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  • #81
  • Dec 6, 2013 4:01am Dec 6, 2013 4:01am
Hi NV

"I know it's US jobs day tomorrow but I honestly pay no attention to NFP"





Hope you could clarify the above statement please. With the usually huge spike in price movement on the NFP event, isn't it statistically significant to take into consideration of price action in your model? Also you seem to imply that traders are disinterested in the event and instead bet on the payroll numbers. If so, who drives the rapid price movement? I am still learning and am all ears to hear from your perspective. Thanks.
  • #82
  • Dec 6, 2013 5:08am Dec 6, 2013 5:08am
Call me cynical but I'm getting the whiff of fish......
He was looking for the card so high and wild hed never need to deal another
  • #83
  • Dec 6, 2013 7:50am Dec 6, 2013 7:50am
Last chance to take a guess at how many monitors I use (Poll above first post)! Thanks for all the votes so far ladies and gents! Answer revealed at the close today.

Quoting mmurray
My guess is 3 monitors for no other reason than thats how many i have
Thanks mmurray, noted.

Quoting ozziedave
Hi NV On the NZDUSD long trade it looks like your entry of 0.8221 was right into the resistance level on the 1hr chart. When you place trades do you take into consideration support and resistance levels or do you not worry about them especially on a lower time frame chart?
Excellent question ozziedave. I have not discussed S/R much because it is such a controversial topic here. It appears to me that most traders see trading without S/R akin to driving a car without a steering wheel. Odd though that I do not see any in depth studies or proof that using it works. Of course like everyone I was so convinced of its prowess because like most that's what I constantly had shoved in my face. When I carried out my own studies I found it to exhibit no edge at all. In fact I found it restricted my profitability hugely as it kept forcing me to take bloody profits or losses for no reason! Also as any mathematician will tell you, given their arbitrary/subjective nature modelling any meaningful levels of S/R is virtually impossible. The key litmus test came when I just dropped these random lines completely and my profitability shot up simple as that really. So to answer your question no I don't use them.

Ask 10 people to draw support and you will get 10 different answers. That sums up how useful it is to me. That's not to say some genius out there cannot find an edge I certainly cannot and I have put in a lot of statistical work to try. If anyone else can make it work I am not knocking them all I say to them is bravo!

After all this game is all about doing what makes money whether that's using planetary cycles, tarot cards or S/R . Just for me it hasn't worked each to their own I guess. The last thing I want to do is get into a battle over whether it has any merits because I know I will be bombarded with mountains of religiously devoted S/R followers telling me it works so I have intentionally tried to avoid going into the topic. Great question though. Happy to talk offline to anyone who wants to show me a live account where they have made credible returns using S/R. No? Thought not.


Quoting IndhiMoney
Actually not able to vote in the poll. Maybe because I have just joined the forum? But 8 is my second and final answer!
Yes likely it is because you just joined. Your answer is noted though! Thanks great to have you on board.

Quoting skyway
{quote} Many thanks NV. {quote} Similar tots here.
Cheers skyway. "Tots" never heard that one before, like it!


Quoting letmetry
Hi NV "I know it's US jobs day tomorrow but I honestly pay no attention to NFP" Hope you could clarify the above statement please. With the usually huge spike in price movement on the NFP event, isn't it statistically significant to take into consideration of price action in your model? Also you seem to imply that traders are disinterested in the event and instead bet on the payroll numbers. If so, who drives the rapid price movement? I am still learning and am all ears to hear from your perspective. Thanks.
Brilliant question I will answer this in a separate post over the weekend if it's OK. I never said that traders are disinterested in the event, short term traders will of course pay more attention to it than medium termers like me. Market makers will generally refuse to give a price 5 minutes pre and post this number so it is most definitely taken into consideration. I most certainly however pay no attention to any data including US jobs data. As you can see I am holding my EURAUD over the number and also I have a buy order on NZDUSD so it's business as usual for me, NFP or no NFP not fussed. I will clarify this anyway over the weekend and answer your questions. Thanks.


