Trading against the majority | Page 2 | Forex Factory

Options

Go to
Permalinks
Print Thread

Similar Threads

Wanna know why a majority of traders lose? 123 replies

Who are you trading against? 2 replies

do big banks collect good trading systems and then move against us? 6 replies

Trading Against the Mass Strategy 8 replies

Trading against the majority

  • #21
  • Aug 10, 2007 2:48pm Aug 10, 2007 2:48pm
But if you believe the rumour that 95% of traders fail....

Quoting Mr demark
Trade against majority of traders?? nah...i rather trade with the majority of the volume
  • #22
  • Aug 10, 2007 3:50pm Aug 10, 2007 3:50pm
Quoting tdion
But if you believe the rumour that 95% of traders fail....
what makes you think that "95%" pick the wrong direction?
  • #23
  • Aug 10, 2007 4:19pm Aug 10, 2007 4:19pm
Quoting tdion
I was just thinking.... if the "95% of traders fail" fact is true,

WHY NOT JUST TRADE AGAINST THE MAJORITY???
Arbitrarilly going against the majority is a recipe for disaster.

To make this work one needs to know where the stops are located. The market usually makes large counter trend moves only when large investors can trigger the stops. Until that happens, majority sentiment rules.

Another important factor is volume. Big money can move the market farther against the LT trend when fewer new positions are created.

This is what I gathered from various articles and threads by the 'old timers' here at FF. I'm not really as smart as I try to sound.
  • #24
  • Aug 10, 2007 5:23pm Aug 10, 2007 5:23pm
Let's just watch the EURUSD sentiment for now.... over 50% are short at Oanda..... I think it is going to continue its long term trend up.

PS) I'm not the only one that thinks this way:

http://www.forexfactory.com/showpost...85&postcount=3

Quoting mbqb11
what makes you think that "95%" pick the wrong direction?
  • #25
  • Aug 10, 2007 5:43pm Aug 10, 2007 5:43pm
Quoting tdion
Let's just watch the EURUSD sentiment for now.... over 50% are short at Oanda..... I think it is going to continue its long term trend up.

PS) I'm not the only one that thinks this way:

http://www.forexfactory.com/showpost...85&postcount=3
you still need the most important part...a trading plan....


The gbp/jpy is going up. Ok? Where do you enter, where do you exit, where is your stop. And then repeat this over a series of trades consistently. (you can pick the right direction everyday and still lose money- I am sure you can agree here).It isn't hard to know where the long term trend is Look at jacko. But look at what he did. Developed a full trading plan around it.

I am not disagreeing with the thought process of retail traders being overall wrong(and learning to profit off that, I do it). But to be long term successful there is much more then that. Next is to use this information(your belief) and develop a full plan around it.

Best,
Mike
  • #26
  • Aug 10, 2007 6:13pm Aug 10, 2007 6:13pm
As I said in post #1 & post #18, I think this could be a filter for an existing trading system. I surely wouldn't take trades based solely on people's positions at Oanda.

Thanks.
  • #27
  • Aug 10, 2007 6:22pm Aug 10, 2007 6:22pm
my point is in post 1 you are making the assumption that "95%" of traders fail because they pick the wrong direction. Using this assumption you are deciding to take the opposite direction of the majority. My point is maybe 95% fail but it has nothing to do with the direction they pick. I just don't think the association is appropriate, not that this couldn't be used in some way for you to profit(that is up to you to figure out).

Good luck,
Mike
  • #28
  • Edited 3:24am Aug 11, 2007 3:13am | Edited 3:24am
Quoting ScottH
.....it's all about your exits, and to try forcing yourself to believe anything else is foolish!
Profit is the difference between both entry and exit.
___________________________________

Anyway, I see an underlying concept behind this thread, that might have opened my eyes......

1. The "mathematical" view: if I buy whenever my system tells me sell, and sell when it says buy, then my bottom line will be the complete opposite (e.g. +$200 instead of -$200). Except of course for spread, which is always against me. If, by reversing my method, I'm still likely to be in the majority that "fail", this suggests that most mathematically based systems are about 50% "accurate", and that costs are ultimately significant enough to tip the balance.

......BUT......

2. The mathematical view breaks down when we consider that the market is much more than just a fixed, inanimate stream of numbers. Instead it is a "living animal" where a decision made by any participant triggers a series of decisions made by other participants. So each time I reverse a buy or a sell, I'm creating a ripple that will have a downstream effect, irrevocably altering the future stream. And if my action influences a handful of others, who then influence another handful, and so on..... then the spontaneous, collective action may grow dynamically to trigger a complete reversal of the trend.

......AND......

3. There are some participants who are already committed to the decisions that they're about to make, so my action will not influence them.


Knowing Oanda's order queue (market depth) may provide valuable information, but there's nothing to stop any of these participants from re-evaluating the situation, for whatever subjective reason, and canceling their pending order before it gets triggered.

In a recent post I recounted an anecdote from Mark Douglas' Trading in the Zone. IMHO it's very relevant to this viewpoint, so I'll repeat it here:

Quoting hanover
What Mark says makes much more sense to me now than when I first read his book. It has reawakened my understanding as to why price movement in such a random process. We know that fear and greed are among the most irresistible of human emotions, hence prices must always move between "overbought" and "oversold" extremes. However, we can not predict who the participants will be at any given point, what their goals and aspirations are, and what their emotions will drive them to do.

