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Trading against the herd

  • #121
  • Jul 12, 2019 4:41pm Jul 12, 2019 4:41pm
Quoting Ill-b-back
GBPUSD bulls now at 70%. This bullish move can't last long...
You don't understand the numbers. Long % numbers won't go up with another upmove. With your logic, price should have dropped, but if that happened, people would start longing and longs would keep going up.

Now, if we go 100 pips higher for example, longs will drop to 50% maybe as many people will reverse their trades into shorts. Then another 100 pips up and 60% might be short, so the majority...so by your own logic, you will start longing 200 or more pips higher? Do you see how that makes no sense?

If anything, trading against the herd could be applied when 90+% of the traders are long/short on myfxbook, not FF, that is meaningless, because the amount of lots displayed on FF are a joke compared to myfxbook. Last time EU dropped, 94% people were long on myfxbook.
Everyone can see the chart, but only a few can actually read it.
  • #122
  • Jul 12, 2019 5:10pm Jul 12, 2019 5:10pm
Quoting OnlineAddict
{quote} You don't understand the numbers. Long % numbers won't go up with another upmove. With your logic, price should have dropped, but if that happened, people would start longing and longs would keep going up. Now, if we go 100 pips higher for example, longs will drop to 50% maybe as many people will reverse their trades into shorts. Then another 100 pips up and 60% might be short, so the majority...so by your own logic, you will start longing 200 or more pips higher? Do you see how that makes no sense? If anything, trading against the herd...
You say it's meaningless.
History says it's not.
Outcomes are outcomes, and historical outcomes show trading against the FF herd to be profitable.

The objective of this experimental approach is not to pick tops or bottoms as the herd does, but to switch positions against the herd.
If that means waiting 200 pips into a new trend,then so be it. I know where my SL will be. Something the herded top and bottom pickers often don't.

Simple.

I am sure there are other sites that may provide more useful data, and I have encouraged others to post it.

My past analysis has focussed on the FF herd, so that is what I am experimenting with.
Come with me if you want to live....
  • #123
  • Jul 12, 2019 5:22pm Jul 12, 2019 5:22pm
Quoting Ill-b-back
{quote} You say it's meaningless. History says it's not. Outcomes are outcomes, and historical outcomes show trading against the FF herd to be profitable. The objective of this experimental approach is not to pick tops or bottoms as the herd does, but to switch positions against the herd. If that means waiting 200 pips into a new trend,then so be it. I know where my SL will be. Something the herded top and bottom pickers often don't. Simple. I am sure there are other sites that may provide more useful data, and I have encouraged others to post it....
i should have listened to you mate i joined the herd and got caught on usa/jpy the herd was buying so was i but it should have been a sell since 66% was buying and down it went but is a positive swap so will keep for a while
people leave, but this thread will go on for ever
  • #124
  • Jul 12, 2019 6:05pm Jul 12, 2019 6:05pm
Quoting Aussi
{quote} i should have listened to you mate i joined the herd and got caught on usa/jpy the herd was buying so was i but it should have been a sell since 66% was buying and down it went but is a positive swap so will keep for a while
Dude, don't listen to me, unless you want to bust your account
My analysis (herd and otherwise), only pertains to GBPUSD.
Not sure about other pairs as I haven't watched them for over a year.
Have a great weekend mate

