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  • #141
  • Nov 7, 2007 4:28am Nov 7, 2007 4:28am
Quoting mbqb11
I don't mind the debate and appreciate the response ST/bwr. What it comes down to is trading ones beliefs in the market. In the end if we are making money then that is what counts


Take care guys/gals

Mike



Debate is good for the soul and for profits
Just Trade It
  • #142
  • Nov 7, 2007 4:49am Nov 7, 2007 4:49am
Green Daivd,
I read your post #130

Let me play devil's advocate for a minute.... Your analysis is so clear and good that you can even be in Bloomberg TV....As an economist I do agree that fundamentals are the reason that drives markets (currencies in this case). When you see a chart like the one you posted its impossible to argue against the validity of fundamentals behind a trend. Moreover, devinitevely trading longer timeframes with fundamental analysis is not rocket science, its the way big players trade and its the "safe" and "easiest" way to be profitable....

But you are missing an important point... it doesnt work for small traders!!! and it doesnt work not because of what your saying but because small traders DO NOT have the CAPITAL and TIME that its required to trade like this.

I know your point is not showing entries and exist and I also know that is so easy to analyze a chart ex post, but for a small trader catching the long trade in your example is as difficult as taking the long in the example I post below (with or without analysing the fundamentals).

Look at the following charts below: .... The first is your daily EUR/US chart may - november and the second is last monday 18 tick chart (only for 30 mins)

http://i21.tinypic.com/mbn7k2.jpg

http://i22.tinypic.com/2e3ddmw.jpg

Of course you could have made a lot more pips trading the daily chart than a 18 tick chart but the point is these trades happends only a few times a year (meaning you have to have a lot of patience... which is not a big problem), plus, and the most important, a small trader can only afford trading a micro or mini lot to support the 50, 100 or more pips that usually the market moves against you before start moving in your favor (depending on your entry of course).

Sadly, even if we agree that longer timeframes with fundamental analysis are the key for trading, small traders do not have the tools to trade this way... And that why a small trader has to look for a leverage (not in terms of money) looking in shorter timeframes (with or without following the main trend) not to maximize profit but to minimize risk and time in the market...

I'll be happy to exchange further ideas...

jjrvat
  • #143
  • Nov 7, 2007 7:11am Nov 7, 2007 7:11am
Quoting jjrvat
Green Daivd,
I read your post #130
thank you for your reply. Finally I got someone who is interested in fundamental analysis.

Quote
But you are missing an important point... it doesnt work for small traders!!! and it doesnt work not because of what your saying but because small traders DO NOT have the CAPITAL and TIME that its required to trade like this.

I know your point is not showing entries and exist and I also know that is so easy to analyze a chart ex post, but for a small trader catching the long trade in your example is as difficult as taking the long in the example I post below (with or without analysing the fundamentals).

I agree. But as I said you don't have be professional as a level of economist. Just know how market reacts to some important economic data, and what's going on. For example, US economy is getting worse after subprime, and ECB Main Officers are still more concerned with inflation than higher Euro.

Quote
Of course you could have made a lot more pips trading the daily chart than a 18 tick chart but the point is these trades happends only a few times a year (meaning you have to have a lot of patience... which is not a big problem), plus, and the most important, a small trader can only afford trading a micro or mini lot to support the 50, 100 or more pips that usually the market moves against you before start moving in your favor (depending on your entry of course).

Sadly, even if we agree that longer timeframes with fundamental analysis are the key for trading, small traders do not have the tools to trade this way... And that why a small trader has to look for a leverage (not in terms of money) looking in shorter timeframes (with or without following the main trend) not to maximize profit but to minimize risk and time in the market...

I agree. But if a trader is quite clear what is the main trend, definitely it will help him even if he is doing day-trading.

Fundamental analysis can't be used directly. But, it really helps trading as stated in my last post. so why refuse anything that helps trading good?

