USDJPY Prediction

All,

I have been trading for 2 years now and I only trade USDJPY. I would highly recommend you to study deeply into Gann stuff and that only. I now understand Gann's time factors and it is nothing like what was being posted in this forum.

To prove that I now present a prediction for the USDJPY market. As now it is trading at around 92.50, it will continue down to around 91.50-91.00 to about 15th September 2009, if the lowest price around that day is above 91.00 or below 89.00, the market will go up from that day to about 10th November 2009 and tops at around 105.00 , otherwise the bullish movement will be shorter and tops at a lower price (to be determined on 15th September 2009).

The trade now is to short USDJPY with a market order now (I put a stop-sell entry order and was filled at 92.65 last night), and put stop loss at 95.00.

Regards,
Communist Trader

Hi Communist

I think you may be right.... or wrong...

For sure is that the word "prediction" in your thread title can give you a huge headache..... mate, nothing personal, just my opinion...

Good trading!

Wish I hadn't seen this thread earlier. I've just spent the last seven hours trading long against the bounces off of the 92.00 level. Guess I was just being foolish.

Where oh where did I put GreatGrandpa's Gann Trading Manuals...


Phil

I strongly urge you not to long USDJPY for any period of time. You should never be long in a down trend no matter how strong you think a support might be or whatever other reasons or indicators you use.

Time has turned on 8th Sept and there is still about 6 days left for the bearish movement.

Save you money and go with the trend, I see you on 15th Sept.

Indeed, I will check in on the 15th. I may or may not trade the USD/JPY between now and then and it might be long or short. I trade what I see and take what is offered.

Good luck with your Gann trading, it can be profitable. I gave up on it as the "end all and be all of trading" 30 years ago because I found it limiting.

There are 7500 trading minutes between now and the 15th, lots of trends and counter trends, LOTS of OPPORTUNITIES...


Phil

Now, price is ahead of time, the trade today is to lower your stop-loss from 95 to 15 pips above today's highest, before your broker closes for the weekend. As price is ahead of time, it shows the market is really bearish and unlikely to break the high of 91.72, so very likely stop-loss will be set at 91.87. Next Monday and Tuesday will be crucial as the bearish movement will end and market turning bullish.

If you followed my advice, you should have made more than 100 pips by now and lock in a profit of 80 pips by end of today with you stop-loss order. I am not here to give money away, this 100 or so pips is a small gift from me. I want you show you how trading should be done and Gann really works, with today's market. And I think the best way to convince people is to let them see with their own eyes, instead of arguing endlessly.

I would also like to discuss some areas of trading which hopefully could re-shape your mentality frame work and get you in the right direction, if the admin allows me. I am a corporate finance banker and there aren't lots of deal flows recently, so I have time.

A bit of introduction about my experience and background first. I am in my mid 20s, I took a government scholarship when I was 15 and went overseas for high school. After graduation I went to a top UK university majoring in computer science. After graduation I joined a top US investment bank as a quant, then a German bank as a corporate financier. I am studying for my CFA level 3 and hopefully will get the charter in the next 1-2 years. Now, I have shared my background and experiences because these have something to do with what I am going to tell you later.

Firstly, I read some posts in this forum regarding whether good education and fancy degrees make you a good trader. The answer is no. In fact, top banks rarely hire graduates with a finance related degree into their trading team, because those guys have their brains fixed by what they learnt in school, and they tend to think by the book instead of having an open mind and really use their brains. Losers like them usually sit in the reseach team writing reports about what the market should do or if they have a PHD they will be slotted into a glorified reseach team writing about the economy.

So what is the point of education? For me, I have succeeded in every subject that I studied, from primary school to CFA, but so what? I am just someone who is good at memorizing other people's thoughts and reproduce them during exam. I hardly find any of the stuff I learnt useful when applied to trading. The only thing I gained from all these years of education is the ability to think and question everything, with confidence and have an open mind for everything.

And this is what I want to tell you, have an open mind, do not dismiss the things which you think are ridiculous or even laughable. Afterall your thoughts have nothing to do with whether those things are true or not, and in most cases you are wrong because how much do you know, really.
This also brings the topic of democracy, which to my understanding means go with the majority. Whenever you want to dismiss something you do not understand, you get someone to laugh at it with you. When you have a thought, you ask someone for their opinion just to get comfortable with it. I saw lots of polls here, how many percent of people think the market should do what, but does the market care about that?

