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Interested in contrarian trading? Ask me!

  • #21
  • Jan 20, 2016 2:40pm Jan 20, 2016 2:40pm
Quoting tashkent
trading and entering/exiting a trade should not be considered just pressing a buy/sell button at highs or lows and just wait for the outcome.......
I was merely being a smartass, by trying to guess what the OP was going to say next. We all have our own theories as to why most retailers lose, and they have been discussed repeatedly in many prior threads. The OP has worked as a dealer at a brokerage, which has given him a different perspective as to how and why retailers manage to get themselves on the losing side of the market -- and how he has developed a winning strategy by doing the opposite. I'm curious to hear what he has to say.

Quoting Sciurus
Without fail, retail longs seem to pick an average higher price than shorts do. Here is the latest data from FF
Interesting!

Quoting mooniekool
Any questions so far?
Please continue.
  • #22
  • Jan 20, 2016 2:49pm Jan 20, 2016 2:49pm
This is another commercial thread.

"I'm in the mood of giving back what I know to the community."

"The only useful indicator for FX Trading"

"very sorry I won't be able to share with you this indicator..."

To make it short, the price is 1,999$.
  • #23
  • Edited 4:47pm Jan 20, 2016 4:07pm | Edited 4:47pm
One can get net position indicator from Oanda (with an mt4 interface) and net volume for FXCM (trading station) for free.
k
  • #24
  • Jan 20, 2016 4:41pm Jan 20, 2016 4:41pm
Quoting kprsa
One can get net position indicators from Oanda (with an mt4 interface) and FXCM (trading station) for free. k
Thank you kprsa you are great
cheers
hannele
  • #25
  • Jan 20, 2016 5:08pm Jan 20, 2016 5:08pm
NB: Best to use this on majors. This is not going to work well on crosses imho. For crosses, I guess one should ideally get the total currency position (for example for EUR from EURUSD, EURJPY, with the corresponding weights, which O@nda also publishes) and then determine the most likely retail position, and then take the side of the liquidity provider, in this case O@nda's. But that procedure is a bit complicated, easier to just avoid crosses.
k
  • #26
  • Jan 20, 2016 5:25pm Jan 20, 2016 5:25pm
Quoting tsf
This is another commercial thread. To make it short, the price is 1,999$.
Yes what you post is correct. This thread and the OP appear to have a clear commercial agenda based on a short visit to OP's website.
  • #27
  • Jan 20, 2016 11:59pm Jan 20, 2016 11:59pm
Quoting hanover
{quote} I might be jumping the gun, but I think I see where this could be heading. I've always said that, to be profitable, a trader must be net long while price is rising, and net short while it's falling, frequently/heavily enough to overcome costs. If that is the requirement to be profitable, then it would follow that retailers lose because they do the opposite. Thus: Entries: they trade pullbacks (use limit orders to enter) instead of breakouts (stop orders). (Hence the poll at the start of your thread?) This means that these retailers are entering...
Another example of nothing new under the sun. Gann said buy high and sell higher and vice versa too. He was completely against trying to pick bottom. He did talk about buying dips and selling rallies however. Marc Fisher also mentions in his work the Daily Sentiment Index. Do you see how the long positions are rising as price is falling? That would be DSI divergence. That is an imminent reversal signal. Of course the problem remains as to at what point do we trade the divergence?

I also see that the OP has been bequeathed the honorable status of COMMERCIAL MEMBER.

Let's see if he comes back.
If you are good at something, never do it for free--Joker
  • #28
  • Jan 21, 2016 12:37am Jan 21, 2016 12:37am
Some books said Buy Low Sell High - Aka pick Top and Bottom
Some books said Buy High Sell Low - Aka Breakout
So who is right? Why is it that contradicting to some?
I am always amused at people debating about the above in forums. Both statements are correct and logical.

Some said buy at pull back, some said buy at breakout, but why still losing?
Those statements passed down by those great successful traders can't be wrong.

Buying pullback should only be done in a bullish trend, not buying when the price is dropping.

Some said breakout strategy doesn't work, but there quite a number of successful traders used it in Market Wizards. It's how each individual interpret it and apply in the market.
Eg, MA crossover, indicator crossover, etc can also be consider a breakout strategy but why there's still trader using it.

