Identifying Market Swings - Medium and Long Term Trading | Page 28 | Forex Factory

Options

Go to
Permalinks
Print Thread

Similar Threads

Medium & Long Term ONLY 390 replies

My Medium Term (5-15 min) BO Trading Journal 29 replies

How do you test if the pair is in a medium/long term trend? 2 replies

US equities medium-long term outlook 1 reply

Short Term / Medium Term / Long Term? 3 replies

Attachments: Identifying Market Swings - Medium and Long Term Trading
Exit Attachments

Identifying Market Swings - Medium and Long Term Trading

  • #541
  • Aug 12, 2011 6:08pm Aug 12, 2011 6:08pm
Quoting Razorjack
...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.
Razorjack,

thank you for this awesome thread. Is volatility a parameter in your trade analysis? If yes, do you happen to know a reliable source that tabulates volatility for different pairs?

Thanks.
  • #542
  • Aug 12, 2011 6:10pm Aug 12, 2011 6:10pm
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...
Hi Edd,

I would advise you to not worry so much about whether the time frame you're looking at is full of noise or not. Instead focus your attention on what the markets are actually doing, i.e which way it's trending or ranging.

Look at the pros and cons of shorter vs longer time frames and see which is more right for you. Then play it from there.

If the markets are ranging then look for areas of a breakout. If the markets are already in a trend, use fundamentals to understand whether it will continue or if it could stall and/or reverse soon.

Then as I described in my previous post set up your trades so that you can make money whether you're right or wrong.
-Razorjack
  • #543
  • Edited 6:52pm Aug 12, 2011 6:27pm | Edited 6:52pm
Quoting pillager
Razorjack,

thank you for this awesome thread. Is volatility a parameter in your trade analysis? If yes, do you happen to know a reliable source that tabulates volatility for different pairs?

Thanks.
Hi Pillager,

My understanding of volatility is not really that technical. It's based more on my understanding of how the markets work.

For example when you have a sudden trend change, then all sorts of things happen. First there are traders taking profits, stops get hit for those on the wrong side of the trade, there are margin calls for those that are over-leveraged etc etc.

For instance, if you are long (buy orders) and the trend reverses against you and your stops get hit or you get a visit from the margin call boogie man....... then your positions are closed with SELL orders adding to the acceleration in the downtrend. Multiply this by 1000s of traders and you can see how this will cause more explosive moves in price and thus increase volatility.

No need for extra indicators, try to develop a more deeper understanding of the markets, this will help you immensely in your trading.

Hope this made sense.
-Razorjack
  • #544
  • Aug 13, 2011 12:38am Aug 13, 2011 12:38am
Quoting Razorjack
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

.
Hi Razorjack,

It's good to see that you're back. I absolutely loved this thread and was sick when you left, although I can understand why.

The 'big picture' really interests me, so I'd like to say thank you for your ideas and suggestions regarding that, but I'd also like to say thank you for getting me to start reading trading books.

When I strated to read your thread, I went straight out and bought the Trader Vic books and the Ashraf Laidi book, hell I even read them, then again....!

In the quote above, you talk about pyramiding and smart money management.

In one of the other books I read (I've read lots now) traders talk about when they are right they add on, and add on until they are wrong, hence making the winners much bigger than the losers. I'm also reading a money management book at the moment (The Mathematics of Money Management by Ralph Vince) but it's pretty hard going.

I'm not asking for 'lessons', I hear you about your lack of time, but do you have any suggestions for books that cover pyramiding in particular, and any other money management strategies?

Keep up the good work

Alan
  • #545
  • Aug 13, 2011 7:43am Aug 13, 2011 7:43am
Quoting Razorjack
Hi Edd,

I would advise you to not worry so much about whether the time frame you're looking at is full of noise or not. Instead focus your attention on what the markets are actually doing, i.e which way it's trending or ranging.

Look at the pros and cons of shorter vs longer time frames and see which is more right for you. Then play it from there.

If the markets are ranging then look for areas of a breakout. If the markets are already in a trend, use fundamentals to understand whether it will continue or if it could stall and/or reverse...
Razorjack,

Thank you, that is very helpful.

God Bless you.

Edd
  • #546
  • Aug 13, 2011 11:05am Aug 13, 2011 11:05am
Quoting 1again
Hi Razorjack,

It's good to see that you're back. I absolutely loved this thread and was sick when you left, although I can understand why.

The 'big picture' really interests me, so I'd like to say thank you for your ideas and suggestions regarding that, but I'd also like to say thank you for getting me to start reading trading books.

When I strated to read your thread, I went straight out and bought the Trader Vic books and the Ashraf Laidi book, hell I even read them, then again....!

In the quote above, you talk about pyramiding...
Hi Alan,

I recommend Dr Van Tharpe's book Trading Your Way To Financial Freedom.

Just try to treat each add on order as a new order so you have precise entry, exit and trade size rules based on money management and developing market conditions.
-Razorjack
  • #547
  • Aug 14, 2011 4:54am Aug 14, 2011 4:54am
Welcome back Razorjack
  • #548
  • Aug 14, 2011 12:41pm Aug 14, 2011 12:41pm
Hi Razor,

What do you think about usdcad, I'm planing to sell it as the big boss is down-trend, last week is huge volume pin-bar testing the resistance.

