Market Maker Psychology (MMP)

Market Maker Psychology (MMP) is the study and understanding of a Market Maker (MM) to know he like to move the current price to go up or do down.

What is the expected high price and expected low price depending on the direction of the market.

It also will help to understand where is the like point of u-turn and how well it can hold at support level or resistant level.

Sometimes, market makers will scare the hell out of traders and spook investors by taking a fast-moving down 10 points or less in a matter of literally two minutes. The idea in doing this is to force what are thought of as the “weaker hands” (or the “scared money”) into selling their positions, out of fear that they will lose whatever profit they may have accumulated. Or, to scare those who are watching a loss mount up tick by tick to bail out so as not to lose even more.

When a serious head fake is taking place, it can come out of nowhere. Things are looking nice and calm and then the price jumps down violently and keeps moving straight down. No one steps in to buy, each tick is less than the one before it. It’s a free-fall and each tick is costing a lot of people a lot of money.

 

What makes this so scary is that by the time you realise what is happening, it is already too late to react. Unless you have direct access execution, you will be too slow to get in a sell order. The price will have already dropped 10 points before you’ve pulled the trigger. And, ironically, this is one of those times where the limitations of the technology actually benefit the investor. Because by the time you’ve comprehended what’s happening and decided to sell, entered an order, confirmed it, and sent it to your brokerage, the price has already begun to come back up again. So, the slowness of the execution process may unwittingly give you the time to reconsider as to whether you want to react out of fear. As the price begins changing direction, the anxiety dies down and the trade can be canceled or voided.

 

Even seasoned day traders occasionally find themselves marvelling at the strategic skills and trading successes of today’s top market makers. As they set the tone of markets worldwide, these market makers must also remain aware of key economic announcements, developing trends, and breaking news events all while staying few step ahead of traders who are, quite frankly, out to beat them at every turn.

 

The Forex Market is also about Psychology and Mind Control. The market makers use every means at their disposal at creating overwhelming sentiments and psy-ops that they wield with maximum robotic precision. They will use alibis from astrology to witchcraft to superstitious to old housewives tales, even fairy tales to achieve their objective of misleading you.  The market makers are the proverbal ‘House’ as in Casinos. The forex market is predatory on the constant prowl to part you with your money. The forex market is the world’s biggest Open Trading platform. Only those who can see through this deception will win.

This knowledge must apply together with Price Movement Analysis (PMA). To know the real effect and how this skill effect  your trading gain, kindly attend our Seminar and course and hope to see you retire at home.

 

 

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Andeerson Wong
Head of ASIA Forex Fund Management Team
Master IB in Asia.
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