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Strat's Long Term Stress Free Trading

  • #9,301
  • Jan 18, 2010 3:59pm Jan 18, 2010 3:59pm
Quoting patrick25
Hi Jideck,

Strat already pointed us out on "change of the existing trend" on the post after my post. I will trade on PASR in direction of the Boss. If the pair has PASR but not in direction of the Boss, I will pass and look of the one that does. I think trading with this objective in mind at this stage, I am trainning myself the discipline and have time to learn the market because I don't look for trades all the time or the feeling of missing one.
Thanks Patrick.http://cdn.forexfactory.com/images/icons/icon14.gif
  • #9,302
  • Jan 18, 2010 4:31pm Jan 18, 2010 4:31pm
At this point in the thread, I am going to make a slight change.

Instead of rejecting fundamentals and focusing on technical analysis alone, let's see if we can benefit and make our lives easier and more profitable by combining the two.

To benefit from this, we need to trade in the direction of the fundamentals PROVIDING this is confirmed by technical analysis.

Therefore, if we know, fundamentally, that a pair should be trading long, we will WAIT until the BIG BOSS and BOSS confirm this so that, as before, we can trade the worker in the direction of the BOSSES. This gives us our lowest risk, safest stress free trades.

Once the BIG BOSS and BOSS have turned in the direction of the fundamentals, we should have greater confidence to stay in the trend and add positions on dips. However, this does not mean that we ignore RISK.

Having discussed this with Alexandra and now having Razorjack join us in addition to Nicola (elitejets), I am encouraging them to share their fundamental views as long as they respect this is a technical analysis teaching thread.
15 YEARS OF PASR ON FOREX FACTORY!
  • #9,303
  • Jan 18, 2010 4:35pm Jan 18, 2010 4:35pm
Let's follow USDJPY in line with the fundamentals as told to us.

The thick line on the BIG BOSS and BOSS are for those who can't see trends.
Attached Image(s) (click to enlarge)
Click to Enlarge Name: usdjpy big boss.gif Size: 35 KB
Click to Enlarge Name: usdjpy boss.gif Size: 31 KB
Click to Enlarge Name: usdjpy worker.gif Size: 33 KB
15 YEARS OF PASR ON FOREX FACTORY!
  • #9,304
  • Jan 18, 2010 9:39pm Jan 18, 2010 9:39pm
Quoting mstandifer
USDJPY Daily as seen from a distance.
This is my interpretation on daily. After breaking Dec 4th high, we can say that the trend has reversed based on a full cycle (HL-HH), but breaking of Jan 4th low indicated a half cycle (LL only) which can be a signal to return to downtrend. To confirm downtrend we need a full cycle (an LH and then break of recent LL not in sight atm). Of course, this interpretation is correct if you look at daily tf only.

When you switch to weekly tf, although we see HH, we need HL and break of that HH to confirm trend reversal. Because we need this full cycle to confirm more reliable trend reversal, that is the main reason the uptrend on daily was a short lived one since Boss controls Worker.

Big Boss shows no sign of trend reversal based on peak-trough analysis.

Even if the down TLs on Worker and Boss charts are broken upside, I find peak and trough analysis for determining the trend more reliable.
Attached Image(s) (click to enlarge)
Click to Enlarge Name: usdjpy-daily.jpg Size: 81 KB
Click to Enlarge Name: usdjpy-weekly.jpg Size: 78 KB
  • #9,305
  • Jan 18, 2010 9:50pm Jan 18, 2010 9:50pm
Quoting Alexandra
I'd throw GBPJPY in the watch list again as well.
I already am. We are nearing to a crossroad.
Attached Image (click to enlarge)
Click to Enlarge Name: gbpjpy-daily.jpg Size: 95 KB
  • #9,306
  • Jan 18, 2010 11:28pm Jan 18, 2010 11:28pm
Quoting Blackeagle
I already am. We are nearing to a crossroad.

Ref Strats post re funnymentals - CPI in the UK is expected to rise to 2.5 today.

Increasing possibility BOE may increase rates = GBP positive.
  • #9,307
  • Jan 19, 2010 1:14am Jan 19, 2010 1:14am
I have been staying away from this pair because although there has been a lot of discussion by people who are already long, Strat has not as far as I know agreed that this can be traded long yet.

I was just thinking then that if in fact it has changed, then there will be corrections and pullbacks in the direction of the 'old' trend which with suitable PASR should be tradeable. Assuming that the trend may have changed then trading these corrctions will just need to be done with that in mind.

And when the point is finally reached when the trend has obviously changed then it can be traded in that direction with confidence.

I suppose Strat will say why bother with this pair until the trend has changed, and that is also true.

I like the inclusion of fundamentals to back up our trading based on PASR

Larry
  • #9,308
  • Jan 19, 2010 5:29am Jan 19, 2010 5:29am
Quoting strat
At this point in the thread, I am going to make a slight change.

Instead of rejecting fundamentals and focusing on technical analysis alone, let's see if we can benefit and make our lives easier and more profitable by combining the two.

