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Stating The Obvious and The Quest For Wisdom

  • #381
  • Mar 15, 2010 7:37am Mar 15, 2010 7:37am
Quoting silverheat
corresponding ...

Presenting Empirical Evidence Of The Existence Of "Greater Fools"

... The underlying premise: the hope that another greater fool will emerge. And emerge they do, until they don't, [and markets collapse bidless.] ...

"......it appears that human traders never learn from history as the speculative element overpowers rationality each and every time. The underlying premise: the hope that another greater fool will emerge. And emerge they do, until they don't, and markets collapse bidless....."


Great article, thanks for posting the link!
  • #382
  • Mar 15, 2010 8:24am Mar 15, 2010 8:24am
To me where I place my own stops (correctly hopefully) is far more important than where the rest of the crowd puts theirs.
  • #383
  • Edited 9:22am Mar 15, 2010 8:44am | Edited 9:22am
Quoting SunTrader
To me where I place my own stops (correctly hopefully) is far more important than where the rest of the crowd puts theirs.
Yes, agreed however the majority of traders are creatures of habit, mostly underfunded, leaving their books due to overleverage close to market. Most seek to place stops behind the nearest supporting/resisting fractal, trendline, round number, ect. worst is the static % of account regardless of where the stop rests in relation to the chart. When enough pool together, during periods of ill-liquidity these present themselves as sitting ducks for the broke r. Knowing this either by avoiding or keying on their run, can serve as an advantage for those paying attention, off hour activity should be held in suspect.

One thing to take into account, I believe is true, large interbank players are unleveraged trading spot (actual swap of currency), unlike the normal speculator, so their position is different as they are continuously in the market. This was just being discussed in a different thread.

fwiw
  • #384
  • Mar 15, 2010 9:25am Mar 15, 2010 9:25am
Quoting auxesis
Yes, agreed however the majority of traders are creatures of habit, mostly underfunded, leaving their books due to overleverage close to market....
Agreed, I suppose one way to avoid being the liquidity to the big guys is to not set a stop but get in when price is temporarily out of balance due to news or stop runs.
  • #385
  • Mar 15, 2010 9:34am Mar 15, 2010 9:34am
Quoting chatzi
Agreed, I suppose one way to avoid being the liquidity to the big guys is to not set a stop but get in when price is temporarily out of balance due to news or stop runs.

Problem is unless you are the one implementing the run, you don't know what is behind the move at the moment. Timing and location will give hints sometimes. Off hours vs. News is two different animals. Filling spontaneous large directional orders everything close gets eaten up, and if it's your market, you control the candle.

regards,
  • #386
  • Mar 15, 2010 9:45am Mar 15, 2010 9:45am
Quoting auxesis
Problem is unless you are the one implementing the run, you don't know what is behind the move at the moment. Timing and location will give hints sometimes. Off hours vs. News is two different animals. Filling spontaneous large directional orders everything close gets eaten up, and if it's your market, you control the candle.

regards,

The runs have to stop somewhere usually when it hits a big block of liquidity which you can speculate using experience and off chart info. The problem is you might need to be watching the market a lot.
  • #387
  • Mar 15, 2010 11:13am Mar 15, 2010 11:13am
You guys might want to check out Osler, She has written some papers about the microstrucutre of the Foreign Exchange Market. I have read Harris's book and I got a lot out of it, however it was more focused on the stock market an options etc.
  • #388
  • Mar 15, 2010 12:14pm Mar 15, 2010 12:14pm
Quoting priceaction
Scotty that has been explained many times, but you explained it (very clearly) in a way that helps hit the message home even more.

Great post!
Thanks

Rob
Hey Rob,

My point was simply that stops are not just hit for fun. They are just another source of liquidity. It's not even necessarily about trading the volatility the stops create. You could in theory do it, but if it were me, I'd simply like to see what the response to the 'new' prices were (thinking longer term).

I for one do not have a source for stop data, I have ways of guessing where they are, but again I just don't know. I can't say for SURE whether or not we had stops execute this morning in EU, but I can be sure that orderflow at this time is fully supportive of a continuation in the up move. It's not guaranteed, but thats what the orders are saying or 'voting' for. There is a pin that has developed on a couple different time frames and I would say it is worth taking strong note of.

I'd be curious what DS or mike has to say about this.
  • #389
  • Mar 15, 2010 12:19pm Mar 15, 2010 12:19pm
Quoting Scotty B
Hey Rob,

My point was simply that stops are not just hit for fun. They are just another source of liquidity. It's not even necessarily about trading the volatility the stops create. You could in theory do it, but if it were me, I'd simply like to see what the response to the 'new' prices were (thinking longer term).

I for one do not have a source for stop data, I have ways of guessing where they are, but again I just don't know. I can't say for SURE whether or not we had stops execute this morning in EU, but I can be sure that orderflow at...
This is an excellent thread Scotty, its good to see there are still people on there that can think for themselves. I am on the same path as you and Leon etc, I had a bit of a hiatus so need to catch up a bit.
Economists have forecast 9 out of the last 5 recessions
  • #390
  • Mar 15, 2010 12:31pm Mar 15, 2010 12:31pm
Quoting Scotty B
Hey Rob,

My point was simply that stops are not just hit for fun. They are just another source of liquidity. It's not even necessarily about trading the volatility the stops create. You could in theory do it, but if it were me, I'd simply like to see what the response to the 'new' prices were (thinking longer term).

