How Banks Manipulate Retail Forex Traders – Day Trading Strategy

hello everyone it is sterling here from day trading Forex live it’s February 26 2014 and today we’re going to talk about a very interesting subject and that is manipulation of the market manipulation of the retail trader in and around economic data, so what we’re going to discuss is really the foundation of this market it’s important to understand that only five banks control 58 percent of the daily volume in this market that’s a number that is not something I pulled out of a hat you can go to Wikipedia look up that number that is the latest bis numbers and with the Bank of International Settlements that is a number that is updated fairly frequently doesn’t change much the bottom line is a very small group controls a very large percentage, if you were to ask yourself think of any stock, if you knew the trader that controlled it that controlled 58 percent of the daily volume of that stock and you were able to buy when he was buying or selling he was selling would you benefit from that information the obvious answer is yes now conversely would it be a major deficit, if you were buying when he was selling, and, if you were selling when he was buying well obviously again the answer to that is yes, so wouldn’t it make sense that, if you could track the person or the institution controlling 58% of the forex market wouldn’t the same logic apply to that again the obvious conclusion that we’re drawn to is yes now the trouble there is how do you do it and at the end of the day us is retail traders we do have our limitations we will only have access to certain information, but what we do know is that, if you controlled the majority of the market you would struggle to find buying pressure when you want to sell and you would struggle to find selling pressure when you want to buy, because, if you’re just buying into a market that’s flat you’re going to begin to create a rising market that is going to allow you tore that is going to mean you’re getting a worse and worse entry the further that market rises, so what smart money often does is they sell into a excuse me they sell into an already rising market, so the market is rising that is a perfect time to be selling into that buying pressure or vice versa they buy into a falling market they’re buying into the opposite side and by the very nature of what they do it puts them at it puts the retail trader almost always at exact odds with smart money and that should illustrate why the retail trader has such a dismal rate of return on their money or percentage of traders that actually create a profit, so today we’re going to talk about how you can get on the side of smart money how you can begin to track what they’re doing in in and around news specifically and we’re going to use some real-life examples, so we’ll start with last week Friday the 21st and I’m not going to get into how they you know they know the news prior to it coming out that’s a whole another subject I’m just going to talk strictly about what’s occurring at this time basically we had UK retail sales coming out UK retail sales right here on this candle comes out and it is coming out worse than expected point 6 worse than expected retail sales is a big market mover probably one of the top five market movers as far as economic data is concerned and it’s been consistent for years I remember spike trading at retail sales UK retail sales seven eight years ago it is a very consistent indicators, but a big mover forever, so with that being said, if you see retail sales coming out and it’s a negative piece of data obviously you have the rest of the market that’s piling on selling into that that weak data expecting to see the market falling, if you look at the pound in this scenario I’ll really zoom out here about right here is where I was talking about it was breaking this previous low remember that as this came out it was breaking the last previous low almost looked like it was creating a breakout to the downside and that’s the key this 6630 level was a predetermined level this is a level that I chose in the daily market review right around midnight Eastern, so I chose it about four and a half hours prior to the start of the session again, if you want to know how I pick manipulation points there’s a lot of information on the site for that as well you can you can check that out, but the bottom line here is the minute the news was used to create the false break, so the news that low liquidity time was used to induce the selling pressure create a false break which is what we term is a stop run or manipulation it was used to push the price into an area of liquidity as you push through a low you’re going to induce further selling pressure that’s why it was a pre-selected manipulation point as they induce the selling pressure what does that allow smart money to do it allows them to buy into the selling pressure and get a great price it allows them to enter a desired position without it allows them essentially the liquidity to enter that desired position after the desired position is entered the price snaps back pushes back to the upside a good illustration of smart money using economic data to create a false break – in this case buy into the selling pressure well maybe that was a coincidence let’s go ahead and move forward and we’ll go to let’s today let’s go to the 24th there’s a very next trading day Monday Monday what did we have coming out will you go back you look we have German Ifo business climate now German Ifo came out better than expected again this is one of our predetermined levels 37 62 I chose it right around this time right here which is midnight 1:00 a.m. Eastern, so I’m choosing it four or five hours in advance or 3-4 hours in advance trading day starts 2 o’clock, so the review always comes out prior to trading beginning why did I select it well very simply previous major turning point the market always going to accumulate orders and around that level what is the second part to this well the second part to this is that it was positive data it’s going to drive the euro up and that’s exactly what happened this euro