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Identifying Market Swings - Medium and Long Term Trading

  • #381
  • Feb 25, 2010 11:44am Feb 25, 2010 11:44am
we virtually trade exactly the same methodoligy.

As confidence in ones long term fundamental analysis grows...the emotional swings of day to day / week to week drawdown diminish sizeably.

now if I could just take the time away from trading...to learn how to spell.

go razor go.

thnx again...and for all...take heed of the wise tellings of the mighty Razor.

looking forward to your future posts and lessons.
  • #382
  • Feb 26, 2010 3:51pm Feb 26, 2010 3:51pm
Anyone have any thoughts on the COT this week?

And how in combination -with fundamentals on the mid term risk aversion?
  • #383
  • Feb 27, 2010 6:04am Feb 27, 2010 6:04am
Quoting Stock_Rocket
Anyone have any thoughts on the COT this week?

And how in combination -with fundamentals on the mid term risk aversion?
IMO, COT doesn't give much guidance this week. It also doesn't change my opinion of the medium term risk aversion.

I'm going to stick my neck out and say that I believe the risk aversion will continue next week and last until the end of March, maybe mid April.

I believe we'll see Greece get some sort of financial help from the EU, not an "official" bailout but more in the form of gov't banks buying Greek state bonds.

I also think that China will have completed it's "first stage" of monetary tightening by letting the Yuan appreciate.

I'm in when/if:

AUDUSD hits 0.82
AUDJPY hits 75
NZDUSD hits 0.65
NZDJPY runs out of steam below 60 (maybe 57?)
CADJPY reaches exhaustion below 80
CADUSD reaches exhaustion around 1.13

EURJPY reaches exhaustion either at 112 or when EU banks start buying Greek bonds.

GBPJPY hits 130

Of course, I could also be completely wrong
-Razorjack
  • #384
  • Feb 27, 2010 6:40am Feb 27, 2010 6:40am
Ok, hopefully everyone has had a chance to absorb how the Big Boys are thinking and why they think the way they do.

Let's take this to the next level.

Based on what we know so far:

1. What advantages do the big boys have?
2. What disadvantages do the big boys have?
3. What advantages do the small traders have?
4. What disadvantages do the small traders have?
-Razorjack
  • #385
  • Feb 27, 2010 7:03pm Feb 27, 2010 7:03pm
Quoting Razorjack
Ok, hopefully everyone has had a chance to absorb how the Big Boys are thinking and why they think the way they do.

Let's take this to the next level.

Based on what we know so far:

1. What advantages do the big boys have?
2. What disadvantages do the big boys have?
3. What advantages do the small traders have?
4. What disadvantages do the small traders have?
OK i will join to this game.

1. Ruling the market with "golden ratio" method thats all what they need.
2. Only the other big boys which have different point of view or i would rather say different concept of market and needs.
3. none except SL
4. too many to point all of them at once.
  • #386
  • Feb 28, 2010 1:23am Feb 28, 2010 1:23am
Quoting Razorjack
Ok, hopefully everyone has had a chance to absorb how the Big Boys are thinking and why they think the way they do.

Let's take this to the next level.

Based on what we know so far:

1. What advantages do the big boys have?
2. What disadvantages do the big boys have?
3. What advantages do the small traders have?
4. What disadvantages do the small traders have?


1. More experieance, more resources (capital, sources of information) to make the market.
2. They expose their capital.
3. We have Razorjack!
4. We have to read/follow the market
  • #387
  • Feb 28, 2010 2:58am Feb 28, 2010 2:58am
Quoting 5ysfx
OK i will join to this game.

1. Ruling the market with "golden ratio" method thats all what they need.
2. Only the other big boys which have different point of view or i would rather say different concept of market and needs.
3. none except SL
4. too many to point all of them at once.
I hope that you are joking and that you really don't believe what you wrote.

