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  • #1,221
  • Apr 5, 2011 11:42am Apr 5, 2011 11:42am
Do domestic bond auctions have much of an effect on the spot market or is it just a fed inventory adjustment?
  • #1,222
  • Apr 5, 2011 11:52am Apr 5, 2011 11:52am
this is another one i started reading latly...

https://gm.bankofny.com/ for briefings and iFlow's

an example of the iFlows for today:
Quote
Our iFlow bond indicators confirm a sharp acceleration in net outflows from peripheral Eurozone debt exposure – Portugal, Spain, Italy, Ireland and Greece are amongst the strongest net sold across the board. This morning’s cut in Portugal’s credit rating by Moody’s Investor Service to Baa1 from A3 has once again brought the Eurozone sovereign crisis into focus – today’s move was the second ratings reduction in three weeks, with Moody’s indicating it is considering another reduction going forward. With the ongoing political limbo, fiscal travails and economic uncertainty in Portugal, global portfolio managers are aggressively paring their exposure to the region’s bond markets. At the same time, however, investment managers are continuing their forays into select higher yielding bond markets rather than just retreating into relative safe-haven holdings. Thus, the silo approach to risk remains in place with debt instruments in Argentina, Turkey, Indonesia, Brazil and Poland amongst others being favored. Amongst global currency markets, our iFlow FX indicators show a further pick up in net inflows into Sterling after the currency had been out of favor in recent weeks – today’s data showing an above-consensus expansion in the UK services sector have rekindled expectations of a rate hike this year, thus proving supportive for the local currency. Elsewhere amongst G-10, commodity-linked currencies such as the Norwegian krone, New Zealand dollar and Canadian dollar remain net bought on balance. At the same time, the Australian dollar is on the back-foot with profit-taking activity in evidence the past two trading sessions after the local currency’s steady gains in recent weeks. Amongst emerging markets, our iFlow FX indicators confirm market participants’ appetite for higher yielding currencies continues to hold up, with net buying of the Polish zloty, Turkish lira, Brazilian real, Hungarian forint, South African rand and Chilean peso. In Asia as well, most local currencies are seeing net inflows, not least due to our iFlow equity indicators continuing to show real-money investors raising exposure to the region’s stock markets.
([email protected])

also one is ScotiaFX - http://www.scotiafx.com/FXCommentaries.htm

has anyone read them or use them?

btw - I have seen bond auctions have an effect. I try to find out what is going on in other markets also, especially those that effect the currency. IFR, Forexlive and ransquawk comment on it when it's going down.
  • #1,223
  • Apr 5, 2011 12:38pm Apr 5, 2011 12:38pm
Quoting Monroe
also one is ScotiaFX - http://www.scotiafx.com/FXCommentaries.htm

has anyone read them or use them?
I started collecting all of the ScotiaFX PDF's in September last year. I have 352 as of now. When I'll have a full year I'll analyze them to see if they are usable in a systemic way.
  • #1,224
  • Apr 5, 2011 1:24pm Apr 5, 2011 1:24pm
Quoting Adal
I started collecting all of the ScotiaFX PDF's in September last year. I have 352 as of now. When I'll have a full year I'll analyze them to see if they are usable in a systemic way.
Not that I would use this stuff in a systematic way, still interesting to see your results anyway.

Along with IFR I like reading a couple of banks briefings like UBS and BNY Mellon, I don't look at too many, but the ScotiaFX looked ok too. I like to see what's up for the day and what happened last session or whatever, keep an eye on flows, get some levels and go to work.
  • #1,225
  • Apr 5, 2011 1:58pm Apr 5, 2011 1:58pm
and so the 3-month average of data DS was talking about... maybe this is what he is referring to.