This is exactly what's been happening in every bank. Take for example my bank, whenever we analyse a M&A deal, we collect dozens of reseach reports from Goldman, MS, JP, Citi etc etc, then we say how many percent of them agreed how much synergy will be generated out of this merger. Do we believe that? No. Do we care about that? No. Do we know what is going to happen? No. We used all those reports because we need some reason to justify why we are financing the transaction, and most importantly, when it doesnt work, we have something to blame at to our credit risk committee. We are only interested in getting the millions of upfront fees from the transaction and thus our bonuses. Now you see why we have the financial crisis?

So moral of the story is, think indepently, do not go to other people for confirmation and justify your actions. Like Gann quoted the Bible: prove all things and hold fast to that which is good.

Now, something about technical analysis, well not drawing charts or calling resistance or support levels, but about the indicators which seem to be the theme in this forum.

Before the collapse of Lehman, I have a friend working in their prop FX trading team. He's got a master degree in economics in UK's best university and work there to tune their trading system with macro factors. We always get together and chat about the markets and various rumors in our banks. And one day he showed me a manual which describes how Lehman's system works. To put the long story short, it has the indicators which you use in your systems, but ofcos it is fancier, not just average this average that, but with complex mathematical models which I could not quite understand. However, the most prominent difference bewteen Lehman's system and the systems you've been using, is that Lehman's system built in macro factors and event shocks, such as the 911 attach, Russian bond crisis, the internet bubble etc etc, and the system behaves differently under each scenario, in a way it is like the system is evolving and responding to different period of market sentiments and risk appetites.
I am not saying that their system is better than yours, I am not interested in this sort of systems anyways. Just to want to show you that even if the indicators work, I think Lehman's way of implementing them make more sense to me.

Afterall, like all systems, Lehman's system react to market, not predict the market, and it is profitable 65% of the time.

Also something about leverage, Lehman's system is 25% leveraged, much less than 1:1. Which means if they have US$100m worth of equity, their trade size is about US$25m. Now compare that to your trade size, when you use your system.

Now, back from lunch, something about fundamentals.

When I first heard fundamental analysis, it made perfect sense to me. I was like yeah this is the reason why markets move, because of the economy, this is what we were taught in school, and CFA! But why does the technical stuff work sometimes? I mean the support and resistance stuff, I asked one of my fundamental friend. It is because so many people use them, so it is becoming a self-fulfilling prophecy, my friend told me.

Then I said to myself, wait a minute, something is not rite here. Isnt't this the same thing with fundamentals? I mean what are fundamental really? If you ask yourself. They are nothing more than stories, hopes and fears, statistics, based on how we were taught to understand the market, i.e. economy, fiscal policies etc etc. Are they the driving force of market movements? Maybe. Let's say they are. Take equities for example, if a company launched a new product which is promising, it should generate more revenue and share price should go up rite? BUT, when this news is out, and share price jumped, has the company's sales and profits gone up yet? Not yet. Then why the price went up? Because of hopes. So you can see, the so called fundamentals are nothing more than stories which stir up people's hopes or fears, until in this case after say 2 years the company did generated the promised sales and profits, then the fundamental became a fact.

So you see, isn't this the same thing as technicals, people are conditioned to react in certain ways to certain stories or fundamental, if you glorify it, when lots of people are conditioned in this way, they buy when they heard the news, price go up. But people are emotional and sometimes their conditioning change, and sometimes like what the fundamental experts tell you when their stuff does not work: the market has already priced in the news or this is better or worse than expectation or other crap, price go down after release of bullish news. Then you say oh my god the market is really stupid, but is it?

Now imagine we are living in a hypothetically insane and stupid world, and people are taught in school that whenever mcdonalds sold 1 million burgers, the price of all stocks globally will go up. If we were all taught this way, and we react according to this when we are trading, what would the stock market index be look like? I bet it will correlate perfectly with big mac sales figures, so as the professors will tell you, at 95% confidence, we fail to reject the null hypothesis that big mac sales is related to global stock price.

