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Stating The Obvious and The Quest For Wisdom

  • #1,101
  • Mar 24, 2010 2:20pm Mar 24, 2010 2:20pm
Quoting Darkstar
I think we need some clarification here. Taking longs on e/u at this point is little more then gambling.



The hard truth is, I failed in my analysis. Apparently the concern was never really about "if" greece would get a bailout. It was "how" that bailout would be organized. I still fail to grasp exactly why an IMF loan is more negative for the euro then a euro led bailout, but the market seems to think there is a difference and that’s all that matters....
I guess it would be like asking an outsider to take care of your business,
European union should have taken care of this problem, not the IMF.
As for taking longs being wrong, it depends on so many things it is a difficult statement to make, fading this market has not been a bad idea, and certainly would have resulted in a lot of profits throughout the last few weeks, obviously the short at 1.3800 was the best trade to take.
It has broken the low but it is still not impossible for the longs, with one level remaining nearby, failing that, the short should have quite a bit of a run so it would not be too late to enter it at any stage in next few days,
IMHO of course...lol
Like the top at 1.3800, failing to enter there, other opportunities presented at lower levels, it is never too late.
Your posts have been very interesting to read, i hope you continue.
Biggest joker
  • #1,102
  • Mar 24, 2010 2:21pm Mar 24, 2010 2:21pm
Quoting Darkstar
I think we need some clarification here. Taking longs on e/u at this point is little more then gambling.

[color=black][font=Verdana]Going back to Monday or Tuesday(?) you might recall my post about cutting the long if price hit 3400. Normally I have no trouble with averaging down in a trade but there was no point in this case. We weren't buying because the euro was cheap. We were buying on the premise that a Greek bailout would entice buy orders into the market. The climax of that event happened yesterday...
Feck that. If I could attribute a loss of $50k to my taking part on a forum then I'd leave forever. I appreciate you sharing your experience here, but I think you're crazy for sticking around if it leads you to making mistakes you wouldn't otherwise make.

Very bad luck; no losses for a year and then the first trade you make on the forum being a loser? I feel for you, must be a blow to the ego.

Regards, Leon
Living the adventure in my head.
  • #1,103
  • Edited 2:58pm Mar 24, 2010 2:33pm | Edited 2:58pm
Just as a discussion point...

If I were to ever have enough capital, positive results, and experience to make a go of full time discretionary trading then I would probably try to set up a group of about 3 equally capitalised and experienced people where a trade would have to pass the scrutiny of all those involved before being placed. Obviously all taking part in the venture would have to be singing from the same hymn sheet, and yes good trades would be passed over, but overall I could imagine results to me much more stable. Obviously, ultimately the success of the idea would depend on the quality of the people involved.

EDIT: Lol, add a person for risk management and we've got separation of powers and a classical business structure forming. So much for being a solo trader. Maybe it's the way it is for a reason.

EDIT2: Sorry, not 'separation of powers', that's a Law term. It's called 'Division of labour'.
Living the adventure in my head.
  • #1,104
  • Mar 24, 2010 2:34pm Mar 24, 2010 2:34pm
Hello everyone !!! i Would like Thank everyone on this thread specially ScottyB for opening this thread & DarkStar for sharing his knowledge with us .. And i want to ask a Question maybe it is off the topic but ... I was watching G/U and saw this (see pics below) is this Stop hunting or lack of supply or ??? any ideas .. Thanx !!!
Attached Image(s) (click to enlarge)
Click to Enlarge Name: 5_min_GU_Stop_H.png Size: 46 KB
Click to Enlarge Name: 1_min_Stop_Hunt.png Size: 49 KB
  • #1,105
  • Mar 24, 2010 3:06pm Mar 24, 2010 3:06pm
Quoting Darkstar
I think we need some clarification here. Taking longs on e/u at this point is little more then gambling.

[color=black][font=Verdana]Going back to Monday or Tuesday(?) you might recall my post about cutting the long if price hit 3400. Normally I have no trouble with averaging down in a trade but there was no point in this case. We weren't buying because the euro was cheap. We were buying on the premise that a Greek bailout would entice buy orders into the market. The climax of that event happened yesterday...

nice post...thanks.

is it me or does it seem that a whole lot of directional biases are derived mainly out of economic outlook in general and less to do with orderflow/PA and things related ?

That's confusing for me cause that's the part i am less familiar with. So, to cut my story short how/what should i pay most attention to (news-vise) both in short term and long term ?

Do you pay close attention to yield differences in bond markets etc ?
  • #1,106
  • Edited 4:46pm Mar 24, 2010 3:21pm | Edited 4:46pm
Quoting lumesh
nice post...thanks.

is it me or does it seem that a whole lot of directional biases are derived mainly out of economic outlook in general and less to do with orderflow/PA and things related ?

