THE MARKETS: DON’T SHOW YOUR HAND!
DON’T SHOW YOUR HAND!
- (Part 3 in the series)
“If you know the enemy and know yourself , you need not fear the results of a hundred battles. - Sun Tzu
As I’ve shown before in the earlier posts in this series, traders and investors today are playing in a Great Game with a most sophisticated adversary on the other side of our trades – The high-speed trading program.
This is an opponent who’s dedicated to manipulating our emotions and our trading habits to work against us and for their further profitability.
Today I’ll show you yet another set of charts to further confirm what was mentioned in the earlier 2 posts in this series (which you can read further down on this web page).
This first chart I’ll leave in the public section and shows a Forex currency pair of the Australian Dollar vs. the US Dollar. This pattern happened in the last few days.
Note that on this chart all candlesticks are 5-minute time periods and, that, in just two of these bars, prices spanned 90-pips which is close to the expected range for the whole day!
Now, you should be asking, ‘WHO or WHAT could cause this?‘.
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THE MARKETS: DON’T SHOW YOUR HAND!
In our previous post, ‘Adapting to Market Changes’, we saw evidence of what programmed trading can do and what it looks like as it’s played out in the markets.
To drive my point in a little bit more, look at what happened just yesterday in the Forex for this currency pair for the EURO vs. NEW ZEALAND DOLLAR:
This market rocketed upwards by 95-pips within 2-minutes.
No Human Being could have pulled this off and, no worldwide market the size of the Forex market should have been able to have been manipulated to this degree within such a short period of time.
This type of strategy (which is not rare these days at all!) should not have been possible.
And, yet, there it is.
We must deal with the new Reality of the markets and this is it:
Machine-based trading is our main opponent in the markets from now on.
That being the case, we’d better not be using other ‘programs’ to trade by in these markets. Why?
Because ALL the standard tools that are popular online tools for trading (moving averages, CCI, etc..) should be considered as HACKED and integrated into the master high-speed programmed trading algorithms.
The same minds that are clever enough to take into consideration your Human emotional responses to price movements have certainly tapped into EVERY publicly available trading tool to find where the vast majority of traders Stops and Entries are located.
It then becomes a simple matter of running those stops or triggering those entries with the type of high-speed price movements shown in this article and the others before.
This is the overlooked trading weakness that virtually all conventional traders are exposing themselves to every time they enter the markets these days.
‘They’ know where you’re trading and why.
This is tantamount to knowing the other player’s cards in a high-stakes poker game.
And, another thing worth mentioning and for your consideration:
Stops have now become ‘targets of opportunity’ begging to be picked off.
A watchful eye and a mental or written list of stops is more in order in this day and age.
It’s us, as traders, who need to know where these ‘money tigers’ are positioned and what their next moves are likely to be.
Not the other way around!
Trading today therefore, requires a more hands-on approach. As in, ‘Human Hands’.
It takes a Human Being to foul up a machine.
We’re naturally great at it.
It’s just a matter of knowing how to:
- throw some sand in the gearbox to bring the machine to a grinding halt,
- mislead it down the wrong path or better yet,
- don’t give it the information it needs to perform it’s functions correctly.
You’re best defense today is to become an ‘unknown’ trader; a question mark as to intentions in the market place.
All this, while, at the same time, accurately reading what the ‘machine traders’ are up to and what their strategies are.
Know where the ‘money tigers’ are; but, don’t let them know that you know or where you are.
Those are the new rules for survival in the Great Trading Game.
And, remember, you’ll need to go beyond the canned programs that every online broker offers their clients as well.
Today, more than ever, the best defense is to draw back to the Natural Order underlying the markets.
All software algorithms are overlaid UPON the Natural Order that is the markets. They can’t override Nature and never will as their software depends on the same nature-based mathematical principles to work.
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In the next post, we’ll look at ‘hit and run’ tactics as applied to the markets. - George
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