Reminiscences of A Forex Speculator | Page 8 | Forex Factory

Options

Go to
Permalinks
Print Thread

Similar Threads

Reminiscences of a gentleman speculator 2006-2014 19 replies

Reminiscences of an alcoholic college student 40 replies

For those who have read Reminiscences of a Stock Operator ... 2 replies

Reminiscences of a FX Operator 1 reply

From Reminiscences of a Stock Operator 3 replies

Attachments: Reminiscences of A Forex Speculator
Exit Attachments

Reminiscences of A Forex Speculator

  • #141
  • Jun 19, 2011 12:45pm Jun 19, 2011 12:45pm
Quoting ingmarforex
Thank you guys for your answers i still really feel like a puppy all 3and half years i waisted only on technical analysis in trading. Lol i can do all technical stuff now but fundies i am still a little fish.
Puppy? Wasted? Why so negative? It's all useful stuff. If you learn how to combine that with fundamental information then you'll have a better grasp of things. But don't think you're worse off than people who know nothing about technicals because you're not.

Quoting ingmarforex
I am profitable in my trading
And you're still beating yourself up for not knowing enough about fundies? Take it easy on yourself. Being profitable is a great thing and more than anything, it allows you to take things easier (the feeling of not having to rush things, I mean).
Quoting ingmarforex
I found that you 2 guys knowing what you doing and a couple of others.
I'm flattered, but I would like to take the chance to caution you - don't trust everything we or others say. Skepticism is a skill like any other and will help you not only in trading but in real life as well. I used to believe a lot of crazy stuff and I found science to be of great help (the works of Carl Sagan and Richard Dawkins in particular). I don't think science can answer everything but it's a hell of a lot better than anything else we've got.

Quoting ingmarforex
1 thing i noticed in my trading journal was that most trades i lost was because trading against the sentiment for the current day for example risk on risk off.
I have noticed that if you have a firm grasp of technicals you don't necessarily need sentiment. The problem with sentiment is that you can do all the analyzing in the world but if you miss a single news piece (like I did on Friday) you are way off the mark. You said you'd done three and a half years of studying technicals. I'm sure you'll find a way to determine the trend in a reliable way. I'm not telling you to ditch sentiment, I haven't, but having technicals to guide you when sentiment is a mess is a good thing. I went back and took another look at my indicators and I discovered they all pointed to an imminent trend change on Thursday and further confirmation on Friday (more info in a later post in this tread some time today).

Quoting ingmarforex
also i came lately to believe what treuly drives the market is macrofundamental and not elliot wave or whatever
You can be sure of that. Around 80% of the trading is speculative in nature and most of those positions are leveraged and held for a very short amount of time. Central banks, companies and investment flows are what determine things in the long run.
If you don't risk, you don't ever have to lose.
  • #142
  • Jun 19, 2011 12:51pm Jun 19, 2011 12:51pm
REPLY TO TACTICAL

It is interesting that you should mention Thomas Sowell. I haven't read his book (just now went and downloaded a full 310 page PDF version of the book via Google search) but I have heard him being interviewed by Russ Roberts of Econtalk. Here is the link: http://www.econtalk.org/archives/200..._on_econo.html
I enjoyed the interview very much when it first came out and I think you will too. Russ Roberts has produced some great stuff over the years and I strongly recommend you check out the archives of Econtalk for more.

Quoting Tact1cal
Bug you're a information machine. I am seriously envious of your organization skills and ability to collect information. I actually consider it an edge in trading. Could you maybe share a bit with how you organize/collect all that data? I'm sure you have a system.

Sorry if that seems a bit intrusive but I know some ideas from you would be great for me personally. A couple links could work too. I know you have them LOL.
Thank you. I like organizing, collecting and summarizing information. I also enjoy writing and I have published a few articles in mainstream media. When you know your article is going to be read by tens of thousands of people who know your real name not some alias there is nothing else to do but to buckle up and do some serious work. Along the road one learns to collect and summarize information, to tell fact from fiction and important from the trivial. I've learned these organizational and analytical things through trial and error and I'm not sure exactly what advice I should give you.

