EURUSD - Trends, Forecasts and Implications (Part 2) - page 253
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And it's interesting how it all moves around in reality.
Look here http://forum.masterforex-v.org/index.php?showforum=204 you can download all the magazines, they won't hurt you, but to avoid having to reread everything, magazine No. 3 page 19
It's like reading coffee grounds and just examining the levels...(and if the price doesn't go lower, there's someone there)
OK fine... maybe I won't argue! I read this article a long time ago. I'll try to find a site (or article) that clearly explains (and shows) price movements...
Here is MM standing below the level and buying huge volumes from whom? (the trend is up and selling newbies and exiting the trade for family reasons is minuscule). Better the previous option holms - trading with itself increasing or decreasing the price - moving on stop orders (visible) and against most positions.
Here's how banks work with options -
"These levels can be seen as support/resistance levels because they are protected by parties who have sold options, and the sellers of the options are often large banks. For example, if a bank has sold a large number of options to buy EUR at an exercise price (strike) of 1.2500 and sees that the price of EUR on the spot market approaches 1.2500 from below. At that moment, the bank can enter the spot market by selling EUR in order to prevent the price from moving above the 1.2500 level, since in this case the bank would incur losses. In our case the level of 1.2500 was a resistance level. Conversely, if the bank has sold a large volume of put options at the strike price of 1.2000 and sees that the EUR price on the spot market goes down to 1.2000, it can enter the spot market at that moment and buy EUR. This is done in order to prevent the price from crossing the 1.2000 level downwards, as in this case the bank would incur losses. The level of 1.2000 in this case was a support level."
Wouldn't you say that most of the volume in this market is someone trading with themselves?
The practice of forex ruins has shown that even the biggest capitalists cannot "steer" this market. If the price has gone against the bank, tens of billions of dollars will not save it. The bank has only to accept the losses and report them to shareholders.
Don't you mean to say that most of the volume in this market is someone trading with themselves?
It's not that simple, but if you have to, you will trade with yourself.... I do not want to search (to quote) I read in the book an interview with a trader by D. Schwager - for example a large bank after receiving a buy order from a client for 2 billion euros. and knowing that the price will rise by 100-150pp. - first they buy 50-60 million. the same with the sales only on the turn sells. And big clients know about these bank cases but tolerate as no one else can cash such volumes... Another example is when MM called the fund and asked about the deal...
Dare I ask: why cash out 2 billion euros?
In forex, market makers are national banks and governments. They manage the exchange rates by issuing and buying back, through managing the interest rates. The Zimbabwean rand can be managed as you might imagine. But the euro and the dollar are not. The Swiss periodically lose money, though they have a relatively small amount of currency. Well, they can print it for themselves, but the average bank cannot. Games with "protection of options" end in failure.
Anyone can go bankrupt if he is alone and stands against the market, but if a team (the club of billionaires) and against the crowd of traders who will win. The Swiss hit the franc exchange rate, the exchange rate goes down, then it rises again, so they sell at a high price and there is a loss.
And the beginning of the correction in e.g. euro and pound at the same time - isn't that a coordinated action of MM.