How Banks Hide their Orders Behind Price: a Guide on Icebergs — Transcript

Full transcript

1. 0:00yes big Banks and big Financial Market
2. 0:02participants basically manipulate the
3. 0:04market on a daily basis because with
4. 0:05their huge orders they move prices but
5. 0:08proper Market manipulation is not about
6. 0:10hunting for stop- losses or fake outs
7. 0:13today we're not going to talk about
8. 0:14price action or retail stuff today we're
9. 0:16going to talk about something that 90%
10. 0:18of retail Traders are not even aware of
11. 0:20and that you can use to have an unfair
12. 0:22informational advantage on the market
13. 0:24now picture an iceberg if you look above
14. 0:26the surface you don't really see much
15. 0:27but actually the biggest part of it is
16. 0:29HD below the surface smart money
17. 0:32participants are doing exactly the same
18. 0:34thing with their orders so they
19. 0:35basically try to hide them under the
20. 0:38curtains of price action and try their
21. 0:40best to not be seen but what most retail
22. 0:42don't know is that actually there's a
23. 0:44way for you to be able to see them and
24. 0:46take an advantage and make money from it
25. 0:48in this video we will discover Iceberg
26. 0:50orders and how we can actually use them
27. 0:52to get an edge in the market and when
28. 0:54this video reaches 1,000 likes I'm going
29. 0:56to make a video with all the trades that
30. 0:58I did passing that Prof from challenge
31. 1:00and we're not talking about a couple
32. 1:01lucky trades we're talking about
33. 1:02hundreds of Trades so an actual Edge in
34. 1:04scalping so ladies buckle up and let's
35. 1:07dive into Iceberg orders as we discussed
36. 1:10in the previous videos of this video
37. 1:11course I'm making about order flow if
38. 1:13you didn't see the previous video you
39. 1:14should see them in order to understand
40. 1:15properly what's going on here anyway to
41. 1:17summarize there's two types of liquidity
42. 1:19market makers which are sell limits in
43. 1:21the ask and buy limits in the bid this
44. 1:24is the best ask this is the best bid and
45. 1:26then there is aggressive liquidity which
46. 1:28is aggressive buyers and aggressive
47. 1:30sellers who are not just putting a sell
48. 1:32limit or a buy limit in the order book
49. 1:34which is this part but are physically
50. 1:35clicking by yourself and buying from the
51. 1:37best ass and selling to the best bit so
52. 1:39say we have five contracts here and five
53. 1:41contracts here these are the menu of the
54. 1:43market these are offered contracts so if
55. 1:46a market buyers buys clicks the buy
56. 1:49button and buys one contract Market he
57. 1:51will be executed here and this five
58. 1:53contracts will become four or if someone
59. 1:55sells they're going to sell at the best
60. 1:57bidder say two contracts this will
61. 1:59become three so this is the menu of the
62. 2:01auction of the market these instead are
63. 2:03people who are willing to pay that a
64. 2:05slightly worse price in order to get
65. 2:08filled this would be our footprint chart
66. 2:10and our candle started from here where
67. 2:12the first contract was executed and is
68. 2:14now here as a sell candle if someone
69. 2:16else comes in the market and buys six
70. 2:18contracts four will be executed here and
71. 2:21two will be executed here so this will
72. 2:23become five and two more contracts will
73. 2:24be executed up here this candle will
74. 2:26live a Weck here and turn all the way to
75. 2:30the level where the last order was
76. 2:32executed this is the basic of Market
77. 2:33mechanics but as we have discussed there
78. 2:35is a huge variety of Market participants
79. 2:37there are small participants big
80. 2:39participants and who actually moves the
81. 2:41market most of the time is Big
82. 2:43participants like Banks institution
83. 2:45hedge funds Pension funds hfts cpos ctas
84. 2:49Sovereign funds University endowments
85. 2:51family offices people and companies who
86. 2:54manage wealth and some of these Market
87. 2:56participants are called smart money
88. 2:58participants and since they have huge
89. 2:59huge amounts of money to put in the
90. 3:02market they're not just going to flood
91. 3:03the market with billions just to get
92. 3:05filled not all of them at least smart
93. 3:07money participant are going to be more
94. 3:09efficient in the way they fill their
95. 3:11orders hence they will manipulate the
96. 3:13market to get those order filled one of
97. 3:15the ways is by trying and hide those
