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Technical Analysis Fallacy

  • #58,041
  • Dec 23, 2018 12:22am Dec 23, 2018 12:22am
Quoting JennyMK
{quote} I don't understand where the dealers long comes from? please can you advise as to where did his long come from that he needs to cover?
He was never long in the first place, he was short, so when you sell to him, he buys from you and covers his short and has no position.
  • #58,042
  • Dec 23, 2018 1:32am Dec 23, 2018 1:32am
But you previously said he was long, that is why I was confused

Quoting CookieMonsta
{quote} dealer steps in, sold to me at 1.0050, and is short, now im long, then he uses your short stops to cover his long
Sincerely Jen x
  • #58,043
  • Dec 23, 2018 2:16am Dec 23, 2018 2:16am
Quoting JennyMK
But you previously said he was long, that is why I was confused {quote} Sincerely Jen x
Your right, there is a typo mistake in my post.

And if you could point out my mistake, it means you understood the mechanics correctly.

Was deciding between an example, either a limit and stop example or stop and stop example.
  • #58,044
  • Dec 23, 2018 4:15am Dec 23, 2018 4:15am
Quoting CookieMonsta
{quote} it means you understood the mechanics correctly.
I am not quite sure I fully understand, let me check with you please: when the dealer filled the buy order he would then be short, and when the dealer filled the sell order, would that have balanced his book already= he matched your buy with my sell?= dealer flat?
  • #58,045
  • Dec 23, 2018 4:38am Dec 23, 2018 4:38am
Quoting JennyMK
{quote} I am not quite sure I fully understand, let me check with you please: when the dealer filled the buy order he would then be short, and when the dealer filled the sell order, would that have balanced his book already= he matched your buy with my sell?= dealer flat?
yes, because he is taking opposite of the orders we put in.
  • #58,046
  • Dec 23, 2018 4:44am Dec 23, 2018 4:44am
Quoting JennyMK
{quote} in the example of a down move, how would the dealer make money by taking the opposite side of our trade, he would buy, and we would sell, but how would that make him short, I don't quite understand how this can maintain his book short. Is it because he matches both trades which balances each other and then he makes the spread? if so and he only makes the spread I don't see how this makes his book short, wouldn't his book be neutral? Scratching my head here, just trying to put this all together. Sincerely Jen x
Then in that case the dealer only makes a profit from the spread, as the dealer is flat as he has matched the trades. The dealers book still isn't short, his book is neutral as he matched the trades and balanced. The above question still remains.

Quoting CookieMonsta
{quote} yes, because he is taking opposite of the orders we put in.
Then the dealer isn't short his book, he is neutral and balanced his book, so in a downmove how is his book short as in the previous question?
  • #58,047
  • Dec 23, 2018 5:26am Dec 23, 2018 5:26am
Quoting JennyMK
{quote} Then in that case the dealer only makes a profit from the spread, as the dealer is flat as he has matched the trades. The dealers book still isn't short, his book is neutral as he matched the trades and balanced. The above question still remains. {quote} Then the dealer isn't short his book, he is neutral and balanced his book, so in a downmove how is his book short as in the previous question?
His book is temporarily short when he sold to me, but as soon as he covers into your short stops, he is flat.

you have to see it as a fluid motion, that the book's state long or short or flat is always in motion, rather than something that is fixed.

how about this, think from the dealer's perspective? if you are the dealer and you quoted me 1.0010 bid and 1.0020 ask (assuming you start out flat), and i decided i want to go short, 1.0010 with 2 lots, and on your order book, you see resting stops, 1lot long at 1.0030 and 1lot long at 1.0040 what will you do if given this information and what would the state of your book be before and after each trade is executed?
  • #58,048
  • Dec 23, 2018 6:14am Dec 23, 2018 6:14am
Hi Jen

If I may.

This has gone deeper than the original back to back question where the dealer takes the spread as his payment, which is fine as the dealer/trader system relationship is complex.

Say there are only 3 dealers who all trade with each other and sell/buy to/from us retail traders, they all hold 1 million of each currency GBP, EUR, JPY and USD, if they all or one of them have a run on one currency they will trade with each other to get the currency they need, so let us say one dealers has an order to fill for 1.5 million USD, he will need to trade the other currencies he holds with the other dealers to get that extra .5 million USD, now he sells it to you, there is now only 1.5 million USD left between them to trade with, the balance has now changed, they are now short of USD and long the other currencies until the USD’s come back to them because of the volume change between them to get the USD’s to sell to fill the order, this is a very simplified way of looking at it, the dealer like any business needs stock to sell, sometimes there is an over supply and sometimes there is an under supply, this is why prices move in all things that are traded, supply and demand for a limited (be it permanent or temporary) resource.

So when you sell (short) something to the dealer (actually you are not, you are buying ONE currency or the other) they are long the other side and when you buy (long) they are short the other side. The trouble is the market is unlimited as they can turn on the printing presses whenever they feel like it so it is more complex to understand because you/we do not think of money as a limited resource in the FX world. You are always buying one currency and exchanging it for another in what we do, we just use the terms ‘long and short’, I think because of this there is much confusion on this point.
This is why the higher bigger tier dealers have to go direct to the CB’s for more stock to sell down the line when there is shortage of a currency, that is why it seems unlimited. The dealers job is to manage and try to maintain the balance of his book, every time we take something the dealer needs to replace it and in the real market there are many way for them to do this to keep their book balanced.

Regards

Phil.
-be careful about what you allow to be put in your mind-
  • #58,049
  • Dec 24, 2018 1:24am Dec 24, 2018 1:24am
HAPPY CHRISTMAS AND PROSPEROUS NEW YEAR

To FTi and all the TAF readers/followers. ..



