EXPOSING How Banks Hide their Trades — Transcript

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1. 0:00After 7 years of trading, by myself,
2. 0:02with prop firms, live in front of
3. 0:05millions of people, sometimes
4. 0:06successfully,
5. 0:08It's a great session, guys. sometimes
6. 0:10unsuccessfully, [ __ ] my pants, bro.
7. 0:12Guys, I'm calling it a day. [ __ ] this
8. 0:15market. and talking and trading side by
9. 0:17side with some of the best traders in
10. 0:18the world, I understood that if there is
11. 0:20one thing you should know as a trader is
12. 0:22liquidity. Because liquidity is the
13. 0:24driver of markets. And we've been
14. 0:26talking a lot about how liquidity works,
15. 0:28about order flow, and the interaction
16. 0:30between aggressive liquidity and passive
17. 0:33liquidity. And with liquidity heat map
18. 0:35softwares like Deep Dome, you can see
19. 0:37where these resting liquidity areas lie
20. 0:40in the market without assuming that
21. 0:41there's some stops up there, maybe. But
22. 0:44you can actually see those orders in the
23. 0:46books of each exchange with something
24. 0:49called level two data. And this is
25. 0:51awesome because market are typically
26. 0:53attracted by these liquidity areas.
27. 0:55Sometimes even a normal heat map with a
28. 0:57normal data feed will not be able to see
29. 1:00all the liquidity. Sometimes, it's
30. 1:02hidden where even normal order flow
31. 1:05can't see. And below the surface level,
32. 1:07one of the most common patterns
33. 1:09institutional traders use in the
34. 1:11professional space to hide these huge
35. 1:14orders below the surface is called
36. 1:17iceberg. Imagine it exactly like an
37. 1:19iceberg. An iceberg might have 10% of
38. 1:21its mass above the surface of the sea,
39. 1:23but the biggest chunk of the iceberg is
40. 1:25[music] below the surface. You can't
41. 1:27really see it. Well, institutional level
42. 1:29traders that trade with institutional
43. 1:31level size will do exactly the same
44. 1:33thing with their orders. They will show
45. 1:35only some in the surface and hide the
46. 1:38rest below. But here's the catch. With
47. 1:40the right tool and with the right data
48. 1:42feed, you can spot it. And you can see
49. 1:44where smart money is really entering the
50. 1:47market [music]
51. 1:48with a level of precision that no other
52. 1:49trading tool can give you. So, let me
53. 1:51introduce you to icebergs. We're going
54. 1:54to see the mechanic behind it, how it
55. 1:56works, how to set up a heat map software
56. 1:59from scratch in order to be able to see
57. 2:01these orders, and how to use this
58. 2:03information and when. So, let's start
59. 2:05from understanding that there's a
60. 2:06difference between the classic retail
61. 2:08liquidity concepts and actual liquidity.
62. 2:10So, we need to kind of clarify for those
63. 2:11who, you know, are still maybe in the
64. 2:14usual ICT concepts or the usual suspect
65. 2:16of the trading space where you believe
66. 2:19liquidity to be stop losses or buy stops
67. 2:22above a high and sell stops below a low
68. 2:26that price will eventually target, price
69. 2:28will eventually hunt for, which is
70. 2:31typically buy stops and sell stop. Well,
71. 2:33that's just partly true, that's just one
72. 2:35side of the liquidity. That's just like
73. 2:37seeing not even half the picture. This
74. 2:39is like, uh, let's say 10% of the
75. 2:43picture, right? Of what liquidity
76. 2:44actually is. This is 10% of the
77. 2:46liquidity. The actual liquidity is a
78. 2:49concept that is a little bit more
79. 2:51nuanced, and actual liquidity is what
80. 2:54actually moves the market. Passive
81. 2:56liquidity, which are buyers and sellers,
82. 2:59so buy buy liquidity below the price and
83. 3:02sell liquidity above the price, and
84. 3:04aggressive liquidity, that are these
85. 3:06bubbles that we're going to learn what
86. 3:08exactly they are. So, you have one side
87. 3:11of the liquidity, which is called
88. 3:12aggressive, one side that's called
89. 3:14passive. These are so-called market
90. 3:16takers, these are the market makers.
91. 3:18These make the markets, these take the
92. 3:21markets. And this is how liquidity
93. 3:23actually works. This is what liquidity
94. 3:25actually is. And to read liquidity in
95. 3:28this way gives you a more comprehensive
96. 3:30view about the market than just
97. 3:32considering one side of the liquidity to
98. 3:34be the only liquidity you need to care
99. 3:35about, right? So, let's start from
100. 3:37understanding the very basics. So, this
101. 3:40is an order book, okay? And you have it
102. 3:42for every market. For example, let's say
103. 3:44this is the price of an ounce of gold,
104. 3:47of Bitcoin, of US oil, or, you know, the
105. 3:50S&P 500, whatever that might be, right?
