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  • #841
  • Mar 18, 2011 10:01am Mar 18, 2011 10:01am
Is anyone watching E/U today? I was waiting for the 4150 barrier to be taken out and maybe enter when the stops are hit, but the barrier is still intact.

The hardest thing for me right now is just being patient.
  • #842
  • Mar 18, 2011 10:02am Mar 18, 2011 10:02am
Quoting relyt
The hardest thing for me right now is just being patient.
I hear you on that one...
  • #843
  • Mar 18, 2011 10:13am Mar 18, 2011 10:13am
Quoting simpleguy
I'm reading about the interventions currently going on....
I am not sure about a lot of these questions, but so far it seems to be a joint intervention here.

From what I understand about past interventions... they generally don't work out to well in the long run, they are just trying to stabilize and I'm sure they have probably the most power out there for the near term at least. We have the FED, ECB, and the BOJ working on it...

It comes in waves, and they like to put a line in the sand. I guess this is just like a warning which psychologically messes with speculators?

I think the drop was selling into the all time lows was from real money then the stops cascaded related to stops from options players and spec margin calls along with the algo's.
  • #844
  • Mar 18, 2011 10:24am Mar 18, 2011 10:24am
Thanks Monroe,

It seems like the best way to trade this right now would be wait till Monday and find the Supply and Demand on the charts and trade off of that.

I would also think that interventions would be best done in illiquid periods cause they could move price further and faster with less capital.

A non intervention question for you.

How much do the order flow traders look cross markets for indications. example, price of oil vs U/Cad?

I just find this whole subject interesting and my trading has improved. Why has it improved? I have no idea but I can see I'm trading much less than before and have a higher percentage of winners over the past two months since I've been reading more and more about this. So now I'm trying to learn more about order flow and figure out what I'm doing different in my thought processes to have me making more money.
A woman drove me to drink, and I forgot to thank her
  • #845
  • Mar 18, 2011 10:30am Mar 18, 2011 10:30am
Quoting relyt
Is anyone watching E/U today? I was waiting for the 4150 barrier to be taken out and maybe enter when the stops are hit, but the barrier is still intact.

The hardest thing for me right now is just being patient.
Just got to be careful. It could easily be one of those fridays where the market just keep grinding higher wayy into the friday close.
Private message me for a link to my order flow website.
  • #846
  • Mar 18, 2011 10:32am Mar 18, 2011 10:32am
Quoting grkfx
Just got to be careful. It could easily be one of those fridays where the market just keep grinding higher wayy into the friday close.
Noted. I appreciate the comment.

I was planning on waiting until the barrier was broken and seeing what the action was right when the stops were hit. Not planning on just blindly placing a limit order at 1.4155 or anything.

As we get into the afternoon though, I will definitely be careful and err on the side of caution.
  • #847
  • Mar 18, 2011 10:53am Mar 18, 2011 10:53am
Quoting simpleguy
Thanks Monroe,

It seems like the best way to trade this right now would be wait till Monday and find the Supply and Demand on the charts and trade off of that....

NP, I am still on my journey as well...

I think you should keep an eye on oil, gold, yields, equities and this kind of thing for sure.

I think we should be looking for anything that will cause order flow on the spot fx market. Find out why prices are moving, we know it's most likely NOT from TA, especially the bigger moves or moves that cause trends.
  • #848
  • Mar 18, 2011 11:00am Mar 18, 2011 11:00am
Quoting relyt
Noted. I appreciate the comment.

I was planning on waiting until the barrier was broken and seeing what the action was right when the stops were hit. Not planning on just blindly placing a limit order at 1.4155 or anything.

As we get into the afternoon though, I will definitely be careful and err on the side of caution.
I have been watching this also. Looks like a snake coiling up for a last strike. Anyhow, I see Golman Sachs is talking up the Euro again. It reminds me of the Scotty B comment a while back. Trend could stay in tack for some time.
  • #849
  • Mar 18, 2011 1:22pm Mar 18, 2011 1:22pm
Well, I just now got back to my computer and see that the 4150 barrier was taken out, but then it shot through to 4180. Now we are back down into the 4160 range.

E/U took out a few barrier levels today (at 4100, 4125, and 4150), but I'm still not sure how to determine what to do when DNT barriers are hunted.

How do some of you more senior people know when to trade with the stops (expecting the stops to fuel the run further) and when to fade them (expecting the profit-taking to overrwhelm the stops, and price snapping back).

I'll make a post sometime this weekend with my thoughts, but I'll admit right now that my thoughts aren't fully thought out, yet.
  • #850
  • Mar 18, 2011 1:50pm Mar 18, 2011 1:50pm
Quoting relyt
Well, I just now got back to my computer and see that the 4150 barrier was taken out, but then it shot through to 4180. Now we are back down into the 4160 range.