That's confusing for me cause that's the part i am less familiar with. So, to cut my story short how/what should i pay most attention to (news-vise) both in short term and long term ?

Do you pay close attention to yield differences in bond markets etc ?
People have biases which cause them to place orders which causes the flow of orders which results in price action on the chart.

Fundamentals in the end always guide currency rates. The extent to which fundamentals play a role depends on the time frame.

As Darkstar has previously stated they play a much larger role in the long term than they do in the short term. In the short term daily news events etc... obviously play a much larger role. I believe this is true for the most part because emotions guide the short term far more than the long term. Fear and greed guide intraday movement. Emotions therefore guide order flow in the short term and therefore emotions create price action in the short term.

Therefore a currency's direction can be shifted from its fundamental direction in the short term... due to the aforementioned emotions. But in the long term these 100-200 pip shifts mean nothing. The real money players who have the biggest and best fundamental departments will enforce the fundamental direction.

It probably seems like economic outlook is playing a large role because as Darkstar has previously stated he is focused on taking longer term trades at this point in his life. Therefore it is natural he will discuss things that are effecting the trades he is taking which are long term in nature.

If you have read Darkstar's posts you would know what guides price mostly in the short term and long term. If you would then read his post history I'm sure you would gain even more insight.
  • #1,107
  • Mar 24, 2010 3:47pm Mar 24, 2010 3:47pm
Quoting Deusomega
People have biases which cause them to place orders which causes the flow of orders which results in price action on the chart.

Fundamentals in the end always guide currency rates. The extent to which fundamentals play a role depends on the time frame.

As Darkstar has previously stated they play a much larger role in the long term than they do in the short term. In the short term daily news events etc... obviously play a much larger role. I believe this is true for the most part because emotions guide the short term far more than the long term....
thanks.
  • #1,108
  • Mar 24, 2010 3:49pm Mar 24, 2010 3:49pm
Quoting Deusomega
Why? Speculation plays a small role in the forex market
Courtesy of Wiki...

"About 70% to 90% of the foreign exchange transactions are speculative. In other words, the person or institution that bought or sold the currency has no plan to actually take delivery of the currency in the end; rather, they were solely speculating on the movement of that particular currency."

It's best not to just repeat what you hear, and be able to back up what you say. I know I don't always follow those rules, but it's good form and will benefit you in the long run to try. I'd like to see some definitive proof on this too, but the common belief seems to be that spec's are in majority in this market. Maybe DS can point us toward an authoritative stat on this?
Living the adventure in my head.
  • #1,109
  • Mar 24, 2010 4:01pm Mar 24, 2010 4:01pm
DarkStar, WOW what a hit, but I admire you for admitting your mistake. That speaks volumes about you. I got caught in this move too, but I cut sooner because I was going to be away from the screen & did not want this trade to run unattended. I have dusted off & am moving on with the next trade. Thanks for your views & comments.

______________________________
  • #1,110
  • Edited 4:55pm Mar 24, 2010 4:37pm | Edited 4:55pm
Quoting Leonlorenzo
Courtesy of Wiki...

"About 70% to 90% of the foreign exchange transactions are speculative. In other words, the person or institution that bought or sold the currency has no plan to actually take delivery of the currency in the end; rather, they were solely speculating on the movement of that particular currency."

It's best not to just repeat what you hear, and be able to back up what you say. I know I don't always follow those rules, but it's good form and will benefit you in the long run to try. I'd like...
That's true and if I am mistaken than sorry to the previous guy. It does have a citation missing so... technically what I say is as good as that wiki writer. But, my definition of speculation is when you buy or sell something looking to gain a profit from its future price movement. I wonder by the writer's definition does he mean literally take delivery? Like corn futures or something literally taking the corn? If he is meaning taking actual delivery then I would argue that 99% are speculative. Because this would mean that transactions by large corporations would count as speculative under the writer's definition because I'm fairly certain they don't take actual possessions of dollar bills or actual euros. But rather just transfer from one bank to another digitally.

I was primarily drawing from DS's article on market structure:

"Unlike the various bond and equity markets, the Forex market is not generally utilized as an investment medium. While speculation has a critical role in its proper function, the lion’s share of Forex transactions are done as a function of international business.

The guy who buys a shiny new Eclipse more then likely will pay for it with US Dollars. Unfortunately Mitsubishi’s factory workers in Japan need to get their paychecks denominated in Yen, so at some point a conversion needs to be made. When one considers that companies like Exxon, Boeing, Sony, Dell, Honda, and thousands of other international businesses move nearly every dollar, real, yen, rubble, pound, and euro they make in a foreign country through the Forex market, it isn’t hard to understand how insignificant the speculative presence is; even in a $2tril per day market."

I think he is utilizing my definition of speculation as well rather than talking in terms of actual settlement and delivery.

