The fundamental terrorists must be stopped | Forex Factory

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The fundamental terrorists must be stopped

  • #1
  • First Post: Edited 5:26pm Jan 17, 2008 3:55am | Edited 5:26pm
I'm sorry, but I really have to write it somewhere, regardless of the author of the article..and since I realized posting this simply into some comment section, the author would probably feel I was on about HIM instead of ANYONE(regardless of who they are as individual) doing this kind of thing..

Here's the thing:
We get a bearish engulfing EURUSD candle; a setup discussed strictly chart based and valid for candles as well as bar setups. Our little J16 thread picks it up, discusses it as a bearish setup THE NIGHT BEFORE.
Some fellow elliot waver(hello LearnToTrade and Beartrade ;p)also had a potentially bearish EURUSD alternative scenario cooking as well.
Again - all of this BEFORE it happens, i.e. actually useful to trade with.

Then it triggers - what a surprise - and not 5 hours after the steep drop the first news rumor crap trickles in...someone said something, oh no, he did gone do it, he talked the EURUSD down..

Quite a feat, considering doing exactly this has failed the last what, 2? 3? 4? Years.

So, if these things move the market and one guy says dovy dove one day and 300 pips down, surely this bulletin
http://forexfactory.com/news.php?do=news&id=65552

and - update - this
http://forexfactory.com/news.php?do=news&id=65458

means 1.6 in the next 10 minutes then?

Doves! Hawks!
Animal farm!

Is there any kind of weighting perhaps of who says what? These people all seem to say a lot day in day out it seems..

Quote
The bulletin editorial closely matches ECB president Jean-Claude Trichet's introductory statement to last week's ECB news conference.
Exactly. All this stuff is just reiterated ad infinitum; occassionally the odd member coughs around a bit to feel more important and you get to see "ECB talks down EUR" written by everyone with a pen and spare time.

We just had Trichet(that's, once again, the president of the ECB) take a stance and a steady ECB; why would a week later the world be different just because someone of the crew talks the usual empty phrases into a microphone..this type of thing has occured all of the last 2-3 years during strong upward trending moves; nobody said they caused a rise then; things drop and there's a proximity of this type of thing and there's suddenly a necessary connection..

It's especially irrelevant to hear one guy's opinion considering it's still a multi-vote based process and a single opinion has no impact whatsoever except creating wire buzz..

But then half the forum reads these things and turns around saying "yea it was that ECB guy(or worse: it was the ECB) who gone did move it"...so very, very tiring..

Seriously - if a single interview could move the EURUSD 300 pips at any one time, don't you think they would have used that "leverage" before when they were utterly distraught about the constantly rising EURUSD?

Oh but they did try to...it just never had an effect...what do you call something that doesn't work more often than it doesn't?

Randomness.

I am getting seriously fed up with this. Not because I do not like the people as persons or because I want to stop them from earning their wage and doing their profession, but because a lot of people read that kind of junk and actually believe that.
Well we all know how very easy it is to say after the fact another thing coincided with the other fact, but even if there was a fragment of truth to it, it does absolutely zero good to know after the fact as the move has already happened.
So even if somebody were to take it serious, it is still an utter waste of time to concern oneself with it as there comes no real trading edge from it as it is after the fact.

And yet people "believe it". It is almost like a religion. I know why, because just like religion, it gives them a reason why things happen in their world while they are so desperately looking for answers. And someone desperate for answers will be grateful for any provided to them even if they help them not one bit to further their own progress or profit. And almost everyone starting or still muddling along in FX is prone to this desperation. They want/need/crave explanations - they get them supplied by the truckload by the noise generators.

I believe this is a very big trap beginning traders fall into, and I can only recommend to completely disregard 95% of the daily headlines on Bloomberg and in the news section and to figure out what the things are that really matter.

Merlin has already pointed out some of this himself: one of the most important factors are the actual rate decisions and directions, not any of the day to day noise and buzz. They are actually important per definition as they are the actual tool used to "valuate" a currency. An interview is not.

And there is a big difference between an official ECB statement on the monthly meeting and rates decision announcement and some guy talking nonsense into a microphone any other day of the week.
Seriously.

