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Quoting Madmoney
{quote} I got something now..... replica pairs to show REAL value It all makes sense. MM


So, is the insight still working? Would you mind sharing a few pointers please...thanks.
Quoting FXTriumph
{quote} So, is the insight still working? Would you mind sharing a few pointers please...thanks.
Yes, still working and will always.

As UP said market inefficiencies are the "same" in all markets - http://www.forexfactory.com/showthre...92#post7793892

You need to find the best value, if "price" is to expensive sell and vice versa.

Baskets are one of the best ways to get true "value".

MM
Quoting Madmoney
{quote} Yes, still working and will always. As UP said market inefficiencies are the "same" in all markets - http://www.forexfactory.com/showthread.php?p=7793892#post7793892 You need to find the best value, if "price" is to expensive sell and vice versa. Baskets are one of the best ways to get true "value". MM
From the highlighted post, it seems you use the dissimilarity between the indicator below and the price action above to get true value. That's fine. I have explored that approach. It has great potential, if one can get tight stops. But if I could create a basket of other correlated instruments/securities and arbitrage the divergence, now that would be something! Thanks for the pointers though! By the way, I like the name...MadMoney aka InsaneIncome
Quoting FXTriumph
{quote} From the highlighted post, it seems you use the dissimilarity between the indicator below and the price action above to get true value. That's fine. I have explored that approach. It has great potential, if one can get tight stops. But if I could create a basket of other correlated instruments/securities and arbitrage the divergence, now that would be something! Thanks for the pointers though! By the way, I like the name...MadMoney aka InsaneIncome
Hey FXT,

I believe UP's mispricing concept is about dissimilarity, look here - http://www.forexfactory.com/showthread.php?p=7193006#post7193006 - http://www.forexfactory.com/showthre...09#post7187409

Quoting UnnamedPlayr
I don't know what you mean with that. What I have noticed is if they wanna run stops (i.e. a good pool of weak shorts) they start lifting the value (minutes or hours) before the news. Then seconds after the release you will see the EUR/USD shooting up. That can also happen on S/R areas (or round numbers) at any time without any news event involved. The second pattern is: they don't lift the value too much but the EUR/USD just spiked up to clear a pool of stops.Usually the move later comes back to value. Third pattern is to use the EUR/USD as the prime instrument to clear stops in different assets.But that's a bit too complex to explain.

You have to get true "value", most of the time price and value will match up. As soon as "price" pulls away from "value" there is a window to make profit.

"Value" will always eventually win.

Keep digging, what you may find may or may not shock you.

MM
Quoting Madmoney
{quote} Hey FXT, I believe UP's mispricing concept is about dissimilarity, look here - http://www.forexfactory.com/showthread.php?p=7193006#post7193006 - http://www.forexfactory.com/showthre...09#post7187409 {quote} You have to get true "value", most of the time price and value will match up. As soon as "price" pulls away from "value" there is a window to make profit. "Value" will always eventually win. Keep digging, what you may find may or may not...
Fantastic post MM.
UPs posts and EURUSDD's posts opened my eyes. I'm glad I'm not the only one who saw the connection. Dissimilarity shows you from a technical perspective what is happening, but UPs posts show you why and how it is happening from a dealers.
A major I use what I learnt from both threads to create a strategy. It works. I'm just trying to finetune how to place stops, cos when the market stops ranging and really starts to trend, then the Dissimilarity concept breaks down and one can rack up major losses that wipe out previous gains. So if one knows what the dealers are trying to do and how they are offsetting their counterparty risk, it can be quite a formidable strategy.
I stumbled upon another thread and I think that's what the person is doing...http://www.forexfactory.com/showthre...80#post7794380
We learn everyday!
Quoting FXTriumph
{quote} Fantastic post MM. UPs posts and EURUSDD's posts opened my eyes. I'm glad I'm not the only one who saw the connection. Dissimilarity shows you from a technical perspective what is happening, but UPs posts show you why and how it is happening from a dealers. A major I use what I learnt from both threads to create a strategy. It works. I'm just trying to finetune how to place stops, cos when the market stops ranging and really starts to trend, then the Dissimilarity concept breaks down and one can rack up major losses that wipe out previous...
Lol, yes, that's because I referred them to this thread.

One more hint, is that if you have this down to a tee, it will work in ALL market conditions. I do not take notice of trend or news.

Now that's all I'm gonna say, I've said too much.

