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Technical Analysis Fallacy

  • #26,981
  • Aug 13, 2011 9:46am Aug 13, 2011 9:46am
I've been reading up on options and there are a ton of ways to hedge exposures, however most of them limit profit potential and your time frame would shift at at least 3-6 months.

I'm very curious to see if anyone on this thread has experience writing and managing these fx options. My hope is that as the terrain for fx changes I'll have other options (lol) than spot fx to cover me. In addition I am interested in understanding fti's bank MO.

From what I gather, I think banks write options and collect their premium. They would then manage that risk with a hedge. The credits from the sale may be used for the spot fx dept thus playing with foreign capital the whole time?

Indianguy, can you speak more on how you identified the bull on the crosses? Up till now my decision for direction has been purely flow, and while it helps a lot, it can lead you into traps traps traps.
  • #26,982
  • Aug 13, 2011 11:29am Aug 13, 2011 11:29am
Quoting fullperson
I've been reading up on options and there are a ton of ways to hedge exposures, however most of them limit profit potential and your time frame would shift at at least 3-6 months.

I'm very curious to see if anyone on this thread has experience writing and managing these fx options. My hope is that as the terrain for fx changes I'll have other options (lol) than spot fx to cover me. In addition I am interested in understanding fti's bank MO.

From what I gather, I think banks write options and collect their premium. They would then manage...
Can you please ask more clearly as I didn't got your question
  • #26,983
  • Aug 13, 2011 5:06pm Aug 13, 2011 5:06pm
Quoting indianguyinny24
Wanted to ask Auxesis... if he was ever able to make out this Multi dimension hedge cross strategy....

post is here


http://www.forexfactory.com/showthre...86#post3003186


V
To a certain degree yes, albeit I was not looking at writing options when I approached Fti on that subject. Simply I was wondering, if in a rescue, one could use another pair. If I'm biased using the dollar, that bias will be played out differently between two other pairs, price action will have longer legs on the stronger of the two, the weaker will have deeper retraces.

If you put yourself into the various scenarios that could be played out in the above, Direction bias right with the stronger, or with the weaker..... direction bias wrong, need rescue against the stronger, against the weaker-- then take into account the simultaneous movement of the other pairings.... you can begin to devise strategies to benefit from them.

It's like a chess game, throw up the charts side by side and start marking them up with entries/play trades using historical highs lows, take it for granted you can pick the exact turns to start, make yourself trade right and then playtrade you entered wrong and rescue, check the strength of the others, what happens if you rescue with the other, is it stronger or weaker. Now go opposite how can this benefit me when i'm right????

The light bulb will go on when you finally see it, what leg directions work and which one's don't.

regards,
  • #26,984
  • Aug 13, 2011 10:11pm Aug 13, 2011 10:11pm
i personally think that every one finds their style sooner or later, fullperson i am also looking into options, as hedge exposure but one thing at a time.

first i need to be proficient trading forex, and investing in stocks similarly then i can start hedging with options and other derivatives.

baby steps.

as far as using other currencies, to hedge exposure or rescue, it is possible, regardless of what other people say, it is the timing that is of essence you need to try it and devise a strategy around it, then do it, and do it till you get proficient at it.

as far as trading the currency market, i have found that correlations in sentiments, stock exchanges, and commodities and other currencies makes the directional bias easier.

i try not to rescue unless im really in trouble.

i use a variation of fti strategy, i like livermores philosophy and the combination has served me tremendously. the market is not something that can be predicted and is not rational, everyone is in it for the their own interests, and although predicting and rigidity is not recommended, when you start to see that there are no time frames, and just measure conviction of the participants by looking at the data in front of you.

in a sense the rigidity is a very ambigous and broad brush, there will always be rigidity, to a certain extent one needs to do a calculated guess and where one things the currency will be at according to the data presented in the chart, if one tries to catch every ripple then it becomes jumping buses.

the important part is knowing WHEN you are wrong, and making the right decision to HOLD, LIQUIDATE, OR AVERAGE,


one is always guessing, because no one really knows where the market will be in the next 5 minutes let alone next week.
AVT INVENIAM VIAM AVT FACIAM
  • #26,985
  • Aug 14, 2011 10:35am Aug 14, 2011 10:35am
Once the 3k's get messy it could be very confusing.
  • #26,986
  • Aug 14, 2011 10:52am Aug 14, 2011 10:52am
Quoting fullperson
Once the 3k's get messy it could be very confusing.
Practice more! Theory is theory, here praxis is the best we can do...
  • #26,987
  • Aug 14, 2011 10:55am Aug 14, 2011 10:55am
oops sorry the question was for auxesis, but if was from 2009, so nevermind.

