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How To Make 1000's of Pips by NFX

  • #41
  • Edited 10:44pm Jun 21, 2009 12:52pm | Edited 10:44pm
Quoting M.A.C.Doug
So far you've recognised previous MFE's by the effect they've had on the market. You saw the move and then attributed the cause of that move to a specific fundamental catalyst. The pound dropping on Lehman - how the hell do you go long USD with confidence under the conditions prevailing at that time?
Because when the market is heavily event driven like this, things can only go one way. In this instance the dollar can only gain as stocks are sold and Treasuries are bought.

Quoting M.A.C.Doug
"How will you go in heavy" if your USD/JPY triangle breaks? Its not a MFE, its just another trade which can easily loose and should be risk managed.
This could be a major technical event because it covers a fairly long time frame (about 1 year) so it's more than just another trade IMO. It's something I'm still watching at this point and actually, the chart could break to the downside although I doubt it.

Quoting M.A.C.Doug
The future direction of the market remains completely unknown to even you NFX, regardless of the events of the day. Good luck
At this time I agree but the market is highly predictable when there really is a Major Fundamental Event.

Let's see if this week's Fed statement will shed any light.
  • #42
  • Jun 21, 2009 2:44pm Jun 21, 2009 2:44pm
Quoting NewstraderFX
At this time I agree but the market is highly predictable when there really is a Major Fundamental Event.

Let's see if this week's Fed statement will shed any light.
I disagree with this statement but it can be we are talking about different time levels. Last month's payrolls was so significantly stronger than expected that it completely changed mkt perceptions of the recovery and how they view different currencies. For many months up to this point, the correlation between equities and yen has been strongly -ve and safen haven plays favouring $. The immediate reaction to last month's payrolls figure was to sell $ and yen. However, after less than 30 mins with eurodollar futures siginificantly pricing in higher expectations for a rate hike in the coming 12 months the eur$ was below pre-payrolls price on expectations for tighter spread on rates and US emerging from the recovery before anyone else. Whilst the the probability that mkt while change on payrolls figure more so than any other event in the calendar, there's no way you could predict the market would now start favouring the $ on strong US data off this one event instead. And in fact, if you'd have changed your view due to this one event, you'd have been crushed the following few months as we have gone back to $ buying on risk aversion
  • #43
  • Edited 8:22pm Jun 21, 2009 8:06pm | Edited 8:22pm
Payrolls are not a Major Fundamental Event-they're just another data point.

What's interesting is that after Treasuries fell (meaning rates rose) it led to a lot of talk about how inflation isn't in the cards for quite some time; that caused the dollar to stop depreciating which cooled the stock and commodity rally.

Commodity inflation is not the type of inflation which concerns the Fed. The reason being is that if oil prices rise too high, demand will fade and cap prices. The dangerous inflation, which has no chance of occurring for a very long time, is the wage-price spiral seen in the 70's. There's too much slack in the labor force for that to happen.

Anyway, Bernanke's "medicine" (depreciating the dollar) like all medicines has good and bad effects-yes you can create a stock rally when the market is convinced the Fed is depreciating the dollar, but it will also help cause commodity prices to rise which can crimp discretionary spending-something that's especially dangerous now given the amount of de-leveraging that consumers are doing (to say nothing of the high rate of unemployment).
  • #44
  • Jun 22, 2009 3:46am Jun 22, 2009 3:46am
Quoting NewstraderFX
Payrolls are not a Major Fundamental Event-they're just another data point.

What's interesting is that after Treasuries fell (meaning rates rose) it led to a lot of talk about how inflation isn't in the cards for quite some time; that caused the dollar to stop depreciating which cooled the stock and commodity rally....
To say that payrolls is 'just another data point' is just says to me that you're an economist playing trader. If you want to make money especially in these volatile markets, you dont have to be right fundamentally, you need to be able to accurately predict what how market sentiment will affect prices. The market is not always right. Your comment on the dollar weakening substantially due to the large scale debt purchases may seem right on the money now but that's because the $ has in fact done what you said in hindsight. I'm sure bond traders expected 2-30yr bonds yields to stay low and indeed they did ... for a few days. the 10yr is now 6 handles lower than it was before the announcement.

