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Trend Trading All Pairs

  • #11,101
  • Jul 3, 2012 9:03am Jul 3, 2012 9:03am
Quoting Holy Cow
That's a lot of data. I frankly would not be able to absorb and make decision based upon it.
How are you managing to trade with so much information considered?
I got used to it. How are we able to drive given all the information we have to process: the road rules of driving, pedestrians, balloons flying, stupid drivers doing stupid driving, listening to the radio at the same time, wet, slippery road, how fast the traffic is moving...etc...But...like a doctor process all that information about the body and synthesize it and make intelligent decision...we are able to do that and drive. same with trading.

Quoting Holy Cow
S/R acts as far as I understand it like this. when this s/r level is against the trend it might give some reaction but price keeps coming to this level again and again until all orders taken out and level broken if it is not broken outright which also happens, if the level is along the trend it might be touched just once or price might even not reach it at all if market is hot, whatever orders were triggered price moves away and might not come back for quite a while.

Certain levels might cause trend to reverse but I think it is only if it...
Succintly put. After i realized that all technical analysis is TL and S/R..or either of them...i made it a personal project to fully understand these two in depth. At first, i went about reading standard trading stuff about them...it wasnt until i started reading academic stuff about them that i realize why they work and what to look for in S/R and TL.


Quoting sisse
Well I read it and replying to your PM in this thread.

Interesting but only useful for an academic journal and to get some credit for research. Completely useless for trading (outside of stating the obvious) .

IMO, the whole thing can be summarized in 3 (well they are 1 million examples to choose) stocks weekly charts with S and R areas highlighting the main FA changes/news related to the stock ...

sisse
I couldnt disagree with you more:

What interests me in that articles is the power law equations interpretation of S/R and the repeating concave functions of executed orders at S/R levels.

Of interest may be:

--What moves financial instrument prices?..

-- MIT analyst did some work on on power law explanations of financial market fluctuations.

--A layman's introduction.
" It may mean something. It may mean nothing at all "
  • #11,102
  • Jul 3, 2012 9:42am Jul 3, 2012 9:42am
Quoting shomari
If I may, in laymans terms, (please correct me, if I'm wrong), Backtesting technical chart patterns is a waste of time. It's been done.
You put it perfectly. It is completely pointless. the main thing is knowing where to trade them(at confluence)....and in what direction(in the direction of the technical and fundamental trend).

A little note: there is this book called "encyclopedia of chart patterns" by thomas bulkowski. He ran statistical tests of all the technical patterns...i have the book myself.....On page 438 of the second edition...chapter 28...you will see a bullish pattern called the "thorn bottoms"...it is a bullish pattern...this bullish looking pattern--as the author freely admit is an experiment--it is a bullish pattern the author pulled out of his arse. I shit you not. He was trying to make a point.

The point? well...let us see what he did next, shall we?
He then examine this bullish pattern in bull market vs bear market, i,.e, trend vs counter-trend. In trending market, the bullish pattern performed 66.66%...and reach its intended price target 76% of the time. In counter-trend market however, the pattern only performed 31.5%.

Mr. Bulkowski then turned the pattern upside down..inverting it thereby creating its opposite--the "horn tops" pattern...a bearish pattern...so, he then run a trend vs counter-trend analysis...this is on page 451, chapter 29. Results? In a trending market it performed at 47%...in a counter-trend market, it performed at 19%. Yes, 19% success rate in a counter-trend!! Look at that disparity in trend vs counter-trend : 47% vs 19%.

My point? TRADE WITH THE TREND. Even if you pull a technical pattern out of your behind..call it the "SHO-FIZZLE-MARI, the shizzle" PATTERN...in a trending market aligned with the polarity of that pattern...i can almost fucking guarantee it...it will score...with a good R/R...you are in business.

Mind you, the "horn bottoms" is not the only technical patterns mr bulkowski made up out of thin air and ran statistical tests on...there was the scallops...the bump and run reversal top/bottom...there is even a complex form of head and shoulder that he created...and the list goes on...

Now, take a wild guess at the performance of these patterns when traded with the trend vs countertrend?

You know the answer to that...i dont even need to post the results.

case closed.


Quoting shomari
.....
Now if you want to backtest, say, what happens whenever a countries yield on bonds goes above, say, 6%, and how that affects the currency, wel now, THAT is a valid and interesting topic to backtest.
Now, you are speaking my language....i couldnt agree more.


