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Technical Analysis Fallacy

  • #22,761
  • Edited 7:17am Feb 4, 2011 6:58am | Edited 7:17am
For sure. And it's always good to read from another source as the wording of an explanation can lead you to understand something you might have missed on an earlier reading of somebody elses explanation...if you see what I mean.

EDIT: Sorry, too much verbiage - deleted. I think I might have just had a light bulb moment too.
  • #22,762
  • Feb 4, 2011 8:42am Feb 4, 2011 8:42am
Quoting lovecraft
Hey, MaMood,
I'm humbled by your graciousness. If I knew, I would have registered and said hello earlier. The real enrichment for everyone (including me) is being witness to your taking charge here. Capital markets knowledge is something that can be taught over a long weekend, but I think your natural inquisitiveness and fearlessness should be an inspiration to others. Okay, now I'm talking too much, so I'll shut up for a while.
i can listen you as long as you are ready to talk...

nice posts....

U could be the fastest 10v Trader here

V
  • #22,763
  • Feb 4, 2011 12:09pm Feb 4, 2011 12:09pm
Hey Niels,

I downloaded that book and I've started reading it. The funniest bit so far is the little section on rogue traders and this comment about Peter Young:

"Morgan Grenfell's star trader is not best remembered for his unauthorised trades (a mere $350m), but the fact that he showed up to court wearing women's clothes in an attempt to plead insanity. Seems like Young got the last laugh since the court delared him unfit for trial!"

  • #22,764
  • Feb 4, 2011 12:38pm Feb 4, 2011 12:38pm
I am rereading lot of things which i read when i was kid in school in india...

This phrase stuck with me....

"Give up a member to save a family, a family to save a village, a village to save a country, and the country to save yourself."

Member ->Scout


"Learning is retained through putting into practice; family prestige is maintained through good behaviour; a respectable person is recognised by his excellent qualities; and anger is seen in the eyes."


"Moral excellence is an ornament for personal beauty; righteous conduct, for high birth; success for learning; and proper spending for wealth."


V
  • #22,765
  • Feb 4, 2011 5:52pm Feb 4, 2011 5:52pm
Hi Mamood, what's your opinion on the use of the 3k? I remember earlier that the 5min 3k was used to see money flow and the daily 3k was used to determine the likely major direction.

How does fti know what has to happen in the markets to result in a certain behavior in the 3K? I thought fti said he only exploits the relationship, but does not know what happens until after the fact.


Quoting MaMood
Hi Mark,

I guess that fti does not use the "Cross-charts" itself very often. He is able to know what has to happen there to result in a certain behavior in the 3kgds.

It was meant more as a recap to be aware that "missbehaving" in the 3 kgds may have some explanation/reason in the crosses. And that might indicate some "engineering" or manipulation of the major players ...

CU,
Niels
  • #22,766
  • Feb 4, 2011 6:50pm Feb 4, 2011 6:50pm
Quoting lovecraft
@sylar,...
Hey a vol arb., sounds like fixed income? CDS? Right next door to the FX boys and girls.

Anyhow, a good example of this in FX this past week would of been Trichet' Thursday.
Getting over hedged the eur crosses with whatever delta figure, and whacking away the exposure on a high skew into Friday, just in time for the weekend.
-Not to say it wasn't a long Thursday and Friday ofcourse.


Regards.
Good weekend all
  • #22,767
  • Feb 5, 2011 12:31am Feb 5, 2011 12:31am
Quoting Fana
Hi Lovecraft. Do you use "snowballing(1,1,2,5...)?" For managing positions? How fast are your actions(trades?) How long do you hold positions and how big? Do you use rescues? Regards
hi, Fana,

wow. a lot of questions. Yes, 'snowballing', or building a position, is an essential part of every trader's repertoire, but not necessarily in the 1-1-2-5 process you mention. Depending on the market that I'm trading, actions can be from a few seconds to a month. I'd rather not say how big (or small) my trades are, but the range can be just as wide. I don't consciously use rescues, but that's probably because in my previous life, our positions were monitored by sophis, which could track listed guys like me in real time, while otc guys were only marked once before the next business day. The difference in MO was split down these lines.
  • #22,768
  • Feb 5, 2011 1:27am Feb 5, 2011 1:27am
Quoting MaMood
Hi Mark,

I guess that fti does not use the "Cross-charts" itself very often. He is able to know what has to happen there to result in a certain behavior in the 3kgds.

It was meant more as a recap to be aware that "missbehaving" in the 3 kgds may have some explanation/reason in the crosses. And that might indicate some "engineering" or manipulation of the major players ...

CU,
Niels
I think you're right, MaMood. I am a rookie to forex, so you should ask fti about this, but a rallying cross-rate,A/B, implies that A is rising faster or falling slower than B. Alternatively, A could be rising concurrently with a falling B. Visually, this can look identical on the cross rate chart, but an A/B which is torn higher is detected differently from an A/B which 'drifts' higher, because two correlated assets have diverged. When certain time/level/vol thresholds are met, stat arb activity or just 'catch-up' trading drives mean reversion, and the cross-rate chart will show a correction in the rally seemingly out of nowhere. The stat arb variety of this activity can fail miserably as a strategy when A and B are too highly correlated, because you'll find that the market doesn't give you any opportunity to get out while 'drifting' you into bankruptcy.

