Attachments: No Brainer Trades

No Brainer Trades

#3,601
Sep 17, 2008 9:34am Sep 17, 2008 9:34am

hendrix
| Joined Feb 2008 | Status: Trader | 250 Posts

Quoting BillyRayValentine

Disliked

Hi Hendrix,
Yeah I think 4 pairs is enough. I monitor the others but the bulk of my trading comes from UJ, EU, GU and UCHF. The issue with trading only one pair can come down to volatility. Sometimes one pair is going to sit and collect dust while the others move along just fine due to any number of reasons, so I like to keep the book open in case that happens, which it does pretty often.

Ignored

Thanks, I appreciate your answer!

#3,602
Sep 17, 2008 10:45am Sep 17, 2008 10:45am

finswin56
| Joined May 2008 | Status: Trader | 308 Posts

Can anyone make sense of this divergence between the Aussie and Gold?
Gold is up over $50 today, but AUD/USD is getting hammered.

I'm long here around 7830, but I'm not going to hold it for very long.

#3,603
Sep 17, 2008 11:19am Sep 17, 2008 11:19am

birdt
Joined Jul 2007 | Status: Trader | 934 Posts

Quoting finswin56

Disliked

Can anyone make sense of this divergence between the Aussie and Gold?
Gold is up over $50 today, but AUD/USD is getting hammered.

I'm long here around 7830, but I'm not going to hold it for very long.

Ignored

I think it was Milton Friedman who said 'the market can remain irrational longer than you can remain solvent.' Perhaps it is useful information if you plan to hold the trade until these two align (if they do - there are incredible forces in the markets at the moment), but I'd certainly be looking for strong entry signals and utilize sensible standard money and trade management rules all the same.

#3,604
Edited 11:57am Sep 17, 2008 11:35am | Edited 11:57am

BillyRayVal
Joined Apr 2006 | Status: Trader | 1,459 Posts

Quoting finswin56

Disliked

Can anyone make sense of this divergence between the Aussie and Gold?
Gold is up over $50 today, but AUD/USD is getting hammered.

I'm long here around 7830, but I'm not going to hold it for very long.

Ignored

Probably the attention to risk and the resultant selloffs on carry trades. AUD/JPY is the key carry trade and when you see equity indices plummeting you'll see these carry trades go along right with them.

Its why we've been seeing these correlations lately between USD/JPY and their counterparts. When equity markets tank you'll usually see them go at the same time for these reasons. Commodities play a big part, no question, so you're likely to see a tug of war here (as we have with EUR and others in the past couple days), but AUD is different, again, because it carries such a high interest rate.

Basically when things are tamer in the equity markets you'll see USD/JPY go up and AUD/USD go down, etc etc - when you get these kinds of extremes you have to adjust and understand that these different factors are going to move the pairs for other reasons.

Remember that money has to go somewhere - if its not in something, its in something else, etc etc. You just need to identify the flow of cash and why its moving from one asset class into another. Its learned with time.

#3,605
Sep 17, 2008 11:47am Sep 17, 2008 11:47am

finswin56
| Joined May 2008 | Status: Trader | 308 Posts

Thanks guys.
I don't know why I completely forgot about the JPY cross sell offs. Pretty stupid since I profited nicely off of GPB/JPY this morning.

Well, I'm done for today. I'm not trying to pick a bottom here.

#3,606
Sep 17, 2008 12:42pm Sep 17, 2008 12:42pm

robgsxr
| Joined Aug 2008 | Status: Trader | 674 Posts

Quoting finswin56

Disliked

Thanks guys.
I don't know why I completely forgot about the JPY cross sell offs. Pretty stupid since I profited nicely off of GPB/JPY this morning.

Well, I'm done for today. I'm not trying to pick a bottom here.

Ignored

----------------------------------------------------------

I think this topic of cross sell offs at the beginning of the week was touched on earlier in this thread. Can someone explain what this means in simple terms?

Is it buying GBP/JPY or other crosses on Mon/Tues and closing Wednesday before 5 pm EST... or something else??

Thanks
Rob

#3,607
Sep 17, 2008 12:53pm Sep 17, 2008 12:53pm

BillyRayVal
Joined Apr 2006 | Status: Trader | 1,459 Posts

Quoting robgsxr

Disliked

----------------------------------------------------------

I think this topic of cross sell offs at the beginning of the week was touched on earlier in this thread. Can someone explain what this means in simple terms?

Is it buying GBP/JPY or other crosses on Mon/Tues and closing Wednesday before 5 pm EST... or something else??

Thanks
Rob

Ignored

It basically just refers to people avoiding risk.

People hold onto long carry trade positions because when they're going up, they offer the investor a good interest rate. For example,

AUD interest rate = 7.00%
JPY interest rate = 0.50%

Buying AUD/JPY interest = 6.50%
Selling AUD/JPY interest = -6.50%

But when equity markets are declining on a global scale, you'll see people selling off these carry trades for safer investments (government backed securities, etc), just like equities themselves.