Will this ever happen in this world? Probly not. Why? Because we are sane people and we found the economy story more convincing than the big mac story, although, in both cases, most of us would not wait until the fundamental hopes or fears become reality.

Some people truly understand the idea of fundamentals, such as Benjamin Graham and his student Warren Buffet. If you are into fundamentals I recommend the books Security Analysis by Graham and Essays of Warren Buffet by Buffet. Then you will see why they all put emphasis on the safety of the company and Graham always said good equity investment should be treated as a fixed income investment. Because they are the ones who will wait after the new products are launched and profits of the company are paid out as dividends. They will make money via fundamentals even if they live in the big mac world where people only care about burger sales figures. Because whatever story people buy into, whatever impact that has on stock price, the value of their investments will be realised by dividend payments the new product brings, they will hold the stake indefinitely and maybe pass to their children as long as the company keeps lauching new products and makes money. Maybe the stock price dropped to $1 per share from $50 per share, it does not matter. They are managing a business, not speculating. So the most important thing they worry about is whether this company will continues to exist when they pass their holdings to their children, thus you see buffet invest in coca cola, american express, etc, cos after say 100 years, maybe we will still drink cola and use a bank?

Having said all these, I have failed to find any fundamental values of currencies or commodities, in a buffet way.

Last post for today, hope these are helpful to you at least give you a new perspective.

Ok so I want to talk about physics in this one. My father is a physics teacher and he used to tell me that you judge someone's IQ by whether he is good at physics, not maths. Physics is the study of nature, linking the observed facts to the maths then try to come up an equation which connects the two and never fails. So in a way physics is bigger than maths.

Now, the above paragraph presents a weakness of physics, which is the process of coming up with the equation. How do we do experiments? We observe events, then we think, we come up with an equation with a couple of variables which we THINK having something to do with the events, then we gather a pool of events and try to fit them into our equation, sometimes we fail, then we add some constants into the equation and re-test it. Sounds familiar? Like a trading system?

Becos of my education, the above process seemed the only solution to solve nature's problems to me, until one day I read a book by Buckingham Fuller, it is called Synergetics. In this book, Fuller illustrated geometry, with simple structures such as the sphere (circle), tetrahedron (triangle) and cube (square). And he proved, with remarkable accuracy that all nature constants, such as the golden ratio, the kepler constant, can be expressed as a fraction of 2 integers. So what's the big deal you asked. Well, nothing much, as Fuller just discovered another way of expressing the numbers which were already discovered by people many many years ago. However, what amazed me is his approach. He did not get these numbers from experiments or what we can call effects of nature. But rather he solved the problem from causes, from the fundamental structure and geometry of our universe.

Then I suddenly understood what Gann meant when he said: I have always looked for causes and when once I determine a cause I can always be sure of the effect or future event which I predict.

You see, sometimes reverse-engineering just wouldn't work. Maybe this is why you failed to find the holy grail of trading? Or the holy grail of anything?

Have nice weekend.

Currencies have no intrinsic value.They are just the means of exchange,so we don't need to change our cows for the grains
Commodities have value,some more because they are rare,and some less because they come in abundance.But I am sure you already know that.

Sorry to get a bit off topic here,but I am interested in why your pseudonim is communist?Is it because you are from china or is this your political belief.I have a feeling you stand on a firm ground regarding this like you do on the markets perspective and you just sparked my curiosity.

Thanks

Hi Communist,

I don't follow your Sept 15th price targets of above 91.00 or below 89.00 to cause subsequent reversal target of about 105.00 on or around Nov 10th.
What if the price lands at 90.00 on Sept. 15? Does that indicate shorter bullish movement? What if it goes lower?

Or, are you saying a Sept. 15 low around 89.00 would cause a reversal to around 105.00, and a low around 91.00 would cause a Nov 10 ish high somewhat lower? And anytrhing in between would result in a reversal high at a porportional level below 105.00?

I see S/R levels at 91.00 and 89.00. Is that the significance? But then one could talk oneself into identifying S/R levels just about anywhere it becomes convenient, no?

Perhaps I read wrong. Would you kindly re-state?.

Thank you sir. I follow your "real-time" prediction with interest.