This had to be posted.
Trust price. Know yourself.
  • #2
  • Jan 17, 2008 4:58am Jan 17, 2008 4:58am
My explanation for yesterday's Eur drop.

Shit happens.
  • #3
  • Jan 17, 2008 7:35am Jan 17, 2008 7:35am
the charts we read as chartists are a reading of human nature....i.e. fear and greed of the masses. candle stick patterns, price movement, patterns, EW. are all a way to read the "attitude" of the herd....we will always have the herd, we have to...they make us money, we, as profitable traders need the herd to lose money. They are always trying to jump onto a moving train and most of the time it's already to late..like you said...they see price moving so they want to know why and if they deem it to be "big" then they jump blindly to follow....we should revel when we see threads discussing 12 hour old news and what the effect is going to be on a currency...we are either flat at that point or price movement has already told us what is going to happen...as far as "talking" the currency down, sure it can be done.....get the right reading of the herd and start a stampede. just like today. I for one am glad for the news, it creates the opportunities for us to make a good living. without it and the herd reacting to it, there is no need for candlesticks or charts.......
  • #4
  • Jan 17, 2008 8:10am Jan 17, 2008 8:10am
Fundamental analysis is subject to a lot of noise, much like your charts. A good chartist can sift through all the noise and find the underlying "signal", as can a fundamental analyst in his field of study.

I use all the news/gossip/BS that comes out of Bloomberg etc to form an OVERALL picture or background of what market sentiment is and where the market is likely to be heading and use my charts to trade against this background. It has provided me with invaluable insights on numerous occasions because I was able to filter out the noise. Trading purely on charts just doesn't work for me personally because I feel like I'm driving with one eye closed. I can see what's around me, but it's hard to gauge distance and depth.
  • #5
  • Jan 17, 2008 9:58am Jan 17, 2008 9:58am
seeking, that was a really great rant man. funny and true at the same time

i dont have any answers to the quandaries you posed...answers may not even exist. all i can say is that this is a crazy game we play, and as dopey pointed out, "shit happens". information is king when trading fundies, but at the same time, ironically, we have to take everything in with a grain of salt. when i am reading news, im NOT looking for the author to tell me how to feel, im looking to see how the author feels! its more about gathering sentiment than gathering advice.

oh and btw, the religion analogy you made is spot on imo!
Relax and be happy.
  • #6
  • Jan 17, 2008 10:06am Jan 17, 2008 10:06am
another note speaking specifically about yesterdays incident... what we saw imo is the ECB following in the footsteps of the Fed. the Fed and the ECB operate in the same world, so why would one be worried about growth (fed) and one worried about inflation (ECB)? to me it makes sense that the ECB is starting to put inflation secondary to growth. i was actually baffled to see them tout inflation this month. as i stated in the 2007 thread, i think what we will see this year is a repeat of what happened in the US happening around the world. basically im using the US economy as a leading indicator of other economies until something happens to tell me this is the wrong idea.
Relax and be happy.
  • #7
  • Jan 17, 2008 2:20pm Jan 17, 2008 2:20pm
Quoting merlin
another note speaking specifically about yesterdays incident... what we saw imo is the ECB following in the footsteps of the Fed. the Fed and the ECB operate in the same world, so why would one be worried about growth (fed) and one worried about inflation (ECB)? to me it makes sense that the ECB is starting to put inflation secondary to growth. i was actually baffled to see them tout inflation this month. as i stated in the 2007 thread, i think what we will see this year is a repeat of what happened in the US happening around the world. basically im using the US economy as a leading indicator of other economies until something happens to tell me this is the wrong idea.
History repeats.

Everything is unwinding according to plan.

LOL

The fact that the U.S. is the worlds motor economy still stands.

...Maybe the China effect will sling shot us all out of trouble by late year?

You can't beat the fact that they still have BIG plans ahead.

Australia still has infrastructure to build to support new demand in raw materials. There are still bottlenecks that need attention.
The money being thrown around at "tradies" at the moment is unbelievable.
There aren't enough of them to go around.
They have lots to spend. ...After their mortgage payments.

Which brings us back to interest rates....
They are the one thing that can trip EVERYONE up. You can't beat the fact that nearly all major expansion is reliant on someone elses money.