But if he does have an authority for these statements then I hesitate to imagine he totally misread them.

Here is a composition of trades according to the NY Fed Reserve:

According to the 1998 survey, as shown in Figure 4-1, 49 percent of the foreign exchange trading activity in the over-the-counter market
represented “interdealer” transactions, that is, trading by the 93 reporting dealers among themselves and with comparable dealers abroad. Of the remaining 51 percent of total foreign exchange transactions, financial (non-dealer) customers accounted for 31 percent, and nonfinancial customers 20 percent.

I edited my previous post because not so sure on the part about speculative presence. The other stuff I said is valid I believe... and my main point was that fundamentals determine long term exchange rate.

  • #1,111
  • Mar 24, 2010 4:55pm Mar 24, 2010 4:55pm
Quoting Deusomega
That's true and if I am mistaken than sorry to the previous guy. It does have a citation missing so... technically what I say is as good as that wiki writer. But, my definition of speculation is when you buy or sell something looking to gain a profit from its future price movement. I wonder by the writer's definition does he mean literally take delivery? Like corn futures or something literally taking the corn? If he is meaning taking actual delivery then I would argue that 99% are speculative. Because this would mean that transactions by large...
I'd hazard to guess that physical delivery includes money being electronically deposited in a bank account.

A high none speculative presence sounds like a good thing to me, how can the market be anywhere close to efficient if the lions share of transactions are none speculative and don't take current economic factors in to account? That means a lot of uninformed liquidity and therefore trading options as a result. On the flip side, if the majority of price movement is due to the exchanges of international businesses then what's the chances of being able to find stops or 'read the emotions' in a chart. As far as I can see, there is no emotion to read and profit from when someone exchanges JPY for $ to pay workers.

Like I said, I don't know either way. I'd like to know though.
Living the adventure in my head.
  • #1,112
  • Mar 24, 2010 4:55pm Mar 24, 2010 4:55pm
Quoting Darkstar
I think we need some clarification here. Taking longs on e/u at this point is little more then gambling.



The hard truth is, I failed in my analysis. Apparently the concern was never really about "if" greece would get a bailout. It was "how" that bailout would be organized. I still fail to grasp exactly why an IMF loan is more negative for the euro then a euro led bailout, but the market seems to think there is a difference and that’s all that matters.

[color=black][font=Verdana]Now...

Hi Folks,

It is cheaper to learn from someone else's mistake than from our own.

DS hats off to you, it took courage to admit a failure of judgment in an open forum it also took courage to post a live trade.


Sentiment towards the Euro and Euro zone has been seriously affected by a failure to effectively sort out the Greece problem behind closed doors, trouble is there are more stinking fish in the barrel to sort out, all of it caused by gorging on cheap money.

Ireland, Spain & the U.K. were living in a fools paradise with every man and his dog getting into the property business using 95 to 100% self certified interest only loans.

Austrian Banks have massive undisclosed exposure in the former Eastern block countries that have joined the Euro-zone.

All of this is happening with no legislated procedure to sort out the mess.

Take care all,

BabeFX
  • #1,113
  • Mar 24, 2010 5:06pm Mar 24, 2010 5:06pm
[quote=Deusomega;3581561]Here is a composition of trades according to the NY Fed Reserve: [/quote]


Well, if we discount the dealer volume, because this will just be recounted volume from customers we end up with (roughly) 60% Financial and 40% non-financial which is closer to what Wiki states.
Living the adventure in my head.
  • #1,114
  • Mar 24, 2010 5:08pm Mar 24, 2010 5:08pm
Quoting Leonlorenzo
I'd hazard to guess that physical delivery includes money being electronically deposited in a bank account.

A high none speculative presence sounds like a good thing to me, how can the market be anywhere close to efficient if the lions share of transactions are none speculative and don't take current economic factors in to account? That means a lot of uninformed liquidity and therefore trading options as a result. On the flip side, if the majority of price movement is due to the exchanges of international businesses then what's the chances of...
Yeah I don't know I think I shouldn't even of mentioned it because probably over thinking the stuff. My main point being that long term fundies are most important and short term news, options, stops, etc things that will entice fear and greed to emerge are the main drivers.

I think emotion(greed) can emerge when large corporations transact because they still need to trade with someone and therefore they are highly susceptible to front running, etc by the banks they deal with themselves. Thereby causing price to overshoot the point where it would of naturally changed because of the transaction itself.