MM
  •  Neio
  • Joined Oct 2012 | Status: Can't think outside?Enlarge the box | 688 Posts
Quoting UnnamedPlayr
It doesn't need a video to explain some basic correlations and inefficiencies. If you are looking for something very easy or to increase the odds most of the time here is a very simple calculation. Everybody knows: EUR/AUD = 50% EUR/USD and -50% AUD/USD But you can also do something interesting like that: Red line: 0.5 EUR/AUD and -0.5 AUD/USD Have fun: {image}

Hmmmm....does anyone know why the Red line is 0.5 EUR/AUD and -0.5 AUD/USD ?


Why not 0.5 EUR/USD and -0.5 AUD/USD? Was it a typo?
An expert is a man who has made all the mistakes which can be made
  •  Neio
  • Joined Oct 2012 | Status: Can't think outside?Enlarge the box | 688 Posts
Quoting Neio
{quote} Hmmmm....does anyone know why the Red line is 0.5 EUR/AUD and -0.5 AUD/USD ? Why not 0.5 EUR/USD and -0.5 AUD/USD? Was it a typo?
OK I see that KPRSA gave a possible reason in a post that followed.

Here is what I have put together so far for EURAUD. Will have to see how this plays out in the real market. I am hoping that it allows me to see the real price or value.

Thank you UP, MM and FXT for keeping this interesting thread going!

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An expert is a man who has made all the mistakes which can be made
this is simply what Ullen & some other try to do
arbitrage trading with synthetic pairs whiich I have tested years ago.

the issue is
sometimes
real pair follows the synthetic pair
or sometimes
synthetic pair follows the real pair

until you understand that you think that you find the Holly Grail
My Best Trade is Next Trade!
Quote
this is simply what Ullen & some other try to do
arbitrage trading with synthetic pairs whiich I have tested years ago.

Gauging a mispricing can be done without building synthetics. I use outright's in other asset classes and works fine.
You can build synthetics, but it's not completely necessary.
Rgds
Quoting UnnamedPlayr
{quote} Bank dealers (and their algos) constantly offset the risk. But there are also times when they're building (small) inventories or working/using orders from clients to trigger little stops and to knock out small barriers (exotic options). Sometimes they also do it because they know the orderflow from their clients. That's when they provide unhedged liquidity to them with the intention to fade later the move by withdrawing liquidity and bringing price back to value. In the current market phase I have noticed that they are moving the EUR/USD...
Unhedged liquidity provided by the banks will almost always see price revert back to the mean/value where the dealers supplied the initial liquidity right? SO, if price moves up 100pips and then comes back down 100 pips, the dealers net exposure is zero. Is there any technical indicator that can show such moves? Can divergence between price and a sentiment indicator like CCI or MACD, or Stoch show this?
Thank you UP for pushing me in the right direction. I can now successfully:

1. Understand dealer counterparty risk and trade it.
2. Identify/create correlated/synthetic instruments and arbitrage the divergence.

I posted this just to give back to this thread that helped me finally get it. Value simply rotates round this market. Find out how to track it. I do so, both at an intermarket level and on an intercurrency level. Attached is a chart of intercurrency rotation. I call this mindset the value flow trading approach. There are SO many ways to apply it, but this chart alone will help someone out there. Forget fundamentals/news releases, forget technical indicators, just eyeball it and follow the flow of value. This is an incredible edge. Pair the weakest and strongest of all four, EUR, GBP, USD, JPY and trade accordingly. Use standard entry techniques (support and resistance retest flip zones), with good money management and risk to reward ratios.

This is an edge. Now the discipline to trade it must come from you. Now that I have an edge, I realize that my greatest problem is my discipline/psychology. That is what I am working on now. Even I am still trying to master that. Automation may be the last resort.
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Quoting FXTriumph
I call this mindset the value flow trading approach. There are SO many ways to apply it, {image}
For example by selling courses about it at a page like the www.valueflowtrading.com that is linked on your profile?
Sounds like a great approach indeed...
k
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Quoting kprsa
{quote} For example by selling courses about it at a page like the www.valueflowtrading.com that is linked on your profile? Sounds like a great approach indeed... k
Past withdrawals are not indicative of future withdrawals.

You just subscribed to the thread. Why, because the thread is a quality thread. And that is because of the quality of dialogue between the OP, Unnamed Playr and all participants, first of all, me. Read my posts. Read my conversation with Unnamed. This took place over a 3 year period. This is not an ego-filled dialogue that is typical of ForexFactory. And yes, www.valueflowtrading.com has a few resources for sale. But is that a crime? It is a growing community of traders & trainers who consistently withdraw. I'd rather be trained by traders who withdraw than by professional "talkers". Period.

PS: Your opinion does not affect my trading income. Likewise, my opinion does not affect your trading income. As such, I will not respond further to anything that does not contribute to the quality of this thread.
is there a special significance of UJ
Quoting FXTriumph
{image}{image}{quote} Past withdrawals are not indicative of future withdrawals.
Looks great, could you please link a myfxbook or a trade explorer that corroborates your consistent withdrawals?