Successful tradings depend two things, right direction and right timing IMHO. As I illustrated in the last post, fundamental analysis, even simple ones help to find and confirm main trend with day chart. Technical analysis is useful for right timing, for TA is just a tool to tell us if there is a overbought, break-out, possible end of retracement.

And as for fundamental data and information, watch how the market reacts to them, not itself.

These are my points.
  • #144
  • Nov 7, 2007 11:44am Nov 7, 2007 11:44am
Wow, looks like I missed lots of fun here last night while I was sleeping!
Thanks to everyone for providing lots of good reading material. Although the topics discussed, i.e. stop running, fundamental analysis and trends have been discussed many times before, I was still able to see things slightly different after reading your discussions.

  1. Stop running: If you can do it consistantly with little risk go ahead. The Asians ran my stops last night, but I've seen this happen many times in light markets before so I was prepared this time with a stop and reverse strategy. I'm at work right now so I can't go into detail. Basically, I was down ~ 100pips at which point I realized that I was wrong about the extent of a possible correction. So far I'm near break even, but I'm giving bias to a weaker $ so I'll hold for a while, but who knows what tomorrow will bring!
  2. Fundamental analysis: Thanks for reminding me to factor that into my trend bias.
  3. Trends: Dough! Here we go again. The market is trying to punish me for trying to disspell the importance of trends. Even so, I stubornly refuse to call the trend my friend. Here's why. The market often makes some very big moves when traders least expect so it can move with the least number of traders aboard. Why? Imagine a few hundred real money players shorting the $ to the tune of $100,000 each. The market then moves 100 pips in their favor. Suddenly the central banks owe one hundred individual speculators a billion dollars. Do this a few times and the real money players start owning banks. Last night was a perfect example. No economic news was expected. The markets went flat, all was quiet on the Forex front then... BAM! Within five minutes price jumps +50 pips. Now that took a combination of empty markets and big bucks to accomplish, but the big boys from China were able to keep many hemeroids from festering while they unloaded their $s. The ONLY way to profit from such a move was to have substantial equity on hand and sit and wait for the major trend to continue. I know from experience that 'small guys become small fries' in this market. This is also why I felt that last night was one of my best trading nights ever, even though I made little or no profit and I was sleeping. I became one with the market (eventually) and switched gears just in time to save my ass before going to bed.

This is exactly why I started this thread. To explore the difficulties associated with having a small retail forex account. I set out in 2003 determined to turn a $500 account into $1000 then $2000 then $4000... Instead I eventually lost +$5000. That was my limit and now I have no choice but to play with my peanuts while I wait for a miracle ship to come in and finance my account at a level that can make me a decent living. Until then, I plan to continue this quest for the tools I need to make a small steady profit so that if my ship comes in I will be armed and experienced enough to handle the responsibility. So far, so good.

  • #145
  • Nov 7, 2007 12:35pm Nov 7, 2007 12:35pm
Quoting Micro-MiniMe
Last night was a perfect example. No economic news was expected. The markets went flat, all was quiet on the Forex front then... BAM! Within five minutes price jumps +50 pips. Now that took a combination of empty markets and big bucks to accomplish, but the big boys from China were able to keep many hemeroids from festering while they unloaded their $s. The ONLY way to profit from such a move was to have substantial equity on hand and sit and wait for the major trend to continue.
I'm not quite sure I follow here how this is the "ONLY" way to profit. The spike last night was actually in the direction of the major trend of pairs like E/U and G/U, so I didn't have to wait for anything, the move was continuing the major trend. I was already in G/U from a breakout a couple days ago and following the trend only to be surprised last night with an unexpected fast move in my favor and a nice follow through today.

The way I see it, the larger trend is based on a whole ton of opinions in the market, but it happens that more of them than not are in agreement that the Euro and Pound are fairly continuously worth more than the Dollar. Taking this logic further it also implies that more often than not the surprise announcements by guys in China and other market movers will coincide with that same underlying opinion bias in favor of the larger trend, like last night. Meaning, in a trend it is more likely than not that surprise moves, news, and breakouts will be in the direction of the major trend, or else there probably wouldn't be a trend in the first place.