106. 3:53And all This thing basically means that
107. 3:55at 101, at this price, there are 33 sell
108. 4:01offers. Okay? So, there 33 people
109. 4:04placing one contract each, for example,
110. 4:05or one guy placing 33 contracts or 33
111. 4:08Bitcoin or 33 gold futures or 33 Nasdaq
112. 4:12future for sale. Okay? So, he's
113. 4:14basically offering to sell. Just
114. 4:16offering. He didn't sell it yet. He
115. 4:18needs someone of these guys then to
116. 4:21accept that offer. We're going to see
117. 4:22that how that works. Above here, we have
118. 4:2542 Bitcoins ready to be sold. 56 Bitcoin
119. 4:29ready to be sold. 64 Bitcoin ready to be
120. 4:31sold. So, these are the offers of
121. 4:34sellers, the so-called ask. And the best
122. 4:37ask, of course, is the lowest price at
123. 4:39which someone is ready to sell, which is
124. 4:41best ask, 101. This, instead, is the
125. 4:44bid. So, all of these are market buy
126. 4:48orders. So, they're buy limit and
127. 4:50they're offering to be a buyer at, for
128. 4:53example, 99. So, there's Then you have
129. 4:5533 at 98, 51 Bitcoins at 97, 60 Bitcoin
130. 5:00at 96, and so on and so forth. So, if
131. 5:02you were to buy, for example, let's say
132. 5:04you want to buy Bitcoin. You have two
133. 5:06options. You either join the offers and
134. 5:08place your buy limit here and basically
135. 5:11be a passive buyer and be a market
136. 5:14maker. You offer to buy. You offer to
137. 5:15buy your own terms. I want to buy only
138. 5:17if price gets to 98. Or, you can And And
139. 5:22that will mean that you have to wait for
140. 5:24a seller to come and accept that offer.
141. 5:27Okay? The other option you have, if you
142. 5:29don't want to wait, if you cannot afford
143. 5:31to wait, is you can buy, for example,
144. 5:34one uh Bitcoin or 50 Bitcoin, whatever
145. 5:36that is. You can buy them from these
146. 5:38guys, cuz these guys are offering to
147. 5:39sell right now. Like, they're ready to
148. 5:41sell if you accept to pay that specific
149. 5:44price, 101. So, let's say you're in a
150. 5:47hurry, you need to buy Bitcoin now.
151. 5:49Perfect. You're going to accept that
152. 5:51offer and buy your Bitcoins from them.
153. 5:54So, you either wait for a seller to come
154. 5:56to you, or you go to the seller and you
155. 5:58accept their offer. This is why we call
156. 6:00this market takers and market makers
157. 6:03because these are like the meat at the
158. 6:05counter, right? This is meat. Buy meat
159. 6:09and sell meat. Do you want to give some
160. 6:11meat? You know,
161. 6:12>> [laughter]
162. 6:12>> it's a bit weird. Do you want to offer
163. 6:14some meat or do you want to take the
164. 6:16meat, right? So, these one eat the
165. 6:19liquidity, the passive liquidity, and
166. 6:21basically accept to pay a slightly
167. 6:23higher price, just like in an auction,
168. 6:25right? So, as we will see now, let's say
169. 6:27a buyer comes, right? A buyer comes and
170. 6:30needs to buy now 25 contracts, 25
171. 6:33Bitcoins, whatever that is, and he's
172. 6:34accepting to pay a slight spread. So,
173. 6:37instead of, you know, buying at 99,
174. 6:40where most of the buy offers are, he
175. 6:42actually accepts a sell offer at 101.
176. 6:45one and gets filled. So, out of those 33
177. 6:48contracts, 25 will be executed and
178. 6:50matched with these, and eight will be
179. 6:52remaining at 101. Now, a seller comes,
180. 6:55an aggressive seller that cannot wait
181. 6:57for someone to fill him. Someone that
182. 7:00actually needs to sell now aggressively,
183. 7:02and he eats with his 25 contracts, he
184. 7:05eats some 25 of those 41 that is passive
185. 7:09liquidity at 99. So, they consume that
186. 7:12liquidity, only 16 are left. Then,
187. 7:14another buyer come. This one is a big
188. 7:15buyer, 75 Bitcoins. Well, there's no 75
189. 7:19Bitcoin at 101. Maybe he will take some
190. 7:23here and some over here. So, he will be
191. 7:25able to fill eight right here, and now
192. 7:28the best ask will move here, and there's
193. 7:3042. Now, he still has 67 that he he
194. 7:33wants to buy. Well, 42 will be eaten
195. 7:36completely, and the remaining 25 will be
196. 7:38eaten above. So, with one big order, he
197. 7:41was able to eat this liquidity, this
198. 7:44liquidity, and this liquidity. And his
199. 7:47order basically got slipped, we say.
