This isn’t my site it’s just something I stumbled across and thought WOW.
I’m not sure if I can share links like this (sorry if I can’t) but I do think that it would be beneficial to a lot of traders out there.
As much as i like patterns i have to admit they are useless.I started trading first based on them, but then i realized that they are completely useless.The one’s that are good are the candlestick formations,they are ok but the chart patterns are useless,random and sometimes the exact opposite,since the large traders will take a contra-trade just to wipe out small traders…
I like chatting with harmonic trading . You normally get risk to reward to 1:4 right up to 1:20
My normal is about 1:8
Agreed! Specially with: ‘large traders will take a contra-trade just to wipe out small traders…’
Noob question:
How exactly do the large trader benefit from counter trading to wipe out small traders?
If a pattern is often invalidated by large traders taking opposite trades then I’d just adjust and trade like the large traders do. Trading fake breakouts for example.
Market makers are the ones benefiting from counter trading really, as they move price to take out the local stop losses. Basically if a head and shoulders pattern appears and traders jump on thinking reversal… Market makers know this so will continue the trend or even spike it for 50 or so pips to take out the traders trading reversal, then usually the market will reverse. Although, it doesn’t happen often with head and shoulders, it happens a lot at support, resistance, pivot and trend line breakouts.
It’s a myth.
Large traders could care less about small traders. In fact retail traders aren’t even playing in the same stadium as the big guys. And players with enough dough to push the market around certainly aren’t paying attention to candlestick patterns.
Retail can help in liquidity, often it is unintentional.
Commercials are selling as price is going up, price hits their orders, the consequent selling pushes price back down, the selling peters out (the remaining commercial sell orders are higher up, commercials are not single trade operatives, they average), so price heads on up to meet those.
The large traders will accept their sell orders because price is rising, there is nothing on the fundamental horizon to suggest otherwise - both commercials and large traders are happy - retail is hopping about trying to figure where price is going, the large traders will take their stops.
Commercials are in the market to ensure that their business does not lose due to currency fluctuations.
In truth commercials are the driver of price - do they look at candlesticks? - no, at chart patterns? - no, at support and resistance, at patterns of any kind? - well sort of.
They look at the pattern of price - where does it seem to be heading, when setting their orders they try to ascertain where to set them and where to stop - daily chart for this - they will usually stop their orders at the previous high - there is where it finishes, so their orders will reflect their needs up to this price level.
If prior to this level the fundamentals change then so do the commercials’ orders, they will group sell orders together so that the reaction is magnified - fundamentals suggest a rise - so they change or push up the closer orders, or the reverse.
So who ‘pushes’ the price about - the one common entity, the same entity that sees all the orders - commercial, large trader and retail.
I should say that the magnification of reaction to a change in fundamentals is not the intention of commercials, it is merely a consequence of their reaction - i.e. their changing of their orders.
So if commercials are the driver of price, why are they selling as the price goes up, and why is the price going up in the first place?
I hope this isn’t something you saw in one of ICT’s videos.
Have to agree about the usefulness of patterns. I could never really see the sense in them, apart from the fact that with respect to major ones such as heads and shoulders, so many people are watching them develop and that may trigger a lot of concurrent orders when the pattern completes.
I also agree about candlestick formations: they are the basis of every strategy I trade.
How?
Retail very rarely ever gets out of the broker’s books that the trade was made in. It’s like saying that high stakes bets at Caesar’s Palace are providing liquidity for a game at The Bellagio.
It doesn’t happen.
I still think patterns are valuable knowledge. If a pattern xyz appears n times over 10 years and causes a reversal 60% of the time in my books that’s a trade opportunity.
I don not believe in patter trading.They are useless for me.I have tried several times but have been unsuccessful.
Good post, Something you need to learn is being able to identify deceivement…
What you see, and whats really happening can be 2 different things… When traders say" trade what you see", you have a 50/50 chance of being wrong. And just my personal feelings, you dont want those odds… But if your able to see thru the wool the MM are trying to cover your eyes with, you can maximize your chances of being right…
THIS, is why you need hours and hours of chart time… You either have a system, and redundently follows thru steps and checkdowns, or you trade by visual recognition of what is about to unfold in the near future, simply by following the jabbin flows of the price…
News is a whole nothing ball game…
Because they have enough money to move the exchange rates in their favor.And then if pro traders see an initiative for the contra move they join it quickly,by this causing a huge spike in the other direction,and usually retail traders are slow and not that pro they will miss it or/and not quit quick and lose cash.
You can have a RR of 1:100 if they have a 10-15% win rate…:56:
Yep I agree with you.
I try to think like a market maker but there isn’t much information… Can you share more on the wool cover details?
What I do think is that for every trade I buy the mm has to sell and will have to at some point make money, not always though, but make money from all these positions to the other side of the market. I see market accumulation taking place and can see when to expect the whipsaws.
Wish I knew more on this subject for sure.
I do believe that news, aside from major event earthquake or bomb etc, translates well to a higher timeframe. A daily or higher chart shows recovery or depreciation of currency just by drawing trend lines.
But hey, I still trade with news in mind and besides… it gives a reason to read FT and means I can sound 'cool’at when out with friends talking about GDP etc. haha
I presently am selling eur, buying gbp, -the actual currencies - not a notional contract, I’m delighted to see the 86.00 support that many exporters were patiently waiting for, that same level that I posted about when price was at 84.50 and we could see all sorts of pin bars etc telling us that price would fall (check out some of my earlier posts)
I export from UK to EZ - so think, why would I sell when eur/gbp rises?
The retail ‘broker’ is not a broker, he is a bookie, when you see all retail short on Aud the ‘broker’ will hedge - thus retail enters the market.
Check out Clint’s posts on the liquidity money chain.
Also check out the cots for non reports - some of which represents retail
Why the hell do you think I used casino references in my comparison?
I know the money chain.
Spare me the remedial condescension.
Again, retail RARELY if EVER registers on the radar of large money market makers, or large bank operations.
They don’t “help” liquidity, or at least not as often as you made it sound, nor do the big guys “run stops” to take out someone’s $0.01 pips.
The point of this entire thread was the importance of chart patterns. And most of the posts I’ve read here seem to think that they fail more often than not. It needs to be known that the failure of patterns aren’t aimed at screwing over retailers. It’s just the fact that they don’t matter in the grand scheme of things.
Simple enough.