The whole process itself is chaotic. When I do research I usually have at least two tables full of books and paperwork, some ten to twenty tabs open on FireFox, a few pdfs and a few Word documents open at the same time. In short I'm afraid I can't give you any good advice regarding the 'process'. I do, however, have links. You will find some of them here: http://www.forexfactory.com/showthre...77#post4601577

I have since added a few links:
http://www.ifre.com/
http://www.marketwatch.com/markets
http://finance.yahoo.com/news/category-currencies

I see that you posted a few links from PIMCO. I have their articles delivered straight to my inbox, I read them as soon as I get them (you can subsribe via their website). Being in the fixed income sector, they concentrate on intermediate and long term trends which is refreshing because most focus on short term issues. Since they manage funds of trillion+ dollars you can be sure that they've done their homework properly. That's a very big advantage over some smaller investment houses that have less money on the line.

By the way, I'm not so sure one can link the decline in money market funds outstanding assets to the Fed's QE program. As you can see from the chart provided by PIMCO (in the donut article) the amount of assets started declining during the credit crunch. It has continued its decline ever since. PIMCO doesn't mention it, but companies' balance sheets have been filling up with cash. This is because companies have been reducing their reliance on money market funds for short term funding (which is used for payrolls and other short term needs) due to their very negative experience during the credit crisis when money markets froze over. On the one hand, companies had trouble securing funds from MMFs and on the other hand investors were pulling out huge amounts of money because they were scared of funds 'breaking the buck' (this happens when NAV falls below 1, something which wasn't considered even remotely possible before the crisis). Companies now prefer to have a bolster of cash instead of relying on the MMFs for all their short term funding needs.

By the way, the role of MMFs is something I learned from the book I recommended to XXTrizzleXX (titled The Fearful Rise of Markets).
If you don't risk, you don't ever have to lose.
  • #143
  • Edited 1:53pm Jun 19, 2011 1:30pm | Edited 1:53pm
Hi bug! I expected you would give me more information than I could ask for. You did not disappoint.

Quote
Along the road one learns to collect and summarize information, to tell fact from fiction and important from the trivial. I've learned these organizational and analytical things through trial and error and I'm not sure exactly what advice I should give you.
This is all the advice you need to give me and you couldn't have worded it better, thanks.

Quote
When you know your article is going to be read by tens of thousands of people who know your real name not some alias there is nothing else to do but to buckle up and do some serious work.
I did not know that about you. I can't imagine that pressure. I feel insecure enough posting my own amateur thoughts on QE2 under and alias.


Quote
The whole process itself is chaotic.
This was actually a big reason I asked you about this originally. I find myself in a similar situation when I start researching. I guess I was just trying to organize something that's better left to chaos. I'm sure efficiency will improve over time provided I keep working for it.

---------

Thanks for the links, suggestions, feedback on PIMCO and MMFs. More delicious brain food.
Cautiously optimistic. . .
  • #144
  • Jun 19, 2011 4:22pm Jun 19, 2011 4:22pm
Quoting bug
The whole process itself is chaotic.
Quoting Tact1cal
This was actually a big reason I asked you about this originally. I find myself in a similar situation when I start researching. I guess I was just trying to organize something that's better left to chaos. I'm sure efficiency will improve over time provided I keep working for it.
I call it organized chaos. In all seriousness the human brain can store and process unimaginable amounts of information better than any machine. As long as there isn't too much information to process I think you will be able to manage it without having to organize every thought and fact like Mr. Monk organizes objects around him.

There is one thing I forgot to mention. After I've finished researching/writing an article I usually go over all the stuff that's piled up and get rid of the clutter. I do keep notes and important links stored somewhere but not the whole lot. The redundant stuff just clutters up your space (physical and electronic).