In the family home these higher interest rates are hurting people. They have to have effect eventually.

I don't know. I think, for us here at least, there may be a "correction" year.

I don't really care. It excites the charts!

Even Fundies wise... Can't wait to buy up some bargains.
The Oz indices here are looking quite uncooperative with support areas at the moment. Can't be sure WHERE they'll stop. Possible trendlines about here. Maybe these for a pullback. This is going to be gooooood. <evil grin> ... where IS the evil grin?? LOL
.
Bundy's status today: "Waiting..."
  • #8
  • Jan 17, 2008 2:46pm Jan 17, 2008 2:46pm
Well don't hold back, SeekingLight; tell us how you REALLY feel! That was a great post and this point in particular is just so spot on:

Quoting SeekingLight
So even if somebody were to take it serious, it is still an utter waste of time to concern oneself with it as there comes no real trading edge from it as it is after the fact.
Whenever I see one of these "after the fact why did it happen" reports I always think to myself "well that's great, but what can I DO with this information to make money?" I mean now that we know Mrs. X or Minister Y is such a big market mover and shaker what are we supposed to do, sneak into their office and peek at a copy of their next speech? Or maybe wait for them to cross the street and see how full their briefcases look the way people used to do with Greenspan?

Unbelievable.

I use fundies too but in a possibly more useful way. As the various releases come out I keep a running total of how many times the analysts were off, and in what direction. Kind of a "surprise index" for each currency. If I see enough accumulation of surprise in one direction, I watch for technical signs that the market is picking up on the new realities. I don't have stats on how well this works, but at least I'm trying to use fundamental data in a predictive way, not in a useless "I'm so smart after the fact" way.

Again, loved the post!!
  • #9
  • Jan 17, 2008 5:09pm Jan 17, 2008 5:09pm
It's nice to see someone call a spade a spade from time to time. I definitely have to agree with you on the fundie terrorism of the news going on. Then again, like they always say, "those who can, do, and those who can't preach and teach". Preaching in this case. Don't even get me started on the American stock market right now...
Never underestimate the powers of the Force.
  • #10
  • Jan 18, 2008 2:56am Jan 18, 2008 2:56am
you make some good points here. like any stream of information, there is a lot of garbage that needs to be weeded out to find the important info. as an example, the 9-0 unanimous vote by the BoE committee last month pushed the pound below the key 2.00 level and has held it below that level even tho the euro has rallied based on hawkish comments by trichet threatening to raise rates to combat inflation that is above their target rate. looking at just charts you would look for perhaps the euro to follow the pound technically since "duh, they're correlated!".

i think the ECB official was just "jaw-boning" the euro back down, usually an unofficial policy by central banks use from time to time, along with intervention threats.

Quoting fierceman
Fundamental analysis is subject to a lot of noise, much like your charts. A good chartist can sift through all the noise and find the underlying "signal", as can a fundamental analyst in his field of study.

I use all the news/gossip/BS that comes out of Bloomberg etc to form an OVERALL picture or background of what market sentiment is and where the market is likely to be heading and use my charts to trade against this background. It has provided me with invaluable insights on numerous occasions because I was able to filter out the noise. Trading purely on charts just doesn't work for me personally because I feel like I'm driving with one eye closed. I can see what's around me, but it's hard to gauge distance and depth.
  • #11
  • Jan 18, 2008 2:59am Jan 18, 2008 2:59am
i thought so too! how could they remain so hawkish, when in a similar situation the fed has switched to growth bias to ward off a recession (could be too late)?

maintaining "price stability" at any cost? a fool-hardy stance?

