Beat brokers at their own game - trading round figures | Page 2 | Forex Factory

Options

Go to
Permalinks
Print Thread

Similar Threads

My chance! to achieve some round figures... 4 replies

Prosperous mindset: relax & rise over emotions, own the game 53 replies

Which MM or ECN brokers can beat Oanda Spread? 155 replies

Be careful with brokers with their own mobile trading platforms 12 replies

Should U.S. Broker Offer U.S. Traders Their Own Monthly Trading Contest 11 replies

Attachments: Beat brokers at their own game - trading round figures
Exit Attachments

Beat brokers at their own game - trading round figures

  • #21
  • Aug 7, 2010 11:59am Aug 7, 2010 11:59am
Quoting pipmutt


We can't say, no-one can.
Not so sure about that. Can be deduced from watching price action, and generally people stay way from placing stops too close to round numbers for the obvious reason that they'd be easily targeted.

Quote

Different levels are probed for sure, including round numbers. Price action around these levels would suggest orders are clustered there.

Certainly, such as yesterday morning around 1.3200 in the Euro. Order clustering, but no stops, and no stop hunting.

Quote

Price action at round numbers frequently seems to be the same as price action around the example you posted, certainly frequently enough to warrant looking at.

Of course, and there are some good threads where that is explored, such as:

http://www.forexfactory.com/showthread.php?t=247896

http://www.forexfactory.com/showthread.php?t=98028
  • #22
  • Aug 7, 2010 2:47pm Aug 7, 2010 2:47pm
Quoting medici

Certainly, such as yesterday morning around 1.3200 in the Euro. Order clustering, but no stops, and no stop hunting.
How can we know that, 1.32 may have been strongly defended for other reasons, 'they' may have tried and failed or just probed for stops. The market looks pretty flat anyway, all waiting for NFP I expect.
  • #23
  • Aug 7, 2010 5:46pm Aug 7, 2010 5:46pm
Quoting pipmutt
How can we know that, 1.32 may have been strongly defended for other reasons, 'they' may have tried and failed or just probed for stops. The market looks pretty flat anyway, all waiting for NFP I expect.
Fair question, and I do appreciate your sceptical approach. 'Knowledge' is formed by hypotheses that are not falsified by experience, says Popper. I share the belief with a famous speculator that Popperian falsification is more appropriate to speculation than the classical inductivist approach.

Disregarding private information, my hypotheses, in this case on how order books are cleared in the morning and of how stops are usually placed, have not been falsified by my years of experience. And those hypotheses led me to the conclusions stated.

So from that perspective I wonder what knowledge you have that merits the hypothesis that there were stops that were heavily protected above 1.32 on an NFP morning serious attention?
  • #24
  • Aug 7, 2010 6:13pm Aug 7, 2010 6:13pm
Quoting medici
So from that perspective I wonder what knowledge you have that merits the hypothesis that there were stops that were heavily protected above 1.32 on an NFP morning serious attention?
It wasn't meant as a hypothesis or anything else, we can't possibly know what orders were clustered there or if indeed there were any. There are so many possibilities it would be slightly pointless trying to speculate, in any event we're unlikely to ever know if we were right or wrong anyway!

You stated with some authority "no stops, and no stop hunting", I merely pointed out that that was just your opinion and not necessarily fact, there are other possibilities.
  • #25
  • Aug 7, 2010 6:32pm Aug 7, 2010 6:32pm
Quoting pipmutt
It wasn't meant as a hypothesis or anything else, we can't possibly know what orders were clustered there or if indeed there were any. There are so many possibilities it would be slightly pointless trying to speculate, in any event we're unlikely to ever know if we were right or wrong anyway!

You stated with some authority "no stops, and no stop hunting", I merely pointed out that that was just your opinion and not necessarily fact, there are other possibilities.
Again, I have to say that I appreciate your scepticism. But unfalsified hypotheses are what we live by, and while "we can't possibly know" may be true in an absolute sense it leaves us without guidance for decision-making and action.

And we can know the facts in these situations if we are privy to order book information. Failing that unfalsified hypotheses is second best, and that is not a matter of opinion but experience.
  • #26
  • Aug 7, 2010 6:49pm Aug 7, 2010 6:49pm
Quoting medici
Again, I have to say that I appreciate your scepticism. But unfalsified hypotheses are what we live by, and while "we can't possibly know" may be true in an absolute sense it leaves us without guidance for decision-making and action.