98. 3:17orders in this order book because if say
99. 3:20I'm a smart money participant and I have
100. 3:21to sell 2,000 contracts here if I put a
101. 3:242,000 contract sell limit on the S&P 500
102. 3:28E mini contract it's all almost
103. 3:30impossible that aggressive buyers will
104. 3:32start filling this order AKA that
105. 3:34someone will actually come there push
106. 3:37the price higher accept worse and worse
107. 3:39prices and buy to my big order so what I
108. 3:42can do as a big operator is to hide my
109. 3:45order so I will show a very small
110. 3:47portion of my order here like 20
111. 3:49contracts say and I will not put inside
112. 3:52the book The Real order so this is going
113. 3:54to be the real Iceberg but what I show
114. 3:56in the book is just the tip of the
115. 3:58iceberg so as the Market moves until it
116. 4:01gets up here eating all this liquidity
117. 4:04inside of the book now the book is going
118. 4:05to get filled with new buy limits
119. 4:08there's always going to be more sell
120. 4:09limits above here the footprint is going
121. 4:11to look something like this so currently
122. 4:13this is the best bit this is the best
123. 4:15ask and another Market participant
124. 4:16decides to buy TW those 20 contracts
125. 4:19right there so those 20 contracts are
126. 4:21going to be executed these contracts
127. 4:23will disappear from the book because
128. 4:24they've just been consumed but as soon
129. 4:26as those 20 contracts has been bought
130. 4:28they will magically pop up again so a
131. 4:31new part of the iceberg order is going
132. 4:33to pop up on the book they buy those
133. 4:35contracts so we reach 40 executed
134. 4:37contracts these will disappear and in a
135. 4:39matter of milliseconds they will pop
136. 4:41back up and so on until the iceberg is
137. 4:44fully consumed and we will feel I don't
138. 4:46know 800 contracts just on this level so
139. 4:49what we are seeing in price is silence
140. 4:53Stillness no movement no information
141. 4:56through orderflow instead we understand
142. 4:58that something serious and big is going
143. 5:01on this is one of the things that only
144. 5:04professionals see through orderflow and
145. 5:06that you also can see if you get
146. 5:08yourself a data feat and a platform that
147. 5:11can interpret this data and put it into
148. 5:13a chart anyway back to our Iceberg this
149. 5:15is the way it works so the iceberg is
150. 5:17basically a big order which is not being
151. 5:19shown in the book which is constantly
152. 5:21being reloaded and absorbing all the
153. 5:24buying pressure that it's on the market
154. 5:26so what can usually happen with an
155. 5:27iceberg order is the price will tap into
156. 5:30that Iceberg realize it's an iceberg
157. 5:32sell back off a little bit maybe try to
158. 5:34hit that again sell off a little bit
159. 5:36again and bounce on this for a couple
160. 5:39times until it eventually breaks up
161. 5:42because remember this is basically a big
162. 5:44sell limit okay so it can be a
163. 5:46takeprofit of a big operator it can be
164. 5:49an actual sell order of someone trying
165. 5:51to sell from that level so it can be a
166. 5:53big participant taking profits or
167. 5:55entering a new sell position or a part
168. 5:58of a new sell position or it can be also
169. 6:00the same operator exchanging contracts
170. 6:02with itself this can actually happen to
171. 6:04rebalance its portfolio or to roll over
172. 6:07to the next contract but the very first
173. 6:09Edge that we can actually use to make
174. 6:12money and trade this is by actually
175. 6:14selling it with a stop above to get a
176. 6:16couple ticks how many ticks do we get do
177. 6:18we get a huge move I'm not going to give
178. 6:20you all the answers you have to do a
179. 6:21part of the homework just know that a
180. 6:23lot of times icebergs are going to fail
181. 6:25so you can eventually also buy the
182. 6:27breakout some icebergs in instead fail
183. 6:30momentarily but then price start running
184. 6:32back down and you can see this as a
185. 6:34liquidity grab while actually it's
186. 6:36something completely different it's just
187. 6:38a little stop run above the high or a
188. 6:40failed auction because price failed to
189. 6:43actually beat this operator and that
190. 6:46operator started also selling Market
191. 6:48when he finished accumulating his
192. 6:50position over here all right by the way
193. 6:51if you're one of those still asking
194. 6:53which platform do I use this is probably