Quoting Tact1cal
Thanks for the links, suggestions, feedback on PIMCO and MMFs. More delicious brain food.
You're welcome.
If you don't risk, you don't ever have to lose.
  • #145
  • Jun 19, 2011 4:25pm Jun 19, 2011 4:25pm
Quoting bug
I went back and took another look at my indicators and I discovered they all pointed to an imminent trend change on Thursday and further confirmation on Friday (more info in a later post in this tread some time today).
I'm afraid that post is going to have to wait until tomorrow. I just had a wonderful dinner and a lengthy conversation after that and feel totally drained. I'll write the post tomorrow.
If you don't risk, you don't ever have to lose.
  • #146
  • Jun 20, 2011 12:43am Jun 20, 2011 12:43am
Set Take Profit level for the last EUR/GBP trade at my entry, so I can at least book some gains on the previous contract I took off at R/R 1:1. Will give clarifications as to why as well as my plans for EUR, AUD and USD after I get some rest. Falling asleep as I type.

EDIT: Adjusted TP level hit, so I'm flat now.

Regards,
xXTrizzleXx
  • #147
  • Jun 20, 2011 3:17pm Jun 20, 2011 3:17pm
So before I went to bed, I decided to book my gains on the EUR/GBP entry which was slightly in heat, by placing the TP for my remaining contract at entry. Reason being that the supposed expectations of a resolution to the IMF tranche conundrum were not met, as they were pushed all the way to July. I also got the feeling that sentiment was slowly becoming increasingly bearish with the uncertainty looming around the vote-of-no-confidence.

If I decided to have stayed in the position, I would have been stopped out by 1 pip.

However, with the confirmation by Junker that the ESM would be backed by further contributions, an almost doubling in size, it felt like the market again breathed a proverbial sigh of relief, triggering covering of shorts today. With sentiment slowly becoming less bearish, it felt like the parliamentary vote of no confidence would be the inflexion point for the coming week. So I sat down and decided to analyze the possibilities of the motion being passed and the motion being failed.

With the motion being failed, we have massive bearish sentiment pulling through. Tensions would mount drastically, and there would be a widespread loss of confidence - it would be the proverbial straw that broke the camel's back. With uncertainty regarding now future disbursement of the IMF tranche, fears of a Greek default and contagion spreading to the peripheries would come to the fore, and the Euro would fall quite rapidly.

Pros for failing the motion:

 

  1. Opposition can further advance their political agenda, as it would greatly appease public frustration.


Cons for failing the motion:

 

  1. Risk of financial crisis sweeping through the EZ peripheries and undermining the economic recovery in the EZ.
  2. Greece would have to answer to the mess it causes.


With the motion being passed, there would be a great deal of relief for now, as it looks like the IMF would disburse its next tranche of Greek aid.

Pros for passing the motion:

 

  1. Greece able to meet its short-term financial obligations, avoiding default.
  2. Opposition can still advance its political agenda, by highlighting all the faults of the incumbent government, and proposing solutions that would appease a very angry public that the austerity measures were passed through.

Cons for passing the motion:

 

  1. Widespread public unrest.

Weighing the pros and cons from my very limited analysis of the situation, it would tempt me to believe that the odds for amicable resolution outweigh those for a tussle.

How do I plan to capitalize on this? I'm looking at entering a long position of EUR/USD during the Asian Session which I can hopefully take risk off the table. My feeling is that interest above the recent range will be eyed. If it does not turn out as planned, I have no qualms closing the position out. The reward, if parliament does work things out amicably however, more than justifies the risk being taken here in my opinon.

As bug pointed out, the rating agencies still consider the roll-over as a credit event, as was echoed by S&P. The news hit my feed shortly after I initiated position..just great I thought, but it appears that fortunately, the market is not responding to this just yet. Going to keep a close eye on how these guys plan to work this out so that it pleases credit agencies.

Regards,
xXTrizzleXx

Attached Image
  • #148
  • Jun 20, 2011 4:28pm Jun 20, 2011 4:28pm
xXTrizzleXx
You mentioned the potential doubling of the EFSF and although from a trading point of view there are far more pressing issues than the long term implication of doubling/tripling the EFSF, I have a few thoughts about the longer term prospects I would like to share.I read about the doubling of the European bailout fund, but as I understand it is just an idea as it stands now - there have been no official talks or meetings. European funding countries are growing increasingly nervous and hostile and I very much doubt there will be any increase in funds available (coming from a funding country I understand the hostility and I think we should let Greece fail and use the funds available to bolster European banks' balance sheets, but this is another topic entirely and I won't go into that in detail).

