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the way the big players trade?

  • #21
  • Nov 20, 2010 1:20am Nov 20, 2010 1:20am
http://www.forexfactory.com/showthread.php?t=2331

There is also a paid forum but I haven't been there.
  • #22
  • Nov 27, 2010 8:29am Nov 27, 2010 8:29am
Quoting resol
I met many interesting strategies over the internet. And many of them are based on the combination of technical indicators macd, stoch, rsi and etc. These strategies advice to enter the market when several indicators show signals at the same time. many backtests were made and they show that these strategies could be profitable in the past. I thought about these strategies, but I dare to suppose that not many of the big players, such as banks follow them. I suppose that people from banks do not sit infront of the screen watching when stochastic will...
anyone you hear on the forum that complains about the big guys trying to fool people and cover up orders is probably unprofitable at trading because they do not understand the mechanics behind what makes a trader successful.. the same thing with speed trading.. ive seen many different styles emerge and die in my life as a trader.. I remember when genetic algorythm creation came out.. people were over optimising trading systems to such high speed that they would show ways to trade the past and provide obnoxious returns but once put into action would slowly destroy the account.. Order Processors would love for us to believe that the use of higher than normal frequency trading systems in conjunction with leverage can make us good money even when there is a wide spread to be paid..

They would like us to believe this because psychologically its easier for us to pull the trigger on faster trades.. we are wrong for less time.. we feel the burn less time.. and so we will trade more and will do so uncontrollably. On lower timeframes the market is a beautiful creation of colorful bars that show massive amounts of money being traded.. if you look at bar counts of these numbers over a large N or amount in statistics you find that there is 1 up bar 50% of the time there is 2 up bars back to back 25% of the time and 3 up bars back to back 12% of the time.. do the counts for yourself.. youll notice that bar creation and bar length seemingly have equal probability of formation through a normal statistical distribution.. the movements of the charts fool us into thinking there is a way at looking at them and seeing what will happen next.. We are fooled by the randomness of the chart we are viewing. So if this is the case and we trade a slightly profitable strategy on a high time frame we are cycling in and out the spread on more money than we actually have.. if the inefficiency exhists between the percentage of position we pay to spread/target/and success rate and we cycle at high rates we are effectively handing our account to the broker and creating excess liquidity to the market..

This is what us in the industry understand because we have been here a while we understand every gear and how every market machine makes money .. how and why.. and we know how to stay away and keep our money.. useful and profitable traders in the industry are cheapskates.. we buy low to sell high but we know we cant pick every move exactly and no professional can..so we use very low size/high long term trends/ and price efficiency.. Professional traders do not just trade one car or vehicle with all the money in the firm or account because it is inefficient.. we understand the price impact of our orders and we adjust our orders to have low impact using multiple entrances over long term and diversified across many markets. the less money we put into one thing the less the price shifts and we get a worse price than anticipated.. we look at the spread as a cost of doing business.. if you are trading short term.. for goal of 10 pips.. and the spread is 2 pips.. than you are automatically paying the broker for 20% of your profits/ and/or position. If you trade long term and have a goal of 1000 pips you are paying .02% to the broker... trends also tend to be indirection of payment cycles because this further provides price efficiency.. if you buy aud/jpy with expectation it will increase 1000 pips at 1:1 leverage and 2 pip spread.. you pay back the spread in 2 days.. so youve recovered your costs.. every day past that income payments pay back your cost of risk.. or the risk the position is under.. so by trading in the most efficient selective way possible we create a slight edge through efficiency. Using low leverage we establish positions early on in a trend and continue to buy through the trend.. this creates a low Initial risk .. and every subsequent risk is buffered by the initial position.. so instead of dropping a full position and hoping that was the definative point.. we use a more shotgun approach to trend trading.. and as it continues to trend.. we continue to buy.. so buy being pikers in trading and using low sizing across trend we enhance reward with lowest possible initial risk.. creating a more skewed statistical distribution of profits....

good luck
dom
  • #23
  • Nov 27, 2010 1:22pm Nov 27, 2010 1:22pm
Quoting Exo18v
I have been trading about 8 months. from the past 8 months i do realise that getting better at indicator doesn't have success all the time. Therefore for now, i am really looking and hoping to learn how the big players trade, i heard alot they are only using price action. Could someone direct me where i can have proper lesson on these?
The big players deal with fundamentals and then technicals. While most retail trades just look at technicals and thats why there are so many losing traders in forex. You must realise fundies determine price direction while tech tells us how far it will go.

