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Thread: Against The Crowd - Profitable sentiment trading

  1. #1


    Hello, traders!

    I'd love to inform you my short story.

    I have been studying, specifically, understanding (there's no a teacher that I can study below) the stereotypes of audience behavior on the market for the previous couple of decades. Due to an idea the market audience generally makes errors and market-makers profit only from the losses incurred from the audience (housewives), I came to a decision that I'll take the side of their market-makers and start earning with them, should I trade contrary to the audience.

    A number of you might think today that there isn't anything new in it, since this kind of idea as sentiment gambling has been around for quite a very long time and virtually everyone heard about it. Like I did which of you researched it for more than two decades? Thus, I believe I have something to tell you.

    Besides, I offer you a guarantee you won't start earning cash immediately after reading the guide, since you need to have the market feeling distinct to a classical one. It takes weeks, weeks and days to get the understanding. You did not hope that you arrive at the market, start a trading terminal and start making money, did not you? In that case, how much cash has to make?

    Unfortunately I cant (possibly, I simply don't need) idealize my egy, such as many other people do it, therefore that I tell you at once it is not a Holy Grail system. However, I can guarantee that you will stop losing your money, if you start applying my methods even in a mix with your egy currently being used.

    Should you rush to start earning, then you arrived at the wrong place. If you're a persistent and a guy, like I'm, you're welcome! Lets start.


    Trading contrary to the audience. This is how I call this technique.

    A time-worn phrase caused me to be a follower of the method: In case all signs indie its time to market, all analysts inform you with a single voice about a nice short position, and you see Sell now signal anywhere, then you need to muster up your strength, make an effort of will and press the Buy button.

    Let me mention at once it's not a usual indior-based egy that enables you opening transactions based on green and red arrows, but it involves using your brains a bit. You'll need to analyze every market scenario from scratch.

    So, the trading contrary to the audience egy is a trading method that implies opening trades in the direction opposite to the view of the majority of traders.

    A question arises at once: How Can we understand or where can we get data on the view of the majority?

    Given that Forex is a decentralized market, there's no a single source of data available on the market sentiment anywhere. You'll need to collect the information and, as important, rank them by their weight.We can accumulate the market sentiment data from various brokers. A lot of them provide a so-called traders open positions ratio. All you might have seen such images: We will discuss how to use it a bit later. Besides there are just two brokers, which provide fully-featured order books demoning all open positions and also limit-orders and stop-orders placed by their clients. Analytics and news. These two kinds of books are have a character that is losing. Can you think if all those traders who read about recommendations to buy in the news would be allowed to earn? No, they don't, since the modern market differs. Those who read the news will bring profit to players. As a final resort, you can visit with with a ribbon of almost any trading forum, a discussion or a site, where people discuss a currency pair of your curiosity. Should you notice that all traders forecast an uptrend, then you should look at position. I named those sources I understand the very best, but it doesn't signify there are no other sources.
    Ideally, the order book similar to that offered by Oanda or Saxo Bank, but covering all of Forex brokers, are the best indior of the market audience sentiment. Notice that I highlighted the word brokers. We have a fascination with data only on all brokers, but maybe not the entire Forex market, since brokers supply data mainly on minor players and quite successfully filter out positions started by major players.

    I guess you have caught the meaning of my words a little at the moment. It is more probable you have questions or counterarguments . However, I ready myself for it in advance (my web-site has yet another language version, by which traders asked me these questions many times) and will provide answers to your questions ahead. I will update the answers after a while.

    By the way, I often get skeptical and imprudent opinions in response to all of my attempts to discuss knowledge/methods. It is usually hard for a guy to discover something helpful from other peoples words in the instance of the Forex market. Though it's a lot more simple and interesting to criticize someone or attempt own self. This is I wrote such a large text to prove my knowledge of the subject matter. You have to admit that if I posted several images and wrote one paragraph of text, you would not read the report.


    FAQ
    Here you can read the most frequent questions and counterarguments linked to the given method.

    Why must the egy work?

    Maybe, you know that many funds and banks arrive at the Forex market not only with the intention of currency exchange, but also for making an additional profit by way of speculations. Even major corporations are not above the speculations, when they generally convert their earnings from 1 currency into another one.

    Moreover, these banks and funds can have a temporary influence on pricing because of the volume of their transactions. Now ask yourself the question: Who is more likely to win: you or a bank/a finance? I guess the response is self-evident. Now imagine there are lots of people like us like randomly moving plankton owing and we look. A number people go up ones go down.