To benefit from this, we need to trade in the direction of the fundamentals PROVIDING this is confirmed by technical analysis.

Therefore, if we know, fundamentally, that a pair should be trading long, we will WAIT until the BIG BOSS and BOSS confirm this so that, as before, we can trade the worker in the...
There's just a couple of things I would like to clarify. This will be simple repetition for those of you understand fundamentals.

The first is that we all know that we have short term, medium term and long term technical analysis, but what you may not know is that the same applies to fundamental analysis.

Please also be aware of how I'm classifying time:

Short term: Fundamentals impacting a time period of several days to weeks, in other words the swings you see on the Worker

Medium Term: Fundamentals impacting a time period of several weeks to months, in other words the swings you see on the Boss

Long Term: Fundamentals impacting a time period of several months to years, in other words the swings you see on the Big Boss

Strat, I'm not sure how these should be labeled, maybe someone can come up with a suggestion.

This means that whenever you get someone's fundamental view, VERIFY whether the view is short term, medium term or long term.

I am a position trader that specializes in building positions at trend changes over the medium term as described above. I'll usually hold positions from a few days to several months. I have my own system of trading which I will not discuss here on Strat's thread. So if I happen to mention that I'm long or short a certain pair, it's not a recommendation for anyone to trade the way I do.

So when I write about my views, please keep in mind that my views cover the Medium Term (several weeks to months) and the Long Term (several months to years).

-Razorjack
-Razorjack
  • #9,309
  • Jan 19, 2010 5:42am Jan 19, 2010 5:42am
Quoting stewrigh
Ref Strats post re funnymentals - CPI in the UK is expected to rise to 2.5 today.

Increasing possibility BOE may increase rates = GBP positive.
Yes, this is correct but not complete. You have to keep the big picture in mind here in regards to the UK economy.

Looking at economic data releases without understanding the big picture can be compared to doing technical analysis without knowing what the Boss and the Big Boss are doing, it's incomplete.

Positive numbers in inflation is positive for GBP, however you have keep in mind that the UK is just now starting to unwind QE (quantitative easing) and the CPI numbers could have been boosted by the QE measures in place at the end of last year. And I don't expect the BoE to raise rates until we see good inflation and employment numbers over a period of several months.

Having said this, I believe the UK economy has turned the corner and I am long on the GBP, but with smaller positions than normal. It all depends on how the economy copes once QE has ceased completely.

-Razorjack
-Razorjack
  • #9,310
  • Edited 9:51am Jan 19, 2010 6:25am | Edited 9:51am
Quoting LarryK
I have been staying away from this pair because although there has been a lot of discussion by people who are already long, Strat has not as far as I know agreed that this can be traded long yet.

I was just thinking then that if in fact it has changed, then there will be corrections and pullbacks in the direction of the 'old' trend which with suitable PASR should be tradeable. Assuming that the trend may have changed then trading these corrctions will just need to be done with that in mind.

And when the point is finally reached when the...
Hi LarryK,

Yes, you are absolutely right.

Keep in mind that you will see times where the market moves in the opposite direction to what the fundamentals are indicating. In fact, just as you see short term trends move opposite to long term trends, you will see short term fundamentals in contradiction to long term fundamentals.

The USDJPY is a very good example of this.

If you look at the intermediate fundamentals (covering about 6 months), the USDJPY has been in a down trend due to lower interest rates in the USD than in Japan spawning the USD funded carry trade.

However the long term fundamentals have been pointing in the opposite direction. The JP national deficit is close to 200% GDP, imagine having a personal debt that is twice the size of your annual income, then think about how long it will take for you to become debt free. In addition to this, the US (as well as most of the world) is unwinding QE while JP is looking to increase QE.

So long term fundamentals are all pointing to the US recovering faster than JP and thus the Fed hiking rates before BoJ, this view hasn't changed much over several months. This is a good example of situations where it takes time for the long term fundamental economic forces to impact the markets.

I'm not recommending anyone go long on USDJPY, everyone should wait for a signal from Strat's system. But at the same time it's good to understand that while this possible change in trend can seem a bit premature for most of you, I've been waiting for this opportunity to mature for months and that's why I'm already in.

Note, that I did say POSSIBLE trend change
No one can say what will happen tomorrow, not even us funny-mentalists another 9/11 or sovereign debt crisis can cause the USDJPY to tank.

And as LarryK mentioned, you can still trade the corrections and pull-backs in the "old" trend, however with the funny-mentals in mind you might want to consider reducing your position size and thus reduce risk. But this is up to you as an individual trader.

Also me personally I would be very careful with shorting USDJPY around the 90 psych level, I believe that will be a very likely area to see a bounce upwards.

Good luck and happy pip hunting to all!

-Razorjack
-Razorjack
  • #9,311
  • Jan 19, 2010 6:35am Jan 19, 2010 6:35am
Quoting Razorjack
[ ] It all depends on how the economy copes once QE has ceased completely.

-Razorjack

Do you mean, when there is no further change of any more QE or do you mean when the current QE has been gathered back in?