I for one do not have a source for stop data, I have ways of guessing where they are, but again I just don't know. I can't say for SURE whether or not we had stops execute this morning in EU, but I can be sure that orderflow at this...
I hate to quote myself, but one more thing. I would consider stops insignificant flow. Mike showed us that profit covering that we saw late Friday was not any sort of informative flow. I'd put all the position management orders in that category.
  • #391
  • Mar 15, 2010 12:39pm Mar 15, 2010 12:39pm
Quoting Scotty B
I hate to quote myself, but one more thing. I would consider stops insignificant flow. Mike showed us that profit covering that we saw late Friday was not any sort of informative flow. I'd put all the position management orders in that category.
Its an intriguing puzzle, trying to work out which orders are being placed by who and why. Im wondering if its better to stick to one pair doing this to keep it simple.
Economists have forecast 9 out of the last 5 recessions
  • #392
  • Mar 15, 2010 12:51pm Mar 15, 2010 12:51pm
Quoting markmm
Its an intriguing puzzle, trying to work out which orders are being placed by who and why. Im wondering if its better to stick to one pair doing this to keep it simple.
If you're doing your due diligence and keeping up with fundamentals and underlying drivers of interest then it would of course be easier to follow one pair, but I don't know if it would necessarily be better.

I think that it might be a good thing to focus on pairs that give you a better bang for your buck. Thats why I like the potential of nzdusd. You can enter into much larger positions just because the price is so low compared all the other pairs above parity.
  • #393
  • Mar 15, 2010 1:03pm Mar 15, 2010 1:03pm
I guess i should be careful about saying 'below parity,' and just say look to trade pairs with the lower prices. Some pairs are a far cry from it.
  • #394
  • Mar 15, 2010 1:12pm Mar 15, 2010 1:12pm
Quoting Scotty B
If you're doing your due diligence and keeping up with fundamentals and underlying drivers of interest then it would of course be easier to follow one pair, but I don't know if it would necessarily be better.

I think that it might be a good thing to focus on pairs that give you a better bang for your buck. Thats why I like the potential of nzdusd. You can enter into much larger positions just because the price is so low compared all the other pairs above parity.
I don't think position size (lots) is related to the price of the pair, if you buy 10 lots at 1.6000 and it moved 100 pips in your favour then the profit is the same if you buy it at 0.7000 and it moves 100 pips.
Economists have forecast 9 out of the last 5 recessions
  • #395
  • Mar 15, 2010 1:21pm Mar 15, 2010 1:21pm
Quoting markmm
I don't think position size (lots) is related to the price of the pair, if you buy 10 lots at 1.6000 and it moved 100 pips in your favour then the profit is the same if you buy it at 0.7000 and it moves 100 pips.
Lets say you have $10,000USD in your account. EU is trading at 1.3500 while NZU is at .7000.

With no leverage at all you can buy or sell 6,250 Euros ($.625/pip) and you can buy or sell 14,285 NZ Dollars ($1.42/pip)

Feel free to correct me if I'm wrong...
  • #396
  • Mar 15, 2010 1:31pm Mar 15, 2010 1:31pm
Quoting Scotty B
Lets say you have $10,000USD in your account. EU is trading at 1.3500 while NZU is at .7000.

With no leverage at all you can buy or sell 6,250 Euros ($.625/pip) and you can buy or sell 14,285 NZ Dollars ($1.42/pip)

Feel free to correct me if I'm wrong...
Technically that is right but

1) Why would you trade without leverage?
2) Why would you trade your full margin.
Economists have forecast 9 out of the last 5 recessions
  • #397
  • Edited 2:14pm Mar 15, 2010 1:31pm | Edited 2:14pm
Quoting Scotty B
I can't say for SURE whether or not we had stops execute this morning in EU, but I can be sure that orderflow at this time is fully supportive of a continuation in the up move. It's not guaranteed, but thats what the orders are saying or 'voting' for.
Up move? On EUR/USD?

And how/where are you seeing this 'supportive' order flow?

Jeepers this is like trying to do the FT's cryptic crossword with half the clues missing, does anyone here have the ability to speak in plain terms and finish a sentence without trying to appear all mystical?

Strikes me that this is somewhat of a wild goose chase, people not quite sure what they're trying to achieve or how they propose to achieve it even if they did know! Plenty of academic sound bites of seemingly irrelevant observations but no meat and potatoes of any practical use to an active forex trader.


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  • #398
  • Mar 15, 2010 1:34pm Mar 15, 2010 1:34pm
Quoting markmm
Technically that is right but

1) Why would you trade without leverage?
2) Why would you trade your full margin.
1. I wouldn't. I was keeping the example simple because all I was demonstrating was price/pip size.

2. I don't have a hard and fast rule here. Depends on the situation.
  • #399
  • Mar 15, 2010 1:38pm Mar 15, 2010 1:38pm
Quoting Scotty B
1. I wouldn't. I was keeping the example simple because all I was demonstrating was price/pip size.

2. I don't have a hard and fast rule here. Depends on the situation.
Ok cool, I suppose if you use % money management then none of that matters.
Economists have forecast 9 out of the last 5 recessions
  • #400
  • Mar 15, 2010 1:56pm Mar 15, 2010 1:56pm
Percent of account risked per trade per pair is what matters most, not potential profit or how many lots at one time that can be traded.
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