Institutional Equivalent Education?

OK that's the Market Maker Model - forget what Steve Mauro and others say, Market Makers only use Limit Orders so it is impossible for them to directly move the market, and they wouldn't want to either in most cases - unless their book was already skewed.

That leads us to Cumulative Delta and to Withdrawals of Liquidity.

The Delta on a bar has nothing to do with Options ( Delta in Options is one of the 'Greeks' which are used to value option positions).
It is the net number of Market Order (lots bought - lots sold) at a price level or over the whole of a time period (e.g a bar on a 1 minute chart etc.
Thus it shows aggressive orders only (passive orders are Limit Orders) and it shows the opposite side of transactions to the Market Maker.
So if there is a +ve Delta on a bar, then the Market Maker is net short that number of contracts over that time period.

If price rises, but the Delta is rising less than it should, then this means that the Market Makers have skewed their price bracket i.e they have sold fewer lots to Buyers, than they have bought from Sellers.
Cumulative Delta just keeps adding up the new net Delta on a price bar to the existing total from prior price bars. In this way you can see how the Market Maker's book is skewed over a longer period of time.

WOLS happen on every major News release - usually they withdraw Liquidity both above and below the market until the figures are out. That is why you get such fast spikes


Cumulative Delta is used for seeing aggressive Buying/Selling pressure and for detecting Withdrawals of Liquidity (WOL), where the Market Maker sees some higher volume Institutional buying/Selling and is getting the heck out of the way in order to minimise their own loss on the move. That is why you get such violent spikes on such news releases - since both the nearest Buy liquidity and the nearest Sell Liquidity is so far away from the per-News price.

I see that Rob Booker has put out a video about advice for unprofitable traders. In it his big suggestion is to concentrate on doing just 1 thing (= trade type etc.) well. There is much merit to that, as I have mentioned before in this thread if I limited myself to only trading the Crude Oil Inventories Release I would be a consistently profitable trader month on month for over 1 year by now. However I don't, and so I am not (yet).
Then he goes and ruins that advice by suggesting you can take almost any free system and master it to become consistently profitable at $1 per week for 4 weeks, then $2 per week for 4 weeks etc. - He is out of his crazy little mind!

He also admits that he has had a big fat zero profit over the last month!
Here is a link to Rob's video :

In order to be consistently profitable you need at least 3 things:
1. A 'system/methodology/setup/trade type etc.' for want of a better description, which is a good one.
A). One which matches your personality and resources.
B). One which can be traded frequently enough for you to get sufficient results in order to show a meaningful Expectancy.
C). And in which it is possible for you to have total confidence.
I strongly doubt if any free system or even most paid for systems or paid for education will give you that.

2. You need the time, the motivation and the resources to master that trade.

3. You need the personal strengths not be be seduced by other traqdes which do not suit you so well.

By the way I wish you the best of luck with doing that because I have not been able to achieve it. It is much easier said than it is to actually do it!

As anybody who has read much of this thread knows, I have only 2 suggestions for finding that initial 'system':
Either sign-up to be taught a 'system' which has been proven over many years - my suggestion is The MAX (if you can put your trust in Indicators).
Or get yourself a real trading education from Ray at CompassFX, he teaches methods possible for a Retail Trader based upon the many ways his Institutional Desk trades plus a whole lot more techniques from his contacts. Moreover he teaches why the Markets move the way they do - based upon the business models of the major market participants, not some B*S oversimplified garbage from the vast majority of people who advertise on the internet or that you get from purely technical traders or purely fundamentals traders. Then pick the trade style(s) that suit you best and practice until you master them.

Some of you may wonder why after a +63% night and 5 consecutive winning days that I still consider myself to be not consistently profitable.

It is because I need at least another month of positive week on week results before I will feel able to add the funds into my account that I put aside for the time when I will know that I can afford to increase my absolute risk!

My own psychology is the main thing holding me back, particularly that I am not able to just trade once per week taking the best trade (for me) that I know of which has a 90% to 95% win rate and a pretty good positive expectancy. I have tried for months, but I still cannot stay away from other trades. Sometimes they work out as on Thursday night Brexit, but more often they don't.

interesting material, I will go over it. Ray reminds me of another trader I knew back in 2008. Pretty good mentor.

