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ReadtheMarket - Supply and Demand with Price Action

  • #221
  • Dec 15, 2013 7:54pm Dec 15, 2013 7:54pm
Quoting Ifmyante
I really don't see the point of getting bogged down wondering whether the orders placed are limit or market. Price usually bounces, to the pip, exactly where it's meant to, and that's forecastable. If the institutions do their jobs properly, they will have sufficiently bewildered the retailers on the lead-up to the bounce that on the inevitable fakeout to the turning price they will entice enough breakout traders to get totally on the wrong side of the market, and catch the stops of those on the right side of the market (making them, in effect,...
Thanks for the reply. As you are a successful trader and run a great site I shant argue, you clearly know what you are doing.

Just a follwup question, if we are always on the lookout for ITs trapping or enticing traders to buy or sell, how can you be so confident that original s/d (rbr, rbd, dbr, dbd's) will hold to the pip. Couldnt they just push through or remove the unfilled orders and run some stops before reversing it, rendering the before mentioned level redundant.

CHEERS, MUCH APPRECIATED
Bye Bye FF
  • #222
  • Dec 16, 2013 5:25am Dec 16, 2013 5:25am
Ah! Now you've gotten to the absolute meat and bones of it!!

If the signal is given by the market mover (an engulf into a new zone), then price is very unlikely to break the extreme of the zone it just came from.

So, if you have the patience to wait at the last remaining set of unfilled orders in the origin, you can be almost certain that that price will be respected
  • #223
  • Dec 17, 2013 2:53pm Dec 17, 2013 2:53pm
Quoting Ifmyante
If the signal is given by the market mover
Hi Ifmyante very interesting thread!! what makes you think there is someone or some institution moving the fx market?
  • #224
  • Dec 17, 2013 4:05pm Dec 17, 2013 4:05pm
What makes you think someone designed this garden? It could've just grown that way naturally

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There is absolute order in the market. Nothing at all there happens by chance.
That's why it's so easy to read what's going to happen next.
There are rules which are strictly followed; so much so you'd imagine it's all run by algorithms, up to the moment when the signal is decided upon, and straight away thereafter.

There is zero chaos in the market. It's elegantly designed; a beauty to behold
  • #225
  • Dec 17, 2013 4:20pm Dec 17, 2013 4:20pm
Quoting Chica
Hi All, Great thread. I hope to just add 2 cents to what DAPPA was asking a few pages ago. I have not included quotes etc because there were a few questions and a few responses. I think most were trying to answer his queries. However, I do note some comments that if he cant understand it, he/she should move onto another method. I think he is asking the right questions! You need to understand the exact whys to how your method has an edge, because when you need to make alterations in the future due to shifts in dynmics or instituitional modus operandi...


Love what you wrote!!
  • #226
  • Dec 17, 2013 4:30pm Dec 17, 2013 4:30pm
Quoting Ifmyante
Ah! Now you've gotten to the absolute meat and bones of it!! If the signal is given by the market mover (an engulf into a new zone), then price is very unlikely to break the extreme of the zone it just came from. So, if you have the patience to wait at the last remaining set of unfilled orders in the origin, you can be almost certain that that price will be respected

Could you attach a pick of this?

I still don't get how you read this. Call me stupid. lol..

I have seen your chart pics, but I still don't get how you are reading the chart. Its as though you know whats happening and know when to buy or short. Is it the engulf thats your signal?
  • #227
  • Dec 17, 2013 4:42pm Dec 17, 2013 4:42pm
Quoting Ifmyante
I really don't see the point of getting bogged down wondering whether the orders placed are limit or market. Price usually bounces, to the pip, exactly where it's meant to, and that's forecastable. If the institutions do their jobs properly, they will have sufficiently bewildered the retailers on the lead-up to the bounce that on the inevitable fakeout to the turning price they will entice enough breakout traders to get totally on the wrong side of the market, and catch the stops of those on the right side of the market (making them, in effect,...