Quoting shomari
....example from contemporary scenarios:

When people are fearful they buy JPY and USD to buy their bonds, hece they strengthen. Interesting backtest, and now a valid trading sort of "common knowledge",in the forex world, that's why we have the term (I know I've said it a milion times, but bare with me) RORO, RISK ON, and RISK OFF. Those terms come from backtesting the recet flows of money over just the past 10 years, and will probaby be valid for a while.
That, fundamental bactesting is valid..but the patterns you use, to actually profit...
RIGHT ON THE MONEY!!

Quoting shomari
This is why CUSTOS I can have a MILION valid trades if I want to. As long as the fundamentals are "good", and the technicals are inline with market sentiment, IT'S GAME ON !!
LOOK AT MY CHARTS OVER THE PAST 2 MONTHS. IF IT'S A VALID TRADE, TAKE IT !! DON'T ARBITRARILY LIMIT YOUR PROFITS!!
Game, set, match.
" It may mean something. It may mean nothing at all "
  • #11,103
  • Jul 3, 2012 9:54am Jul 3, 2012 9:54am
Here is site that may even be better..it was provided by quezoy. it contains the same information with more flexibility of manipulation.

Quoting shomari
Nice.
I'm familiar with the US index, but to tell you the truth, I didn't even know they did it for all currencies.
Yeah, you totally get me. I love to see the WHOLE picture first (macro view), THEN poke around in the charts to find entries based on my macro analysis. I SUGGEST EVERYONE DO THE SAME !!
GOOGLE: "bonds and forex market", "CDS and forex market", "COT charts and forex market", and the stuff from SKYNETS post.

THESE INDICATORS WILL GIVE YOU A "BIRDS EYE VIEW" MACRO VIEW OF THE FINACIAL WORLD, AND A...
A good example is my long GBP/AUD trade(now closed). I know it is counter trend(fundamental and technical). that is why i didnt post it here on trend trading all pairs.

the trend went up by +80pips from the bounce off the trendline at confluence...and by +50pips off my entry point.twice. before going into consolidation pattern which prompt me to close it. anyways.

Here is the setup mechanics.

Here is how i used the index to determine trading direction.(what you are interested in.)

of course, you can use the same thing to trend trade. easily.

Quoting shomari
Hey SKYNET, if you could, sort of break it down for me how you personally use this data. Like, walk me through your typical thoughts as you analyze these.
Is it week to week, what do you look for etc. ?
Speak to me like I'm a 5th grader. Thanks
" It may mean something. It may mean nothing at all "
  • #11,104
  • Jul 3, 2012 10:36am Jul 3, 2012 10:36am
I have taken a buy in AU @ 1.0275 SL @ 1.0234 tp1:1.0296 tp2 : 1.0407

Another buy in NZDJPY @ 64.28 SL @ 63.79 tp 1: 64.53 tp2 : 65.05


http://optimus-forex-trader.blogspot.in
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  • #11,105
  • Jul 3, 2012 10:59am Jul 3, 2012 10:59am
Personally, i wait for them to break below support solidly...then take short at retracement test of support now turn resistance.

Quoting shomari
I know you guys might think I'm nuts, but as far as I can see AUD, NZD, and CAD seem to be strengthening, while USD and JPY are weakening as well as GBP and EUR. So for me I'm ( I know CUSTOS w're at support). taking e/n, e/a, g/n and g/a short, and I might try the a/u, a/j, n/u and n/j long. That's mostly based on the fundamentals. I'm going to start sarching for entries now.

I'll post charts later.

tell me what you guys think.
" It may mean something. It may mean nothing at all "
  • #11,106
  • Jul 3, 2012 1:08pm Jul 3, 2012 1:08pm
Quoting Skynet

I couldnt disagree with you more:
... excellent...

Quote
What interests me in that articles is the

...MIT analyst did some work on on

Let me put this in very simple terms. I am sure most academics can talk the talk, but can they all walk the talk?

Look I know that very few very smart individuals can develop high quality algorithms for trading using very complex models but those very few "genius" from the Ivy League schools are most if not all headhunted before they even finish school and they don't have time or the authorization to start publishing articles in a journal explaining in detail how the goose laid the golden eggs...