    What do you believe will happen to the chaotic mass of the plankton, if a whale (a major player) comes in view? The whale will eat all of these: both moving up and going down.

    The trading contrary to the audience egy is practically the same as following a market-maker. All successful day trading egies are based on the following a major player.
    In the end, where is the cash, which infamous 95% of traders lose? Can they fall into the hands of the rest? No, they don't. They fall to the hands of market-makers.

    Data from 1 broker are not enough, since one broker does not represent the entire Forex market.

    You might have known of such term as exit poll. That's when sample surveys are held and voting results are provided prior to announcement of official results through elections. Exit poll results vary from actual election outcomes slightly in the majority of cases.

    Exactly the same effect is accurate in this case. Lets presume that 10,000 individuals trade through a broker. If 60 percent of these buy Euro, then the same percentage of all traders (60 percent) in the entire Forex market will more probably buy Euro too.

    Actually, we accept a representative sample of data from a particular broker. We receive data from several brokers: weight of our data raises.

    Only consider such backtesting results:

    Can you say that data from 1 broker are not sufficient?

    P.S. I selected 40 points as a stop-loss along with a take-profit size to illue a more profitable regularity in the event of a lot of transactions. Actually a stop-loss of 120 points fits much better the given egy.

    Brokers can decode info and supply false data

    Yes they could.

    However, we could filter out liars thanks to stereotypes of the audience behavior.

    You might not believe me, but we could accept data even out of a scam broker, which doesn't submit transactions of its customers to the real market. Communiion with the rest of the market audience is done by stereotypes inherent to all traders. Ill tell you more about the stereotypes a bit afterwards.

    Have a peek at the current percentage ratio of open positions:



    All brokers take one side. If a broker fudged data, we would find out it.

    What's better to use: amount of traders or lot size?

    Remarks are usually divided on the matter. Some traders think that the thing that is right would be to calculate amount of traders and many others that lot size is a more important thing.

    Personally I believe that lot size is of higher significance. Because the ratio data are very similar, but, it does matter as a whole. Have a look at the ratio pub even here in FXFactory . Data on number of traders and lot size differ and rarely generate opposite signals.

    What will happen, if this egy really works and everybody start using it?

    No they wont start. A propaganda system promoting Fibonacci, Bollinger along with indiors functions than my arguments.

    I can see an increasing number of sources of the market sentiment data in the future, But I do not exclude a small degradation of their performance.

    It isn't so simple to employ the egy profitably. Even most can provide up midway.

    What's going to occur, if brokers remove shared access to their ratio information?

    Applying the given method produces the ideal market understanding, which is a really valuable experience. Nowadays I can frequently predict the ratio data taking a look at the chart and not looking at the ratio information of applying the method, after 2 decades. I feel comfortable, when I use the info, of course.

    That is all about these questions. Lets move into the principles of the egy.


    Ratio signs (SSI)
    Ratio is a percent value showing the current difference between the amount of traders, which have opened transactions to Buy and Sell a currency. At that, already closed transactions do not impact the indior readings.

    Ill clean up a stage: a percent value of long positions is shown on the chart. Proportion value of short and long positions is equal to 100%. For this reason, you can easily compute a percent value of short positions by subtracting a percent value of long positions from 100 percent.

    Long-term ratio sign

    According to a long-term egy, a market entry sign is generated, once the percentage ratio of positions opened via the majority of brokers is in favor of one side (for example, a number of buyers is a lot more than that of sellers). At this, you should trade towards the direction opposite to the opinion of the majority of traders. Such a sign can last from a few months to a year.
    Lets think about the situation about the illuion of the ratio of open positions on EUR/USD:



    We can see from the picture that if the percent ratio of Buy or market open positions is greater than that of the other open positions, it functions as an excellent indior of trend. Therefore, by opening a position contrary to the crowd, it is opened by you .

    Benefits of the egy:Like every egy, it's straightforward; Minimum prices punctually; Trade with tendency. Weaknesses of the egy:It doesn't work on all financial instruments. In terms of the metal market, Buy transactions dominate over trades. In terms of AUD/JPY, Buy transactions (carry trade) also prevail over market trades. Additionally, the egy generates signs for softly traded currency pairs. It doesn't supply you with points, but just shows the ideal direction for future transactions. The egy is raw, so I advise using it combined with much more accurate egies. Medium-term ratio sign

    The core of the egy is really a searching for violent fluctuations of value of the percent ratio of open positions. A significant change of the value to one side (bearish or bullish) for many of brokers is of interest to us. Much like the previous egy, we will search to a spurt for entry in the direction opposite.