from IFR: [EUR/USD]
Quote
Digging through the data however reveals a slightly more optimistic view. Using a 3-mth rolling average instead of the monthly swings, today's print was the highest print in the data series over the last 5 months. The sub-categories; Business activity plummeted in March by 4 points however the 3-mth avg was just -0.9 and the absolute level remained above November's. New orders slipped 0.3 but the 3-mth avg jumped 0.9. Exports jumped 2.5 and the 3-mth average jumped 1.0 back to January's levels.
The jobs index slipped 1.9 m-on-m but the 3-mth avg. jumped +0.37 and is at its highest level in at least 5-mths (the data set released this AM). The inventory sent index leapt 9.5 m-on-m but was a snap back from the February snow storms that slowed deliveries but the 3-mth index hit 61.5, also its highest levels in 5 months. What is worrisome is that prices have screamed higher unabated and the import category has slumped to its lowest level in 5-mths (-3.5 m-on-m but that may also be weather related as February inventories were worked off)
  • #1,226
  • Apr 5, 2011 2:05pm Apr 5, 2011 2:05pm
Quoting auxesis
Tis' exactly what I am doing. I believe I understand what DS was implying but, imho, there's times when the simple mechanics of the market can be an underlying force that moves it. The Yen was used as such. Identifying these opportunities can shed some light, as well as profitable trade setups.

regards,
RE the carry trade: if you recall i prefaced my statement with "outside of retail forex". Little fish actually hold the currency in their brokerage account and collect the daily swap, so yes in effect this is directly tied to the interest rate differential, however, when big fish carry, they use the forex market solely to convert the currency (or hedge out the currency fluctuation risk). They do this in order to buy coutry specific assets. Whether it be government securities, company stock, or other instruments, the yield they are collecting is from the underlying assets, not the swap.

Remember that the swap rate on a currency pair is usually the overnight lending rate, which is usually the lowest yield rate that exists in an economy. For example, the fed funds rate is currently 0.09%. By comparison the 6mo tbill is priced to yield 0.14%. Thats a 55% yield improvement on an equivelent risk free security. If you consider corporates or municiple debt your looking at ~300% more yield for marginally more risk. Stocks and other FDI assets in a booming economy can be on the order of 10,000% higher yield for those willing to take the associated risk.

Now, if your goal is to earn net yield, it pays to convert your capital into the denomination of a booming economy to buy appreciable assets. One of the indicators of a booming economy is a central bank that is raising interest rates (to combat inflation, which raises the price of assets). So currencies with rising interest rates are likely to see their currencies appreciate.

Care must be taken however to realise that the cause of appreciating exchange rates (in relation to interest rate changes) is the opportunity for investors to earn meaningful yields on the underlying assets. If the underlying assets are unlikely to appreciate (or the currency is likely to depreciate more then the net yield on the investment), investors will forego a high yielding currency in favor of one providing a better net yield on the investment.

So long story short, interest rate differentials can be a proxy for indicating good investment opportunities, but you have to keep an eye on the underlying economy to determine if future capital flows will improve the value of the currency because capital flows are what ultimately drive exchange rates.
  • #1,227
  • Apr 5, 2011 2:37pm Apr 5, 2011 2:37pm
Thanks Ds,

That was an excellent post
  • #1,228
  • Apr 5, 2011 2:40pm Apr 5, 2011 2:40pm
Dark I will have a PM ready for you in an hour or so, would be really thankful if you could point me in the right direction..
Take care
  • #1,229
  • Apr 6, 2011 1:56am Apr 6, 2011 1:56am
interesting day:
barrier defense on eur$ ongoing (touted barriers @ 1.4275, 1.43)
who will win?

if u have questions, better ask the experienced OF traders.
  • #1,230
  • Apr 6, 2011 12:44pm Apr 6, 2011 12:44pm
Allright you know the deal. Live and all.

The only thing I have to say is that my psychology is fucked. I know there are a million threads about psychology but people dont trade like we do so I need some OF thoughts..

Today I placed an awesome trade seriously, 0,5 pips from bottom. Then it moved up 5-7 pips and then moved down quite fast so it closed it immediately. The fucked up shit is that it turned around in a jiffy and continued and never looked back.

Why did I do this? Why did I feel this? How can I tackle this problem?
Need some deep insights lads.

Take care
  • #1,231
  • Apr 6, 2011 1:05pm Apr 6, 2011 1:05pm
Quoting Carnegie
Allright you know the deal. Live and all.