195. 6:56the best platform for volume analysis in
196. 6:59the world world and we're soon going to
197. 7:00release all the details to the public
198. 7:02we're probably going to hold a live
199. 7:03webinar or something to present it so
200. 7:05you can use the email below to subscribe
201. 7:06to the waiting list but it's still going
202. 7:08to take some time for us to to finally
203. 7:10release it by the way in this YouTube
204. 7:11channel there is a full course on
205. 7:13orderflow I'll leave you the playlist
206. 7:15down below and I'm interviewing two
207. 7:17times three times World Trading
208. 7:18Champions to share with you their
209. 7:19insights on trading you might want to
210. 7:21subscribe however this is our chart in
211. 7:24the S&P 500 E mini contract and if we
212. 7:27zoom in we can start seeing the
213. 7:29footprint chart and here I have an a
214. 7:31first example of Iceberg order so as you
215. 7:33can see here every level of the
216. 7:35footprint doesn't have a lot of
217. 7:36contracts we're in the London session so
218. 7:38we're still in the Asian session so
219. 7:39there is very few liquidity but suddenly
220. 7:42up here 223 contracts are executed 1119
221. 7:46price stays there and can't break this
222. 7:48level this is the first confirmation
223. 7:50that we might have an iceberg order a
224. 7:52level not being broken the the P the
225. 7:55pock of the candle so the majority of
226. 7:56the volume there a huge Delta on the
227. 7:59candle which represents a huge
228. 8:01aggression without any result in price
229. 8:04action this is how we spot an iceberg so
230. 8:07the first sell for me would be around
231. 8:10here and as you can see from here we go
232. 8:12down pretty much a lot by the way if you
233. 8:14want to back test it you can see this
234. 8:16happening with your own eyes on the 19th
235. 8:18of April in the es contract then price
236. 8:21start moving back there little bit of an
237. 8:23absorption here and then we start
238. 8:24bouncing back down new bounce we try
239. 8:27again and once more they fail then we
240. 8:29try again once more to attack this level
241. 8:32and when we actually attack it more and
242. 8:34more contracts are being absorbed
243. 8:36there's one more cell over here boom
244. 8:38then we run back up here more absorption
245. 8:40one more cell more absorption one more
246. 8:42cell more absorption and 1,000 contracts
247. 8:46are starting to be executed here so now
248. 8:48we realize that someone is willing to
249. 8:51push and break that level because 1,000
250. 8:53contracts was never seen in in any one
251. 8:55of the candles before and as you can see
252. 8:57they push they push so hard hard that
253. 9:00all of their orders are creating a huge
254. 9:03inertia in the next candle zero contract
255. 9:05zero contracts this is almost a
256. 9:07liquidity void and once we break such an
257. 9:10impressive order there's only one thing
258. 9:12price can do which is rise up for the
259. 9:14rest of the session so as I said the
260. 9:16first Edge is to sell it for as many
261. 9:18times as price can Bounce from there the
262. 9:20second Edge you can try to find is when
263. 9:22the iceberg gets broken you can
264. 9:23eventually trade the breakout which
265. 9:25happens a good 60 70% of the time by the
266. 9:28way do us both a favor in subscribe to
267. 9:30the channel okay to be honest this
268. 9:31pattern happens kind of frequently but
269. 9:34not so frequently if you're a day trader
270. 9:36this thing doesn't happen every single
271. 9:37day it happens with this Edge probably
272. 9:40once or twice a month so it doesn't
273. 9:42often happens this way in the London
274. 9:44session because in the London session
275. 9:45there's few liquidity it's an anomaly to
276. 9:47have this big orders during the London
277. 9:49session that's why it has an edge mainly
278. 9:51in the London session 2,000 contracts in
279. 9:53the cash session where the New York
280. 9:55session and the US session starts
281. 9:57kicking in you know 2,000 contracts can
282. 9:59be eaten in a matter of millisecond it's
283. 10:01it's so easy to execute 2,000 contracts
284. 10:03per level during the New York session
285. 10:05but if you see this anomalies in the
286. 10:07Asian session or the London session
287. 10:09there's a higher chance that they're
288. 10:10going to have a tough time trying to
289. 10:12break that Iceberg and as if it wasn't
290. 10:13enough together with the developers of
291. 10:16the software we developed an iceberg
292. 10:17indicator that you can set up and as you
