Edge trading the compression periods

Discussion in 'Newbie Questions' started by lucacrebbe, Mar 30, 2019.

  1. lucacrebbe

    lucacrebbe Trader

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    Hello, a friend of mine told me that Tecnical analisis is the way the market makers can know what the retailers will do, so if you want to have an edge on the market you have to trade the compression periods. Here his argumentation:

    Mainstream TA was created to deceive the masses into having a false sense of control, for the sole purpose of providing liquidity to smart money.

    The way to beat smart money is to trade a game they aren’t trying to win, compression. Smart money only cares about trend, their order flow creates trend. Periods of compression are natural in the markets as trend breaks down into temporary “noise.”

    Identify the subtle direction of compression and you’ve got yourself a very real trading edge.


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    my questions:

    1) their order flow creates trend

    why the whales's order flow creates trend? Can someone explain me this sentence please? In an easy way to understand (maybe with example, please)?

    Identify the subtle direction of compression and you’ve got yourself a very real trading edge.

    how? How to identify it's going to be in compression and in which direction?
     
  2. Enivid

    Enivid Administrator Staff Member

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    Regarding the first part of your post, your friend makes a rather controversial statement without providing any evidence, which means that it is better not to pay any attention to it.

    As for your questions:

    It may or it may not create a trend. Each particular case is unique. I assume here that by "whales", you mean big orders.

    Compression is a consolidation of price movement. It can be analyzed using TA methods the same as any other chart if you just switch to a lower timeframe.
     
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