Quoting dr_who
Call me cynical but I'm getting the whiff of fish......
Thanks for your insightful comment. I agree, the smell of that coconut paste smothered salmon is DELICIOUS! Time for lunch.

Back later, NV
(skype: nv_trader, email: [email protected])

REAL LIVE ACCOUNT:

***http://www.myfxbook.com/members/nv_t...-trader/749457***
  • #84
  • Dec 6, 2013 8:44am Dec 6, 2013 8:44am
CLOSE above 10%

OK folks thanks for your patience, my candle doesn't close till 2pm GMT so I actually had no idea we closed above 10% whilst I was writing the last post and as I have mentioned I don't pay any attention to data or anything that happens in between my h4 candle closes.

So unless anyone has any objections I will start talking a little about the theories behind my method. I will start over the weekend because I have a prior engagement I need to go to this afternoon/evening with some investors to discuss November returns and just have a general catch up. Luckily I am going with some good news . I'm just joking they are a pretty relaxed bunch everyone knows the market has its ups and downs. It also looks like I will be flat risk into the weekend because I can't see anything setting up at present. The NZDUSD got cancelled automatically.

Unfortunately I feel like complete sh## and have a terribly sore throat because I got drenched with sweat during boxing class last night and then had to walk to my car in the absolute freezing cold - London is freezing at the moment! That combination of sweat and freezing weather definitely wasn't good.

Just a quick note please manage your expectations.

a) I have had a lot of messages asking me if I am selling a system. The only thing I am selling is the truth.

b) The equity curve may dip below 10% I have no idea that's just how it works as you know, make a lot give some back and so on. I am just keeping my word that if we closed above 10% I would start talking about how I trade.

c) I use highly advanced mathematics to define my PA theories most of which is well beyond the scope of this thread. However I have some fairly easily understandable Price Action theories that underline this. I am happy to go into those ideas.


Do not expect some holy grail strategies, if that's what you are expecting then please pass and move on to the other 99% of threads here. Plenty of roulette machine ideas floating around.

I will be back at the close, hopefully not having had too many drinks . if you have any questions just add me on skype or email me.


Catch you soon, NV
(skype: nv_trader, email: [email protected])

REAL LIVE ACCOUNT:

***http://www.myfxbook.com/members/nv_t...-trader/749457***
  • #85
  • Dec 6, 2013 9:50am Dec 6, 2013 9:50am
Im guessing 0. You use an old strategy that the wise man on top of a mountain uses, a flip of the coin. Since I can't guess that amount I'll guess 1. Are you going to let us know how exactly you make a call for a buy or sell? Staying tuned. Thanks for starting this, very encouraging.
Faith ends where worry begins, and worry ends where faith begins.
  • #86
  • Dec 6, 2013 12:49pm Dec 6, 2013 12:49pm
I voted 8
  • #87
  • Dec 6, 2013 12:56pm Dec 6, 2013 12:56pm
For executing a 4-hour strategy, more or less model-based, i would assume 1 screen is sufficient. 2 would maybe be more convenient, 1 screen for charts/data, the other for order entry platform, excel or whatever. Many people in an office environment have 2 screen nowadays too.
  • #88
  • Dec 6, 2013 1:18pm Dec 6, 2013 1:18pm
Quoting nv_trader
{quote} Thanks for your insightful comment. I agree, the smell of that coconut paste smothered salmon is DELICIOUS! Time for lunch. Back later, NV
Glad you confirmed my insightfulness. I thought I was too
He was looking for the card so high and wild hed never need to deal another
  • #89
  • Dec 6, 2013 2:01pm Dec 6, 2013 2:01pm
Quoting nv_trader
Analysis for Thursday 5th December 2013 (See fun poll, can you guess how many screens I use to trade? Answer @ Friday close) Good Evening,

Hi NV,
I voted
Still waiting for good news tonight.
  • #90
  • Dec 6, 2013 2:21pm Dec 6, 2013 2:21pm
Hi nv , apart from sounding like you know what your talking about, I'm always interested when traders have a different view on S&R especially if they think it's bollox as my trading is all about that.

Hope to learn about other possible perceptions of price action and market movements.

Thanks for taking the time, look forward to hearing more.

Q
  • #91
  • Dec 6, 2013 4:22pm Dec 6, 2013 4:22pm
Hi NV,

Re your comment about not using S/R.

How do set your stop and target points? Specifically, setting a stop, I believe you would be setting it behind a recent S/R. Technically speaking, the high or low of a 4 hour candle is a resistance or support in the last 4 hours.

Enjoying your thread so far and looking forward to more information.

Regards,
Merv
  • #92
  • Dec 6, 2013 7:59pm Dec 6, 2013 7:59pm
POLL RESULTS (See attached photos)

Good evening ladies and gents. Thanks for voting in the fun poll.


Congratulations to forexvegan, fxbishop, skyway, srt, whatfx and zamboni. I'll have to think of some way of rewarding the 6 of you for getting it right just give me some time to work something out please. To the rest of you many further polls to follow don't worry.


The answer I can reveal is ONE screen. I only use a single monitor for trading as per attached (NV Current). I have two dogs (girls), the one on my chair is Tiger I also have a smaller dog (pomeranian called Goldie) but she was too busy eating to come and join me for a photo shoot, next time . She is a right diva.


On the trading floor for 5 years I had 8 screens but to be honest they were necessary as I was responsible for a variety of tasks as a market maker. Then when I left the floor to go it alone I invested in a 10 screen setup in my home office for the first 12 months (2009, see attached, NV OLD).


One day I realised, just like 99% of the crap in this industry it was all a gimmick. I just did not need it, it was causing me to lose focus. So I got rid of 9 and stuck with 1 screen which was the best decision I ever made.


The more focused, precise and above all manageable pieces of information you give your brain the higher the chance you won't end up screwing it up. Not to mention how much more relaxed it is compared to having a gazillion things going on at the same time. It used to make me a nervous wreck having all those screens.


srt summed it up nicely:

"My guess, 1 monitor. Longer-term trader doesn't need to be watching all markets @ the same time. Just scroll through them one at a time."


The Funny thing is whilst I am not a day trader you can all see I am still very active in all my chosen markets. I cover every trading day and every time zone but I manage to do all of that with just one screen with minimal effort. Yes thousands of hours of work have led me to that point but having the right infrastructure doesn't half help and usually what's best in this game is exactly the opposite of what they want us to believe is best i.e having as many bits of information on as many screens as possible.


Thanks for all the other comments and posts I just got home a short while ago and it's 1:45 am here I am absolutely shattered I'm off to bed I will get through all the outstanding emails, PMs and posts tomorrow and try to kick start some price action posts as well tomorrow.

Good night all, NV
(skype: nv_trader, email: [email protected])

REAL LIVE ACCOUNT:

***http://www.myfxbook.com/members/nv_t...-trader/749457***
Attached Image (click to enlarge)
Click to Enlarge Name: NV Current.jpg Size: 824 KB
Attached Image
  • #93
  • Dec 7, 2013 5:30am Dec 7, 2013 5:30am
nv_trader: what exactily did you do as a market maker? I would assume that the marketmaking process is by and large automated nowadays.
  • #94
  • Dec 7, 2013 12:03pm Dec 7, 2013 12:03pm
MarketMaker huh?
  • #95
  • Dec 7, 2013 3:16pm Dec 7, 2013 3:16pm
Common Courtesy

This is just a gentle reminder that the criteria for posting on this thread is that you must at least attempt to behave as if you are over 3 years old. I have unfortunately had to ban 2 members. I've got better things to do than to even reply to these members that seem to intentionally enjoy tarnishing other people's efforts.

Anyone else who wants to waste my time with ridiculous comments will be banned with no notice. I may be polite but I'm no mug.