E/U took out a few barrier levels today (at 4100, 4125, and 4150), but I'm still not sure how to determine what to do when DNT barriers are hunted.

How do some of you more senior people know when to trade with the stops (expecting the stops to fuel the run further) and when to fade them (expecting the profit-taking to overrwhelm the stops, and price snapping back).

I'll make...
you could try gauging PA on the reaction and thinking about overall trend and various other elements.... who would be a big seller? where are the buyers? when did it happen....
  • #851
  • Mar 18, 2011 1:58pm Mar 18, 2011 1:58pm
Quoting relyt
Well, I just now got back to my computer and see that the 4150 barrier was taken out, but then it shot through to 4180. Now we are back down into the 4160 range.

How do some of you more senior people know when to trade with the stops (expecting the stops to fuel the run further) and when to fade them (expecting the profit-taking to overrwhelm the stops, and price snapping back).
FWIW, I don't think the rise from 1.6200 on cable and from 1.4150 on euro was about stops. They may have helped, but if the market was only above that figure because of a stop hunt then the PA would have looked a lot different. imho
  • #852
  • Mar 18, 2011 2:09pm Mar 18, 2011 2:09pm
I actually have a bit of time right now, so I'll post some thoughts. I recently made the following two posts, and that is what my post will be about:

Quoting relyt
I'm still not sure how to determine what to do when DNT barriers are hunted.

How do some of you more senior people know when to trade with the stops (expecting the stops to fuel the run further) and when to fade them (expecting the profit-taking to overrwhelm the stops, and price snapping back).
Quoting relyt
Do you trade with the hunters and liquidate into the stops? Do you trade with the hunters and hope for the stops to get hit and cascade higher, waiting even longer to liquidate? Do you wait for the stops to get hit and fade them? Do you enter short just before the level gets hit and trade with the option defense?

The questions I just listed above are the hardest part for me right now.
Trading with the hunters and liquidating into the stops: I have no idea here. Even when I know where the DNT option is, I still don't know when the hunt is beginning. Am I getting in as the hunters are makng their push, or are the defenders just about to come in and push price away? I'm not much help here.

So outside of that scenario, the question becomes when do you fade the stops and when do you trade with the stops? My thought is to trade against whichever side is artificially impacting price. Here is what I mean by that: let's say the E/U has been moving up strong and a DNT has recently traded with a bottom barrier relatively close to current price. Everything is pointing toward the E/U continuing to rise, but price drops to the DNT level. In this case I think fading the stops would be the best play, as once the level gets taken out, I would expect price to move back up to its previous level. The opposite would be true for trading with the stops. If you the same situation is true with E/U but there are DNT barriers to the topside, and it seems like the defenders are artificially holding price lower, then I would think that trading in the direction of the stops would be the best way to go.

Anyway, these are my thoughts (and I know they're very basic... like I said, I have been struggling with this a while now). If the more experienced guys would let me know where I'm wrong, I would appreciate it. Also, feel free to add anything to this. It's frustrating knowing where the levels are, and knowing that something is going to happen there, but never being sure which direction to position myself.

Have a nice weekend everyone. I'll be studying some more and watching some college basketball.
  • #853
  • Mar 18, 2011 2:13pm Mar 18, 2011 2:13pm
Quoting Monroe
you could try gauging PA on the reaction and thinking about overall trend and various other elements.... who would be a big seller? where are the buyers? when did it happen....
Quoting eurotrash
FWIW, I don't think the rise from 1.6200 on cable and from 1.4150 on euro was about stops. They may have helped, but if the market was only above that figure because of a stop hunt then the PA would have looked a lot different. imho
Awesome, thanks guys. So you both cite PA. And Monroe, I like your question of when it's happening, also.

eurotrash, would you mind giving an example of the PA you would expect to see if it was only about the stops? My guess would be: consolidation/battle about 15-30 pips below the barrier, then a quick break up through the top of the consolidation range and through the barrier level.

If you have other thoughts, I would appreciate it. Thanks for your quick replies.
  • #854
  • Mar 18, 2011 2:25pm Mar 18, 2011 2:25pm
Quoting relyt
So outside of that scenario, the question becomes when do you fade the stops and when do you trade with the stops? My thought is to trade against whichever side is artificially impacting price. Here is what I mean by that: let's say the E/U has been moving up strong and a DNT has recently traded with a bottom barrier relatively close to current price. Everything is pointing toward the E/U continuing to rise, but price drops to the DNT level. In this case I think fading the stops would be the best play, as once the level gets taken out, I would expect...
yes, this all makes sense to me. after all we are looking for the mispricings.