Im not following the chart illsutrations. Its on a 1 minute chart, but the annotations I am not following, you refered to one location as being a supply zone, but price went up, stopped and turned around. So how was that a supply zone, the price had not droped as of yet. Am I enterpreting things wrong? Sorry If I don't get it.



Hey Saquib, you need to holla at me on skype brother. Your hurting my feelings.
  • #228
  • Dec 17, 2013 10:25pm Dec 17, 2013 10:25pm
I must admit, I should go back and re read the engulfing articles on the RTM site. Dappa, Im kind of in the same boat as you. However, I think IFMYANTE was drawing attention to how IT's entice retail traders to do what they need them to do to find liquidity. By pushing price up and down.

However, I respect his comments about getting bogged down with the deatils that dont matter. But, I have been back to the RTM webiste, which I think is fantastic and much of it makes sense to me execpt the parts on S/D zones themselves.

For example and I hope Ifmyante or someone else could clear this up, The reason I was asking about the whole Limit and Market order thing arises out of articles on RTM.

**to see articles I sugget you sign up to their site. great content and its free**


Orderflow article
Great article on how price moves. One can come away deducing that bids and offers (above and below) provide liquidity, while market orders move the price. provides examples with a DOM/orderbook scenario.

Supply (http://readthemarket.com/index.php/education/markepedia/166-education1/markepedia/209-supply-and-demand-zones-levels-by-mel) and Demand zones article
Areas RBR, RBD, DBR. DBD where institutions are buying or selling, therefore creating footprints of their activity and large moves away from a area that could only be created by IT's

Liquidity article
That it’s the injection of one sided supply/or demand from institutions that causes the large move away, and these are the big candles we see from S/D zones.

Stacked zones article
There are pending orders all over the chart, orders waiting to be filled. At S/D zones these are stacked at different prices.Price reflects filled orders and the empty space surrounding it is full of unfilled orders. Bids and offers can represent stacked zones. So I come away thinking these S/D zones are stacked with Bids and offers, waiting for market orders to come to them!

If I have interpreted all the articles correctly it seems the authors are explaining tha S/D zones are made up of massive pending bids and offers (above and below price) as per the stacked zones and S/D articles.

However, the orderflow article explains price moves due to market orders consuming the best bids and offers. Furthermore, the liquidity articles shows large moves away form a level. If I have intepreted the articles correctly the only way I can see IT's moving the markets even with massive zones of pending bids or offers (limit orders- wating for market orders) is if:


1. price is climbing approaching 1.00 where a IT has a massive amount of Offers sitting (pending limits)

2. buy market orders hits 1.00 and pending orders thus price stops in its tracks

3. At the same time sell market orders start moving price down a little while the buy orders are being resisted by the large IT offers they have placed.

4. So am I right in thinkning that the same IT' would have to become aggressive at some stage and also enter with sell market orders along with their pending offers to get some filled at a slightly worse price thus cretaing the large candles away from the S/D zones as per the liquidity article.

5. The ITs eventually stop being aggressive because they are getting worse and worse fills and they wait for price to return hopefully filling the remaining unfilled offers they orginally placed


So in a nutshell, the articles suggest that there are bids offers all over the place and the market orders on each side move to these orders, which caused price movement. ITs, place large stacks of these pending bids and offers (limits). So unless they also place market orders at the same zones, I cant understand how their passive bids or offers could move the market substantially.

I appologise if I have misintepreted anything however, just trying to work out if we are saying the same IT is placing market orders to sell at a zone thus creating the move when the premsie is based on them placing large pending Offers at a level (in the example of a supply zone)

Please see image attached . Any comments from IFMYANTE or others very much appreciated

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Bye Bye FF
  • #229
  • Dec 18, 2013 2:09am Dec 18, 2013 2:09am
Some like to complicate things, what you’re doing here is confusing yourself and others. I’m the author of order flow, stacked orders, and liquidity gap articles at RTM.