Peter O

great stuff here comrade..keep it coming

Should be an interesting week then, I guess we'll all wait and see. I'm short the USD/JPY at the moment, and Communist's predictions for later in the year go against my reasoning and targets.
Personally, I expect the bearish sentiment surrounding the USD to continue for the foreseeable future (not that there is such a thing as 'foreseeable' around here).

I think Communist's price target of around 105 in mid-November is very high, and not very likely; however, stranger things have happened.

Lets all pick this up again in November then eh?

i gotta say i agree with communist! I am waiting for 15 th usa economics datas! (retail sales) ...
And dont forget that from 26 th sept duties on china tire will start!!

Trade for today is to lower your stop-loss order to X, then add a stop-buy entry order at Y.

Calculation of X:-
At the end of today (preferably after US closes), take the highest price of today, add to the lowest today and divided by two. Then add 15 pips to the result. Let’s say today the lowest is 90.19 and highest is 91.00, midpoint is then 90.59. Add 15 pips to 90.59 will get 90.74. So, if today’s closing price is below 90.74, lower your stop-loss order to 90.74. If today’s closing price is above 90.74, simply close your short position with a market order.

Calculation of Y:-
Simply add 15 pips to today’s highest, then place the stop-buy entry order. So if today’s highest is 91.00, place the order at 91.15.

Time is about to turn and market turning bullish, sometimes it will be a day earlier or later, so get prepared to protect your profit and get ready to reverse your position and ride the new trend.

Prediction of end of the coming bullish trend and price target will be done once the trend has turned and turning time and price is known. However judging by the current market strength, end of the coming bullish trend will be from 30th Oct 2009 to 10th November 2009.

To FxOptimus

I have no political preference, currently the communist party is ruling China, and they are making China a strong country, sure there are various problems, but I rather live with those than turning China into a huge democratic country like India and living in slums.

Also political system has nothing to do with whether a country is strong or weak. I believe the only thing that matters is technology. The western world in general is better off today because it was more advanced than India, China, South America etc and hence conquered the less civilised. And if I remembered correctly the European countries still used a queen or king back then. So this is simply the survival of the fittest, simple.

Now when you are in power, you certainly do not want the civilisations which are less advanced than you to overthrow your power, so you made rules, regulations and make the whole world play by your rules. And it is convenient to bend the rules to your advantage when say you want oil from the Middle East? Just bomb them and take their stuff, like in the old days. Again, this is only human nature, no objection.

I think I have made my point, I have no sorrow feelings towards the once colonised civilisations because that was what they deserve for being ignorant and less developed. Likewise, when the rising powers such as China started the process again by invading other countries for its own interests, it is only Darwin’s theory of evolution all over again.

To Petero

You will see a more specific prediction in 2-3 days when time and price are certain. I hate to discuss what-if s, too much what-if s only show that you have no idea what is happening. Certainty will kick in soon.

I do not think you understand my methods and it is not my aim to explain them here. You are right in saying one could just pick any top or bottom, this is just completely subjective and arbitrary. You need to pick the ones at the right TIME, like Gann said, it is very important to find the correct starting point. Also highs or lows do not mean you should pick them, for example for USDJPY, you should not pick 6th April 2009, the starting point is at 13th April 2009, it is all about TIMING.

To Lycurgan

Why do you think it is high? How do you define high? Everything in this world is relative so it has too be higher than what? Or is this just your feelings? You see you cannot trade based on your feelings, because the market do not care how you feel.

My 105.00 target is based on calculations. As I have predicted the bullish movement will start from 15th September 2009 to 10th November 2009, for about 56 calendar days, with a 25 pip per day vibration frequency of USDJPY market, and a 91.00 starting point, it will go to 91.00 + 0.25 * 56 = 91.00 + 14.00 = 105.00.

Additionally, I do not care about price that much, I care about TIME, like Gann said, time is the most important factor and when time is up, price will reverse. So as long as I get in and out at the right TIME, I make money, the only problem is how much, I can control that with my leverage.

It is funny that people always talk about price, too high, too low, I rarely hear people talk about time, is your target too early or too late?

And I perfectly understand why, because most of us view time as a straightline, you only see time going in one direction on your chart, this is the key problem. Time is not linear, it is circular, I will explain this in more details when TIME is right.