The 2 “market modes” of any FX market…

[FractalFreak]

Hi traders,

it is time for me to select various topics within the MK and to elaborate a bit further / to express things which have been explained beforehand in a different manner, since that helps some here to understand the MK better.
Today I would like to talk about the fact that if you try to take a really “simplified” approach to any FX market, you should consider that it is either in a “rangy / MTS hunt / turkey shoot / IR mode” or in a “trendy / LTS hunt / squeeze-based / OR mode”.
I now try to post examples to explain further:

[FractalFreak]

Within the “rangy / MTS hunt / turkey shoot / IR mode”, like EU in the above screenshot, one can find some good MTS trades. There are H4 reversals. The SM algos try to maintain some “mean-reverting” price action on the H4. Highs and lows get cleared, but then the price falls back into the range.
If there is a yellow “net loss” indicator area, the market is sensitive towards DM switches. One can find some good trades on the H1.

[FractalFreak]

In a “trendy / LTS hunt / squeeze-based / OR mode”, the market is reaching for price areas further away (such as MA stops on the day charts, LTS etc.) and is driven by a (developing) squeeze.
That means, the red lines of the Net DM indicator and Dynamic Net DM indicator are pointing up, and eventual cross the green lines (for a squeeze move up).
In such a scenario, we can see “failed H4” reversals, so let us say the price is around the upper H4 band, but DM shorties (red bars) enter again.
The SM algos are locking in DM short positions (so red PB nests) and get them into drawdown.

IMPORTANT:
In such a phase, they may leave MTS on the table (for now or forever). The squeeze takes priority over an MTS.
Only after a DM switch will the SM algos consider to take previously untaken MTS.

[FractalFreak]

Make sure to understand the difference between these 2 modes.
Sometimes, a market stays within one mode for weeks and weeks.
However, once the mode switches, adjust and keep the above in mind.

That is the required “adaptiveness” an MK needs to have in order to do well over different market modes.

Do not use the wrong receipt for the wrong soup. 😉

D

[FractalFreak]

In particular, if there is a squeeze even on the day chart, that one takes priority!

[Admin SME]

[FractalFreak]

That is why an “MTS (medium-stop) is not an MTS.”

The context is important (well, if you try to achieve a high strike rate that is).

D

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