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someone PLEASE explain this market to me

  • #21
  • Aug 8, 2011 11:24pm Aug 8, 2011 11:24pm
Quoting Goat
No, that's why hedgefund managers are billionaires.
Oh, so now every hedge fund manager has a PhD in economics, interesting.

By the way, the salary of the average fund manager is about $150,000 a year. So it would take him what, about 750 years to make a billion, assuming he does not spend a dime in the meantime, not even on taxes?

Pfft, piece of cake.
  • #22
  • Aug 9, 2011 1:56am Aug 9, 2011 1:56am
Quoting The Fool
Right, just open your trading platform and make a snap decision based on some indicators, or better yet, your gut. If your gut is queasy just flip a coin. By all means, don't spend any time considering, reflecting, analysing, or anything like that.... and, oh yeah, this is the main thing: go all in on every trade! Booyah!
haha, good post!
  • #23
  • Aug 9, 2011 1:59am Aug 9, 2011 1:59am
Quoting gspajon
Perhaps you could loan me your crystal ball...mine doesn't work, which is why I am asking these questions...

DUH...every entry or exit is basically anticipation of what I think will likely happen in the market. If I know when the market was going to turn I'd wait for the very pip and put in a 10 pip stop loss and realize a 1000:1 risk-reward-ratio.
no need to get so offensive, man. I just told you how it works in theory. If you want to use fundies, you need to anticipate what will happen. Once it happened, it is already too late.
  • #24
  • Edited 2:23am Aug 9, 2011 2:10am | Edited 2:23am
Quoting Goat
This is what most people think in their first few years of trading. It's easy to understand drawing lines on a chart... but understanding the complexities of money flows and how they react to economic changes takes years of experience.
This sounds like the path i took. I started filtering which of my technical analysis trades not to take by analysing market conditions with fundamentals and market sentiment. The more i did it the better i become until one day i switched priorities. Now i analyse the market off the chart and if i find a bias then i look to the charts for an entry/exit

TA allows me to time the market and reduce my stop loss which in turn increases leverage and/or risk return ratio
FA and market sentiment analysis allows me to win more trades than i lose (and improve risk return ratio)

95% of the time i still have no idea what is going on (until too late), i just wait until i think i know what is going on and i am right more often than i'm not
  • #25
  • Aug 9, 2011 10:55am Aug 9, 2011 10:55am
Quoting Mr Breakout
I would go even further Eagle4X, fundamental analysis is totally worthless, everything we need to know is already reflected in the price, end of story.

Fundamental "analysis" can, at best, explain the past.
If everything you need to know is already reflected in the price, then how do you explain news releases affecting the market?

Back on August 3, USD/JPY was trading at 77.10 at 9pm EST. One minute later it was trading at 77.50. Looks like price was missing and was not reflecting something.

Just wondering how you explain it and rationalize it.
Private message me for a link to my order flow website.
  • #26
  • Aug 9, 2011 11:43am Aug 9, 2011 11:43am
Stop thinking to much, get active...
Your edge is YOU in YOUR plan of trading.. that's it.. forget the rest.
  • #27
  • Aug 9, 2011 12:41pm Aug 9, 2011 12:41pm
Quoting grkfx
If everything you need to know is already reflected in the price, then how do you explain news releases affecting the market?

Back on August 3, USD/JPY was trading at 77.10 at 9pm EST. One minute later it was trading at 77.50. Looks like price was missing and was not reflecting something.

Just wondering how you explain it and rationalize it.
As a trader, I am not in the business of explaining/rationalizing why the price moved that way or that way and not that way. I really, really do not care at all about the WHY (which is the fundamental approach), it is a complete and total waste of time and energy.

To be successful, the trader only needs to do one thing and one thing only : find a statistical trading edge (through numerous backtesting) and exploit that edge with discipline and strict money management, day after day, week after week, year after year.

That's it, the rest is just conversation.
  • #28
  • Aug 9, 2011 12:50pm Aug 9, 2011 12:50pm
Quoting Mr Breakout
fundamental analysis is totally worthless, everything we need to know is already reflected in the price, end of story.



Quote
Fundamental "analysis" can, at best, explain the past.
Funamental analysis is a leading indicator not a lagging one.

Quote
find a statistical trading edge (through numerous backtesting) and exploit that edge with discipline and strict money management, day after day, week after week, year after year.

