Manipulated Markets: A Strategy To Profi
This is certainly the art of market participant analysis (or more commonly known as volume analysis). By 2023, it is a well-known fact that financial markets, by nature , are rigged. Using tools I'll discuss later, we can actually detect this manipulation (or just aggressive activity as objectively as possible) in real time and in the past, and use them in conjunction with each other!
The spot FX market is no different from other markets when it comes to manipulation, and here’s the scary fact: many different players actively trade, invest, or otherwise participate in the FX market every day, such as;
- commercial bank
- hedge fund
- real money
- retail trader
- sovereign wealth fund
- prime broker
- retail broker
- Self-operated trading company
- Money Transfer/Remittance Company
- Foreign exchange fixing
- business company
- governments and central banks
However, the shocking but undeniable fact is that just 10 banks control approximately 80% of spot currency trading volumes;
Just imagine for a moment the crazy advantage this gives them. This is their game we're playing. Fascinatingly, this is Euromoney's recent 43rd annual survey of liquidity consumption in global FX markets. These are the top 10 companies by market share in 2021;
No matter how much faith you have in any institution/company/bank, they all show the same grim picture. The theory is good enough, but if you still have any doubts, to drive home the point, just search for some variations like "bank trader manipulation/conspiracy/fines/lawsuits/evidence" along with the specific bank name...
The real ideology and theory behind the strategy gives us the mission and mindset of what we really want to achieve, unlike the endless garbage - green crossed red etc strategies that have no value and more importantly meaningless (no ability to concretely define your strengths and absolutely no meaningful theory behind it).
It’s that simple… let’s get started! The tools we will use to visualize the above two goals are respectively.
Before we go any further, there are some important things to note. I use and recommend using Forex futures for analysis to improve precision and accuracy at all levels, this is called secondary market data. There are various ways to enter these tools using spot FX data, but the results are always less than accurate. In what follows, I will assume that you (reader and trader) are already familiar with the tools listed, but if not, I will do my best to mark everything I can so that you can delve further into these tools if needed.
Using the previous day's trading range and volume distribution (via the Volume Profile) to categorize, confirm and then look for significant volume clusters within the trading range, if price enters the relevant area we will look for trade rejection at that level. We will confirm this and add confluence/tendency to the trade by analyzing the order flow when price reaches these areas, looking for multiple confirmations - bid x ask imbalance, accumulation, large limit orders, delta, cumulative delta divergence, etc.
The following posts will be taken directly from my old trading logs related to this strategy, at the end I won't be selling anything, I won't even be linking to any products, etc. My only motivation is the desire to expand my trading network with other serious, talented traders. I hope this post will stimulate discussion on all aspects of the strategy including - general related issues, testing/research, live trading , and potential evolution of the strategy.
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