this is were they take your lunch
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DislikedI dont know of anyone that uses this other than us... Its in our training manuals for new traders.. Ive used it for trading for a long time now using it as a major long term trend indicator.. when the inflation rate differential starts to spread generally its followed by price rallies and interest rate differential change.. We plot the inflation data in excels to see the differentials and we relate them to the Interest rate differential .. if the inflation data starts to widen and the Interest rate data was narrowing .. we have divergence in data.....Ignored
DislikedWhere is this manual?
DislikedYou funny, you want him to give you the manual,he his kind enough to share the idea,dont ask for too much, lets work on what he has shared.
Thank you domino for sharing.Ignored
DislikedWhen he said new traders I thought he was referencing new traders to this thread in which case the "manual" would be located in this thread which I looked for and failed to find. I had no idea he worked for a trading firm.Ignored
DislikedI get CPI and assortment of other fundamental numbers from the OECD statistics website:
I played with this stuff a couple of years ago with the general conclusion that the fundamental models kinda do work on long time scale, but are susceptible to external variables ('black swans'), politics and structural regulations.
Here's a related interesting example of an fx model based on money supply:
Dislikedplease note its the actual spread in the inflationary rates making a differential in inflationIgnored
Disliked... trading is the application of all known data to make the best decisions and apply risk mitigation to them.
when all things are lined up.Ignored
DislikedRZ12C-Swapped Compressed and Broken
Rechallanging break .. this is neat PA bearish with IRD..
Looks like well see mild continuence into 2011Ignored
Out of interest where would you short, break at point 1 or would you try to enter earlier?Ignored
I never tried to predict actual interest rates (or exchange rate) with cpi (and differential), which looks like a good idea. Shouldn't inflation actually depreciate a currency (according to economics textbooks) ? - I suppose this doesn't account for expectations of central bank eventually increasing interest rate in response.Ignored
DislikedBtw, just read somewhere a dude named Tim Wood claiming the fed discount rate cycles predictable with 3mTbill (fed simply lags the market), though I haven't tested this myself. ok, here is the article http://www.financialsense.com/contri...d-and-equities
Disliked- sounds like a pretty comprehensive plan.
edit: obviously my models miserably failed out of sample
Dislikedhey head I short at 3 that inital break will tell you everything you need to know about the setup.. a break that extends past the break point on good volume tells you everything you need to know even if that break point is is touched again as new resistance. so you can short at 3 and if you want to position build again at 4..
p.s. ive taken positions in these two trades.. small sizing of course like alwaysIgnored
Dislikedlookin at the pa surrounding 9950 on the a/u resumption on usdmxn and a/j scaling inIgnored