True but this does not apply to price action patterns trading.
  • #29
  • Aug 9, 2011 12:53pm Aug 9, 2011 12:53pm
Quoting Mr Breakout
As a trader, I am not in the business of explaining/rationalizing why the price moved that way or that way and not that way. I really, really do not care at all about the WHY (which is the fundamental approach), it is a complete and total waste of time and energy.

To be successful, the trader only needs to do one thing and one thing only : find a statistical trading edge (through numerous backtesting) and exploit that edge with discipline and strict money management, day after day, week after week, year after year.

That's it,...
Thank You for your response Mr Breakout.

Na, I am not talking about fundamental analysis. I am not going to try to defend that.

If everything is reflected in the price, then I assume that some statistical edge can be found analyzing the USD/JPY prices of the past using some sort of technical indicators/chart patterns/price patterns/robot/programming, etc in order to "predict" the Bank of Japan intervention.

I do not know of any technical indicator, chart pattern, or price pattern that can predict that with any statistical edge.

There are various ways to help you know and predict such events, but they usually have to do with information outside of the chart, and thus do not show up in the price data.

I have no idea how someone would attempt to back test such news and central bank intervention. You can't back test it with price data alone, because price data is not the only useful information about the market.

If your system that you so diligently back tested happened to be short USD/JPY during that time and had it's stop loss anywhere between 77.20 - 80.00 then it got smoked. In other words that trade would of had a much lower probability of success than your system indicated because a system that only looks at price data does not take into account the information that does not appear on the chart.

Now I obviously do not know your system and do not know if your system would of been short or how you manage your stops, etc.

Just my two cents. That's it, the rest is just conversation.
Private message me for a link to my order flow website.
  • #30
  • Aug 9, 2011 12:54pm Aug 9, 2011 12:54pm
Quoting P.Dean
Stop thinking to much, get active...
Your edge is YOU in YOUR plan of trading.. that's it.. forget the rest.
So you in your trading plan is the edge? Ok so where excatly is the edge? U didnt explain anything saying "the edge is in you".
  • #31
  • Aug 9, 2011 1:24pm Aug 9, 2011 1:24pm
Quoting grkfx
Thank You for your response Mr Breakout.
You are welcome.

Quoting grkfx
If everything is reflected in the price, then I assume that some statistical edge can be found analyzing the USD/JPY prices of the past using some sort of technical indicators/chart patterns/price patterns/robot/programming, etc in order to "predict" the Bank of Japan intervention.
The minute the trader tries to "predict" anything he is finished. A trading system does not predict, it simply exploits a statistical bias, just like a BlackJack card counter does not try to predict the value of the next card, he is just playing the odds because he knows that in the long run he is going to mathematically beat the casino.



Quoting grkfx;4854845I
do not know of any technical indicator, chart pattern, or price pattern that can predict that with any statistical edge.
I don't either, but again we are not trying to predict this or that event, that's not the purpose of a trading system. The trader backtested his system with 10 or 15 years of data and discovered that it is a profitable system (and the test includes all the previous BOJ interventions, weird spikes, crashes, etc...), that's all he needs to know.

That said, the minute BOJ intervenes my system will sense that and I can place a high probability trade with little risk. I made over 100 pips yesterday shorting USD/JPY (see USD/JPY thread) while almost everybody was buying and "expecting" an intervention. Sorry but trading on rumors and expectations is a losing proposition, I only trade what is actually happening right now on the chart.
  • #32
  • Aug 9, 2011 1:34pm Aug 9, 2011 1:34pm
Quoting Mr Breakout
The minute the trader tries to "predict" anything he is finished. A trading system does not predict, it simply exploits a statistical bias, just like a BlackJack card counter does not try to predict the value of the next card, he is just playing the odds because he knows that in the long run he is going to mathematically beat the casino.





I don't either, but again we are not trying to predict this or that event, that's not the purpose of a trading system. The trader backtested his system with 10 or 15 years of data and discovered that it...
I generally agree with the statistical edge thing. But you should also be aware that there are highly successful individuals that do try to predict fundamental events: george soros, victor sperandeo, paul tudor jones,...

So, I think both approaches towards the market are valid.
  • #33
  • Aug 9, 2011 1:43pm Aug 9, 2011 1:43pm
Quoting Custos
I generally agree with the statistical edge thing. But you should also be aware that there are highly successful individuals that do try to predict fundamental events: george soros, victor sperandeo, paul tudor jones,...

So, I think both approaches towards the market are valid.
I know, but like I said in a previous thread, Soros also used his "judgment" and lost Billions betting against the Euro and other currencies.

