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Technical Analysis Fallacy

  • #31,321
  • Feb 22, 2012 3:02am Feb 22, 2012 3:02am
Quoting imjscn
Nice! If she prefer slim, sure don't learn trading :-))
Seems Spring is here, ice melting...
Thanks imjscn

I get it now. Hope you are recovering well.

Regards
  • #31,322
  • Feb 22, 2012 3:06am Feb 22, 2012 3:06am
Quoting piccolo
FTI has explained how dealers operate in a post long time ago, try to find it.
I've tried but couldn't find something concrete.

Care to share how would you do it? (construct a quote)
  • #31,323
  • Feb 22, 2012 3:13am Feb 22, 2012 3:13am
Quoting tricello
I've tried but couldn't find something concrete.

Care to share how would you do it? (construct a quote)
You need to go through the first pages of this thread. There are many posts that you need to put together so it's not easy to give a reference.
There is also a huge body of literature on the subject, mostly theoretical (ie models etc) but also empirical. You can google "microstructure", "order flow" etc
  • #31,324
  • Feb 22, 2012 3:16am Feb 22, 2012 3:16am
hi Tricello,

try this. post 59

http://www.forexfactory.com/showthre...48#post1735948

regards

Phil.
-be careful about what you allow to be put in your mind-
  • #31,325
  • Feb 22, 2012 3:17am Feb 22, 2012 3:17am
Quoting tricello
I've tried but couldn't find something concrete.

Care to share how would you do it? (construct a quote)
Have you tried the "Search" button?

Anyway, this is a good start:

Quote from FTI

"...So you would use the daily charts for trend and candle formations to indicate possible changes in movement. Do you use the hourly similarly? ..."

Yes I use Daily Chart studies to indicate trend,
I use short charts to indicate form.

Ponder this,
On the daily EUR/USD now we see possible topping formation, correct.

We may be right, So tell me where is it going? Should be Down, right?

When will we know if it is going down?
What if on the short charts, its going up?
So do we still want to go short?
So when should we go short?
When the short chart shows you that it topping out, right?


So if this market continues to go up.
Then You miss the bus (borrowed from leighsww) ,right?
You missed the bus going north, why?
because you were at the bus stand waiting for the south bound bus, right?

Thats why I, said.
Bull makes money, Bears make money, Pigs get slaughtered.

You see, when bulls are making money, Bears are not.
When bears are making money bulls cannot.
But the one whos trying to catch both buses will sooner be dead. Crossing the road from one bus stand to another,
Because he could be at the north stand when the south bus comes, or the south stand when the north bus comes.
or mostly in the middle of the road, when both bus comes.

Do I make any sense?

For dealers, its a different game, because when markets are going up in a BEAR market, customers keep making them short,
their book keeps getting bigger short, but their average cost of being short keeps going up.
all they have to do is to wait for the trend to enforce and
when the market returns to the point where the buying started ,
he would make nearly the amount of money that made him short in the first place.

For this to happen, he has to have a book big enough to accommodate the customer base.
AND as the market swings back towards the start point, he has to ascertain that his book of shorts, be kept constant.
This is because on the way down the customers will be making him long.
So by constantly covering back to back on the way down he maintains his book short.
So for the dealer, as long as he maintains his poise in the direction of the markets major trend,
he will always make "scalp money", guaranteed.

His modus operandi, is to "duck and move quickly"
so as to have a better average on the up swing towards stops to maximise his shorting near the top of the swing.
This scenerio is most effective if there are stop near levels where he has a large order to sell,
where he can help the customer sell OB and "kill the sitting duck stops" in the same blow.
Another scenario is where by the heavy selling is CB levels or specific sell zones,
where many teir 1 are ready to pounch on the buyers.
You must understand that only tier 1 and some big tier 2 will have this advantage.

This is the reason, why you have rubber band snap backs in the direction of trend directions,
and slow puffy moves counter trend.
Am I making any sense to anyone here?

So we use daily trend as the direction to build book size and short charts to make market for retraces.
Do discuss this on this thread, no questions are silly, just discuss until it becomes clear.
Don't understand ! Argue until you understand. Fight if you must, I will not complain.

YOU MUST GET THE CONCEPT OF MARKET STRUCTURE RIGHT TO UNDERSTAND THE CHARTS.

I didn't want to get into this first, but since it is being asked here we go.
I wanted to get across the basic foundations right first,
cos if your foundation is sloppy you will get a sloppy structure built on it not so unlike building a house. Nevertheless this is also the advance level of foundation and is an acceptable direction to go.

End of Quote from FTI
  • #31,326
  • Feb 22, 2012 3:21am Feb 22, 2012 3:21am
hi piccolo,

same post

regards

Phil.
-be careful about what you allow to be put in your mind-
  • #31,327
  • Feb 22, 2012 3:25am Feb 22, 2012 3:25am
Quoting tricello
Dear TAF members and FTI,

Yesterday discussion got me thinking and would like to hear your views.

