TRD

I ordered it and some more! Best books about trading ever released!

Great books!!!

You may have heard about it already, if not, there is a little book named "Phantom of Pits" (Question/Answer of a mystery trader in the style of wizards series), wisdom in your signature is one of two rules in that book!

http://www.trading-naked.com/library...he%20_Pits.pdf

Wow, exceptional document! But not sure how many will
1. read it
2. get it
3. apply it correctly

to understand its importance. For me it confirmed my views.

Thanks!

Hello everyone,

it has been a great week with a lot of volatility. And volatility will continue. Be ware to use 10x less risk on trades in order to survive the DD.

Thanks for sharing Johny1,another pearl for my treasure chest

True words TRD,only if your readers new the pearls you are sharing,a shared friend of ours once gifted me these same words that changed my world once I applied it to my trading,
GW

Be warned,crude language but powerful message.
To get what only the 5 percent have, you need to be willing to do what only the 5 percent do.

“People who succeed at the highest level are not lucky; they’re doing something differently than everyone else.”

Hello everybody, I am new to the forexfactory with short experience in Forex market. I am impressed about knowledge which is presented in this thread. I have read every page from the start and after all I want ask you TheRealDeal about something. Could you tell me how looks your daily trading routine ?
How do you prepare before the session begin ?

I'm sorry if I omitted the page on which was the answer to my question

Wow, finally i read some good question. I think best guy to answer that question will be Darren Hardy. Just watch his videos on youtube. He explains very well how your routine should look like.
All the analysis and preparation have to be done hours before the trading session. So when you start you review it and then go on. Also you should put yourself in good physical and mental condition before the session. If morning exercise, take a shower, drink coffee/tea, don't do anything that can influence your decisions like call a trading friend, chat to fellow traders and ask them what they think about the market today, read/watch news of any kind. Even you have a pro as a friend and he tells you to buy only today, he is for sure 100% wrong.
You need clean head, because any bias before the session will destroy your ability to read the market correctly.
And even if you read it correctly, you may hesitate to pull the trigger, because you have some thought which has nothing to do with what is happing now.
We know from exprerince but also from the books that great traders failed not because they lost their skills, but because they let the problems in their life affect their trading.
You can test that on yourself. Just trade normally every day, but note the days you felt bad, unhappy, tired, out of focus, biased from news/other traders etc. Then compare your results with the good days. And write here your results. Will be good for everyone to notice the importance of this concept.

TRD

Hello again TheRealDeal, It's my first time when I am trying to find liquid spots with my own scenerio. I know that u have more experience so could u tell me what u think about this outlook ?

I was watching this very trade - any entry (second red arrow) happened too late last night for me to take advantage - hope you got in. What sort of target did you have in mind

Bartlby I am from Poland and I don't like to trade at night, It was my plan for london open but market has changed during the Asian session. You can see my max target on image which I have posted up but I would not wait for exit if my plan does not coincide with the market plan. In july I will try to upgrade my skills and post here more pic's with trades

the selected highs/lows have too many wicks. What i said about wicks? What do they indicate in orderflow?

Hi, TheRealDeal!

First of all, I'd like to express my thanks to you as many of your posts enlightened me much. I also express my thanks to Stevepatt for his illustrations with many live charts.

Then, I would like to add some discussions/opinions regarding your sound trading philosophy. Actually, they are some refections very relevant with your trading philosophy.

In your cornerstone post as I quoted, you've mentioned the three phases as 1. Manipulation (stop hunt) 2. Accumulation (ITs accumulate positions. We too!) 3. Distribution (ride price for profits). Actually since around 2 years, I've noticed the same thing (but not only this, I mean, this is a part of the game, but not the whole). The price is sometimes looking for the stop-loss orders on both sides. This move "cleans" the market like a re-shuffle of the cards or a restart of the game and bring the commssions to the whole industry, which is the blood making the whole game continue. You can not force a person to open a trade, but you can force him to close it. And do not forget, the broker (and the whole industry based on this game) makes money (commission revenue) on both "open" and "close" positions!


However, I felt that I must have missed something if I consider that the price was ONLY looking for stop-loss orders to hunt. The story must be more complicated than this. This is because that so many times it is very obvious that there are many stop-loss orders below or about a certain level, however, after several attempts, the price seems to be forced to go to the other side. Sometimes the price is not just hunting the stop-orders and then turn back, it could go far away, away and away. Anyway, there are many phenomenons which could not be explained by the "stop-loss hunt" reasoning.