spikes to the upside in the direction of positive data, but, if smart money is using that what are they going to do they’re going to snap it right back and that’s the first indication that smart money took the price into a predetermined emission point they waited for the news all the suckers bought into the positive data and who is the one selling to them well smart money was more than happy to sell into them, because they knew what they were going to do next they knew what they were going to snap the price back create a falling market, so they wait for this time where the rest of the market is going to be buying into that market expecting a rising market and the positive data they sell into all the buying pressure later we had a confirming entry set up right here this was a picture really a picturesque type trade did everything we wanted and entry was taken out a pullback a lot of information on picking manipulation points and the confirming entry on the site, if you want to check that out further, because we don’t have specific time or we don’t have time to specifically cover all those here today otherwise it’d be a 30 minute video Oh anyways again the positive data was used to create the false break of a predetermined manipulation point and that is done in an effort to create buying pressure, because they have to find buying pressure, if they want to sell into that market, if you control a massive chunk of the market you have to find the other side news is a great time to do that again maybe a coincidence maybe a you know just a random thing that occurred well let’s go to the very next day we go into the pound let’s go to the 25th here and what do we have well again we have a predetermined manipulation point one spot 6779 it right back around here again around midnight 1:00 a.m. it will go back why did I choose it well previous major turning point always going to be a level that accumulates orders pretty straightforward, so what do we see happen well news today consumer confidence on Tuesday this is again the 25th of February 2014 what do they do on negative dollar data well negative dollar data should do what it should drive the pound dollar up people would be buying pounds selling dollars which would drive the pound up that’s exactly what happened short term this candle right here was when the news comes out the market spikes up initially in the direction it should again negative dollar data should spike the pound up the pounding spikes up past that manipulation point creating the false break inducing all that buying pressure and lo and behold what a smart money do they begin to sell into that buying pressure the market snaps back and drives to the downside now this is something that’s occurring three days in a row that’s usually the catalyst of a lot of videos I do it’s something occurring recently in the market now is this a random three day period that is really rare doesn’t occur well the bottom line is news that can move the market doesn’t occur every day you know, so that’s one of the limiting forces, but this is really just an illustration of a standard setup manipulation around these high probability points is something we look for every single day it’s something that occurs every single day it just, so happens that when it occurs with news and when that news is the actual catalyst for the false break of our pre again our predetermined levels I’m not saying I select these levels when it occurs these levels are written down for two hours before the session begins and we have a track record of these of these levels predetermined and, so it’s a simple matter of waiting for the market to get into those levels and either confirm the trade give us an entry or do what the confirming entry does really well which is keep you out of a bad trade that’s one of the strong suits of the confirming entry not just to get you into trades, but to keep you out of bad ones, so when it creates that manipulation around those points and news was the catalyst for that stop run we have more confidence in the reversal and it produces a very high risk reward scenario doesn’t mean we’re going to win every trade, but again it produces that high risk reward scenario that’s exactly what happened here really nice stop are those levels again the news being the catalyst for creating the stop run and a nice set up overall for tracking what Smart Money is doing at the end of the day there’s two types of traders there there’s the type of trader that understands smart money is doing and there’s a type of trader that doesn’t understand what smart money is doing, but we know is that five banks control 58% of the volume, so just like the example in the beginning, if you knew the trader that controlled 58 percent of a stock it’s going to be a huge advantage, so is true in the forex market, if you know what smart money is doing you have a major advantage on the flip side, if you don’t know what smart money is doing you are going to survey or you’re going to serve essentially as the manipulation fuel for them to either buy into your selling pressure or sell into your buying pressure obviously in one individual trader really doesn’t matter it’s the accumulative hole that is really the focus and, so the power and identifying what smart money is doing is really critical, because it’s indisputable they are the controlling force of this market that’s naughty that’s not really a disputable fact the numbers support that and at the end of the day numbers don’t lie, so we as traders have a choice we can either understand what the indisputable controlling force in this market does or we can continue to believe that some magic indicator is going to give us an indication of future market direction and, so our belief is that at the end of the day nothing matters, but smart money that’s the entire focus of day trading Forex live, if you want to learn more about that feel free to check out the site day trading Forex or shoot us an e-mail at day trading Forex live at we will be happy to get back with you I look forward to seeing you guys next time and until, then happy trading.

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