They all do the same thing over and over and over again:
1) positions are initiated or closed in locations that the most pain is inflicted by the participants
2) This works three fold:
- Large participants need volume to transact
- Brokers need to get paid and love volume
- Exchanges need the revenue from the volume to keep the lights on
The art to the entire game is to know where these locations in the market largely reside...this is the art.
If you know where these locations are...guess what, that is where the market is headed.
This is the fundamental structure of the market, the art is understanding where these likely places are and placing bets that the market will hit that area.
This happens in all time frames, but the larger traders operate on longer time frames.
IF you are learning to trade, understand that 80% of the time the market is targeting these locations and place bets that they will hit that location. 20% of the time they are looking to change direction at these locations. Conclusion: spend less time picking changes in trends and more time finding areas the market wants to resolve ie trend continuation