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  • #21
  • Sep 19, 2009 8:34am Sep 19, 2009 8:34am
Quoting Leonlorenzo
Time is of the essence, its a given that these guys will only release their views once they have opened their positions. Dopey opened a thread that described this kind of thing, by the time an analyst has released his outlook then the majority of players have already made their move.

If you can come come up with the same trade idea before the analyst opens his mouth, then he's to thank for your profits, sinse the ones who paid attention to his analysis are pushing price's in your favour.

Leon and Dopey, you guys are so far off the mark with this, sorry.

Let's take someone like Hans Guenter Redeker (BNP Paribas) as an example....


In August 2008 when Cable was at 1.97 he was saying 1.65, which it fell to by October 2008.
In October 2008 when Cable was at 1.59 he was saying 1.40's handle which it fell to in January 2009 (and lower).
In October 2008 when Eur/usd was at 1.35 he was saying he expected a fall. 10 days later Eur/Usd was at 1.23
In October 2008 when Usd/Jpy was at 98.00 he was saying he expected Yen to appreciate, it was at 87.00 by December 2008.
In June 2009 when Eur/Usd was at 1.40 he was saying he expected it to top out around the end of the quarter around 1.45/1.48 followed by a significant move lower by year end. The first part was correct, the second part has yet to play out.
In June 2009 when Cable was at 1.66 he was saying 1.70/1.72 but that it wouldn't be sustainable. Cable went to 1.70 by August then fell to 1.61.
In August 2009 he was bearish on Cable when it was at 1.70, a month later it was at 1.61.



......I could go on and on citing some excellent fundamental analysis from his team, all broadcast in advance, with perfect opportunities to take advantage of the levels he predicted, it was never too late or after the event.

No-one is suggesting anyone follows this analysis blindly but you have to take into account it's source, these are the people who move the markets.
  • #22
  • Sep 19, 2009 9:04am Sep 19, 2009 9:04am
Quoting solarray
If fundamentals were the only thing that mattered... there would be no market. Numbers would be released...

As an example. Let's say a market is at 1.40 and our fundamental view is rock solid. We KNOW the market is going to 1.60 within 6 months based on our fundamental analysis. We absolutely KNOW this will happen.

No-one 'knows', it's just a probability based on available information, no different than any other kind of analysis apart from it being based on something more relevant like various country's economic outlook, believe it or not they don't make plans around technical analysis of a forex chart!

By the way fundamentals aren't just about some knee-jerk reaction to numbers being released, this isn't about 'news traders' trying to make a fast buck as NFP data is released
  • #23
  • Sep 19, 2009 10:56am Sep 19, 2009 10:56am
Quoting pipmutt
Leon and Dopey, you guys are so far off the mark with this, sorry.

Let's take someone like Hans Guenter Redeker (BNP Paribas) as an example....

No-one is suggesting anyone follows this analysis blindly but you have to take into account it's source, these are the people who move the markets.

It doesn't prove anything. No one said that all analysts are wrong all the time. Hans may be a great analyst. But until one has in front of them all the calls he's ever made, citing a handful of them proves nothing. He could be on a roll.

When you consider the hundreds of active analysts, and then the thousands before them and their performance which as an INDUSTRY AVERAGE is no better than random, pointing out one guy, again, means nothing to what the central point of this thread is.

Also, try trading those calls Hans made. It takes someone with very deep pockets, a lot of patience and the conviction that Hans is right. I personally don't know anyone who would put on a long-term trade because Hans or others like him made a call. I'm sure there are people who do, but I wouldn't call them traders.

There's nothing wrong with using fundamentals to gauge market direction. The point is that analysts are basically useless to those who are able to think for themselves. Tetlock has proven that with his research.

Also, you stated "these are the people who move the markets". Are you implying that the traders for Paribas trade according to what Hans predicts? That would be naive to even think so, simply because unless you are a trader for Paribas, no one knows what they are doing. Analysts don't trade. Perhaps you're suggesting that the trading floor is giving Hans their trading methods and he's publishing those. That would be pretty stupid though, wouldn't it.

Analysts for banks and large houses that publish their info publicly are doing it to meet the agenda their house has vis-a-vis the public. Do you really believe that when a bank spends all that money on their in-house analysis that they are going to release it to the public?

Sure Paribas is large, but they don't move the market anymore than any other bank does. Maybe Deutsche bank can move the market more than anyone, but not for long. So adding that sentence to your argument was really a very feeble attempt to add weight to your argument. I sure don't buy it.