I'm looking to long eurchf as well, hoping it'll dip next week (it probably won't and continue its big correction) I'm not looking to long usdchf as I anticipate eur strength over usd

What do you think?

Thank you.
  • #549
  • Aug 14, 2011 1:18pm Aug 14, 2011 1:18pm
Quoting duyk20
Hi Razor,

What do you think about usdcad, I'm planing to sell it as the big boss is down-trend, last week is huge volume pin-bar testing the resistance.

I'm looking to long eurchf as well, hoping it'll dip next week (it probably won't and continue its big correction) I'm not looking to long usdchf as I anticipate eur strength over usd

What do you think?

Thank you.
Hi Duyk,

If this happened a month ago, I'd agree with your plan regarding USDCAD and probably do the same.

However there is a change a happenin'. Basically the Big Boss downtrend was due to the recovery in the global economy fueling price increases in the commodities, this has been driving AUD, NZD and CAD appreciation vs the USD. Had this continued, I'd probably do the same as you and short USDCAD.

However the economic fundamentals for the global economy are starting to deteriorate and we're seeing a slowdown. There is also a chance that the US could be heading for a double dip into recession again.

So with that in mind, I anticipate USDCAD drifting down between 0.9650 - 0.9800 before heading north past the recent high at parity (1.0000) and then possibly even a 3rd leg higher.

In other words, you and I will be on the opposite sides of the trade!

Of course, I could also end up losing as well!

As for the EURCHF, I think you may have the missed the train as I see the big part of the move under way. Get down to the hourly time frame wait for the next dip and get in, but you'll have to be quick to exit as I don't see the price moving much higher after that.

The big trades that I see at the moment, are going long EUR/GBP vs commdolls. I'm anticipating them to drift down over the coming week before exploding upwards past the last high made after the panic.
-Razorjack
  • #550
  • Aug 14, 2011 1:35pm Aug 14, 2011 1:35pm
Thank you for your prompt response
Eurusd has always been my favorite pair, I expect it to breakout soon in favor for euro.

What do you think?

Thank you again!

Many pips to you next week.
  • #551
  • Aug 14, 2011 3:32pm Aug 14, 2011 3:32pm
Quoting duyk20
Thank you for your prompt response
Eurusd has always been my favorite pair, I expect it to breakout soon in favor for euro.

What do you think?

Thank you again!

Many pips to you next week.
As I wrote earlier in the thread, I don't really look at individual pairs first then analyze them. I do the opposite, I evaluate the current fundamental outlook and see how they impact the different economies. Then I try to match up the strongest vs the weakest ones to find the pairs that have the greatest potential movement/trend.

In this case, I expect USD to strengthen vs the riskier currencies until there are signs that the global economy is picking up again. The pair itself also depends on whether the next Euro Summit will provide some clarity on the debt situation.

So this one could go either way in my opinion. I believe that there are much better trades setting up. If however the EZ govts agree on Euro bonds or a common joint fiscal policy, the Euro will explode out of the blocks.
-Razorjack
  • #552
  • Aug 18, 2011 5:47pm Aug 18, 2011 5:47pm
So Razor, I'm working my way through the first Trader Vic book. Do you do an in depth analysis of the US stock market as part of your overall feel of the world economy? He talks alot in the beginning about using the DJ industrial average vs the DJ transports to identify what the trend is. Are those indexes something you use regularly? He also talks about bringing this analysis up to date and stating, "all related averages must confirm" the trend. He also says that we now have the indexes of the S&P 500, Value Line, Major Market , Bond, Commodity....
I know the DJ industrial index lineup has changed its roster over the years. Is this analysis still valid, and what indexes most influence your trading?

So far , it seems like you explain Trader Vic's stuff better than Vic does.
Thanks in advance,
M
  • #553
  • Aug 21, 2011 6:29am Aug 21, 2011 6:29am
Quoting mikeyshaun
So Razor, I'm working my way through the first Trader Vic book. Do you do an in depth analysis of the US stock market as part of your overall feel of the world economy? He talks alot in the beginning about using the DJ industrial average vs the DJ transports to identify what the trend is. Are those indexes something you use regularly? He also talks about bringing this analysis up to date and stating, "all related averages must confirm" the trend. He also says that we now have the indexes of the S&P 500, Value Line, Major Market , Bond, Commodity....
I...
Hi mikeyshaun,

I dont do an in-depth analysis of the US market per se, but I look at the fundamentals that influence the stock markets (US and others) such as inflation, manufacturing indexes, unemployment figures for consumer dependent economies, Central Bank policies and sentiment, fiscal policies, elections, debt levels, etc. These are the things that influence the stock markets themselves.

Now this is what I do, because I like to get slightly ahead of the market before a trend change. But remember that this is just based on how I like to do things.

If you dont feel that all this is right for you, there is still plenty of money to be made following the long term trends. And in this case you only need to look at the different indexes and keep an eye on inflation and monetary and fiscal policies of the currencies you want to trade. If you're just following the long term trends, then you dont need in depth analysis of anything you only need confirmation of the current trend or to know whether the current trend is going against the fundamentals so you can reduce your risk exposure.

