Overview: Market Price Manipulation in Forex

Price Manipulation in the Forex Market and Stop Running




Is price in the Forex market manipulated?  Stop Runs?




The Forex Market is manipulated | Taking out of Stop Orders at Highs/ Lows and at Support/ Resistance Trading levels



In Day and Swing Trading the Forex market price is often manipulated (particular at News Release) to slightly penetrate Support and Resistance levels (e.g. important market Highs/ Lows, Pivot Points, round numbers or in general where stop loss orders and limit orders are anticipated) to trigger most of the market orders.

The often observed Failed First Breakout clears many Stop orders - Stop Runs - and fools the breakout traders who often enter the market at a slight break of important Highs and Lows (typical mainstream trading setup). In the FX Market price often reverses after a marginal break of an important chart level as many Stop loss orders and also many limit orders of the breakout traders are already triggered.

If the Stop Running/ Price Rejection got accomplished with the marginal temporary breach of the striking chart price level then Forex Market Manipulators are often targeting the opposite market direction to clear many stop loss orders of the fooled breakout traders. This manipulative price behavior and price pattern is repeatedly observable in the EUR/USD, GBP/USD, EUR/GBP as well as in the other Forex Majors.


The Intention of the Market Manipulators


Whether the market price is testing the important chart level again after the failed first breakout or reversing the market direction depends most often on the intention of the Market Manipulators. In general, the market price manipulation in Forex aims to catch the stop loss orders as well as the limit orders of the Breakout traders at important chart levels e.g. Highs/ Lows. The triggering of the stop loss and limit market orders allows the FX market manipulators to position themselves against the mainstream FX traders. The market manipulators can increase their profits if the manipulators can even fool more traders. This may explain why most of the traders and mainstream Forex trading strategies fail and will fail in the future.


How to deal with market price manipulation in the FX market


An efficient strategy to successfully trade the Forex market e.g. the EUR/USD and the GBP/USD might be to accept and understand the way the market price is manipulated. Hence, it becomes important to analyze the intention of the Forex Market Manipulators, which is to catch stops of the mainstream traders and to fool them into bad trading setups (mainstream trading strategies) by moving the market in the opposite direction targeting the mainstream stop zone e.g. at popular Support/ Resistance (Highs/ Lows).

In general, stop runs and market price manipulation in the forex market should be understood by FX traders and it should play an important part in a traders day and swing trading strategy to successfully trade the forex market. A wise alternative would be to stay away from forex pairs.


Market Manipulation and Chart Patterns



Popular and famous trading setups/ strategies and chart patterns like the Head and Shoulders pattern only succeed when these chart patterns are related to the manipulator's trading strategy. So it often falls back to the manipulator's intention. However, if the mainstream trading strategy will be a success, which probably is statistically insignificant, then this often reinforces the hype about the mainstream trading strategies.

Most often these famous trading strategies are fooling traders into bad setups and giving the Forex market manipulators the trading edge to know how most of the traders trade in the market, including the location of their stop/ limit order positions. Hence, the implementation of mainstream trading strategies and famous trading setups by most of the fx traders often ease the market price manipulation process of the FX manipulators to position themselves against the mainstream fx traders and thus to maximize profits.

However, there are also forex trading strategies which are not that famous/ popular. These trading strategies might be successfully exploited by technical chart analysis. Very often, these trading setups are in-sync with the market manipulator' strategy but not necessarily in every case. Thus, very often, reading the intention of the market price manipulator and to copy the market manipulator`s strategy could be a superior profit maximizing trading strategy in the forex market.


Price Manipulation through automated algorithmic trading in Forex



Furthermore, there are many automated algorithmic trading robots of the market manipulators, which are automatically employed on the short term time frames like 1 min, 5 min, hourly, programmed to use the manipulator`s market power to move market price against the mainstream traders (against popular trading strategies) to shift the odds of successfully trading the Forex market heavily against most of the FX traders putting the question of forex scam in focus.


Mainstream trading wisdom supports the success of price manipulation patterns



Interestingly, the success of this manipulative price action is also strongly supported by the mainstream trading wisdom of cutting loses short, letting winning trades run and the use of trailing stops. Although it is always important to trade with small and acceptable risk this trading behavior of mainstream traders ease the process of fooling breakout traders as they often get stopped out with the initial price retest of the penetrated chart level and if traders once get a clean breakout they often hold on the winning trade till the deeper retest is eroding the profit.

Clean breakouts are not so often as these kind of breakouts are often against the interest of the market manipulator. However, clean breakouts are more likely during news releases and against typical trading strategies - for more information go to Forex Market Manipulation analyzed


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1 comment:

  1. IMHO the manipulators are the Primary Dealers (& TBTFs) As may be seen in this link Primary Dealers control more than 73% of FX volume! What could "we" do if we controlled > 73% of FX volume? Anything we like.. Quote Wikipedia "according to the Wall Street Journal Europe (2/9/06 p. 20), all of the top ten dealers in the foreign exchange market are also primary dealers, and between them account for almost 73% of foreign exchange trading volume" Link --> http://en.wikipedia.org/wiki/Primary_dealer

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