Putting faith in fundamentals is no different than putting faith into technicals. The problem is the same, trying to predict the future movement of markets. It's simply a choice, one is no better than the other at predicting the future. If someone could prove to me that there really is a fundamental difference between someone calling a level based on fundamental or technical methods, I'd sure like to see it.


In the end, all successful traders make their own decisions regardless of how they trade. I think most of us who are familiar with Tdion are a bit surprised at his post. He could be busting our balls for all we know.
  • #24
  • Sep 19, 2009 1:07pm Sep 19, 2009 1:07pm
Quoting Dopey
When you consider the hundreds of active analysts, and then the thousands before them and their performance which as an INDUSTRY AVERAGE is no better than random, pointing out one guy, again, means nothing to what the central point of this thread is.
Which is? I thought the thread was about trading fundamentals, so I gave an example of a fundamental analyst who happens to be very good at what he does, consistently. Leon mentioned paying for Reuters, all I was saying was that if people like Redeker, who obviously has a wealth of experience and knowledge behind him, publishes his analysis for free then why not use it instead of getting involved in complex economics which may take years to master and more importantly (and more difficult to gauge) how the market is viewing things, sentiment can change on a dime.

Quoting Dopey
Also, try trading those calls Hans made. It takes someone with very deep pockets, a lot of patience and the conviction that Hans is right. I personally don't know anyone who would put on a long-term trade because Hans or others like him made a call. I'm sure there are people who do, but I wouldn't call them traders.
Why deep pockets and patience, that analysis was right on the button, every bit as good as any technical analysis I've ever seen, in fact better. You don't have to trade his analysis though, you could just use it as a guideline and then look for opportunities to trade in that direction, that's what I do and I'd call myself a trader!

Quoting Dopey
Also, you stated "these are the people who move the markets". Are you implying that the traders for Paribas trade according to what Hans predicts? That would be naive to even think so, simply because unless you are a trader for Paribas, no one knows what they are doing. Analysts don't trade. Perhaps you're suggesting that the trading floor is giving Hans their trading methods and he's publishing those. That would be pretty stupid though, wouldn't it.
lol hardly naive, I wouldn't think BNP Paribas pay him and others like him to be Chief Currency Strategist for nothing, plus if he's that accurate why wouldn't Paribas traders use his analysis, maybe he's even a self-fulfilling prophecy!

Quoting Dopey
Analysts for banks and large houses that publish their info publicly are doing it to meet the agenda their house has vis-a-vis the public. Do you really believe that when a bank spends all that money on their in-house analysis that they are going to release it to the public?
It's a credibility game, informative and accurate research notes to clients are an important part of drumming up business, a useless and consistently inaccurate analyst isn't going to get invited back too often, I think Jim Rogers made that point on CNBC one day when he was talking about the decisions the Fed were making

Quoting Dopey
Sure Paribas is large, but they don't move the market anymore than any other bank does. Maybe Deutsche bank can move the market more than anyone, but not for long. So adding that sentence to your argument was really a very feeble attempt to add weight to your argument. I sure don't buy it.
Haha, you don't have to 'buy it', I'm not trying to sell it. Fundamental analysis is what it is, obviously people have different views, but you'll often find that opinions on important economic outlook is often shared by these major players and their analysts. And as for institutionals not moving the market for long, well who exactly do you think moves the market into longer term trends, us pissant retail traders with our few thousand bucks accounts? Come on, it can take those guys weeks or even months to build and exit positions!

Quoting Dopey
Putting faith in fundamentals is no different than putting faith into technicals. The problem is the same, trying to predict the future movement of markets. It's simply a choice, one is no better than the other at predicting the future. If someone could prove to me that there really is a fundamental difference between someone calling a level based on fundamental or technical methods, I'd sure like to see it.
Well at least there's a sensible and logical reason behind fundamentals more than there is for most technical analysis. But I use both, fundamentals for overall outlook and then technicals to find opportunities to trade in that direction, ie as Tom said in his opening post, looking to short Eur/Usd (although not until 1.48/50 area for me), my longer term trading decisions are based on fundamentals and technicals which is sensible in my opinion.

