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Identifying Market Swings - Medium and Long Term Trading

  • #521
  • Sep 5, 2010 10:59am Sep 5, 2010 10:59am
Thank you Razor for your very valuable contributions.

I wanted to thankyou directly via PM, but unfortunately my posts need to be approved first by a moderator before I can take advantage of this facility

In any event, I recognise that you are generally long-term bullish the US economy. I was wondering if there would be anything that would change such an outlook?

Again many thanks,



Stefan
  • #522
  • Jan 10, 2011 10:43am Jan 10, 2011 10:43am
Too bad it went dead Anyone interested to revive it?
  • #523
  • Jan 11, 2011 12:41am Jan 11, 2011 12:41am
Quoting challenger78
Too bad it went dead Anyone interested to revive it?
I believe many people would be happy. But it does not make sense without Razorjack...
Don't touch, just look...
  • #524
  • Feb 17, 2011 7:58am Feb 17, 2011 7:58am
If we revive the discussion, maybe we could use what Razor has taught us and move forward. I'm interested.
  • #525
  • Mar 25, 2011 12:03pm Mar 25, 2011 12:03pm
Quoting Razorjack
HAHAHAHA!! LOL!

I love the nick!

I agree the technicals are important, I also use technicals but very few, I use only trendlines, volume and 1 fib on the long term swings. I also use a customized statistics indicator that I developed myself to map swing levels.

However, just to be clear, I use technicals to help me time my trades but I am ALWAYS anticipating what the markets are doing or going to do through fundamentals.

Also why H4? I think anything less than Daily is noise, very unpredictable. There are less opportunities but...
Using higher TF like the daily and weekly, how do you tackle DD. How do you measure noise in terms of pips? I ask this question to give me an idea where to put my SL. Do you use SL in your trading? Sorry, I am a new in this thread and have not read the entire post.

Edd
  • #526
  • Mar 25, 2011 12:50pm Mar 25, 2011 12:50pm
Quoting Edd Ganuelas
Using higher TF like the daily and weekly, how do you tackle DD. How do you measure noise in terms of pips? I ask this question to give me an idea where to put my SL. Do you use SL in your trading? Sorry, I am a new in this thread and have not read the entire post.

Edd
Seems like you haven't even read the first post.

But of course you probably got too much going on to read one post and rather ask, right? Also there is a simple tool called "search this thread", you click on that and then enter "stop" or "stop loss".
Not that hard.

cheers
  • #527
  • Mar 26, 2011 12:13pm Mar 26, 2011 12:13pm
Quoting Custos
Seems like you haven't even read the first post.

But of course you probably got too much going on to read one post and rather ask, right? Also there is a simple tool called "search this thread", you click on that and then enter "stop" or "stop loss".
Not that hard.

cheers
Custos,

I just need to follow-up my question earlier in relation to Razorjack earlier post that anything less than daily (I think anything less than Daily is noise, very unpredictable. There are less opportunities but...) how to quantify noise in terms of pips in the lower tf. Research studies shows that noise can even go as high as 150 pips or even higher. What if that 150 pips noise will not come down to where it came from and continues even higher, then you are burried in a hole. Since you have been following this thread very long than I am and started couple of threads of your own, I pressume that you have a credible solid approach with the issue i raised up on how to tackle dd, I would appreciate very much if you can help me improve my trading in the higher tf.

By the way, I search the thread as you suggested but with negative resullt.

God Bless,

Edd
  • #528
  • Mar 26, 2011 12:50pm Mar 26, 2011 12:50pm
Quoting Edd Ganuelas
Custos,

I just need to follow-up my question earlier in relation to Razorjack earlier post that anything less than daily (I think anything less than Daily is noise, very unpredictable. There are less opportunities but...) how to quantify noise in terms of pips in the lower tf. Research studies shows that noise can even go as high as 150 pips or even higher. What if that 150 pips noise will not come down to where it came from and continues even higher, then you are burried in a hole. Since you have been following this thread very long than I am...
In his first post he wrote:
My system is quite simple, I trade daily charts or higher and have almost no indicators. I use trend lines, volume, 1 fib, and market swing statistics. My initial Stop Loss is 1 ATR (Daily) and I go for 200-500 pips profit, sometimes more. The rest is just understanding the fundamentals to identify new opportunities.

