Hi, I have been seeing alot of adverts recently from ex traders / companies suggesting that the traditional charts and methods which are usually taught are “useless” and not used in reality by big players. Instead they suggest to use other methods and things like order books.
I guess they are all out to sell something (training and so on) but was interested in knowing what people’s thoughts were on this??
I wouldn’t disagree. The big players start the trends and then they follow them.
But order books? For private retail forex traders? Is that their best and serious suggestion?
Do you mean order blocks?
Lots of interest in order blocks and smart money concepts recently on YT anyway. ICT is the guy putting a name of a lot of this but he wasn’t the first.
Different traders use different methods. That’s what makes a market.
If some folks think certain methods are useless, that’s coming from their personal experience, but it may not be the same for somebody else.
What you should question is the claim that one knows how the “big players” or “banks” trade since it implies that all “big players” trade the same.
A common explanation of “order blocks” are candlesticks that denote the presence of banks breaking up a large order into smaller orders to minimize the market impact (volatility) and suffer from slippage.
But this assumes banks are actually trading…but bulge bracket banks don’t have prop trading desks anymore, they handle customer order flow, acting as liquidity access providers (if they can’t internalize or offset customers with opposing orders).
Also, major banks and financial institutions use trading execution algorithms. Popular examples are Time Weighted Average Price (TWAP), Volume Weighted Average Price (VWAP), and Percent of Value (PoV). along with their own proprietary flavors.
These algos use predictive analytics to recognize and take advantage of patterns that are imperceptible (or computationally impossible) to human traders.
So technically, if you want to trade like “big boys”, you wouldn’t be a “screen trader” looking at a chart and analyzing price action. You wouldn’t even need a screen since you’d be connecting to your broker via an API with your trades being executed by an algo(s).