Quoting Dopey
In the end, all successful traders make their own decisions regardless of how they trade. I think most of us who are familiar with Tdion are a bit surprised at his post. He could be busting our balls for all we know.
He could be but it's an interesting topic anyway!
  • #25
  • Sep 19, 2009 1:34pm Sep 19, 2009 1:34pm
One can go back and forth on this subject to no avail, for every successful technical trader there is supposedly a successful fundamentals trader, all that matters is that a re-creatable approach works, be this technical analyses or tea leaves is missing the point IMO. The thing that strikes me about this and other similar threads is that people seem to feel the need to divine some type of hidden truth about the way the market works, to understand why A follows B or why the market moves in a particular way, I can't help but think of Seykota again 'some people would rather understand the markets than make money'. In the end the market is there, the question is not why is it like it is but how are you going to make money with it?
The breaking of a wave cannot explain the whole sea.
  • #26
  • Sep 19, 2009 1:45pm Sep 19, 2009 1:45pm
Quoting Craig
I can't help but think of Seykota again 'some people would rather understand the markets than make money'. In the end the market is there, the question is not why is it like it is but how are you going to make money with it?

I just find the markets interesting....sad huh! I forget sometimes that others don't share my enthusiasm

Like any other job I think to stay in this game for the long term you have to be interested in more than just the money, otherwise we would become as terminally bored as a factory production-line worker just waiting for retirement, let's face it actual trading itself is about as boring as it gets!
  • #27
  • Sep 19, 2009 2:08pm Sep 19, 2009 2:08pm
Quoting pipmutt
I just find the markets interesting....sad huh! I forget sometimes that others don't share my enthusiasm
I wasn't having a go at you in particular, sorry if it came across that way.
It was meant as a generalized 'opinion'
The breaking of a wave cannot explain the whole sea.
  • #28
  • Sep 19, 2009 2:09pm Sep 19, 2009 2:09pm
Quoting tdion
i can hear the groans ("Tdion is back again.... great, more bashing)

i was watching CNN the other day, and they had an FX analyst on their that spoke about the fundamentals that should have moved the price one way or the other. FUNDAMENTALS. the books.

and the price moved, just like they said.

this is so much better than a crap shoot on a chart pattern. i can hear all the jacko and jame16 people coming to the thread. "tdion, you are jealous. you've been here for 4 years and just don't have what it takes"

my response: trading patterns...
Fundamentals are what moves the market- not chart patterns.
However, even if you trade on fundamentals there is a lot of noise in the markets, which means your position can go very much against you.
So, you have to be right and you have to stick to your guns.

It's not that easy, even if you are right you can still get wiped out.
Jesse Livermore, perhaps one of the best traders ever, went broke in the end trading fundamentals.

As far as averaging a position, remember the old adage:

"Those who average down ain't around"

and

"Never catch falling daggers"

Hope it helps.
  • #29
  • Sep 19, 2009 2:56pm Sep 19, 2009 2:56pm
Quoting Craig
I wasn't having a go at you in particular, sorry if it came across that way.
It was meant as a generalized 'opinion'

No apology necessary but thanks anyway, I get too passionate about this stuff sometimes, lol!
  • #30
  • Sep 19, 2009 3:11pm Sep 19, 2009 3:11pm
Quoting finally
It's not that easy, even if you are right you can still get wiped out

Nope, not even if you are wrong, there's absolutely no reason to get wiped out.

If you plan the trade with sensible money management and have the discipline to trade the plan then you can do pretty much anything you want, average down, catch falling knives, whatever you like, it's when you stray from the plan and turn an intraday trade into a longer-term mess that you can run into trouble.

For example I'm going to start building a short from around 1.4825, hopefully it goes up to 1.50 so I can build a decent position. I'll plan on a stop above 1.60 and have a target around 1.35 and scale out, maybe close some trades along the way and re-open them on retracements, but it's all good because the worst can happen is it breaks above 1.60 and I get stopped out but it's no biggie, I planned for that before I opened the first trade, the chance of getting wiped out is zero.
  • #31
  • Sep 19, 2009 3:30pm Sep 19, 2009 3:30pm
Quoting pipmutt
Nope, not even if you are wrong, there's absolutely no reason to get wiped out.

If you plan the trade with sensible money management and have the discipline to trade the plan then you can do pretty much anything you want, average down, catch falling knives, whatever you like, it's when you stray from the plan and turn an intraday trade into a longer-term mess that you can run into trouble.

For example I'm going to start building a short from around 1.4825, hopefully it goes up to 1.50 so I can build a decent position. I'll plan...
Good Luck.
  • #32
  • Sep 19, 2009 3:42pm Sep 19, 2009 3:42pm
Quoting finally
Good Luck.
Thanks but you know what I'm going to say, it's not luck which makes money.

Just enjoy your trading, it's supposed to be enjoyable, play the market, be flexible and adaptable, up-down-sideways it doesn't make any difference for trades like that, it's just relaxed and less intense, and more's the point it's fun!