Back to my occasional rants about the misleading, misinformed emails we get about trading:

This time from Forex Smart Tools (Evelyn and Mindy):

Their latest email is about the use of Intuition in trading. They say you need intuition and give advice (using one of their tools - ForexTester) on how to practice it - LOL !

When you read the content, you soon see that what they call Intuition is actually just accumulated live chart experience (they mention 10,000 hours) - not a hunch based on how your gut feels following that dodgy hamburger you ate for lunch!

Their suggestion of using Meditation is very good, though more for getting the mind calm and 'in the zone' rather for any 'Intuitions'.

My main gripe about their email's content is that they ignore most of the things that Ray teaches Intrinsics, OrderFlow, Statistical Arbitrage - still that is no surprise since MT4 makes Order Flow study almost impossible and also they don't have any institutional experience.

Anyhow, here is their email:
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The Professional Trader's Secret Edge: Intuition
For those of you who have been following our Newsletter series, this volume may surprise you. You've come to know us as scientists, analysts and statisticians who love to pick things apart and delve into the details of trading to extract the truth.
It's time to take a break from that and bring balance to the equation by working with the right hemisphere of the brain instead of just the left analytical side. Why? Because if you only rely on analysis and indicators and technique, you'll never really become a true trader, able to flow with the changes in the market and realize profit month after month.
Is intuition something you have to be born with or can it be developed? Certainly some people are more gifted than others, but we believe that everyone can develop better intuition, regardless of how much or how little they start with – and we'd like to show you how. Read on...
Good trading to you all, Evelyn & Mindy

Lesson Nineteen - Part A: Why Intuition Works
http://www.forexsmarttools.com/i/crystal_ball.jpgIf trading could really be reduced to an exact science, then there would be hundreds of EAs (Expert Advisors) and black box robots that would work flawlessly. You could turn them on and sit back and make money without doing anything more.
But there aren't. Most EAs can work for awhile (long enough to generate a short-run statement to make you buy it), but if they really worked consistently, why would the programmer who made the EA be selling it? They'd be using it and keeping it a secret from you.
The truth is, an experienced trader will see things going on in the market that a computer algorithm or program will never be able to size up and factor into the decision-making process. Why is there such a difference between a robot and an experienced trader? The answer is NOT because the trader can analyze more factors than an EA can compute – because if a person can describe a behavior in words, then it can be programmed into an EA too. So it's not the simplicity or lack of complexity of any computer program that's at fault in all EAs and robots. It's something else.
The hidden factor that live traders have going for them is the way their minds can synthesize and put together so many parts into a whole. Their minds can grasp an incredibly complex situation and extract meaning from it. It can understand nuance at a subtle level almost beyond description.
How does the mind do this? Through intuition.

Lesson Nineteen - Part B: What Is Intuition?
Intuition is a sense of knowingness. In fact, many ancient wisdom-schools refer to intuition as the sixth sense, beyond hearing, tasting, feeling, seeing and smelling. You might hear someone say "Oh, she had a sixth sense about it", meaning knowledge came to that person from a source other than the five senses, pure analysis or learning. You could say that intuition comes from the subconscious portion of the mind.
If you've ever tapped into something that you had a gut-level sense of yes or no about, then you were acting from your intuition. Everyone has felt this at one point or another – and yes, you can learn to use that sense more and more often. And if you do, you will take your trading to a whole new level of skill and enjoyment (and of course with that comes profit).
Intuition Is Based On Experience
That gut-level information we gain from intuition does not come from thin air or out of the blue. It is actually based on a ton of experience. That's why we feel anyone can develop this secret edge, if they put their time into it.
We've only heard experienced and seasoned traders tell us "I feel like I can look at the market and just know where it's going". This is never something we hear from new traders. If you read our newsletter about the result of having put 10,000 hours into a practice, you'll know what we mean. (If you haven't read that volume yet, click here now).

Intuition Requires Practice
Making intuition available to your trading requires more than simply putting in the hours. If you want to use intuition you have to make a fundamental shift in what you listen to when you make a decision. You have to actually practice listening to your gut.
You've probably heard stories about how keen the sense of hearing becomes for a person who loses their sight and becomes blind. Why? Because they have to rely on their hearing more than they used to. They are forced to make a fundamental shift in which of their senses they use to extract information from the world. Intuition can be developed in the same way - but for awhile you have to force yourself to make this switch, in order to cultivate this secret sense.

