The arch-nemesis of the directional trader?

Efficiency. Periods when all known information is reflected in the price. It's unlikely price will move meaningfully to profit from.

The trouble is, without an awareness of when market efficiency falters, most traders are firing shots in the dark, hoping to catch these lucrative trades.

However, their shots are aimless. Catching a 'one-way traffic' trade is mostly a matter of luck and doesn't compensate for the losses incurred for missing. Hence the saying, "You win some—you lose more."

Instead, you're looking for the rare occasion when market efficiency breaks—resembling a broken ATM spitting out a continuous stream of 100-dollar bills to those who know what to look for—a frenzy of aggressive buying or selling activity that dominates the market. Described as a 'strong move', price is 'one-way traffic' only.

But here's the kicker

Market opportunities frequently resemble the deceptive tactics of chess. Often, the winner purposely disguises the outcome (checkmate) by allowing the opponent 'small victories'—taking a bishop, knight, pawns, or rook (castle)—on the journey to their ultimate demise.

Like chess, the element of surprise is the catalyst for the outcome—checkmate in chess, broken ATM in trading.

I refer to the period leading up to the broken ATM trade erupting as 'before the outcome is known'.

It's a critical part of your strategy because if you wait until the outcome has taken place, you'll miss out. Make sense?

It requires knowing the deceptive moves and which market participants will fall for them. As Michael Marcus, who turned 30K into 80M, said, "Successful trading is anticipating the anticipations of others."

Once you're aware deceptive tactics have ensnared enough competitors to fuel the broken ATM trade, the next challenge is knowing the exact timing of the trade erupting.

It's a challenge because you're not pulling the strings; you'll ride along on the coattails.

Take Monday

The first attempts to enter a trade to erupt to the upside were in vain. You can see the buy entries and subsequent exits in the chart below.

Chart

What happens next?

They highlight the need for precision and timing skills. The reason to exit is not a 'gut feel'; it's market evidence-driven. But without these skills, trades are entered only to quash hopes and dreams as the price moves further and further against you until you're facing an outsized loss. Sound familiar?

What do you know about it being by design?

If too many of us try to ride the coattails, the market will flush many out. Why? Because this business is about the majority paying the minority. Like poker, there's no such thing as an even distribution of winnings in trading. Correct?

Shortly after the above trades, the market moved significantly lower, and hangers-on were washed out of the market for a loss.

One of the 'easiest' trading edges is outlasting the competition. But it's only accessible if you know how the game works. If not, you fall victim to what I refer to as the 'time-trap'.

The broken ATM trades occurred hours later. The last of which was 6 hours after the initial trade above.

The reason for showing one of the trades is to illustrate how the price was one-way traffic, an example of when trading takes on the appearance of seeming effortless.

 

Chart

Notice in both charts the buying was in the same pricing area?

If held, the first attempt would have resulted in an epic fail (and loss), while the second time was successful. As mentioned, this is by design.

Why else do broken ATM trades transform your trading?

I've already touched on it: Winnings aren't evenly distributed—the majority pay for the few to win.

When you shift your focus to broken ATM trades, you join the prosperous few and remove yourself from the majority who are net losers.

It's a powerful reason to focus on inefficiency in the market. Agree?


Forex and derivatives trading is a highly competitive and often extremely fast-paced environment. It only rewards individuals who attain the required level of skill and expertise to compete. Past performance is not indicative of future results. There is a substantial risk of loss to unskilled and inexperienced players. The high degree of leverage can work against you as well as for you. Before deciding to trade any such leveraged products you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with trading on margin, and seek advice from an independent

Editors’ Picks

EUR/USD stays defensive below 1.0500 amid light trading

EUR/USD stays defensive below 1.0500 amid light trading

EUR/USD struggles to capitalize on recent upside and oscillates in a narrow range below 1.0500 in European trading on Monday. However, the pair's downside remains cushioned by persistent US Dollar weakness and an upbeat mood. Focus shifts to central bank talks. 

EUR/USD News
GBP/USD ranges near 1.2600 as US Dollar steadies

GBP/USD ranges near 1.2600 as US Dollar steadies

GBP/USD keeps its range near 1.2600 in the early European session on Monday. The pair stays support amid a subdued US Dollar price action following Friday's disappoining US Retail Sales data. Thin trading is likely to extend as US markets are closed in observance of Presidents' Day. 

GBP/USD News
USD/JPY off lows but heavy near 151.50 amid upbeat Japan's Q4 GDP

USD/JPY off lows but heavy near 151.50 amid upbeat Japan's Q4 GDP

The Japanese Yen sticks to its strong intraday gains in the wake of a strong domestic Gross Domestic Product print, which reaffirmed bets that the Bank of Japan will hike interest rates further.

USD/JPY News

Editors’ Picks

EUR/USD stays defensive below 1.0500 amid light trading

EUR/USD stays defensive below 1.0500 amid light trading

EUR/USD struggles to capitalize on recent upside and oscillates in a narrow range below 1.0500 in European trading on Monday. However, the pair's downside remains cushioned by persistent US Dollar weakness and an upbeat mood. Focus shifts to central bank talks. 

EUR/USD News
GBP/USD ranges near 1.2600 as US Dollar steadies

GBP/USD ranges near 1.2600 as US Dollar steadies

GBP/USD keeps its range near 1.2600 in the early European session on Monday. The pair stays support amid a subdued US Dollar price action following Friday's disappoining US Retail Sales data. Thin trading is likely to extend as US markets are closed in observance of Presidents' Day. 

GBP/USD News
Gold: Bulls have the upper hand near $2,900 amid trade war fears and weaker USD

Gold: Bulls have the upper hand near $2,900 amid trade war fears and weaker USD

Gold regained positive traction on Monday amid sustained USD weakness. Concerns about Trump’s tariffs further benefit the safe-haven XAU/USD pair. The fundamental and technical setup underpin prospects for additional gains. 

Gold News
Five fundamentals for the week: Peace talks, Fed minutes and German election stand out

Five fundamentals for the week: Peace talks, Fed minutes and German election stand out Premium

US President Donald Trump remains prominent, especially in a week when high-level peace talks kick off. Nevertheless, the Commander-in-Chief competes with the world's most powerful central bank, and other events are of interest as well.

Read more
Tariffs likely to impart a modest stagflationary hit to the economy this year

Tariffs likely to impart a modest stagflationary hit to the economy this year

The economic policies of the Trump administration are starting to take shape. President Trump has already announced the imposition of tariffs on some of America's trading partners, and we assume there will be more levies, which will be matched by foreign retaliation, in the coming quarters.

Read more

RECOMMENDED LESSONS

7 Ways to Avoid Forex Scams

The forex industry is recently seeing more and more scams. Here are 7 ways to avoid losing your money in such scams: Forex scams are becoming frequent. Michael Greenberg reports on luxurious expenses, including a submarine bought from the money taken from forex traders. Here’s another report of a forex fraud. So, how can we avoid falling in such forex scams?

What Are the 10 Fatal Mistakes Traders Make

Trading is exciting. Trading is hard. Trading is extremely hard. Some say that it takes more than 10,000 hours to master. Others believe that trading is the way to quick riches. They might be both wrong. What is important to know that no matter how experienced you are, mistakes will be part of the trading process.

The Best Brokers of the Year

The Best Brokers of the Year

SPONSORED Explore top-quality choices worldwide and locally. Compare key features like spreads, leverage, and platforms. Find the right broker for your needs, whether trading CFDs, Forex pairs like EUR/USD, or commodities like Gold.

Read More

Strategy

Money Management

Psychology

Best Brokers of 2025