I'll still be trading other pairs intraday, Eur/Usd will probably run until the new year I imagine, who knows!
  • #33
  • Sep 19, 2009 5:48pm Sep 19, 2009 5:48pm
Quoting pipmutt
No-one 'knows', it's just a probability based on available information, no different than any other kind of analysis apart from it being based on something more relevant like various country's economic outlook, believe it or not they don't make plans around technical analysis of a forex chart!

By the way fundamentals aren't just about some knee-jerk reaction to numbers being released, this isn't about 'news traders' trying to make a fast buck as NFP data is released
Certainly... the point of using technicals, fundamentals or any other type of analysis is to find an exploitable edge which gives you a positive expectation of making a profit over time.

The glaring "weakness" of FA (and the point I was trying to make) is essentially that even when a trader's FA is spot on... they are still subject to the same chaotic gyrations in price in the marketplace that all technical traders, gamblers, hedgers and every other type of trader are subjected to.

If you believe in FA... and you are great at FA... you still by default need to look at the price action on the charts and trade "technically" to avoid exposing yourself to severe risks which may obliterate your trading accounts even though you may be absolutely right on the eventual direction of the market based on FA.

If a market is at 1.40 and your FA says the market will head to 1.60... and instead... influences cause that market to head to 1.20... you had better either have very deep pockets to withstand those inevitable temporary losses before your forecast becomes reality... or you had better trade "technically" with stops and money managment rules with a realization that your correct FA forecast isn't the only variable that causes market prices to do what they do.

FA traders make and lose money in the markets... the same as technical traders and gamblers lose money in the markets. To say fundamentals give us the ONLY exploitable edge that makes it the ONLY way to go is saying that it's all that matters and all that influences the market which is obviously incorrect as the market will be chaotic and cause losses and drawdowns in your equity no matter what type of analysis you use to trade with.
  • #34
  • Sep 19, 2009 6:36pm Sep 19, 2009 6:36pm
Hi,
all Analysis for an a entery at best got a 50/50 chance of winning.. technical and definantly fundemental.. yes indeed..
its your expectancy that would make the difference for you..
if your gonna depend on some bozo on TV to guide you to take a postion.. then you got to be a fool to think that his anaylisis is anything more than a speculation..

Thats my humble opinion..
  • #35
  • Edited 2:52am Sep 20, 2009 1:06am | Edited 2:52am
Tom,

Why are you concentrating on the obvious aspects of currency trading fundamental/technical analysis? Why aren't' you using your scientific/mathematical brain for finding inefficiencies in the markets :nerd:

P.S. Its bout dam time you posted again
It's me...
  • #36
  • Sep 20, 2009 2:42am Sep 20, 2009 2:42am
Quoting solarray
If you believe in FA... and you are great at FA... you still by default need to look at the price action on the charts and trade "technically" to avoid exposing yourself to severe risks which may obliterate your trading accounts
Quoting solarray
If a market is at 1.40 and your FA says the market will head to 1.60... and instead... influences cause that market to head to 1.20... you had better either have very deep pockets to withstand those inevitable temporary losses before your forecast becomes reality... or you had better trade "technically" with stops and money managment rules


Money management and the use of stops to control risk aren't exclusive to technical analysis you know, you don't have to use TA when you trade FA (although like I said before I use both, FA for direction and TA for entry).

Did you know that some people don't actually look at charts at all, or use stops or even leverage their capital?

As mentioned in this post, no matter what anyone uses there should never be a time when their account is at risk of obliteration, that's what trading is primarily all about.
  • #37
  • Sep 20, 2009 3:42am Sep 20, 2009 3:42am
Quoting pip mutt
Money management and the use of stops to control risk aren't exclusive to technical analysis you know, you don't have to use TA when you trade FA (although like I said before I use both, FA for direction and TA for entry).

Did you know that some people don't actually look at charts at all, or use stops or even leverage their capital?

As mentioned in this post, no matter what anyone uses there should never be a time when their account is at risk of...
Look at it this way... if FA is the only way to go... extend that out to it's logical conclusion and you shouldn't even look at charts. The price gyrations between today and the day when your target price is hit (if you have one based on your FA) is irrelevant because your FA tells you Market X will be at Price Y at some point in the future. Everything else is irrelevant.

That type of trading scenario requires either very deep pockets, an enormous amount of ego, insanity or 100% knowledge of the markets.