The reasons a trend exists are often the same reasons it continues.
  • #146
  • Nov 7, 2007 1:32pm Nov 7, 2007 1:32pm
Does anyone really need to know the fundamentals behind the US$ bear market. The trend is down and has been for awhile. Most likely will be for a lot longer. Sell on good news, sell on bad news. Sell in May (2002 that is) and go away. As long as the trend remains in effect - sell sell sell.

Oh but what about Bernacke, Trichet, trade deficit, yada yada freaking yada.

BTW, psst hey buddy wanna see a picture of a dive worthly of a 10 in the Summer Olympics:
Attached Image (click to enlarge)
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  • #147
  • Nov 7, 2007 1:33pm Nov 7, 2007 1:33pm
Quoting Philww
I'm not quite sure I follow here how this is the "ONLY" way to profit.
The reasons a trend exists are often the same reasons it continues.
About the "Only". I was speaking from my perspective as a trader with a small account. I had recently closed my GBP/USD longs from last week, due to what I perceived as a possible significant correction that started on monday. You and others who have more faith in the trend continuing held onto your longs as they moved over 100 pips against you on Monday. This is what I ment by the need for substantial equity needed to play the trends long term. Without the equity, a trader is almost forced to take a 100pips profit like I did rather than risk loosing much of it in the case of a large pull back as happened in July and again in early Sept.
Maybe I don't understand exactly what your saying, but it's hard without charts and details of how and why you entered the trend.
  • #148
  • Nov 7, 2007 1:34pm Nov 7, 2007 1:34pm
And remember markets are fractal in nature. What is found on a weekly chart can be found on a daily and a minute chart as well.
  • #149
  • Nov 7, 2007 1:54pm Nov 7, 2007 1:54pm
Quoting SunTrader
Does anyone really need to know the fundamentals behind the US$ bear market. The trend is down and has been for awhile. Most likely will be for a lot longer. Sell on good news, sell on bad news. Sell in May (2002 that is) and go away. As long as the trend remains in effect - sell sell sell.

Oh but what about Bernacke, Trichet, trade deficit, yada yada freaking yada.

BTW, psst hey buddy wanna see a picture of a dive worthly of a 10 in the Summer Olympics:
Thanks for reminding me of the Summer of 2003 and the all but forgotten HIA (Homeland Investment Act). During this time most of the economic data was very bad for the US, yet thanks the cleaverness of the HIA several hours after each news announcement the USD would mysteriously gain strength, and lots of it. Finally, by October-November the real cause for USD strenth was unveiled. The HIA. I remember this well as it was the time that my accounts declined and my trust in economic data faltered.

Sure, in the grand scheme of things it was just a pull back, an opportunity to buy more longs (for the big guys), but the price of EUR/USD fell from 1.1900 to 1.0800. Over 1,000 pips. That feascoe left many traders wondering WTF do I do now? How can you trust in trends after such BS. Well, that's trading they say! I say that's just good ole fashion BS.
Attached Image (click to enlarge)
Click to Enlarge Name: eur_usd_2003.gif Size: 18 KB
  • #150
  • Edited 5:03pm Nov 7, 2007 2:02pm | Edited 5:03pm
Quoting Micro-MiniMe
How can you trust in trends after such BS.
I guess what I should have said was I watch the charts exclusively and ignore the BS. You believe the charts are sometimes BS. Not trying to put words in your mouth. But what will happen will happen. I trade the market, not the news.

Put it this way: If you could trade a chart in the past (we all wish) would it matter knowing what was making the market move the direction it was heading? Why does it matter in the future? Knowing, is the media's job - and they are lousy at it.
  • #151
  • Nov 7, 2007 2:07pm Nov 7, 2007 2:07pm
Quoting SunTrader
Did I miss something there or is the BS the fundamental govermental BS and not the trend that was on the chart.

