What a great market... | Forex Factory

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What a great market...

  • #1
  • First Post: Edited 9:12pm Oct 12, 2008 7:26pm | Edited 9:12pm
...Not!

There are many claiming what great opportunities this market presents--what a blessing the volatility is. (Interestingly, these are the folks selling services on FF). Of course they would never advise anybody to stay on the sidelines and wait it out...

TODAY'S FX MARKET:

1. Widening spreads on ECNs and Re-quotes on DDs. This cuts into profits, makes placing limit orders harder and gets you stopped out more easily (and makes trading in general a bitch)
2. Ranges with no definite long term trend
3. Tremendous (unprecedented) volatility making MM more difficult due to the fact that stops have to be widened (therefore increasing risks)
4. Any rumor can move the markets a few 100 pips in minutes. Event risk is always very high.
5. Finally, LIBOR rates are of the mark, making predictable swap income almost impossible.

All this points to a very risky and abnormal market.
  • #2
  • Oct 12, 2008 7:35pm Oct 12, 2008 7:35pm
agreed
  • #3
  • Oct 12, 2008 8:36pm Oct 12, 2008 8:36pm
I concur. Newbies heed his words.
  • #4
  • Oct 12, 2008 8:50pm Oct 12, 2008 8:50pm
How annoying!
MUSTARD
  • #5
  • Oct 12, 2008 9:28pm Oct 12, 2008 9:28pm
We need to be extra careful today as banks are closed from Japan, Canada and the US. Don't get caught in stop loss hunting guys.
  • #6
  • Oct 12, 2008 9:31pm Oct 12, 2008 9:31pm
I would take these type of high volatility markets over any other kind any day of the week/year
  • #7
  • Oct 12, 2008 9:48pm Oct 12, 2008 9:48pm
Right on Mike, movement = profit. Risk is managed by position size.
  • #8
  • Oct 12, 2008 9:54pm Oct 12, 2008 9:54pm
Quoting HipsterPipster
Right on Mike, movement = profit. Risk is managed by position size.
Just want to say that yes markets are highly illiquid, spreads widen, slippage occurs. But when you have to pay double the spread/slippage for 10 times the avg daily move. In fact these markets guided by fear IMO means more opportunity to exploit inefficiencies when normally you have so many more players in the market taking advantage.

It is beautiful thing if you cut your losses and ride those big moves

But yes standing on the sidelines if your methods do not fair well in a certain type of environment is JUST as good

Mike
  • #9
  • Oct 12, 2008 11:13pm Oct 12, 2008 11:13pm
Hey Mike

High volatility is a two edged sword. Lots of uncertainty. And you always have to pick your direction.... pain can be twice as painful.

So those raking in huge profits, kudos.
  • #10
  • Oct 12, 2008 11:15pm Oct 12, 2008 11:15pm
Quoting tdion
Hey Mike

High volatility is a two edged sword. Lots of uncertainty. And you always have to pick your direction.... pain can be twice as painful.

So those raking in huge profits, kudos.
It certainly is.

mostly for those that aren't managing their risk, I would quite agree. In fact these markets are meant to clear out the weaker players(see over leveraged ). Again sitting out when things don't make sense to a trader is high priority. But volatility is a great thing if you ask me.

Not to fret though, "normality" is around the corner
  • #11
  • Oct 12, 2008 11:33pm Oct 12, 2008 11:33pm
Quoting mbqb11
Just want to say that yes markets are highly illiquid, spreads widen, slippage occurs. But when you have to pay double the spread/slippage for 10 times the avg daily move. In fact these markets guided by fear IMO means more opportunity to exploit inefficiencies when normally you have so many more players in the market taking advantage.

It is beautiful thing if you cut your losses and ride those big moves

But yes standing on the sidelines if your methods do not fair well in a certain type of environment is JUST as good

Mike
Quoting mbqb11
It certainly is.

mostly for those that aren't managing their risk, I would quite agree. In fact these markets are meant to clear out the weaker players(see over leveraged ). Again sitting out when things don't make sense to a trader is high priority. But volatility is a great thing if you ask me.

Not to fret though, "normality" is around the corner
Nicely put Mbqb11...
  • #12
  • Oct 12, 2008 11:54pm Oct 12, 2008 11:54pm
Im going short on AUDUSD right NOW
MUSTARD
  • #13
  • Oct 13, 2008 12:11am Oct 13, 2008 12:11am
Question: would an indicator like RSI be more meaningful today than normally, because of who the market movers are, or no?
MUSTARD
  • #14
  • Oct 13, 2008 2:23am Oct 13, 2008 2:23am
Quoting mbqb11
Not to fret though, "normality" is around the corner
This newbie must stand aside until then!
I'm patient. No problem.
  • #15
  • Oct 13, 2008 3:45am Oct 13, 2008 3:45am
Mike isn't it fair to say you just have to guess right when it is raining pips like it is now

So many stop and reverses on low timeframes

You talk of risk management... Small stops will hit often.... So maybe you can shed some light on the idea behind profiting in this type of market


If you are generous and kind
  • #16
  • Oct 13, 2008 4:39am Oct 13, 2008 4:39am
Quoting tdion
Mike isn't it fair to say you just have to guess right when it is raining pips like it is now

So many stop and reverses on low timeframes

You talk of risk management... Small stops will hit often.... So maybe you can shed some light on the idea behind profiting in this type of market


If you are generous and kind
Yeah sure just learn to read price action

Think about it like this, if your having swings of 500-600 pip days. You are able to nail even one nice move it will cover up for your small losses very quickly(most are cutting there winners and running their losers). Actually IMO the simplest things work the best in this environment.
  • #17
  • Oct 13, 2008 4:39am Oct 13, 2008 4:39am
Quoting FXSurfer
This newbie must stand aside until then!
I'm patient. No problem.
And there is nothing wrong with that, smart man
  • #18
  • Oct 13, 2008 4:51am Oct 13, 2008 4:51am
Some things about the market change, some don't change. Volatility is something that changes every day. If you can't adjust for volatility changes, you are always going to have problems. For the variables, like volatility, there is no such thing as normal, because that's another variable. Historical norms for variables do not equal future norms. Any method depending on historical norms has a short shelf life.

Therefore, we must be constantly adapting to changing variables. Sitting it out waiting for things to go back to the way you liked them is not IMO a sensible option. Measure the volatility, set stops and targets appropriate to the conditions and trade normally.
  • #19
  • Oct 13, 2008 5:25am Oct 13, 2008 5:25am
Quoting tdion

So maybe you can shed some light on the idea behind profiting in this type of market
Your favorite edge TD....luck

Seriously though, everything may feel like it's volatile but if you look at a chart we're pretty much in a range on most of the majors, it's hard to lose money long or short!

Wide stops, average in and scale out, it's child's play....
  • #20
  • Oct 13, 2008 6:33am Oct 13, 2008 6:33am
Quoting lostinspace
Your favorite edge TD....luck

Seriously though, everything may feel like it's volatile but if you look at a chart we're pretty much in a range on most of the majors, it's hard to lose money long or short!

Wide stops, average in and scale out, it's child's play....
Newbies
Please re-read his message again and if you did not try ever before average in and scale out, just think again before follow this judgement...
otherwise experienced traders in such practices can survive ;-)
it's o'k to win ...
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