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Market Makers Algorithm
Day 1: 10-May-2024
Swing:
Bull: Expansion above high
High -> Break
Low -> Protected
Bear: Expansion below low
High -> Protected
Low -> Break
Buy/Sell Strategy:
Buy at Swing LOW
Sell at Swing HIGH
Uptrend:
Retracement:
After an up move market goes down. It will not go below the low. There is no trend change
happening here.
Reversal:
After an up move market goes down. It will go even below the low. Trend direction is changed
from uptrend to down
Downtrend:
Retracement:
After the down move market goes up. It will not go above the high. There is no trend change
happening here.
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Reversal:
After the down move market goes up. It will go even above the high. Trend direction is changed
from downtrend to up
Liquidity:
1. Strong LQ
2. Weak LQ
Strong LQ LOW:
1. First market takes out previous low
2. Create strong LQ low and
3. Takes previous high with continues thick one sided single direction bullish candles and
creates strong high
4. Within this range market creates liquidity like trendline, equal lows and high before
taking the strong low liquidity
Strong LQ HIGH:
1. First market takes out previous high
2. Create strong LQ high and
3. Takes previous low with continues thick one sided single direction bearish candles and
creates strong low
4. Within this range market creates liquidity like trendline, equal lows and high before
taking the strong high liquidity
Market condition:
Bullish Market:
1. Expansion above the swing high
2. Rejection at swing low
Bearish Market:
1. Expansion below the swing low
2. Rejection at swing high
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Range market:
Rejection at swing highs and lows. There is no expansion above/below swing low/high
Bullish range:
Rejections at swing lows and candle close above the swing high
Swing high => Above candle close
Swing low => Rejections
Bearish range:
Rejections at swing highs and candle close below the swing low
Swing high => Rejections
Swing low => Below candle close
Market structure shift:
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Bearish shift:
1. Structure shift: Create Strong LOW with sudden push after taking the previous low
2. Then makes strong high
3. When the market comes down and takes low then that structure shift has been
invalidated
4. Creates the LQ near strong low before taking the LOW LQ
Bullish shift:
1.
2.
3.
4.
1.
2.
Structure shift: Create Strong HIGH with sudden push after taking the previous high
Then makes strong LOW
When the market goes up and takes high then that structure shift has been invalidated
Create the LQ near strong high before taking the HIGH LQLearnings:
FVG: Always market creates the liquidity when it comes back to this FVG
Always take the trade at retracement - Why? Retracement creates the LQ and when you
enter here the move will be strong
Queries & Doubts:
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Finding the strong low and high (dealing range) is a struggle for me. I couldn’t come to a
conclusion. Where does it is starting and end?
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Is this high acceptable? The sudden up move has not happened after taking the
previous low & the market is took time to make high with sudden pus.
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When the market is in an uptrend continuously how to find the range?
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My understanding for above query:
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Step 1. Created strong low
Step 2. Created new low
Step 3. Created another low.
Guess market is creating more liquidity
Market is taking the lows with candle close.
Creating the LQ at highs
And taking all low LQ
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Is the range? If I consider this as range, within this range, the market is creating the LQ
on both sides. The market shift has happened on the down side. Can we find this earlier
● Understanding: Need correction
https://www.tradingview.com/x/J5XxCHvH/
● Couldn’t understand this range
https://www.tradingview.com/x/akaZZRhp/
Day 2: 12-May-2024
More understand of LQ:
Time is the key for LQ.
If the market takes much time to make LQ then that is strong LQ.
Example:
Lowest low is not initial for the bullish expansion
Why because, this low collected only the LQ - expansion doesn’t happen from this low. Market
has again came back to the same order black candle and then expansion happened. So the
actual expansion started at next low
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Premium & Discount: Buying at low/discount price
Swing analysis with premium and discount:
1. 33% - The actual retracement happens only after 33%. In case if the market retracement
stops 33% then this is not a retracement and this is swing expansion
2. 50% - Market chops at 50%
3. First drop into the discount area - avoid. Why because the market goes up/down to
make LQ
4. 62-79% - Retracement mostly ends here. Enter after the market chopping is completed.
At (62-79)%. 62-79% - original reaction - High probable trades
5. FVG: When FVG is in discount this will be taken away easily/fastly.
Algo signatures:
1. Volume imbalance - Strongest algo signature
2. FVG
3. OB
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FVG:
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FVG: Price should be balance for every buy with sell and sell with buy
Not all FVG will be filled by market
FVG - is place where market generates LQ to fill FVG
FVG - Even if the market tap once - algo consider this as filled and reacts immediately
FVG - When market comes to FVG either LQ generation happens or it may fail. The
failure happens when FVG is created after LQ sweep
Big FVG - Avoid trading in big FVG areas, because in this area LQ generation happens
for longer time to fill it up
Small & medium sized FVG - consider for trade
FVG - Which falls in discount area of a swing then that is high probable one
After touching FVG market falls approx. 50%
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For trading use 2nd grab of FVG16
Common reaction at FVG is wick
Explosive reaction at FVG is candle close
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Volume imbalance:
Strongest algo signature is volume imbalance.
Strategies:
1. Important liquidities are available at Indian Market
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a. Previous month high/low
b. Previous week high/low
c. Previous day high/low
2. Important liquidities are available at FOREX Market
a. Asian session high/low
b. London session high/low
c. New York session high/low
LQ purge:
This happens once a week in Bank nifty. We can capture 30% movement of that day.
LOW Rejection - Bullish:
1.
2.
3.
4.
PML/PWL/PDL should be taken and then the rejection should happen
The rejection should take the recent HIGH which actually making market shift
While taking the recent HIGH market makes FVG
Enter into buy trade when the market retraces to FVG
High Rejection - Bearish:
1.
2.