That's pretty much it. When the moves are so extreme, as they have been recently, you'll see these carry trade selloffs take precendence over the root pairs themselves (in this example AUD/USD), despite any "normal" correlations to gold, or whatever the currency typically moves with.

Identifying what's actually going to move the pair is the tricky part, and then forecasting its own movement. It becomes a matter of extremes, and whats worse at any given point in time (equities or commodities or just the country itself). Usually if you see one taking precedence over another you'll see the root pair (AUD/USD) snap back into place with commodities. But with what we've been seeing lately, everything, commodities, equities, etc. are all selling off simutaneously, hence the dramatic and sharp decline in all the JPY crosses.

Right now AUD has the second highest interest rate of the G10 currencies, with NZD taking the gold at 7.5%.

http://www.fxstreet.com/fundamental/...t-rates-table/

#3,608
Sep 17, 2008 1:19pm Sep 17, 2008 1:19pm

lemmingboiv2
| Joined Jul 2008 | Status: Trader | 104 Posts

Sell it between 6648 and 6660. . . I have a sell order on both TP 6535 [edit forgot the SL 6720]

http://i38.tinypic.com/330tpqx.jpg

#3,609
Sep 17, 2008 2:05pm Sep 17, 2008 2:05pm

finswin56
| Joined May 2008 | Status: Trader | 308 Posts

Quoting finswin56

Disliked

Thanks guys.
I don't know why I completely forgot about the JPY cross sell offs. Pretty stupid since I profited nicely off of GPB/JPY this morning.

Well, I'm done for today. I'm not trying to pick a bottom here.

Ignored

It's going to happen to everyone, but seeing that opportunity and bailing on it before the price jumped nearly 200 pips is making me sick to my stomach.

#3,610
Sep 17, 2008 4:14pm Sep 17, 2008 4:14pm

hanover
Joined Sep 2006 | Status: ... | 8,112 Posts

Quoting birdt

Disliked

I think it was Milton Friedman who said 'the market can remain irrational longer than you can remain solvent.' Perhaps it is useful information if you plan to hold the trade until these two align (if they do - there are incredible forces in the markets at the moment), but I'd certainly be looking for strong entry signals and utilize sensible standard money and trade management rules all the same.

Ignored

Birdt, it's a favorite quote of mine also; it wasn't Friedman, but John Maynard Keynes.

David

#3,611
Sep 17, 2008 4:51pm Sep 17, 2008 4:51pm

lemmingboiv2
| Joined Jul 2008 | Status: Trader | 104 Posts

Quoting lemmingboiv2

Disliked

Sell it between 6648 and 6660. . . I have a sell order on both TP 6535 [edit forgot the SL 6720]

http://i38.tinypic.com/330tpqx.jpg

Ignored

Every time I watch it happen it simply amazes me.......

Score one more for NBT...freaking awesome

#3,612
Sep 17, 2008 4:56pm Sep 17, 2008 4:56pm

birdt
Joined Jul 2007 | Status: Trader | 934 Posts

Thanks Hanover! Good quote, even if it was attributed to the wrong guy. To redress the balance in the forex quotation sphere, I am going to state here and now that what we call Fibonacci numbers should actually be called Euclidean numbers, as he was around about 1400 years before. Somehow I doubt it'll catch on though.

Hey finswin, my heart goes out to you my friend. There is such a thing as a 'bad' profitable trade IMO, and conversely a 'good' losing trade, and it is important to make the distinction between these good and bad trades as they are not always tied to their short term results. It might be argued that a bad profitable trade could affirm bad trading behaviour which may lead to losses down the road.

For instance, I was in a long GBPUSD trade overnight, and when I got up to have a look at the chart I saw that it had gone from being 80 pips up (where I would have set the stop to b/e) to back in the red so I closed it out for a 50 pip loss. The initial stop was set behind where I suspected bunches of limit buy orders would have been set (and therefore support) and as it turned out this level held and since bounced up 400 pips. Was it a 'good' loser or a 'bad' loser? I'm not getting too upset about it but it revealed that I need a tested and thought out contingency plan in that situation. Had I left it running I might be up a couple of hundred pips (where my original TP was) but it was not part of my trading plan.

#3,613
Sep 17, 2008 5:13pm Sep 17, 2008 5:13pm

Gerard212
| Joined Apr 2007 | Status: Trader | 125 Posts

Birdt

Not sure if it helps but there is a FX alert service "Alert FX .com " whic send your set pricing levels via Text which could overcome your missing the action so to speak.

Gerard

#3,614
Sep 17, 2008 6:33pm Sep 17, 2008 6:33pm

lemmingboiv2
| Joined Jul 2008 | Status: Trader | 104 Posts

Key Level here getting tested at 1.4300. . . .

#3,615
Edited 9:49pm Sep 17, 2008 7:27pm | Edited 9:49pm

BillyRayVal
Joined Apr 2006 | Status: Trader | 1,459 Posts

For the EUR/USD and other related nuts: its possible we've got something in place here, atleast for the time being. I'm not going to blame it on one thing over another, but simply say that the sharp declines we've been getting in the US Equity market has spearheaded a lot of buyers in gold today and oil is hitching a ride.