200. 7:49This is called slippage when you buy
201. 7:52some here, buy some here, buy some here,
202. 7:54you get slipped because there's not
203. 7:55enough liquidity to fill all of your
204. 7:57order at the same place. So, this is
205. 7:59called slippage. So, the main takeaways
206. 8:02from these are you can either be
207. 8:03passive, so you buy or sell at the price
208. 8:06you want, so you have pricing authority,
209. 8:08but you have no guarantee that you're
210. 8:09getting filled, right? You can place
211. 8:11your buy limit here and hope that
212. 8:13someone will fill you, or you can act
213. 8:15now and choose to accept these slightly
214. 8:18less inconvenient, slightly more
215. 8:20inconvenient sell offers. Or you can be
216. 8:22aggressive. You can buy and sell when
217. 8:24you want, so you have execution
218. 8:26authority, but you'll likely pay a worse
219. 8:29price, which is the spread, right? And
220. 8:31this brings us to a very important
221. 8:33concept. Because if your size is a
222. 8:35retail trader size, okay? And you buy
223. 8:38Bitcoin, for example, have you ever had
224. 8:39a problem buy Bitcoin? Not really,
225. 8:41right? Or buying anything in financial
226. 8:43markets? No, because your size is so
227. 8:45small that you will be easily executed
228. 8:47inside of the market. Maybe there's a
229. 8:49market maker, maybe there is some other
230. 8:51traders that is your counterpart at any
231. 8:54moment. And because your size is small,
232. 8:56let's say you're you have a five
233. 8:57contract [snorts]
234. 8:58order, well, it's going to be easy for
235. 9:00you to find a seller. But let's say
236. 9:01you're Blackrock and you need to buy 5
237. 9:04million of contracts. Well, it's not
238. 9:07going to be that easy because if you
239. 9:09were to buy now, because if you have to
240. 9:11buy all of them at once, you have two
241. 9:14options. You either place an enormous
242. 9:17buy order here, everyone will see it in
243. 9:19the book, and no one will ever think of
244. 9:22selling to you because you probably know
245. 9:23something they don't. So, everyone will
246. 9:25start buying because they'll try to
247. 9:27front-run you. But at the same time, if
248. 9:29you choose to buy all of these markets,
249. 9:31you're going to have to accept to pay
250. 9:33higher and higher and higher and higher
251. 9:35prices and be slipped all the way up and
252. 9:38move price super fast. And that's also
253. 9:41inconvenient. So, what happened is some
254. 9:44mathematicians thought about, "Hey, how
255. 9:47about we take this huge order, and we
256. 9:50split it into multiple small ones. And
257. 9:52we pour it in the market a little bit at
258. 9:54a time, a little bit at a time, a little
259. 9:56bit at a time, and basically fraction
260. 9:59this order into multiple millions of
261. 10:02small orders, right?" So, the first step
262. 10:05is they fraction these orders. The
263. 10:07second step is they optimize. So, maybe
264. 10:10some of these will be placed here in the
265. 10:13book. Some will be used market to see if
266. 10:16they can get some good fill with the
267. 10:18sell offers. So, they will optimize the
268. 10:21filling of their order to pay a little
269. 10:23less spread, and at the same time have a
270. 10:26little bit less transactional cost by
271. 10:28placing these buy offers instead. So,
272. 10:31this brought up a huge science behind
273. 10:33this that basically tries to understand,
274. 10:36"How do we optimize the execution of the
275. 10:38orders?" How many do we put
276. 10:40aggressively, and how many do we put
277. 10:42passively? And there's a lot of, you
278. 10:44know, algorithms that try to optimize
279. 10:46this. For example, the VWAP, the TWAP,
280. 10:48percentage of volume, implementation
281. 10:50shortfall, and many other that basically
282. 10:53try to optimize the filling of these
283. 10:55orders so that the transaction cost of
284. 10:58huge operator is optimized, and they can
285. 11:01have some alpha also, and some
286. 11:03optimization in the way they execute
287. 11:04these huge orders. So, so that's why
288. 11:07there is some level of predictability in
289. 11:08order flow because typically when
290. 11:10there's huge market participants coming
291. 11:12into the market, and they put a lot of
292. 11:13orders, well, this is likely a small
293. 11:15part of a huge meta order that they're
294. 11:17planning to put in the market, right?
