Trading Against the Crowd – How to Get the Most of a Big Player?

Trading Against the Crowd - How to Get the Most of a Big Player?

Today I will tell you how to trade against the crowd and not fall into the trap of a large player. Global levels of imbalance (GUDs) will help us in this. At the moment of the formation of GUDs (global levels of imbalance), the market goes out of balance and the probability of concluding a profitable deal doubles! Today we will consider the correct levels, how to find them on the chart and how not to get lost in the trade, following the majority – the crowd.

Using the levels, you will accurately see the expected direction of the price, find the correct entry points to the market for buying / selling. According to this trading scenario, you can close the maximum profit on completed trades.

In order to better understand the logic of working with global imbalance levels, let us recall the peculiarity of trading of large exchange players.

How does a major player trade?

The price does not move in a strictly straight line. Its movement is characterized as impulsive and directed in one direction or another.

A trend downward movement of the price, in which it is logical to make major sell deals, if we talk about medium-term trading. Most traders do this. What is a major player doing at this time? If he has set himself the goal of gaining a specific buy position, he will methodically “take out” all market participants, collecting the stops of sellers.

Moving in a downtrend, the price makes some highs that are important to us. In our case, it is advisable to set sell stops behind local highs.

We have just reviewed the situation with the EUR / USD currency pair on the M30 TF. What do you think will happen at this time on the older timeframes? Absolutely nothing new. The same logic works here, but it is already applicable to an upward trend, which we observe for the same currency pair on TF H4.

I must immediately notice that the most important and interesting level for us lies at the lowest minimum. It is to him that a major player will strive to bring the price and collect the maximum number of market participants. Next, we will observe a market situation that will lead to a reversal of the market trend. The reversal movement is difficult to find in the middle of the market. If this happens, then in the overwhelming majority of such cases, such a “reversal” is a normal recoil price movement.

With each sharp impulse price movement, traders begin to actively open positions in the direction of the growing momentum. If, for example, a buy candle starts to form on a downtrend, traders immediately begin to open buy positions. What will happen to their trades if a powerful bearish impulse candlestick begins to emerge at the same rate immediately behind the bullish momentum? In fig. Figure 6 shows how a major player successfully gathers all participants on a pullback impulse price movement

I would also like to draw your attention to the fact that before each reversal, the price updates its local minimum / maximum. In fig. 7, you can see that before each price reversal, its local extremes were updated. However, we see that the price rebounded from the current level and, having turned around, broke through the level of the previous local minimum.

Global level of disbalance 

Global level of disbalance

Moving in different directions, testing levels, breaking them or rolling back, the price moves in the main trend along a certain price range. To be able to see the global level of imbalance, you should understand the simple logic of its formation – consider a global reversal with good movement. The formation of the global level is the result of the struggle between buyers and sellers. Look for this movement itself after most of the players have already been knocked out of the market. Only in this case is there a possibility that the market will reverse.

Therefore, do not rush to enter the deal!

Consider an example of the appearance of sharp impulse movements and the formation of a global level of imbalance. In fig. 11 you see global highs (1,2,3) and lows, there are sharp impulse price movements.

Note that all sharp impulse movements are similar to each other. Therefore, we can assume that a similar formation will follow. Further on our chart a level is formed, which we call the “global imbalance level”. In other words, we see a breakout of the minimum, price withdrawal and its return soon. It is this level that is interesting to us, since from it we can consider the possibility of entering the market with global purchases.

I would like to warn you – not in every case it comes to price level retesting. In the case when it leaves without testing the level, we should look for the places where the market stops or its rollbacks and get attached to them.

For example, you find pullback points and then analyze this entire pullback mechanism in detail in order to make a correct and balanced decision on the further algorithm of your trading. An indispensable condition – take your time. If you are unsure about a particular situation, do not experiment with your trading account. The best solution in such a situation would be to simply watch the price in order to check the correctness of your conclusions in the future.

The formation of global levels of imbalance occurs in a similar way on other currency instruments. For example, if we look at TF H4, the chart of the GBP / USD currency pair, we will also find the places where the global imbalance level is formed. Of course, we find the very maximum that updates this level.

Usually, after a high is broken by a false break, the market can either reverse or roll back well. The chart, like the market itself, does not expand with all these price movements, but moves in a certain price corridor. At the same time, the price can roll back with or without correction, collecting the stops of those traders who entered the market correctly.