I understand that the fast large moves in the market are caused by the large banks and market makers, having to fulfill their quota, make a large transaction etc. To do this they will attempt to take out our stops and such. I understand this I think. But what confuses me is this. If one of the large 20 or so banks are about to make a large move in the market which consequently moves the candle 50 pips in one direction… why is it that I always tend to see an instant resistance to this move sometimes bring price right back to where it started resulting in a pin bar?
I mean if it really took maybe 500 million for the bank to move price how on earth did it rebound back? Who made is rebound back?
Surely when such a huge move is made by a large bank, the move should “stick” and be un moveable no?
I should add that i’m referring to a large and fast move, often within 30 seconds I see this big move and resistance.
Generally speaking, large short-term price moves are triggered by news events in the majority of cases. They are not caused by a single bank handling some business. News changes the order book. It brings in new orders and it causes orders to be filled and/or pulled. What most people don’t understand is that it’s the absence of orders that can be the cause for big moves. For example, a large price drop can happen simply because there aren’t any buy orders. This is what has been the situation in the case of flash crashes.
And just as in the case of a flash crash, once orders start coming back into the market, price can turn around quite rapidly.
As for a single bank moving the market in a way which will stick, think about how many trillions of dollars of volume is done in the markets each day. A $500mln order in something like EUR/USD is nothing. One order by one bank is not going to move the needle much or for very long if there are opposing orders (if there aren’t, see above).
They run it to the stops to seek liquidity. Say they run it down. They trigger everyone’s sell orders which enables them to buy an even larger amount to take it the other way. It’s the only way they can get big orders on.
Have a look at your charts. In an uptrend you will see a 30 PIP or so dip down then back up between around 7-9am gmt time most days. Used to trap traders in the wrong way and create liquidity.
The assumption here is that banks trade to trap us speculators. They simply don’t. This dip you talk off is nothing more than the employees of these “firms” for-filling their morning duties and heading off for smoko, meetings and lunch. These moves are because of a lack of liquidity not to create it.
You are 100% correct, and looking at the charts proves what you are saying. When they run it down, they trigger the sell stops and also the sell limit orders. I could not have said it better. Great post.
[QUOTE=bobbillbrowne;716723]The assumption here is that banks trade to trap us speculators. They simply don’t. This dip you talk off is nothing more than the employees of these “firms” for
I would like to better understand the affect of eating and smoking on price action. Is there a video someplace that explains this? On days where we may not see a dip in price, is this the result of smart money dieting and or trying to quit smoking? Personally, I don’t smoke, but if I start smoking, are there foods that I can also eat that will help me get into sync with smart money.
Dude… do yourself a favor and take some time to learn about price action before you try to teach others.
[QUOTE=bobbillbrowne;716723]The assumption here is that banks trade to trap us speculators. They simply don’t. This dip you talk off is nothing more than the employees of these “firms” for
I’m updating my trading strategy, is this correct?
Should of been able to double your account on that analysis bro.
The point is these large spikes you have identified occur not because large amounts of cash is being dumped on the market or brokers are out stop-hunting for liquidity, but the exact opposite. Large amounts of cash is being withdraw from the markets for very good reasons. The classic and most identifiable is around news events.
And even though most transactions are automated today, there is still a human behind the scene authorizing and controlling order flow. And that human works in an institution. He comes to work in the morning, analysis his books, places his orders, lets the computers do their thing. Then business processes kick in. Meal breaks, meetings, reviews take over and the trader leaves his desk and withdraws his orders. This withdrawing of orders, this loss of liquidity causes intraday spikes because these people all do it at the same time. And it’s something us PA traders can take advantage off.
Dude… you should not be so narrow-minded in your views.