AFAICS, your trading strategy has little to do with value as defined by UP, but rather with money flows within the currency market/reversals in the currency strength. Those repainting indicators are tricky though...

Good luck with your trading and marketing endeavors.

k
Quoting kprsa
{quote} Looks great, could you please link a myfxbook or a trade explorer that corroborates your consistent withdrawals? AFAICS, your trading strategy has little to do with value as defined by UP, but rather with money flows within the currency market/reversals in the currency strength. Those repainting indicators are tricky though... Good luck with your trading and marketing endeavors. k

Till date, I have not been able to understand how UP creates synthetic instruments. It involves some serious mathematics, calculating the intrinsic value of a currency pair, according to him. I hope he posts some more. But he has been a bit quiet. UP really never explained his strategy (strategies)...he just shared a mindset. This single thread changed my entire trading career. His posts are deep and thought provoking. Also Tyoon, KnoHoly Grail and a few other guys steered me away from traditional technical analysis (indicators, chart patterns, multiple timeframe analysis, etc) towards exploring the relationships between various markets and even various currencies. It was when I realized that the entire financial markets are intertwined, and the entire fx market is intertwined that things started becoming clearer. The market is 50% unpredictable and 50% predictable, IMHO. With a good risk to reward ratio of 1:3, a 50% win rate can still keep you away from a margin call.

As for myfxbook, well, I really am not into all of that. Why? Past performance is not indicative of future results. Case in point, Long Term Capital Management.
Fat tail risk is easily masked. Black swan events are happening more frequently. SNB, HFT disruptions etc. Once you know the basic logic behind an edge, you can determine whether it is sustainable. Which is why UP's thread is the only thread where I have posted more than 6 times. Cos his logic was so clear. Even his profile summary was different. BTW, if 95% of traders lose, then 95% of the stuff on forex factory is questionable. UP is the 5%. I wish he would post some more.

Meanwhile, the chart I showed simply confirms to me when price will reverse on any pair. DON'T ANALYSE THEM IN PAIRS. ANALYSE THE BIAS ON THE INDIVIDUAL CURRENCY, EUR, GBP, USD, JPY. Use all 6 pairs to identify the trend on individual currencies EUR, GBP, USD, JPY. Then trade it intraday, with good risk to reward, and money management. You can add it to whatever technical analysis system you use. If for example, your system gives you a sell on GBPUSD , don't sell until the EURGBP is buying and GBPJPY is selling. That way, the flows are in your favour. Take one trade per session. Wait, wait, wait, be very patient. And wait for retests before you enter! Cheers!
Quoting skfx
{quote} Gauging a mispricing can be done without building synthetics. I use outright's in other asset classes and works fine. You can build synthetics, but it's not completely necessary. Rgds
I agree 100%. Create synthetics or identify "correlated" asset classes, either intracurrency or intermarket.
Quoting dagoods
is there a special significance of UJ
Yes UJ and EG hold everything together. Take note of the sunday open price for both UJ and EG. Also, take note of the daily session opening price for EG and what happens when it is breached. If dealers can bring price back to the weekly open price, at any point during the trading week, then they usually have faded liquidity back. This has been my personal experience.

Find an edge. Develop a proven strategy around it. Trade it. Tweak it. Make yourself accountable to a small group of fellow traders to improve your trading discipline. Keep compounding.
Quoting FXTriumph
Thank you UP for pushing me in the right direction. I can now successfully: 1. Understand dealer counterparty risk and trade it. 2. Identify/create correlated/synthetic instruments and arbitrage the divergence. I posted this just to give back to this thread that helped me finally get it. Value simply rotates round this market. Find out how to track it. I do so, both at an intermarket level and on an intercurrency level. Attached is a chart of intercurrency rotation. I call this mindset the value flow trading approach. There are SO many ways to apply...

5 days after posting this:

GBPJPY down +600 pips from 191.311 to 185.40.
GBPUSD down +200 pips from 1.5586 to 1.5358.
EURJPY up +90 pips from 0.7122 to 0.7210.
USDJPY down -200pips from 122.73, but note that the arrow I drew was curved downwards before pointing up, meaning AS AT WHEN WE DREW THE ARROWS,we expected some downside before a reversal upwards.
EURUSD down +30pips.

Like I said earlier, this is an edge. Simple. Straightforward. Follow the flow of value. I call this Value Flow Trading.
It is obvious in all markets, not just FX. I'm happy I can give back to a thread that helped me! Cheers!
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