Now back to those that actually want to get something out of my time. I will start to get through all the outstanding questions then we can start with a slow introduction in to some more info on my trading style.

Regards, NV
(skype: nv_trader, email: [email protected])

REAL LIVE ACCOUNT:

***http://www.myfxbook.com/members/nv_t...-trader/749457***
  • #96
  • Dec 7, 2013 3:44pm Dec 7, 2013 3:44pm
Hi NV,

I have been a member in FF from a long time but don't post often. But after reading this thread, I was compel to post and thank you for starting it. So far from what you have written, it does make a lot of sense to me. Please ignore some of the posters here (who you rightly banned) and don't let them affect what you have to share for folks who are open and really want to learn from you.

Your trading style and some of your findings mentioned so far kind of makes for sense to me after years of playing this game and after spending thousands in courses and software. One thing I totally agree with you is that 99% of things mentioned about Forex is all drivel and to be consistently profitable (over years) is really hard. I am at a point where I no longer lose money but I am not profitable either.

I am really looking forward to your price action posts.

Thanks and have a great weekend.
  • #97
  • Edited 4:13pm Dec 7, 2013 3:50pm | Edited 4:13pm
Quoting forexvegan
Im guessing 0. You use an old strategy that the wise man on top of a mountain uses, a flip of the coin. Since I can't guess that amount I'll guess 1. Are you going to let us know how exactly you make a call for a buy or sell? Staying tuned. Thanks for starting this, very encouraging.
Thanks for your vote. I will go in to more detail about strategy in due course. Great to have you on board.

Quoting Dkam
I voted 8
Thanks for your vote. Good to have you following.

Quoting shrike
For executing a 4-hour strategy, more or less model-based, i would assume 1 screen is sufficient. 2 would maybe be more convenient, 1 screen for charts/data, the other for order entry platform, excel or whatever. Many people in an office environment have 2 screen nowadays too.
Thanks for your vote. Good analysis, almost correct. In fact I have tried doing exactly what you mention, one for charts and one for order entry/excel etc in the past but I actually found it just as easy to do it with one monitor by just switching between applications. I never do anything in a panic so to me it made absolutely no difference having the extra screen so I stick to one. Good guess anway!

Quoting mosah
{quote} Hi NV, I voted Still waiting for good news tonight.
Thank you kindly for your vote. Good to have you on board.


Quoting Quidsey
Hi nv , apart from sounding like you know what your talking about, I'm always interested when traders have a different view on S&R especially if they think it's bollox as my trading is all about that. Hope to learn about other possible perceptions of price action and market movements. Thanks for taking the time, look forward to hearing more. Q

Dear Quidsey,

I very much appreciate your kind comments. As you know S/R is a very sensitive topic, in particular amongst the retail community so I have tried to be careful with my words on the subject. However the fact of the matter is amongst the professional community it simply isn't used as much as people would like to believe it is. The market is anywhere from $3-5 trillion per day and a high percentage of those transactions are based on matters totally unrelated to previous common price points. The discussions regarding S/R and the importance placed upon these ideas simply do not take place on a trading floor to anywhere near the extent they do on these forums.

Anyway it is not my intention to rule any approach out totally because I respect that what doesn't work for me may work for someone else. However I am here to share my experience and my direct experience is that S/R is, if I may quote you, "bollux" .

As you say you are open to other ideas, which is a great attitude to have, so I hope I can introduce some new angles into your trading, as small as they may be.


Quoting Merv
Hi NV, Re your comment about not using S/R. How do set your stop and target points? Specifically, setting a stop, I believe you would be setting it behind a recent S/R. Technically speaking, the high or low of a 4 hour candle is a resistance or support in the last 4 hours. Enjoying your thread so far and looking forward to more information. Regards, Merv

Dear Merv,

Thank you for the kind comments. I will go in to more details of strategy very shortly. Great to have you on board.