Quoting merlin
another note speaking specifically about yesterdays incident... what we saw imo is the ECB following in the footsteps of the Fed. the Fed and the ECB operate in the same world, so why would one be worried about growth (fed) and one worried about inflation (ECB)? to me it makes sense that the ECB is starting to put inflation secondary to growth. i was actually baffled to see them tout inflation this month. as i stated in the 2007 thread, i think what we will see this year is a repeat of what happened in the US happening around the world. basically im using the US economy as a leading indicator of other economies until something happens to tell me this is the wrong idea.
  • #12
  • Jan 18, 2008 3:10am Jan 18, 2008 3:10am
Quoting fierceman
Trading purely on charts just doesn't work for me personally because I feel like I'm driving with one eye closed. I can see what's around me, but it's hard to gauge distance and depth.
This could be a matter of "trust"...fact is, you can use a very simplified set of logical approaches to either stay in or get out of the market(trailing[MANUAL trailing, not autotrailed broker fixed size stops], setting a far enough away target / projecting price targets) without any "outside influence" needed to do it.

I would dare say these can do at least as well (or perhaps better? hard to compare as there is no standardized "measure" in discretion) than reasons to stay in or exit on sentiments / fundamentals et al.


You used "feel", so I think this issue might reside in the emotional realm more than the logical side of things..that it's doable is known to the rational brain by the many examples of people trading like that(chart based); that it's doable for YOU is a question of whether you can "allow it" (or believe it)for yourself I think
Trust price. Know yourself.
  • #13
  • Jan 18, 2008 3:34am Jan 18, 2008 3:34am
second everything SL said.

Data works, price and its pattern works, all else is trash.

Its a good thing that the market has a constant supply in the slaugther house, i believe this naivety religion is the main driver for my profits.
  • #14
  • Jan 18, 2008 3:43am Jan 18, 2008 3:43am
Quoting SeekingLight
This could be a matter of "trust"...fact is, you can use a very simplified set of logical approaches to either stay in or get out of the market(trailing[MANUAL trailing, not autotrailed broker fixed size stops], setting a far enough away target / projecting price targets) without any "outside influence" needed to do it.

I would dare say these can do at least as well (or perhaps better? hard to compare as there is no standardized "measure" in discretion) than reasons to stay in or exit on sentiments / fundamentals et al.


You used "feel", so I think this issue might reside in the emotional realm more than the logical side of things..that it's doable is known to the rational brain by the many examples of people trading like that(chart based); that it's doable for YOU is a question of whether you can "allow it" (or believe it)for yourself I think
I usually choose my words very carefully, and my choice of the word "feel" is no exception. Reason being that purely rational thought tends to break down when trying to gauge a very complex situation. That is why humans tend to be better than computers when handling complex situations (think chess, or better yet bridge). We are better at estimating while computers are better at calculating. Each have their advantage, but the barrage of fundamental data that comes at us every day is too complex to process in any exact, quantifyable way. That is where my human ability to get a feeling, or a statistical "estimate" of a huge dataset comes in handy - that's why they call it market sentiment.

TA tends to be somewhat more quantifyable, but even that is not an exact science because of the complexity of the market, and because of the human nature of the market participants. However, it most certainly is more precise and that's why it is absolutely necessary if accurate entries and exits are to be achieved.

Armed with a good feeling of the market pulse, together with some (relatively) exact calculations based on charts, it becomes difficult to see how a trader can fail, barring any psychological weakness or excessive risk.
  • #15
  • Jan 18, 2008 5:16am Jan 18, 2008 5:16am
Quoting fierceman
Armed with a good feeling of the market pulse, together with some (relatively) exact calculations based on charts, it becomes difficult to see how a trader can fail, barring any psychological weakness or excessive risk.
..ironic then to have(several)threads full of people denying it could be psychology blocking them from success if we've just ruled out the rest

It is CRUCIAL.

I rather like that last(the quoted bit) paragraph

Reads almost like a plaque or something

Must read a bit "easy for you to say" to someone just starting(I remember the period well still), but the hard part is realizing that it is the NOT making it easy for oneself that leads to all the trouble in proceeding
Trust price. Know yourself.
  • #16
  • Jan 18, 2008 12:15pm Jan 18, 2008 12:15pm
Quoting fierceman
That is why humans tend to be better than computers when handling complex situations (think chess, or better yet bridge). We are better at estimating while computers are better at calculating. Each have their advantage, but the barrage of fundamental data that comes at us every day is too complex to process in any exact, quantifyable way. That is where my human ability to get a feeling, or a statistical "estimate" of a huge dataset comes in handy - that's why they call it market sentiment.
brilliantly said man

