Could someone explain what this means?

[athlonmank8]

It's all crazy talk. They don't know how many stops or what size is up there.

The more you ignore that garbage the better.



Honestly though they can run highs for stops/get traders in, but it's better if you just keep it on the back-burner because that info really just screws up your mentality of trading.

 

[Bakinec]

I just wanted to say what a great thing it is to have a forum where you can come any time and ask a question to which you get many people share their opinions and knowledge. I just wanted to express my deep gratitude to everyone that chimed in here! Thank you gentlemen, and especially ladies

Quote from athlonmank8:

It's all crazy talk. They don't know how many stops or what size is up there.

The more you ignore that garbage the better.



Honestly though they can run highs for stops/get traders in, but it's better if you just keep it on the back-burner because that info really just screws up your mentality of trading.

I think it helps to know as much as possible about our job, which is trading. Whether one chooses to integrate that knowledge or ignore it is up to the trader

 

[Bakinec]

madmaxer, if you don't mind, please elaborate on the points that I have touched upon below, because I think I don't understand your message quite correctly

Quote from madmaxer:

With all the respect to what have been said, You also need to know that in many situations when price gets close to a support or resistant line, market makers will actually look to see that which side of the line contains more sleeping orders .

The assumption here is that the "sides" of the line are the price areas BELOW and ABOVE the R or S, correct?

They absolutely do not care if that requires a breakout or reversal; they just go toward that side. WHY ???, because that direction is where they can fill their orders.

What I mean by THEY, can actually be 1 or 2 unit only. For example, if GS and JPM together can fill all the orders in one side of the line when there are not enough orders at the other side, then thats whats going to happen. it moves to the side that can fill thier orders

I lost you here. Please elaborate :|

Now, how that would make them money,?? As it was mentioned by other freinds, the new traders that see this action as a break out or reversal will come in and push the price higher or lower.

breifly, How individuals can make money is to follow what these big ones are doing, but big boys job is not chart reading or analyzing or bla bla bla, their job is to find where more money is and how they can go after it
.... and guess what...
IN THE PAST 12 MONTHS WITH THE BAIL OUT MONEY IN THEIR HAND, THEY COULD MOVE THE MARKET MUCH EASIER THAN BEFORE,

Got you here!

 

[dumb_mother]

they push through everyone's stopouts because it then gives them liquidity on the way back. as they are buying markets for example they will just continue to buy until someone new comes along to grab that hot potato hoping to carry it up another price. once they get someone else to come in and buy (ie triggering a lot of stop buys at the top) they are given a lot of liquidity to get out of the stuff they previously bought. it doesn't matter if you buy it from them or someone else, because so much of what is traded now is blackbox looking for small gains (1-3 tics) even if they don't get the other side of the trade initially when a stop is triggered, as they sell down through it later they'll get those contracts within a couple tics of the high, when whoever really got it takes their quick money and runs- so theoretically they get all of that liquidity that they just forced to come in at the top. hope that makes sense because it is actually what happens.

 

[Bakinec]

Quote from dumb_mother:

they push through everyone's stopouts because it then gives them liquidity on the way back. as they are buying markets for example they will just continue to buy until someone new comes along to grab that hot potato hoping to carry it up another price. once they get someone else to come in and buy (ie triggering a lot of stop buys at the top) they are given a lot of liquidity to get out of the stuff they previously bought.

Liquidity is also what I originally had in mind, and that's what I guessed at in asking the question, so I got this part down

Below is the part that confused me

it doesn't matter if you buy it from them or someone else, because so much of what is traded now is blackbox looking for small gains (1-3 tics) even if they don't get the other side of the trade initially when a stop is triggered, as they sell down through it later they'll get those contracts within a couple tics of the high, when whoever really got it takes their quick money and runs- so theoretically they get all of that liquidity that they just forced to come in at the top. hope that makes sense because it is actually what happens. [/B]

Why would they want to take the other side of the trade (sell)? They are aware that driving price up could spawn a rally, but to drive the price up in the first place they will have to BUY.

So, they buy, the price goes up, hits stops on the way creating even more buying, other traders see the breakout and also buy, and we have a mini-rally.

Now, the part where I see the big guy's intent being fulfilled is when he uses the higher price and all the new liquidity composed of all the new stop-buy orders situated between the breakout level and the current price/high put there by traders hoping to get in long on a correction, to OFFSET his long position and make a nice profit.

So, basically, I think I got the basic first steps towards understanding the concept of "stop-hitting" down, which is stops are hit to, in the 1ST SCENARIO - set off a breakout leading to a mini-rally, which can be used as liquidity by the big guy to offset his long positions he accumulated by hitting the stops, and subsequently make a profit. The 2ND scenario is that price doesn't rally and goes back down (or up if its a support) to the swing point, the big guy ends up with a losing position, at which point we can expect him to AGGRESSIVELY SELL and create a steep sell-off in the market.

I think I got the 2nd scenario wrong somehow. Why would he want to aggressively sell and create a loss??

 

[yepso]

I think this thread shows why Bright and others require a series 7. Understanding of market structure is vague at best and "topdogtrading" I mean come on.

 

[Bakinec]

Quote from yepso:

I think this thread shows why Bright and others require a series 7. Understanding of market structure is vague at best and "topdogtrading" I mean come on.

Matter of fact, I'm actually a possessor of that license, but its expired now. Nowhere in the test or the training materials was the concept of stop-hitting as explained here was mentioned, so what's your point?

I think what I need to read is a book on market structure, market-makers, and how it all works - micro fundamentals of the markets.

 

[yepso]

"Trading and Exchanges" by Larry Harris, "Empirical Market Microstructure" Joel Hasbrouck, and "The Treasury Bond Basis".

The "TBB" is complex and is a testament to uncertain outcomes and how hard pros have to work to make money. Markets are complex systems and anyone can get rolled including mm boogey men.

It's an oversimplification blaming market makers for anything, it's a market. As for the series 7 I'm not sure why you wouldn't believe that the breadth of topics covered didn't give you a more solid foundation. That said the question of "stop running" implies some kind of conspiracy. I mean really it's a market, it works how it works. Market Structure

Quote from Gubinec:

Matter of fact, I'm actually a possessor of that license, but its expired now. Nowhere in the test or the training materials was the concept of stop-hitting as explained here was mentioned, so what's your point?

I think what I need to read is a book on market structure, market-makers, and how it all works - micro fundamentals of the markets.

 

[dumb_mother]

Quote from Gubinec:
So, basically, I think I got the basic first steps towards understanding the concept of "stop-hitting" down, which is stops are hit to, in the 1ST SCENARIO - set off a breakout leading to a mini-rally, which can be used as liquidity by the big guy to offset his long positions he accumulated by hitting the stops, and subsequently make a profit. The 2ND scenario is that price doesn't rally and goes back down (or up if its a support) to the swing point, the big guy ends up with a losing position, at which point we can expect him to AGGRESSIVELY SELL and create a steep sell-off in the market.

I think I got the 2nd scenario wrong somehow. Why would he want to aggressively sell and create a loss?? [/B]

it does not matter if it goes up or down afterwards, the breaking of the stops and the mini-rally that makes is the only out that they were really looking for. there are no real expectations of starting a huge rally after hitting the stops- they needed to hit those to get out of their already accumulated positions. if they get lucky and start a real rally, awesome- but since real breakout rally's are by far the minority when watching the ebb and flow of the market, banking on them would be foolish. and they aren't taking huge losses frequently even when it does sell off, because if they rally the market 10 tics to break stops, then sell off and average sell within 5 tics of that, they are likely still up money on the day. with the only losers really being those who's stop loss was triggered.