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Identifying Market Swings - Medium and Long Term Trading

  • #301
  • Edited 1:35pm Feb 22, 2010 1:07pm | Edited 1:35pm
Quoting rac
Thinkorswim has that information available in their software, for example right now AUDUSD is at .8998 and I see
Volume Price

1320000 .9000
740000 .8999
750000 .8995
1210000 .8990

Is volume related to pending orders?

Is volume related to pending orders?

No Volume is how many contracts were actually traded, I think what you are looking at are the pending orders on the order book.
-Razorjack
  • #302
  • Feb 22, 2010 1:23pm Feb 22, 2010 1:23pm
[quote=rac;3486770]



Another question is how do you get get reliable support and resistance levels?

I use fibo, in this case the 61.8 level is at .9042 so one option is putting a SL above this level, another option for me is use round numbers and put a SL above .9100.

quote]

You don't have to use fibs to determine S/R, but if you do use them, there is a way to add more weight to them.
Biggest joker
  • #303
  • Feb 22, 2010 2:21pm Feb 22, 2010 2:21pm
[quote=baron193;3487701]
Quoting rac



Another question is how do you get get reliable support and resistance levels?

I use fibo, in this case the 61.8 level is at .9042 so one option is putting a SL above this level, another option for me is use round numbers and put a SL above .9100.

quote]

You don't have to use fibs to determine S/R, but if you do use them, there is a way to add more weight to them.

Baron,
I know that there are several ways to get R ans S levels. (check FX360, calculate them, use indicators, etc) what method is more reliable for you?
Thank you
  • #304
  • Edited 6:33pm Feb 22, 2010 6:10pm | Edited 6:33pm
Quoting Razorjack
Yes, exactly. As a big player, you need to sell into rallies and buy into declines.

Ok, now the next step. Let's say you work with a syndicate that is large enough to move the market. And you start putting on your position.

1. How do you make sure the market doesn't take off until you have your full position on?

2. If you are buyer then when can you expect the market to move upwards?

Say a big boy wants to accumulate 1000 particular currency pair, it starts by buying a modest number about 500, and it pushes the price up as it clears immediate orderflows available. Then it withdraws, and the withdrawing act causes weak holders who have been watching the move up - to fear that they might miss the boat. These weak holders place sell orders which causes the share price to react downwards.

The tricky and manipulating part is this big boy applies some of their purchased say 50 (10% of the original 500 purchased) to force the price down further-possibly to lower level than where they purchased.

This causes more weak holders to panic out to sell while that big boy pickup the 550 contract needed. The bottom line is the currency remains about the same or even could be lower while he picked up 1000 contracts in accumulation in the end.


Razorjack,
Thank you for the great thread!

Best Pip Wishes!
  • #305
  • Feb 22, 2010 10:07pm Feb 22, 2010 10:07pm
A spike in forex graph can be caused by:

e.g.

an investment house has intention to long 500 million GBP/USD
but market price is not low enough.

this investment house shorts 500 million GBP/USD via bank-A .
this bank-A may shorts 700 million GBP/USD via interbank deals.
this will magnify the effect of decline in GBP/USD.

maybe minutes later,

this same investment house longs 1000 million GBP/USD via another bank-B at a lower rate. the bank-B may longs 1200 million GBP/USD via interbank deals. and bank-A buys back 200 million GBP/USD to cut loss.
this will also magnify the effect of ascent in GBP/USD
and this same investment house makes money.

thus, a spike in the graph appears.
bank-A loses money but bank-B gains money.

this emphaise the important of medium or long term trade, according to Razorjack because short-term trade has to tolerate many spike or noise or stop-loss.
  • #306
  • Feb 22, 2010 11:12pm Feb 22, 2010 11:12pm
[quote=rac;3487817]
Quoting baron193


Baron,
I know that there are several ways to get R ans S levels. (check FX360, calculate them, use indicators, etc) what method is more reliable for you?
Thank you
The way i do it is a bit too complicated, and probably more of an art than a method, but nothing beats eyeballing a chart for places where price has reacted to levels.....
Biggest joker
  • #307
  • Feb 23, 2010 3:42am Feb 23, 2010 3:42am
There were some really good replies, well done everyone. What you wrote is pretty accurate.

You are now getting an idea of how the big boys think.

We can see that with BIG MONEY the big boys can move the markets to their advantage in CERTAIN conditions. Please be aware that even the big institutions lose money, so they don't always get it right, but on the whole you get the general idea.