Come with me if you want to live....
  • #125
  • Jul 12, 2019 6:23pm Jul 12, 2019 6:23pm
Quoting Ill-b-back
{quote} Dude, don't listen to me, unless you want to bust your account My analysis (herd and otherwise), only pertains to GBPUSD. Not sure about other pairs as I haven't watched them for over a year. Have a great weekend mate
i have my own way mate and it works got caught out last night but the next week is another time to sort that trade out but it was interesting regarding what you are saying overhaul , years and years ago i did look at that type of trading you can equate it to where the stops are so by taking the opposite way where herd stops are
people leave, but this thread will go on for ever
  • #126
  • Jul 12, 2019 7:59pm Jul 12, 2019 7:59pm
Quoting OnlineAddict
{quote} You don't understand the numbers. Long % numbers won't go up with another upmove. With your logic, price should have dropped, but if that happened, people would start longing and longs would keep going up. Now, if we go 100 pips higher for example, longs will drop to 50% maybe as many people will reverse their trades into shorts. Then another 100 pips up and 60% might be short, so the majority...so by your own logic, you will start longing 200 or more pips higher? Do you see how that makes no sense? If anything, trading against the herd...
Actually Forex Factory although doesnt have enough data on lots/positions but it is usually around 90% the same as Myfxbook (in direction terms).. The retail herd are predictable.

Now what some say is that they are still 64% in buy postions according to Forex factory and the price is rising. If you look at the forex factory SSI data they have hold those buy positions for over nine weeks on average so most of those buyers are still in drawdown.

If price did the exact opposite 100% of the time don't you think we would all be billionaires. They is more to it then just the SSI.

I don't want to post myfxbook charts and data as I'll-B-Back is following Forex Factory SSI but just this once so you can see the bigger picture on how the herd trade.

Notice 1 - 2 - 3 | The more price rises the more they sell.. yes, the GBP/USD has rose and the data is saying buying but take a look - the buyers are leaving. The sellers are still close to what they have been.. Now if we get large pullbacks the data will go inline with the herd. The retail trader.

Even for the last three days the Forex Factory data on the GBP/USD buyers have dropped even though prices have risen.

If next week the GBP/USD starts falling again all the retail traders will start buying it and the data will go up to say 70/75%
Attached Image (click to enlarge)
Click to Enlarge Name: GBPUSDChart.png Size: 48 KB
The most violent element in society is IGNORANCE
  • #127
  • Jul 12, 2019 8:20pm Jul 12, 2019 8:20pm
Quoting neilsdigest
{quote} Actually Forex Factory although doesnt have enough data on lots/positions but it is usually around 90% the same as Myfxbook (in direction terms).. The retail herd are predictable. Now what some say is that they are still 64% in buy postions according to Forex factory and the price is rising. If you look at the forex factory SSI data they have hold those buy positions for over nine weeks on average so most of those buyers are still in drawdown. If price did the exact opposite 100% of the time don't you think we would all be billionaires....
You are free to post data from other sources.
Your last statement will show herd mentality in current/ live action if correct. As long as it keeps dropping, which I think it will.
Come with me if you want to live....
  • #128
  • Edited 4:25am Jul 13, 2019 2:53am | Edited 4:25am
Total lots ratio: FF/Myfxbook less than 0.3%
Attached Image



FF details shows: one persion bet 200 lots, almost 67% of total FF traders lots, which means if that guy changes his mind, the ratio will change dramatically
Attached Image


Don't want to be negative, nothing wrong with trading agains the herd, but FF's data is not herd data, it's a small portion of day traders/scalpers' noise.
Be a spectator, not a player
  • #129
  • Jul 13, 2019 3:40am Jul 13, 2019 3:40am
Quoting Ill-b-back
My past analysis has focussed on the FF herd, so that is what I am experimenting with.
https://www.myfxbook.com/en/community/outlook
I check the numbers here, its way more traders, lots and volume in general.

