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  • #121
  • Dec 9, 2013 4:12am Dec 9, 2013 4:12am
Analysis for Monday 9th December 2013

Hello everyone,

I trust you all had a great weekend. Sorry for the late daily post I have been feeling like utter crap the whole weekend and decided to sleep it off last night. As I had mentioned on Friday night I caught something after stepping out in the cold drenched in sweat. I have no idea where I mustered the energy from to write those posts over the weekend. I will tidy up the main front post later this week and incorporate them into an index formet there for ease of access.

Based on Daily closes, possible:

a) Long GBPUSD (active H4 order)
b) Long EURAUD

Looking like a quiet start to the week although not unusual after the heavy day on Friday.

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

REAL LIVE ACCOUNT:

***http://www.myfxbook.com/members/nv_t...-trader/749457***
  • #122
  • Dec 9, 2013 4:22am Dec 9, 2013 4:22am
Quoting hanover
{quote} {quote} At last! Someone who thinks along the same lines as I do.
Dear Hanover, I appreciate your comments. I am well aware of how highly you are regarded on this forum and with good reason. Some of your work is excellent. Having read your material in the past, I knew all about your contributions on FF before I even started this thread and out of all the big names here on FF you are someone I always have plenty of time and respect for. So to see you comment here means a lot to me.

Thanks for following.

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

REAL LIVE ACCOUNT:

***http://www.myfxbook.com/members/nv_t...-trader/749457***
  • #123
  • Dec 9, 2013 4:44am Dec 9, 2013 4:44am
The Laandan Cocksuckers. (all the traders im working with based in Laaandan) Why LCS? As the whole Europe seems to wait and shake untill those bastards start the machines at 9 oclock my time. This name is purely a recognition of high respect for the boys at their desks. Visited lots of banks there, talked to lots of traders there. All good chaps. Especially guys in Barclays. All pretty much good drinkers.

Concerning market making role. You explanied it very nicely there mate. One wants all of it to be eaten by the machine and it naturaly evens out in a way. Does not care bout the stops. Otherwizze, one needs to handle the risk on the table wisely. Especially if one gets half a yard on the table instantly, then I guess the silent play is in order to limit the risk. Two general questions for ya, havent had oppurtunity to talk about this directly yet:

1. Do market makers look only to one cross or they can balance the risk with other cross currency plays? I guess mostly in this direction or not? If CAD is in question, could they balance it as an index play on all the pairs in CADXXX/XXXCAD world? Can you explain how big players look at the index story of one currency in question.
2. I saw that you play only 6 or 7 pairs. How did you pick that out and why?

thanks 21vs7
  • #124
  • Dec 9, 2013 4:51am Dec 9, 2013 4:51am
Hi NV,
Thanks again for your effort.
Could you post charts about the 2 possibles trades (GBPUSD & EURAUD) for today Monday?
  • #125
  • Dec 9, 2013 5:59am Dec 9, 2013 5:59am
Hi NV,

Can you describe how you decide that a wave is finished?

What is your definition of a new valid high/low to draw a valid wave?

Thanks
  • #126
  • Dec 9, 2013 8:16am Dec 9, 2013 8:16am
Ni NV,

thank you for sharing your view and method of trading. It is very interesting, to follow your concept of fractal relationships.

When reading your posts some random thoughts come up to my mind:

It sounds like you invented/found some sort of allometric model for forex.
Inside of a H4 candle there may be some waves on lower timeframes, but they are limited - otherwise it is a straight line. Therefore, there is a restriction of waves - at least on the upper or lower end :-).
Could those waves per timeframe ratios give me some overview of how trending the currency pair is and how long this trend may live?
Is there a certain probability of wave numbers and wave amplitude per candle?

Regards
Nichess

MyFxbook
Salmei, Dalmei, Adomei!
  • #127
  • Dec 9, 2013 2:21pm Dec 9, 2013 2:21pm
I like to see visual examples so I drew out what I saw. Is this what you are seeing as well nv_Trader?

Thanks

Orange = entry
Red = SL
Attached Image (click to enlarge)
Click to Enlarge Name: Screenshot1.png Size: 26 KB
  • #128
  • Dec 9, 2013 3:27pm Dec 9, 2013 3:27pm
Ditto. Nearly

Attached Image (click to enlarge)
Click to Enlarge Name: Image 09122013.png Size: 38 KB
  • #129
  • Dec 9, 2013 6:10pm Dec 9, 2013 6:10pm
Analysis for Tuesday 10th December 2013

Good evening,

Thank you for all the emails, skype queries and posts above asking questions. As you may have noticed if you post here, email or skype your query will get a response at some stage. I must apologise in advance because during the weekdays I get very busy with managing my own trades, my own private investor queries which take priority, general research I like to do, my 2 dogs, the gym everyday without fail and then some days evening boxing sessions as well. As things quieten down heading in to the Friday close and the weekend I get more time to answer all the posts and emails and skype queries. If it is just a general query then of course I will reply the same day if I can.

My point is I am not ignoring anyone so feel free to ask here, email or skype but just bear with me till I get some quiet time to answer most likely Friday - Sunday. As this thread has taken off the volume of questions has increased dramatically and so as not to favour anyone and not to disturb my own routine I am going to set aside some time during the weekend to answer everyone. So if you ask you will get a response but it may take some time.

I have cleared up the first post to include an Index and also slightly amended the methodology post "breaking the market down" if you care to re-read.

Based on Daily closes, possible:

a) Long GBPUSD (active H4 trade, SL to be managed)
b) Long NZDUSD

The cable is currently on a long wave 3 as a couple of you have correctly identified above but now it is completely in the hands of the market how big this impulse gets (how many more waves will form) or whether this is the end of the line. Not fussed just let the market decide no crystal ball here folks. Because of the NFP spike the low of wave 2, i.e. the stop is a bit larger than normal but that's what the market intended so that's what we go with.

The EURAUD was cancelled as the wave 1 turned into an irregular correction before the order kicked in so nothing doing there.

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

REAL LIVE ACCOUNT:

***http://www.myfxbook.com/members/nv_t...-trader/749457***
  • #130
  • Dec 9, 2013 9:21pm Dec 9, 2013 9:21pm
Hello NV,

I have some questions for you. I am trying to understand what the big boys are thinking at certain times.

1. When the market moves opposite of strong fundamental data like the US had last week, are the big guys taking advantage of this to make money or does it have to do more with keeping price at a certain level because of hedged positions (options, other)? I just find it hard to believe that fund managers would buy Euro with the fundamentals given.

2. From my understanding the four biggest banks control nearly 50% of the market. When price fluctuates in both directions at important news releases, are they working together to create this volatility or does it have to do with so many different price quotes coming in at one time?

3. This ties in with questions 2. I heard that banks can speed up or slow down the feed on price quotes, is this true?

I'm not trying to be that guy, I am really curious how they operate.


Thanks
  • #131
  • