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What have I Discovered!?

  • #1
  • First Post: Feb 7, 2009 3:08am Feb 7, 2009 3:08am
A month ago I never realised a retail Forex market existed. Now I wonder why I've never before met anybody who does it. The sheer depth of information, interest and comment is staggering! Another thing to note his how much of this comment is seemingly contradictory, and also the clamour (and sometimes desperation) to get the 'right' information. I suppose this is because folks are trying to predict the future, which is essentially impossible.

Still, it looks like likely outcomes can be predicted to an extent, at least enough to skew the odds in my favour, so after lots of demoing and learning I shall be giving it a go.

What I'd like to know about is the big players. If just 10 institutions control 80% of the money in the market, then what are the best resources for finding out how they work? Charts and indicators are all very well, but they are just graphical representations of group psychological behaviour, and the group is mainly the young suits within those large institutions. So, rather hopefully, does anyone on here have more of an inside skinny on where these guys get their information and as importantly, how they use/react to it? Anybody know any good links, documentaries on Youtube, books or even have personal experience?

If you don't ask....

Hertz
  • #2
  • Feb 7, 2009 7:02am Feb 7, 2009 7:02am
for what i have known the big players trade only with horizontal supports and resistances, which can be fibonacci levels, round numbers and pivot points...so, theorically, that's how we should trade, but it seems quite difficult because we keep using 3-4 indicators trying to predict the movements...IMO
  • #3
  • Feb 7, 2009 8:00am Feb 7, 2009 8:00am
Quoting Eclipse
for what i have known the big players trade only with horizontal supports and resistances, which can be fibonacci levels, round numbers and pivot points...so, theorically, that's how we should trade, but it seems quite difficult because we keep using 3-4 indicators trying to predict the movements...IMO

Dito. Everyone should at least try it once for 3 months before looking for yet another "4 Indicators M5 Scalping - OMG IM GOING TO BE RICH SOON" - System. Less is more you know...
  • #4
  • Feb 7, 2009 8:08am Feb 7, 2009 8:08am
Quoting Eclipse
for what i have known the big players trade only with horizontal supports and resistances, which can be fibonacci levels, round numbers and pivot points...so, theorically, that's how we should trade, but it seems quite difficult because we keep using 3-4 indicators trying to predict the movements...IMO
And how do you know what the 'big players' do?
Living the adventure in my head.
  • #5
  • Feb 7, 2009 8:11am Feb 7, 2009 8:11am
Quoting Eclipse
for what i have known the big players trade only with horizontal supports and resistances, which can be fibonacci levels, round numbers and pivot points...so, theorically, that's how we should trade, but it seems quite difficult because we keep using 3-4 indicators trying to predict the movements...IMO
It is a great way to trade , however, this is a business where words like Never, Always, Only, and others like those have no meaning because of the simple fact they do not apply.
  • #6
  • Feb 7, 2009 8:13am Feb 7, 2009 8:13am
Quoting Tjpld
Dito. Everyone should at least try it once for 3 months before looking for yet another "4 Indicators M5 Scalping - OMG IM GOING TO BE RICH SOON" - System. Less is more you know...
Agreed. Once you try it you will never go back to the Indicator Search. I have never looked back.
  • #7
  • Feb 7, 2009 8:23am Feb 7, 2009 8:23am
Quoting Hertzvanrent
What I'd like to know about is the big players. If just 10 institutions control 80% of the money in the market, then what are the best resources for finding out how they work? Charts and indicators are all very well, but they are just graphical representations of group psychological behaviour, and the group is mainly the young suits within those large institutions. So, rather hopefully, does anyone on here have more of an inside skinny on where these guys get their information and as importantly, how they use/react to it? Anybody know any good links,...
I wish I had the brains to think of a question like this when I was a month into this....
  • #8
  • Feb 7, 2009 8:44am Feb 7, 2009 8:44am
Quoting tommyd
It is a great way to trade , however, this is a business where words like Never, Always, Only, and others like those have no meaning because of the simple fact they do not apply.
Yeah, I'm getting that already
  • #9
  • Feb 7, 2009 8:51am Feb 7, 2009 8:51am
Quoting tommyd
It is a great way to trade , however, this is a business where words like Never, Always, Only, and others like those have no meaning because of the simple fact they do not apply.
They do. NEVER invest all of your margin.
Show me one person with trading experience who disagrees.
  • #10
  • Feb 7, 2009 9:00am Feb 7, 2009 9:00am
Quoting Tjpld
They do. NEVER invest all of your margin.
Show me one person with trading experience who disagrees.
Well I guess I proved my point then..

(never say they never do)...
  • #11
  • Feb 7, 2009 9:35am Feb 7, 2009 9:35am
This is an old wives tale. Central Bankers are trading based on fundementals, not stupid chart patterns.

Now.... there are trading floors in banks with hundreds of traders working for them. And these traders are individuals - there is not a universal formula: "horizontal support and resistance / fibonacci / round number" they all must follow. Some trade quant methods and others charts. But each one only trades a small % of the bank's client funds.

Quoting Eclipse
for what i have known the big players trade only with horizontal supports and resistances, which can be fibonacci levels, round numbers and pivot points...so, theorically, that's how we should trade, but it seems quite difficult because we keep using 3-4 indicators trying to predict the movements...IMO
  • #12
  • Feb 7, 2009 10:29am Feb 7, 2009 10:29am
Quoting tdion
This is an old wives tale. Central Bankers are trading based on fundementals, not stupid chart patterns.
Got ya. I get that fundamentals are ultimately what makes one currency worth more or less than another.