Regards, NV
(skype: nv_trader, email: [email protected])

REAL LIVE ACCOUNT:

***http://www.myfxbook.com/members/nv_t...-trader/749457***
  • #98
  • Edited 5:59pm Dec 7, 2013 5:21pm | Edited 5:59pm
Quoting shrike
nv_trader: what exactily did you do as a market maker? I would assume that the marketmaking process is by and large automated nowadays.
Market Making

Dear shrike,

Excellent question I was wondering when someone was going to ask me. As I have explained in previous posts the market I covered was the options/exotic options market (complex derivatives). The type of fast action trading everyone associates with being a "city trader" and the kind that was shown on the trading floor video links I posted earlier is specifically related those that handle pure directional risk (spot market).

Whilst I did not handle the spot market I have a very good understanding of all product suites because generally all options traders will entirely hedge out their delta (spot) risk as they have no interest in having exposure to the market directionally. Therefore I had significant interaction with the spot desk as I transacted with them very regularly from my desk.

I have avoided getting in to complex discussions over the various risk exposures in options, namely the "greeks" because it is just completely irrelevant to what we are doing here, i.e. taking pure directional risk. I would just end up either confusing everyone for no reason or if not then boring them into submission. However as you ask let me start off by just saying that this huge distinction must be realised between the spot market makers, options market makers and then exotic options market makers. The demand for taking pure directional spot risk is enormous compared to the demand for taking risk based on say volatility or even volatility of volatility (now you can see why I try not to bother going in to these details as it is just going to bore the pants of most and is totally irrelevant.)

The reason for the varying demand levels is quite simply down to one thing, LIQUIDITY. The spot market is so liquid and widely transacted, it is relatively straightforward to make a price. The price will generally reflect the price at which the market maker can get in or out of the trade you force him into. Remember a market maker is in the pure sense not a risk taker like you and I (prop traders). He is more like the manager of a supermarket responsible for the entire operations. Essentially a market maker is managing inventory (currency or currencies he specialises in), pricing inventory and making sure the risk of that inventory is always within the bank's predefined risk tolerances. He is not in theory taking any outright risk. However he has no choice but to take on certain positions because he has an obligation to always show a price and if a customer either hits his bid or lifts his offer he has automatically taken on risk with no say in the matter. Of course he can skew his bid/ offer to reflect his appetite (called his axes) but generally you can imagine with the amount of transactions that come on to his book inevitably he is going to be either long or short of the market and he needs to be constantly either hedging that as practically possible or taking a view on the market through this process of taking on and hedging "inventory". More senior market makers will of course have more leeway to leave certain portions of their inventory unhedged, i.e. directional, it varies from bank to bank desk to desk etc.

I could really write about this for 10 pages but in the interest of keeping this thread relevant and to the point I will just quickly compare that to say a derivatives/ complex derivatives market maker, which was my product set. You see the more complex a product, i.e. the more "moving parts/risks" involved naturally the more difficult it is to quote a price, i.e. it's illiquid. The liquidity of the market is significantly lower and the cost of hedging every element of risk (spot, volatility and so on...) is that much greater and more complex/time consuming to calculate, hence why the spreads are so much wider compared to spot markets. I would have to consider the cost of me getting out of several risks, not just spot risk. Therefore you don't really get derivatives traders jumping up and down screaming at each other because the pace of the market is so much slower than the spot market because it takes that much longer to offer a price in a product because there are so many moving parts to calculate. Options on options are even slower, which I also had huge exposure to. It may take me half an hour to give a price on a product to a hedge fund customer, compare that to 3 seconds to a spot trader . Ultimately I have so many risks to establish, compare them to any existing inventory of those risks I may already have on my book and then reflect a bid or offer that reflects that and also my bank's propensity to take or not take on the risk. Those familiar with options pricing models will be aware of some of these risks and why there are so many other considerations to take into account that a spot market maker may not have to. That's why the amount of maths and spreadsheet modeling involved in what I do was more prevalent because of the sheer complexity of the risks involved.