Another such example of your so-called MFE would be the massive easing announced by snb in march. I would be interested to hear what you would have suggested doing on that as it is now 3 big figures lower than where you would reasonably have been able to buy eur/swiss. And the fact that because the market is quite obv so incredibly short swiss, any slight crack in the snb's resolve will see eurswiss crashing back down through 1.48

If this post sounds like an attack on you I apologise, but I strongly disagree with your suggestions to potentially new traders that they should 'go in heavy' on certain trades because things seem to have fit in the past. I have no doubt you believe in your views totally and my I disgreeing with you is what makes a market, but if you are to make a call in the future, to tell traders to do it in size without offering money management advice is something I would not agree with
  • #45
  • Edited 6:52am Jun 22, 2009 6:37am | Edited 6:52am
Quoting sccz97
To say that payrolls is 'just another data point' is just says to me that you're an economist playing trader. If you want to make money especially in these volatile markets, you dont have to be right fundamentally, you need to be able to accurately predict what how market sentiment will affect prices.
You can't make a living betting your money on daily (or hourly or whatever) sentiment swings-you might as well bet on which the wind is going to blow. The last NFP is a perfect example; it was a very favorable number and it didn't do anything. That's exactly the point of my thread-you wait until things can only go one way, then go in heavy.

Quoting sccz97
Your comment on the dollar weakening substantially due to the large scale debt purchases may seem right on the money now but that's because the $ has in fact done what you said in hindsight.
I've been writing about how the dollar is connected to other asset classes for several years now so what happened was no surprise. When Bernanke went on 60 Minutes and announced the Fed was electronically printing dollars, the dollar had to weaken while stocks and commodities rose and Treasuries fell.

You may want to ask why would a purposeful depreciation of the dollar affect stock and commodity prices. Well, what do stocks and commodities gain against when those markets appreciate? The dollar. They're priced in dollars, meaning that you need more dollars to buy them which is what depreciation is. So the Fed did exactly what it set out to do-start a stock rally by depreciating the dollar.


The SNB isn't a major anything so I really don't follow swissy all that closely. Price may move as you say; I really don't know.

Actually my advice is to not trade right now (or just trade small) and to raise as much capital as possible. When one of these major events hits (which may not happen for months-who knows) you go all in. No guts no glory.
  • #46
  • Jun 22, 2009 10:29am Jun 22, 2009 10:29am
Quoting NewstraderFX
You can't make a living betting your money on daily (or hourly or whatever) sentiment swings-you might as well bet on which the wind is going to blow.
Quoting NewstraderFX
You can't make a living betting your money on daily (or hourly or whatever) sentiment swings-you might as well bet on which the wind is going to blow.
this has got to be the most ignorant statement I have ever seen from someone of your supposed stature and makes you come across as incredibly arrogant. I dont want to start a pissing contest but it's obvious that you have no idea how to trade on a shorter time frame which is why you assume that it's impossible to make a living as such. I've been day trading for the last 4 years and am making significantly more than what you'd call 'making a living'. The fact of the matter is, short term price action is much more predictable than long term trends especially in this environment. when the fed announced that they were purchasing 300bn long term securities, whilst you were sitting on your hands looking at the price action and thinking 'hmmm this looks like one of my self termed MFEs', I was piling in heavy (as you say) eur$ which was pretty much a sure thing.

Anyway, as i said before, differing opinions is what makes a market and I just want to make sure the ppl reading your posts dont get stuck with the idea that there is only one way to trade succesfully in these markets as the following will show
20090618 08:31:20.638 BN - SNB TO CONTINUE CURRENCY PURCHASES
20090615 16:00:00.855 BN - ECB SAYS EURO-AREA BANKS FACE $283B MORE LOSSES BY END 2010
20090611 18:35:51.054 RTRS - FED'S LOCKHART SAYS DOLLAR ROLE AS RESERVE CURRENCY MAY DECLINE ON RELATIVE BASIS OVER TIME
20090610 12:21:40.495 RTRS - RUSSIA C.BANK SAYS WILL REDUCE SHARE OF RESERVES INVESTED IN U.S. TREASURIES, BUY IMF BONDS -- CBANK 1ST DEPUTY CHAIRMAN
20090604 19:08:00 BN - EU'S JUNCKER SAYS FURTHER EURO INCREASE NOT WELCOME
20090603 09:37:51.027 RTRS - THERE ARE NO ALTERNATIVES TO THE U.S. DOLLAR AS MAIN RESERVE CURRENCY, INDIA, JAPAN, S.KOREA OFFICIALS SAY
20090602 10:30:00.922 BN - GEITHNER SAYS CHINA SEES DOLLAR AS RESERVE CRNCY FOR LONG TIME
20090602 15:25:05.754 MNI - SOURCES: ECB COULD EASE REFI RATE FURTHER, TIMING VERY OPEN
20090528 09:56:23 RTRS - IGNATYEV SAYS RUSSIA MAY SELL SOME U.S. TREASURIES TO BUY IMF BONDS
20090527 16:00:03 - EURO ZONE CENTRAL BANK SOURCES-ECB LIKELY TO APPLY SAME RULES TO COVERED BOND BUYS AS TO COLLATERAL
20090521 09:23:16 RTRS - S&P REVISES UNITED KINGDOM OUTLOOK TO NEGATIVE: RTGS AFFIRMED

Quoting NewstraderFX
The SNB isn't a major anything so I really don't follow swissy all that closely. Price may move as you say; I really don't know.
Ah I see .... so the fed saying they are basically going to devalue the $ via qe is major, but the snb selling francs to ensure no further apprecation is not..... gotcha
Attached Image (click to enlarge)
Click to Enlarge Name: News_-_ECB_SAYS_EURO-AREA_BANKS_FACE_$283B_MORE_LOSSES_BY_END_2010_20090615.PNG Size: 25 KB
Attached Images
  • #47
  • Jun 22, 2009 10:30am Jun 22, 2009 10:30am
additional charts from prev post
Attached Image (click to enlarge)
Click to Enlarge Name: News_-_S&P_REVISES_UNITED_KINGDOM_OUTLOOK_TO_NEGATIVE-_RTGS_AFFIRMED_20090521.PNG Size: 92 KB
Attached Images
  • #48
  • Jun 22, 2009 12:54pm Jun 22, 2009 12:54pm
Ok, I'll tell you what.

If you can trade the daily ups and downs and make a living at it-fine. The facts are that it's incredibly difficult for the vast majority and we all know that 95% end up as losers.

What I'm trying to point out here is that there are certain times when markets can only move one way. It doesn't happen all that often but when it does are when the best trades occur IMO. If you have a different idea I won't argue. Perhaps you might want to start your own thread and proceed from there if you haven't done so already.
  • #49
  • Jun 22, 2009 2:43pm Jun 22, 2009 2:43pm
Quoting NewstraderFX
Ok, I'll tell you what.

If you can trade the daily ups and downs and make a living at it-fine. The facts are that it's incredibly difficult for the vast majority and we all know that 95% end up as losers.

What I'm trying to point out here is that there are certain times when markets can only move one way. It doesn't happen all that often but when it does are when the best trades occur IMO. If you have a different idea I won't argue. Perhaps you might want to start your own thread and proceed from there if you haven't done so already.
as i said before ... dont want to get into some heated argument and have already said that there are plenty of ways to make money in this market. All I'm trying to get at is that with these type of longer term trades you are talking about compared to the examples I posted, you do run the risk of the market going against you for short periods of time and you need to have good risk management in place to ensure you don't get stopped out of a potentially winning trade.
  • #50
  • Jun 22, 2009 10:28pm Jun 22, 2009 10:28pm
Wow-it turns out that the triangle on USD/JPY broke to the downside suggesting that a pretty good move can be seen.
  • #51
  • Jun 23, 2009 4:00am Jun 23, 2009 4:00am
Quoting NewstraderFX
Wow-it turns out that the triangle on USD/JPY broke to the downside suggesting that a pretty good move can be seen.
Or a buy of a potential triangle bottom third touch around 94 on the weekly. Pretty tight stop with reverse order binded incase price decides to turn against us, should do the job fine.
  • #52
  • Jun 23, 2009 4:00am Jun 23, 2009 4:00am
Cool thread.
  • #53
  • Jun 23, 2009 7:33am Jun 23, 2009 7:33am
Here's an excellent article about a real trader: http://www.bloomberg.com/apps/news?p...d=a_OMWZYEtPnM

Note this part especially: At the end of the decade, he’d racked up seven winning years -- including an 84 percent gain in 1990, when oil prices took off after Iraq invaded Kuwait that August. From July 1 to Oct. 9 of that year, oil futures soared 142 percent on fear of supply disruptions.