As an illustrative example, Mark tells a story of a capable analyst who was hired by a firm. The analyst explained to his new boss how he could predict turning points by using support and resistance levels. When soybeans price reached a major support level, his boss said to him "OK, what you're saying is that price can go no lower, right?" The analyst said "Absolutely. This is the low of the day". His boss immediately picked up the phone and said "Sell two million beans at market", and within 30 seconds, the soybean price had dropped another 10c. The boss said "Now where did you say price was going to stop? If I can cause that, anybody can".

Of course the point is that the action of any one of a million traders can influence price, and that to have any degree of certainty in our analysis, we would need to have an omniscient view. Not having this view, price movement, especially in the short term, will always appear random to us, even though the underlying reasons may be anything but.
Am I making sense to anybody? If so, then this means that one important key to a successful trading method is having the experience necessary to gauge sentiment at any point, and the adaptability to ride on the coat-tails of the prevailing set of beliefs and methods that have the greatest current influence on the market. In this regard, a purely mechanical approach would always be at a disadvantage.

David
  • #29
  • Aug 11, 2007 3:35pm Aug 11, 2007 3:35pm
Quoting ScottH
You're only getting oandas data.. people from other brokers might be long..
True, but Oanda is one of the biggest retail FX brokers, their customer position ratios present a noteworthy viewpoint of general retail sentiment. I just found out FXCM also publishes similar data. An examination of the two data sets shows nearly the same sentiment across both brokers' customer pools (GBP/USD showed the only minor variance).

I'm not sure if FXCM's SSI is available publicly or to customers only, but DailyFX does a weekly review of the data here.
  • #30
  • Aug 11, 2007 9:08pm Aug 11, 2007 9:08pm
Provided that I understand well how to read Oanda's indicator, I think is very strange GBP/JPY had an 80% of long positions this week... really?

Am I in the outerspace? with all the carry traders that must've been flushed, and the latest movements, I imagined almost all ppl that trade this pair, with their tedy bear cap that claps when you pull a cord, waiting for another fall in the price... :
Ado Whether you believe you can do a thing or not, you are right.
  • #31
  • Aug 11, 2007 9:23pm Aug 11, 2007 9:23pm
Quoting Ado
Provided that I understand well how to read Oanda's indicator, I think is very strange GBP/JPY had an 80% of long positions this week... really?

Am I in the outerspace? with all the carry traders that must've been flushed, and the latest movements, I imagined almost all ppl that trade this pair, with their tedy bear cap that claps when you pull a cord, waiting for another fall in the price... :
...eeemmm ahh yes! this thread is about wether or not trading against the majority not about the percentage of long/short positions last week at Oanda, or the caps that traders wear...

Well, I agree with "trend is your friend", and I think people that failure in fx is because they try to outsmart the market and go in the wrong direction or lack of a trading plan.

My two pips.
Ado Whether you believe you can do a thing or not, you are right.
  • #32
  • Aug 11, 2007 11:26pm Aug 11, 2007 11:26pm
Actually it is about the percentage of long/shorts last week at Oanda. Reread....
  • #33
  • Aug 11, 2007 11:55pm Aug 11, 2007 11:55pm
Quoting tdion
I was just thinking.... if the "95% of traders fail" fact is true,...
WHY NOT JUST TRADE AGAINST THE MAJORITY???.
95% of Traders do not comprise the Wise Market. What they DO comprise is the noise we have to contend with. Stick with YOUR True evaluation of the Market.
  • #34
  • Aug 12, 2007 12:15am Aug 12, 2007 12:15am
Quoting tdion
Actually it is about the percentage of long/shorts last week at Oanda. Reread....
Yes, It's what I said... if you look at the GBP/JPY data, it's over the 80% what means 80% is long and 20% is short. Am I right?

My first thought was the number was unbelivable, but I gues I might have been wrong with that argument, in the short term there is a bearish trend, but maybe in long term strategy it's still up, and -1,000 pips it's nothing.
Ado Whether you believe you can do a thing or not, you are right.
  • #35
  • Aug 12, 2007 3:00am Aug 12, 2007 3:00am
Quoting ScottH
You're only getting oandas data.. people from other brokers might be long..
I would like to hear a single argument, based on some fact, as to why retail traders with Oanda are different from retail traders with other brokers.
  • #36
  • Aug 12, 2007 3:44am Aug 12, 2007 3:44am
Darkstar talks about this some here. Maybe SMJones or Merlin can verify that Darkstar knows what he is talking about. I personally don't have much experience w/ forex infrastructure.

At the bottom of the article, he talks about brokers taking the opposite position of the majority w/ the banks.....

http://www.forexfactory.com/showpost...18&postcount=3
  • #37
  • Aug 12, 2007 3:20pm Aug 12, 2007 3:20pm
Quoting tdion
Darkstar talks about this some here. Maybe SMJones or Merlin can verify that Darkstar knows what he is talking about. I personally don't have much experience w/ forex infrastructure.

At the bottom of the article, he talks about brokers taking the opposite position of the majority w/ the banks.....

http://www.forexfactory.com/showpost...18&postcount=3
i assure you Darkstar knows what he is talking about.
  • #38
  • Aug 12, 2007 7:52pm Aug 12, 2007 7:52pm
Yes DS I highly qualified..
  • #39
  • Aug 26, 2007 7:07am Aug 26, 2007 7:07am
trade against the majority ........ yes...
that mean we trade along the minorities....

who are this minorities group ? Bank, financial institute, government.......
  • #40
  • Aug 26, 2007 3:00pm Aug 26, 2007 3:00pm
Quoting Syafi
trade against the majority ........ yes...
that mean we trade along the minorities....

who are this minorities group ? Bank, financial institute, government.......
Trading with minorities ..... hmmmm, sounds interesting ...
0 traders viewing now