Hope the above are readable, I'm unable to put it better.
The only winner is the one who survive the longest...
  • #29
  • Jan 21, 2016 12:53am Jan 21, 2016 12:53am
Quoting jmn5611
Another example of nothing new under the sun. ......
I also see that the OP has been bequeathed the honorable status of COMMERCIAL MEMBER. Let's see if he comes back.
Agreed, there was nothing new in my post. But what if my guess at the OP's angle was completely wrong, and he has something far more significant to say? If he doesn't come back, we'll never know.

Never mind, it's back to business as usual, using my 'conventional' toolbox..........
  • #30
  • Jan 21, 2016 1:01am Jan 21, 2016 1:01am
Quoting hanover
{quote} Agreed, there was nothing new in my post. But what if my guess at the OP's angle was completely wrong, and he has something far more significant to say? If he doesn't come back, we'll never know. Never mind, it's back to business as usual, using my 'conventional' toolbox..........
Hanover, I hope that you did not take that post as criticism. You are a very well respected member of this community and I would not try to denigrate you in any way!

I was merely point out that the markets have been around since the Japanese rice traders, and most things have already been covered.
If you are good at something, never do it for free--Joker
  • #31
  • Jan 21, 2016 1:30am Jan 21, 2016 1:30am
wow I just come back and see quite a lot of negativity and sacarsm here.
I may just try to change the thread title to "My daily mumbling" so it's just me mumbling all day about the market and hopefully won't offend anyone
Anyway people are skeptical and I totally understand.

Alright so please just regard this thread as my own opinion toward the industry, the market and everything I feel like to share. If anything is irrelevant or commercial nature from my part then the mod can do what is right.

Also for me maybe the best way is to not relate any discussion toward contrarian trading any more I will just mumble my own view about different aspects of trading other than contrarian trading.

Alright I will keep mumbling to myself....

Today the topic is .... Retail Broker Manipulation

So you guys have been wondering for a long time about the Stop loss hunt. Feels like every stop orders you put have the tendency to be filled, and then the price is reverse right after that, to your amazement.

From what I saw, and what I could do. This is true. Retail brokers can and will hunt the stop.


How does a retail broker know where the stops are?

How can they know? Of course the source is their own order book. It's easy for me to spot 5-10 pip zones where the stops are heavily accumulated. Why? because most retails were just taught the same thing. They don't put their stop loss at arbitrary levels, but two types of levels:

- The obvious below supports or above resistance --> this is what retails are taught, even with price action trading (above high of weekly candle, below low of weekly candle), or almost any trading strategies.
- The round numbers --> this come from human psychology to favor round numbers.

What I was able to observe is the Stop orders have many zones that "stacked" i.e a lot of Stops at a particular level, but the limit orders don't have this characteristic. The stop zones are predictable but the limit order zones are not as predictable. Probably because retails Take Profit are much less predictable than stop loss because of their emotional trading ( they don't usually put their limits at a particular level but put them based on their emotional bias - they take profit when they feel good about that profit).

Limit order may be stacked at zones but will talk about this later...

Stop loss run operation

There are 2 types of stop loss run a market maker can do:
- They manipulate the spreads
- Or they manipulate the price

For a small retail broker, probably what they can do is to manipulate the spreads by changing time delay and price feeding to the clients.
- Price feeding: they can widen the spreads if they feel the level is going to stop out the most number of traders. This is easy. Will the traders know? Maybe, possibly suspicious but have no way to verify it. The spread widening of 1-5 pip at the stop zone may happen in just a second. Most of the time traders look back at the trade and just accept the fact. Some make inquiry but the broker standard answer will be: low liquidity at that price level so you got to accept that.

What about different price feed? there might be different price feeds among different brokers, but what if all retail brokers see the same stop levels and act at that price level at the same time? As retail traders always accumulate the stop there no matter which brokers they're trading at. ( This is only my speculation about the "coordinated attack" of brokers but it looks right for me that they can do it without even communicating directly with each others. Again, it's just my speculation. But I certainly could manipulate the price feed in a short period of time to kick traders out from their stop zone).