295. 11:19And so, typically bullish order flow
296. 11:21will lead to more bullish order flow,
297. 11:24okay? And we can see these order flow in
298. 11:26these type of charts that we're going to
299. 11:27see very soon. And so, because there is
300. 11:30a constant need for liquidity by these
301. 11:33huge market participants because they
302. 11:35have so many freaking orders to fill and
303. 11:37there's only so many in the markets.
304. 11:40Well, if there's going to be something
305. 11:41like this happening when there's a huge
306. 11:44bunch of meat right below here, what
307. 11:47will tend to happen is that market will
308. 11:50be attracted by these areas and they
309. 11:52will push price down and they will push
310. 11:54price down and eat all of that
311. 11:57liquidity. This is the principle behind
312. 11:59the liquidity heat map. The liquidity
313. 12:01heat map is nothing more than if you
314. 12:03were to give a heat score to how much
315. 12:06liquidity there is, you will have very
316. 12:08hot areas where there's a lot of
317. 12:10liquidity and kind of not so hot areas
318. 12:12where there's not a lot of liquidity,
319. 12:14right? So, big liquidity areas, hot.
320. 12:17Small liquidity areas, cold or not so
321. 12:19intense. And with some specialized
322. 12:21software, you can also see not just the
323. 12:24current depth of market and the current
324. 12:26liquidity, but how this liquidity
325. 12:28changed through time. If an order, for
326. 12:30example, was moved first here, then
327. 12:32here, then here. If some orders were
328. 12:35completely deleted and every single
329. 12:38order, buyer or seller, aggressive, of
330. 12:40course, that ate the best liquidity
331. 12:43offered. So, this is an example of an
332. 12:45actual liquidity heat map. And as you
333. 12:47can see, there's going to be some hot
334. 12:49levels and here you have all of the the
335. 12:52current level of liquidity areas. And
336. 12:55here you can see you have a 465
337. 12:58contract order right up there. And as
338. 13:01you can see, the the first thing that
339. 13:02happened right after is that price pumps
340. 13:04up incredibly fast and goes and eat that
341. 13:08level of liquidity. The The run towards
342. 13:10this level of liquidity was really,
343. 13:12really obvious. As it was here, right?
344. 13:14They were both of these orders. The
345. 13:16first order got taken and then the other
346. 13:19one got taken care of as well, okay? So,
347. 13:21price will be drawn to these liquidity
348. 13:23areas. And with the software like this
349. 13:25one, you can see also the bubbles. So,
350. 13:27this is the first step, right? So, you
351. 13:28kind of understand that um but as we
352. 13:31said, sometimes market participants
353. 13:33don't want to advertise their position.
354. 13:36They don't want to show that they want
355. 13:38to sell or buy. So, what they will do is
356. 13:40they will only show, for example, eight
357. 13:43orders offered to buy, but every time a
358. 13:46seller comes and accepts that offer,
359. 13:49every time one of these bubble pops up
360. 13:51and eats that liquidity, a new fresh
361. 13:53liquidity is presented. Once that one is
362. 13:56eaten as well, a new liquidity magically
363. 13:59pops up and so on and so forth until
364. 14:01they've basically filled this huge order
365. 14:05without showing it and without creating
366. 14:07a liquidity effect, a seeable liquidity
367. 14:10area, but by hiding it below the
368. 14:12surface. And with the And with a normal
369. 14:15heat map like this one, you cannot even
370. 14:16see this. Because if I click and go to
371. 14:18source settings, you can see that the
372. 14:20source type is MBP, but I should put
373. 14:24MBO. What does that mean? Good question.
374. 14:27Let's kind of refresh our minds on how
375. 14:29data feeds work. So, all trading
376. 14:31activity, all order flow happens inside
377. 14:33of an exchange. In our case for Nasdaq
378. 14:35and S&P futures, it's the CME, the
379. 14:38Chicago Mercantile Exchange, and this is
380. 14:39where all the transactions happen. So,
381. 14:42what you can do is you can ask for the
382. 14:44exchange to provide you with this
383. 14:46information, with the information of
384. 14:48order flow, with all of these orders
385. 14:50that are entering the market. So, the
386. 14:51exchange will send the order to a data
387. 14:53feed provider like Rithmic, CQG, and
388. 14:56DXFeed that will be fed to, for example,
389. 14:59an order flow platform like deep charts,
390. 15:01like deep DOM as a stream of order flow
391. 15:05data, a live stream of order flow data,
392. 15:08so that ultimately you can see it in
393. 15:11your charts. So, this type of data feed
394. 15:14can show up in many different versions.