And we can know the facts in these situations if we are privy to order book information. Failing that unfalsified hypotheses is second best, and that is not a matter of opinion but experience.
It's of little consequence to us whether orders existed at those levels or not, and as I already said we will never know so it's not going to help very much with your unfalsified or falsified hypotheses dilemma.

You are entitled to your opinion based on your interpretation and experiences, others have different opinions based on theirs, namely the author of an article I posted a link to. He's a reasonably well respected analyst who has held positions at two of the world's top marketmakers, one would assume he knows what he's talking about. That aside, I tend to read everything and then make up my own mind based on my own experience and interpretation, if I'm wrong then I have no-one to blame but myself!

Are we done here because this is getting slightly tedious, not just for me but probably for other thread participants as well.
  • #27
  • Aug 7, 2010 7:15pm Aug 7, 2010 7:15pm
Boris Schlosberg talks about retail guys who are highly leveraged and set stops behind round numbers.

But retail guys don't make the market neither the prices.
IMO, his opinion of the forex market is incorrect.

About Euro 1.32 at NFP:

Liquidity is extremely thin before/after the announcement.

When the news comes out many buyers want jump on (the train) and price explodes.
It's less stop hunting.
  • #28
  • Aug 8, 2010 1:29am Aug 8, 2010 1:29am
Quoting UnnamedPlayr
Boris Schlosberg talks about retail guys who are highly leveraged and set stops behind round numbers.

But retail guys don't make the market neither the prices.
I think you miss the essence of the 'stop hunting with the big players' strategy slightly. It's based on the premise that the majority of forex traders invariably use stops. What leverage they use is immaterial to a certain extent. Are you saying stop hunting doesn't happen?

Quoting UnnamedPlayr
IMO, his opinion of the forex market is incorrect.
Evidently FXCM, GFT, CNBC, Bloomberg, Reuters, Dow Jones, and AFP (just to name a few) don't share your opinion.

Quoting UnnamedPlayr
About Euro 1.32 at NFP:

Liquidity is extremely thin before/after the announcement.

When the news comes out many buyers want jump on (the train) and price explodes.
It's less stop hunting.
I don't think anyone said the motive behind volume across NFP was stop hunting did they? No doubt stops are triggered which adds momentum to the spike but I imagine quotes and the reason to trade are based on the data itself.
  • #29
  • Aug 8, 2010 7:36am Aug 8, 2010 7:36am
Quoting mfoste1
well said my friend
If brokers dont hunt stops - then why are round numbers significant???

They KNOW people will set there stops at round numbers, and place their trades either side -

it IS that simple!

They dont set the market - they don't have to - they work on human nature!
  • #30
  • Aug 8, 2010 7:43am Aug 8, 2010 7:43am
Quoting Jhig
Whole numbers are a staple in my market trading strategy and analytics. Whole numbers are not new but it seems traders are just picking up on the concept. I realized whole numbers about 10 years ago trading equities, when I realized price seems to reverse on them.

Whole numbers by themselves will not make you a profitable traders. My entry catalyst is based on reversal bar formations on whole numbers. Equities seems to respond better of whole numbers as in forex, you'll often see price overshoot/undershoot a whole number level. Which is where...

PREECISELY!!!
The other fellow who said the stops were taken out at 1.5960 - funnily enough 10 pips above a round figure (1.5950)!!!!!

Thanks for proving my point!!!!

round figures are based on 50 pip and 100 pip levels!!!
  • #31
  • Aug 8, 2010 12:27pm Aug 8, 2010 12:27pm
How about "Who Cares". What's the point of argueing 'why' price does something at a certain point. Why not just take advantage of what appears to happen more often then not!

Price bounces more often then not when it approaches one of these so called round numbers. Which side it will bounce off of is uncertain. Just play the game and hope for more wins then losses.
  • #32
  • Aug 8, 2010 12:51pm Aug 8, 2010 12:51pm
didn't read the thread

but people love to take profit 3-6 pips ahead of 00's

so if price has been rocketing towards a 00 without taking a break you can get short at say xx97 with a 15 pip SL, and depending on the location either scalp a quick one or move SL to BE and hope for a black swan

i was considering starting an interactive trading on this because it happens all the time on all the pairs
  • #33
  • Aug 8, 2010 2:51pm Aug 8, 2010 2:51pm
Quoting frankkn