Quoting tdion
Now.... there are trading floors in banks with hundreds of traders working for them. And these traders are individuals - there is not a universal formula: "horizontal support and resistance / fibonacci / round number" they all must follow. Some trade quant methods and others charts. But each one only trades a small % of the bank's client funds.
I get that all the traders are individuals but that still makes for a relatively small group. If you say hundreds per bank then lets say 500 per institution then 10X500 so 80% of $2 trillion is in the hands of just 5,000 people. And they don't work in isolation, they work alongside other traders, they get on the 'phone to other traders and they were trained with, and by, other traders. It seems like a worthwhile activity looking for commonalities amongst that group.
  • #13
  • Feb 7, 2009 10:37am Feb 7, 2009 10:37am
Well that is the misconception that over 90% of people on this forum have: forex is not a true speculative market!

Please see Darkstar's structure of forex market sticky for more information.

The fact of the matter is that forex is almost exclusively a tool for conducting business transactions, not for speculating on like stocks.
  • #14
  • Feb 7, 2009 10:45am Feb 7, 2009 10:45am
Quoting tdion
Well that is the misconception that over 90% of people on this forum have: forex is not a true speculative market!

Please see Darkstar's structure of forex market sticky for more information.

The fact of the matter is that forex is almost exclusively a tool for conducting business transactions, not for speculating on like stocks.
I shall check it out. Always learning
  • #15
  • Feb 7, 2009 11:46am Feb 7, 2009 11:46am
Read everything on the Federal Reserve of NY website.
  • #16
  • Feb 7, 2009 12:47pm Feb 7, 2009 12:47pm
Quoting tdion
This is an old wives tale. Central Bankers are trading based on fundementals, not stupid chart patterns.

Now.... there are trading floors in banks with hundreds of traders working for them. And these traders are individuals - there is not a universal formula: "horizontal support and resistance / fibonacci / round number" they all must follow. Some trade quant methods and others charts. But each one only trades a small % of the bank's client funds.
News does not move markets. It only plays on the human perception of value. Chart patterns and news are basically one in the same, they do the same thing to the mind of the trader. It's pretty easy to track game in the snow, just follow the stupid footprints.
  • #17
  • Feb 7, 2009 1:15pm Feb 7, 2009 1:15pm
Quoting Scotty B
News does not move markets. It only plays on the human perception of value.
Sorry to be picky, but if news influences perception of value then doesn't news affect demand so therefore, indirectly, move the market? Or am I missing your point?

Quoting Scotty B
Chart patterns and news are basically one in the same, they do the same thing to the mind of the trader.
The minds of the traders, particularly the traders within those ten top tier institutions, are what I'm interested in. I take your point that chart patterns influence those traders, but if traders just take their cues from charts then thats an internal influence, the market influencing itself. Surely fundamental influences are external? Wouldn't a market without external influences eventually just flatline?
  • #18
  • Feb 8, 2009 5:20am Feb 8, 2009 5:20am
Quoting Leonlorenzo
And how do you know what the 'big players' do?
i know nothing...i simply follow what the experts on this forum say and i see that they are right
  • #19
  • Feb 8, 2009 5:44am Feb 8, 2009 5:44am
Quoting tdion
This is an old wives tale. Central Bankers are trading based on fundementals, not stupid chart patterns.
technical analysis or fundamental analysis? the million dollar question...
in my opinion you are right, fundamentals are what really drive the market, but in the long term period; i mean banks must operate day by day and you can see that trading the intraday with the news is a suicide, so which other tool may they use in order to make money everyday? i think technical analysis.

Quoting tdion
And these traders are individuals - there is not a universal formula: "horizontal support and resistance / fibonacci / round number" they all must follow. Some trade quant methods and others charts. But each one only trades a small % of the bank's client funds.
obviously there are many trading strategies, but the most important thing is to follow what the majority of traders do; so the simpler the method, the higher the probabilities that the majority is following it.
  • #20
  • Feb 8, 2009 9:39am Feb 8, 2009 9:39am
Quoting tdion
The fact of the matter is that forex is almost exclusively a tool for conducting business transactions, not for speculating on like stocks.

That is not my understanding, or the understanding of others who work in the currency exchange industry. Although there are no definitive statistics to my knowledge, it is estimated that around 80-90% of forex volume is speculative, and do not result in physical delivery of the currency. Even a great deal of those that do take delivery will employ foreign exchange specialists to attain the best rates, and they are extremely aware of technical aspects and make decisions based upon them.

Dismissing chart patterns as 'stupid' is a bit ignorant. A pattern is neither objectively stupid or smart, such an opinion only exists in the eye of the beholder. The 'fact of the matter' is that price and only price contains all the known relevant information about the value of a market instrument, whether it be USD, wheat or chocolate buttons, and yes, that includes fundamentals. Before Charles Dow even put past prices on a chart ie. before any technical analysis was being used on Western market interests, at least on any widespread scale, it has been shown that these stupid patterns were still being respected. The market does not move because the pattern is there, but the psychology of market participants moves in repeatable ways. If the breaking of what looked like it could have been a solid support level rocks your belief in technical analysis, then you haven't understood the concept at all.

In any case, we are all entitled to our own beliefs, I am not going to attempt to force mine down anyone else's throat. The existence of other ideas does not challenge or offend my understanding of the market.
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