293. 10:19can see it shows you the iceberg from
294. 10:22the very beginning and by the way gives
295. 10:24you an alert if you enable it and a
296. 10:27popup message whenever the conditions
297. 10:29are met just to make things a little
298. 10:31easier because it doesn't happen that
299. 10:33often but when it happens the edge of
300. 10:35this pattern is great now I made a video
301. 10:37about it so probably at some point The
302. 10:38Edge is going to completely Decay but I
303. 10:40just launched the channel so I doubt
304. 10:42that a lot of people are going to be
305. 10:44seeing this and actually putting this
306. 10:45into action I probably have found
307. 10:47another example of Iceberg order where
308. 10:49we were starting to absorb in this area
309. 10:52evidently we see a lot of delta in these
310. 10:54levels and then at some point we moved
311. 10:57that Iceberg up here which that some
312. 10:59time can happen and as you can see price
313. 11:01tries to break this level tries again
314. 11:02tries again and all these bounces we can
315. 11:05take big move back up then Market tries
316. 11:07again to break this Iceberg can't make
317. 11:09it boom bouncing back down bouncing back
318. 11:11up until it finally breaks it tests it
319. 11:14and we go down for the rest of the
320. 11:15session we also test again this area we
321. 11:18get all the buyers absorbed by the way I
322. 11:20just got a notification about this what
323. 11:22the hell let's see what's actually
324. 11:23happening right now no for now it's not
325. 11:25a real Iceberg yet as I told you in the
326. 11:27New York session we you have to kind of
327. 11:29angle with the with the threshold of
328. 11:31contract because as you can see the
329. 11:32indicator is set on a minimum cluster of
330. 11:35volume of 400 of 300 contracts but 300
331. 11:38contracts as a threshold for the New
332. 11:40York session is not close to be enough
333. 11:41so you can just adjust it for the New
334. 11:43York session or for the London session
335. 11:44so this is the kind of information that
336. 11:47you can only see with order flow this
337. 11:49level of institutional activity and
338. 11:52Order flow you simply can't see with
339. 11:54price action this specific edge of
340. 11:56Iceberg orders you can't see this this
341. 11:58way with price action so especially if
342. 11:59you're a short-term Trader and a
343. 12:01short-term scalper and you're not using
344. 12:03orderflow you might want to give it a
345. 12:05try there's a free course here on the
346. 12:07channel so feel free to check it out if
347. 12:08you're a swing Trader granular orderflow
348. 12:11is not really useful because it's all
349. 12:13about short-term market dynamics if
350. 12:15you're an intraday Trader some say that
351. 12:17it's just noise but I completely
352. 12:19disagree you just have to know what you
353. 12:21are looking for in the professional
354. 12:23trading floors if navinder SAR was using
355. 12:25this kind of tool and so many Traders I
356. 12:27have met in my journey and also for
357. 12:29intraday trading it can give you some
358. 12:31really nice insights and more objective
359. 12:33and reliable confirmations for entries
360. 12:36then you can be profitable with
361. 12:37everything you can be profitable with
362. 12:39price action you can be profitable with
363. 12:40trend lines with macros orderflow what
364. 12:43it has done to me is making things more
365. 12:45clear more objective which is a problem
366. 12:47that a lot of people have and if I were
367. 12:48to get back to normal price action now I
368. 12:50would feel completely shortsighted so
369. 12:52for me orderflow is literally like
370. 12:55putting x-ray glasses and see the
371. 12:57anatomy and the physiology of price
372. 13:00movements so it can be really useful
373. 13:02also for intraday Traders and most
374. 13:04retail don't watch this stuff so if you
375. 13:06will start to back test these Concepts
376. 13:07let me know in the comments if you find
377. 13:09an edge in iceberg orders if you want to
378. 13:11have this platform and this indicator
379. 13:12leave your email in the waiting list
380. 13:14down below we will probably launch it in
381. 13:15a couple months or so if you enjoyed
382. 13:16this video remember to click a like And
383. 13:18subscribe to the channel if you want to
384. 13:19see the next videos about orderflow and
385. 13:21all the podcasts and interview I'm
386. 13:22making on this channel I'll see you in
387. 13:23the next video ciao