Forex Market Manipulation: Identifying Market Maker Manipulation Points

Summary

Sterling Sirium, head trader at Day Trading Forex Live-dot-com, discusses the concept of market manipulation points in trading strategies. He explains that these points are areas of high liquidity, often targeted by large banks and institutions for trading due to their control over a significant portion of the Forex market volume. Sirium emphasizes the importance of identifying these points to avoid entering trades at unfavorable times. He outlines a method for selecting manipulation points, which involves looking for significant bounces from previous turning points that represent at least 30-40% of the Average Daily Range (ADR). Additionally, he advises traders to consider the presence of other nearby levels, supporting factors like pivot points and Fibonacci retracements, and to visually confirm the level's significance on a 15-minute chart before trading. The video also touches on the timing of trades, recommending focusing on the first half of the European session and the beginning of the New York session for optimal trading opportunities.

Takeaways

• 📈 **Market Timing Issues**: Many traders experience difficulty in timing their market entries, often feeling like they enter at the worst possible moments.
• 🔮 **Reactive vs. Predictive Strategies**: Sterling Sirum discusses the importance of moving beyond reactive trading to predictive strategies, which can anticipate the actions of retail traders.
• 🏦 **Banks and Liquidity**: The Forex market is largely controlled by ten banks, which means there's a concentrated competition for liquidity. Understanding this can help retail traders.
• 🤔 **Manipulation Point Identification**: Sterling introduces the concept of 'manipulation points', which are high liquidity points in the market that can be exploited for trading advantages.
• 📊 **ADR and ATR Importance**: He explains the significance of the Average Daily Range (ADR) and Average True Range (ATR) in identifying potential manipulation points.
• 📉 **Support and Resistance**: Basic support and resistance levels, as well as previous turning points in the market, are key to identifying manipulation points.
• 🚫 **Avoiding Close Levels**: When selecting manipulation points, avoid choosing levels that are closer than 20% of the ADR to a more significant support or resistance level.
• ⏱️ **Timeframes for Trading**: Sterling recommends trading during specific sessions: the first half of the European session and the first half of the New York session.
• 🧲 **Liquidity and Trading Decisions**: Knowing where traders are underwater (in a loss) can signal areas of high liquidity and potential decision areas in the market.
• 📌 **Level Selection Process**: The process of selecting manipulation points involves looking for a bounce of 30-40% of the ADR from a turning point, ensuring the level is visually appealing and significant on a larger timeframe chart.
• 🔍 **Confirming Entry Strategy**: Once a manipulation point is identified, traders should look for a confirming entry signal to ensure the market is behaving as expected before making a trade.

Q & A

What is the main issue discussed in the video?

The main issue discussed is the challenge traders face when they feel like they always enter the market at the wrong time, despite seeing a good signal.

What is Sterling Sirium's background in trading?

Sterling Sirium is the head trader at Day Trading Forex Live-dot-com, which he has been running for nearly a decade. He started trading at the age of 17 and has been trading for over 15 years, with about 11 and a half of those years being full-time.

What is a manipulation point in trading?

A manipulation point is an area of high liquidity in the market that is likely targeted by large players for entry and exit due to its significance as a previous turning point.

Why are manipulation points important for retail traders?

Manipulation points are important for retail traders because they can provide insights into where large market participants, such as banks, might step in to buy or sell, which can be used to predict market movements.

What is the significance of the ADR (Average Daily Range) in identifying manipulation points?

The ADR is used to measure the minimum bounce required for a level to be considered a valid manipulation point. A bounce of 30 to 40 percent of the ADR indicates a significant enough reaction for the level to be potentially influential.

How does Sterling Sirium define the selection criteria for manipulation points?

Sterling Sirium selects manipulation points based on a bounce of 30 to 40 percent of the ADR from a previous turning point, ensuring there is no deeper level closer than 20 percent of the ADR, and considering the visibility and reaction at the level on a 15-minute and hourly chart.

What are supporting factors in the manipulation point selection process?

Supporting factors include the ADR or ATR, major Fibonacci levels, pivot points, psychological barriers like round numbers, and the 200 EMA. These factors can reinforce an existing manipulation point but are not used as standalone points.

Why does Sterling Sirium recommend trading during specific sessions?

Sterling Sirium recommends trading during the first 4.5 hours of the European session and the first 4.5 hours of the New York session because these are the times when liquidity and market activity are typically the highest.

What is a confirming entry in the context of Sterling Sirium's strategy?

A confirming entry is a technique used to validate that a stop run at a manipulation point is genuine. It involves waiting for the market to show that it is moving in the expected direction before entering a trade.

How does Sterling Sirium use the concept of traders going underwater to identify liquidity areas?

By identifying levels where traders who have shorted the market start to go underwater (i.e., their trades move from profit to loss), Sterling Sirium can deduce where liquidity is concentrated, as these are the areas where traders are likely to cover their positions.

What is the purpose of the daily market preview Sterling Sirium provides for members?

The daily market preview serves to identify the specific currency pairs and exact manipulation points that Sterling Sirium is focusing on for the next day's trading. It helps members understand the strategy and see it applied in real-time.