The model that I use: Market maker models

The final guide in a series to learn how I trade personally. This latest guide is everything about market maker models. You see them a lot in my posts. On twitter, in my personal channel, everything is mapped out around market maker models. No, I did not invent this model myself, but I have learned this from some great traders along the way in my journey.

The knowledge that is provided in all the other guides are needed to fully understand this one.
So, if you did not read all the previous guides, it is probably better to read those first before going into this one.

Bias

This is one of the subjects that keeps on coming back into a lot of the guide that I have written and that is bias. Forming a correct bias is crucial whilst trading these models. So, having a good understanding of where price is likely to is crucial in finding success whilst trading these models.

So if you have not studied my on Bias before this one, I would highly recommend to study that one first before you start learning about this. You can find this guide in the #advanced-education channel in the discord server.

Timeframe alignment

Ok, you have your high timeframe bias set. Where do the the models occur? That is where timeframe alignment comes into play. We have our longterm perspective (LTP), price delivers on the intermediate term perspective (ITP) and within the leg we can play on the short term perspective. For example, when you have created a clear bias on the daily, price will deliver in a market maker model on the 1 hour (intermediate term perspective) and within the 1 hour we can play on the m5 which is our short term perspective (STP).

It is important that all timeframes are aligned. So if you are bearish on the daily, you should be bearish on all perspectives and vice versa.

Timeframes align as followed:

LTP-> ITP -> STP

Monthly -> Daily -> H1

Weekly ->H4 -> m15

Daily -> H1 -> m5

H4 -> m15 -> m1

Personally as an intraday trader I use these alignments the most:

Daily -> H1 -> m5

H4 -> m15 -> m1

How to identify a market maker model

We have two variants of the market maker models, you can find them in the form of a buy model (Market maker buy model aka MMBM) or as a sell model (Market maker sell model aka MMSM). I will start with the market maker buy model and we will finish this paragraph with the market maker sell model.

MMBM

In the picture you can see a schematic of the market maker buy model. The MMBM is identified by 2 sides of the curve. On the left you can see the sell side of the curve. The sellside of the curve starts with the original consolidation. In my opinion it is very important to have a clear original consolidation, this to confirm that we are really in a MMBM.

After we drop from the original, we will get a first period of accumulation and afterwards another one. It is possible to have more than 2 accumulation periods before we start reversing, but I like to see a minimum of 2.

When price hits a high timeframe PD array, price can get the opportunity to start reversing. If we are able to break structure, we can get into the buyside of the curve. The model is completed when we take out the liquidity above the original consolidation.

MMSM

We have spoken about the MMBM, but now we are going to talk about the market maker sell model. In the schematic you can see that the MMSM is a complete mirror image of the MMBM.

We have an original consolidation, 2 accumulation periods and after we hit a premium PD array, we start reversing. The sell model is completed once we take out the liquidity underneath the original consolidation.

Realtime example

A nice example of a market maker model is the one that I have shared recently with you in the form of a short on USOIL.

Longterm perspective -> daily timeframe

As you can see we created our bias on the daily timeframe. We took out internal liquidity in the form of the daily FVG and as you should probably know by now, you should be looking for external liquidity.

Intermediate term perspective -> 1 hour timeframe

How is price delivered? Yes on the intermediate term perspective and that is in this case the 1 hour timeframe.

Short term perspective -> m5 MMSM

Last but not least a perfect mmsm on the m5 played out

A final tip, it is by far the easiest to play the last leg towards the original consolidation. This gives the quickest expansion and is the highest in probability.

Written by: Daan Foppen