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- Joined Feb 2017 | Status: Member | 312 Posts | Online Now
Quoting pkimnyc
{quote} ??? dude. i'm not a fortune teller. have no clue how deep it will dip down, if any. i will pickup what i can, if any setups presents combine with news is how i trade. i look at where they bought and sold. works way better than fibs, but that's just me. /r
The reason behind this is institutional trading.
Fibonacci patterns are very precise. Many retail traders use these patterns. In technical anaysis of Stocks markets, Mr. Gartleys book is one of the first books you will read. And many traders apply these patterns to the Forex markets. The patterns themselfes are very accurate, but peoples Stops are not.
So, if I am a large institutional trader with the ability to move the market with really large orders, then for sure I have my technical analysts measure and line out the exact same patterns. The numbers are the same, the analysis is the same, the resulting patterns are the same.
So now as an institutional trader I know where retailers orders are, and I know where they put their Stops for these orders. The pattern is there, there orders are at this level, most Stops are at this level. That's not rocketscience, that's not even "high math" or being smart. That's "I draw the fibs and see what you see".
All I need to do now as an institutional "big player" with the capability to move the market is: wait for the pattern to fill.
Now this happens:
- Pattern got filled
- Market begins to dip because Sell orders got filled (in this case we assume it's a bearish pattern)
- I (institutional trader) push large Buy orders into the market now, so large in size and volume that the market actualy turns around and pulls up again
- People panic and close their Shorts. Less Sell preasure, market moves up more.
- Stops get killed, Short orders fall out of the market, market pulls up more.
- Now I close my Buy orders
- Market drops
- Retailers go apeshit on the forums because "got stopped by one pip again"
- Institutional trader orders prostitutes and new car
And that is what happens.
And it's not even "unfair" or shit like that. It's commons sense.
He who has the money to make the price, wins. There is only one thing the big guys don't do: lose.
But "oh, Fibs don't work"... eh?
Of course they work. Your Stops and Orders don't work because you refuse to be smart and keep trading "the lines/patterns" instead of the market.
And that's the truth.
PS: I am not an institutional trader, this was just an example of reality.
Seriously you see it every day all day.
(same truth for Pivots. use them, but not for your Stops)
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