FTI methodology was designed for dealers. To quote prices and sizes for customers.

I've read most of the thread and there is little discussion about this (sorry if I've missed it) and in my opnion the "DANCE" is all about this.

So... I would like to hear from you. If I'm a customer calling at your bank (your account) How would you determine the two-sided quote that you would offer me?

I've shared my view, but would like to hear others opinion,...
Hi Tricello,

I think most of the replies covered the key concepts for the price movement. But I think you are asking that as individual dealer, how does one determine what price to quote? Does he pluck a number from the air? Have a reference that he is looking at?

Not sure if I understood you correctly. I also do not have the answer. I think we need some experts to help.

However, I do not feel that this will not have a major impact on our trading performance, which is to pulse the market and go with the flow. Perhaps understanding of the concept will suffice?

Just my 2 pips worth.

regards
  • #31,328
  • Feb 22, 2012 3:29am Feb 22, 2012 3:29am
Quoting piccolo
Have you tried the "Search" button?

Anyway, this is a good start:

Quote from FTI

"...So you would use the daily charts for trend and candle formations to indicate possible changes in movement. Do you use the hourly similarly? ..."

Thanks Phil and Piccolo,

I've read that post. But my question is more about the actual quoting.

I believe that the quote a dealer offers is completely related to his capital/exposure/position. That's why the spread exists.

Thanks for the help, I'll continue my ramblings on my own
  • #31,329
  • Feb 22, 2012 3:37am Feb 22, 2012 3:37am
Quoting N_Trader
Hi Tricello,

I think most of the replies covered the key concepts for the price movement. But I think you are asking that as individual dealer, how does one determine what price to quote? Does he pluck a number from the air? Have a reference that he is looking at?

Not sure if I understood you correctly. I also do not have the answer. I think we need some experts to help.

However, I do not feel that this will not have a major impact on our trading performance, which is to pulse the market and go with the flow. Perhaps understanding of the concept...
I believe I understand the main concept

But I disagree in that It will not have an impact on your trading performance. In the end, the market is your customer and you never know if "he's" going to ask you to sell or buy. That's where I see the importance of being able to "know" where and how much you can take a "hit".

I'll stop now with this and continue on my own.

Thanks

Thanks
  • #31,330
  • Feb 22, 2012 3:59am Feb 22, 2012 3:59am
still have peeps ask me why those songs satanic.
Just think.
Is about coverting and deceiving.
Try understand Satan.

regards
  • #31,331
  • Edited 4:14am Feb 22, 2012 4:02am | Edited 4:14am
Quoting tricello
Thanks Phil and Piccolo,

I've read that post. But my question is more about the actual quoting.

I believe that the quote a dealer offers is completely related to his capital/exposure/position. That's why the spread exists.

Thanks for the help, I'll continue my ramblings on my own
yes, but unless he looking at your blotters.

spreads exist because a dealer can quote you any where he so wishes.
To make sure he "in the market", he is obliged to make the otherside of the bid or offer he wants quote, so that if he not in line with market, then all who he quotes can whack the shit out of him and take him to the cleaners.

Without standard practise of a spread, he can quote you anywhere he wishes.
Some brokers do that.
Normally if quotes are wide spread in non fast markets , then you know they "flying" prices.

Normally the big egos like fly prices. But because the other end of his tail is quoted, he can have a real pain, if he's not in line with the market.

This the reason why need non nano second prices. With computer tech they can curcumvent it and have tricks not allow you hit the other side which is not in line. This is unacceptable practise in interbank. Thats why dealers need allow you time to "show hand".
regards
  • #31,332
  • Feb 22, 2012 4:10am Feb 22, 2012 4:10am
Quoting fti
still have peeps ask me why those songs satanic.
Just think.
Is about coverting and deceiving.
Try understand Satan.

regards
Satanic songs? I like Highway to Hell by AC/DC.
  • #31,333
  • Feb 22, 2012 4:13am Feb 22, 2012 4:13am
Quoting fti
yes, but unless he looking at your blotters.

spreads exist because a dealer can quote you any where he so wishes.
To make sure he "in the market", he is obliged to make the otherside of the bid or offer he wants quote, so that if he not in line with market, then all who he quotes can whack the shit out of him and take him to the cleaners.

Without standard practise of a spread, he can quote you anywhere he wishes.
Some brokers do that.
Normally if quotes are wide spread in non fast markets , then you know they "flying" prices.

regards
Thanks Fti,

so in reality he's quoting just the side that interests him? The other side is an obbligation to avoid showing off his position?

I understand that he can quote anywhere he wishes, but that's where the sizes come in...don't they? He wouldn't risk being hit big on the opposite side.

Hope the questions are not too naive
  • #31,334
  • Feb 22, 2012 4:16am Feb 22, 2012 4:16am
Quoting ukmanthailan
Satanic songs? I like Highway to Hell by AC/DC.
sure, no problem.
Hell has gambling dens and night clubs.
but surely burn from it all.
Enjoy it, if its your thing.