    Lets consider an example of such a spurt on NZD/USD pair:



    Spurts of this type are nothing but inflow of smart money to the market. By creating positive conditions, they make the crowd to buy, while amassing the opposite position at that time. I believe it is a secret for you which transactions set by major players are not displayed on the chart of the percent ratio of open positions. This is the spurt seems on the chart.

    Benefits of the egy:It generates efficient signs. It implies trading . It includes signs produced by the egy. Weaknesses of the egy: you have to wait to appear. It doesn't supply you. There is a ratio sign which needs using an order book, which the subsequent section is devoted to.


    Profit ratio indies
    Profit ratio is a percentage ratio of traders, which are currently profitable.

    The average Profit/Loss ratio numbers to 25-40 percent profitable/60-75 percent losing traders.
    Envision that the amount of profitable traders has risen up to 50%. What does it imply? It usually means that price moves in the direction, and reversal will likely happen.



    The best way to test it : In the event the profit ratio (black line) breaks out of a green area, it serves as a reversal signal.

    Trade management can be described with a lower chart. If a lot of profitable traders are buyers, we should sell, and vice versa: if a lot of profitable traders are sellers, we should buy.

    We should set take-profit in the amount of a grey line called RP.

    RP is a price, where the profit ratio will take its minimal price, which is possible right now. By way of example, the profit ratio equals 42% for now, but it is going to take a value of 28.


    Order book indies


    Because of Oanda for this a pleasant and a Exceptional tool. The only strange thing is that other brokers do not follow its example.

    Fundamental signals generated by the order book are based on aggregation of various orders: limit orders, stop orders or opened places.
    I ready a small cheat sheet on basic patterns, which is recognized in the order book.

    For Buy transactions:


    For Sell transactions:


    For all ease of these patterns you will find numerous nuances, which, sadly, I can't tell you , even if I write a complete book.

    I will attempt to offer practical examples in the future. You will have to learn by yourself how to use these tools against the market crowd profitably. I repeat once more: you must admit that it'd be too simple, if you are able to start earning money immediately after reading the article


    Conclusion
    Today I will inform you about a few more nuances to conclude the report.I would not like anyone to attempt to automate the egy even regardless of those nice profitability charts provided above. When I have not developed an EA until today, then it's not simple to accomplish the task. The fact is that there are many nuances, and yet one pattern can produce equally bullish and bearish signals at different situations. You have to give up a classic interpretation of the market and consider in some conspiracy theory stating that the market always runs contrary to the crowd. Normally I open 2-3 trades based on these signs each week. It usually means that you attempt to see should you trade more frequently.

  2. #2
    Limit order attained.
    Trade closed by TP.

    Easy and fast trade.

  3. #3
    Waiting for more. subscribed bro

  4. #4
    Love it.
    Trading with statistics and a border is always best!

    Please infos :-)

  5. #5
    Quote Originally Posted by ;
    Picture Hello, traders! I'd like to inform you my story. I've been studying, specifically, understanding (there's no a teacher I can study below) the stereotypes of audience behavior on the market for the previous couple of years. Because of an idea the market audience generally makes mistakes and market-makers profit just in the losses incurred from the audience (housewives), I came to a conclusion which I'll choose the side of the market-makers and start earning together, if I trade against the audience. Lots of you may think now that there is nothing new in...
    so you amassing data from brokers (?) And you have history data which you're able to backtest with coded algorithm.is this right?
    butterfly pattern

  6. #6
    Quote Originally Posted by ;
    Picture Hello, traders! I'd love to inform you my brief story. I've been studying, namely, understanding (there is no a teacher I will study below) the stereotypes of crowd behavior on the market for the last two decades. Because of an idea the market crowd generally creates mistakes and market-makers profit just from the losses incurred from the crowd (housewives), I came to a conclusion that I will choose the side of the market-makers and start earning together, if I trade against the crowd. Lots of you might think today That There's nothing new in...
    Nice Thread , subscribed
    Due

  7. #7

  8. #8
    Quote Originally Posted by ;
    Hello, traders!) ....
    Fantastic image.

    The butterfly ...

  9. #9
    Interesting thread and very much value time and your insights.

    all - You will find this thread quite interesting - real all or you will overlook, its related to this particular method.
    https://www.forexsoutheast.asia/fore...ut-system.html

  10. #10
    Quote Originally Posted by ;
    quote to help that you amassing data from brokers (?) And you have history data which you're able to backtest with coded algorithm.is this correct?
    Yeap. But I am not going to create an EA and so on. Is about thinking, but not about rowing money by shovel with EA.

    Thanks everyone for the feedback.

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