Hope this makes sense? Remember to try to link all of this stuff back to trading YOUR style, you dont need to do what I do or what Victor Sperandeo does. Look at different indexes to see if t helps with how you want to trade, if something helps, great keep it, if not remove it.

I'm not sure if this was the answer you were looking for, but basically I like to look at the fundamentals themselves and to relate it back to the stock market indexes and currencies. This way if the trends in the indexes and currencies are in line with the fundamentals then I can expect the trend to continue. On the other side if the trends are going against the fundamentals then I should look for an exit if I'm riding the current trend and/or look for opportunites to get in at a trend change.

For me the most valuable lessons from the Trader Vic book was the explanation of how the Fed works, how to consistently draw proper and objective trendlines, how he spots trend changes and finally how he trades those trend changes.

Hope this helps.
-Razorjack
  • #554
  • Aug 25, 2011 12:48pm Aug 25, 2011 12:48pm
Yes Razor, this is exactly the answer I was looking for.
I've been demo trading for over a year now (I know its not the same as going live, but I see no reason to throw in money until I can rock a demo acct) using mainly price action. The demo acct is actually doing fairly well. However, after reading thru FF its come to my attention that almost all of the great traders on here have a thorough understanding of tech and fund analysis. So I need to "shore up" my fundamental side.

I think the next step for me is to start a table for each country and in that table keep track of the indices, news, politics, etc for each country and compare that to daily and weekly ranges for the related currency pairs between countries.
That just seems the best way for ME to start absorbing this.

Im curious how you started to learn all this? Did you keep track of it by writing it down, or did you just start absorbing it by looking at the data on a regular basis?

Thanks for you help. I really feel like you have pointed me in the right direction to get a solid foundation in the fundies.
M
  • #555
  • Aug 31, 2011 4:08am Aug 31, 2011 4:08am
I am a newbie here an unable to start up new topics. My question doesn’t fall into any of the offered categories anyway, so I decided to ask it here. If you have rights and can take my question and start up a new thread, please do it. I would really appreciate it.
Anyhow, my question is what do you think about QE3 and what decision is more likely to be taken in this regard.
The information is quite contradictive at the moment.
  • #556
  • Sep 8, 2011 10:24am Sep 8, 2011 10:24am
Hi, RazorJack

with CHF peg to EUR at 1.2 per EUR, do you think this a big change at fx market now?

i think if SNB can maintain this rate for longer priod, market will follow SNB and use CHF as carry trade source. BUT, if they can't, EUR/CHF will have big down move & SNB loss lot of money (for buying-holding EUR).

like to hear your opinion.
thank you
  • #557
  • Sep 8, 2011 10:31am Sep 8, 2011 10:31am
Quoting redbox
Hi, RazorJack

with CHF peg to EUR at 1.2 per EUR, do you think this a big change at fx market now?

i think if SNB can maintain this rate for longer priod, market will follow SNB and use CHF as carry trade source. BUT, if they can't, EUR/CHF will have big down move & SNB loss lot of money (for buying-holding EUR).

like to hear your opinion.
thank you
The only worrying part is if all Central Banks decided to do the same and peg their currencies to each other's.

Having said that I suspect the recent 'intervention' did not see SNB purchase a whole lot of Euros. Just by saying that they will peg the CHF at 1.20 Euros is enough to send traders and funds rushing in to cover their short CHF positions and thereby pushing the CHF down. Clever, huh? Well, the SNB has 55% of total currency holdings in Euro already. More wouldn't hurt I guess.
  • #558
  • Sep 8, 2011 10:42am Sep 8, 2011 10:42am
Quoting hohgch
The only worrying part is if all Central Banks decided to do the same and peg their currencies to each other's.

Having said that I suspect the recent 'intervention' did not see SNB purchase a whole lot of Euros. Just by saying that they will peg the CHF at 1.20 Euros is enough to send traders and funds rushing in to cover their short CHF positions and thereby pushing the CHF down. Clever, huh? Well, the SNB has 55% of total currency holdings in Euro already. More wouldn't hurt I guess.
source?

thank you.
  • #559
  • Sep 8, 2011 10:54am Sep 8, 2011 10:54am
Quoting redbox
source?

thank you.
Wow. Normally no one asks for the source for statistics

http://www.snb.ch/en/iabout/assets/id/assets_reserves
  • #560
  • Sep 8, 2011 9:18pm Sep 8, 2011 9:18pm
http://img3.imageshack.us/img3/1074/20201893.png

until june, they don't doing investment in money market (fx). i think most EUR (55%) are in goverment bonds with AAA credit rating. so i assume they holding lot of GERMANY BOND, not pure-EUR money. overall it's riskless than holding EUR directly. with pegging to EUR, i think SNB open unlimited volume of EUR/CHF 1.2000 ask price. short term, SNB will win. but longer period, i doubt...

(germany may leave euro & let euro dooms alone. )

cmiiw, im just newbie

thank you
2 traders viewing now