All language subtitles for 1. Wyckoff and the forex market

The right context for applying the
Wyckoff method.

In this module, we will address some key
ideas that we must keep in mind if we

are to apply the principles of the
Wyckoff method in the most productive

possible.

We will learn about which markets are
the most suitable for trading in, as

as those that we should avoid.

Wyckoff and the Forex Market As we
already know, one of the great

the Wyckoff method is the universality
of its principles.

which enables us to trade any asset at
any time following exactly the same

premises and strategic ideas.

If we take this to the outermost layer
of reasoning, we need to dig a little

deeper to continue defining that idea.

To do this, we must consider the type of
market according to its degree of

formalization, that is, the type of
market depending on whether it has a

centralized order book or not.

The main difference is that in
centralized markets, there is a single

book, which is responsible for
connecting all the participants in that

while in non -centralized markets there
are multiple order books, as many as

there are market makers, where the lack
of transparency regarding market depth

is clear as, in most cases, only the
price of the last bid and ask is shown.

It is also important to know that there
are many different prices for the same

asset. due to the very nature of these
types of non -centralized markets.

In other words, if we want to trade the
Euro -US dollar currency pair, each

market maker will offer us a different
price and volume.

The slide shows three examples of the
same asset, the Euro -dollar currency

from different decentralized markets,
FXCM, Pepperstone, and Oanda.

If we look carefully, we can see that
the candlesticks are not exactly the

so it is likely that the listed prices
also differ.

The problem here is that any analyses we
perform with these types of markets

will be based on data which, whilst a
meaningful and valid representation of

entire market, does not in reality
genuinely represent all trades.

To ensure the data we have is reliable,
we need to analyze said asset in a

centralized market.

Continuing with the example of EURUSD,
we should analyze the futures market,

centralized market, which corresponds to
the ticker $6E.

Therefore, the recommendation is, if you
don't have enough capital to trade in

the futures market, you can analyze the
asset in this futures market and execute

the trade through another more
affordable financial derivative, such as

a good broker, not a market maker.

An intermediate option would be to trade
the small version of the future, the

micro future, which corresponds to the
ticker $M6E in the case of the EURUSD.

If we open a chart of the future 6E and
the CFD EURUSD, we can see that the

price movements are practically the
same, even though they are different

markets. This is possible thanks to an
arbitrage process carried out by high

-frequency algorithms, which takes place
systematically between both markets.

Financial arbitrage is a form of trading
that consists of profiting from the

price differences between similar
instruments.

The algorithms used in this approach
identify the difference between both

and then buy in one market and sell in
another until both prices converge,

obtaining a profit from said differences
and facilitating market efficiency.