I had some semi-automatic quant-like trading systems. Sort of like indicator based systems, but done the quant way (line charts instead of candles, log prices, deseasonalized time frames). They were mildly successful.
Now I've started to incorporate sentiment and positioning indicators into that. This seems to be a much lower hanging fruit than continuing to dig into more advanced mathematics.
The profitability drastically improved, especially when combining multiple sentiment sources. I use sentiment and positions as a modulator of the quant...
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sentiment and positioning indicators, like the brokers open position ratios?
sentiment and positioning indicators, like the brokers open position ratios?
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Yes, and also specific order book levels. I know that retail is only 10% of the market. But a big part of the other 90% is also amateurish - trades like retail. The book "Traders, Guns and Money" is full of stories about "institutional" traders, who didn't know which way is up and were easy marks for the banks.
Quoting Tact1cal
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Food for thought from Beat the Forex Dealer
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That was one of the best trading books I've read. Truly eye opening. I even took to heart one of it's mantras: Always Be Fading.
The majority isn't wrong, so trading against them will not provide you with an edge.
However, I like what you're hinting at. It would be very interesting to see real-time retail orderflow. In fact, if you read into market microstructure literature, it becomes apparent that collective (possibly, orchestrated) trading by retail customers may exploit the dealer-based nature of the forex market, and gain an edge over them.
First question is, who is going to set up a platform so that retail clients can anonymously link their trading account to a database, in order to get an idea of retail trading volume and the direction of orderflow?
First question is, who is going to set up a platform so that retail clients can anonymously link their trading account to a database, in order to get an idea of retail trading volume and the direction of orderflow?
And it's more and more used. On 18 Jan it reported $50.2 mil in real account open positions. Today it reports $457.5 mil in open positions (4575 lots). One thing I'm not sure of is if you have two opposing positions in your account ("hedging"), if they count both of them or only the net.