People perhaps don't realize that a short-term positive reaction on capital and foreign exchange markets doesn't mean increasing the size of the fund is going to work in the real world. You can keep on pumping more money into the EFSF but at some point the exposure from the fund to solvent countries will start affecting their own sovereign funding costs in effect potentially bringing the whole EMU down with it. I don't think the breaking point is something you call calculate in advance but it is a very real possibility and perhaps something that European politicians haven't considered. It seems to me that European politicians are gambling using a martingale type of strategy.

I have given this a lot of thought and I've reached a conclusion that there can only be a limited number of outcomes:
(1) The gamble pays off. Troika manages to stabilize Europe either with out without a bigger EFSF.
(2) The EMU comes very close to collapsing, some countries dump the euro leaving the remaining members with debt that will never be paid off.
(3) The EMU collapses.

What worries me is the possibility of capital controls and financial repression being introduced (it is already happening in the US on a small scale). And I don't think you need me to tell you what capital controls mean for the fx market.

These are my thoughts on the long term prospects of the bailout drama in Europe. This is something that will play out in the long run (many months to many years), but I decided to write it down here anyway in case it may interest people. I haven't given very much detailed thought to the more pressing matters of Greek politics and IMF funding but I find myself agreeing with most of what xXTrizzleXxwrote in the post above.
If you don't risk, you don't ever have to lose.
  • #149
  • Jun 20, 2011 5:03pm Jun 20, 2011 5:03pm
Quoting bug
I'm afraid that post is going to have to wait until tomorrow. I just had a wonderful dinner and a lengthy conversation after that and feel totally drained. I'll write the post tomorrow.
I had a lengthy post all written up but I lost it due to power failure (I pulled the plug on my laptop). So here is a short summary of what I found.

During the weekend I took a look at Friday's charts and I discovered that my trend indicators were all pointing up. Some of them were showing a positive divergence beginning Thursday afternoon. It's always easy to play smart in hindsight but the conclusion here is that I should've taken a look at my trend indicators on higher timeframes. I guess I got too caught up in EUR bearish news which is stupid because I developed those trend templates to balance out technicals and sentiment. Oh well, at least I know what I did wrong on Friday and I can move on.

PS. I started reading Sowell's book and I like it a lot. Can't remember who brought it up first but thanks for mentioning it. I'm already
If you don't risk, you don't ever have to lose.
  • #150
  • Jun 20, 2011 6:17pm Jun 20, 2011 6:17pm
Looking to take risk off @ 4360ish trizzle? I got a marker there. They've been sitting for a bit.

Edit: speak of the devil LOL

Quote
PS. I started reading Sowell's book and I like it a lot. Can't remember who brought it up first but thanks for mentioning it.
NP, I got the recommendation from Darkstar as a good book to start a foundation of understanding macroeconomics on. Or at least that's what I remember. I wasn't expecting it to be 600+ pgs but it's still an awesome read.
Cautiously optimistic. . .
  • #151
  • Jun 20, 2011 6:51pm Jun 20, 2011 6:51pm
Quoting Tact1cal
I wasn't expecting it to be 600+ pgs but it's still an awesome read.
Hmm. I've got a copy I got online that's 310 pages. Google Books gave about the same page count. Amazon gives 700+ pages for a hardcover copy. I hope it's the font size that's playing a role here. Otherwise I have to start looking for a new version of the book (I don't like settling for less when it comes to knowledge).
If you don't risk, you don't ever have to lose.
  • #152
  • Jun 20, 2011 7:20pm Jun 20, 2011 7:20pm
This might help you figure out which version you are working with. There seem to be quite a few. I purchased this one, the 2010 edition.
Cautiously optimistic. . .
  • #153
  • Jun 20, 2011 7:50pm Jun 20, 2011 7:50pm
Quoting bug
xXTrizzleXx
You mentioned the potential doubling of the EFSF and although from a trading point of view there are far more pressing issues than the long term implication of doubling/tripling the EFSF, I have a few thoughts about the longer term prospects I would like to share.
See this is the reason I find some of the material you provide so valuable - it helps me know where we stand in the big scheme of things, since my trading is a bit more 'in-the-moment' oriented. It's just like what happened when you reminded us of the views of the rating agencies earlier on. I normally jump off the short-term reactions like you note further down.