If you are serious, then you're thinking is so far off from reality that it will be impossible for you to have a profitable career in trading.
-Razorjack
  • #388
  • Feb 28, 2010 3:03am Feb 28, 2010 3:03am

Based on what we know so far:

1. What advantages do the big boys have?
big boys
- can afford to lose a lot or stomach large loss
- have faster access (maybe few mins ahead) to news released
- can move market in their favour for very short time
- have analysts or economists to advise them
- may have access to insider information (econ figure).
- can have reward/risk ratio less than one - easier to make money


2. What disadvantages do the big boys have?
big boys
- cannot buy or sell in large amount in market at same price (large slippage)
thus, they have to get in or get out slowly and they cannot change position suddenly.
- hold position for a longer time frame, compared to small trader


3. What advantages do the small traders have?
small trader
- can get in or get out with ease (little slippage).
- can do scalping or day-trade with ease (more strategy)


4. What disadvantages do the small traders have?
small traders
-no access to insider info or professional help from analysts.
- most of them has limited money, thus, will be stop out if position is on wrong side.
- should have reward/risk ratio more than one -harder to make money.
- easily screwed by the broking house in terms of high commission and bad execution of orders
  • #389
  • Feb 28, 2010 3:05am Feb 28, 2010 3:05am
Quoting rac
1. More experieance, more resources (capital, sources of information) to make the market.
2. They expose their capital.
3. We have Razorjack!
4. We have to read/follow the market
1. Yes, the big boys can move markets and the big boys are the ones that define the trends

2. Yes, if they get things wrong. But think about how/when they have to put on their positions and try again.

3. Thanks, but there are much better advantages. Again think about how and when the big boys need to put on positions and try again.

4. Yes, we can't move the markets ourselves, so we have to understand what the big boys are doing and do what they do.


Not bad, rac, you got 2 out of 4. Try again with the #2 and #3, it will provide you with some deeper insights into how you can use this knowledge to create a profitable system.
-Razorjack
  • #390
  • Feb 28, 2010 3:19am Feb 28, 2010 3:19am

". Yes, if they get things wrong. But think about how/when they have to put on their positions and try again."

usually, big boys put on a position in line with long term trend
but they do it when market temporarily corrects.
e.g. when mkt trend is up , they buy when mkt dips.
thus, when a bad news is released and mkt move slightly down
probably big boys are buying the mkt.

i think :
when they are right, mkt is less volatile - they let profit run
when they are wrong, mkt is more volatile - they cut loss

can someone comment the above?

  • #391
  • Feb 28, 2010 3:42am Feb 28, 2010 3:42am
Quoting Razorjack
I hope that you are joking and that you really don't believe what you wrote.

If you are serious, then you're thinking is so far off from reality that it will be impossible for you to have a profitable career in trading.
In which point I was wrong or did not present facts ?
  • #392
  • Feb 28, 2010 3:47am Feb 28, 2010 3:47am
Quoting peter lee
[color="RoyalBlue"]
Based on what we know so far:

1. What advantages do the big boys have?
[color="Black"]big boys
- can afford to lose a lot or stomach large loss
- have faster access (maybe few mins ahead)...
Well done, Peter, you're progressing. You're almost there.....

I will only comment on what I don't agree with.

can afford to lose a lot or stomach large loss

Maybe, but remember that even the big boys have to answer for these losses to managed clients, hedge fund investors, etc.

can move market in their favour for very short time

Short time? Think about this again, WHO decides which way the long term trend is going to be?

can have reward/risk ratio less than one - easier to make money

Not quite, you mentioned in your answer to #2:

- cannot buy or sell in large amount in market at same price (large slippage)
thus, they have to get in or get out slowly and they cannot change position suddenly.
- hold position for a longer time frame, compared to small trader

This is correct. They can't get in and out very quickly, so if they get the direction wrong, then they stand to lose a lot more than us small traders.

Take for an example, where the market turns from uptrend to downtrend. You have a large trader with a large long position and the market starts moving against him. Now as he starts to liquidate his position in a runaway market every time he closes a long lot, he is essentially selling it which causes the price to move FURTHER AGAINST HIS POSITION. So even the big boys can end up with huge losses in certain circumstances.