Going with the hunters on both plays makes sense though, but as to fading it... yea, what you say about overall directional bias is what I would look to do.
  • #855
  • Edited 2:44pm Mar 18, 2011 2:29pm | Edited 2:44pm
Quoting relyt
Awesome, thanks guys. So you both cite PA. And Monroe, I like your question of when it's happening, also.

eurotrash, would you mind giving an example of the PA you would expect to see if it was only about the stops? My guess would be: consolidation/battle about 15-30 pips below the barrier, then a quick break up through the top of the consolidation range and through the barrier level.

If you have other thoughts, I would appreciate it. Thanks for your quick replies.
Why do you want to trade after the barrier is taken out other than not getting the information soon enough. I ask myself statistically how many times does the barrier get taken out. Most of the time they do so I would prefer to be trading against the defenders. My thinking is that it might be a little more risky to trade against the trend in the Euro due to Goldmans recomendation. I believe that we can position ourselves very well for the next DNT 1.3500/1.4200 level right now. Just my opinion.
  • #856
  • Mar 18, 2011 2:44pm Mar 18, 2011 2:44pm
Quoting Monroe
Going with the hunters on both plays makes sense though
Quoting Louie
Why do you want to trade after the barrier is taken out other than not getting the information soon enough. I ask myself statistically how many times does the barrier get taken out. Most of the time they do so I would prefer to be trading against the defenders. That is just my opinion.
I think you guys are both saying the same thing, and that is to trade with the hunters while they're trying to take out the option level (please correct me if I'm wrong).

But the big problem I run into is, when do I enter? For example, on March 3 there were a couple options (a DNT and a KO, I believe) that got taken out at 3950. Then price rose to 4036 on March 7 and I knew that the next siginificant DNT was at 4100. I almost entered long at 4030, but then I thought, what is there to the downside that makes me so sure we'll take out 4100 before price goes down first? What happened? Price dropped to 3750 before we got back to 4100. I don't want to take a 280 pip drawdown to make 70 pips. So that's my big issue with trading with the hunters. When do I enter to be sure I won't have a huge drawdown before we take out the barrier? I know where to take profit once I'm in, but where is the best place to enter?
  • #857
  • Mar 18, 2011 3:11pm Mar 18, 2011 3:11pm
Quoting relyt
I think you guys are both saying the same thing, and that is to trade with the hunters while they're trying to take out the option level (please correct me if I'm wrong).

But the big problem I run into is, when do I enter? For example, on March 3 there were a couple options (a DNT and a KO, I believe) that got taken out at 3950. Then price rose to 4036 on March 7 and I knew that the next siginificant DNT was at 4100. I almost entered long at 4030, but then I thought, what is there to the downside that makes me so sure we'll take...
There's no hunt as far as 70 pips away from the level. Just imagine how much funds the hunter would need to push the price 20 pips and 70 pips. If the market happens to be around the option level then the option writer will be interested in the game, otherwise he'll just lose more during the battle then make on the expired option.
  • #858
  • Edited 3:26pm Mar 18, 2011 3:21pm | Edited 3:26pm
Quoting seagreen
There's no hunt as far as 70 pips away from the level. Just imagine how much funds the hunter would need to push the price 20 pips and 70 pips. If the market happens to be around the option level then the option writer will be interested in the game, otherwise he'll just lose more during the battle then make on the expired option.
Thanks, seagreen, that is very helpful. But my question still remains, at what point are you pretty sure that the hunters are pushing for the level (without being too late to get in on it)? Is it something that you just have to witness over and over again to just get a "feel" for it?

For example, in DS's post here, all it looks like is a range breakout, but I'm almost positive it's more than that. I guess I could be wrong, do you just wait for a battle about 20 pips from the level, and then enter on the topside breakout? I'm still not grasping how I can feel 80% sure (the percentage that DS cites in his post) that price won't move down and stop me out before taking out the barrier.
  • #859
  • Mar 18, 2011 3:26pm Mar 18, 2011 3:26pm
The hunters do not need to move price by themselves... they can persuade others to join them, even if they don't know the real reason, such as generating patterns, or simple higher highs/lower lows during illiquid times, etc... and putting out rumors....

DS talks about looking for clues of such things in the PA. I guess this requires a good understanding of structure and micro-structure first.
  • #860
  • Mar 18, 2011 3:33pm Mar 18, 2011 3:33pm
Quoting relyt
Thanks, seagreen, that is very helpful. But my question still remains, at what point are you pretty sure that the hunters are pushing for the level (without being too late to get in on it)? Is it something that you just have to witness over and over again to just get a "feel" for it?

For example, in DS's post here, all it looks like is a range breakout, but I'm almost positive it's more than that. I guess I could be wrong, do you just wait for a battle about 20 pips...
I don't think there's a straight answer to your question. Just watch these option plays for some time and you'll get a feel for your entry. I'm not an option hunter myself so I can't comment on this. BTW, where did you get the info about 1.4125 option? I only saw 1.41 and 1.415. I guess the option calendar on IFR is for vanilla options right?
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