Market Makers Strategy

Beginner Questions
1

I stumbled across A professional trader on youtube named Martin Cole. He has opened my eyes to the real world of FX, to understand “why” the market moves the way it does instead of just trading blind off of signals and the formations the chart portrays. He says that 95% of traders look at the shop window instead of through it. This is what most traders do, they use indicators and candle formations and well… most people lose. It says it all really…

He trades Forex without a strategy. He plays “off of the Market Makers own Strategy” He says they use a business system which is as follows.

  1. accumilation - these are the congestion boxes where Market Makers accumilate either buy orders or sell orders “covertly” so not to be seen doing so (which would break the whole operation). If they want to buy low and sell high they “important!!” MUST PLAY WITH OUR BELIEFS TO MAKE US BELIEVE PRICE WILL FALL"

What does this mean? It means all newbie traders and well, 95% of traders are using there indicators and tools and coming to the decision price will go down when infact the Market Makers move the market not us, and are 100% certain to make price rise!! They use us to oppose there trades. They need us to sell so they can buy…

  1. Manipulation - All the false breaks and whipsaws… this is merely the Market Maker finishing off there quota of buy/sell orders. They may have 90% and need another 10%. How do they get it? by pushing price to “important” WHERE TRADERS HAVE PUT THERE STOP LOSSES IN ORDER TO GAIN BULK BUY ORDERS and finish the quota. You see Market Makers have access to information we do not. To put it simply were all using the tools they want us to use so that they can trick us into placing trades, and they will use this to there advantage whenever they want to add to there accumilation by eating up our stop losses and add to their accumilation process… Think about it. When we place a sell order below a key support line… they know this. They eagle eye the bulk of buy stop losses above the support line and target this area to get buy orders from us.
    Why do we all get stopped out only to see price turn around 1 pip later and go on to what would have been a massive profit? exactly because of this, the Market Maker just took out our stops to add to their accumilation.

  2. Profit release - The break out, the trend. This is the “only” time the Market Makers invite us to join in. Why? well all the accumilated buy orders they took from owning us in the congestion box, buying low… they now need us to push prices up so they can sell back for profits. It’s supply and demand. When they oversell this is the retrace, not only this, they will happily play off the fear in traders and use our SL for accumilating mre buy orders before prices rise again. This process repeats until exaustion and then goes back into another accumilation phase to start all again. This is why we see zig zags formations. You see it’s not good enough to now that fibs work some times… you must understand why price is retracing!

Now I have surely misses out vital points here and probably not explained it very well. But now I actually understand why price moves the way it does.

So I will never look at Forex in the same way ever again. I will be plotting the likely areas where traders will place Stop losses and focusing my attention closely at these point because that area is likely where price is going.

The magic to this, is that you can get winners by default. Even the Market Makers have to show their hand eventually. This might be shown in the form of a false break. Why was there a fault break? they took out our stops and price is likely to go the other way to what we thought.

I’m explaining this **** but anyway… most traders lose and this is the reason why. If your tricked into the belief that price will fall but the Market Maker is only accumilating buy orders on the other end of your trade… your going to be trading the wrong way… lol

The trick is waiting for them to reveal their hand and then getting in the trade at the right time. Don’t be a victim of there manipulation.

Now… i’m not saying this is the Holy grail or anything of the sort. Infact I feel I understand what i’m looking at on the screen alot better but jesus… it doesnt help know when to enter and exit trades. To know when the Market Maker is actually going to go into stage 3 “profit release” is very difficult Im at the stage where im staring at the chart thinking “hmmm” but i think soon I would be able to read the mind of the big boys purely by looking for when they show their hand…

Some people say that Market Makers do not do any of this, that they do not manipulate the market. BS!!

It’s a business and they have a model. The Market is not too big to control in this way. The various Market makers communicate with each other and take us traders all for mugs… I truly beleive what Martin Cole has taught is true and very very helpful. Check him out. Buy his Ebook on Amazon for £6. Very worth it… I did. But don’t sign up to his course. Total ripp off…

I’m unsure how all this works with multiple time frames… by that I mean how this kind of manipulation business model creates fractals… I’m also unsure how it works with news. But that;s for another day.

Thanks

5 Likes
2

That’s not exactly news. :slight_smile:

Item 2) is what you call ‘stop hunting’, which is done mainly by large institutions, the real Market Makers; do not confuse them with the broker type ‘Market Maker’ (as oppesed to broker type ‘ECN’).

That’s why they are called ‘Market Makers’ … because they make (i.e. steer) the market.

So I will never look at Forex in the same way ever again. I will be plotting the likely areas where traders will place Stop losses and focusing my attention closely at these point because that area is likely where price is going.

Yep.

O.

3

Yes I guess its not exactly news but I reckon you make profits? Do most people make profits? nope and do most people understand this stuff? I think not.

Yes I refer to Large institutions not brokers. I’n not totally confident in all this yet but i’m on my way

thanks

4

Yeah, you’re right, and that’s one topic which the [I]BabyPips School[/I] only touches fleetingly in one of its chapters.

You’ve written a good post, which will make many people who have not realized this yet understand the markets better.

Cheers,
O.

5

Does not matter to me as long as I make money!!

1 Like
6

Every time you open and close a trade you lose the spread. This adds up to a significant value if you trade frequently. Not only this but market maker brokers are notorious for creating spikes, they do it in order to take out customer’s stops. Some market maker brokers also freeze their platform during news announcements or increase spreads by 20-30 pips which is quite common. Since Forex is not tightly regulated as other markets there is not much NFA or similar organizations can do.

