Market Makers remember do you ?

I received a mail this morning from a user who is clearly getting caught up in bar watching. Every bar MUST mean something!! It’s nonsense of course but this has been going on for months now. Not only that this trader believes that he MUST be able to understand and win on EVERY move. He believes he should be able to read every single twist and turn and should make money every day in every way. Anything less than this is failure in his eyes.
The stock phrase is

If I just knew this or understood that, THEN I would really get it

It’s very sad because this trader can succeed in this business in a big way if only he would ACCEPT that he will never achieve the level he believes he should. We are all going to fall victim to the market makers business model THIS IS WHAT IT IS DESIGNED TO DO, it is as they say…

An occupational hazard

I decided to draw circles all over the chart to make it as messy as I could. Now our trader friend would (and likely will) demand an explanation for EVERY circle and every resulting move. So can I make myself understood by showing so many circles?
Well let’s have a go.

In the example here I have highlighted just one circle. I guarantee I will get a mail from our trader friend saying

Why that one?

You think I am kidding? I am not.

I would like him to understand that there will ALWAYS be many circles, always many market twists and turns that we can NEVER understand and trade.
What we can do is filter out information to gain the knowledge that says….Probably the market is going to react from here in this way. The way to do this is to see how this market reaction (any market reaction) fits INTO THE MARKET MAKERS BUSINESS MODEL. We do this by looking at the model in closer detail.

Lets have a look at this in the 15 min chart.

Ah! so it’s about looking in a smaller time frame to break down the longer time frame?

NO!!

It’s about looking at a move RELATIVE to the market makers business model. If we look at the chart this way (remember CONTENT and NOT form) suddenly the stop take makes SENSE, the stop take is at the END of the profit release phase that PAT software has marked up for you.

Now the accumulation area makes sense, now the COMPLETE move makes sense.

Now I am going to pre-empt our trader friends next mail. You think I can’t? I tell you I can..

Ok that is all well and good but what about the up move from the accumulation area? I missed that.

Open up your own PAT charts on the same day (17th) from this chart we can clearly see that from the accumulation that PAT has highlighted for you, there has been an up move. What we need to know is….Is that up move going to continue?

What DO WE KNOW?

We know in almost all cases that no move goes in one direction without at least some retrace.

We know that from 7:45 to 8:30 the market did indeed retrace down against the break direction of up. NONE of this is speculation, it’s all observable FACT.

At 8:45 we can know that belief bar in PAT has jumped up, again observable fact.

NOW we need to speculate. Is the market likely to continue up to the profit release at 1.2805 or is this going to fade to the upside and turn down? MMMMM….

Make sure you have sync cursors switched on your 15 and 60 min charts. Tile them up side by side. Click on the 8:30 bar on the 15 min (the lowest bar of the FACT retrace) look to where you cursor is on the 60 min and what do you see? Is there a historic area that shows why the market turned upwards from here?
In this case where the 60 min line falls it does not reveal very much, we need to investigate further. The low price in the 8:30 bar is 1.2739 so snap a line on that price on the 60 MIN CHART. Scroll back to see what you can find. I see the 11th and the 12th as being significant. On the 12th the market makers showed clear intent and powered the market up. Now also the 8:30 bar make sense as it tests back into the accumulation box that pat has drawn in for you.

Now the FADING to the downside makes sense as well.

This has to be a buy speculation and you can now buy and place a stop under that 8:30 bar giving you TINY risk for about a 50pips win.

I have of course drawn out the complete process into a long explanation, but you can do all that in seconds in PAT and be in on this very low risk trade.

Just to finish off, now place a line on the top of the 10:15 bar and duplicate that line on the 60 min and look back……NOW that makes sense right….now you can see WHY that downturn happened at that point.
Then later the STOP TAKE takes place and you KNOW the outcome because you know WHY the stop take.

This is reading CONTENT