M ANIP ULATION BASICS
T O UNDERSTAND HOW THE MARKET IS MANIPULATED, LETS
F O RGET EVERYTHING WE WERE EVER TAUGHT AS A RETAIL
TRADER ABOUT TECHNICAL ANALYSIS.
IF IT WERE REALLY THAT EASY WHY DO 95% OF ALL TRADERS
FAIL? WHY DOES THE AVERAGE TRADER USING THE
M AINSTREAM FORM OF TECHNICAL ANALYSIS BLOW HIS
ACCO UNT WITHIN THE FIRST 3 MONTHS OF TRADING? WHY IS IT
T H AT MOST TRADERS USING TECHNICAL ANALYSIS TAKE 10+
YEARS TO EVEN BECOME PROFITABLE?
P AT T E RN MANIPULATION
P atte r n Price Manipulation: "A known pattern forms on the chart, onc e
the market maker completes the pattern and Induce the masses to ente r
the market, they will be shown profit for a short time (20 to 30 pips)
tr i c ki ng the weak ametures to risk more money and take more trades. T he
mar ke t then goes completely against them the opposite way hitting stop
losses and blowing accounts.
MANIPULATION OF SPREAD
O M S ~ ORDER M A N A G E M E N T S Y S T E M
WHAT IS THE ORDER MANAGEMENT SYSTEM?
WH E N A RETAIL TRADER PLACES A TRADE THROUGH HIS OR H E R
B RO K E R, THE BROKER THEN TRANSFERS ALL THE ORDERS INT O
AN ORDER MANAGEMENT SYSTEM AND SENDS THAT
INF O RMATION TO THE BANK WHERE A "MARKET MAKER" CAN
USE T HE INFORMATION AND PUT IT THROUGH AN ALGORITH M
T HAT WILL MAKE SPECIFIC PATTERNS IN THE MARKET
ACCO RDING TO WHERE RETAIL TRADERS HAVE THEIR ORDERS.
SO , YOUR ORDER IS GOING THROUGH AN ALGORITHM THAT
SCANS YOUR ENTRY POINT, STOP LOSS, AND TAKE PROFIT. TH IS
ALGORITHM THEN F L U C T U A T E S A C C O R D I N G T O T H E
MASS A M O U N T OF ORDERS IT IS R E C E I V I N G A N D W H E R E
THE RETAIL TRADERS HAVE PLACED THEIR STOP
LOSSES, WITH THE INTENT TO HIT AS MANY STOP
LOSSES AS POSSIBLE WHILE AT THE SAME TIME
AVOIDING TO HIT TAKE PROFIT LEVEL AREAS OF
RETAIL TRADERS.
YOU SEE WE ARE THE RETAIL HERD, WE ARE
VERY SUSCEPTIBLE TO PERSUASION IN ANY WAY OR
FORM AND WILL DO WHAT THE MAJORITY OF OTHERS
ARE DOING JUST BECAUSE WE FEEL
MORE CONFIDENT IN OUR TRADES WHEN SOMEONE
ELSE CAN BACK US UP.
T H E DIFFERENCE BETWEEN ASK AND BID IS CALLED SPREAD.
IT R E P R E S E N T S THE BROKERAGE SERVICE COSTS AND REPLACE S
T RANSACTIONS FEES. SPREAD IS TRADITIONALLY DENOTED IN
P IP S ~ A PERCENTAGE IN POINTS, MEANING FOURTH DECIMAL
PLACE IN CURRENCY QUOTATION.
AL M OST ALL RETAIL TRADERS ARE USING WHAT IS CALLED
A VARIABLE SPREAD. VARIABLE SPREADS ARE SET BY
B ROKERAGE FIRMS / HEDGE FUNDS TO F L U C T U A T E IN
CO RRELATOIN WITH MARKET CONDITIONS. GENERALLY
VARIABLE S P R E A D I S L O W D U R I N G T I M E S O F M A R K E T
INACTIVITY (1-2 PIPS), BUT DURING V O L A T I L E MARKET TIMES
SUCH AS NEWS EVENTS. THE MARKET MAKER CAN ACTUALLY
WIDEN THE SPREAD TO AS MUCH AS 40 TO 50 PIPS OR MORE!