- should have reward/risk ratio more than one -harder to make money.

This is a matter of perception. When properly managed this is the essence of "cutting losses and letting profits run".

- easily screwed by the broking house in terms of high commission and bad execution of orders

ONLY TRUE FOR SHORT TERM TRADING .....

Think about it, if you are trading the long term trend for 5 000 to 10 000 pips, what's it matter if you get a slippage of 10 pips or even 100 pips?
-Razorjack
  • #393
  • Edited 6:19am Feb 28, 2010 3:54am | Edited 6:19am
Quoting peter lee

". Yes, if they get things wrong. But think about how/when they have to put on their positions and try again."

[color="Black"]usually, big boys put on a position in line with long term trend
but they do it when market temporarily corrects.
e.g. when mkt trend is up , they buy when mkt dips.
thus, when a bad news is released and mkt move slightly down
probably big boys are buying the mkt.

i think :
when they are right, mkt is less volatile - they let profit run
when they are wrong, mkt is more volatile...
Peter, this statement below tells me that you haven't quite understood how the big boys operate:

usually, big boys put on a position in line with long term trend
but they do it when market temporarily corrects.
e.g. when mkt trend is up , they buy when mkt dips.
thus, when a bad news is released and mkt move slightly down
probably big boys are buying the mkt.

Think about these questions:

1. If the big boys are putting on a position in line with the long term trend as you say, then WHO decides what the long term trend will be?

2. What usually happens just before the start of a long term uptrend / downtrend?

What you wrote about buying when the market dips is only partly correct, the big boys ADD to their position on the dips and rallies.
-Razorjack
  • #394
  • Feb 28, 2010 4:02am Feb 28, 2010 4:02am
Quoting 5ysfx
In which point I was wrong or did not present facts ?
From your post:

OK i will join to this game.

1. Ruling the market with "golden ratio" method thats all what they need.
2. Only the other big boys which have different point of view or i would rather say different concept of market and needs.
3. none except SL
4. too many to point all of them at once.

These are not facts, they are assumptions based on a belief that the big boys have all the advantages and the small trader none.

The only one that comes close to a fact is #2.

Let me ask you 2 serious questions:

1. Do you really believe the markets are against the small trader?

2. If the small trader has no advantages (SL is not an advantage) then the small trader will only end up losing everything. So why are you trading?
-Razorjack
  • #395
  • Feb 28, 2010 4:33am Feb 28, 2010 4:33am
U are really get wrong who is the "big boys".

Let me use metaphor.

Real Big Boys are whales (mammals)
Yours big boys are only sharks they scare even orca.
Retail traders are small creatures floating around and seek for rest of their feast.

but retail trader can be divided into two classes

1) Suckerfish(remora) which follow after sharks (there were cases that sharks attack even humans)
2) Whales and barnacles.


Who cares about retailers anyway shark or maybe whale ?
Who is the loser in bigger picture ?
  • #396
  • Feb 28, 2010 5:25am Feb 28, 2010 5:25am
Quoting 5ysfx
U are really get wrong who is the "big boys".
.......
I guess I'm wrong and don't know what I'm talking about.

You are right and you understand exactly what moves the markets and why so I am sure that you are consistently making profits.

I can not teach someone who already knows everything, so I will just end the discussion here.

Good luck.
-Razorjack
  • #397
  • Feb 28, 2010 5:43am Feb 28, 2010 5:43am
Adding on to everyone else's response and what I believe also comes into play are :

1. What advantages do the big boys have?
Hedging their losing positions? If they get it wrong against the other big boys that are defining the current market trends.
If big boys defined the trend would they somehow have the advantage by being able to push the markets against current trend to cover their losses from their previous positions.