Since two month, with a detailed review of the trades, I am trying to give a summary (which is not yet finished) about how the market works, in order to get a solid understanding/reasoning of the mechanism behind it. Then I begin to review all my trades only with a short opening position and all the bearish reversals. Here I need to mention that, as a wargame fan, I've always been making a comparison between Trading and War. After some weeks of revision, I got a more generalized picture about the price action, I believe.

Now majorly based on this "comparison mentality", I believe that I have a better picture about what is going on in the financial market with a War perspective (which is totally my personal opinion, nothing generalized at all), and I would like to share here with you and all others, maybe I would open a new thread with this reasoning.

Let's generalise the market participants into only two entities, bear and bull. As an individual or an institution, one could become easily a "traitor" the next minute, which means one minute ago he longs, one minute later he shorts. But in my reasoning, the bear and bull are two abstract entities. All money with a short position is bear, all money with a long position is bull. (This is a abstraction, I hope we understand this abstraction the same way.) A bad metaphor to illustrate, bear and bull are like Nazi Germany and Soviet Union, they hate each other to the teeth and they fight against each other with everything they can throw into the battle.

As a bear (who only opens a short position), in the battle field as financial market, he could only have two kinds of movements:

1 attack (move to the north or move up)

2 retreat (move to the south or move down)



and there are five kinds of attacks:

1.1 targeted attack
1.2 continued attack
1.3 deceitful attack
1.4 counter attack after a retreat
1.5 failed attack

The 1.1 targeted attack is what TheRealDeal has perfectly described in this whole thread. (but if we go a little further, there is a combination of attack and retreat, Which explains better how the price moved sometimes this way and sometimes that way.) What I would like to mention is that when there is a such attack, there are generally two different senarios: 1.1 + 2.1 = targeted attack + deliberate retreat; 1.1 + 1.2 + 2.3 = targeted attack + furthur attack + counter attack

The 1.2 continued attack is when the stop-loss orders are hunted, the price still moves to north further and further. The target is beyond the stop-loss orders as the first target, which means that the bear wants to force the bull "totally surrender" : force the bull to close all the positions with margin calls. This is when a big move happens.

The 1.3 deceitful attack is when there is a violent retracement to the north, but then it suddenly and quickly move to the south. (It is very similar to the counterattack in a war in order to garantee a better retreat.) The 1.3 deceitful attack is also when there is a "false breakout" or "retest" of a certain unimportant/unstrategic levels (with the same time, many rumors and misleading "news" in the market). IMHO, a sound understanding of this kind of "trap-purposed" attack (the nature is retreat) will make one have a sharp edge in trading business.

The 1.4 counter attack after a retreat is when the bull has used up all of its energy and when bull is poorly prepared to retreat at the end of a certain gain. Sometimes the counter attack could even gain back all the "lost territory".

The 1.5 failed attack is an attempt without being a success (failed to hunt for stop orders liquidity pool)

and there are three kinds of retreats:

2.1 deliberate retreat
2.2 forced retreat
2.3 deceitful retreat

The 2.1 deliberate retreat is after a certain bull's important stop-loss orders are successfully hunted, as soon as the price level is reached, the price moves back to south (target reached, mission accomplished, profited positions should be closed, a decent retreat is better than a continued attack).

The 2.2 forced retreat is the worst scenario bear wants to see. But unfortunately, in any warfare, there are causualties. This is when stop-loss orders for bears were hunted (unexpected, unwanted). This is even when all the positions are forced to be closed with margin calls for the bear.

The 2.3 deceitful retreat is the opposite of the deceitful attack, which means it is for the preparation of an attack. During my reviews, I saw many this kind of PAs, generally they make the bull fall into the "trap" situation as 1.2 (supply exhausted) and prepare themselves for a counter attack 1.4.



In general, for a bear,

With any winning movement, there is a retreat (usually decent, sometimes not so);

With any losing movement, there is a revenge (a counter attack, sometimes very violent).

All the analysis on PA (Price action), is an analysis of the power/strength of the bear and the bull. The PA will tell if the bear is satisfied with their hunt for a certain bull's stop-orders liquidity pool, or it wants more than that; or the bear is unable to reach their target because there are more ammunitions and manpowers in the hand of bulls during a certain period of time.

It is still not very clear, but my picture (architecture) about the market is something like this.

Anyway, no one really understands how the market functions, even those guys working inside the banks(something even like those working in the church know no better God). We all have an unique understanding of the market and even with the same understanding, two individuals would have different behaviours and results in their trading acounts.