The orderflow article was created to explain the very basics of market microstructure (how exchange occurs in markets). The stacked orders article to inform that empty space around price in a chart isn’t really an empty space. The liquidity article explains the why momentum candles gets filled most of the time.

Now regarding the big debate of limit orders vs. market orders and which moves the market or if limit orders are expected to be sitting at a historical S/D area, IMO this kind of questions are just efforts to complicate things. And trust me no one can give you a clear answer because no one has a 100% clear answer. If you want to dive deep into these stuff then read books not just a simple article and may god help you to find peace of mind.



I’ve been asked the same questions many times and I’ll repeat my answer here:


It’s as simple as this...the bigger orders moves price in their direction, whether it’s market orders or limit orders it doesn't matter, what matters is where are the big orders are sitting or shall be injected into the market, in other words where are the decision areas for the big money, S/D & S/R levels are created by the big money (whatever you call them: institutions, smart money, pro money, market makers, dealers, etc.).

The idea of price reversing from a S/D or S/R areas (first visit) that the initial strong move hasn't included all the orders otherwise price would travel too far causing a spillage in filling and the big money doesn't want this to happen, so price returns to the same entry to fill the remaining orders and of course it doesn’t return by luck or by coincidence, now whether it’s a limit orders or a market orders it doesn't make a difference as the quantity or size that matters.
Is a 10 years old S/D would be valid? I think it’s valid as much as a historical S/R level, they are all created on chart by the big money and they serve a purpose, however a level validation depends on some factors like the approach and price action at the level in addition to the overall view and this where your trading and risk management skills are required.



Many thanks.
Sniffing Snake's Tracks...
  • #230
  • Dec 18, 2013 3:55am Dec 18, 2013 3:55am
Quoting Ifmyante
What makes you think someone designed this garden? It could've just grown that way naturally {image} There is absolute order in the market. Nothing at all there happens by chance. That's why it's so easy to read what's going to happen next. There are rules which are strictly followed; so much so you'd imagine it's all run by algorithms, up to the moment when the signal is decided upon, and straight away thereafter. There is zero chaos in the market. It's elegantly designed; a beauty to behold
Hi Ifmyante, sure i got your point, but trust me no one is able to move the FX Market, its a simple concept
anways for your information take a look at BIS's quarterly report (market partecipants)


Daily turnover in the foreign exchange market fell 6 percent to $5 trillion a day in October, as trading in the yen and the euro declined, an analysis by the Bank for International Settlements showed on Sunday.

Volumes hit a high of $5.3 trillion in April, led by a surge in yen trading as investors positioned for the Bank of Japan to introduce aggressive monetary stimulus to help revive the economy. That resulted in the yen weakening sharply against most major currencies.

But interest faded somewhat in the second half of the year due to the sheer weight of bets against the yen.

At the same time, uncertainty over when the Federal Reserve would begin withdrawing its stimulus and a political stand-off over the U.S. budget prompted many investors to stay on the sidelines, holding down volumes. That has hurt revenues for a number of large banks who rely on trading activity to bolster their bottom lines.


Activity in the euro also took a hit, the BIS said in an update to its three-yearly snapshot of the foreign exchange market, which was first released in September.

It said spot trading in euro/dollar between September 2011 and October 2013 fell by $400 billion, leading to a drop in the euro's share.

The BIS analysis said spot trading overall had fallen to $1.8 trillion a day from above $2 trillion in early 2013. In contrast, trading activity in FX swaps, often used to hedge positions and exposure to assets, has fluctuated between $2 trillion and $2.2 trillion per day since early 2011.


HEDGE FUNDS AND ALGOS

Despite the drop in volumes, the BIS analysis showed that the cost of trading currencies had dropped. This has attracted many new participants from hedge funds to machine-driven traders to the foreign exchange market in the past few years.

Data showed hedge funds and high-frequency trading firms together account for 11 percent of currency market volumes. And non-reporting banks - usually smaller, regional commercial or publicly-owned banks - made up around 24 percent of the market. They are clients of large FX dealing banks but do not engage in market-making in major currencies.