[QUOTE=“bobbillbrowne;716846”]<img src=“301 Moved Permanently”/> Should of been able to double your account on that analysis bro. The point is these large spikes you have identified occur not because large amounts of cash is being dumped on the market or brokers are out stop-hunting for liquidity, but the exact opposite. Large amounts of cash is being withdraw from the markets for very good reasons. The classic and most identifiable is around news events. And even though most transactions are automated today, there is still a human behind the scene authorizing and controlling order flow. And that human works in an institution. He comes to work in the morning, analysis his books, places his orders, lets the computers do their thing. Then business processes kick in. Meal breaks, meetings, reviews take over and the trader leaves his esk and withdraws his orders. This withdrawing of orders, this loss of liquidity causes intraday spikes because these people all do it at the same time. And it’s something us PA traders can take advantage off. Dude… you should not be so narrow-minded in your views.[/QUOTE]
Ok, can you please cite the sources for your opinion. Where did you learn this. You will notice that the spikes I identify would have activated orders above or below prior highs. I agree that my views are narrow, but I see a market place that has incredible precision.
It’s illegal, called spoofing - Dodd-Frank 2010: “the illegal practice of bidding or offering with intent to cancel before execution.”
Hard to prove, always can cite a reason for the order(s) being pulled - why are they trying to legislate? because the spoofer gains and because it happens.
I haven’t read the thread backwards, but possible someone will post about all the trillions in the FX market and therefore impossible to manipulate.
The S&P is a reasonably sized market, is it possible that one trader can cause that market to drop by 600?, if it is so possible and that trader, in his defence, says that he was just being ‘good at his job’, then is it possible that a group of traders who are also good at their jobs could cause a few pips movement in FX.
I do really hope that this guy is found to be innocent of any wrongdoing, in my humble opinion he was just good at what he did.
In order for someone to trigger a bunch of sell stops they must first get through the existing buy orders below the market. If there is a bunch of buy interest, that will be a challenge and would explain a rapid turn back up in prices after the first dip.
If the buy order book is thin, it is easier to make the drop happen (see my first post), in particular if sell stops can be triggered. And if there are sell stops tripped, that would serve to help keep the market moving down, not push it back up again - at least until they are all filled. If someone were looking to use stops as liquidity to enter a long position, they run the risk that the market keeps going south because there aren’t any buy orders to prop it up (unless they themselves can do it, which might require a lot of money). It’s one thing if we’re talking a few pips, but if you’re talking 30+ in the initial move, that’s potentially a very serious risk to take. Running stops to provide liquidity for exiting a position is the more likely (and profitable) scenario.
I know we’re just getting past the weekend and all have busy lives, so there is no need to rush. However, you are dealing some pretty strong opinions about how markets move, so when you do get a little time, I’d appreciate you supporting your opinions with some sources. I can cite almost every book, mentor, source of videos that have gone into my trading education, I’d appreciate you honestly supporting your opinions when you have the time. Because my friend, with all due respect, you are completely wrong.
That is the point. I understand Harmonics, Seiden S/D, Standard Price Action, Pivot Analysis. I also understand that numbers tell a story - any decent accountant will tell you this. In trading the charts tell a story. I have no problem with people like yourself who manage to be profitable using some other method to make the story of price action make sense internally. The problem I do have is that some people who are just learning forex, would benefit from understanding Institutional order flow, yet when we try to help them (for free mind you) some of us get shouted down.
This thread is about understanding those large moves. When we look at those moves, we see that prior to them happening, we can see areas where we’d expect stops and limit orders. Not because ICT tells us so, but because the retail trading education world teaches where to place orders. Deutsche, Goldman, UBS, are all trading to make money (as well as filling orders) and they all can control price. Do you really believe they don’t control price to their advantage in a nearly unregulated market, simply because it would not be nice.
I went long on cable, based direction on probable inflation numbers - long story, different thread.
So where to enter? - sloping trend line h4 going back to June 18 for a visual aid, line has been there for a while.
Same chart zoomed in on h1, there is one level with 3 confluences , it is the white line at 5580.
1 - 200sma
2 - sloping trend line which was clear support during recent sessions.
3 - Mid Asian level
So why did price reach down at the down arrow, to just below Thursdays US and European session low, or again just below Friday’s low, or why does price often ‘reach down’ just before an upward causing news release?
Everyone has their own theory, what matters is being aware of the levels.
Here is a closer view of what the OP is talking about as a fast move today.
Suppose that a person was aware of the two lows to the left, suppose he was aware of the 3 confluence levels and suppose he sees price reaching down to break those levels.
A safe type of trade, with upcoming news, would be a buy stop above the 3 confluence levels, then if he is correct on his news bias…