I will post some examples with illustration laterly as you guys did.

yours,
shunfengcn

Hello,

very interesting way too look at markets. Whatever it is true in life and war, it can be applied in trading for sure. However there are no real battles in markets if you consider what every participant is doing. Most of the time aggressive buying were shorts being covered, aggressive selling was profit taking, depending on the situation. Keep in mind that most large positions were initiated in previous sessions!
However i do believe that stop hunt exists as part of the orderflow. You can call it as you want, but many times price suddenly runs through some level and then comes back pretty fast. Your job is to identify specific parameters of the hunt to recognize it. (here come the nuggets )
I personally discovered 3 kinds of hunts:
1. Trend hunt
2. Range hunt
3. Gap hunt

Imo Trend hunt is the most powerful. You see price trending nicely and suddenly out of the blue price spikes in other direction and comes back fast and trend continues. Its hard to catch it.
Range hunt is something i was trading since years and like it because market sets a trap in the recent price action. Price goes up/down/up/down. Every time more and more orders are accumulated. Many times it will break in one direction, but some times will come back pretty fast into the range.
Gap hunt one on the finest hunts with very high probability of working out. This is when market falls dramatically creating a liquidity gap (thin move). There are theoretically no orders inside, so every new price structure created after the fall is very important. Its like markets start to move for the first time. And every new high after the big drop might be a good sell.

And these points above are incomplete. Find out how to spot the working ones. They all have something in common. And learn to trade them. Spot in real time when they are about fail and close the trade to reduce the loss.

Shunfeng, if what you explained helps you in your trading to improve your profitability (which i doubt) use it. But simplifying your philosophy may do wonders for you. At the end of the day market moves up and down. Price HAS to go down to go up and HAS to go up to go down.

TRD

TRD:
Wicks represent a thin move, which has thin liquidity, where price shoot and came back fast. If you push price through thin liquidity price may even jump to the level. Thin moves create liquidity gap, which are getting filled pretty fast. Why? Because after price jumps up and someone sells in a thin move, price would jump back down, because there is nothing to stop it. But why it comes down? Because it hits a liquidity pool.
Wicks are created by bank traders to hit stops and reverse price.

So too many wicks in area telling us that there don't exist enough stop orders for large sized trades ?
TRD could u mark my fails on image ?

Dear TRD,

My sincere thanks for your reply!

I can't agree more with you on your point "simplifying your philosophy may do wonders for you." Actually, I just posted my whole picture vis-a-vis the market but when I have to formulate a feasible strategy to collect some real money, I have to "simplify" (as you pointed out), or in my vocabulary, "give up most and focus on the most effective piece". I would define a series of characteristics on some candle patterns as "the exhausted attack" and "trapped attack" and trade them (maybe this is the same thing in your "Range hunt", but just in different words.). Time will tell.

The three types of "hunting" has summarized very well. In my early trading endeavour, as many others, I spent (wasted) much time on the first hunt (trend hunt). Gradually, with many retro-inspections as well as reviews of trades, reading of others thoughts, I noticed that it is basically the most ineffective way to collect money in the market.

About Gap hunt, I have some ideas:
After the Gap (market falls dramatically), it is better to keep an eye to see if the market retreats (retrace/drawback/pullback) quickly enough (a retreat into the large drop in several TF elements), or else, it could become a major reversal (targeted attack 1.1 for the hunt the top of the Gap), but not a retracement (then go back to fall). This is because that as time goes by, without the price retracing enough but accumulating at a low level, it could turn out to be something like a range hunt for the bull (a mutation from a gap sell model to a range hunt for a bull). This is the difficult part of the game, there is alway some mutations during the development of a certain pattern. When one side is very sure about their set-up of a certain pattern, new traps aiming to hunt their SL stealthily, gradually and steadily take shape, and one has to be vigilant and keep a critical-thinking eye all the time, even on a ride of a profitable trade. And I think this is why your signature illustrates that cutting off the loss early is the only true edge. In my own vocabulary, I would express this as "watch the market always with a pessimist and objective eye, always watch the bad signals against my position, not the good ones" Some pictures about my point to illustrate this as below.

Anyway, thanks for your advice, TRD! I would continue to work on my system and my performance. Without collecting some real money from the "weath redistribution pool", one is better to be on his homework than wandering too much, isn't it?

yours,
shunfengcn

Hello TRD, I have made new outlook. I know that I am taking your time but i want to study the market by the right way ^^
Mainly i suggest that cable probably will take a look for gap and he got space to move to 1.367 level.

If market want to get higher then he first will drop to take out low players and then use the support to liquid accumulation, what u think ?

i said many times that wicks consume stops, so not many above\ below them. stops are below and above bodies of candles which have small to no wicks. because trading happens in the bodies. these candle bodies represent ranges on ltf, which can be hunted. this is were the wick comes from.
your analysis is too complex. i would say: if price breaks 3450 , it may go easy to 3420