Out of curiosity though, while traders are being extremely nimble what are dealers doing? How are they positioning? What's his MO?
  • #26,988
  • Aug 14, 2011 12:36pm Aug 14, 2011 12:36pm
Quoting fullperson
Once the 3k's get messy it could be very confusing.
Yes, hence FTI's warning, that the underlying bias must be correct, that such strategies are used to enhance positioning, not rescue an incorrect direction .

regards
  • #26,989
  • Aug 14, 2011 9:35pm Aug 14, 2011 9:35pm
Quoting auxesis
To a certain degree yes, albeit I was not looking at writing options when I approached Fti on that subject. Simply I was wondering, if in a rescue, one could use another pair. If I'm biased using the dollar, that bias will be played out differently between two other pairs, price action will have longer legs on the stronger of the two, the weaker will have deeper retraces.

If you put yourself into the various scenarios that could be played out in the above, Direction bias right with the stronger, or with the weaker..... direction bias...
Auxesis,

i think i will pm you about this...as i have an idea what you are talking but i guess not so solid like you got it...

will pm you abd discuss with you....

V
  • #26,990
  • Aug 15, 2011 12:32pm Aug 15, 2011 12:32pm
it is one of the best post on FF


http://www.forexfactory.com/showthre...89#post4871089


V
  • #26,991
  • Aug 15, 2011 3:13pm Aug 15, 2011 3:13pm
I'm having trouble pinning down the exact definition for fti's time window. Could someone elaborate on this?
  • #26,992
  • Aug 16, 2011 2:35am Aug 16, 2011 2:35am
Quoting fullperson
I'm having trouble pinning down the exact definition for fti's time window. Could someone elaborate on this?
If I remember correctly Fti mentioned that according to his observations, traders intense focus was limited to a certain period of time (around 35min or seven 5min bars).

What I got from this is that after that period in a move or wave you should be looking closely for hints about the next possible outcome (consolidation of the move, retracement-reloading, unloading)

Would be glad to hear other interpretation of this
  • #26,993
  • Aug 16, 2011 3:11am Aug 16, 2011 3:11am
Happy trading day everyone. I just finished my London chart work and am in a wait trade until the next series of announcements. Hope you are all well, and trading well. Lots of data today and for the rest of the week. Good trading and stay focused. Time for coffee.
  • #26,994
  • Aug 16, 2011 9:09am Aug 16, 2011 9:09am
Quoting indianguyinny24
it is one of the best post on FF


http://www.forexfactory.com/showthre...89#post4871089


V
thanks for sharing V..
When the internal struggle ends, everything becomes easy - Mr. Douglas
  • #26,995
  • Aug 16, 2011 11:09am Aug 16, 2011 11:09am
Well, no trades yet for me today as we await the Sarkozy/Merkel press conference. Been tempted several times to take a trade, but resisted and am high and dry at this time. Hope the Euro leaders can stir things up! Good/safe trading everyone!
  • #26,996
  • Aug 17, 2011 8:42pm Aug 17, 2011 8:42pm
Hello All!
Any word how FTI is doing?
Thanks
  • #26,997
  • Aug 17, 2011 9:23pm Aug 17, 2011 9:23pm
Quoting Jaro
Hello All!
Any word how FTI is doing?
Thanks
Ditto, curious minds want to know.

Assassin patterns working Euro.
  • #26,998
  • Aug 17, 2011 10:18pm Aug 17, 2011 10:18pm
Quoting auxesis
Ditto, curious minds want to know.

Assassin patterns working Euro.
What do you mean by "Assassin patterns"?
Thanks,
Jaro
  • #26,999
  • Aug 17, 2011 10:23pm Aug 17, 2011 10:23pm
Quoting Jaro
What do you mean by "Assassin patterns"?
Thanks,
Jaro
Broadening patterns, expanding wedges, successful new highs, lows, highs ect......
  • #27,000
  • Aug 18, 2011 1:57am Aug 18, 2011 1:57am
Quoting auxesis
Broadening patterns, expanding wedges, successful new highs, lows, highs ect......
Thanks auxesis,
Yes, different movements these days....
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Ferrym