Fundamentals here are out of whack | Forex Factory

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Fundamentals here are out of whack

  • #1
  • First Post: Mar 27, 2012 7:11pm Mar 27, 2012 7:11pm
Heh funny situation here

i mostly trade stocks but my roots are in forex, so i still use this site for the calendar... which is pretty fine if you dont trade news anouncements specifically (which i dont)

so recently i decided to dig in (lol slowpoke) into info that we are looking at daily

and... i realised that in some cases i had NO IDEA at what am i actually looking

(i monitor us fundamentals mostly)

here are a couple of examples:

1) any SAAR rate of change is bullshit. (hello GDP=) its basically an assumption that the current rate of change will stay same over the following year, and that resulting yearly rate of change is reported

gdp has hard numbers, but you have to look into release (and divide the dollar value for a given quarter by 4. reported rate of change is for REAL (chained 2005 gdp) btw - its different from current dollar (separate topic)

gdp is basically sales per given period

so for instance last reported change is 3%, but in real dollars gdp (sales) are up ~0.95% in 4th quarter, compared to 3rd

2) any diffusion index is BULLSHIT!..(hello PMIs ALL) basically it shows how many purchase managers said better conditions over worse. but it doesnt state TO WHICH EXTEND=)))

fun fact - JPMORGAN tries to predict EU gdp, and uses EU PMI as their basic guide

thats what i call predicting bullshit with bullshit=)))

unfortunatelly those guys in JPM are on payrolls (large) and live in a bubble, unlike traders who base decisions on their forecasts and risk their cash

...

anyway its just a couple of examples. i have dissected most major US fundamentals, can answer if you want anything particular

...

another point - FFactory gives economic indicators together with monetary and fiscal policy ones, without describing difference. which is sad...

///

sure dont forget that the same fundamentals are reported in bloomberg and reuters pro systems (without delay but still -same) so we as traders have to take into account the impact of reported numbers on market

I am more talking about situation where you want to make an overview about an economy - not as an economist, but to have at least a remote kind of idea in which state thigns are

modern paradimg is (trader - screen - real world) - so we need to keep out screens as clean as possible,

cause even the hard numbers reported are mostly surveys, which contain errors - (again, another topic)
  • #2
  • Mar 27, 2012 11:11pm Mar 27, 2012 11:11pm
I agree with your basic premise... I think!

Personally I trade the markets' reaction AFTER economic releases rather than trying to predict what the market SHOULD do if the economic release points THIS way or THAT.

Quoting Killy
...

another point - FFactory gives economic indicators together with monetary and fiscal policy ones, without describing difference. which is sad...
This one comment of yours... what did you mean? Where I come from (I was a Bank trader once upon a time), monetary and fiscal policy events would form part of the analysis. You disagree?

Again, in case there is some misunderstanding, I think all fundamental analysis (where it supposedly assists a trader in making money in markets) is largely faulty. But I accept that (rightly or wrongly) markets (sometimes) move on the basis of these releases. And it is these reactions that I monitor, not the economic releases themselves...
I'm not trying to convince anyone. I'm not in the "convincing" business.
  • #3
  • Mar 27, 2012 11:37pm Mar 27, 2012 11:37pm
You absolutely cannot trade this market based on fundamentals because the markets are highly corrupted by central bank intervention. Prices as well as perceptions and expectations are very distorted right now. When will this sort out? maybe after the next crash, but probably not since they will try to inflate markets more with easing measures, thus further distorting the true interest rate.

To be quite frank, I dont even follow the news anymore. I just follow my tech models because they never lie. Its all math....

To be successful in these markets you need to understand statistics/probability/expectancy and you need to know your risk and trade your own book, forget everything else, period. It doesn't matter what the news or data is, trade the market alone.

These markets do what policy makers want them to do, and you need to know that. The stats bureaus/govt agencies distort and report cooked numbers ALL the time to follow policymakers requests. If you think otherwise you are extremely naive. So whats a trader to do? follow technicals, price, and manage your risk.
  • #4
  • Mar 28, 2012 3:29am Mar 28, 2012 3:29am
Quoting skenobi
This one comment of yours... what did you mean? Where I come from (I was a Bank trader once upon a time), monetary and fiscal policy events would form part of the analysis. You disagree?

yea what i mean that they are very different in nature, but ints not explained here. both types are of interest.

I mean that FOMC event and Retail Sales are just different type and that should be noted
  • #5
  • Edited 4:10am Mar 28, 2012 3:34am | Edited 4:10am
Quoting mfoste1
You absolutely cannot trade this market based on fundamentals because the markets are highly corrupted by central bank intervention. Prices as well as perceptions and expectations are very distorted right now. When will this sort out? maybe after the next crash, but probably not since they will try to inflate markets more with easing measures, thus further distorting the true interest rate.

To be quite frank, I dont even follow the news anymore. I just follow my tech models because they never lie. Its all math....