The rest in this particular field stay in the academic level, the good ones developing theories and explanations very useful for finance and science but useless for trading and the mediocre ones making theory after theory to satisfy their intellectual needs. (I call this "intellectual masturbation").

Please understand that I am not referring to the authors of the good links you sent me but in general.

Just to make my point and go back to earth, let me compare an extract of one of the articles with a real trading chart but let me split in 2 post otherwise it will get messy...

sisse
Pending conversations? PM for a chat...I am mainly in OTM now
  • #11,107
  • Jul 3, 2012 1:55pm Jul 3, 2012 1:55pm
Look what they said:

 

  1. "To test our theoretical predictions ..... we need to identify individual hidden orders....... Doing this accurately [highlight]requires information about trading accounts. We do not have such information, but we do have anonymized membership codes making it possible to identify which orders are made by the same member of the exchange[/highlight]......"


And only here you can see where is the main problem.: this is not realistic for anybody not even the biggest banks in the world.

[sarcastic] no shit we ALL have the info (especially in forex) to identify every single major transaction by a player [in academic terms perfect information] and not only that we can also get live (not after the move) that info in real time updated directly, organized and filtered and translated into a tradable algorithm .....[sarcastic].

and after:

 

  1. "...We assume that all the transactions of a given hidden order are made by the same member of the exchange, that they are of the same sign.......the algorithm proceeds by applying the criteria to the rst 100 orders, labeling all orders ........
  2. [highlight]We then examine each new transaction successively[/highlight], either adding it to any pre-existing hidden order (including those of length one) if it satis es the criteria above or designating it as a new hidden order of length one.....
  3. ....[highlight]Our algorithm assumes that all agents submit their orders through a single member of the exchange. .......The algorithm imposes an upper bound max which will arti cially split hidden orders if any two executions are separated by more than max transactions[/highlight]"


Again how on earth we found this information (1st not available for anybody) and how do we even put all this assumption in real trading terms if we don't know have the information during the fact. Yeap sure after the fact we can find ways but that is useless for trading as the move will be already gone a couple of weeks before...

So we reach to the meat of the argument in this:

 

  1. http://i50.tinypic.com/207n8sm.png


well ...that lead us to? ...maybe a fib extension or pivot.... are we sure we are not going to get to the next support ..wouldn't be easier and more realistic to just evaluate the model against an extension to next support for example to evaluate those "hidden" orders....just saying///

and finally we get to

 

  1. http://i46.tinypic.com/24qsvau.png


.....no further comments markets prolly just move a few thousand ticks until we get all the data for our variables...

Sorry for the sarcasm but I hope you get my point. I am not judging the academic validity of the models. I am just judging the applicability in real trading.

now compare all that with a real FA chart move...

sisse

Pending conversations? PM for a chat...I am mainly in OTM now
  • #11,108
  • Edited 2:08pm Jul 3, 2012 1:56pm | Edited 2:08pm
Compare and contrast with a real FA chart.

Barclays scandal last week.

Retrace to broken support (real FA support as is weekly), very bad news, reaction of players in the market is obviusly sell , target next support first, leave the rest trailling for a test on a furhter break to the lows of the financial crisis when BARC went under given EZ banks problems...

That's it ...rest my case

sisse
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Pending conversations? PM for a chat...I am mainly in OTM now
  • #11,109
  • Jul 3, 2012 2:30pm Jul 3, 2012 2:30pm
You' ve clearly made your case with the chart sisse. As for the algorithms, I would have thought it should be possible for data to be instantly processed and assessed. This is more an off topic remark as I have not had the chance to follow your ongoing discussion without knowing the subject of debate.

I would only like to argue that our empirical decisions in trading following a more or less rigid set of rules are not different in nature from calculated decisions based on their own set of rules.

If you implied that systems are hardly profitable then the same can be said about traders who follow their own system. However I acknowledge that there is a level of complexity to program a system that is on par with experienced traders.

Sorry this got so long and is in creepy english. Not a first language after all
  • #11,110
  • Edited 4:08pm Jul 3, 2012 2:39pm | Edited 4:08pm
Quoting vladutz112
hy Shomary , why don't u make a mini course about fundamental analysys? to help the other trades for me personally is hard ,what i personally do is look at the previous day if the news is good or bad
If anyone should make a course around here it's SKYNET. But , tell you what I'll do. In the next coupe of days I'll write a post and I'll put links to all the fundamental annalysis stuff I have and you guys can go nuts.

