I have looked for a detailed description of this in the forum and have not found it. If someone
is aware of a thread that covers this, please let me know. This will not be news to experienced traders buit I have seen some frustration here in the forum and it is clear that not everyone knows about this.
Let's get right down to the point. Market makers (the companies you have your money with
in real accounts) are out to take your money as their own. There is an old saying about 90/90/90. 90% of small retail traders lose 90% of their money
within 90 days. So true. And it's not an accident. You will soon see why. The recent FXCM flap is a perfect example of this, however, FXCM is not the only guitly party here. That is just the tip of the iceberg. Have you every wondered why it's so hard to make money with forex? Why you get stopped
out so much? Why your position goes against you sometimes as soon as you open it? Why you are in profit and then suddenly reversed and stopped out? Frustrating isn't it? It is not an accident and there is a whole game that is played by the market makers and the banks (big money) to take your money from you. You need to know this! Market makers get your money 4 ways:
1. Commissions on each trade. The more you trade, the more they make.
2. Spreads. Again, the more you trade, the more they make.
3. They often take the opposite side of your trades and when you lose, they get your money.
4. Interest rates on overnight trades.
MANIPULATION
Most experienced traders know the markets are manipulated on a daily basis. I was shocked to learn this but dozens of articles and You-Tube videos later I GOT IT. I actually used to think that the market makers (like FXCM and so Oanda and so on) were my friends because I was their client! Wow, how naive!
There are very specific patterns used by marlet makers. Call it the Market Makers Strategy.
1. There is a period of ACCUMULATION (often called consolidation) where the market makers
and others are accumulating LONG and SHORT positiions. You will see this every day at the end
of each day (before midnight GMT) carrying through usually the beginning of the next day (after
midnight GMT). There are other such accumulation periods during each day just before a major
move (or before a fake out intended to get people to take a posibtion in the wrong direction away
from their intended major trend).
2. Then the market makers create a small movement in the markets, up and down 15-25 pips which makes us think that the trend has started when it hasn’t. Its a teaser that goes down and up or up and down and we wonder which way IS the trend going to go? This creation of uncertainty is intentonal and is designed to get us into Buy and Sell positions that quickly rebverse and get stopped out to their benefit and our loss.
IF YOU HAVE EVER WONDERED WHY THE MARKET GOES AGAINST YOU JUST WHEN YOU OPENED A POSITION, THIS IS OFTEN WHY.
3. Then the swing of the market is INCREASES, which is a stop loss hunting expedition by the market makers to take out the stop losses that you have been so carefully TAUGHT to put just above and below Support and Resitance points. They COUNT ON these stops being put in those places and they go gunning for them! They trigger these stops for 2 reasons: a. To take your money on your losing trades (remember, they are on the opposite sides of your trades) and
b. To activate your SELL STOPS or BUY STOPS to reinforce the direction they want the market to go.
4. This all takes place over a number of hours and leads up to the main game – the major move of
the day, whether up or down. How do they decide which way this move will go? If most traders are
LONG, the major trend will be sent DOWN to make the majority lose so they can win and vice versa.
And, IMPORTANT, just to be nice about it, they send the market a little in the OPPOSITE DIRECTION
just before the major trend starts, again to confuse us and get us to take positions in THAT wrong
direction! When you have a position in profit and then suddenly your profits disappear, this is often
why.
5. And finally, as if the above wasn't enough, at the end of each day they send the market into another
ACCUMULATION PHASE, just before midnight GMT, which traps traders into holding positions overnight
(or closing them at a loss or minimal profit). This way they can charge you an interest fee on your
overnight positions.
THAT'S IT! And the same process is done the next day, and the next and the next!
One day they take the market high (big trend rises) so they can sell the next (big drops). Then, with the
market LOW the day after, THEY BUY (big rise). This is the banks and the market makers making money
day after day and tricking us all the way into taking the wrong side of the trade. WELL, NOW YOU KNOW.
If you ever thought your market maker was your friend or wanted to help you make money, think again!
Look up MARKET MAKER STRATEGY on You Tube and watch some of the videos (there are plenty)
and you will get more details and specifics as to how and when they do this.
If you think this is dishonest or evil, I AGREE.
But knowing this is VITAL for our maturity as traders and to blow any naivity out of the water. The markets
are a massive chess game and you have to know who your opponents are!
Learn as much as you can about this and incorporate it into your trading and you will be more
successful.
I would appreciate any comments or experience with this or any details or aspects I may not have touched
on above. I feel this is important enough to make widely known. Before a few weeks ago I had NO IDEA THIS
WAS GOING ON.
Good luck to all of us!