Also, how many traders understand that the big boys play the usd dollar index and not usually individual dollar currency pairs. However since the euro is a major component of the dollar index we see similar chart patterns on that pair. Best advice download a demo which has the dollar index and put 5/10/21 ema on the chart(that is all you need ) change to the weekly time frame. The first thing you notice is that there is always a trend(thats where the money is). Bring up your eurusd chart (you would discover its similarities with the usd index) Go down to the daily chart and trade in the direction of the 3 emas on the weekly.Particulalry never trade against the daily 21 ema. Use your 4 hr charts to fade significant levels in the direction of the trend. Apply good mm and you would realise how easy it is to trade. The smaller time frames are the nemesis of retail traders.
LISTEN TO MR FUNDAMENTAL AND MR TECHNICAL
  • #24
  • Nov 27, 2010 2:41pm Nov 27, 2010 2:41pm
Quoting okehiedon
The big players deal with fundamentals and then technicals. While most retail trades just look at technicals and thats why there are so many losing traders in forex. You must realise fundies determine price direction while tech tells us how far it will go.

Also, how many traders understand that the big boys play the usd dollar index and not usually individual dollar currency pairs. However since the euro is a major component of the dollar index we see similar chart patterns on that pair. Best advice download a demo which has the dollar index...
Now you've done it .... revealed the secret and given it all away .
The odd thing is that most retail traders refuse to believe that trading is really that straight forward and simple, it's just not an easy concept for most to come to terms with let alone apply in a "no nonsense nuts and bolts" sort of way. So goes human nature and in the end that's what is reflected in the charts. Regardless of how the big boys trade (smoke and mirrors and all the bullshit included) it's not that hard to take their money.... really! Yes, do learn something about support/resistance and how to identify key levels of s/r. What happens around those levels should reveal how the money is moving (what the big boys are doing). The rest is just being a Flea on the Elephant. No need to complicate trading any more than that because simplicity is actually your most dangerous weapon. It is also the advantage retail traders have over the big guys.
Stay calm, be brave, wait for the signs - Jasper Friendly Bear
  • #25
  • Dec 4, 2010 4:10pm Dec 4, 2010 4:10pm
Quoting okehiedon
The big players deal with fundamentals and then technicals. While most retail trades just look at technicals and thats why there are so many losing traders in forex. You must realise fundies determine price direction while tech tells us how far it will go.

Also, how many traders understand that the big boys play the usd dollar index and not usually individual dollar currency pairs. However since the euro is a major component of the dollar index we see similar chart patterns on that pair. Best advice download a demo which has the dollar index...

so have you been making pips regularly for the last few years using this method ? would be good to know.

also what are the 3 emas on the weekly, and the settings ? and what do you mean by 4hr charts to fade ?


regards
  • #26
  • Dec 10, 2010 7:19am Dec 10, 2010 7:19am
Quoting domino
anyone you hear on the forum that complains about the big guys trying to fool people and cover up orders is probably unprofitable at trading because they do not understand the mechanics behind what makes a trader successful.. the same thing with speed trading.. ive seen many different styles emerge and die in my life as a trader.. I remember when genetic algorythm creation came out.. people were over optimising trading systems to such high speed that they would show ways to trade the past and provide obnoxious returns but once put into action would...
Bravo! very accurate
  • #27
  • Edited 3:04pm Dec 23, 2010 3:03pm | Edited 3:04pm
I suspect that many professional traders are as useless as the general public and that they really don't have any magical systems that are kept secret. In any normal distribution you'll get those that do well and those that don't. I have no doubt whatsoever that those that do well will put that down to skill but in most cases it will be luck, pure and simple.

Don't forget Nick Leeson was a pro trader who had every possible advantage available to him and how much did he lose for his bank ?

Outside of FX, fund managers are particularly useless at stock picking and historically perform no better than a buy and hold strategy.

Guys like George Soros do consistently well because of insider trading. Good luck to him but don't go round thinking all pros know what they're doing because they don't.

Read 'Fooled by randomness' by Taleb
He was looking for the card so high and wild hed never need to deal another
  • #28
  • Dec 23, 2010 3:16pm Dec 23, 2010 3:16pm
Arbitrage.
The breaking of a wave cannot explain the whole sea.
  • #29
  • Dec 23, 2010 4:12pm Dec 23, 2010 4:12pm
In my opionion, the major advantage of professional traders in financial institutions is: they are being watched.