First and foremost you need an edge, and I think fundamental analysis like this here is one of the edges available to us.
With regards to noise, that is why we employ stops. There will always be noise to some extent. Sometimes you get taken out by noise and sometimes not. We never know what will happen beforehand. You just have to make more money when you win than the money you lost.
You handle dd by embracing it. You will never get rid of it. But if you have an edge, then statistics tells us that we will sooner or later get out of dd. Maybe after 1 trade, maybe after a thousand, depends on your approach.

Anyways, I don't wanna clutter the thread, since my thoughts about stops and so on have nothing to do with the thread. Finding the proper stop really depends on the strategy and time-frame.
  • #529
  • Mar 27, 2011 5:28pm Mar 27, 2011 5:28pm
Quoting Custos
In his first post he wrote:
My system is quite simple, I trade daily charts or higher and have almost no indicators. I use trend lines, volume, 1 fib, and market swing statistics. My initial Stop Loss is 1 ATR (Daily) and I go for 200-500 pips profit, sometimes more. The rest is just understanding the fundamentals to identify new opportunities.

First and foremost you need an edge, and I think fundamental analysis like this here is one of the edges available to us.
With regards to noise, that is why we employ stops. There will always be noise...
Thank you for your explanation, it is highly appreciated. Trading the Higher TF needs some amount of capital coupled with sound money management by avoiding overexposure to preserving your capital.

God Bless,

Edd
  • #530
  • Aug 6, 2011 7:54pm Aug 6, 2011 7:54pm
What a bummer. I just finished reading this whole thread on the day the US credit rating got downgraded. I would love to hear Razor's thoughts on this, but I see he is gone.
  • #531
  • Aug 6, 2011 10:59pm Aug 6, 2011 10:59pm
Quoting Razorjack

My system is quite simple, I trade daily charts or higher and have almost no indicators. I use trend lines, volume, 1 fib, and market swing statistics. My initial Stop Loss is 1 ATR (Daily) and I go for 200-500 pips profit, sometimes more. The rest is just understanding the fundamentals to identify new opportunities.
I like it.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #532
  • Aug 6, 2011 11:04pm Aug 6, 2011 11:04pm
Quoting mikeyshaun
What a bummer. I just finished reading this whole thread on the day the US credit rating got downgraded. I would love to hear Razor's thoughts on this, but I see he is gone.
I'm still planning to read it someday, but now mostly busy with news.
  • #533
  • Edited 4:35am Aug 7, 2011 4:07am | Edited 4:35am
Quoting mikeyshaun
What a bummer. I just finished reading this whole thread on the day the US credit rating got downgraded. I would love to hear Razor's thoughts on this, but I see he is gone.
Wow I'm surprised to see people still keeping this thread alive. Unfortunately, I don't have enough time to post actively, but since you asked I can give you my take on the latest events.

First of all I suggest looking at all the current developments and not only the US credit downgrade.

1. slow down in China impacting commodities, i.e. AUD, NZD and CAD.

2. record high CHF and JPY levels impacting their economies causing direct or indirect (SNB cutting interest rates and increasing money supply) intervention.

3. Euro debt crisis - the increased firepower to the EFSF will help stabilize the Euro in the long run but the real question is the amount of ammo, i.e. if the amount of money in the fund is enough to help Italy and Spain

4. US fiscal policy, the downgrade was caused by the unsustainable levels of debt meaning that the govt didn't cut enough of the debt, which means that it will have to cut more in order to avoid further downgrades. This would cause further slowdown and push the Fed to ease a bit more, i.e. QE3

So to sum it up, the safe havens (USD, JPY and CHF) govts and central banks are pushing to ease their policies thus depreciate their currencies, while the global economic slowdown will cause the riskier commdolls (AUD, NZD and CAD) to depreciate.