It's really important to know the fundamentals. I mean you could replace the word fundamental analysis for the word reality and it would be the same.

since I'm here let me say. got to www.babypips.com and READ THE WHOLE THING. Just this site alone put so many of the pieces of the puzzle together for me about forex and global markets and how they interact with each other.

Google the folowing:

- "bonds effect on forex"
- "COT charts and forex"
- "oil and forex"
- "comm dolls"
- "RISK ON RISK OFF"
- "CDS and forex"
- "interest rates and forex"
- "central banks and forex"

Read up on these and learn how they affect currency moves.
Basically, I look at thosepieces of info FIRST before I even open my metatrader. I kind of "know" what I think the market will do overall for the week. THEN I fire up metatrader and start lookig for entries. Now, if I'm triggered good. If not, oh well, I guess the market just didn't see things the way I did and, so what, on we go.
Charts show you WHEN to trade, but I feel like the fundamentals give me the WHY of the trade. (If that makes sense).
You know someone may say, "Shomari, why are you shorting x/y pair?" and my answer is usually something like " y just raised interest rates while x is suffering a banking crisis and their bond yields are through the roof. The COT report also shows MAJOR buying of y and MAJOR selling of x."
You see ? That's WHY I'm shorting x/y.
THEN I go to the charts and someone might say "Where are you going to short it?" And my answer is always the same. "Under the BPC of the retacement trendline."
The WHY of the trade is costantly changing, that's why you have to watch these things, but the HOW is aways the same. BPC BANG !! You're in.
  • #11,111
  • Edited 4:09pm Jul 3, 2012 3:33pm | Edited 4:09pm
Quoting Skynet
You put it perfectly. It is completely pointless. the main thing is knowing where to trade them(at confluence)....and in what direction(in the direction of the technical and fundamental trend).

A little note: there is this book called "encyclopedia of chart patterns" by thomas bulkowski. He ran statistical tests of all the technical patterns...i have the book myself.....On page 438 of the [url="http://www.amazon.com/Encyclopedia-Chart-Patterns-Wiley-Trading/dp/0471668265"]second...

Dude, SKYNET, bro, I AM LMMFAO RIGHT NOW !!!!!
Not only because you now gave me the name of my next pattern "SHO-FIZZLE-MARI, the shizzle" PATTERN ((I love it), but also because the test that guy did kind of just blows away all the B.S. and shows us that if we're in a trend, it's almost like "guaranteed" to produce you some profits, if you go in the main direction. I guess what I mean is that, hell, you could put a monkey in front of a chart and teach it to place orders in the direction of the main trend,and it would probably produce profitable trades in excess of any losses. THAT IS HILARIOUS !!!
The trend is your friend, that's almost all that matters. (assumig the fundamentals are in order, of course)
SKY, I now have a new folder on my destop called "SKYNET INFO". I've downloaded ALL those reportrs and such you've posted .
THIS IS SOME DEEP SHIT !!!!
I can see investopedia, a dictionary, and wikipedia, are going to be in FREQUENT USE for me over the next little while..
One thing is I've always wondered,HOW DOES PRICE CHANGE. I mean the technicals of it. How does everyone know the same price, but how does say, a billion dollar buy of say e/u cause it to say, go up. HOW? Are their just milions of computers calculating this? Where are they ? How does price drop when BOJ intervenes ? Just because they pump money out there, who or what is deciding that now the jpy shoud be weaker. The actaul mechanical mechanisms of the market, the actual computer infrastructure, if you will? I don'tknow if that made sense, but the inner workings of the system.

Anyways, I just caught a glimpse of a sweet "SHO-FIZZLE-MARI, the shizzle" PATTERN off the d1 tf. I'm going in !!!!
Again bro LMMFAO!!!
  • #11,112
  • Jul 3, 2012 3:49pm Jul 3, 2012 3:49pm
Quoting Skynet
Here is site that may even be better..it was provided by quezoy. it contains the same information with more flexibility of manipulation.