There are traders that fit into the first 3 of those categories and none that exist in the 4th. We would have multi-trillionaires if there were some in the 4th category. Everyone makes trades and judgments that turn out to be incorrect no matter what analysis they use. FA isn't a magic bullet.

We are always at risk of account obliteration whenever we trade any security with theoretical unlimited risk. That includes leveraged forex, selling naked options, futures etc. We can try to control our risks and take steps with MM rules and stop placements to limit our risk but there will always be the potential for an outlier catastrophic trade or series of catastrophic trades that wipes us out no matter what risk prevention measures we take. Any trader should first and foremost realize that the #1 goal is preservation of capital and work at limiting that risk... but there will always be the possibility of total obliteration when you are placing your capital in asset classes with potentially unlimited losses. Broker fraud, unforeseen cataclysmic financial market altering events, natural and man-made disasters etc all can cause our risk controls to be ineffective.
  • #38
  • Sep 20, 2009 5:37am Sep 20, 2009 5:37am
Quoting solarray
Look at it this way... if FA is the only way to go...
I'm not saying it's the only way to go but it's a good a way as any, and it's based on something more relevant than squiggly lines on a chart. Like I keep saying, personally I use both types of analysis, fundamental for overall direction and technicals for entry and exit.

Did you know that not so long ago there weren't any ready-made charts available, if a trader wanted to use technical analysis (considered voodoo-like!) he had to draw his own charts! Some people, myself included, would take a view on different economies strengths and weaknesses, sometimes based on nothing more than the pages of the FT or the business news reports on TV, and trade accordingly. In comparison to what's available nowadays it was primitive for sure but it was effective all the same. Imagine having to phone an order through and being quoted maybe 2 or 300 pips spread plus a service charge, but still making money! Today's instant execution online platforms, tight interbank spreads, and the availability of and access to top quality fundamental and technical analysis make trading the easiest it's ever been, it's sliced bread!


Quoting solarray
That type of trading scenario requires either very deep pockets, an enormous amount of ego, insanity or 100% knowledge of the markets.
Nope, it doesn't require any of those things, it's simply an educated guess on where price is likely to go. Will it go there? Who knows, there are a lot of things which can happen in the world, who thought Lehman would be allowed to fail, and all the things which followed it's collapse? But that's all trading is, a bet, if we're wrong then we lose and because we've limited our risk (or had very little, if any, risk) we live to trade another day.

Quoting solarray
We are always at risk of account obliteration whenever we trade any security with theoretical unlimited risk.
Well with the exception of "...Broker fraud, unforeseen cataclysmic financial market altering events, natural and man-made disasters etc...." which we obviously have absolutely no control over and by definition can't really plan for in advance, in the normal course of business there should never be a time when you're exposed to such excessive risk that it may obliterate your account, it's why powers around the world are trying to prevent a repetition of recent events by limiting or eliminating oveleverage and excessive risk. Even as small private speculators haven't we learned anything from what's just happened?
  • #39
  • Sep 20, 2009 5:56am Sep 20, 2009 5:56am
Quoting pipmutt
Well with the exception of "...Broker fraud, unforeseen cataclysmic financial market altering events, natural and man-made disasters etc...." which we obviously have absolutely no control over and by definition can't really plan for in advance.....
Actually on second thoughts the risk of 'broker fraud' we can very easily take out of the equation, there are all sorts of ways available to us to counter that risk.....so that leaves us with 'cataclysms' and 'natural and man-made disasters', hmmm not so bad
  • #40
  • Sep 20, 2009 6:06am Sep 20, 2009 6:06am
Quoting tdion
i can hear the groans ("Tdion is back again.... great, more bashing)

i was watching CNN the other day, and they had an FX analyst on their that spoke about the fundamentals that should have moved the price one way or the other. FUNDAMENTALS. the books.

and the price moved, just like they said.

this is so much better than a crap shoot on a chart pattern. i can hear all the jacko and jame16 people coming to the thread. "tdion, you are jealous. you've been here for 4 years and just don't have what it takes"

my response: trading patterns...

The problem with FA is what do you do when you have a nice profit and the market comes back and takes your profit away before it hits your price target.

For instance, I was short the DJIA at 13,000 and I was looking for a total smash.
The market moved down, I had a nice profit and then it started coming back, so I closed out my position because I was scared that my profit would turn into a loss, only to see the market drop down to 7,000.

Here I was dead right on the market but I made no real money.

What would you have really done in this situation?

Would you have taken the risk that your profit could turn into a loss with the hope that you could eventually make a bigger profit?

In reality, trading on FA is just not that easy.
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