The Market Makers know what the indicators on the charts will be telling traders and, more importantly, how traders are likely to respond based on the free training provided by the brokers. For them to make money, they have to convince you to sell to them or buy from them. If they want to buy, then they have to convince you to sell.
They do that by creating a belief about what the price will do and a little manipulation of the charts. They will often hold prices within a narrow range for an extended period to accumulate as much as possible. They will often create a false breakout or create flags or ascending wedges, triangles or pennants, a head and shoulders pattern or whatever you want to call the patterns they create on the chart. The Market Makers take the other side of every single pip of movement so that they can accumulate all they can in preparation for what is coming later.
As part of the model, one of their goals is to trap traders with losses at certain crucial times and then to squeeze them and create losses. They will then look to take back what they bought or what they sold but at a very profitable price. They can hit the stop losses and clear the pending orders. This is often in the form of a spring or stop hunt.
In effect, they clear all the pending orders and get you into trades or get you out of trades by hitting your stop losses.
Who is a Market Maker?
They know exactly where the stop losses are. They know exactly how much money is needed to blow up a traders account and force a margin call.
They can see everything about a traders account. They accumulate, they manipulate, they work orders, they mark prices up, and they mark prices down, and then they release it as part of a profit release phase. Note they cannot repeat it the same every single time because it would be much to clear for you to identify their intentions. They accumulate to sell at higher prices, or they accumulate to buy at lower prices.
That, in essence, is what drives the success of the Market Makers business model. This is followed by the accumulation phase and the setting up of an initial high and an initial low. You will see this phase in the Asian session, and you will see the price held in a narrow range of pips. The accumulation phase is then often followed by a spring or stop hunt , which is a move against the real intentions of the Market Makers. The Market Makers then initiate the actual planned market move which results in the formation of a trend that can be slow and steady, or it could be swift and furious.
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Viewed on the chart, the trend will be seen as a series of drives or pushes in the direction that the Market Makers want to move the price. The price will attempt to pull back toward the mid-range and into a slow, choppy consolidation phase.
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When looking for trading opportunities, you need to identify, at any given moment in time, where the price is on the Market Maker Cycle. The Market Maker Cycle outlined above is, in part, based on our experience of trading the market and, in part, based on our interpretation and adaptation of the Wyckoff trading method.
Trap moves are price moves that, at different points throughout the week, throughout the day and the session, are made by the Market Makers to trap traders into a sell position or trap traders into a buy position. These trap moves induce you to take a position and, as soon as you take a position, it goes against you. They typically happen at the beginning of the week, so usually Sunday night into the Monday open to create either the high or the low for the week.
They can happen at the beginning of the day, they can happen at the beginning of the session, at the end of the session, at the beginning and end of the day and the beginning and end of the week. You will see price pull back at around 8 pm as they attempt to pull price right back into the mid-range. The Market Makers want you trapped in a position over the weekend. It provides them with the opportunity to gap the market. They look at all the different stops, look at all the different positions and if they can gap the market against the open positions and close the positions at the worst possible time for the traders and take your money , they will.
If the adverts for the Forex market are to be believed, the Forex market trades 24 hours a day, and you can jump in anytime. Liquidity is available at all times, and you can trade what you want when you want. While you can place an order at any time, there are times when liquidity is virtually non-existent and, more specifically, times when the Market Makers are inactive. You want to trade with the Market Makers and, therefore, you need to know when they are active and when they are inactive. The London session is 8. Normally the New York session starts at 2. Typically referred to from the New York perspective as the end of the day session, it is effectively a gap time.
The market is effectively closed, and there is little if no liquidity. There is little price movement in this period as the Market Makers in the Asian and London session are talking to each other. They discuss what needs to happen in the London session to get the price to where they want it to be. Between 2 pm and 2. While not strictly a gap time, the period between 5 pm and 7 pm is a period of limited Market Maker activity.
You need to understand the Market Makers business model, what the market makers are going to do, or more likely to do.
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Home Dojo Journal Contact. Kumite Market Makers. You win by joining them. Time to earn the black trading belt. The primary aim of their adverts is to attract your interest and attention. Understanding that will help to manage your expectations. The discipline and patience to wait for the right signal and not be a gambler. To trade the right way requires a sound understanding of how the market works.
Forget All You Know. Now, why is that? They have a massive incentive to make the quant work. Do you think all those indicators that the broker gives you for free are going help you? The market is the business of the market makers. The Market Makers know all the available indicators. They know the trading systems that you find on broker websites. The Market Makers know where your stop losses are. The market is the business of the Market Makers.
Anton Kreil. Market Makers. In addition, they trade derivatives, bonds, Treasury notes and stocks. The Market Makers rig it. Market Makers control the market. So how can you win in a market that is controlled by the Market Makers? To do that you have to understand their game and you have to understand their goals. Market Maker Aims And Goals. Market makers analyse the market vertically. They have a so-called order book just like the one in the picture below , where all our Take Profits, Stop Losses and pending orders are displayed.
While the Moving Average indicator signals Short, see the chart on the left, the cluster of Stop orders above the current price is clearly visible in the order book on the right. Market maker is interested in such clusters, and, as we can see, the price responds accordingly. As we've mentioned before, market maker can't simply reverse the price.
MARKET MAKERS
However, they can push it to the required level, move it towards the cluster of Stop Losses, or help form a pattern and "launch" it, if this is their goal, of course. In other words, a market maker acts against the market crowd, but on the other hand, they need another part of the crowd to push the price in the right direction. Here's a picture to illustrate this:. Let's assume that a market maker wants to buy a currency and, of course, they want to do this at the best possible price.
The left side of the picture above shows a pretty good cluster of Sell orders, which are our Stop Losses in this case as well. This volume of Sell orders will be sufficient to satisfy the demand of a market maker. On the other hand, we can see a cluster of buyers — they will be used as a safety cushion to prevent the price from breaking out further. All that is left for the market maker to do is to push the price towards the cluster by placing small orders, gather all sellers in one place, and Limit orders are going to act as a support restraining any further price movement.
By the way, we use pictures showing the Order Book in our examples, but this is not exactly the order book that market makers have. However, this is a small part that is available to ordinary traders and is well-suited for the examples provided in this article. If you are unfamiliar with the concept of the order book, read this article "How to Trade Order Book".
So, all we got in response to our request to share knowledge was a phrase:. You just need to think a little and recall the high school math course. They know better than we do how the price will behave and how to make money why wouldn't they if they are the ones pushing the price. What do we need for it? We need to act against the market crowd since this is their market makers' primary strategy, otherwise they would simply not make any money.
The second obvious thing : you should finally realise that indicators are a dead-end. The only useful indicators are informative ones, for example, round-levels , trading sessions or news indicator.