A good example is my long GBP/AUD trade(now closed). I know it is counter trend(fundamental and technical). that is why i didnt post it here on trend trading all pairs.

the trend went up by +80pips from the bounce off the trendline at confluence...and by +50pips off my entry point.twice. before going into consolidation pattern which...
Yah...I like to fool around and nibble at the markets sometimes, where I'm "not supposed to" . I too don't post those charts here,because their more of "instinct" trades rather than proper trend trading. But after you've spent enough time with at this,you ca make plays like that. Excellent trade, and I see how you use the indexes.....NICE!!
I'm looking forward to successfully incorporating that data in my forex toolkit. thanks
  • #11,113
  • Jul 3, 2012 3:56pm Jul 3, 2012 3:56pm
Quoting kumarr81
I have taken a buy in AU @ 1.0275 SL @ 1.0234 tp1:1.0296 tp2 : 1.0407

Another buy in NZDJPY @ 64.28 SL @ 63.79 tp 1: 64.53 tp2 : 65.05


http://optimus-forex-trader.blogspot.in

LOOKING GOOD BRO.
Keep a sharp eye out on Thurs and Fri. BIG NEWS !!
I'm not trying to tell you how to handle your account or anything, but personally, whether I reach my full targets or not, I'm definately going to bank some profits before the news tsunami of Thursday and Friday.
Just a suggestion.
  • #11,114
  • Jul 3, 2012 6:51pm Jul 3, 2012 6:51pm
I think things should not be complicated. Too much thinking messes with ability to trade and make right decisions.
I have taken a number speculative trades. not sure how things will work but there were a number of double tops hence I am shorting few pairs. got stopped today on cad/jpy but still short on few other: e/u, e/j, g/j. g/u, chf/j, usd/chf. the goal is to get on trend which might resume. if stopped and trend reverses will be looking to go with another trend.
ema's help me to decide which double top I decided to bet upon. generally, it is all probabilities game. No one knows what market gonna do.
  • #11,115
  • Jul 3, 2012 7:02pm Jul 3, 2012 7:02pm
Quoting sisse
Look what they said:

 

  1. "To test our theoretical predictions ..... we need to identify individual hidden orders....... Doing this accurately [highlight]requires information about trading accounts. We do not have such information, but we do have anonymized membership codes making it possible to identify which orders are made by the same member of the exchange[/highlight]......"


And only here you can see where is the main problem.: this is not realistic for anybody not even the biggest banks in the world.

[sarcastic]...

Sisse, btw, in FX market we practically have no information outside of PA.
We do not have neither Level II information nor volume. I wonder why people engage in FX day trading at all when it is clear day trading stocks is much better proposition. it is always dangerous to increase leverage in FX cause we have no idea what we are buying or selling. for example we can increase size on green candle when this candle is happening on low volume but we do not know and then it obviously goes against us.
  • #11,116
  • Jul 4, 2012 2:25am Jul 4, 2012 2:25am
Interesting article about interest rates and their effects on currecy movements

http://www.dailyfx.com/forex/educati...FX_Market.html

Also here's one about centra banks ad FX

http://www.dailyfx.com/forex/educati...t_effects.html
  • #11,117
  • Jul 4, 2012 4:29am Jul 4, 2012 4:29am
I took a sell usdcad AT 1.0124 sl @ 1.0264

TP 1 : 1.0104

TP 2 : 1.0084

http://optimus-forex-trader.blogspot.in
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  • #11,118
  • Jul 4, 2012 4:44am Jul 4, 2012 4:44am
Quoting kumarr81
I took a sell usdcad AT 1.0124 sl @ 1.0264

TP 1 : 1.0104

TP 2 : 1.0084

http://optimus-forex-trader.blogspot.in

This is the problem I see with Hector's approach. Now you entered trade few pips away from support. in most cases this trade will go straight against you while actual signal to go short was 3 days ago and 60+ pips better price.
Hector's uses slow big period ema's when we see trend on them big part of that trend already gone and he uses these ema's as s/r.
what i think is that this method is not trend following but trend nibbling. Trying to bite small pieces of trend.
in any case it is better than trading without plan at all
  • #11,119
  • Jul 4, 2012 6:46am Jul 4, 2012 6:46am
Just shorted NZD/Cad. a bit late by 20-30 pips. stop 0.8230. no target. speculative trade.
  • #11,120
  • Jul 4, 2012 6:47am Jul 4, 2012 6:47am
took shorts in cadjpy and audjpy

http://optimus-forex-trader.blogspot.in
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