My trade cockup - UK retail sales | Forex Factory

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Attachments: My trade cockup - UK retail sales
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My trade cockup - UK retail sales

  • #1
  • First Post: Jan 19, 2007 5:12am Jan 19, 2007 5:12am
Image 1: Setup prior to news release

http://www.nicktodd.com/UKretailsales/pic1.gif




Full extent of spike a few seconds later (nowhere near enough time for me to make a rational decision based on the figures)

http://www.nicktodd.com/UKretailsales/pic3.gif




Spread widens to 20 pips - can't even think about getting in here

http://www.nicktodd.com/UKretailsales/pic4.gif





Price starts to fall back to pre release position - my perfect opportunity to get in

http://www.nicktodd.com/UKretailsales/pic7.gif



I dither and then go and screw it up completely.

http://www.nicktodd.com/UKretailsales/pic8.gif

CONCLUSION

There were a few opportunities to trade in the first 5 minutes, but the incredible reactions required and the spread-widening make it impossible. In my view, the best opportunity was to trade the market's reaction to the news, either going long on the breakout of the news spike, or going short on the retrace. In the event, I dithered and then accidentally traded in the wrong directions.

As they say, practice makes perfect.
  • #2
  • Jan 19, 2007 5:30am Jan 19, 2007 5:30am
Quoting Castlemain
Image 1: Setup prior to news release

http://www.nicktodd.com/UKretailsales/pic1.gif




Full extent of spike a few seconds later (nowhere near enough time for me to make a rational decision based on the figures)

http://www.nicktodd.com/UKretailsales/pic3.gif




Spread widens to 20 pips - can't even think about getting in here

http://www.nicktodd.com/UKretailsales/pic4.gif





Price starts to fall back to pre release position - my perfect opportunity to get in

http://www.nicktodd.com/UKretailsales/pic7.gif



I dither and then go and screw it up completely.

http://www.nicktodd.com/UKretailsales/pic8.gif

CONCLUSION

There were a few opportunities to trade in the first 5 minutes, but the incredible reactions required and the spread-widening make it impossible. In my view, the best opportunity was to trade the market's reaction to the news, either going long on the breakout of the news spike, or going short on the retrace. In the event, I dithered and then accidentally traded in the wrong directions.

As they say, practice makes perfect.
Maybe you find a different broker who doesn't widen the spread so much.
  • #3
  • Jan 19, 2007 6:31am Jan 19, 2007 6:31am
The market is ever changing. This complete reversal also happened with cable yesterday after the CPI announcement. Remember the initial drop and subsequent move up yesterday that could have been attributed to the strong cable uptrend.
This time it's a spike up with a complete reversal down. The ingenuity of the operators (banks, liquidity providers, brokers ...etc) to create these type of scenario knows no bounds. They reinvent the market behaviour all the time at the expense of many other players. We always need to find a way to outsmart them and when we do they change the behaviour again so it's never ending.
Was your cable buy entry wrong? Well, the market says so. But on another day, it could have been a good entry.
  • #4
  • Jan 19, 2007 8:41am Jan 19, 2007 8:41am
Quoting PipStar
The market is ever changing. This complete reversal also happened with cable yesterday after the CPI announcement. Remember the initial drop and subsequent move up yesterday that could have been attributed to the strong cable uptrend.
This time it's a spike up with a complete reversal down. The ingenuity of the operators (banks, liquidity providers, brokers ...etc) to create these type of scenario knows no bounds. They reinvent the market behaviour all the time at the expense of many other players. We always need to find a way to outsmart them and when we do they change the behaviour again so it's never ending.
Was your cable buy entry wrong? Well, the market says so. But on another day, it could have been a good entry.
Hi Pipstar,

I am puzzled as to how the banks and brokers could possibly 'invent' market behaviour in this way. I understand that the initial spike is the banks' automated reaction to the released data, but for a subsequent international conspiracy to short the EURUSD in this way 6 minutes after the release strikes me as impossible to coordinate between all the parties involved.

In the end, I suppose, they could all invent any price they want individually, but that's risking the creation of arbitrage opportunities between market makers for traders. Can anyone illuminate me on how the determination of price actually works? This would be very helpful indeed.
  • #5
  • Jan 19, 2007 9:15am Jan 19, 2007 9:15am
you'll need a good broker, very very fast decision, fastest connection and good computers

today i got filled @1.9743 and my computer closed @1.9758 (15 pippies net)

if you too smart for them (brokers), they will close your account - i recently hear about Oanda, they closed some successful news-traders without a reason ...
expect the unexpected
  • #6
  • Jan 19, 2007 9:28am Jan 19, 2007 9:28am
Unless you do your homework pre-release, news trading will kill you. Once price retraced from the first spike up (it basically couldnt break through an area of heavy resistance on the 4H chart), why on Earth would you enter long again? The chart had already told us yesterday that we dont want to be long GBPUSD until that level breaks up. In fact, the best news trade today would have been if the UK retail sales had been negative: we would have seen a long run down.

Picture attached below:
Attached Image
  • #7
  • Jan 19, 2007 8:13pm Jan 19, 2007 8:13pm
Quoting Castlemain
Hi Pipstar,

I am puzzled as to how the banks and brokers could possibly 'invent' market behaviour in this way. I understand that the initial spike is the banks' automated reaction to the released data, but for a subsequent international conspiracy to short the EURUSD in this way 6 minutes after the release strikes me as impossible to coordinate between all the parties involved.

