The only thread you will ever need: FX Exposed!

"Hope I am in this list of NICE people :-) "

You are my dear....

;-)

L&L,
FF

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"I was a non-believer in Price in Spot FX and slowly becoming a non-believer of Price in futures as well. Price is manipulated in every market where market makers are involved in making the market. Those fuckers have control over everything.... most likely even in a global centralized exchange. There is a reason why I have tried 100s of price-based, indicator-based strategies and none of them work! Garbage in Garbage out really with no end in sight. I feel no amount of screen time will help if you only focus on price or interpretation of price itself without a razor sharp focus on price levels. just my 2 cents bro. I miss FX as one can get creative with multipairs etc. I must admit, I am getting sick of focusing only on NQ in futures.
Keep up the good work brother."



Hi VEEFX,

yes,
most likely; markets have ALWAYS be manipulated in one way or another from the first day they were created. These days; as shown in FX, this manipulation is completely dominating the price creation process and it is conducted by algorithms in high speed. One should accept that reality as it is and then create an approach that allows for a chance of success in that "pre-determined" environment.
There are many "non-conventional" ways of trading modern FX markets, George AUS for example has shown one. What he calls "play ground" and "herd behaviour" is what I call "fake SR". But if one is serious about making it in this FX game of today; some SERIOUS DEDICATION is needed. The "easy money" years are over long ago. The known statistics are there for a reason; over 90% of market participants will lose after a few weeks only.
So, do not follow the herd. Be the OUTLIER.

All the best,
FF

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The smart money (SM) loves to play "packman"; they want to "cover as much price range" as possible; because that way they can clear out all STS which are close (remember that if they would not; DM traders could place good RR trades); they also fill any limits that places new DM positions into the market. Of course; as shown SOOO MANY times by now; if the DM positions accumulate on one side (as the DM Longies in GU recently etc.); then the SM Algos conduct a "trend" move against these positions; even over weeks; going for the "main targets"........... Often, they then overshoot; clean the low (or high) several times and then conduct a move back into the RANGE for example once some shorties try to enter expensively into the market. Certain market modes repeat over and over again; as an experienced causality trader you will recognize similiar situations over and over again.
From a trader's perspective; you are better of identifying what the "herd thinks" and to do the opposite; to avoid getting lured into the market by fake moves; to avoid getting tricked by the "fake SR" games, "fake momentum" games etc. (see videos).
Understand your disadvantage in this domain; your disadvantage when it comes to transaction costs etc. Have a risk policy in place which makes sure that single trades do not blow all your profits etc. Take the current market environment for what it is; from YOUR perspective as a DM trader; it is a chaotic, non-linear, erratic beast. Think in terms of price zones and levels. Think in terms of the SM Algos' where would YOU clean the "plateaus"; when would YOU close the "grail pattern" etc. This thread here allows you to MAKSE SENSE of it all; to "think like the Algos".

This is the KEY; to INTERNALIZE the "algo prio decision patterns" and to do the OPPOSITE of the herd.
That way you may be able to move from the 90% losing majority to the 10%.

FF

... seems good levels to buy

Agree in principle but I am the guy with all the questions in the world :-)

1. Would you consider trend following traders (in essence trading DFM- Divergence from Mean) subscribing to "herd mentality" who will always lose in the long run?
2. Would you consider RTM-Reversion to Mean traders (in essence trading bounces, reversals, fakeouts etc) subscribing to "opposite of the herd" who will always win in the long run?
3. Do you feel DFM has a smaller "risk-adjusted return" profile compared to RTM?
4. Which style is better to produce consistent daily income ?

Edit: and here's my holy grail question..... is there a way to "consistently" use just Volatility (example: ATR, ADR, Open Session Range etc ) to decide which style of strategy to incorporate. Do low volatility suit well for trend following/breakout systems and high volatility systems suit well for reversals ?

Edit1: I am parsing data thru piles of unnecessary shit to find if Volatility has a hidden signature to determine the right type of strategy to trigger during trending and rangy markets. Meaning, at what point Range Expansion "ends" to stop trend following and being mean reversal strategies. This is just impossible and that is why many algos fail imo. Agree?

Hi VEEFX,

thanks for the questions, here my answers:

"Agree in principle but I am the guy with all the questions in the world :-)

 

1. Would you consider trend following traders (in essence trading DFM- Divergence from Mean) subscribing to "herd mentality" who will always lose in the long run?"

In a nutshell, trend followers on the DM side are the ones who get whipsawed; who often enter expensively into the market, who even if they catch a "trend" get kicked out early or half-way; and if they are persistent, they are part of the big DM positions eventually piling up on the wrong side of the market. Apart from George using the term "herd mentality" in a different context; yes, one could use that expression I think.



"Would you consider RTM-Reversion to Mean traders (in essence trading bounces, reversals, fakeouts etc) subscribing to "opposite of the herd" who will always win in the long run?"

No. Most of the time, the DM tries to trade "reversals", this by trying to enter "cheaply" into the market. They do theoretical calculations such as "if I enter now against the trend; I will make x pips out of this inner range move". However, in most cases, they just fuel the market move against the "reversal setup"; seeing the highs and lows getting cleaned again and again.
If you look back at all the screenshots in this thread; you can see how this is the most common scenari


"Do you feel DFM has a smaller "risk-adjusted return" profile compared to RTM?"

DFM =?
RTM = ?


"Which style is better to produce consistent daily income ?"

It is always harder to trade reversals then to trade in the "trend direction"; however, the SM applies particular tricks to "pullbacks"; this by doing grail patterns, by over-shooting, by drawing in fake SR etc.
Looking at my own approaches; my most "consisten" approach is a day trade approach whereby I often trade opposite of the "general move"; but this is just my own trading style. It is possible to develop ANY approach; even reversal ones; as long as one considers the market causality.


!Edit: and here's my holy grail question..... is there a way to "consistently" use just Volatility (example: ATR, ADR, Open Session Range etc ) to decide which style of strategy to incorporate. Do low volatility suit well for trend following/breakout systems and high volatility systems suit well for reversals ?"

Generally speaking, I would not say that this is the general rule. While incorporating VOL in one or another way is helpful; I doubt that one can pick a certain style by considering volatility only.


Stay safe,
FF

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