EDIT: Just saw the post above me. Thanks for the detailed comparison.
Everyone can see the chart, but only a few can actually read it.
  • #130
  • Jul 13, 2019 5:53am Jul 13, 2019 5:53am
Quoting OnlineAddict
{quote} https://www.myfxbook.com/en/community/outlook I check the numbers here, its way more traders, lots and volume in general. EDIT: Just saw the post above me. Thanks for the detailed comparison.
Yes I know, and others like Neil are tracking myfxbook.
As I said before, FF herd data is what I have looked at before and it grabbed my interest as a contraindicated based on outcomes of historical data.
Now I am experimenting with it, mainly out of interest to see the result over say 12 months.
Come with me if you want to live....
  • #131
  • Jul 13, 2019 8:48am Jul 13, 2019 8:48am
Ill-b-back, Your idea is very sound no matter the data source, but I am also am using FF data. The trade I posted a few pages back produced some nice pips & has prompted me to continue to experiment with your idea while continuing with my current method of trading. The herd will always be on the wrong side. Follow the herd over the cliff, or trade against them & begin to climb the mountain to pips. This is an indicator less way to trade. That is why most will shy away after following for a bit. No bright flashing lights, only data. Best of trades to you & thank you for sharing your observations & idea.
  • #132
  • Edited 4:24pm Jul 13, 2019 2:38pm | Edited 4:24pm
Recently I became interested in the idea of trading against retail volumes, hence I decided to perform my own research. I shared some software that I wrote, which collects the myfxbook webpage data and plots it as a timeseries on MT4 charts. You can read my conclusions, and/or download the software and investigate for yourself. All here.

The screenshot below of GBPUSD,H4 shows that net retail volumes (the solid white line) increases while price falls, and vice versa. You can see how its plot is almost invariably the mirror image of the price candles**, sometimes lagging by a candle or two, as it takes retail traders time to react to the move. The dashed green and tomato colored lines are the % of buy and sell volumes, respectively, corresponding to the 0 to 100 scale at the LHS of the chart. Again, you can see how the % of buyers increases as price falls, and vice versa. The blue and magenta lines represent the average retail buy and sell prices, respectively, corresponding to MT4's price scale on the RHS. You can see how retail buy positions are significantly under water, while sell positions are currently around breakeven.
[** note how the same type of pattern is likewise evident in Neil's screenshot in post #126.]
Attached Image (click to enlarge)
Click to Enlarge Name: PPI 443.png Size: 38 KB

Here's my point: if you followed these % figures, then by trading against the herd you'd be looking to sell GU because the % buyers is always > 70%. If you sold at candle 'A', you'd have made money. But if you'd waited to sell until the buyers exceeded the even higher value of 90%, you'd have sold at 'B' and currently have a pending loss. The retailers who, attempting to "buy low, sell high", correctly picked the bottom at 'B' are currently in profit at the 'contrarian' trader's expense. (So, as always, to profit from a move, you need to enter your position early enough). My question: given that retail volumes merely confirm (the inverse of) price, and tend to lag price by 1-2 candles, why not simply follow price, and trade with the existing move, preferably with an early entry (i.e. selling nearer point 'A' than 'B')?

The way I see it: retail volumes are merely a confirming, rather than a leading, indicator. I'm not condemning that, as an independent confirmation of price can potentially add conviction to your trading decisions. My research also shows that the herd tend to leave their losses open, supposedly hoping for a return to breakeven. Hence a 'contrarian' strategy essentially amounts to: buy early into existing moves, cut losses and maximize gains, all of which is typically what a 'trend-following' approach attempts also. (For comprehensive info on trend following systems, you could start with Copernicus' posts).

If you doubt my assertion that retail volumes mirror price almost 100% of the time, please feel welcome to download the software and draw your own conclusions.
  • #133
  • Jul 13, 2019 5:49pm Jul 13, 2019 5:49pm
First thanks for the update Hanover.. I cant post in my thread or yours as you know why.. Phycho stalker will find me LOL

Before and if you read this post . Take note that to be succesful in trading or anything in life takes dedication and research.. No indicator OR EA is going to help you if you don't dedicate yourself to research.

(Quote) The way I see it: retail volumes are merely a confirming, rather than a leading, indicator. (End quote)
I so agree.. If with any method I use to trade as mentioned in the other Contrarian thread I use the SSI as confirming. If I get a buy through my method I will only trade it if The herd are trading the other way by at least 75% (myfxbook).
---
I was working on this for a long time as like you say retail volumes mirror price almost 100% of the time.