3.
4.
PMH/PWH/PDH should be taken and then the rejection should happen
The rejection should take the recent LOW which actually making market shift
While taking the recent LOW market makes FVG
Enter into sell trade when the market retraces to FVG
Volume Imbalance:
1. Volume imbalance + FVG - most powerful algo and if this falls at discount area then
more value added
2. Volume imbalance + OB - this is also powderful
3. Volume imbalance is an indication for bullish strength at bull side
4. Volume imbalance is an indication for bearish strength at bear side
5. FVG + volume imbalance after 3rd candle is also powerful
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Volume imbalance invalidation:
When the volume imbalance will be filled with body of the candle then only that volume
imbalance is considered as invalidated
Day 2 - Learnings:
1. After taking strong high - you can’t find trading opportunity immediately
2. High secret: Big FVG took it with a sudden move. When the market comes to this area
market will chop here then make next move
3. 4 hr HTF FVG - Market generates OPEN LQ in LTF before taking its FVG. 3 rd time
touch at (15 - 1) min - big trend change - semma trade if you catch.. Catch if you
can…patience is imp and LQ understanding is imp…
4. Strong LQ - Will be collected after choppy condition because to take strong LQ market
needs LQ
5. After taking strong LQ then also market will be with choppy condition to create LQ
6. Weak LQ - easily take out
7. Open highs & lows - Till date which is are not touched by market
8. Secret: OB + FVG - Market surely retraces to FVG
Strong LQ
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Learning 3 - Example:
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Day 2 - Questions:
1. FVG + Failure -> what will happen when market comes here again?
Is it support and resistance?
Ans: Market chops here when comes back it will consolidate here
2. FVG or VOL IMB
Ans: The down move is created with FVG. These FVGs should be balanced before
reaching a discount or sensitive area. If we view the market in this perspective the entry
would be after balancing all the FVGs at marked volume imbalance.
3. Retracement crosses 79?
What will happen after the retracement crosses 79%? In the YT PD video you have said
that it will go to a liquidity pool?Not all FVG will be filled by market - Can we
interpret/predict/find when the FVGs will be filled?
4. FVG - When market comes to FVG either LQ generation happens or
it may fail - Can we find whether the FVG is going to fail or LQ
generation is going to happen?
5. FVG - in discount - high probable one ( I have noted) - what happens
for the FVG at discount
6. LQ Purge: If market makes doesn’t make FVG. Will the market
always make FVG? Is it only FVG or vol imb and OB too?
7. LQ PURGE: TIME FRAME DIFFERENCE
a. 5 MIN TF: https://www.tradingview.com/x/l7hlPARJ/
b. 1 MIN TF: https://www.tradingview.com/x/6hG5rSlc/
8. Can we take trade immediately after volume imbalance and what
about the 2nd entry when the market comes back here?
9. Can we guess how the FVGs are getting filled? Like a choppy market or failure?
Sometimes the market is generating LQ, sometimes it fails.
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Day 3: 13-May-2024
Learnings:
1. Strong LQ: How much the time (a week, many hrs & how many bars) is taking to
generate the LQ then that much the LQ is stronger
2. HTF FVG - analyze at LTF task Sumathy PRS
3. Trading:
a. Trade time (5-1) means - 1 hr chart analysis is enough
b. 4 hr - monthly levels
4. When the FVG crosses strong high that will be filled immediately
5. If any FVG is tapped once later this FVG will be traveled smoothly
6. LQ pool - More and more LQ generated from one point and this LQ point is protected
longer time we can call it as big pool LQ
7. When the market trend starts if the FVG is started then this is not going to be filled
immediately this will be filled later. Now it is defense for market will not go to opposite
side
8. When the FVG is in discount area then this will be taken easily and fastly
9. Premium FVG:
a. Bullish FVG - Will be grabbed easily
b. Bearish FVG - Taking this is not easy
10. Discount FVG:
a. Bullish FVG - Taking this is not easy
b. Bearish FVG - Will be grabbed easily
11. Task Sumathy PRSJournal success and failure FVG trades
12. If the market takes the big LQ then 3-4 days the market will be in consolidation mode.
Avoid those days
FVG balanced:
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Questions:
Where can I expect the reversal?
Both FVG and VOL IMB clubbed. And VOL IMB has already been tapped 3 times. Will market
balance FVG Or market consider both as single signs?
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Key points:
Important: before taking the big FVG market generates LQ. This is what happening in RBL bank
in day TF and Weekly TF. 15/05/2024
Big LQ Sweep:
1. The LQ sweep candle should happen
OB - when don’t have any high - can we expect reaction (open - 50%)
a. Ans:
i.
Wick 50% - reaction
ii.
Consolidation or LQ generation within the big candle
iii.
No trading opportunity for immediate after this
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Order block:
1. OB will be created mostly after a big LQ (LQ pool) sweep at lowest low. OB placed at
swing high/low is always better
2. Bullish OB: Any swing low bullish OB is last down close candle
3. Bearish OB: Any swing high bearish OB is last up close candle
4. Mostly OB will be created with FVG in discount area Sumathy PRStask - very and
update here
5. LQ transfer should not be below 50% of the OB candle
FVG - resistance at down and up side.
Market first clears out one side's resistance then moves to the other side.
Day 4: 15-May2024
Dealing ranges:
Power of 3
Low price
Average - middle - 50%
High price
BN: 15 mins and 1 hr - 729
Chopping - 243
Expansion - 2187
Dealing ranges calc:
Swing average movement at that particular TF
Stock
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Day 3 questions:
1. Why market is not reacted to this volume imbalance is
https://www.tradingview.com/x/l6NcjaVn/
2. Show some examples for this
○ Common reaction at FVG is wick
○ Explosive reaction at FVG is candle close