As Market Makers target stops, I want to note areas on the chart where they might push price so they can eat our stops up. However i’m wondering just how I would go about doing this because of the multiple time frames.
Traders can risk the same amount of money on any time frame so essentially Market Makers will be trading all time frames and target absolutely any stops on any time frame they like… Does’t this make noting SL placements totally useless? I would end up with lots of SL areas and everything would become a blur…
Any advise on how utilising the knowledge of where SL placements are would be appreciated.
I know i’ve been making a few odd threads like this one. Most people loss in FX and most threads are generic anseen again and again. I feel I need a different approach and things like this need to be understood. Afterall. Forex is NOT our business. It’s the Market Makers, they have a business model which is repeatable in order to make profits. We all know they release profits against the direction we trade. So I know I need to be able to follow or try to predict the MM moves… otherwise well, i’m just another pawn in their game and will fail.
Who is actually hunting our SL? Is it just the broker who increases the spread at a time price is nearing our SL or is it the actual banks who literally throw money into the market to push price in the direction of our SL? Or both?
I think if you check out InnerCircleTrader’s thread on this very forum (the one with 9000+ replies) you will really be able to build on these theories you have…
I’ll answer your question though… it is the actual banks that throw their money in to push price. It isn’t exactly with “malicious” intent… they NEED the liquidity to pair orders. There HAS to be someone to take the other side of the contract. If the banks want to build a Long position… an obvious sell stop camp (likely below a swing low) is an excellent place to find willing sellers for their bids.
The broker… they want volume. They want you in new trades, and they want you out of old trades… because more transactions means more spread profits. If you are an uninformed trader… and you are consistently placing your stops in vulnerable areas… you are offering yourself as both profit for brokers and LIQUIDITY for banks.
I’m impressed that you connected the dots between stop losses and market makers
If you aren’t profitable yet… I imagine you will be soon
Trade when the price is moving away from a peak, i.e. after the stops have been taken out, it can be futile to try and work out where these areas are, so wait until an area has established then trade when the price moves away.
For one thing your own personal stop loss won’t be hunted by anyone because your order doesn’t even hit the actual market, well certainly not in the way you think it does.
If you’re trading through a typical retail broker then your trade is warehoused inside the brokers platform & generally netted off against another customer playing the opposite direction. It never sees the light of day on the interbank.
Your broker will send blocks of orders to the interbank to offset his overall risk, but you don’t need to worry about being hunted by anyone, let alone a market maker.
Stops are targeted in the wholesale market by banks as the volume of orders begin stacking up at specific levels on the ladder, however the only person you need to worry about when placing your stop loss order at your brokers is someone else on his internal book waiting with an opposite order to take your cross match.
You’re simply betting against your competitor at the broker shop.
There are 2 way stops from the large market operators residing at most swing zones on a currency pair, because they will represent specific objectives for those groups of traders. One traders exit stop loss order is another one’s entry ticket.
The thing that establishes a zone or level as significant is the bulk or strength of orders waiting from the winning side.
For example, when a pair is running a strong bullish directional bias, each pullback or correction wave will attract stops. But those stops will usually be 2 way, because they’ll house buy limit & sell entry.
The bull stop side will be perhaps be looking to add to a core long position, taking advantage of profit takers. There will also be new entrants at these common levels seeking a seat by trading with the directional bias via a pullback playing the high probability card.
The bear stop side will be probing for possible extended profit taking & the chance of a deeper, more lengthy sell off.
They will have very different objectives & differing strategy plays & those objectives will affect & impact the behavior & strength of a move away from that swing level.
Open up your EURUSD chart & look at last weeks action to give you visual example of that scenario.
You should be able to identify a clear support zone around the 1.3025 area. That zone has been touted for well over a month as a probable stop conflict zone.
Those are the type of levels that will attract the heavier & more significant each way stop activity due to the importance & heightened relevance of the 2 different camps. If you’re patient enough to wait for the psychology to reveal itself via the price action bars on your hourly charts, you’ll clearly see which camp is winning the mini battle, at least from the 1st time of asking.
You don’t need to anticipate or front run a level such as that, merely wait for the dominant side to exert their influence & pick an entry up via a pullback into the direction of the stronger flows. No worrying about market makers or brokers presumably hunting your stops.
Next batch of stops leading on from your example will be setting up below at 1.3090 on the round number which will be light intraday profit stops from the leveraged community… Heavier stops will be tiered from 1.2950 to 1.2875
To the long side, buy stops will be light above the 1.32 round number with more beyond 1.3220 loking for a run to last weeks & the previous weeks highs at the 1.3290-3320 zone.
Most of it is common sense & doesn’t need any scientific, complicated explanation.
I suggest following the comments posted by the guys over on the Forex News | Currency News by ForexLive site. Follow their up-dates and running commentary for a few weeks and you’ll start to get a sense of how the big players (not just evil market-makers) layer their orders up and down the price range. They also comment on option barriers giving some insight into the price action around the big numbers. Great “play by play” insights on the trading day and the action of some of the big players.
