Could anyone recommend some books which cover topics such as market maker tricks? Essentially, I have been given to explanations for stop hunting: 1) to increase liquidity so big players can build positions (when a sell stop is hit it is the institutions buying it from you) 2) sell stops being hits increases selling pressure and forces the stock down Obviously both of these can not be true at the same time. Can anyone recommend a book around this topic, is market micro structure the correct term for what I am interested in?
Ever consider taking it one step further and typing "market microstructure" into Amazon's search field?
Try this book : The Forex Edge: Uncover the Secret Scams and Tricks to Profit in the World's Largest Financial Market, by James Dicks.
Well I read all of his books on Amazon and yes, they are just so-so, but you can still find a few gems here and there on some chapters.
Obviously your thread/question will create some conflict of interest in trading forums like this, since a lot of brokers and market makers sponsor the website.
thank you, I will try that book, this afternoon I have been reading several research papers which all concluded that yes stops are run (because their placement is predictable) and yes they do serve to accelerate price. In fact I have learnt more about order flow from research papers than I have from other educational sources in the past few weeks.
Probably because the researchers noticed the phenomenon, and thought it's a curiosity worth exploring ... It's easier and faster to write a paper than a book. Plus, a book presupposes a market professional/insider spilling the secrets of his trade for $19.99/$39.99/$59.99 a pop (and earning a 10% royalty or a whopping $2-6 per book). Not likely... And given trade books tend to be slow sellers, the author will likely net less than minimum wage for the time spent writing his expose..