And the spreads widening only affects 1 side of the market. I can keep my bid price the same as the liquidity provider but widen the offer price if I see a lot of buy stop. This way the sell side won't be affected.
Side note: MT4 price only display the bid price, so in case your open position is short, you have to get out by using buy stop at offer price. You have no way to know the number of this offer price (MT4 doesn't record it). Offer price doesn't even show on the chart historically.



Alright MetaQuotes may probably kill me for this (hope FF isn't an affiliate)
- The 2nd method MT4 broker can exploit you is using backend plug-ins. These plug-ins are installed on the server side at MT4 Administrator. There are the Virtual Dealer & Quote Checker plugin. Basically what they would do is to ensure your execution price is always worse off than the price of Liquidity provider. It will delay your orders in the execution process. And in that delayed time it will constantly monitor the price feed from the Liquidity Provider and give you the worst price during that delay. This is especially effective in news time and when price at the stop zone.

More on this later...
  • #32
  • Jan 21, 2016 1:44am Jan 21, 2016 1:44am
Quoting jmn5611
I hope that you did not take that post as criticism.
No I didn't. And anyway, criticism doesn't bother me too much. I regard myself very much as a student of forex, as I continue to learn new things all the time. The markets have been around for a lot longer than I have.

Quoting mooniekool
wow I just come back and see quite a lot of negativity and sacarsm here.
None intended from me! I'm still keen to read your views on contrarian trading, if you're willing to share them.
  • #33
  • Jan 21, 2016 2:14am Jan 21, 2016 2:14am
Quoting mooniekool
Alright MetaQuotes may probably kill me for this (hope FF isn't an affiliate) - The 2nd method MT4 broker can exploit you is using backend plug-ins. These plug-ins are installed on the server side at MT4 Administrator. There are the Virtual Dealer & Quote Checker plugin. Basically what they would do is to ensure your execution price is always worse off than the price of Liquidity provider. It will delay your orders in the execution process. And in that delayed time it will constantly monitor the price feed from the Liquidity Provider and give you...
This is quite well known, or at least I thought so. This video is not new, various similar ones have been around for a couple of years.
Inserted Video


It's openly available: http://mtexperts.com/en/plugins/virtual_dealer/

But Metaquotes were unhappy with 3rd part plugins: http://www.financemagnates.com/forex...legal-plugins/

Probably not worried about the underhand nature of the plugin, more the breach of license agreement!
Wealth comes from what you keep, not what you earn
  • #34
  • Jan 21, 2016 2:16am Jan 21, 2016 2:16am
Quoting trader34
{quote} This is quite well known, or at least I thought so. This video is not new, various similar ones have been around for a couple of years. https://www.youtube.com/watch?v=v2Ow8nPQ7Qs It's openly available: http://mtexperts.com/en/plugins/virtual_dealer/ But Metaquotes were unhappy with 3rd part plugins: http://www.financemagnates.com/forex...legal-plugins/ Probably not worried about the underhand nature of the plugin, more the breach of license agreement!
True, these plugins have been around since forever, but still it's better to know how to avoid the brokers with these plugins rather than keep trading with them.
  • #35
  • Jan 21, 2016 2:17am Jan 21, 2016 2:17am
Quoting mooniekool
wow I just come back and see quite a lot of negativity and sacarsm here. I may just try to change the thread title to "My daily mumbling" so it's just me mumbling all day about the market and hopefully won't offend anyone Anyway people are skeptical and I totally understand. Alright so please just regard this thread as my own opinion toward the industry, the market and everything I feel like to share. If anything is irrelevant or commercial nature from my part then the mod can do what is right. Also for me maybe the best way is to not relate...
Any time you start a thread with a system using an indicator that you cannot share, you only hurt yourself. You would probably have some subscriptions if you had just said you were selling something from the beginning.

It's about being honest with your intentions.

Quoting hanover
{quote} No I didn't. And anyway, criticism doesn't bother me too much. I regard myself very much as a student of forex, as I continue to learn new things all the time. The markets have been around for a lot longer than I have. {quote} None intended from me! I'm still keen to read your views on contrarian trading, if you're willing to share them.
I am very aware that you are as much a student of the market as I, so I did not want to come off as snarky!