B U T ! ! N O T O N L Y I S S P R E A D U S E D A S SERVICE COST, IT IS AL SO
USE D T O PICK UP THE ORDERS "BREAK OUT TRADERS" PLACE O N
T H E O THER SIDE OF T R E N D L I N E S A N D I N C E R T A I N Z O N E S O F
HIGH LIQUIDITY! SEE THE EXAMPLE BELOW.
STOP HUNTS
A "ST O P HUNT" IS WHEN THE MARKET SPIKES IN ONE DIRECTIO N
O R T H E OTHER HITTING THE STOP LOSSES OF EITHER SELLE RS
O R B UYERS, WHILE AT THE SAME TIME INDUCING TRADERS T O
ENTER THE MARKET.
ST O P HUNTS CAN OCCUR AT ANY TIME, BUT ARE MOST LIKEL Y
TO OCCUR DURING VOLATILE NEWS EVENTS.
B ELOW ARE A FEW EXAMPLES OF "STOP HUNTS" AND
"WHIPSAWS"
WHAT IS A "WHIPSAW"?
A WH IPSAW IS A TERM USED WHEN MARKET MAKERS MAKE T H E
P RICE OF A CURRENCY PAIR SPIKE IN ONE DIRECTION, BUT IS
F O LLOWED QUICKLY BY A MOVEMENT IN THE OPPOSITE
DIRECTION.
B E LOW IS AN EXAMP LE OF THE MT4 MANAGER SCREEN
YO UR MAIN GOAL IS TO GO COMPLETELY AGAINST THE RETAIL
TRADER HERD.
WH AT YOU LEARNED AS A RETAIL TRADER, IS WHAT IS KEEPING
YO U FROM GOING ANYWHERE. FOLLOW THE PATH LESS
FOLLOWED AND YOU WILL SEE SUCCESS!
T RAP Z ONES
H O W TO DRAW AND CO NFIRM A TRAP ZONE & A TRAP MOVE
TRAP MOVES OCCURON EVERY PAIR
& EVERY TIMEFRAME
H E RE IS AN EXAMPLE ON THE 1 MIN CHART PAIR: USDCHF
T RADE R BEWARE! THIS TRADE IS ONLY VALID IF PRICE ENTE RS
O UR Z ONE A CERTIAN WAY.. NOT ALL MOVES ARE TRAP MOVE S,
WE M UST BE ABLE TO IDENTIFY OUR CONFIRMING ENTRY TO
VALIDATE THE TRADE.
WHAT IS OUR CONFIRMING ENTRY?
...O NCE PRICE ENTERS OUR ZONE, WE WAIT THE NEXT 3 CANDL E S
TO SHOW THE GENERAL DIRECTION OF THE PRICE .
H O W TO DETERMINE IF A TRAP MOVE HAS BEEN VALIDATED?
1. L OOK FOR A LARGE "WICK CANDLESTICK" INSIDE OUR TRAP
ZONE (SEE EXAMPLES BELOW)
2. L OOK FOR A SET OF "RAILROAD TRACKS" THAT CLOSE OUTSIDE
THE ZONE AND RAPIDLY REJECT
3. "ST A R" FORMATION, RA PIDLY FORMING AND REJECTING IN A ND
OUT OF OUR ZONE.
4. A MARKET GAP INTO A ZONE (RARE, BUT HAPPENS)
B E LOW ARE SOME EXAMPLES OF A CONFIRMING ENTRY
IN T H E EXAMPLE ABOVE WE CAN SEE MULTIPLE "TOOLS" BEING
USE D ON OUR GRAPH.
USING A COMBO OF TREND LINES, LEVELS OF SUPPORT AND
RE SISTANCE AND ZONES , WE CAN SEE EXACTLY WHERE PRICE
H AS THE H IGHEST PROBABILITY TO TRAP AND DROP!
IMPORTANT! ~ THE CHART ABOVE SHOWS A CLEAR
DO WNTREND. NEVER TRADE AGAINST THE MAJOR TREND
T RADING AGAINST THE TREND IS NOT RECOMMENDED.
THE TREND IS YOUR FRIEND
L O O KING AT THE ANALYSIS ABOVE, WE CAN SEE CLEAR TRAP
AND DROP ZONES IN WHICH THE MARKET HAS THE HIGHEST
P ROBABLE CHANCE OF CONTINUING THE DOWNTREND