Now Ok, this chart is just a mirror of price on the GBP/USD Daily.
Lets say the Blue/ White is retail traders and Green/Orange is price. 100% mirror of retail traders trades versus price.

Can we tell with some degree when the SSI has hit a limit and will go with the retail trader. IE. As Hanover mentioned it lags a couple of candles to catch up or it goes with the retail trader in a large pullback before it goes the Contrarian way again.

This is just pure theory as I was tested it out but gave up trading and left this forum for a year whilst I enjoyed life.

Had no time as yet to carry on with all the data I gathered to see if and when the SSI has a limit and then price reverses and goes with the retail trader until they catch up with price and start trading the other way again, as which is now happening with the GBP/USD..

Will price continue upwards and retail herd start selling or will prices drop again but as we seen the USD did become a very weak curency through last week, so that is one way the GBP/USD rose just because of the USD weakness and not GBP strengh.

Anyway I will leave it at that for now as it is a bit off topic of what Ill-B-Back is researching with The Forex factory SSI on the GBP/USD.
But take a look at the two charts and see how they matched and how the SSI tops and prices started going the other way, with the retail trader.
Attached Image(s) (click to enlarge)
Click to Enlarge Name: GBPUSDSSI1.png Size: 37 KB
Click to Enlarge Name: GBPUSDSSI2.png Size: 50 KB
The most violent element in society is IGNORANCE
  • #134
  • Jul 14, 2019 12:56am Jul 14, 2019 12:56am
Thank you Neil and Hanover for your contributions.
I really just started this as an experiment but see it has real practical application with the right tools and data sources.

Thanks again
Come with me if you want to live....
  • #135
  • Jul 14, 2019 1:31am Jul 14, 2019 1:31am
Quoting hanover
Recently I became interested in the idea of trading against retail volumes, hence I decided to perform my own research.
Great stuff H. That research is a great asset to 'price followers'. It really helps to put meat around the conviction of cutting losses short and letting profits run. Thanks very much for sharing :-)
  • #136
  • Jul 14, 2019 4:51am Jul 14, 2019 4:51am
Quoting hanover
Recently I became interested in the idea of trading against retail volumes, hence I decided to perform my own research. I shared some software that I wrote, which collects the myfxbook webpage data and plots it as a timeseries on MT4 charts. You can read my conclusions, and/or download the software and investigate for yourself. All here. The screenshot...
Good to see your post hanover. Thank you.
  • #137
  • Jul 14, 2019 1:24pm Jul 14, 2019 1:24pm
This is what i got, kindly help with brief steps on how to have the price and volumes line added.

Thanks
Attached Image (click to enlarge)
Click to Enlarge Name: Screenshot2.png Size: 34 KB
  • #138
  • Jul 14, 2019 1:53pm Jul 14, 2019 1:53pm
Quoting osittu
This is what i got, kindly help with brief steps on how to have the price and volumes line added. Thanks {image}
Same thing happened with me. I got it working when used the templates that Hanover supplied in zip file, then all was working. So use his template, and hopefully works.
  • #139
  • Jul 14, 2019 4:27pm Jul 14, 2019 4:27pm
Quoting PippinUSA150
{quote} Same thing happened with me. I got it working when used the templates that Hanover supplied in zip file, then all was working. So use his template, and hopefully works.
Yeah, actually loaded the template (myfxbook_consolidated.tpl and myfxbook_outlook.tpl), still same.
Is there something i'm still not getting right?
  • #140
  • Jul 14, 2019 11:29pm Jul 14, 2019 11:29pm
Quoting osittu
{quote} Yeah, actually loaded the template (myfxbook_consolidated.tpl and myfxbook_outlook.tpl), still same. Is there something i'm still not getting right?
I have the same problem.
Loaded the templates and the indicators but just got this.
I'm plotting the data from FF manually anyway, so not a big issue for me.

I hope you get it working.
Attached Image (click to enlarge)
Click to Enlarge Name: GBPUSDH4.png Size: 22 KB
Come with me if you want to live....
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