Lesson Nineteen - Part C: How To Practice
Drill Yourself: Step One ~ Watch The Flow
Start by watching candles in motion. The best way to do this is to use the Forex Tester, and set it to play mode. You have to get a sense of FLOW, and you cannot do this by watching the stagnant nature of candles forming slowly over minutes or hours in real time. You have to teach yourself to understand the FLOW of the market in order to develop your intuition.
No matter how many indicators you may use in your live trading, strip them all away in this practice drill. Have a simple naked chart just showing candles or bars. You can permit yourself one simple moving average, just as a bit of reference, but the idea is to keep it really simple and clean.
Put on some relaxing music and just start watching the market unfold before your eyes. It's important to relax as you do this, because the subconscious mind is more easily accessed when you are not tense and controlling.
We've created a demonstration movie for you to watch here:
http://www.forexsmarttools.com/i/pla...l_the_flow.jpg
What time frame should you use? It absolutely does not matter because the market behaves in a fractal manner, meaning the macro matches the micro. The patterns you see in a 5 minute chart are the same you see in a daily or weekly chart. Just make sure that you are using well-formed candles with enough volume in each bar for it to display properly on your charts. (For more information about "well-formed" candles, watch this movie).
If you are using the Forex Tester, we recommend you match your time frame and tick packet size like this:
http://www.forexsmarttools.com/i/tes...l_the_flow.jpg
Notice how we are using a 5 minute chart and viewing 5 minute tick packets. You could of course use 15 & 15, 1 hour & 1 hour, etc. The benefit of matching the two time components is that it removes tick action within a candle. In other words, you just see whole candles forming.
Drill Yourself: Step Two ~ Start "Guessing"
As you watch your candles or bars forming, start talking to yourself:
"I think price will go down from here..."
"Now price will consolidate for awhile..."
"This will be a great reversal point..."
"The trend will continue here..."
In this step you will be developing the bridge or inner link between watching and thinking. As you do this, you will be cultivating the ability to intuitively predict where the market will go.
Don't grade yourself strictly as you do this. Remember that developing intuition requires a delicate touch, not a rigid military approach. Think of this as a game. But also understand that you must value this time, so don't discount it as 'oh, it's just play time.' It should be as fun as play time, but it is some of the most important work you will do in your trading development.
And don't set your expectations too high. The market is a random beast... yet it does also show repeating patterns and behaviors. You will never be able to be 100% right even with ESP level intuition, but if you can access the inner part of your mind that subconsciously picks up on these patterns, you will be ahead of the pack.

Lesson Nineteen - Part D: Learn To Meditate
We (Evelyn and Mindy) have both been meditating for about 40 years (yes, we reveal our ages a bit...). In fact our friendship began when we met in a meditation group. We each spend about an hour a day in meditation, so this continues to be an important part of our lives – and our trading success.
Meditation is the process of clearing out the mind. If you're not familiar with meditation, you can think of it like cleaning up your desk each day so you can see what's there and so you can differentiate what's important from what is not. But you don't do the differentiating work DURING the meditation. You do meditation so that the discrimination becomes sharper and more reliable for the rest of your day after meditation.
How To Meditate
If you do not have a meditation practice now, it's easy to start. Simply carve out a few moments of your day and begin. It's great to start with at least 15 minutes a day. If you can, build up from there, either going for a 30 minute session or break up your day with two 20 minute sessions.
Sit in a comfortable upright position. You don't have to assume a pretzel posture. Just sit in a chair. Find a position so you are neither slouching nor stressing-out about sitting ramrod straight. Go for something in between.
Close your eyes.
Notice your breath. This will be your focal point during your meditation. Simply watch the breath going in and out. Don't try to control your breath or hold it or make it do anything in particular. Just notice it.
As you watch your breath, you will find your mind naturally becomes more quiet and at ease. This is meditation.
You are not trying to stop thinking. Simply ignore the process of thinking all together. Thoughts will occur, but just take a neutral attitude towards them. As soon as you notice you are thinking about something other than simple attention to the breath, then make the choice to let go of the thought and go back to attention on the breath. That's all it takes.