Quote
I read about the doubling of the European bailout fund, but as I understand it is just an idea as it stands now - there have been no official talks or meetings. European funding countries are growing increasingly nervous and hostile and I very much doubt there will be any increase in funds available (coming from a funding country I understand the hostility and I think we should let Greece fail and use the funds available to bolster European banks' balance sheets, but this is another topic entirely and I won't go into that in detail).

People perhaps...
Noted. I'm really hoping that their gamble pays off. Then they can learn from their mistakes and stop the martingaling!


Quote
What worries me is the possibility of capital controls and financial repression being introduced (it is already happening in the US on a small scale). And I don't think you need me to tell you what capital controls mean for the fx market.
Yeah, I read your views in the other thread about it, and luckily I'm not in the US, but I find it quite sad. It was also ironic that the news about the controls comes to the fore right when I took a faint interest in XAU/USD...

Regards,
xXTrizzleXx
  • #154
  • Edited 8:09pm Jun 20, 2011 7:56pm | Edited 8:09pm
Quoting Tact1cal
Looking to take risk off @ 4360ish trizzle? I got a marker there. They've been sitting for a bit.

Edit: speak of the devil LOL
LOL! Mighty good marker you've got there! Mrs. Watanabe was good to us! But yes risk's been taken off and now it's all up to Greek Parliament..I'm even thinking of setting my stop at entry going into Europe, so if things go bad at least I can book some gains as I've been doing with the rest of the positions.

I'm now eyeing a position in AUD/USD. More to come on that in a bit.

Quote
NP, I got the recommendation from Darkstar as a good book to start a foundation of understanding macroeconomics on. Or at least that's what I remember. I wasn't expecting it to be 600+ pgs but it's still an awesome read.
And I can't manage to get anywhere decently into it yet since I promised myself to get through Reminiscences of A Stock Operator first..but I'm trying to soak in the book and make notes so it's a really slow process.

@bug,
I think Amazon has a feature where they let you check inside the book for some random pages. Perhaps you can compare inside the book to your pdf at some pages to see if you're good to go.

Regards,
xXTrizzleXx
Attached Image
  • #155
  • Jun 20, 2011 8:31pm Jun 20, 2011 8:31pm
Essentially, the market is not expecting overly hawkish rhetoric from the RBA, as it isn't really pricing in many more interest rate hikes in the future. If this is the case, then I wanted to see if I could a position from a bounce at 1.0560, so I can establish a longer-term leg.

The longer term leg is based on the view of continued diversification out of USD into AUD, by Russian, South American, Eastern European and Asian sovereigns and central banks.
Attached Image
  • #156
  • Jun 20, 2011 8:53pm Jun 20, 2011 8:53pm
Part of me has a feeling the move would retrace, but I was beginning to feel uncomfortable at the scope of the order flow that the RBA minutes produced. I would have felt better if my order took 'more effort' to get hit so to speak, so I've scrapped the position on a retrace to my entry at break even for +1.

When in doubt..stay out..if it does retrace..it's a learning experience and no harm done..

Regards,
xXTrizzleXx
  • #157
  • Edited 10:03pm Jun 20, 2011 9:16pm | Edited 10:03pm
You're keeping the limit order at 1.0500 right? This is a smart trade IMO. I'd be curious what Cindy would have to say about this. I know he follows the AUD closely.