Based on this, 2 weeks ago I got in long on Euro and GBP vs the commdolls (AUD, NZD and CAD) right on the turn. I believe these pairs have the biggest potential gains over the medium term, i.e. 2 to 6 months. Of course I could end up being wrong but so far it's going in the anticipated direction and I have a profit.

Finally, always make your own analysis and trade your own systems using fundamentals as a road map. Remember that fundamentals can tell which way the markets will be headed, it just can't tell you when, that's where your own system comes in.

Hope this helped, good luck! :-)

EDIT: Oh yeah, almost forgot...look for gold to continue upwards over the medium term until the easing cycles are completed then short the hell out of it for a long long ride down!
-Razorjack
  • #534
  • Aug 7, 2011 7:11am Aug 7, 2011 7:11am
Much appreciated. Thanks!
  • #535
  • Aug 7, 2011 9:11am Aug 7, 2011 9:11am
Quoting Razorjack
EDIT: Oh yeah, almost forgot...look for gold to continue upwards over the medium term until the easing cycles are completed then short the hell out of it for a long long ride down!
Yep, silver too & maybe moreso. I'm keeping some powder dry for those. Thanks for your thread.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #536
  • Aug 7, 2011 2:16pm Aug 7, 2011 2:16pm
Quoting Razorjack
Wow I'm surprised to see people still keeping this thread alive.
Razorjack:

Your thread has definitely been helpful to a number of traders. Based upon your recommendations I read Trader Vic and Currency Trading and Intermarket Analysis. Both were very helpful, but your explanations of both texts were most helpful.

To be honest, the Trader Vic book needed a better editor, but you were able to capture, express, and most importantly implement the lessons that he was attempting to pass on.

I read the entire thread about two months ago, and am working toward understanding how the big boys trade, the advantages that retail trades have, and how to use the short, medium, and long term trends to structure trades.

I understand why you might have gotten frustrated by the end of the thread, you definitely invested a lot of energy in it. IMO it is one of the gems on FF.

I hope that you decide to finish the "Thinking like the Big Boys" series. Even if you don't, thanks for your contributions here.

Best wishes.
  • #537
  • Aug 9, 2011 12:29am Aug 9, 2011 12:29am
Hey Razor,

Good to see you're still around.

I'm kinda scratching my head on how you were able to identify the EUR and GBP as the best vehicles to short the commodity currencies. The EUR just recently added Italy and Spain to the mix of countries it's already bailing out. The GBP economy is in bad shape with inflation in the high 4% while still refusing to raise interest rates in fear of hampering an already slow recovery. Was it just a case of picking the lesser evils since JPY and CHF were actively intervening while the US just got downgraded? Would love to hear your thoughts on this when you have time.


Quoting Razorjack
Wow I'm surprised to see people still keeping this thread alive. Unfortunately, I don't have enough time to post actively, but since you asked I can give you my take on the latest events.

First of all I suggest looking at all the current developments and not only the US credit downgrade.

1. slow down in China impacting commodities, i.e. AUD, NZD and CAD.

2. record high CHF and JPY levels impacting their economies causing direct or indirect (SNB cutting interest rates and increasing money supply) intervention.

3. Euro debt crisis - the increased...
  • #538
  • Aug 12, 2011 3:04pm Aug 12, 2011 3:04pm
Quoting sir6
Hey Razor,

Good to see you're still around.

I'm kinda scratching my head on how you were able to identify the EUR and GBP as the best vehicles to short the commodity currencies. The EUR just recently added Italy and Spain to the mix of countries it's already bailing out. The GBP economy is in bad shape with inflation in the high 4% while still refusing to raise interest rates in fear of hampering an already slow recovery. Was it just a case of picking the lesser evils since JPY and CHF were actively intervening while the US just got downgraded?...
Hey mate,

Yes, you are partially correct in that EUR and GBP were the lesser of evils in that intervention in one form or another clouded the view of CHF and JPY.