To be successful in these markets...

try to hold a position for a month based only on technicals.... intraday maybe - especially fx - its moved by dealers, their corporate clients (non-speculators - like companies fx needs) and algos.

but on longer term basis its impossible to trade without making a hypothesis about some kind of real life event (not necessarily just fundamentals btw) - cant be locked in your own box

technicals only (even if good) is like trying to ski backwards=) no ammount of risk management will give you good trades

policy makers - yes. but their timeframe is monthly (do you think its accidental that EURUSD moves within 1.2-1.5 range?=)
  • #6
  • Mar 28, 2012 9:23am Mar 28, 2012 9:23am
Quoting Killy
try to hold a position for a month based only on technicals.... intraday maybe - especially fx - its moved by dealers, their corporate clients (non-speculators - like companies fx needs) and algos.

but on longer term basis its impossible to trade without making a hypothesis about some kind of real life event (not necessarily just fundamentals btw) - cant be locked in your own box

technicals only (even if good) is like trying to ski backwards=) no ammount of risk management will give you good trades

policy makers - yes. but their timeframe is...
holding trades is all about mental discipline and your risk, anyways macro events are always in the charts long term or short term. I have systems that produce 37% win ratio are are still profitable because of good risk management.
  • #7
  • Mar 28, 2012 10:55am Mar 28, 2012 10:55am
Quoting mfoste1
holding trades is all about mental discipline and your risk, anyways macro events are always in the charts long term or short term. I have systems that produce 37% win ratio are are still profitable because of good risk management.

produce based on backtesting?

anyway who cares about your system... the thread is not about that, why people tend to prove their point without listening to others

thread is about validity of information consumed by markets - and traders

its your personal right to choose to live in a box and follow price action, or actually trying to predict it.. with information at hand, including statistics reported
  • #8
  • Mar 28, 2012 11:03am Mar 28, 2012 11:03am
Quoting Killy
try to hold a position for a month based only on technicals.... intraday maybe - especially fx - its moved by dealers, their corporate clients (non-speculators - like companies fx needs) and algos.

but on longer term basis its impossible to trade without making a hypothesis about some kind of real life event (not necessarily just fundamentals btw) - cant be locked in your own box
why it should be impossible? If you have a working system that just exploits the behavior of market participants, then hypotheses of real life events are not needed in the trading process.

Quoting Killy
technicals only (even if good) is like trying to ski backwards=) no ammount of risk management will give you good trades
not true


but in general I also like to trade sometimes on real-life events. However, not as short-term as you do.
  • #9
  • Mar 28, 2012 11:52am Mar 28, 2012 11:52am
FUCK YOU GUYS =)

too many offtopic bullshit and too many trying to show off

thread was about information

i have no idea to discuss your trading. in real - if you discuss it so much - you are in trouble there i guess, trying to prove your point to anybody to feel comfortable


THREAD IS ABOUT GODDAM REPORTED NUMBERS=) i guess noone really uses this site for its main function (calendar)
  • #10
  • Mar 28, 2012 12:16pm Mar 28, 2012 12:16pm
Quoting Killy
FUCK YOU GUYS =)
  • #11
  • Mar 29, 2012 4:15am Mar 29, 2012 4:15am
Quoting Killy
FUCK YOU GUYS =)

too many offtopic bullshit and too many trying to show off

thread was about information

i have no idea to discuss your trading. in real - if you discuss it so much - you are in trouble there i guess, trying to prove your point to anybody to feel comfortable


THREAD IS ABOUT GODDAM REPORTED NUMBERS=) i guess noone really uses this site for its main function (calendar)
Keep your wig on eh? Yeah they're out of whack but they have been for a couple of years. The calendar is all well and good, but when risk is the major driver, fixed income and correlated markets rule. Then there's QE which skews any data to the point of meaningless. And there's policy makers propping up rates as you say.

For both euros and dollars I can't see any way of making meaningful predictions based on fundies. The euro is almost certainly going to survive but at what level is anyone's guess. The TV pundits have never been as clueless in history - you can hear them stumbling over every move frantically looking for cause and effect.

That said ... plenty of london HFs were long from Xmas and were adamant about EU strength so their crystal balls must be bigger than mine.
  • #12
  • Mar 29, 2012 4:53am Mar 29, 2012 4:53am
Quoting triphop
Keep your wig on eh? Yeah they're out of whack but they have been for a couple of years. The calendar is all well and good, but when risk is the major driver, fixed income and correlated markets rule. Then there's QE which skews any data to the point of meaningless. And there's policy makers propping up rates as you say.

For both euros and dollars I can't see any way of making meaningful predictions based on fundies. The euro is almost certainly going to survive but at what level is anyone's guess. The TV pundits have never been as clueless in...

well its a matter of how do you look at the data, for instance i am long eur since january somewhere at 1.31, with stop at 1.26, target 1.38 - basis is US monetary policy, not fundamentals

the economic data is useful for stocks, to get a some kind of picture of an enviroment were in

(for instance - us retail sales include inflation, so if they grow less than CPI it means that overall sales are coming dow, which will hit gdp - where retail sales is about 70% of volume...)

i think its better to do a little homework and not be lazy, but also not getting maniacal about releases... the data always comes with a lag, at least a month
  • #13
  • Last Post: Mar 29, 2012 5:19am Mar 29, 2012 5:19am
Monetary policy is part of fundies in my eyes but I won't get too hung up on definitions. Your trade was a brave move because the EU policy has been all over the show... but its paying off, so fair enough.

As for algos and news, more often specs shaking out weak hands in my experience. A lot's been made of the rise of algos in FX but the bigger question is % of price-based algos vs other, ie reactive vs proactive. I reckon the latter is tiny.
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