And during all that time, a simple moving average could have prevented those catastrophic losses.
  • #34
  • Aug 9, 2011 1:46pm Aug 9, 2011 1:46pm
Quoting Mr Breakout
I know, but like I said in a previous thread, Soros also used his "judgment" and lost Billions betting against the Euro and other currencies.

And during all that time, a simple moving average could have prevented those catastrophic losses.
yeah, that may be, nonetheless he is still highly successful. Just saying.
  • #35
  • Aug 9, 2011 1:48pm Aug 9, 2011 1:48pm
Quoting Custos
yeah, that may be, nonetheless he is still highly successful. Just saying.
Probably because NOW he is using technical analysis only
  • #36
  • Aug 9, 2011 1:53pm Aug 9, 2011 1:53pm
Quoting gspajon
I don't get it...if the fundamental analysis of the US economy is "negative" by the "experts" in not one but several rating agencies...and if the fundamental reports are increasingly poor to negative...WHY on earth is the USD rallying?
Market is not only about fundamental, but also technical plus speculation. However, fundamental and technical analysis does not move price, it is the actual decision to buy/sell (and to what extent) from those with strong liquidity does. And don't forget, it's dog eat dog up there ;-)

I personally don't think I need to find every reason why price goes here and there, too many variables involved. I just try to find my way to make positive pips and enjoy it. Life's easier that way =)
The tone of your words reflects the quality and result of your trading ;-)
  • #37
  • Aug 9, 2011 2:14pm Aug 9, 2011 2:14pm
Quoting Mr Breakout
That said, the minute BOJ intervenes my system will sense that and I can place a high probability trade with little risk. I made over 100 pips yesterday shorting USD/JPY (see USD/JPY thread) while almost everybody was buying and "expecting" an intervention. Sorry but trading on rumors and expectations is a losing proposition, I only trade what is actually happening right now on the chart.
What if what is actually happening right now is a mispricing and the move is about to be faded/reversed?
Private message me for a link to my order flow website.
  • #38
  • Edited Aug 10, 2011 6:55am Aug 9, 2011 3:35pm | Edited Aug 10, 2011 6:55am
the only thing you need to understand about fundamentals is risk appetite (EUR, AUS,CAD,OIL) AND RISK AVERSION (JPY,USD,CHF,gold)

let me explain.....asume your Donald Trump and the more hotels you build the more money you make, this money has to be stored somewhere...a bank. Now a hedge fund manager in a bank has trumps billions, gates billions, buffets billions.....and his job is to make sure that his clients money does not depreciate in value against other currencies.

so if there is good news in world economies especially europe and london AND US then there is risk appetite and hedge fund manager puts the money in (EUR,AUS,CAD, OIL---AS GROWING ECONOMIES HAVE MORE PRODUCTION AND THUS NEED MORE OIL) thus these currencies go up across the board. against the risk aversion currencies that drop e.g. eur/ usd will go up.

if there is bad news in world economies especially europe, london and IRONICALLY THE US.then there is risk aversion(opposite of above) but for the US THE STOCK MARKET DROPS! this meeans people sell stocks before they hit rock bottom and they are paid in dollars which they put in the bank...thus STRENGTHENING THE DOLLAR! some people buy gold... and so the currencies that benefit are USD, JPY, CHF,GOLD.

so if we look at your example...there was bad news in europe(spain default/ greece etc) and bad news in US( DEBT CEILING, credit rating etc) THE US stock market was crashing........where do you think the price is going to go.....ONLY ONE WAY SON!(IN A HURRY!)

Fundaments and TA go hand in hand dont let anyone tell you different.
hope i have shed light on your path.....Godspeed on your forex journey!
  • #39
  • Aug 9, 2011 3:47pm Aug 9, 2011 3:47pm
Quoting grkfx
What if what is actually happening right now is a mispricing and the move is about to be faded/reversed?
Then I will take my (small) loss and look/wait for another trading opportunity (or even close and reverse the trade if I have a green light), simple as that.
  • #40
  • Aug 9, 2011 4:00pm Aug 9, 2011 4:00pm
Quoting kevguy

Fundaments and TA go hand in hand dont let anyone tell you different.
When you mix Fundamentals with TA you only create confusion and indecision.

Fundamentals = This and that "should" happen because according to blah... blah... blah...

TA = This is what IS happening right now, jump aboard and make money.

You could even be right on your fundamental "analysis" and STILL lose 800 or 1,000 pips before the market starts moving in the expected direction.
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