and lets not forget that a human that is good with computers can get the best of both worlds when a trader can back up his estimations with computer calculations that is a very powerful combo! this is why i believe that every trader should be able to write code (in TS preferably) even if they are a strictly fundies trader.
Relax and be happy.
  • #17
  • Jan 18, 2008 11:20pm Jan 18, 2008 11:20pm
Quoting fierceman
I usually choose my words very carefully, and my choice of the word "feel" is no exception. Reason being that purely rational thought tends to break down when trying to gauge a very complex situation. That is why humans tend to be better than computers when handling complex situations (think chess, or better yet bridge). We are better at estimating while computers are better at calculating. Each have their advantage, but the barrage of fundamental data that comes at us every day is too complex to process in any exact, quantifyable way. That is where my human ability to get a feeling, or a statistical "estimate" of a huge dataset comes in handy - that's why they call it market sentiment.
...
Armed with a good feeling of the market pulse, together with some (relatively) exact calculations based on charts, it becomes difficult to see how a trader can fail, barring any psychological weakness or excessive risk.
fierceman has nailed down there, pretty much, but I object slightly to this last paragraph. It is a MIRACLE that we are making ANY correct statements about a market that was at one point thought to be inherently chaotic and foolish to participate in. Remember that it took several academic papers in the Journal of Finance to prove that the market is not a random walk model.

In fact, the market (and any similar exchange) is inherently chaotic, due to the large number of unrelated participants whose actions both commercial and speculative cannot be previously determined, and whose collective effect, weighed by volume, is even harder to predict. It's a crazy game we are playing if you think about it. Just because you have charts that seem to tell a picture in hindsight does not mean that anything makes sense at all. This is an unknown function with a built in random factor, and we're trying to ride it. F*cking crazy.

At the same time, there seem to be recurring patterns in the market activity that repeat themselves, and which do form both a statistical and an intuitive basis to make time series propositions (aka trades), but that is a topic for another discussion. Your statement about human brains and computers is also yet another huge debate-starter, being in the realm of Artificial Intelligence and the nature of human reasoning. No room for that here, but suffice to say, for now, that it is not about estimation. Computers can do that too, you know. The reason Kasparov beat Deep Blue..etc is much more complicated.

SeekingL: Why the anger? The BS is important for us. It sets things moving, and when the market is ready to sell, a small comment like the one you referred to works as the catalyst. You are right of course, the only news worth taking note of are the milestones like interest rates, trade balances..etc. I, like everybody else here use the constant stream of BS to see how the "herd" is feeling. It's not a science..it's like a social skill. And at times I get tired and just read my charts. Last few days we discussed trades here on the forum that had no news factor included at all. Hundreds of pips in the green now, and not exactly the first time either. Moral of the story: If the bosses want to talk, let them.

As a finale I was going to make fun of news traders but I just realized Merlin is on their side of the fence, so I'll keep it shut
One day you'll have to tell me whatever it is you do during news time, merlin. I think I pretty much figure what darkstar et al are doing, but you... that wizardry freaks me out.

Good luck all.
Virtue finds and chooses the mean. Aristotle, Ethica Nichomachea
  • #18
  • Jan 22, 2008 11:24am Jan 22, 2008 11:24am
Generally speaking (emphasis noted), lots of words and fundamentals and no charts compensates for the thread writers lack of trading acumen, kind of like a big jacked up 4-wheel drive truck does for a guys.....well, you know!
  • #19
  • Jan 23, 2008 8:40am Jan 23, 2008 8:40am
I just posted a chart of USD/JPY with my interpretation of price direction. I know there are not a lot of words and stale fundamental analysis that accompany it but given the title of this thread, I know you guys will appreciate that - especially 'Seeking'

I also realize that that posting will not qualify for Pulitzer prize material.

http://www.forexfactory.com/news.php?do=news&id=66651
  • #20
  • Jan 25, 2008 7:02am Jan 25, 2008 7:02am
Felt this screenshot fits in well with related "news" behavior of the outlined phenomenon of the original post.(makes for good comedy for me, call me weird)

I find it incredible both releases are actually found useful by anyone
Attached Image
Trust price. Know yourself.
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