
Attached Image
  • #12
  • May 28, 2011 2:51am May 28, 2011 2:51am
Quoting srmfx
I start this thread with the intention to share my 12-years trading experience. Actually I already did this but my books are in Bulgarian and this could be a little hurdle to most of the FF readers. Let me explain the logic behind my trading style. After all these years trading forex and futures I understand one thing - if you want to make profits just follow the big money. That is what the trading is all about. The point is that the big guys never tell you in advance what they intend to do and you have to learn to think they way they think. The...
Hello srmfx,
Wish tou good thread
I always say my thing,80 % OF Forex VOlume is speculative in nature...Knowledge+moneymengament+discipline=potencial profits
FOrex is risky buissnes and need good risk control..

Cheers
Petar
"Buy on fear, sell on greed !!!
  • #13
  • Edited 6:04am May 28, 2011 5:41am | Edited 6:04am
Hi, I find your thread intreguing and useful. Thank you for the time in showing us how you trade.
Do you look at support and resistance at round numbers only or do you look for particular price action such as exhaustion or price spikes?

EDIT: I had a look on your profile. Interesting. I will subscribe to this thread and will expect a great deal from a man of your experience.
*Getting popcorn*
Searching for a cure...:nerd:
  • #14
  • May 28, 2011 6:09am May 28, 2011 6:09am
Quoting Petar_Serbia
Hello srmfx,
Wish tou good thread
I always say my thing,80 % OF Forex VOlume is speculative in nature...Knowledge+moneymengament+discipline=potencial profits
FOrex is risky buissnes and need good risk control..

Cheers
Petar
Hi Petar,
You are absolutely right. Currency trading is about making money and the fundamentals are used only if necessary. It's all about order flows. If you go with the right ones you will be profitable. Your equation is very important but most of the traders foucs only on the knowledge. They think that there is a one and only system which is right all the time. My experinece shows that MM and discipline are much more important.
  • #15
  • May 28, 2011 6:13am May 28, 2011 6:13am
Quoting funlovinj
Hi, I find your thread intreguing and useful. Thank you for the time in showing us how you trade.
Do you look at support and resistance at round numbers only or do you look for particular price action such as exhaustion or price spikes?

EDIT: I had a look on your profile. Interesting. I will subscribe to this thread and will expect a great deal from a man of your experience.
*Getting popcorn*
I look for the right price action around the support and resitance levels. I can't explain exaclty what this means. It is like e puzzle. I'm watching the PA and looking for a specific picture and when all the parts fit I pull the rigger.
  • #16
  • May 28, 2011 6:26am May 28, 2011 6:26am
Big guys always try to trick the small traders and almost never reverse the price moves with V tops or bottoms. One of their favorite patterns are 1-2-3 tops and bottoms. This example shoes how it can be traded. The good thing is that you enter the price move from the beginning and by following the big money you can make a nice profit with small risk. The risk/reward ratio is 1:3 in the worst case. The set up is a reversal candlestick (white if the previous move was down and black if it was up) which forms lower swing high or low. The entry is 1 pip below the low (for sell) ot above the high (for buy) of the reversal candlestick. The stop is 2 pips above/below the opposite end of the candlestick. The initial stop loss usually is about 10 pips but the expected profit is 40-50 pips. If the price moves in the direction of your position just follow it by moving the stop above/below swing highs/lows.
Attached Image (click to enlarge)
Click to Enlarge Name: eur123.gif Size: 20 KB
  • #17
  • May 28, 2011 8:29am May 28, 2011 8:29am
Hiya,
Im only in demo so bear with me, but I have attached my setup for EuroUsd, i dont normally go below H4 when t comes to trading demo.

Here, I use supply and demand lines to establish where price will react, I use J16 PA to make sure I get in at the right time.
Red is monthly, Orange is weekly and daily or lower is kacki.

What do you think?
Attached Image(s) (click to enlarge)
Click to Enlarge Name: eurusd d1 28.5.11.gif Size: 24 KB
Click to Enlarge Name: eurusd h4 28.5.11.gif Size: 25 KB
Searching for a cure...:nerd:
  • #18
  • May 28, 2011 8:35am May 28, 2011 8:35am
Quoting srmfx
I look for the right price action around the support and resitance levels. I can't explain exaclty what this means. It is like e puzzle. I'm watching the PA and looking for a specific picture and when all the parts fit I pull the rigger.
I think you mean confluence
Searching for a cure...:nerd:
  • #19
  • May 28, 2011 2:11pm May 28, 2011 2:11pm
Great thread srmfx, thanks for taking the trouble to help.

I've had my head in the sand for too long, focusing on every move on the 5 min charts without much more than a glance at the bigger picture. My results have improved a great deal since I started waiting for price to approach the areas where big money is likely to be sitting.

I use the same stop placement and entry method as you but enter on M5 which means my stops are generally larger than yours. Would be interested to hear the kind of spread you are working with. Mine is 2.5 to 3 on EU and so a 5 pip stop would only have about 2 pips of wiggle room. I guess the M1 entry method has a higher failure rate but smaller losses? I might be persuaded to try M1.

I've come to the conclusion that experienced guys like you have good results because they know sooner when a position looks likely to fail and so cut early with small profit or small loss - whereas guys like me hold on for the bigger hit. Would you say that is true or do you always let the market make the decision for you?

I ask because I've tried to be clever about early exits but found I was getting spooked out of too many nice moves. I'd enter on a reversal bar and when price failed to take off on the next bar or two - or went up and came straight back down with a reverse hammer - I'd exit, only to watch price then take off properly. I'm sure these are the games the big guys play to keep the retail crowd out of the moves.

Anyhow, thanks again for being so generous with your knowledge.
  • #20
  • May 29, 2011 12:23am May 29, 2011 12:23am
Quoting funlovinj
Hiya,
Im only in demo so bear with me, but I have attached my setup for EuroUsd, i dont normally go below H4 when t comes to trading demo.

Here, I use supply and demand lines to establish where price will react, I use J16 PA to make sure I get in at the right time.
Red is monthly, Orange is weekly and daily or lower is kacki.

What do you think?
Your horizontal lines mark major swing points on the chart but I don't know what J16 PA is. Can you explain?
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