The OP did man up and return, so I will leave further discussion to him.
If you are good at something, never do it for free--Joker
  • #36
  • Jan 21, 2016 2:35am Jan 21, 2016 2:35am
Quoting mooniekool
wow I just come back and see quite a lot of negativity and sacarsm here. I may just try to change the thread title to "My daily mumbling" so it's just me mumbling all day about the market and hopefully won't offend anyone Anyway people are skeptical and I totally understand. Alright so please just regard this thread as my own opinion toward the industry, the market and everything I feel like to share. If anything is irrelevant or commercial nature from my part then the mod can do what is right. Also for me maybe the best way is to not relate...
Thanks for sharing. I noticed one of the paragraph you mentioned appear quite often to 1 of my broker.

Eg, EU Buy-1.12346 Sell-1.1.12330, then become Buy-1.12347 Sell-1.1.12330, Buy-1.12349 Sell-1.1.12330 at split seconds, spread widening on one side only. Can I consider that fall under your spread widening category? How can we detect price manipulation? *I am not using mt4 for trade execution
The only winner is the one who survive the longest...
  • #37
  • Edited 2:58am Jan 21, 2016 2:46am | Edited 2:58am
Quoting jmn5611
{quote} Any time you start a thread with a system using an indicator that you cannot share, you only hurt yourself. You would probably have some subscriptions if you had just said you were selling something from the beginning. It's about being honest with your intentions. {quote} I am very aware that you are as much a student of the market as I, so I did not want to come off as snarky! The OP did man up and return, so I will leave further discussion to him.
Well as I said. It's just me mumbling around. What I post is my view of how things work, and I'd like to keep it that way You guys can just read them for fun if they don't add any value for you thanks for getting by any way.

Back to the topic,

Not all retail brokers or B-book brokers use these plugins to rip you off. But still, you can test whether they're using these or not. Here are some tips to check from the client side (take this evil brokers ):
You'll need a VPS that locates near your broker's server, so you get the ping very low to their server.

- Try to get in with a market order and compare the price you see on the MT4 screen when you click buy/sell with the execution price you get. If they're different most of the time then it's a red flag. Of course the price can move in the time of execution- but make sure both price the same most of the time.

- Check the time delay of the order, if the broker doesn't use the plugin and your ping is low then your order should be executed quickly (<0.5s for example). If there is a delay in order execution, especially long delay (>2 seconds) consistently then it's also a red flag.

- Check your limit order history execution, if all your limit orders are executed at the requested price then it's also a red flag. Limit orders can be filled with price better than your requested price. If there is no case of better limit price fill then it's a red flag. Also make sure your sample size for limit orders is large.

These plugins are one of the reason why scalping on demo accounts doesn't work in live accounts. So don't test it on a demo server. No broker ever install these on a demo server.

That's it for now...
  • #38
  • Jan 21, 2016 2:54am Jan 21, 2016 2:54am
Quoting kinspk
{quote} Thanks for sharing. I noticed one of the paragraph you mentioned appear quite often to 1 of my broker. Eg, EU Buy-1.12346 Sell-1.1.12330, then become Buy-1.12347 Sell-1.1.12330, Buy-1.12349 Sell-1.1.12330 at split seconds, spread widening on one side only. Can I consider that fall under your spread widening category? How can we detect price manipulation? *I am not using mt4 for trade execution
Thanks for getting by,

In your case if it's under normal market condition (no big news), it might very well be they're using spread widening to rip you off - if the price is falling then widening the bid side looks logical for me. Unfortunately, I don't really have any experience with the backend of other platform except MT4 but still they can manipulate it with their platform ( widening the spreads can be an internal tool to manage the broker side of risk but also an effective tool to exploit retail traders).

If you're looking for how to detect price manipulation with VD plugins then I already posted above, hope it can be useful for you.

P/S sorry mistakening the side. your (manipulated) buy price is the offer price so the price should be going up so they can take out the buy stops
  • #39
  • Jan 21, 2016 10:39am Jan 21, 2016 10:39am
I saw a very similar thread here not to long ago. It ended up turning into a subscription service. We will see!
  • #40
  • Jan 21, 2016 12:09pm Jan 21, 2016 12:09pm
Quoting renegade
I saw a very similar thread here not to long ago. It ended up turning into a subscription service. We will see!
So what? The complete forum is commercial.
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