didn't read the thread

...if price has been rocketing towards a 00 without taking a break you can get short at say xx97 with a 15 pip SL
It's exactly that kind of stop placement which the strategy being discussed attempts to exploit!
  • #34
  • Aug 8, 2010 3:00pm Aug 8, 2010 3:00pm
hey pip

i disagree

i understand that people like to place their stops on the other side of RNs and they also trail them with RNs and that is what the OP said

the method i mentioned is discretionary and will work for some traders and will not work for others

if it gives me $$ that's all i care about

the situation i would like to see is on the 5M, we have had a strong move that has not retraced (by the time it reaches the RN will have been 40 pips for the sake of argument) most intraday traders take (at least partial profits) at the next RN or S/R and when price has not retraced you can be sure that price will drop down anywhere from 5-15 pips immediately when price reaches a few pips shy of a RN as people take profits.

of course many times after the initial profit taking price will smash the level so both the OP and I could make money on the same trade you see

i'm sure you will notice this if you watch for it

but like i said it depends on the trader you have to have a quick and reliable trigger finger. also if it makes you $ then great! if not don't worry about it
  • #35
  • Aug 8, 2010 3:07pm Aug 8, 2010 3:07pm
Quoting frankkn

hey pip

i disagree
Hey frank

No problem disagreeing, it's what makes a market!

In my book, if it makes money for you then it can't be wrong!
  • #36
  • Aug 8, 2010 3:13pm Aug 8, 2010 3:13pm
Quoting pipmutt
I think you miss the essence of the 'stop hunting with the big players' strategy slightly. It's based on the premise that the majority of forex traders invariably use stops. What leverage they use is immaterial to a certain extent. Are you saying stop hunting doesn't happen?


Evidently FXCM, GFT, CNBC, Bloomberg, Reuters, Dow Jones, and AFP (just to name a few) don't share your opinion.
Honestly, i don't care what media says.

Stops get triggered all the time,not only on round numbers.


The fact is: stop "hunting" is a little bit more complicated.

The average trader on the interbank market acts more different and without empirical statistics nobody knows for sure.
  • #37
  • Aug 8, 2010 3:34pm Aug 8, 2010 3:34pm
Quoting UnnamedPlayr

Honestly, i don't care what media says.
Oh it's not what they say, it's what logic says. People don't usually get top level jobs in the industry or get regularly invited as guests on mainstream financial news channels and newswires if their opinion isn't worth something! I suppose there are exceptions but Boris has been around for quite a while, he's a household name in the biz.

Besides that, I think what he says makes sense and at the end of the day that's all that matters to me.
  • #38
  • Aug 10, 2010 6:05am Aug 10, 2010 6:05am
Quoting medici
2) That as soon as price is close to a round number the probability is larger than 50% that there's are stops and buy orders close on the other side. Simply not true.
Maybe not "as soon as" especially if that level has already been crossed/breached recently and not many orders have accumulated there again, and I can imagine that if price hasn't been near in awhile i.e. within 100 pips then there may not be many stop losses there, but in general there are more buy stop orders just above RNs and sell stops below RNs, when price is below/above respectively, than at random numbers. Then again "beyond" is often 5-20 pips, and just because there are stops somewhere doesn't mean price will necessarily react in a certain way.

http://www.newyorkfed.org/research/s...orts/sr150.pdf
  • #39
  • Aug 10, 2010 7:00pm Aug 10, 2010 7:00pm
Has anyone done a long term test of this idea to any degree of statistical confidence?

10 pips is tiny, if euro got to say 1.3000, I wouldn't have my stop at 1.2990, of course its going to hit! 10 pips is finger tip away from 1.3. The stops will be hit at 1.3, push it down through 1.2990 and probably 1.2980.

1.2970 would seem a more reasonable number if we were using a nominal number rule. I'd rather just wait for it to find a little support...
  • #40
  • Aug 10, 2010 7:37pm Aug 10, 2010 7:37pm
Quoting scottyfromau
Has anyone done a long term test of this idea to any degree of statistical confidence?

10 pips is tiny, if euro got to say 1.3000, I wouldn't have my stop at 1.2990, of course its going to hit! 10 pips is finger tip away from 1.3. The stops will be hit at 1.3, push it down through 1.2990 and probably 1.2980.

1.2970 would seem a more reasonable number if we were using a nominal number rule. I'd rather just wait for it to find a little support...
The smart thing to do is to push that stop back 50 pips. Of course this all depends on the pair. 50 pip stop is usually safe enough from whip saws.
0 traders viewing now