395. 15:16The first one being level one. A level
396. 15:19one data is typically very cheap,
397. 15:21sometimes provided even for free, And
398. 15:23what a level one data feed or top of
399. 15:26book shows you is mostly all of the
400. 15:29executed orders, whatever amount of
401. 15:31orders in the best bid, whatever amount
402. 15:32of orders in the best ask. That's it.
403. 15:34You cannot see a liquidity heat map like
404. 15:37this one if you have a level one data
405. 15:40feed because you would probably see only
406. 15:41this 17 and 53, only the first two best
407. 15:45level. And you will not see the entire
408. 15:47treasure map, if you know what I'm
409. 15:49talking about. But this is good enough
410. 15:50if, for example, you want just a
411. 15:52footprint chart. A footprint chart like
412. 15:54this one where you can see how many
413. 15:55orders were executed at every price
414. 15:57level once they're already executed. So,
415. 16:00for volume profiles, for footprint
416. 16:01charts, for delta, and all this kind of
417. 16:04stuff, level one is technically good
418. 16:06enough. But if you want this, it's not.
419. 16:09So, that's why you need a level two data
420. 16:13feed, which basically is which is known
421. 16:15as full market depth, which is the full
422. 16:19which shows you the full depth of
423. 16:20market, the full order book, and every
424. 16:23single liquidity level at every price,
425. 16:26not just the best bid and the best ask.
426. 16:28Plus, of course, your good old bubbles
427. 16:31or orders. So, this is both good for
428. 16:33footprint chart and also good for heat
429. 16:35map because a heat map needs all of the
430. 16:38levels of the book in order for it to
431. 16:40make sense and show you the liquidity
432. 16:42areas that matter. But this is just an
433. 16:45MBP data feed, which means market by
434. 16:49price. So, you'll see how much market
435. 16:52there is at every single price. Market
436. 16:56by price. But here, these 78 contracts
437. 17:00can be one guy putting 78 contracts, it
438. 17:02can be 78 small retail guys playing
439. 17:05placing one contract each. And with MBP,
440. 17:09you will never be able to learn the
441. 17:11difference. So, with a data feed like
442. 17:13CQG, they will typically provide level
443. 17:16two but with MVP. But, feeds like the X
444. 17:19feed or rhythmic will provide a MBO data
445. 17:24feed, which is still level two, as in
446. 17:26you see all of the orders of the order
447. 17:28book, but some people also call it level
448. 17:31three because it doesn't show you just
449. 17:32the full market depth, but it also shows
450. 17:34you the market by order. So, how many
451. 17:37orders are in each and every single
452. 17:40level of the book, so you can know if
453. 17:43that's one big guy or multiple small
454. 17:45guy. Both on the passive side and also
455. 17:48on the aggressive side. So, each
456. 17:50aggressive order and each passive order
457. 17:53have their own unique order ID. And this
458. 17:57is the most granular level of order flow
459. 17:59data money can buy. But, why do you need
460. 18:01to know this exactly? Well, back to our
461. 18:03iceberg. The thing about iceberg orders
462. 18:06is that even though they look like
463. 18:08multiple small orders, they all have the
464. 18:11same order ID. So, thanks to MBO data
465. 18:15feeds, we can see that these small
466. 18:18orders of eight contracts have the same
467. 18:20order ID, so they're likely part of one
468. 18:23big order. And we can spot institutions
469. 18:26hiding these orders thanks to MBO data.
470. 18:30And the platform you're about to see, by
471. 18:31the way, is called deep dome, and we've
472. 18:32just released it on deep charts. And if
473. 18:35you have an active deep chart
474. 18:36subscription, you can get it as a
475. 18:37lifetime add-on at like $300. Of course,
476. 18:40as an add-on to your current active deep
477. 18:43chart subscription, which is awesome.
478. 18:44So, so if you want to get your hands on
479. 18:45the same software, click the link in the
480. 18:46description because these launch prices
481. 18:48are going to end very soon. And on top
482. 18:50of that, you get a liquidity bootcamp
483. 18:52from Enrico Stucky, Fabio Valentini, my
484. 18:54mentors in order flow, and our friend
485. 18:56Carmine Rosato. It's going to be
486. 18:57awesome, so I'll see you there. Now,
487. 18:58back to our heat map. So, what I'm going
488. 19:00to do now is I am going to right click,
489. 19:03go on to source settings, and select
490. 19:06MBO. And as you can see, nothing has
491. 19:08changed. Why is nothing exchanged?
