Market Maker Balance

8 Apr 2021

Where is the market maker in his cycle of building longs or shorts? When is that big drop or big pump coming?

This is a simple and unexpectedly powerful indicator that shows you an estimate of the market maker's position over the last 200 candles. It works on any timeframe.

How does it work?

It combines a simple 10-candle Price Volume Support Resistance Analysis metric of climactic and rising volume. That volume is combined to create a bullish and bearish balance over a period of 200 candles. The curves are smoothed out with a 10 period EMA.

The MMB (Marker Maker Balance) oscillator is the resulting bearish volume - bullish volume, which shows us THEIR position balance.

Indications:

• when shorts are increasing (further below 0), we are in a bullish trend -- you should be taking profit on longs
  
• when shorts are flat or decreasing, the trend is due for a reversal -- you should be closing longs and looking to short
  
• when shorts cross 0 to long, the trend is reversing down -- you should be in a short position by now
  
• when longs are increasing, we are in a bearish trend -- you should be taking profits on your shorts
  
• when longs are flat or decreasing, the trend is due for a reversal -- you should be closing your shorts
  

For extra information, there are also the separate lines for rising and climactic volume to give you early indications of reversal or change in Market Maker behaviour. You can disable them in the Style settings, but they can be a useful early indicator that the current trend is losing strength when rising volume overtakes climax volume (MM's no longer moving out of zones higher/lower).

Ways to use this indicator are quite simple and eerily accurate:

• for short term gains, do the opposite of MMs: long when MM are opening more shorts, short when they are opening more longs
  
• for huge positions, mimic the MM position: build long positions / close shorts when MMB is rising, build shorts / close longs when MMB is falling or crosses above 0 (be careful with leverage, begin on 1x leverage)
  

Note: the results of this indicator will be different for each exchange, because of their different trading volumes per candle. It's advisable to use it for the exchange you're trading on or use a chart that averages all exchanges for that asset, like INDEX:BTCUSD.

For those of you who use the Backtesting & Trading Engine by PineCoders, the BTE Signal plot generates long and short entries as well as filter states. Use this plot as the source for BTE.

Shout out to infernixx for PVSRA calculations in his awesome Traders Reality indicator, the code of which I shamelessly ripped off and edited for this indicator.

Leave comments below if you want something added.

8 Apr 2021

Catatan Rilis

Added the ability to override the active symbol, either with a single symbol or a sum of different exchanges, just like Traders Reality indicator.
Added grouping for input options.
Added generic functions for PVSRA and optimised security calls.
Added automatic division of symbols with a +, unless division is also present. Technically, it should use volume weighted averages, but that may be too anal...

Enjoy!

23 Mei 2021

Catatan Rilis

Here is the new and improved Market Maker Balance.

First off, I inverted the scales because it caused some confusion for others... I must admit, even I prefer it this way.

I removed the goofy rising vs climax balance lines and crosses. They were useless in the end.

I added a local high and low line per cycle (cycle changes are noted by the orange and cyan dots, where a cycle flips primarily bullish or bearish -- not a buy/sell indicator on its own).

I added MACD-like fading for falling and rising MMB either side of the 0 line. This indicates a tapering off of MM interest in that direction.

The big piece de resistance, though, are buy and sell signals as I have been using this indicator.

It's really simple. You build on circles and close on crosses, blue is long and pink is short. To maximise profit, these signals are lined up with climax candles as calculated in Traders Reality style PVSRA.

You should always use the build signals with 1x leverage or lower. You can opt to increase leverage, if you're using it, as the MMB definitively curves away from its high/low and brings you into profit.

I also added a bit of hidden code too that can be enabled if you hide the other plots and show the spike counts. Spikes are any pin that's 2x the 200-period average and the delta is which side MMs are screwing over more.

IMPORTANT: Bear in mind this is just a glorified calculator for me to trade faster on 1m, 5m, 15m timeframes. It helps, it speeds things up, it is not something you trade on its own. It's there to help me favour the right bias, in order to stay on the side of MM's and not retail. The key thing to keep in mind is that bullish candles are bearish indicators; the MM has taken on the short side of a buy market order, which means they are going to bring price back down to that point to realise their profit. When, we don't know, but with the MMB you can at least get a sense of how overstretched the price is vis-a-vis the market maker's position.

Enjoy and trade light, trade often!