If the latter, then surely that will take many years. A very rapid cutting of the deficit will lead to further recession, IMO.
  • #9,312
  • Jan 19, 2010 6:54am Jan 19, 2010 6:54am
Quoting Lotuselanman
Do you mean, when there is no further change of any more QE or do you mean when the current QE has been gathered back in?

If the latter, then surely that will take many years. A very rapid cutting of the deficit will lead to further recession, IMO.
Hi Lotuselanman,

Sorry for not being clear, what I meant was how the UK economy will cope when there is no ADDITIONAL QE over the planned 200 Billion GBP, being injected into the economy.

So it's the former not the latter.

-Razorjack
-Razorjack
  • #9,313
  • Jan 19, 2010 9:10am Jan 19, 2010 9:10am
What is QE?
  • #9,314
  • Jan 19, 2010 9:11am Jan 19, 2010 9:11am
Quoting mstandifer
What is QE?
Quantitative Easing.
  • #9,315
  • Jan 19, 2010 9:14am Jan 19, 2010 9:14am
Quoting mstandifer
What is QE?
In post #9309:

QE = quantitative easing, basically the central bank or gov't injecting money into the economy via asset purchases in bonds, mortgage backed securities, etc
-Razorjack
  • #9,316
  • Jan 19, 2010 9:16am Jan 19, 2010 9:16am
I overlooked that, thanks for point it out. Just out of curiosity, which books did you read that finally cleared up fundamentals for you?

-m
  • #9,317
  • Jan 19, 2010 9:36am Jan 19, 2010 9:36am
Quoting mstandifer
I overlooked that, thanks for point it out. Just out of curiosity, which books did you read that finally cleared up fundamentals for you?

-m
I'm assuming that this question is aimed towards me.

A better question would be, what books haven't I read.

I've read pretty much every economic book that I could get a hold of. I'm not sure if there are any in particular that "finally cleared it up".

I'd suggest reading up on everything you can find written by Kathy Lien, as well as reading about how the Fed works to control inflation and steer the economy, Macro economics to understand the big picture, Intermarket Analysis to see how developments in oil and gold can impact global economies, etc.

Just a warning though, this stuff can be extremely boring but is great if you're having trouble sleeping!

But if you're willing to persevere then it can be well worth it in my opinion.

-Razorjack
-Razorjack
  • #9,318
  • Jan 19, 2010 10:05am Jan 19, 2010 10:05am
Hi,

I am not even close to an expert on the subject, BUT isn't there always different views on the fundamentals.

The good thing about PASR is that we can all read the same story, if we know the language.

I have READ a lot of books on the economy and most recently I have been reading books by Ron Paul and Peter Schiff. These economist are Austrian economists and believe that government intervention is only creating a bigger bubble and ultimately will lead to a currency crisis where the US will no longer be the reserve currency.

Having said that, there is another huge camp that believes that Keynesian economics (government spending, national bank) is absolutely necessary to avoid huge periods of deflation.

Maybe if the Fed ever gets audited we can see for ourselves if a central bank is good or bad.

I do not discredit fundamentals in anyway, I just think there is so much room for interpretation and discussion that it could take our attention away from the main purpose of this thread, which is PASR.
  • #9,319
  • Jan 19, 2010 10:18am Jan 19, 2010 10:18am
Please confirm that IF this daily candle remains more or less as it is then this is a BUOB which would be off SR and in the direction of the MAYBE new trend.

Would Alexandra add to her position here?

If my chart attaches please ignore the highlights, those are homework on history.

Larry
Attached Image (click to enlarge)
Click to Enlarge Name: usdjpy daily.gif Size: 17 KB
  • #9,320
  • Jan 19, 2010 10:40am Jan 19, 2010 10:40am
Quoting pipfx
Hi,

I am not even close to an expert on the subject, BUT isn't there always different views on the fundamentals.

The good thing about PASR is that we can all read the same story, if we know the language.

I have READ a lot of books on the economy and most recently I have been reading books by Ron Paul and Peter Schiff. These economist are Austrian economists and believe that government intervention is only creating a bigger bubble and ultimately will lead to a currency crisis where the US will no longer be the reserve currency.

Having said...
I do not discredit fundamentals in anyway, I just think there is so much room for interpretation and discussion that it could take our attention away from the main purpose of this thread, which is PASR.

That is exactly the remit our resident funny mentalists have.

While everyone has their views and is entitled to sharing their views, it would be preferable to just leave the funny mentals to Alexandra, Nicola and Rajorjack without challenge – there is enough internal challenge between these three anyway!

Sure, if something is not clear, ask for further explanation but as for challenging their opinions, this thread is not the place.

Just to be clear, this thread is for teaching PASR and basic PASR first and then trading, using PASR technical analysis, in the direction of the fundamentals.

As has been said many times, just as PRICE will go AGAINST the technicals, it will also go AGAINST the fundamentals.

Finally, if the fundamental analysis does shift our attention away from PASR, the prime purpose of the thread, then it will be stopped and we will back to status quo.
15 YEARS OF PASR ON FOREX FACTORY!
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