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Short Term Macro Trading

  • #1
  • First Post: May 31, 2020 8:34pm May 31, 2020 8:34pm
I'm not going to give you a system, but I will give you a framework by which you can stop being a muppet and stop losing money.

There are a million ways to make a million dollars, and looking at chart patterns is not one of them (else you wouldn't be reading this). This approach is just a simple thesis to get you off the muppet train and into a positive P&L.

1. Look for an artificial move, either a clump of shorts/long that goes against common wisdom and all fundamentals (Bloomberg, Financial Times, and whatever else muppets who lose money read, are NOT fundamentals). Look within a one week time horizon. E.g. all fundamentals point to EURUSD going long, but pair went short for the week.

2. Look for either confirmation that 1. wasn't an artificial move (trend keeps going) or for traders taking profit. Because we can't see volume in an OTC market, we'll have to use price action to make an educated guess as to whether the price movement indicates profit taking or not.

3. Use the dumb f*ck money going in the artificial direction (that has now ended) as liquidity to take the other side of the trade. I find the 62 fib presents a pretty good price.

4. Use the dumb f*ck money jumping at the end of your move as liquidity to get out of the trade.

The bread and butter of this approach put simply is to find price imbalances from short term, artificial moves. I find that depending on volatility, you can be in and out of a trade between 3 days - 6 weeks. Perfect for the short term trader.

Attached example of 2 weeks ago on USDCAD. You get your 3:1 in just over a week, which from a stress point of view, is pretty damn great.
Attached Image (click to enlarge)
Click to Enlarge Name: USDCAD.png Size: 92 KB
  • #2
  • May 31, 2020 8:40pm May 31, 2020 8:40pm
Obviously, this approach requires a pretty solid understanding of how to gauge direction of an asset correctly.

You need to have a list of criteria that you believe moves an asset. To get everyone started, Real Interest Rate, Inflation/GDP%of debt/Retail, and Futures Positioning (non leveraged), can give you an idea of where a pair is *supposed* to move on any given week.

The benefit of this approach is that you only enter with confirmation that a previous weeks' move was artificial, and you have price action to confirm your idea about where the real direction is.
  • #3
  • May 31, 2020 8:46pm May 31, 2020 8:46pm
Last week, I believe the fundamentals showed NZDUSD to be short. However, the pair rallied, which I believe is an artificial move.

So I wait to either;

1. Be shown that I was wrong, in which case I never enter (if the long continues), or
2. Price action shows profit taking at some point this week, bringing price back down to it's intrinsic value.

If 2., then I wait for the muppets to give me a good price to enter a short trade and wait for price to go back to it's actual value.

At the moment, nothing in the price action shows profit taking action, so I will stay put.
  • #4
  • May 31, 2020 9:09pm May 31, 2020 9:09pm
Disclaimer: Cherry picking and being bias on the media is never a good thing. You won't know when they'd decided to snap, and there goes your losses. It's at best if you could perform a neutral viewpoint on it
  • #5
  • May 31, 2020 10:20pm May 31, 2020 10:20pm
Quoting thegrimreape
Disclaimer: Cherry picking and being bias on the media is never a good thing. You won't know when they'd decided to snap, and there goes your losses. It's at best if you could perform a neutral viewpoint on it
Fortunately for me, I don’t have the burden of proof to prove anything. Mostly because like I’ve already said, I’ve not outlined a system, but a principle. Depending on what you let shape your worldview, the result will differ drastically. I have a system that generates a positive p&l over 5 years (I’ve just not had time to get the data for any further).

If you are building trading ideas on the media, I know you have a negative p&l without even looking
The conflict of the media is blatent; if there is no “news” MSM think are worthy, nobody will consume, so they blow everything out of proportions so muppets consume. Financial “news” and experts? Riddled with conflicts of interest. If you are a fixed income, bond, or anything long only trader like a pension fund manager, you want everyone to have an optimist outlook. If you are a hedge fund manager, you want max volatility so you increase your AUM. So every “expert” that appears on Bloomberg that tells you to trade a certain way... Yeh...