I apologize again because I was going on little evidence and shouldn't of bothered to talk about something I wasn't completely informed about.
  • #1,115
  • Mar 24, 2010 5:18pm Mar 24, 2010 5:18pm
Quoting Leonlorenzo
Here is a composition of trades according to the NY Fed Reserve: [/quote]


Well, if we discount the dealer volume, because this will just be recounted volume from customers we end up with (roughly) 60% Financial and 40% non-financial which is closer to what Wiki states.
That figure sounds better I suppose. Btw I saw the 102% math NOOB! lol jk

Anyways here is another snippet and the source(forgot to include)

The range of financial and nonfinancial customers includes such counterparties as: smaller commercial banks and investment banks that do not act as major dealers, firms and corporations that are buying or selling foreign exchange because they (or the customers for whom they are acting) are in the process of buying or selling something else (a product, a service, or a financial asset), managers of money funds,mutual funds, hedge dealers in the United States is done by these U.S. branches and subsidiaries of foreign banks. Some, but not all, of the 93 reporting dealers in the United States act as market makers for one or a number of currencies.A market maker is a dealer who regularly quotes both bids and offers for one or more particular currencies and stands ready to make a two-sided market for its customers.Thus,during normal hours a market maker will, in principle, be willing to commit the firm’s capital, within limits, to complete both buying and selling transactions at the prices he quotes, and to seek to make a profit on the spread, or difference, between the two prices. In order to make a profit from this activity, the market maker must manage the firm’s own inventory and position very carefully, and accurately perceive the short term trends and prospects of the market. A market maker is more or less continuously in the market, trading with customers and balancing the flow of these activities with offsetting trades on the firm’s own account. In foreign exchange, as in other markets, market makers are regarded as helpful to the functioning of the market—contributing to liquidity and short-run price stability, providing useful price information, smoothing imbalances in the flow of business,maintaining the continuity of trading, and making it easier to trade promptly.

The Foreign Exchange Market in the United States All central banks participate in their nations’ foreign exchange markets to some degree, and their operations can be of great importance to those markets. But central banks differ, not only in the extent of their participation, but also in the manner and purposes of their involvement. The funds, and pension funds; and even high net worth individuals. For such intermediaries and end-users, the foreign exchange transaction is part of the payments process—that is, a means of completing some commercial, investment, speculative, or hedging activity.

http://www.newyorkfed.org/education/...sfxm/chap4.pdf

That pdf has more in depth information than I anticipated good stuff.
  • #1,116
  • Mar 24, 2010 6:21pm Mar 24, 2010 6:21pm
BrightStar has his trade to remember for a couple of years, probably wiped a way a years profit. Scotty by his own admission aint doing so well either.

Any clues about this approach?
  • #1,117
  • Mar 24, 2010 6:30pm Mar 24, 2010 6:30pm
Quoting spekkiefx
BrightStar has his trade to remember for a couple of years, probably wiped a way a years profit. Scotty by his own admission aint doing so well either.

Any clues about this approach?
Only risk 0.5% or less of your over all trading account per trade, until you are comfortable risking more, when you are intimate with the operating parameters of your method. You should be able to sustain a hefty run of losing trades and still be in the game. Basic stuff.
  • #1,118
  • Edited 7:28pm Mar 24, 2010 7:09pm | Edited 7:28pm
Quoting spekkiefx
BrightStar has his trade to remember for a couple of years, probably wiped a way a years profit. Scotty by his own admission aint doing so well either.

Any clues about this approach?
I can't vouch for anything, but I'm assuming that Darkstar would/will respond to a comment like this by saying that what he lost is nothing close to a years worth of profit. What I've gathered from DS is that he might take a couple of trades a month which are each worth equal to or more than the loss on the last trade. I know, If that's true then he truly is 'big time'.

RE. Scotty... As far as I know he's never professed to be a profitable trader. As far as I know not a single person who has posted in this thread is; the only person who is assumed to be is DS.

EDIT: In other words, everyone here is a learner except DS, and you should expect learners to lose most of the time.
Living the adventure in my head.
  • #1,119
  • Mar 24, 2010 7:44pm Mar 24, 2010 7:44pm
Quoting Leonlorenzo
I can't vouch for anything, but I'm assuming that Darkstar would/will respond to a comment like this by saying that what he lost is nothing close to a years worth of profit. What I've gathered from DS is that he might take a couple of trades a month which are each worth equal to or more than the loss on the last trade. I know, If that's true then he truly is 'big time'.

RE. Scotty... As far as I know he's never professed to be a profitable trader. As far as I know not a single person who has posted in this thread is; the only person who is assumed...
You are quite right about scotty but I am pretty sure he lost his "I got it feeling".

Maybe you are over estimating BrightStar, you may well have been deceived.
After all people like to idolize people. BrightStar could ofcourse post his 50k oanda loss to show that this loss is only minor on his "massive" account but I guess it is unlikely he will do so.

I guess this is maybe the biggest lesson, find your own way.
  • #1,120
  • Mar 24, 2010 7:49pm Mar 24, 2010 7:49pm
Are you trolling or something? Wtf is Brightstar.
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