492. 19:10Because, of course, I'm only plotting a
493. 19:13normal liquidity heat map. I still
494. 19:14didn't activate the iceberg tracking.
495. 19:17But the first thing I could do for
496. 19:18example is I can go on properties and on
497. 19:21the heat map DOM levels section, if I if
498. 19:25I go on display mode biggest order and
499. 19:28total, you will now see that there's you
500. 19:31know you will now see that something has
501. 19:32changed in our heat map. Now not only
502. 19:34you can see how many orders there are
503. 19:36but also what is the big order inside
504. 19:39there. So you can know for example that
505. 19:41this guy is a 795
506. 19:44contract guy. Not exactly a retail,
507. 19:46right? This is not a crowd of retails.
508. 19:49And this is very good. This is very good
509. 19:52information to know. Also here we knew
510. 19:54that 400 was just one guy. Same same
511. 19:57thing over here, 94 was just one guy out
512. 20:00of this 135. And so at this point I can
513. 20:03go into right click and indicators or go
514. 20:05up here and click on indicators and add
515. 20:09the deep iceberg tracker. And there you
516. 20:11go. Now we can have a clear
517. 20:14representation of when there's an
518. 20:17iceberg in the market. And for example
519. 20:19here throughout this whole market phase,
520. 20:22you can see there was an iceberg for 125
521. 20:25contracts hidden below the surface. So a
522. 20:28seller started accumulating here,
523. 20:30started accumulating here, and
524. 20:32accumulating here again. And price and
525. 20:35price dropped before the news came out.
526. 20:38But also in the middle of this
527. 20:40happening, of this mess, you could
528. 20:42clearly see there was a big buyer
529. 20:44reloading and a big seller. There was a
530. 20:47huge battle over here. But this is, you
531. 20:49know, what happens during news events.
532. 20:52But this is, you know, a typical mess
533. 20:53that happens during news event. And now
534. 20:56markets are closed and today, you know,
535. 20:57it was bank holiday, whatever. I think
536. 21:00it's best if we click on options and
537. 21:03replay and maybe go to a the day
538. 21:05instead. I'm going to include MBO on my
539. 21:08replay and set. It's going to load the
540. 21:10data for the replay. Let's take some
541. 21:12look Let's take some more contrast in so
542. 21:15we can see. And as you can see there's a
543. 21:17lot of these icebergs in the New York
544. 21:18session. There's a lot of institution
545. 21:20buying and selling and buying and
546. 21:22selling at every single level of price.
547. 21:24So what we can do, another cool thing we
548. 21:26can do, is for example, we can go on
549. 21:29indicators, iceberg, and filter out only
550. 21:33big icebergs. Let's say above 150
551. 21:36contracts. So let's apply. Now this is
552. 21:38much cleaner. Now you don't have the
553. 21:39small icebergs. The small institutional
554. 21:42orders. We just have the big guys. And
555. 21:44when you filter for the big guys, look
556. 21:46at what happens. Iceberg here, probably
557. 21:49keeps reloading here. Boom. Price drops.
558. 21:52This was the high of the entire session.
559. 21:55Price melted right after this huge
560. 21:58iceberg. Then we had some reversal and
561. 22:00we touched the bottom here. Where did we
562. 22:03touch the bottom? On the obvious
563. 22:04liquidity area? No, sir. We touched it
564. 22:08on the liquidity areas plus with an
565. 22:11iceberg of 160 contracts as well. So
566. 22:14they were not satisfied over here. They
567. 22:17filled an order and then they reloaded
568. 22:18160 more two contracts at a time. And
569. 22:21exactly when these moments happen, where
570. 22:24these huge market participants absorb
571. 22:27all of the market pressure of buyers,
572. 22:29they build this wall of liquidity that
573. 22:31buyers can't pierce through, price
574. 22:33melts. They do the same thing on the buy
575. 22:35side. Huge buyer here absorbing all of
576. 22:37these selling pressures and boom, that
577. 22:40plots the low of the market and price
578. 22:42reverses. And and so on and so forth. Of
579. 22:46course, it doesn't happen every single
580. 22:48time. As you can see here, there was a
581. 22:50huge liquidity level that responded and
582. 22:52then these There was a huge buyer here
583. 22:54that kept buying here, that kept buying
584. 22:57here. So he kept buying all the way
585. 22:59through. He didn't really plot the low.
