I see the same behaviour in different markets over and over again in CL, NQ, Dax Futures. 1.The market stops exactly on the last High/Low. How is it possible ? Do a larger player calculate (algo ) from the order book how many contracts he needs to move the market until it stops on the last high/low ? 2. Often we see that it moves one tick avobe and below and reverse immediately (Fake out) So he uses the liquidity of the stop orders above or below the high/low in order to reverse the market ? 3. After this fake out we see often that the market moves to the level of the stop orders of the trapped traders than it reverse and moves in the initial direction from point 1. Does anybody know if one big player can play this game (manipulate) with his algos in such a way or is this behaviour a result from the simple supply and demand mechanics and that´s why we can see them in different markets ?
Market on close orders in the equities that the future’s track can cause this. Does it have to be manipulation ?
No one can give you definitive answer. My guess it is both ... Sometimes manipulated but sometimes natural based on collective market participants' psychology. To me, this IS the power of TA, not the squiggly lines on your chart, but collective psychology at work. Everyone is seeing more or less same thing ... The decision one needs to make is whether to join or to fade. Easy
There are times of the day I have open orders at H/Ls for scalps, when time expires, so do the orders. At least 50% of my signals are based on where newer traders going to get screwed, certain systems they used from some older books or some new book I will learn where the entries are and more importantly where their protective stops will be. Why I don't usually do breakouts, risk expands. Who cares of lost opportunities cause of breakouts as I am only concerned with drawdowns and risk.
@Handle123: of course you can create a strategy from this pattern but my initial question is still open: can some one calculate how many lots he needs to trade in a certain moment in order to move the market until a certain point. I´m always impressed that the market stops exactly on the last high or low.
I always thought that Futures markets have more sophisticated participants compared to equities. I guess that's not the case anymore as technology leveled the playing field.
Prior swing highs/lows are magnets for the markets to probe for orders - if you see this during the regular session chance are its natural market behavior. On individual stocks you can have the lunch hour stop gunning, usually its a market maker maker loading up on inventory. If it happens after hours than chances are that it may be a larger operator gunning stops. The giveaway is you typically first see a big volatile spike in the opposite direction immediately before the operator marches the market to the desired level. Keep in mind many pro traders enter their positions in the areas where the herd is shaken out - like major support or resistance breaks which includes moving averages. Even if one operator gamed the market briefly, there are a lot of informed traders taking advantage of it. The biggest game of all - the market
With retail traders most that are trading futures are far from sophisticated, seems like most are in futures because they don't have enough to trade stocks and look only at the upside with futures - big leverage/pure greed. With derivatives you have a few winners and a lot of losers. I think just about everyone on the Forbes richest traders list is trading primarily stocks, and a few are using options as well. Some use stocks to buy & sell companies - now that's sophisticated. "if you can't spot the sucker at the table, than its you"