I just got a piece from Goldman tonight basically proclaiming that commodities are very attractive at their current levels (of course it happens after gold goes up about a hundred bucks in one day, but we wouldnt want them to be wrong now would we - thanks for the 20/20 hindsight GS, you're the next to go). But joking aside they have a point over the long haul, and whether it be here all the way down to 75 or so on crude, US equities are in the spotlight, and USD buyers are now muted. The Fed's action not to raise rates the other day in my own opinion is a bad thing - they've only got 200 bps of wiggle room and to me it looks like they're saving ammunition more than anything else. Inflation is still not in horrifying shape, so they were allowed to keep things where they were, but with equities dropping and oil buyers coming along, it will be.

Eurozone and England and Australia, you name it, aren't in fanstastic condition either as we all know and to say the least. But something has to go in the spotlight, and this week it's been the US. As more concerns come from abroad we'll see consolidation to more selling, but again, we want to look at whats at the here and now, and what most people are looking at/where the hysteria is. The only thing that's going to keep things muted are the selloffs in carry trades and investors running away from risk, which has proven to be a strong, major factor in this USD uptrend.

So bottom line I'm still looking for more decent places to get short USD for holds for the time being, contingent on any more disasterous news coming out from abroad, which shouldn't surprise us at all. But given the previously discussed scenarios, I wouldn't still be afraid to buy USD either, as we might get a tug of war among all these factors for further consolidation in the week ahead.

Hope it helps, going to try to get back into the swing of posting levels, I know its been some time.

#3,616
Sep 17, 2008 7:41pm Sep 17, 2008 7:41pm

BillyRayVal
Joined Apr 2006 | Status: Trader | 1,459 Posts

Quoting finswin56

Disliked

It's going to happen to everyone, but seeing that opportunity and bailing on it before the price jumped nearly 200 pips is making me sick to my stomach.

Ignored

Its tough emotionally when you're in a trade thats tanking but all other signs are pointing north. You're scrambling for clues.....

As long as you're controlling your risk, you should be fine running everything out until all other signs point to otherwise. Again when you see an increase in gold like that today you know something has to snap back into place. The second you lose control of any trade you can pretty much kiss your butt goodbye.

Weaning your way out of a portion of the position and lowering your stop isnt necessarily a bad thing either, as long as you're in the bounds of your own risk reward. So if you're using a 3:1 ratio to begin with, but things arent working out, scaling out of a portion of it, moving your stop lower, would allow you to still remain within the bounds of 2:1 to 3:1 at the same profit target (not all the way to 3:1 but you get the idea). But starting off with 3:1 is the way to go in any event becuase you then atleast have some room to play with.

#3,617
Edited 8:05pm Sep 17, 2008 7:54pm | Edited 8:05pm

BillyRayVal
Joined Apr 2006 | Status: Trader | 1,459 Posts

Quoting birdt

Disliked

Thanks Hanover! Good quote, even if it was attributed to the wrong guy. To redress the balance in the forex quotation sphere, I am going to state here and now that what we call Fibonacci numbers should actually be called Euclidean numbers, as he was around about 1400 years before. Somehow I doubt it'll catch on though.

Hey finswin, my heart goes out to you my friend. There is such a thing as a 'bad' profitable trade IMO, and conversely a 'good' losing trade, and it is important to make the distinction between these good and bad trades as they are not always tied to their short term results. It might be argued that a bad profitable trade could affirm bad trading behaviour which may lead to losses down the road.

For instance, I was in a long GBPUSD trade overnight, and when I got up to have a look at the chart I saw that it had gone from being 80 pips up (where I would have set the stop to b/e) to back in the red so I closed it out for a 50 pip loss. The initial stop was set behind where I suspected bunches of limit buy orders would have been set (and therefore support) and as it turned out this level held and since bounced up 400 pips. Was it a 'good' loser or a 'bad' loser? I'm not getting too upset about it but it revealed that I need a tested and thought out contingency plan in that situation. Had I left it running I might be up a couple of hundred pips (where my original TP was) but it was not part of my trading plan.

Ignored

I feel like this is the thing that screws most people in general, especially newbies.

I put up a basic post about a couple months back now about why patience pays off, and did some basic math in regards to holding onto positions instead of doing what most people do: letting losers run and clipping winners too early.

The main issue with this is a combination of lack of knowledge, which leads to lack of conviction, and lack of patience and a "take the money and run" mentality combined with a "I'm so desperate I can't lose money" mentality.

This thread in general has evolved into a basic teaching of finding the best possible entries for trades in order to avoid any sick stomachs, but over the long haul, you simply have to know your stuff if you want to survive. That's why I bring up all these other issues in here, and not just post levels. Either way, these levels usually pay pretty damned good for all the reasons I dont think I need to go into again, for any trader, new or experienced.

I'd rather take the time analyzing charts and data for 5 hours and make sure I'm doing something right than jump the gun and take a trade because a level is staring me in the face.

#3,618
Sep 17, 2008 7:59pm Sep 17, 2008 7:59pm