The only thing I have to say is that my psychology is fucked. I know there are a million threads about psychology but people dont trade like we do so I need some OF thoughts..

Today I placed an awesome trade seriously, 0,5 pips from bottom. Then it moved up 5-7 pips and then moved down quite fast so it closed it immediately. The fucked up shit is that it turned around in a jiffy and continued and never looked back.

Why did I do this? Why did I feel this? How can I tackle this problem?
Need some deep...
Maybe your using too tighter stop for the volatility?
  • #1,232
  • Apr 6, 2011 1:23pm Apr 6, 2011 1:23pm
Actually as I think about it I think it is a deeper problem. It is a problem about seeing this as some holy grail and cant stand any drawdown so I get scared and close it out. That's the deal.. Im trapped in a holy grail mentality I think.

Take care
  • #1,233
  • Apr 6, 2011 1:27pm Apr 6, 2011 1:27pm
Carnegie,
There are perfect entries and perfect exits. It sounds like your entries are spot on, but your exits are needing some fine-tuning. This is something that can only be achieved from live experience imo. A TA based disaster point should be identified to let you know when your analysis was incorrect. Learning to take the heat on these trades is a part of trading with currency biased orderflow (imo of course). I believe DS posted a pic recently of a long trade via the A/U. Although he did not catch the bottom (which I feel is one of the main vices that leads to most blown up accounts), his analysis was correct and the A/U continued to rally soon after the heat was withstood. I'm sure those entries were perfect in his standards as well .
  • #1,234
  • Apr 6, 2011 1:30pm Apr 6, 2011 1:30pm
Quoting Benevolent
Carnegie,
There are perfect entries and perfect exits. It sounds like your entries are spot on, but your exits are needing some fine-tuning. This is something that can only be achieved from live experience imo. A TA based disaster point should be identified to let you know when your analysis was incorrect. Learning to take the heat on these trades is a part of trading with currency biased orderflow (imo of course). I believe DS posted a pic recently of a long trade via the A/U. Although he did not catch the bottom (which I feel is one of the main...
Yes but he defined the trade on other stuff.. it was long term trading the AUD trade with 200 pips DD on on scottybs thread. But darkstar is darkstar and I will never have that kind of belief in my own trading.. My real question maybe should be more clear.. How do you guys trade with regard to MM?
Anyone of you average in?

Take care
  • #1,235
  • Edited 1:49pm Apr 6, 2011 1:37pm | Edited 1:49pm
Quoting Carnegie
Yes but he defined the trade on other stuff.. it was long term trading the AUD trade with 200 pips DD on on scottybs thread. But darkstar is darkstar and I will never have that kind of belief in my own trading.. My real question maybe should be more clear.. How do you guys trade with regard to MM?
Anyone of you average in?

Take care
I personally average in. I focus on increasing exposure and decreasing risk.

Edit:

I also never use a SL, only to bring trades to BE or to trap up profits to a failure point.
  • #1,236
  • Apr 6, 2011 1:43pm Apr 6, 2011 1:43pm
Carnegie, I suggest you to put on a trade, wait for it to be executed and then leave the PC, or just close the platform.
Reopen it later on. It helped me a lot, because I got used to not touch the trade, so when later on I kept open the platform, I didn't have problems.

Entry, stoploss, takeprofit and a rule about the price almost reaching the entry point and then reversing is all you need to manage simple short term trades.

That's my thinking though. =)
Good luck my friend.
  • #1,237
  • Apr 6, 2011 1:55pm Apr 6, 2011 1:55pm
Quoting Carnegie
Allright you know the deal. Live and all.

The only thing I have to say is that my psychology is fucked. I know there are a million threads about psychology but people dont trade like we do so I need some OF thoughts..

Today I placed an awesome trade seriously, 0,5 pips from bottom. Then it moved up 5-7 pips and then moved down quite fast so it closed it immediately. The fucked up shit is that it turned around in a jiffy and continued and never looked back.