3. What advantages do the small traders have?
Essentially have better risk management if the small trader have sound system they have developed to match their personality.
  • #398
  • Edited 6:06am Feb 28, 2010 5:49am | Edited 6:06am
For those of you who haven't realized it yet, the big institutions, central banks, brokers, etc are not your enemy when it comes to succeeding in the financial markets.

Your biggest enemy is you.

There are many that believe that the markets are rigged against the small traders and the major players have all the advantages.

This is entirely FALSE and IMO, brought on by a belief of wanting to point the blame at something else other than the trader himself / herself.

This is my personal truth, take it for what it's worth:

The markets are NOT rigged against the small trader. The markets are rigged to take advantage of the fallacies of human emotions, such as fear, greed and the tendency of wanting to be right. There is a big difference between these 2 statements.

The market movers are influenced by ECONOMIC FUNDAMENTAL DEVELOPMENTS, the "herd" is influenced by human emotions like fear, greed and the tendency of wanting to be right.

And the reason why 95% of small traders lose is NOT because the market is rigged against them, but it's because 95% of the small traders fall prey to their emotions of fear, greed and wanting to be right.

So, in order to succeed in the financial markets, the trader needs to understand who / when / why / what is moving the markets and OVERCOME HIS/HER OWN EMOTIONS OF FEAR AND GREED AND THE TENDENCY OF WANTING TO BE "RIGHT".

So if you want to succeed, no matter what time frame you trade you need to resolve these 3 things:

1. What causes you to become greedy and what can you do to avoid that you become greedy? I.e. too big position size, hanging on to a trade too long, etc.

2. What fear do you have? Fear of losing? Fear of being wrong? Fear of seeing a winner turn to a loser? Then what can you do to resolve these fears? i.e. not hanging on to a winning trade long enough, hanging on to a losing trade etc.

3. If you can not admit to being wrong, then you will end up losing everything. Always ask yourself, what will it take for you to admit that you are wrong and how much are you willing to risk to be proven wrong? i.e. using no SL, too big SL, adding to losing trades, etc.

You will hear the cliché "You are the system", but know one really understands what this REALLY means. IMO, the 3 questions I wrote above are what this phrase really comes down to.

Having said all this, I already know that most readers will continue to look for new technical indicators, systems, methods, etc because they believe that's what they need to succeed.
-Razorjack
  • #399
  • Feb 28, 2010 6:20am Feb 28, 2010 6:20am
Quoting Razorjack
For those of you who haven't realized it yet, the big institutions, central banks, brokers, etc are not your enemy when it comes to succeeding in the financial markets.

Your biggest enemy is you.

There are many that believe that the markets are rigged against the small traders and the major players have all the advantages.

This is entirely FALSE and IMO, brought on by a belief of wanting to point the blame at something else other than the trader himself / herself.

This is my personal truth, take it for what it's worth:

The markets are...

well said razor. I hope you stick around for awhile for all us noobie traders to learn from
  • #400
  • Feb 28, 2010 7:31am Feb 28, 2010 7:31am
1. What advantages do the big boys have?
- have faster access to news released (peter lee)
- can move market in their favour for very short time (peter lee) but not only for short time, because they define the trend
- a lot of ways to enter/exit trades and to secure their positions

2. What disadvantages do the big boys have?
- they can't get in/out in one step with large size and they have to realize accumulation/distribution phase
- they can change short term trends, but they can't change fundamentals, economic situation in the world, etc...

3. What advantages do the small traders have?
- We have Razorjack! (rac)
- can get in or get out with ease (little slippage) (peter lee)
- big boys have to do all the dirty work (accumulation/distribution phase) and create a trend and we can just prosper from this effort

4. What disadvantages do the small traders have?
- we can't move the markets ourselves (Razorjack)
- we have to recognise the state of the market, actual phase of the business cycle and make the trade based on these information, we have to adapt to the market conditions

2. What usually happens just before the start of a long term uptrend / downtrend?
- there is the accumulation/distribution phase of the business cycle, when big boys enter/exit their trades
Don't touch, just look...
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