1 Like
7

Indeed, as long as you dont making money in phase 3 only to give it back to the Market in stage 1 and 2… That’s what most people do.

8

Ahh, Epidot you have been enlightened, it is the ‘Holy Grail’ in a way, and you don’t need to buy the book, the very best information for trading this is right here on Babypips!!! :wink:

9

Most newcomers/traders don’t lose money for the reasons he described, they lose money because most of them are as thick as two short planks & have trouble seeing further than the nose on their face.

The first part is the funniest item in your post
The second part is very true, but they or anyone else doesn’t have to try very hard to achieve that aim.

So all these amazing inside revelations & awe inspiring market insights contained within the covers of his storybook are worthy of your £6.00, but his course material, which undoubtedly is based on those same revelations, isn’t worth the paper it’s written on?

If you actually conduct some proper research on these characters as opposed to stumbling across them & allowing them to use you as a garbage deposit, you’ll discover he’s pimping nothing more than regurgitated nonsense.

10

He may well be regurgitating information but to call it nonsence? It’s all relevant information which occurs in Forex and most traders don’t learn this. they jump into a system which is used by the masses and well 95% fail. What does that tell you? I see things more clearly now. Not just by reading his £6 book but all his videos and explanations… Keep that frame of mind going… won’t do you any good.

The reason said his course is a ripp off is only because its a monthly rental and very expensive. It includes a PAT system he created which i’ve looked into and can be done manually so therefor a rip off. you try to sound smart but sorry, your not. You make out everyone is a thick as a plank thats why they lose? really as simple as that huh? ok…

11

Yes I have been enlightened :slight_smile: but babypips doesn’t really touch on why the market moves… It’s talks about systems and methods only. Think Ollie mentioned that above.

Being enlightened doesn’t really help because i’m still looking at charts thinking “how can what i’ve learnt help me” and i’m not getting very far lol…

12

stop runner isn’t totally wrong.
Like I said in my first post, it isn’t exactly news … but that does not make the info any less valuable, especially to somebody who hadn’t known about it.

Making money from this sort of info (even if it’s only six pounds) isn’t exactly ethical though.
After all, it’s publicly available … just search the net a bit.
But then, so is the content of most ebooks.

Cheers,
O.

13

Interesting theory but to be honest if you look past the market makers and small traders . The guys how really move markets and other options are the commercials have really seen this in action
The last 3 weeks on fiber who’s been long all 3 weeks commercials all the way . Get on side with these guys as covered by larry Williams also if you look at inter market relationships you will see past all the noise I’m not saying stop hunts etc don’t happen I am just starting to get who is moving the markets. Larry Williams covers it very well in his book cot reports .
Although he has suggested that even now the dynamics stated in this book have changed since he wrote it .

14

That’s right, most traders don’t learn it & even if they did most of them wouldn’t know what to do with it anyway.

Market makers or whatever you’re attempting to describe these entities as, don’t need to lay such elaborate traps or even be half as clever as this guy or you think they are.
The majority of amateur stock & forex market traders do a brilliant enough job of consistently f*cking things up all on their own.

You’re demonstrating exactly the type of behavior that stop runner described in one of his comments.
You haven’t properly read or digested what he said at all have you.
He didn’t say [U]everyone[/U] is as thick as two short planks at all.
What he actually said was [U][B]most[/B][/U] newcomers/traders are as thick as two short planks & can’t see further than their nose.

And browsing this & other similar forums reading some of the absolute junk that masquerades as acceptable trading information, I certainly wouldn’t disagree with that view.

15

It is undeniable that you could find this information elsewhere for free, but if epidot found value in spending £6 on an ebook, then fine, that’s all that matters (to him).

Unless you work in the ivory towers of the institutional investors (banks, large commercials), you’re not going to be party to half of what passes in their attempts to part you (us) from your (our) money.

I agree with Oliver, the more you know about the people who are manipulating [I]your[/I] market, the better off you will be, and more importantly, hopefully, more successful.

I don’t think epidot meant literally ‘[I]everyone[/I]’ in his post. It’s a little uncharitable to criticise him for nothing less than a genuine attempt to disseminate potentially valuable information that most new traders will not have been aware of. While ever mindful of the need to make a point, perhaps a slightly more generous view of the OP and a little encouragement would be more appropriate, after all, regardless of experience, we’re all here to try to become better traders?

That may be so, but there are a disproportionate number of those at the sharp end of these institutions that have maths PhD’s.

I believe (although I can’t remember where I read it), Kathy Lien & Boris Schlossberg have devised a trading strategy precisely to take advantage of this situation. Worth a look if you’re struggling with it!

Good luck

16

Help us know how to do it manually mate. i see money popping all around my openings.

17

Try this for a start - Market Profile

18

Hello Epidot,

You bring up some good points, and I do actually teach why the market moves the way it does, how to read the order flow behind these markets, how to determine accumulation buying, as that is the point of reading price action - to understand the institutional order flow behind it.

This can be learned with training and practice.

Although I think the things discussed in here only cover some of the behaviors of market makers, and how institutional order flow plays out.

But feel free to check out my thread on Forex Price Action and how to read the order flow behind it as I share this and some of my personal trades as well.

Kind Regards,
Chris

19

Looks to me like Richard Wyckoff phases.

1 Like
20

Yep you’re not wrong there, kind of the same as Elliot Waves, Accumulation/Distribution, it’s all the same thing, but ICT’s way of illustrating it, is clearer as well as being more flexible, and much more up to date.