I am talking charts - TA. Are you when you refer to trends?
The trend that's based on the fundies is the same one that shows up on the charts, or at least it should be.
  • #152
  • Edited 3:21pm Nov 7, 2007 2:08pm | Edited 3:21pm
Quoting Micro-MiniMe
About the "Only". I was speaking from my perspective as a trader with a small account. I had recently closed my GBP/USD longs from last week, due to what I perceived as a possible significant correction that started on monday. You and others who have more faith in the trend continuing held onto your longs as they moved over 100 pips against you on Monday. This is what I ment by the need for substantial equity needed to play the trends long term. Without the equity, a trader is almost forced to take a 100pips profit like I did rather than risk loosing much of it in the case of a large pull back as happened in July and again in early Sept.
Maybe I don't understand exactly what your saying, but it's hard without charts and details of how and why you entered the trend.
Right, my bad, I was mistaken and thought that you were talking about last night's move as the 100pip move. Incidentally though, if one were trading longer term with the trend, even that 100 pip drop on monday didn't break any major S/R areas in the trend.

I see what you're saying about needing equity to ride out the natural retracements in a trend, but I think that can simply be solved with reducing your position size, if in fact you do want to trade longer term with the trend. Of course a short term trader would definitely have exited where you did knowing full well they could get back in the trend again later. Either way though, you're still playing the trend. In the later case you're just getting out of the way of retracements to preserve equity like you did.

I see it as more of a trading style decision rather than trusting or not trusting that the trend is your friend. Just because you believe the trend is your friend doesn't mean you have to ride the entire 2,000 pip move, wheathering every 100-300 correction along the way.
  • #153
  • Nov 7, 2007 5:05pm Nov 7, 2007 5:05pm
Tried to copy an earlier message from a couple of hours ago. But it overwrote the previous post from 302pm edt
  • #154
  • Nov 7, 2007 5:11pm Nov 7, 2007 5:11pm
Quoting SunTrader
I guess what I should have said was I watch the charts exclusively and ignore the BS. You believe the charts are sometimes BS. Not trying to put words in your mouth. But what will happen will happen. I trade the market, not the news.

Put it this way: If you could trade a chart in the past (we all wish) would it matter knowing what was making the market move the direction it was heading? Why does it matter in the future? Knowing, is the media's job - and they are lousy at it.
Yes, I wish I had the time to watch the charts more, but my time for trading is limited. That's why I determine a directional bias before placing my orders. If I'm wrong...oh well, C'est la vie!
  • #155
  • Nov 7, 2007 10:26pm Nov 7, 2007 10:26pm
Quoting Micro-MiniMe
Wow, looks like I missed lots of fun here last night while I was sleeping!
Thanks to everyone for providing lots of good reading material. Although the topics discussed, i.e. stop running, fundamental analysis and trends have been discussed many times before, I was still able to see things slightly different after reading your discussions.

  1. Stop running: If you can do it consistantly with little risk go ahead. The Asians ran my stops last night, but I've seen this happen many times in light markets before so I was prepared this time with a stop and reverse strategy. I'm at work right now so I can't go into detail. Basically, I was down ~ 100pips at which point I realized that I was wrong about the extent of a possible correction. So far I'm near break even, but I'm giving bias to a weaker $ so I'll hold for a while, but who knows what tomorrow will bring!
  2. Fundamental analysis: Thanks for reminding me to factor that into my trend bias.
  3. Trends: Dough! Here we go again. The market is trying to punish me for trying to disspell the importance of trends. Even so, I stubornly refuse to call the trend my friend. Here's why. The market often makes some very big moves when traders least expect so it can move with the least number of traders aboard. Why? Imagine a few hundred real money players shorting the $ to the tune of $100,000 each. The market then moves 100 pips in their favor. Suddenly the central banks owe one hundred individual speculators a billion dollars. Do this a few times and the real money players start owning banks. Last night was a perfect example. No economic news was expected. The markets went flat, all was quiet on the Forex front then... BAM! Within five minutes price jumps +50 pips. Now that took a combination of empty markets and big bucks to accomplish, but the big boys from China were able to keep many hemeroids from festering while they unloaded their $s. The ONLY way to profit from such a move was to have substantial equity on hand and sit and wait for the major trend to continue. I know from experience that 'small guys become small fries' in this market. This is also why I felt that last night was one of my best trading nights ever, even though I made little or no profit and I was sleeping. I became one with the market (eventually) and switched gears just in time to save my ass before going to bed.