In the end, I suppose, they could all invent any price they want individually, but that's risking the creation of arbitrage opportunities between market makers for traders. Can anyone illuminate me on how the determination of price actually works? This would be very helpful indeed.

If you look at cable these last few days, on last few announcements it has spiked or fell in the direction of the news, then reversed well below pre release price and then after slowly gone back in the direction of the news. You may think that this is tradable next time as it is a clear pattern but it is nothing more than short term market behaviour. Once it gets identified and traders start to follow this pattern, the big operators then change this behaviour. How many traders have lost money on cable the last 3 announcements trying to enter in news direction on the retrace? If the market always behaved the same way, we would all be making money all the time at the bank's expense and they wont allow this; thus they play all these games of whipsaws, running stop losses and other unexplainable behaviours.
  • #8
  • Jan 20, 2007 4:28am Jan 20, 2007 4:28am
Quote
If you look at cable these last few days, on last few announcements it has spiked or fell in the direction of the news, then reversed well below pre release price and then after slowly gone back in the direction of the news. You may think that this is tradable next time as it is a clear pattern but it is nothing more than short term market behaviour. Once it gets identified and traders start to follow this pattern, the big operators then change this behaviour. How many traders have lost money on cable the last 3 announcements trying to enter in news direction on the retrace? If the market always behaved the same way, we would all be making money all the time at the bank's expense and they wont allow this; thus they play all these games of whipsaws, running stop losses and other unexplainable behaviours.
Not sure if this is true. I work for a major investment bank and read their analysis every day. Before cable went down yesterday, they were saying that it was going to continue up against a weaker dollar. Then at the end of the day, they were saying that because we have had 6 consecutive days of GBP increases and it was the end of the week, there was a lot of position squaring going on. In other words, they dont always know either.
If it's too good to be true, it probably is.
  • #9
  • Jan 20, 2007 6:25am Jan 20, 2007 6:25am
Analysts dont know. Traders (big dogs) sure do.

It's been a while I pay NO attention whatsoever to what analysts say.
  • #10
  • Jan 20, 2007 1:10pm Jan 20, 2007 1:10pm
Quoting foxxx
if you too smart for them (brokers), they will close your account - i recently hear about Oanda, they closed some successful news-traders without a reason ...
GFT found a good solution (for them, of course). System freezes during news. Period. Nobody in, nobody out.

I still don't know if they fill pre-set orders around the news. I didn't have the guts to try it yet.

BTW, system works better on demo account
  • #11
  • Jan 20, 2007 2:05pm Jan 20, 2007 2:05pm
This is why I don't trade news
  • #12
  • Jan 20, 2007 3:43pm Jan 20, 2007 3:43pm
Quoting cesarnc
GFT found a good solution (for them, of course). System freezes during news. Period. Nobody in, nobody out.

I still don't know if they fill pre-set orders around the news. I didn't have the guts to try it yet.

BTW, system works better on demo account
Someone over at a different forum asked how to protect his profit trading with GFT. I told him "Close the Account and Withdraw Money immediate".

I have traded live with 7 brokers (GFT included). I had withdrawn from 6 of the other brokers and have my money within 48 hours upon request. But GFT requires me to WAIT 1 extra week before they can remit my money.

Why trade TA with GFT? There are lots of brokers that offer way better spreads and swaps not to mention easy + fast remittance of money.
  • #13
  • Jan 20, 2007 4:56pm Jan 20, 2007 4:56pm
all "big ben" type breakout traders took a double loss on that day.

triggered short, stopped out, triggered long, and stopped out. all of them. no joke.

g

edit: well, not all. the ones with a bit of a brain cancelled their long orders after being short. lol.
With a break always expect a pullback, otherwise, you're dead meat/
  • #14
  • Jan 20, 2007 7:51pm Jan 20, 2007 7:51pm
Quoting ghitz
all "big ben" type breakout traders took a double loss on that day.

triggered short, stopped out, triggered long, and stopped out. all of them. no joke.

That's exactly what the liquidity providers were trying to achieve. Traders losses are their gains.
  • #15
  • Jan 21, 2007 5:23am Jan 21, 2007 5:23am
Quoting PipStar
That's exactly what the liquidity providers were trying to achieve. Traders losses are their gains.
So therefore, traders' gains are their losses. Taking money from liquidity providers is therefore a tall order.

Do the banks have to use their money and place trades themselves to change the price in the direction they want, or can they just change it as they please?
  • #16
  • Last Post: Jan 21, 2007 6:10am Jan 21, 2007 6:10am
Quoting Castlemain
So therefore, traders' gains are their losses. Taking money from liquidity providers is therefore a tall order.

Do the banks have to use their money and place trades themselves to change the price in the direction they want, or can they just change it as they please?
Price is the interaction between demand and supply; I dont think that banks can change price as they please as it depends on the orders in the market. Banks may buy and sell for their own account but they also execute large orders on behalf of institutional clients, hedge funds and other big players. Central banks (apart from commercial banks) are powerful players in the forex market as you would have noticed from Bank of Japan interventions.
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