Now the next question, let's talk about time perspective:

So let's say that the big boys are accumulating or distributing their positions, I hope all of you know what accumulation and distribution is.

How long does it take for an accumulation or distribution phase?
-Razorjack
  • #308
  • Feb 23, 2010 3:52am Feb 23, 2010 3:52am
Quoting Stock_Rocket
I see the the pair turning down (from parabolic rise in last 14 days)..from top of channel more or less at 88/88.50.

Do we have this right razor?...you would be waiting til it comes down to 83.00 before looking to go short to 80...then 77?

wow....that is patience.

maybe I've mis understood.
To get the trendline, zoom out on the daily chart and connect the low of Jan 21, 2009 to the low on Nov 27, 2009. This is the long term trend.

My plan is to:

 

  1. My short got picked up yesterday
  2. I will first ride it down to the trend line,
  3. take off some of the position,
  4. then add to the position if it breaks the trend line,
  5. ride it down to 80,
  6. take off some of the position
  7. add to the position if it breaks 80,
  8. ride down to 77 and exit the entire position.

-Razorjack
  • #309
  • Feb 23, 2010 4:44am Feb 23, 2010 4:44am
Quoting peter lee
A spike in forex graph can be caused by:

e.g.

an investment house has intention to long 500 million GBP/USD
but market price is not low enough.

this investment house shorts 500 million GBP/USD via bank-A ....
this emphaise the important of medium or long term trade, according to Razorjack because short-term trade has to tolerate many spike or noise or stop-loss.

Well explained, this is definitely a possibility. Different institutions, banks, etc will have different ways of pushing the markets to their advantage. the goal is for us to start thinking like the big boys so that we can anticipate their moves and let them move the markets to make us money!

The idea isn't to take my word for it, but for you to think this out yourself and come to your own conclusions. This will also help you design YOUR OWN system that suits your personality.
-Razorjack
  • #310
  • Feb 23, 2010 6:10am Feb 23, 2010 6:10am
Razorjack, I was wondering if we cud have a trade taking scenario explained. Like say today we have "CB Consumer Confidence" for the USD, how do you look at USD pairs to trade off them. I know, these news will change things in a short term but if you ever take your next trade, please, one step guide?
  • #311
  • Feb 23, 2010 6:36am Feb 23, 2010 6:36am
Quoting Razorjack
There were some really good replies, well done everyone. What you wrote is pretty accurate.

You are now getting an idea of how the big boys think.

We can see that with BIG MONEY the big boys can move the markets to their advantage in CERTAIN conditions. Please be aware that even the big institutions lose money, so they don't always get it right, but on the whole you get the general idea.

Now the next question, let's talk about time perspective:

So let's say that the big boys are accumulating or distributing their positions, I hope all...
U never know, if u knew that u would have been the richest man on the world
If u speak about longer term only fundies or bad news are able to change trend so accu/dist phase will last as long as its needed but in all case trend change must occur near technical spot.

How long does it take for an accumulation or distribution phase?

Until one of side win after testing of market deeps

Btw great thread.
  • #312
  • Feb 23, 2010 8:34am Feb 23, 2010 8:34am
Beautiful Razor.

I got short at 87.50 and will look to follow a similar management of trade.

Thanks for the 'big boys" discussions here as well.
  • #313
  • Feb 23, 2010 9:06am Feb 23, 2010 9:06am
Razor,

you had sighted earlier in the thread that you are looking ahead at aud/usd to a price around 82.00 - as an area you might consider seeing prices low enough to really spark buying and risk appetite increase.

could we look to use the current price and position (aud/usd at 90 - top of channel /range -in the med term correction of longer term up trend ) as a practical discussion and example of how we all see dis/acc occuring?

this would be a great working model - and could provide valuable insight in a real "here and now" example.
  • #314
  • Feb 23, 2010 9:14am Feb 23, 2010 9:14am
Quoting 5ysfx
U never know, if u knew that u would have been the richest man on the world
If u speak about longer term only fundies or bad news are able to change trend so accu/dist phase will last as long as its needed but in all case trend change must occur near technical spot.

How long does it take for an accumulation or distribution phase?

Until one of side win after testing of market deeps

Btw great thread.
You'll never know exactly, but you can anticipate.