586. 23:01This could be either a guy taking
587. 23:03profits on shorts as well, or a guy
588. 23:06reloading a lot of buying contracts
589. 23:08because he has a buy program and he
590. 23:10ultimately knows that, you know, we're
591. 23:12buying today. And at some point in the
592. 23:14day that's exactly what happened and
593. 23:16price completely reverses above that
594. 23:18huge accumulation level. So, of course,
595. 23:20they're not going to plot the high every
596. 23:22single time. I wish it was like that,
597. 23:24but if it was like that, we would all be
598. 23:26rich. But, of course, you need to give
599. 23:27it context. You need to put it in the
600. 23:29context for example, of let's say an
601. 23:31opening range breakout strategy or maybe
602. 23:34you want to have your daily volume
603. 23:36profile activated and see which are the
604. 23:39areas where this is happening, right?
605. 23:41So, for example, you might just want to
606. 23:43take a look at things that happen only
607. 23:46at the value area highs or at the edges
608. 23:49of the profile and then you know it's
609. 23:51right where I want to see it, right?
610. 23:53And, you know, this kind of stuff,
611. 23:55giving it a little bit of context.
612. 23:56There's some other really cool stuff
613. 23:58that, of course, you can do. No, wait.
614. 24:00You can, of course, customize it however
615. 24:01you like it. Let's say I want to have it
616. 24:03red. I want to have it green, more
617. 24:06punchy. Active icebergs are basically
618. 24:08icebergs that haven't yet filled
619. 24:10completely. So, icebergs that were not
620. 24:12completely filled. So, yeah, now that's
621. 24:14a lot better. Now I can see them better.
622. 24:16Let's now Let's now try and replay
623. 24:18another day. Come on. Okay. Buggy trace.
624. 24:21Okay, this Let's Let's try this day.
625. 24:23This is another example. Yeah, here we
626. 24:25saw a guy buying 150 contracts hidden
627. 24:29below the surface. Then another guy
628. 24:31starting to accumulate sell positions
629. 24:33here and then re-accumulating sell
630. 24:35positions here. So, we see that sellers
631. 24:38are very active and then they start
632. 24:40getting aggressive. And then when they
633. 24:41go up, they start accumulating again and
634. 24:44then you see price dropping like hell.
635. 24:47Again, of course, this is just some very
636. 24:49basic example. The ideally you want to
637. 24:51backtest this in your strategy. So, I
638. 24:53strongly advise you to do this to see if
639. 24:56they happen, for example, at some
640. 24:57specific areas of the volume profiles
641. 24:59like this one, like this one over here,
642. 25:01where is the exact value area? That's
643. 25:03where they start accumulating sell
644. 25:04positions. Well, that's a good
645. 25:06indication that price might continue
646. 25:07lower after that. Or maybe they do it
647. 25:10right above a important high. That's
648. 25:13also another cool place to look for
649. 25:14these to spot some very high probability
650. 25:17reversals. Let's try to replay this in a
651. 25:19session, but at the beginning of the
652. 25:21session. So, at 4:30 my time, which
653. 25:23would be 9:30 market time. So, we have I
654. 25:26don't know if that was a news, but look
655. 25:28at what happened here. And you're going
656. 25:29to start seeing this working very well
657. 25:32in London sessions, by the way. London
658. 25:34session is where, you know, big orders
659. 25:36like these, or let's say before the
660. 25:38regular trading hours, right? Because
661. 25:39regular trading hours starts here. When
662. 25:41this happens in the London session or in
663. 25:44the, let's say, extended trading hours,
664. 25:46that's where it has the most power. Look
665. 25:48at the Look at this one, bro. Huge
666. 25:50absorption here. Boom. And then below
667. 25:52here, another big absorption before
668. 25:55market opens. Kablao. Keeps absorbing,
669. 25:58and look at what happens at the
670. 25:59beginning of the session. Boom. They're
671. 26:00still absorbing. Well, this is clear
672. 26:02It's clear where we're planning to go,
673. 26:04right? Let's see what happens if we
674. 26:06replay. Yep, there you go. So, for
675. 26:08example, let's see if we can, you know,
676. 26:10find a way to make this profitable. We
677. 26:11see that we're in an accumulation area.