More importantly, fti might say that if you get too hung up on this, you're re-introducing rigidity and can't see the forest for the trees. But since he has identified the 3 kngdms as a tool in his repertoire, I think that is enough information and you can make of it what you will based on your own feel. Again, meaningless without practice.
  • #22,769
  • Feb 5, 2011 1:28am Feb 5, 2011 1:28am
@indianguy

  • #22,770
  • Feb 5, 2011 1:36am Feb 5, 2011 1:36am
Quoting jacson101
Hey a vol arb., sounds like fixed income? CDS? Right next door to the FX boys and girls.

Anyhow, a good example of this in FX this past week would of been Trichet' Thursday.
Getting over hedged the eur crosses with whatever delta figure, and whacking away the exposure on a high skew into Friday, just in time for the weekend.
-Not to say it wasn't a long Thursday and Friday ofcourse.


Regards.
Good weekend all
Hi, jacson,
index vol, and listed. not exactly next door. I have to admit, I can't understand what you're trying to say. Sorry.
  • #22,771
  • Feb 5, 2011 3:33am Feb 5, 2011 3:33am
Quoting lovecraft
hi, Fana,

wow. a lot of questions....
Thank you
  • #22,772
  • Feb 5, 2011 5:46am Feb 5, 2011 5:46am
@lovecraft,

why forex ? I imagine the good liquidity here is a disadvantage to someone who played mostly on models ...
there are other low liquid instruments where inefficiency creeps out more often and gives the modelists their edge ...
To Live is the rarest thing in the world , Most people exist , that is all
  • #22,773
  • Feb 5, 2011 6:30am Feb 5, 2011 6:30am
Quoting lovecraft
Hey, MaMood,
.. I think your natural inquisitiveness and fearlessness should be an inspiration to others... .
yes he is an inspiration, as well as several others here.
...& now that includes you.
thanks for sharing your insights here, Sir.
  • #22,774
  • Feb 5, 2011 8:33am Feb 5, 2011 8:33am
Quoting lovecraft
Hi, jacson,
index vol, and listed. not exactly next door. I have to admit, I can't understand what you're trying to say. Sorry.
Yeah, understood. Good to have your colour around.
Am not really one to elaborate after the fact, but to sum things up in a couple of words.
-Negative drift.
I think you eluded to fti' cross tear and drift quite eloquently, and why most including myself who have an fti' style can appreciate the patient colour he's continually presented.
Cheers, and I hope everything is fine with fti.
  • #22,775
  • Feb 5, 2011 11:29am Feb 5, 2011 11:29am
Just for info:

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  • #22,776
  • Feb 5, 2011 12:22pm Feb 5, 2011 12:22pm
What is the London Fix by the way? I saw that table and googled it and only came up with the fixing of gold and silver prices, which I don't think is what he is referring to.
  • #22,777
  • Edited 1:32pm Feb 5, 2011 1:16pm | Edited 1:32pm
Quoting MaMood
Hi Mark,

I guess that fti does not use the "Cross-charts" itself very often. He is able to know what has to happen there to result in a certain behavior in the 3kgds.

It was meant more as a recap to be aware that "missbehaving" in the 3 kgds may have some explanation/reason in the crosses. And that might indicate some "engineering" or manipulation of the major players ...

CU,
Niels
... therefore, he always said "the market is manipulated" ... ie. difference between harmonic and non harmonic ... romance of the Three Kingdoms you have read?
  • #22,778
  • Feb 5, 2011 2:35pm Feb 5, 2011 2:35pm
Quoting fullperson
Is the study of statistics useful? I am currently studying time series analysis (cointegration will be explained in the course). As fortune would have it, my prof happens to be an economist.

There is a person in my class that works in the quant field w/ arbitrage..not sure how well he is doing, but I plan on talking to him about it next week.

The way I see it, models are necessary for complexity of certain instruments. As long as we keep in mind that it is simply a model and learn to manage the position, we could still use the model with good...
statistics is averaging ... what method you use to trade? ... averaging?
  • #22,779
  • Feb 5, 2011 5:29pm Feb 5, 2011 5:29pm
Quoting ukmanthailan
What is the London Fix by the way? I saw that table and googled it and only came up with the fixing of gold and silver prices, which I don't think is what he is referring to.
I am not sure of the exact meaning, but I believe that, at least in part, it involves banks in London and Europe setting a fixed exchange rate for that day's transactions. If you are travelling in Europe or the UK that day from another country, and purchase something using a credit card or want to convert your currency into euro or pounds, the fixed rate is the rate you are charged. There is a NY fix, too, fwiw.
  • #22,780
  • Feb 5, 2011 7:03pm Feb 5, 2011 7:03pm
Quoting GEfx
I am not sure of the exact meaning, but I believe that, at least in part, it involves banks in London and Europe setting a fixed exchange rate for that day's transactions. If you are travelling in Europe or the UK that day from another country, and purchase something using a credit card or want to convert your currency into euro or pounds, the fixed rate is the rate you are charged. There is a NY fix, too, fwiw.
Yes, and no.I'd have to say the London fixing is more dreaded by most dealers from my experience. Just because of the fact that a ton of volume can change hands within a short period of time, say 15:30 gmt even up to 16:00 gmt and impacts well beyond some days.

The fix is basically, the flagged fixed rate that as you said is used for "arms-length" clients. Its use is to mark the books for corporate purposes, "semi officials" or gov'ts agencies for a closing price.
Bigger attention and concern lay with the funds and custodian types.
It can get quite hairy staring down those types of sales while trying to keep the impact to a minimum.

Fwiw, it's all in the charts.I wouldn't want to start guessing( rigidity) as to what's actually going on around these fix's, but there is a dance there.
Hope it helps fwiw.


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