The other part had to do with the price movements before the big panic. Both EUR and GBP vs the commdolls were headed down before the panic. So a panic would cause a TREND CHANGE. Where as in the other pairs, e.g. AUDJPY & AUDCHF, were already in a downtrend and the continuation in a trend wouldn't be as big a move when you position your trading size based on volatility.

Take a look at the chart for GBPAUD, I got lucky and caught the turn as it was happening. The move ended up being over 1600 pips!

http://i49.servimg.com/u/f49/14/99/43/07/gbpaud10.gif

You can see that it was actually a change in the trend rather than a continuation. It was a good run and I was lucky enough to catch well over a 1000 pips on that run.

So for me, the main factor was that it was a trend change (rather than a trend continuation) that suggested the greatest potential.

I don't advise anyone to trade the turns, it can be dangerous if you don't know what you're doing. This just happens to be my edge and I can see the turns before they happen.

Here's another one where I got lucky again!

It was right after I dumped the EUR/GBP longs vs commdolls. I thought the Swissy was way overvalued especially considering the expansion in money supply the SNB is implementing, so I went long AUDCHF:

http://i49.servimg.com/u/f49/14/99/43/07/audchf13.gif

I believe there is still another 1000 pips left in this move, but of course I could be wrong about that!

I'm also long CAD, EUR, GBP and USD vs CHF as well as a few other trades. However I think these will only be a short term bounce, before they turn back for an even bigger longer run towards risk aversion.

Hope this helps.
-Razorjack
  • #539
  • Aug 12, 2011 5:47pm Aug 12, 2011 5:47pm
Quoting The Cheetah
Razorjack:

Your thread has definitely been helpful to a number of traders. Based upon your recommendations I read Trader Vic and Currency Trading and Intermarket Analysis. Both were very helpful, but your explanations of both texts were most helpful.

To be honest, the Trader Vic book needed a better editor, but you were able to capture, express, and most importantly implement the lessons that he was attempting to pass on.

I read the entire thread about two months ago, and am working toward understanding how the big boys trade, the advantages...
Hello my predatory and parasitic trading friend,

I'm glad you got something out of the thread and all my rantings!

Yes, it was definitely a lot of time and energy invested. Knowing that some people actually learned a few things from it makes it a bit more worthwhile.

Unfortunately I don't have as much time as before to actively post here, but I'll consider dropping by once in a while to post when I can.

Right now the best advise I can offer for you is to develop your own trading system that works around your lifestyle.

For example, do you enjoy sitting in front of the screen watching the charts as the bars develop? Do you need to jump in and out of trades frequently? Then develop a short term or even intra-day system, but only trade in the direction of the long term trend. This is where your knowledge of fundamentals and having your finger on the pulse of the current "market psychology" will help you filter out trading signals.

If you however are more like me and would rather go play golf or go sailing while making money, then trade the longer time frames and learn to pyramid with smarter money management to maximize your profits. Even here, you need to develop a system that your comfortable with, i.e. do you want to get in at the turn or would you rather wait for a breakout or more conservatively at the first dip/rally? How long do you stay in? When do you exit? etc etc

And finally, this is just me talking to myself but hopefully it will help you as well.... Never trade your opinions.....the markets are always right, but your opinions can be wrong or mistimed......so always go with the market.....

For example, if the market is in a downtrend but your analysis tells you that the trend will turn upwards soon.....keep in mind that the ODDS OF THE TREND CONTINUING ARE GREATER THAN ODDS OF THE TREND CHANGING. So what this boils down to is look for your entry where you believe the turn will be, but just in case you get in too early and/or you're wrong then always have the stop and reverse at a strategic point so you can continue riding the trend and make up for any loss.

Remember that the idea behind trading is NOT to be right, but to make money!

If you plan your trades this way you can make some money EVEN when you're wrong and make a killing when you are right!

Hope this made some sense.
-Razorjack
  • #540
  • Aug 12, 2011 6:06pm Aug 12, 2011 6:06pm
hi razor
i enjoy reading your thoughts... perhaps you would consider to post regularly including your trade charts... sure do alot of traders to gain your inputs. thx. have a nice weekend.
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