Hedge funds' influence in some areas was more dominant - they account for 17 percent of forwards volumes and 21 percent of options volumes. This was boosted by a rush into dollar-yen options early this year to bet on Japan's easy monetary policy.

But some trades by hedge funds - which run money for wealthy clients and institutions - have gone awry.

Carry trades - borrowing a low yielding currency to invest in a search for higher returns - and bets on market trends have suffered as differentials between interest rates have fallen and currencies have traded in narrow ranges.

As a result, the assets run by currency hedge funds specialising in computer-driven trade slid to around $10 billion from more than $30 billion before the credit crisis.

Nevertheless, macro funds, which trade a wide variety of assets including currencies, have more of an influence, and were likely drivers of yen volumes in late 2012 and early this year, according to the BIS review.

High-frequency traders, who trade their own money with lightning-fast computers, are becoming important players in the market, accounting for 30-35 percent of volumes on the EBS trading platform.

http://www.bis.org/publ/qtrpdf/r_qt1312.pdf
  • #231
  • Dec 18, 2013 4:11am Dec 18, 2013 4:11am
would be a easy job for "them" if they could move the market or not? for example take a look at this trade recommendations for today
http://s7.directupload.net/images/131218/7mnjg6xr.pdf
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  • #232
  • Dec 18, 2013 4:57am Dec 18, 2013 4:57am
for example UBS has a contrary position on eur/usd
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  • #233
  • Dec 18, 2013 5:03am Dec 18, 2013 5:03am
What do you think public information may cause their positions?
If they would tell the truth about their positions they would not have any edge over the market.

It is more likely IT's are using publications to spread manipulation to the markets.
  • #234
  • Dec 18, 2013 5:06am Dec 18, 2013 5:06am
GS seems to be bullish on eur/usd too


Citi is looking for parity on eur/usd


Barclays has a bearish view


i hope you get the point, take care and keep posting
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  • #235
  • Dec 18, 2013 5:08am Dec 18, 2013 5:08am
Quoting gilben
What do you think public information may cause their positions? If they would tell the truth about their positions they would not have any edge over the market. It is more likely IT's are using publications to spread manipulation to the markets.
lol... what makes you think so.. do you have any background or better have you ever seen a trading desk?
  • #236
  • Dec 18, 2013 5:20am Dec 18, 2013 5:20am
I don't mean any offence at all by this, so please take none:

My weakest students can easily prove that the market is moved by design.

If it weren't, I for one wouldn't be working in it, gambling on the outcome of a random sequence of events.

I've shown, over and over, that (and how) the market is controlled, and by now I expect it to be taken as a given.

There is no chaos - nothing is random. Put those ideas behind you and please move into the light
  • #237
  • Dec 18, 2013 5:21am Dec 18, 2013 5:21am
Quoting z1p
{quote} lol... what makes you think so.. do you have any background or better have you ever seen a trading desk?
Is this an attempt to undermine the thread or RTM?
  • #238
  • Dec 18, 2013 5:25am Dec 18, 2013 5:25am
Quoting Ifmyante
{quote} Is this an attempt to undermine the thread or RTM?
Hell no i respect your work and your ideas, i can simply tell you guys that there is no bank or institution that moves or can move the market
all have contrarian views and positions in the market.

take care
  • #239
  • Dec 18, 2013 5:27am Dec 18, 2013 5:27am
Ah yes, OK

So the people who move the market make publications telling everybody what they intend to do.

That sounds reasonable, I'm sure I'd do it myself.........
  • #240
  • Dec 18, 2013 5:29am Dec 18, 2013 5:29am
Quoting z1p
{quote} lol... what makes you think so.. do you have any background or better have you ever seen a trading desk?
I wish you luck with all the paper work you bring on yourself.
and by luck it is what I mean. you 'll need lots of it, dude.
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