This is exactly why I started this thread. To explore the difficulties associated with having a small retail forex account. I set out in 2003 determined to turn a $500 account into $1000 then $2000 then $4000... Instead I eventually lost +$5000. That was my limit and now I have no choice but to play with my peanuts while I wait for a miracle ship to come in and finance my account at a level that can make me a decent living. Until then, I plan to continue this quest for the tools I need to make a small steady profit so that if my ship comes in I will be armed and experienced enough to handle the responsibility. So far, so good.

Well, you are right. I have the same experience with you, except I have one more 0 than your $5000!

Pilwww is right too. A Chinese officer's unofficial saying is responded by market violently and it is US Dollar down, ant that IS trend.
  • #156
  • Nov 8, 2007 12:38am Nov 8, 2007 12:38am
Quoting Green_David
Well, you are right. I have the same experience with you, except I have one more 0 than your $5000!

Pilwww is right too. A Chinese officer's unofficial saying is responded by market violently and it is US Dollar down, ant that IS trend.
There is always something in the news to point to why something went up or down. Look at crude go higher and higher. Some say that is a good sign because it means the world economy is going strong and continuing to grow. Yeah but for how long with each new all time high.

What the Chinese official said was only important for the kneejerk reaction. There are far more important factors to consider to the US situation. The Chinese would like nothing better than the US$ to hold its value since they have a lot of dollars in their reserves. So that official would be wise to keep his opinions left unsaid.

But tomorrow will bring new stories to twist people heads.
  • #157
  • Nov 8, 2007 3:04pm Nov 8, 2007 3:04pm
The Trend is now my employee. I works for me if I let it, but I have to keep an eye on it so it won't steal me blind.

I've recently proved to myself that there is an obvious, yet small, statistical advantage to employing trend bias in my trades. I now believe it is possible and somewhat advantagious for small dudes like me to trade with the major trend, even during most corrective phases. However, too much trust in trends for a little guy like me is a dangerous thing and I've come to realize that until I have made substantial profit from this I must be conservative with my expectations.

This weeks trading has been a wash for me mainly because I was in a state of confusion and lost my confidence. I recently determined that even in a counter trend there are substantial, relatively small moves that go with the major trend. Adjustments to position size and profit targets during these periods appear to be effective ways of limiting losses and even generate small gains while I wait for the major trend to continue.

I want to thank all the contributors to this thread especially the guys who made me question myself and my methods. As I become more experienced I realize more and more just how frustrating it must be for full time traders to read something you know is just not true like "The Trend Is Not Your Friend". Even so, I refuse to believe anything until I can pull it apart, examine it and put it back together.

I wish everyone success and encourage you to hire the trend, just don't let it become your manager.
  • #158
  • Last Post: Nov 11, 2007 2:10pm Nov 11, 2007 2:10pm
Here's one you hear once in awhile, not too often on FF:

"If a trader is not trading a system profitably, it's because he isn't following the rules".

In every one of the many hundreds of cases I've seen, this is absolute horse manure!

Show me a system that can be traded mechanically and is profitable. By mechanically, I mean no discretion - you take every signal. OK, I'll let you stay out during news, and I'll even let you trade only with the trend, as long as you give the method for defining trend and always stick to that method.

If such a thing existed, it would be the holy grail.

Meanwhile, thousands of traders are wondering what is wrong, why "everyone else" is winning with that system and they're not.
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