678. 26:14And we're in an accumulation area in the
679. 26:16highest volume node of the session. We
680. 26:18have the value area low below here, um,
681. 26:21and it ends pretty much here. This is
682. 26:23another big important level, which is
683. 26:25the low volume node, which is this one
684. 26:26over here, the the the one highlighted
685. 26:29in green. Let's see if we maybe try and
686. 26:32buy there if we align ourselves with the
687. 26:36smart money. So, I'm going to activate
688. 26:38the trading panel and select my uh, back
689. 26:40test. Okay. For example, test. And we
690. 26:43see that smart money is buying now. It's
691. 26:45buying here. It's buying here. It's
692. 26:47still buying here. Let's see if we have
693. 26:50a test on the low volume node, and maybe
694. 26:52we can start buying. So, let's for
695. 26:53example, say that we want to buy with a
696. 26:55stop loss based on our on the money. So,
697. 26:57for example, I want to risk in this
698. 26:59position $5,000, let's say. We can start
699. 27:02buying, right? And put our stop loss
700. 27:05Nope. Nope, wait. I first have to go and
701. 27:07click risk instead of quantity and I can
702. 27:09buy the exact quantity when I place my
703. 27:11stop loss, for example, below this low
704. 27:13volume node. And then I want to add a
705. 27:15little bit more if we reach the low
706. 27:17volume node. So, for example, here with
707. 27:19my stop below here, also below the
708. 27:22entire high volume node over here. Let's
709. 27:25see. Let's see if we get filled on the
710. 27:26second one. No, apparently we don't.
711. 27:29Let's see if we get another iceberg on
712. 27:31our direction, we can for example buy
713. 27:34Oh, there we go. Oh my god, this was a
714. 27:361,000 contract iceberg. That's some huge
715. 27:41stuff. So, let's cover ourselves below
716. 27:43the highest volume node here and look at
717. 27:45that. We are in the side of smart money.
718. 27:481,000 contracts all absorbed. Absorbed,
719. 27:51absorbed. We saw it before any retail
720. 27:54could ever imagine. And as of now, we're
721. 27:56probably breaking above the opening
722. 27:58range breakout. Let's see if we can see
723. 28:00some interesting activity. Oh, we have a
724. 28:02huge sell order over here. Let's see
725. 28:04what they're going to do about it. Well,
726. 28:06they accumulated even more. Look at
727. 28:07that. They accumulated 500 more buying
728. 28:10with an iceberg. Sold a little bit, but
729. 28:13200, it's not that much. Let's see if we
730. 28:15can maybe put our stop to break even.
731. 28:17Oh, we have more buyer absorbing. Let's
732. 28:19see if we can add a position. Yeah,
733. 28:21we've added a little bit more. I think
734. 28:23we did. Did we? Well, the idea was to
735. 28:25add a little bit more there, yeah. And
736. 28:27now we see some sellers kind of
737. 28:29deloading their position. So, maybe now
738. 28:31it's time to sell maybe at least six
739. 28:35contracts, for example. So, we're going
740. 28:36to half halving our exposure so we can
741. 28:40sell market, yeah. Now we only have six
742. 28:42contracts of exposure and the other ones
743. 28:44we can, you know, take the final profit
744. 28:46when we see another big iceberg if
745. 28:49there's any. Let's see. Ooh, there it
746. 28:51is. Now, I was a little bit too fast, so
747. 28:54let's cancel and flat. So, we unloaded
748. 28:56our position. Ooh, but we have more
749. 28:57buyers joining the party. We didn't have
750. 28:59the time to join again, but this was
751. 29:01exactly the best point to take profits
752. 29:03and then maybe reload once more. And
753. 29:05they reloaded again. Let's see because
754. 29:08there's a huge levels of liquidity here
755. 29:09plus absorbing. Yeah, there you go. And
756. 29:12look at look at that again. Boom. More
757. 29:14icebergs more icebergs again plotting
758. 29:16the low of this move. We have some
759. 29:19liquidity to go and eat here. Let's see
760. 29:20if buyers are still hungry or if they've
761. 29:23had enough because they've eaten a lot
762. 29:25already. So, all of this liquidity now,
763. 29:27let's see if they're going to be still
764. 29:28hungry, but I doubt so. Yeah, there you
765. 29:30go. But still, 500 contracts being
766. 29:32absorbed and price moves up. Then
767. 29:35another iceberg over here. Price slowly
768. 29:37retraces and then moves back up. Let's
769. 29:40see if they're going to finally eat that
770. 29:41liquidity because this 500 contract was
771. 29:44really huge. Yeah, they're deleting some
772. 29:46of this. So, yeah, there you go. Amazing
773. 29:49stuff. This is the world of liquidity,
774. 29:52guys, and icebergs. And that was exactly
775. 29:55what icebergs are, how to use them, and
776. 29:58now you can also have the ability to
777. 30:00read the market with the lens of
778. 30:02professional traders to spot where smart
779. 30:04money's entering the market for real. If
780. 30:07you enjoyed this video, you want to see
781. 30:08more around this topic, let me know in
782. 30:09the comments. Leave a like as always,
783. 30:11and I'll see you in the next one. Ciao.