They just cannot overleverage their accounts and they cannot risk more than they are allowed to risk per trade. They just cannot go on tilt like everybody does once in a while. And if they do, they are probably kicked by their institution.

Trading is easy if you follow these simple rules:

#1 The trend is your friend
#2 Don't risk more than 1-2% per trade
#3 Let profits run
#4 Cut losers short

Easy. But why do so many fail? It's because of our emotions... fear, greed, being undisciplined.

If you have someone behind you, who's watching you, you are forced not to make stupid mistakes. External risk control is the key to success if you don't have the guts to control yourself in each and every trade...
  • #30
  • Edited 1:20am Dec 24, 2010 1:03am | Edited 1:20am
By the name of big player they play with big $ account and most of them have strong "psychology strength" and cool as ice like Bjorn Borg (the ice man). With big account and cool attitude "you will never lose" uuppsss almost forgot they play with price action.
  • #31
  • May 30, 2011 9:44pm May 30, 2011 9:44pm
Quoting Pinkpanter
You think they gonna share here .I think they dont even wanna sell that what they are usingfor trading.
=====================================================
Well said........successful traders never reveal their trading secret.
  • #32
  • Jun 23, 2011 5:11am Jun 23, 2011 5:11am
Quoting adamp
In my opionion, the major advantage of professional traders in financial institutions is: they are being watched.

They just cannot overleverage their accounts and they cannot risk more than they are allowed to risk per trade. They just cannot go on tilt like everybody does once in a while. And if they do, they are probably kicked by their institution.

Trading is easy if you follow these simple rules:

#1 The trend is your friend
#2 Don't risk more than 1-2% per trade
#3 Let profits run
#4 Cut losers short

Easy. But why do so many fail? It's because...

What goes through your mind when you have a trade that went in your favor but begins to go the other way? Do you move the stop loss so you at least protect some of your profits or do you keep it there and hope for the best? I have a huge problem letting my profit run when I see it approaching my break even, and will have no issue exiting my trade before my stop loss hits if I clearly see it was the wrong move. The results are I keep stopping myself, even on a demo account. Is this dependent on each trade or is it a general rule to just walk away from your computer?
  • #33
  • Edited 12:20pm Jun 30, 2011 11:49am | Edited 12:20pm
There are a number of books and articles that detail how the big players trade. Here are just a few:

Inside the House of Money
More Money Than God
Market Wizards
New Market Wizards
Reminiscences of a Stock Operator
The Quants
Education of a Speculator
  • #34
  • Jun 30, 2011 1:12pm Jun 30, 2011 1:12pm
Fundamentals/news, arbitrage.

Why does people pay for expensive services like bloomberg professional or reuters news, its about beeing ahead of the mass.
Paired with a strong fundamental knowledge of the trading arena.