Why did I do this? Why did I feel this? How can I tackle this problem?
Need some deep...
Try the following thing. Before making any decision, like entering a trade with a market or limit order, moving SL or TP, exiting a trade prematurely etc, think if such decision will make you profitable in the long run. The outcome of any particular trade does not matter, what matters is where you are after 100 trades. I know, you're trying to get to 80%+ winrate, but it's not easy, you'll need a lot of practice before you get there. So for now focus on repeating something that you have an idea about. Do it strictly according to your rules and if you see it doesn't work after a few weeks practice, then move to another thing.
  • #1,238
  • Apr 6, 2011 1:57pm Apr 6, 2011 1:57pm
Think about how to place stops where they can't be hit.

Personally I don't trade with TPs (anymore).. something about breakeven or big trade that suits my style.
  • #1,239
  • Apr 6, 2011 2:14pm Apr 6, 2011 2:14pm
Quoting Carnegie
Allright you know the deal. Live and all.

The only thing I have to say is that my psychology is fucked. I know there are a million threads about psychology but people dont trade like we do so I need some OF thoughts..

Today I placed an awesome trade seriously, 0,5 pips from bottom. Then it moved up 5-7 pips and then moved down quite fast so it closed it immediately. The fucked up shit is that it turned around in a jiffy and continued and never looked back.

Why did I do this? Why did I feel this? How can I tackle this problem?
Need some...
Well, you need to ask yourself does the market move 5-7 pips in your favor mean that you need to move your stop (physical or mental) to breakeven or closer to your entry point?

Does your system tell you that if the market moves 5-7 pips, you should move your stop to breakeven or closer to your entry?

The thing that probably happens is that, you see the trade go in your favor and that causes certain scenarios/emotions to play out in your head. Perhaps you think of all the money you can make, or all the pips you can make, or that great this is a good trade and it should not come back because you finally caught the bottom to the pip on this trade. Or you think to yourself that this is the trade is going to go in my favor and explode in this certain direction and never retrace. I suppose something like that may be going through your head.

On the other side when the market drops very quickly and you are in drawdown, it can cause the following emotions to come into your mind and body. What if this is the trade where the market finally hits my stop loss so I should bail out early and only take this small loss instead of a full loss. Perhaps you see a certain pattern play out unrelated to your system and say I saw this and this pattern and that can cause my trade to hit my full stop loss, so I should bail out now, even though that pattern is not related to your trading system. You may be asking yourself why is the market in drawdown for so long? Am I missing something? Why isn't the market moving into my favor. Is the market going to hunt my stop and then go in the direction that you thought it was? I suppose something like that may be going through your mind.

Now the ideal trader mindset would be something like this I believe:

You find the entry criteria and place the trade. You set your stop loss. You have rules in your system that state when to move the stop to breakeven, or move the stop to lock in profits, etc. Only when those conditions are met do you exit your trade, or move your stop. Now you may say, well I want to flexible and thus don't need rules! Well thats kind of the problem. You need some sort of framework/rules that you tend to follow.

Yes order flow trading can be a heavily discretionary trading system, but that doesn't mean you cannot establish some rules to guide you along.

Will there be certain situations when the market goes 5-7 pips in your favor, then goes into drawdown and continues to give you a full loss, and you would of been better off taking the premature loss instead of the full loss, absolutely that will happen. But in the beginning you probably do not have that type of discretion developed to do that successfully. So the more likely scenario would be that you choose to bail out of the trade prematurely and the market decides to explode in your favor and if you did not do that, you would of ended up with a killer trade that made back all of your losses and then gave you a killer profit on top of that.

The market moving 5-7 pips can be caused by an infinite amount of things, most of which is noise. I used to bang my head against the wall trying to figure out the smallest 5-10 pip movements of price and explain them. Eventually that was a lost cause. A lot of pain and frustration. So I would generally recommend you focus on trades with at least 15-20 pip profit potential, and at least 15-20 pip stops. Even that might be a tad too low.
Private message me for a link to my order flow website.
  • #1,240
  • Apr 6, 2011 2:16pm Apr 6, 2011 2:16pm
Quoting EmeraldEyes
Think about how to place stops where they can't be hit.

Personally I don't trade with TPs (anymore).. something about breakeven or big trade that suits my style.
There's an emerald or two in here if you really contemplate the possible outcome of this statement Carnegie
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