Ok no more mails on this subject, You think about it for yourselves.

regards
  • #31,335
  • Edited 4:47am Feb 22, 2012 4:18am | Edited 4:47am
Quoting tricello
Thanks Fti,

so in reality he's quoting just the side that interests him? The other side is an obbligation to avoid showing off his position?

I understand that he can quote anywhere he wishes, but that's where the sizes come in...don't they? He wouldn't risk being hit big on the opposite side.

Hope the questions are not too naive
ya, why you think sometimes your prices gets greyed out, or have requotes.
Because some one not in line and trying a fast one on the accounts stops.
They can electronically block you. But this issue is for the authorities and unfair practises litigation.

In interbank, all it takes , is 1 counterparty do such unreasonable occurance, and the dealer or broker will be lineoff for long long time. Unfortunately retail is stuck to 1 broker, and you have little alternatives. In interbank, its an honour system, you dishonourable, and you never get to the market. No one will deal you.

Nornmally if an interbank broker is dishonourable, he surely gets "stuffed" all the time by dealers. Which also puts them out of business very quickly.

"stuffed" means broker need make good the deal, or is goodbye forever. And markets all , will be tolded.
news like that spreads very fast in interbank. and said broker will starve to death.

In interbank is lots goodfaith. Sometimes dealers honours deals even if they off price at the same time as the hit came, just to hold to customer goodwill.

Unfortunately, the infancy retail markets knows little about goodwill and some leverage on the piptits quoting denie their customers market access. In fact if i was electronically market making. I could make computer filp the piptits in nanao seconds and no one will ever get to hit my prices, which i could make anywhere i like, while i eat up all your stop losses and grow rich.

The technology con?


regards
  • #31,336
  • Feb 22, 2012 4:26am Feb 22, 2012 4:26am
Quoting fti
ya, why you think sometimes your prices gets greyed out, or have requotes.
Because some one not in line and trying a fast one on the accounts stops.
They can electronically block you. But this issue is for the authorities and unfair practises litigation.

In interbank, all it takes , is 1 counterparty do such unreasonable occurance, and the dealer or broker will be lineoff for long long time. Unfortunately retail is stuck to 1 broker, and you have little alternatives. In interbank, its an honour system, you dishonourable, and you never get to the...
As always, your replies open a whole new window for thinking...

Thanks
  • #31,337
  • Feb 22, 2012 4:50am Feb 22, 2012 4:50am
I'm far from an expert on the subject. As I said there's a lot of academic literature on the subject that you might be interested to review. Here is an interesting paper that also touches some of your questions (I think):

http://www.wiwi.uni-hannover.de/Fors...ere/dp-351.pdf

From my restricted review of the literature I found that this author ie C. Osler is one of the top in the subject and most of her papers are free to download.
  • #31,338
  • Feb 22, 2012 4:57am Feb 22, 2012 4:57am
Quoting fti
In fact if i was electronically market making. I could make computer filp the piptits in nanao seconds and no one will ever get to hit my prices, which i could make anywhere i like, while i eat up all your stop losses and grow rich.

The technology con?

regards
I haven't thought about this... so the piptits actually give brokers an edge, making it harder to get hit on their "wrong" side and taking all deals on their rigth one

Talk about advertising... we are supposed to be all excited about 5 digit prices
  • #31,339
  • Feb 22, 2012 5:01am Feb 22, 2012 5:01am
Quoting Arhs99
I'm far from an expert on the subject. As I said there's a lot of academic literature on the subject that you might be interested to review. Here is an interesting paper that also touches some of your questions (I think):

http://www.wiwi.uni-hannover.de/Fors...ere/dp-351.pdf

From my restricted review of the literature I found that this author ie C. Osler is one of the top in the subject and most of her papers are free to download.
Thanks Arhs99. I'm familiar with the author papers but they require a great effort to understand them at my level of knowledge.

Like most subjects, the more you immerse in it, the more you find out that you don't know!
  • #31,340
  • Edited 5:52am Feb 22, 2012 5:01am | Edited 5:52am
Quoting tricello
I haven't thought about this... so the piptits actually give brokers an edge, making it harder to get hit on their "wrong" side and taking all deals on their rigth one

Talk about advertising... we are supposed to be all excited about 5 digit prices
ya, if need business.
all needs to do is to paint it nipple pink. Much suckers will be had.
the markets move by tenths of pips and in fast markets can move a couple of handles, whats the point in piptit?
have you ever calculated you P&L in piptits?

ya and today i can buy a hotdog for $9.99 a coney dog cost 9.90 , So lets eat coney dogs instead of hot dogs.
Oh forgot tell you mustard or sauce is 59.5 cents not included topping. mayo is 59.3 cents.

come collect it yourself get 5 cents discout, if i send over need pay $5 for service and service tax is $5 also.



regards
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