What I was looking for was that the time it takes to see a reversal depends upon the time frame we're looking at. For instance a reversal in the short term trend can take between a few days to a week. A reversal of the medium term trend can take from a few weeks to a couple of months. And a reversal of the long term trend can take from several months to a year.

This time frame is important because the longer the time frame the more currency/contracts/money needs to change hands.

Using this information, you can set up a strategy to help get you in at the beginning of the trend.
-Razorjack
  • #315
  • Feb 23, 2010 11:00am Feb 23, 2010 11:00am
Quoting Stock_Rocket
Beautiful Razor.

I got short at 87.50 and will look to follow a similar management of trade.

Thanks for the 'big boys" discussions here as well.
Some words of advice:

Never ever follow another trader's trading plan. The plan that I have is designed around my personality. You need to come up with a plan that suits your personality, otherwise your emotions will completely mess you up.

Unfortunately it takes some time to figure out what will suit your personality, so it's usually a bit of trial and error until you find what works for you.
-Razorjack
  • #316
  • Feb 23, 2010 11:07am Feb 23, 2010 11:07am
Quoting Stock_Rocket
Razor,

you had sighted earlier in the thread that you are looking ahead at aud/usd to a price around 82.00 - as...
I don't think we'll see any MEDIUM TERM accumulation in AUDUSD until AFTER AUDUSD hits 0.82, then I don't expect the price to take off immediately. Instead I'm anticipating it ranging for a few weeks above 0.82 before it takes off into the 2nd leg.

Of course this picture can change, but we'll have to wait a while before seeing the accumulation phase.

But there is another pair that we can look at now.
-Razorjack
  • #317
  • Feb 23, 2010 11:09am Feb 23, 2010 11:09am
In my opinion, there is a currency pair that is currently in the LONG TERM ACCUMULATION phase.

Can anyone guess which currency pair this is?
-Razorjack
  • #318
  • Feb 23, 2010 11:16am Feb 23, 2010 11:16am
Hey Guys, I just want to say that I've been browsing this thread lately and have found it super interesting. I too like RazorJack have switch to longer timeframes from doing everything from the 15min to the 4 hr. Now I"m trying to stick to dailies, 4 hr incase I need to zoom in, and am tempted to try the weeklies, but boy those things require a lot of patience.

I will begin to follow and do some catch up reading over the next cpl of weeks as I"m busy with a bunch of personal stuff but pls keep this thread going. I've been dieing to learn how to tie in fundamentals with my technicals and you guys might be able to help me out a bit, so thanks.

I know you guys recommended a cpl of names within the first few replies on learning fundamanetals, but what about John Murphy's 'intermarket analysis'? or Ashraf Laidi's 'Currency trading and intermarket analysis'? Any feedback regarding those guys???

fyi I haven't read either book, but was introduced to John Murphy's book through Todd Gordon, who's the currency strategist for Forex.com, and Ashraf Laidi is the Currency Strategist for CMC markets. I follow them both on twitter, and they are good at what they do, but those guys trade smaller timeframes and like I said, those aren't appealing to me anymore.

Anyway incase some of you would like to get a feeling for my style of trade, pls check out my blog @ www.mtfmgmt.blogspot.com

I look forward to keeping in touch and contributing to this thread after I'm uptodate with the readings.

Thanks!
  • #319
  • Feb 23, 2010 12:13pm Feb 23, 2010 12:13pm
how bout usd/cad.

2005 low around 1.0780....and Feb high around the same.

would you consider this 'long term range' between 1.08ish and low of 1.02ish a time of accumulation?..
  • #320
  • Feb 23, 2010 1:12pm Feb 23, 2010 1:12pm
Quoting Stock_Rocket
how bout usd/cad.

2005 low around 1.0780....and Feb high around the same.

would you consider this 'long term range' between 1.08ish and low of 1.02ish a time of accumulation?..
Not quite.

I think you're misunderstanding what is meant by long term accumulation.

There are 4 phases in the business cycle: accumulation, markup, distribution and markdown

The accumulation phase takes place BEFORE the markup and start of the trend.

If we are looking at the long term trend, then we are looking at a pair that has NOT started the long term trend yet.

Look again at USDCAD, has it not already started it's long term trend?

Try again, it's a pair that has not reversed it's LONG TERM TREND yet, but can in a several weeks/months. And this will present an opportunity to get in at the VERY BEGINNING of the long term trend that we can expect to last for years.
-Razorjack
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