And to tell muppet retail traders that you should have a “neutral” viewpoint on something that is the epitome of conflict of interest is at best idiotic, and at worst, straight up c*ntish.
  • #6
  • May 31, 2020 10:40pm May 31, 2020 10:40pm
Quoting renatusmusic
{quote} Fortunately for me, I don’t have the burden of proof to prove anything. Mostly because like I’ve already said, I’ve not outlined a system, but a principle. Depending on what you let shape your worldview, the result will differ drastically. I have a system that generates a positive p&l over 5 years (I’ve just not had time to get the data for any further). If you are building trading ideas on the media, I know you have a negative p&l without even looking The conflict of the media is blatent; if there is no “news” MSM think...
It's genuinely a saddening community that we have here, that for once a constructive comment can turn into a nightmarish provocateur. You do you, but I've been here long enough to know that your method will kill you before actual realization hits. To further denote your ego, good luck and trade safe.
  • #7
  • May 31, 2020 10:51pm May 31, 2020 10:51pm
Quoting thegrimreape
{quote} It's genuinely a saddening community that we have here, that for once a constructive comment can turn into a nightmarish provocateur. You do you, but I've been here long enough to know that your method will kill you before actual realization hits. To further denote your ego, good luck and trade safe.
Interesting you think that giving retail muppets one of the worst possible advice is a "constructive comment".

You go on consuming nonsense from Bloomberg and Reuters that only report fundamentals after the fact. My job is to work out what Bloomberg and Reuters will report in the next week, month, 6 months. You take a guess as to what makes money and what doesn't.

And out of your "however long you have been here", I wonder how much outside AUM you have taken on and what your annualized returns on those are? Yeh, I didn't think so.

Interesting to hear also that this is ego inflating as well? I've not claimed a system or tried to prove my method yields x%, but have put out one of the approaches I and other funds in the City actually use to make money, and expelled lies to the muppets that keep losing money. I'm not going to beg people to try this out; it's a take it or leave it for people who keep losing money. Very interesting that is seen as ego inflating
  • #8
  • May 31, 2020 11:26pm May 31, 2020 11:26pm
Original post is very good! interesting that your buying at the points you feel the pair reaches an intrinsic value.
This might be a very repeatable theory and I like your minimal approach.
  • #9
  • May 31, 2020 11:50pm May 31, 2020 11:50pm
Quoting renatusmusic
{quote} Interesting you think that giving retail muppets one of the worst possible advice is a "constructive comment". You go on consuming nonsense from Bloomberg and Reuters that only report fundamentals after the fact. My job is to work out what Bloomberg and Reuters will report in the next week, month, 6 months. You take a guess as to what makes money and what doesn't. And out of your "however long you have been here", I wonder how much outside AUM you have taken on and what your annualized returns on those are? Yeh, I didn't...
Thank you
  • #10
  • Last Post: Jun 1, 2020 12:35am Jun 1, 2020 12:35am
Quoting trader john
Original post is very good! interesting that your buying at the points you feel the pair reaches an intrinsic value. This might be a very repeatable theory and I like your minimal approach.
Woah woah... Buying *back*, i.e. covering shorts at the points I feel a pair reaches it's real value. I would only buy the short (in the case of buying back at the real value) if I thought the pair was overpriced. Just double checking.

Buying anything at the actual value of anything would be a bad idea unless you were certain of the direction...

The best use of this thread would be to discuss what creates an artificial move and what the intrinsic value of something is, I suppose. I can't reveal my system, I'm afraid, because I need liquidity of people taking the other side, but an example of this in the scalping world would be options expiries.

If there is a large option expiry at a certain price, and price moves aggressively to that strike, we can assume the short term move was artificial by options traders with a conflict of interest to return their options ITM. We would then buy a position opposite of the artificial move at the expiry until price gets back to around where the day opened. (Disclaimer: volatility is dead (VIX < 30), so you will be waiting a LONG time for this to set up)

We just need to be creative in coming up with ideas about what in the market could create an artificial move. Happy hunting.
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