NFP – amusement

[Edington]

Dear Fellow Traders,

I would like to share and discuss an observation about trading during big news event such as the NFP. After observing many events like this, I have come to notice a repetitive pattern in the way market makers play the event out. Right before the news, 1 minute or so, they start to make a big push in one direction setting a bull/bear trap for traders that believe that this move is in fact a markets reaction to the news event…In reality, the move is generated only to allow themselves to jump in at a favorable price. Moments after,an major opposite push comes in and takes the PA hard in the opposite direction. Now, there is no saying that that is the final PA direction…as they may change their mind and set a double trap…like NFP is August. I have not traded any of these live, but i find it quite fascinating. Just take a look at 1 minute today…simply fascinating. 

Best, Michael E

 

Attachments:

You must be logged in to view attached files.

[Edington]

Sept 4 action.

Best, Michael E

Attachments:

You must be logged in to view attached files.

[CSendo]

I noticed this as well. I don’t have much to back it up atm though, it’s something to pay close attention to thought because often this sort of thing can happen within a 1 minute bar as well, so looking over exported data will not show it correctly. My current issue with this is that trading during the news has such a huge spread for most of the standard small fish brokers..

[Edington]

Agreed. The spread can be deterred by an ECN broker, but there is still slippage. It would take real courage to trade this event in a real account, but as long as you figure out where its pushed and why, one could make some nice pips. I am not trying to encourage anyone to do this, but it is important to note the actions of the MMs. One of the basic premises of the PVSRA trading “system” is that the prices are not determined by the buyers or sellers, but by the MMs. Their job is to create liqudity by filling orders, and they determine the sequence of price movements to fill those orders in a way that best suits them…while trying to trick everyone else.  Anyone here ever played GO?  Considering they know the sequence, they take additional positions themselves for extra profits. The idea here is to take a look at the tricks they play…

But, i will say this, as you know 95% of all traders ultimately lose money in Forex.  The reason is, that the market is run by the banks and it was designed for them to make the $ and not the trader. However, learning the tricks they play on you might give you an edge over them. Fool me once – shame on you, Fool me twice………

Best, Michael E

[scissors]

That is what I am seeing the same in the past! Thanks for verifying, I have the same sentiment :)

[gg53]

Edington wrote:

Dear Fellow Traders, I would like to share and discuss an observation about trading during big news event such as the NFP. After observing many events like this, I have come to notice a repetitive pattern in the way market makers play the event out. Right before the news, 1 minute or so, they start to make a big push in one direction setting a bull/bear trap for traders that believe that this move is in fact a markets reaction to the news event…In reality, the move is generated only to allow themselves to jump in at a favorable price. Moments after,an major opposite push comes in and takes the PA hard in the opposite direction. Now, there is no saying that that is the final PA direction…as they may change their mind and set a double trap…like NFP is August. I have not traded any of these live, but i find it quite fascinating. Just take a look at 1 minute today…simply fascinating. Best, Michael E

There are quite a few posts about that behaviour in the intro to Gadi_OBV (@FF) and the later ForexGT_Activity indicator – with trading samples and screen-shots on how to identify and avoid those “traps”.

 

G.

[Edington]

Thanks gg53. I will take a look. There is always more out there to learn. 

Best, Edington

[Author]

Posts