This brings me on to your final point about things being automated in terms of market making. As you can see the answer is absolutely no. There is no way full automation could be used in particular on the more complex products where all the risks need to be taken in to consideration. Sometimes the market will not reflect what the pricing models say (just ask Robert Merton, LTCM crash 1998). I can understand why you ask however. When I left the bank 4 years ago yes there was a big push in the spot industry, especially in forex to capture market share using E-platforms. As you may well be aware all the big names, Deutsche, Citi, Barclays all offer E-FX platforms to smaller customers. However this was simply as far as I could tell to stop small customers (i.e. small business, small volume speculators etc with say 100k - 5 mil accounts) phoning up unnecessarily and wasting valuable time of the market maker (through the salesperson). The market maker can now focus on other more relevant tasks at hand such as managing his ever changing risks and also managing the large volume players such as central banks and hedge funds. You see this element of operations can never be automated (extremely large volume players). When transacting in very large volumes, say 500 lots or even more there is absolutely no way a bank would leave that kind of risk to a machine. Can you imagine before you know it the bank's inventory book would be getting completely out of hand. A market maker is a very skilled individual who will skew his bid/offer as well as using a variety of other techniques to ensure that this inventory risk does not get out of control. That's what he is paid for and he is very good at it. Another key role he will play is feeding market information (about supply and demand) sometimes directly more typically through a saleperson to the bank's huge customers. This is a service that could never be done by a machine. This additional "service" (along with taking large customers to football matches and other events with the market makers in attendance) is a crucial part of the "relationship building" process for the bank in making sure big hedge funds, central banks and asset managers are transacting their requirements through them and not one of their competitors. This part of the service can never be automated.

This is where I could honestly write an entire thesis explaining to you how these big players play against each other like a game of poker in determining their bid/offer prices and the nasty tactics sometimes involved but it has absolutely no relevance to what we are doing here. To conclude I did something very similar to a spot dealer but for an entirely different product set, one that had a lot more moving parts and therefore required a lot more mathematical skill set, I guess you could say a "quant" type role. I would not say one was easier than the other, they just required different skills and each had their own quirks. I must say however that I don't miss the sheer intensity of number crunching and calculating various complex risks I used to have to do. I am really enjoying the spot market for its simplicity and transparency, however the exposure to modeling techniques has clearly come in very handy. I guess I am lucky that I have had a good blend of exposures that have helped me to get to this stage now.

The way i look at it is it's ultimately, regardless of how many calculations are required, just a number and it either goes up or down, so from that perspective why trade complex products when you can trade straightforward vanilla items like spot currencies. I would never go back now that I am a pure risk taker in the spot market. In any case as a player outside of the bank now, i.e. being an independant trading anything more complex than the spot market is just suicide in my opnion.

If anyone wants to know anything else about the floor processes absolutely happy to answer over skype or email but let's not get distracted from what we are trying to achieve here.

Great question I hope I was able to answer some of it for you.

Regards, NV
(skype: nv_trader, email: [email protected])

REAL LIVE ACCOUNT:

***http://www.myfxbook.com/members/nv_t...-trader/749457***
  • #99
  • Dec 7, 2013 6:21pm Dec 7, 2013 6:21pm
Hi NV,

Thanks for the insights of the market makers. While it may not pertain to everyday trading, it's good to know some of the mechanics of how it operates behind the scenes.

Nice job of trading. Reviewing your trades it really shows the importance of "letting your winners run & cutting the losers quickly". Over 11% return in a few weeks with 3 wins & 8 losses is pretty impressive. Would have been even better if the one GJ trade hadn't been barely nicked before it ran in your direction but that's trading.

Please continue passing the knowledge.
Thanks
  • #100
  • Dec 7, 2013 10:20pm Dec 7, 2013 10:20pm
Hello NV,

I understand you make trading decisions based on 4 hr.
However, I see some of the trade graphs are 5M and 15M. Do you zoom down to lower time frame to time the entry once you have decided to take a trade?
Thanks
TS
Haste not to Enter AND Haste not to Exit !-TradeStar
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