Words in bold indicate Major Fundamental Event
  • #54
  • Jun 23, 2009 7:35am Jun 23, 2009 7:35am
Quoting belekas
Or a buy of a potential triangle bottom third touch around 94 on the weekly. Pretty tight stop with reverse order binded incase price decides to turn against us, should do the job fine.
Which is exactly why I started this thread-these dumb trades will ruin you the more you do them.

Keep your powder dry and just wait for the next MFE-then go in heavy and ride the trend.
  • #55
  • Jun 23, 2009 7:42am Jun 23, 2009 7:42am
trading is relatively simple it should not be complicated
  • #56
  • Jun 23, 2009 9:52am Jun 23, 2009 9:52am
I have to agree with this, fundamentals and trader sentiments are usually what drives the market in this environment. But there's one thing that I have to disagree though - the notion that it is only the fundamentals that drive price action in the chaotic world of foreign exchange.

Sometimes, I believe that technicals also play a role in determining trends especially in the daily and weekly timeframes. Traders' sentiments are usually derived from technical charts when nothing of importance is involved in the market and I believe that groups of individuals tend to base their trading decisions on these technical indicators instead of these Minor Fundamental Events (I just term them as noise in the market). For the majority of traders to be successful using technicals alone though, you have to find out just what system the majority actually uses and you'll have to know each and everyone's sentiments.

Unfortunately, we'll never know, unless you're God or have a crystal ball. But I agree with TS here, if something Major does come up (like the lowering/raising of interest rates or plans to provide liquidity in the market) then it's advisable to liquidate all your trades and ride with the trend.
  • #57
  • Jun 23, 2009 11:06am Jun 23, 2009 11:06am
Quoting NewstraderFX
Which is exactly why I started this thread-these dumb trades will ruin you the more you do them.

Keep your powder dry and just wait for the next MFE-then go in heavy and ride the trend.
Which trade you recall dumb? Well, i guess the contrary opinion is always right. Cheers
  • #58
  • Jun 23, 2009 12:16pm Jun 23, 2009 12:16pm
Quoting belekas
Which trade you recall dumb? Well, i guess the contrary opinion is always right. Cheers
You were saying? As you can see price did indeed fall below the bottom trend line.
  • #59
  • Jun 23, 2009 12:24pm Jun 23, 2009 12:24pm
Quoting NewstraderFX
Which is exactly why I started this thread-these dumb trades will ruin you the more you do them.

Keep your powder dry and just wait for the next MFE-then go in heavy and ride the trend.
So where do you see the EUR/USD heading? It looks like we're going to have a close above the downward trendling line on the daily chart today giving us a bullish breakout signal from this flag. I was thinking once the correction was finished we'd head to about 1.47-1.50; however, I expected the correction to head down to about 1.3450-1.35 before resuming the uptrend. Fundamentally it looks like this rally is being caused by an expectancy from the market that the Fed is not looking to raise interest rates any time too soon or as early as some economists had forecasted. I think what we need from the FED announcement to sustain this rally, is a worst behind us sort of announcement and a suggestion that interest rates will continue to remain low for some time. I'm curious to see what reaction markets will have if the announcement is gloom and doom like the IMF and suggests lower interest rates for some time. Technically, risk aversion may kick into gear which would actually mean a stronger dollar. However, lower interest rates also mean a weaker dollar. I'm leaning towards the former. So anyways, Where do you see it going Newstrader? I'm Long here at 1.4050 targeting 1.47 and will be listening in on the FED announcement.
  • #60
  • Jun 23, 2009 12:30pm Jun 23, 2009 12:30pm
Quoting NewstraderFX
You were saying? As you can see price did indeed fall below the bottom trend line.
Yes, but that doesnt mean it cant/wont form an ascending triangle (dayly) which is continuation pattern on its own and breaks out upward 73% of the time ,if price rises into the pattern, according to T. Bulkowski
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