Hope you are still reading this great thread fti my friend, thank you for all you have left here and helped me with over the years to enable me to find a way to trade, it was and is a great journey. ..... .

Regards

Phil.
-be careful about what you allow to be put in your mind-
  • #58,050
  • Dec 24, 2018 4:16am Dec 24, 2018 4:16am
Quoting phil13
HAPPY CHRISTMAS AND PROSPEROUS NEW YEAR To FTi and all the TAF readers/followers. .. Hope you are still reading this great thread fti my friend, thank you for all you have left here and helped me with over the years to enable me to find a way to trade, it was and is a great journey. ..... . Regards Phil.
Hello Phil; Advance Happy New year! Of course, we are since it’s an awesome thread!
  • #58,051
  • Dec 25, 2018 5:24pm Dec 25, 2018 5:24pm
Merry Christmas and happy New Year to Fti and all...
  • #58,052
  • Jan 3, 2019 11:06am Jan 3, 2019 11:06am
Hi All,

I am reading this thread from start since 2 months and now at page 50. I am glad to find this thread which is full of wisdom.

Many thanks to FTI, naked lady, Zoran, pip_cru, david and all other members. I have started treading in demo account now. I will start posting my questions once i read first 500 pages.

I am also compiling short but detailed version of this thread. I will share once i am done.


I would be grateful, if someone share some wisdom who is still active in this thread since last 7-8 years.

Happy trading.

regards,
Ant
  • #58,053
  • Jan 4, 2019 1:17am Jan 4, 2019 1:17am
Hi Ant

Welcome and good luck with your journey into this world of FX.

Most of what you need to read/know is in the first 200 pages, but it is a good idea to read as much of the thread as possible, there are many jewels spread throughout this thread about the FX world,

Our friend FTI is not posting anymore, he has given us everything we need here and all that was happening was we were going over things that are already here, unfortunately his health issues means he cannot trade anymore and I guess that played a part in his decision to stop posting here.

The first 200 pages are the foundation for your trading training, the rest of the thread also discusses deeper things to do with trading and how the banks/big boys trade, these are things that may help you develop further once you have the basic training under your belt, do not rush and re- read as you will not take it all in at first this trading course is the basis FTI used to train his dealers and it should take anywhere between 3-5 years to get to a proficient point so as you are not losing money.

Try to treat your demo account as it if were your real account, a good idea is to set goals like a 3 months period without any loss in any one week before you move to a small live account, as for compiling a detailed version to post, a few people have done this but each of us trade and see things differently so in reality your compilation is only any real use to you, FTI states he is not trying to create carbon copies of himself but rather provide a good foundation for us to build on.

There are still a couple of people around who will try to help with anything you may want to ask.

Regards

Phil.
-be careful about what you allow to be put in your mind-
  • #58,054
  • Jan 4, 2019 2:26am Jan 4, 2019 2:26am
Thank you Phil. Much appreciated.

i am demoing and my last 15 trades are in profit. As FTI, i am saying no to loss however small it is. I have questions on attack and rescue sequence and how to dance properly. I will ask after reading first 200 pages.

Thank you so much.

-Ant
  • #58,055
  • Jan 4, 2019 4:46am Jan 4, 2019 4:46am
Quoting antmindset
Hi All, I am reading this thread from start since 2 months and now at page 50. I am glad to find this thread which is full of wisdom. Many thanks to FTI, naked lady, Zoran, pip_cru, david and all other members. I have started treading in demo account now. I will start posting my questions once i read first 500 pages. I am also compiling short but detailed version of this thread. I will share once i am done. I would be grateful, if someone share some wisdom who is still active in this thread since last 7-8 years. Happy trading. regards, Ant

good luck - my advice pay attention to every word FTI says at start of thread in particular - he actually tells us all we need to know here.


Alex
check out the terrain - follow never lead
  • #58,056
  • Jan 4, 2019 4:47am Jan 4, 2019 4:47am
Happy New Year to all on thread and especially FTI - wherever you may be.


Alex
check out the terrain - follow never lead
  • #58,057
  • Jan 4, 2019 10:12am Jan 4, 2019 10:12am
Thanks Alex. Happy Trading
  • #58,058
  • Jan 4, 2019 6:30pm Jan 4, 2019 6:30pm
Hi Ant, Alex & Phil13,

truly this is an outstanding thread, every page is worth of reading it. Made by great man and trader.
PA trading is not a new thing for me, but this method developed in this thread is a pure wisdom.
Thank you all.
  • #58,059
  • Jan 6, 2019 9:23am Jan 6, 2019 9:23am
You are right 7thTorch. i am committing my next 2-3 months only to read and understand and re-read this whole thread specially initial 300-500 pages. I am also demoing in parallel. As FTI said, we need to work as Ant and grow equity gradually. Power of compounding will take its time to do magic.

FTI said lot about dancing, but i am not able to find out how other than my understanding of simple chart patterns.

Can someone teach me how to dance?

-Ant
  • #58,060
  • Jan 6, 2019 6:07pm Jan 6, 2019 6:07pm
Quoting antmindset
You are right 7thTorch. i am committing my next 2-3 months only to read and understand and re-read this whole thread specially initial 300-500 pages. I am also demoing in parallel. As FTI said, we need to work as Ant and grow equity gradually. Power of compounding will take its time to do magic. FTI said lot about dancing, but i am not able to find out how other than my understanding of simple chart patterns. Can someone teach me how to dance? -Ant

try dancing and then put a trade what u thik and why u took the trade then we will see
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