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Market State Regime Switch at the Open of the European Forex Session

By JohnLast 3228 days ago Comments (10)
От Forex Day Trading Systems

Here I would like to show a regime switch from the Asian session and the European session. On this shot the time is the London time, that is why I used a shot of London based broker.

At the Asian session we had a Stable and Volatile market state.

At the European the market state switched towards Trending and Quiet market state.

We need to monitor the market for events that are producing  a change in the market state. An opening of the European session and the London session are such kind of events.

This is a whole new paradigme because this is not directionnal indication. This knowledge eventually would help us to know what kind of tool to use in order to properly trade the market state.




  • londontrader 3227 days ago

    my recommendation is reading the 2 orderflow threads started by carnegie on ff

  • londontrader 3227 days ago

    btw john nice discoveries,its getting warmer 

  • JohnLast 3226 days ago

    It reminds me the film matrix, the heroes atart ask questions and finally they find out that the same questions were asked before again and again. 

    It is the same thing with the order flow, you wonder you ask questions and you wonder and finally you realize that this happened  before. 

    Anyway the hypotheisis in the group about Oanda are quite different. 

    The interesting idea is to have again a look about the fxorderbook. I think once we had a discussion but none of us made some serious work on it.



  • JohnLast 3226 days ago

    One of the most interesting posts I would like to cite:

    The concepts of Hitters and Sitters comes in. If you read the PDF a few times, you will see that if a market maker is net short on EBS at the top of a rally because everyone was buying at market. They have to put in BIDS to Buy lower on another platform like Currenex or Hotspot to adjust their position to breakeven or make a few $.

    This is the retracement of the bull run that does a few things. Hits the stops of the weak players who bought late in the rally, and allows the market makers who were nice enough to sell to you while the market was rising to adjust their exposure with lower bids , like I mentioned above.

    The pdf link and the post are in the previous post. 

    This is interesting and merit some analysis. For example when you read the Traders Tricks Entry by Joe Ross, the same kind of retracement have a completely different explanation. The explanation by Joe Ross is that the insiders are trying to hit the stops at the top and that is why they initiate their positions. Even if that idea is for the stocks markets Joe Ross uses this same pattern in the Forex Trading too. 

    The other explanation is that Market makers are rebalancing their stocks.

    Which one is true?

    How the Hot potato trading between the market makers affect the market. 

    And finally how the High Frequency Traders are affecting this whole structure. It is a legitimate question because most of the theories about interaction between informed traders and market makers were published before the rise of the machines (I like too much this metaphore).

    Questions, Questions, Questions.

    Maybe this merit a blog post. 


  • londontrader 3225 days ago


  • JohnLast 3224 days ago

    Really the market state is the key. For example I looked at the site of wave59 a video explaining how to use their neural networks. And look at the chart, the perfect trend, stable and quiet. You cannot wondoer why the neural net works fine, a buy and hold works too, a Moving averages cross - over would work too.

  • jaguar1637 3224 days ago

    so, 2 kind of strategies should be applied here

  • JohnLast 3224 days ago

    I do not understand? 



  • JohnLast 3224 days ago

    Basically the brain Trend would perform simultanioulsy at several different market regimes. What it does not like is the antipersistent market condition with high fractal dimension (FGDI in blue zone and iVAR above. 0.5 level).


  • JohnLast 3105 days ago

    Switching regime  of the market. Here you can see how you can make trend lines in order to appear the switching of the regime in the market. 

    Why bother?

    It matters because of the market regime depends the profitability of the EA systems. The market regime does not concern only the discretionary trading. More on this you can read here.


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