What Meditation Will Do For You
The value of meditation is tremendous, and far exceeds the scope of these newsletters. It will benefit every aspect of your life, from health to emotions to outlook to mental clarity. Everything is touched by this simple yet powerful practice.
http://www.forexsmarttools.com/i/dre...s_24909416.jpgBut let's get specific – in this newsletter we've been been focusing on intuition and the role it plays in mastering forex trading. Intuition is a quiet voice. It's not a bossy mentor standing at the podium in the front of the class saying "when price touches this line then sell". It's a feeling that comes from within you that may say "Gosh, even though all the indicators look like I want them to when I'v and e been taught to take a trade, something just doesn't feel right about this setup. I'm going to sit on my hands and wait for a better setup."
How do you hear this quiet voice if your mind is in the habit of being full of thoughts and feelings and distractions? You won't be able to hear it at all. To hear your own intuition, you have to have a quiet mind. And to have a quiet mind, you have to meditate regularly.
Most people have a mind like a Jackson Pollock painting, like the busy abstract art painting we show here. If you are trying to notice if one more blue stroke has been painted on the canvas, it's going to be hard to know.
But if the canvas were pure white or only had a few strokes of color on it – and then a blue stroke was painted – it would be easy to immediately see that color and recognize its addition.
This is what meditation can do for you. It can clean up the canvas of your attention so the subtlest nuance of signal becomes easy to recognize through your most refined sense: your intuition.

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I was on the Brexit news thread. You made me think you knew something about cumulate delta that I might be missing
So here I came as you suggested and spent the whole day checking it out. So far, I haven't seen anything like a cause and effect relationship between the maket makers withdrawing limit orders and the delta dropping.
But I am okay with your admitting that you might have muddled somewhere. We all do.

Best,

Hi Muntu,
I was obviously assuming too much prior knowledge, so let us start from the simplest steps.

1. In order to Buy at the market (current bid/ask prices) a trader's order has to be matched up with a sell order of the same size or greater. In almost all circumstances this order, or orders, are Limit Orders placed there by a Market Maker. Exceptions to this are when there are 'Iceberg Orders' or there are 'Stop Runs'.

2. Market Makers want to do as much business within a small range as possible, so they place Limit orders at every price level within a few ticks of current price.

3. So Limit Orders rest in the market both above and below price. There are Sell limit orders above price for market orders to BUY into which would move price up at least 1 tick or several ticks consuming all the Sell Limit orders at higher prices until the whole of the market BUY order was filled. And there are similar Buy Limit orders below price which again are consumed by Market SELL orders. These Limit Orders are called 'Liquidity' and an alternative (slightly wider) term for a Market Maker is a 'Liquidity Provider'.

4. Thus if a Market Maker reduce the number of SELL Limit orders they place at the price levels (= withdrawing Liquidity), it will take much fewer market Buy orders to move price up by quite a few ticks than it would in normal conditions. This is seen in the Cumulative Delta since price rises, but the CD hardly goes up at all (and can even go down) because so few Market Buy orders are executed - remember no liquidity = no trades. The reason there can actually be negative Delta on an up move is because the Market Maker ONLY withdraws their liquidity above the bid/ask prices NOT below. In fact they keep replenishing consumed limit orders below (remember these are BUY Limit orders and the Market Maker is anticipating an up move). So although there could be many more Sell market orders than Buy Market orders, because there is much less liquidity above than below price will still go up and up.

Is that clearer now?

Hi, with whom did Ray reminds you? Is it a know voice...

Thank you Sir, for taking the time to reply. Suffice it that it is clear to Ian Foster.
As for me, I am just fine with the way I understand, plot and use Cum Delta and delta volume.
Otherwise, I also trade CL inventories every week, with some success.

I dont know his name, it was a trading room called fxnewswiz or news profiteer, I only know him as Mr. X but he was good for a while till external shocks destroyed the room and a joker Henry Lew or something took over.

Some reviews for Mr X and fxnewswiz on FPA. (just google I'm not providing links)

Some of the rep isn't good so hope Mr X and Ray are not one and the same

Yeah! I've just spent the last 20min and a coffee scrolling from the rep in FPA, a lot of disappointed people...