The so called pro traders have these advantages plus they are almost always 100% deticated to their business and have ninja workethics .
  • #35
  • Jun 30, 2011 7:55pm Jun 30, 2011 7:55pm
Quoting chipstopips
What goes through your mind when you have a trade that went in your favor but begins to go the other way? Do you move the stop loss so you at least protect some of your profits or do you keep it there and hope for the best? I have a huge problem letting my profit run when I see it approaching my break even, and will have no issue exiting my trade before my stop loss hits if I clearly see it was the wrong move. The results are I keep stopping myself, even on a demo account. Is this dependent on each trade or is it a general rule to just walk away...
The problem with guys who post "the trend is your friend", the phrase is meaningless. Unless you define what a trend is you dont know what he is talking about. The reason most people fail is they dont define what they are doing. They throw some indicators up and take their best shot. I read once that the #1 trading indicator was the 200 MA. I looked at that and thought that didnt make sense. Well if you put the 200 MA on a 1H chart and back it off to a daily then you have something. In other words 200 on a 1H is 50 on a 4H and is an 8 on a daily. I took the 8 MA and put it on a chart as a 8MA smoothed median and an 8MA linear weighted median and this is what I got. I gave myself some definitions. If price is above both lines it is in an uptrend. Below both lines it is in a downtrend and if the high is above and the low is below I am in a ranging market. Now you can trade. Why?? Because you have definitions. The red line becomes your stop loss and you move your profit up each day. Now you may not agree with these definitions and you may want to develop your own but without clear definitions of what a trend or range is you are going to be beating your head against the wall. You can also go to a lower chart and trade with the trend or find a place to enter one. This will help your trading immensely. So find a definition you can live with and then trade your definition. Without a definition you wont know what to do with your trades. Whether to ride them or not, stay or go. Then keep a wary eye on the big fundamentals and away you go. See pic below on the daily chart. I hope this helps even though you may disagree with the definitions. Most of the professional traders I know use 1 or 2 indicators and have a basic idea of the prevailing fundamental. Good luck.
Attached Image (click to enlarge)
Click to Enlarge Name: aud nzd.gif Size: 21 KB
  • #36
  • Jun 30, 2011 11:43pm Jun 30, 2011 11:43pm
Big players are the ones who drive the market. The news may be good but if they want the instrument to go down it will go down.
Then there are the professionals who are trading alongside the big players.
All professionals use are strong areas of support resistance. They know where for example the 50% retracement is, market profile, volume, ringed pivots, point of pain. Different professionals look at different levels. And unlike the average joe who is sitting staring at the screen all day they have discipline to place a limit order and walk away since they know those strong levels.
  • #37
  • Edited 1:02am Jul 1, 2011 12:50am | Edited 1:02am
Quoting moneydeep
Big players are the ones who drive the market. The news may be good but if they want the instrument to go down it will go down.
Then there are the professionals who are trading alongside the big players.
All professionals use are strong areas of support resistance. They know where for example the 50% retracement is, market profile, volume, ringed pivots, point of pain. Different professionals look at different levels. And unlike the average joe who is sitting staring at the screen all day they have discipline to place a limit order and walk away...
Sorry but no. Traders do not drive the market, business and govt. do. FOREX is where businesses and governments exchange funds from one currency to another. That is why it is dozen times bigger than the stock market. Investors dont have enough money to drive the market. A pip is a hundredth of a penny so when a news story moves 100 pips the change is one penny. That is not moving the market. When the govt. changes interest rates and the market moves 1000 or more pips to readjust to the new fundamental on the scene then you have a market move. When a govt. like Greece faces bankruptcy that moves the market. Even big banks cant always control where the market goes so they hire professional traders to trade for them and keep them on the plus side. Traders are at the mercy of the market just like we are, they just use a lot more money than we do. Just look at COT some are bears some are bulls, they even disagree where the market is going.

For a good understanding of FOREX read DarkStar's article it will greatly enlighten you:

http://www.forexfactory.com/showthread.php?t=7484
  • #38
  • Jul 1, 2011 2:48am Jul 1, 2011 2:48am
by big players I mean the ones who know whats going to happen before it happens. The market is manipulated by big players. (market shenanigans). If you refuse to believe that than I have nothing to say. Every market is manipulated to some degree.
  • #39
  • Jul 1, 2011 5:10am Jul 1, 2011 5:10am
Quoting moneydeep
by big players I mean the ones who know whats going to happen before it happens. The market is manipulated by big players. (market shenanigans). If you refuse to believe that than I have nothing to say. Every market is manipulated to some degree.
You can blindly believe that if you wish and yes banks do interfere and so do govt. to a point. But there is also a point they cant control it either. Ask the big boys in Europe if they really wanted the EURO to go from 1.60 to 1.20. I dont think they really planned that but that is what they got. The USA govt. position at the time was to have a weak currency to boost exports but that is not what they got. The market is the market and not even the USA govt. can completely control what it does even though it is clear everyone tries to influence it at some point. China is now beginning to reap what it has sown with its currency control. Sooner or later it will catch up to it, keeping it artificially low for so long. Now inflation is beginning to run out of control here. So govt. and banks can have short term influence but after a while it will go where it wants to go.
  • #40
  • Jul 1, 2011 6:34am Jul 1, 2011 6:34am
Quoting nanningbob
You can blindly believe that if you wish and yes banks do interfere and so do govt. to a point. But there is also a point they cant control it either. Ask the big boys in Europe if they really wanted the EURO to go from 1.60 to 1.20. I dont think they really planned that but that is what they got. The USA govt. position at the time was to have a weak currency to boost exports but that is not what they got. The market is the market and not even the USA govt. can completely control what it does even though it is clear everyone tries to influence it...
Yes I am not arguing that point. Such a large market cannot be controlled for extended periods. No big players can.
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