It was a nasty sell off but IMO we didn't hear anything we didn't already know. 1.0500 is an very nice support area and I don't see us breaking below it on this. The main issue is euro risk aversion. If that subsides this is a good long.

Some links

Link

Link

Link

-------

Some observations on recent action. I truly believe some inefficiencies lie within positions quickly being zeroed out in times of low liquidity.

http://i.imgur.com/ZhTB4.jpg


Cautiously optimistic. . .
  • #158
  • Jun 20, 2011 10:40pm Jun 20, 2011 10:40pm
Quoting Tact1cal
You're keeping the limit order at 1.0500 right? This is a smart trade IMO. I'd be curious what Cindy would have to say about this. I know he follows the AUD closely.
Yep I'll keep the 1.0500 one in the hopes that maybe price will be nice enough to come and visit before it takes off. I'm quite bullish AUD/USD for July onwards. Judging by the links you've provided I'm assuming you're playing to the topside too?

Quote
It was a nasty sell off but IMO we didn't hear anything we didn't already know. 1.0500 is an very nice support area and I don't see us breaking below it on this. The main issue is euro risk aversion. If that subsides this is a good long.

I really didn't think they would react that way, but if they did then I guess one has no choice but to adapt to the situation to take it into account.

Quote
Some observations on recent action. I truly believe some inefficiencies lie within positions quickly being zeroed out in times of low liquidity.

I'd definitely agree with you here! Especially spotting the vacuum on EUR/USD. Good thinking!

Regards,
xXTrizzleXx
  • #159
  • Jun 21, 2011 4:04am Jun 21, 2011 4:04am
Quoting Tact1cal
This might help you figure out which version you are working with. There seem to be quite a few. I purchased this one, the 2010 edition....
Thank you, Tact1cal. I now see that it's definitely the font size. My pdf version has bigger pages (A4 as opposed to standard A5 for books) and smaller font so it's all well.

Quoting xXTrizzleXx
@bug,
I think Amazon has a feature where they let you check inside the book for some random pages. Perhaps you can compare inside the book to your pdf at some pages to see if you're good to go.

Regards,
xXTrizzleXx
I did exactly that but Sowell's books don't have the 'Look Inside' feature on Amazon. Tact1cal's link to Google Books allowed me to browse away inside.

Quoting xXTrizzleXx
If this is the case, then I wanted to see if I could a position from a bounce at 1.0560, so I can establish a longer-term leg.
Are you sure taking a longer term position one day ahead of the FOMC Minutes and press conference is a good idea? Bernanke has been expressing his unwillingness for further easing, but you never know what he might be keeping from us until the meeting. There could be a change in tone/language in the FOMC press release that could catch the market by surprise sending the USD higher. Even if it's just a short-lived rally it could hit your stop. Or not. Who knows, right?
If you don't risk, you don't ever have to lose.
  • #160
  • Edited Jun 22, 2011 9:12am Jun 21, 2011 5:21pm | Edited Jun 22, 2011 9:12am
Quoting bug
Are you sure taking a longer term position one day ahead of the FOMC Minutes and press conference is a good idea? Bernanke has been expressing his unwillingness for further easing, but you never know what he might be keeping from us until the meeting. There could be a change in tone/language in the FOMC press release that could catch the market by surprise sending the USD higher. Even if it's just a short-lived rally it could hit your stop. Or not. Who knows, right?
Definitely agree with you here! I had judged the trade to be worth the risk because if the news went according to plan I'd have my stop in what I reckoned would be a very safe place so that it would stand a chance of battling against The Bernanke!

But I read it wrong so opted to get out at BE+1 instead. It was however, a learning experience and looking back the trade would have actually been successful - but no use lamenting over it now. Let's just hope I eventually get my position on there soon!

But as you pointed out I was indeed reluctant to establish any USD positions especially with FOMC on the horizon, but wanted to express some EUR strength after the parliamentary vote. I thus opted to establish a position on EUR/GBP again, which I'm hoping will have risk quickly removed. I'm still holding on to the EUR/USD position as well.

Regards,
xXTrizzleXx
Attached Image
0 traders viewing now