Hi Ian, thx much for the insight regarding the Cumulative Delta, I used to follow it last year into the fall and a little this spring, but I have problems finding something truly reliable for MT4... does anyone have some tools, or some ideas from where it could be obtained,...even something paid. Thx in advance!

Hi,
Somebody on ForexFactory started a thread on Cumulative Delta. An MT4 indicator was provided. I tried it but couldn't get it to work properly, although others seemed to find it was okay. Here's the thread:

http://www.forexfactory.com/showthread.php?t=557042

Not sure if its of any use to you but at least somebody had a go at trying to provide something.
Dave

On a news event a market maker is unlikely to give a stuff about delta. Like you say he just wants to keep his book square.

A market maker can of course widen his quote spread, causing prices to spike. The easiest way to protect himself.

Hi djcash,
I don't know if MT5 is an improvement, but the data supplied to an MT4 platform makes it impossible to show Delta and thus Cumulative Delta!
MT4 data only shows Tick Volume not actual volume , but as well as showing actual volume it would have to distinguish as to whether the Market Order Volume was a buy or a Sell in order to be able to construct Delta.

I know that FXCM do provide a data feed which apparently does this for the Spot FX and CFD markets, however since there is no central exchange for these FXCM can only provide their own, or their Liquidity providers volume - not the total volume.

Pecunia Systems do have an MT4 indicator (for Ray students only) which uses this FXCM data feed into a Sierra Chart Platform and then pushes the resulting data into an indicator on MT4.

This resulting Delta and Cumulative Delta is just about usable for the FX cross pairs and for the Majors during the London session before the US Open when the bulk of volume is in the Spot Market rather than the Futures. However it becomes less accurate whe the Futures market volume picks up. And I would say that for the CFDs it is only ever usable on Major News Releases when there is decent volume in the CFDs compared to the equivalent Futures market.

Hi Hostwey,
You post is confusing for less experienced traders.
Market Makers don't use Delta as such, Delta is purely a way of tracking what the Market Makers and the aggressive (i.e. non-responsive) Traders are doing.
Market Makers look at 'pressure' - Buy pressure and Sell Pressure in order to determine when a big institution is starting to push price in a particular direction.
Then they do a WOL on that side so as not to get too much trade underwater (because they are ALWAYS on the opposite side of all Market Orders).

Thus as you say, they adjust their price brackets so as to keep their book as square as possible. Though their Book is always skewed against them in a trend and is only in decent balance when price is in a range.

Hi Christy,
As I explained above there is no Cumulative Delta (or any Delta) that I would use in MT4. I do not (yet) trade live in the Futures markets, so I chart on Sierra Chart with the free FXCM data feed which comes with it. I do use Cumulative Delta to assist in my trading, but only for certain markets and at certain times, since the deltas from the FXCM feed are really only indicative and at times of low volume are completely worthless (in my opinion).

Delta and Cumulative Delta is no 'Holy Grail' even in the Futures Markets. No single thing is! Not even Liquidity Heatmaps - though those are a very good tool during news releases.

What I do is to chart with Sierra Chart using the (free with the software) FXCM SpotFx and CFD data feed. I execute my trades on my Broker's proprietary (and rather primitive, but fast) platform.
The indicators (actually called studies) that I rely on most in Sierra Chart are 'Volume Profile' , 'Numbers Bars' and 'Volume By Price'. I also use Investing.com charts to chart correlated markets not included in the FXCM data feed.

Please DO NOT try to trade just based on indicators of which you have no detailed knowledge.
Do not attempt to trade just based upon a few things I have shared in this thread.

Either go to a good system provider (if you need an indicator based trade methodology) - I can recommend 'The MAX', but there are others which appear O, but I have not checked them out thoroughly.

And/Or get yourself some good trading education - The ONLY one I can recommend is Ray De Medici at CompassFX, there was one other mentioned earlier in this thread, but he apparently no longer teaches.

It is much cheaper to get good education than to pay for lack of knowledge in lots of losing trades. I learned this the hard way over more than 10 years. The main problem people have is in not knowing what good education is.
You don't have that excuse!

Hi Ian,
Thanks for the information regarding cumulative delta and MT4. I am aware that MT4 uses tick volume. I was just providing the link for information to show that some people were thinking about trying to code something.
Also thanks for the info about Pecunia, I was wondering how they managed to create their indicator, so that was interesting.
Dave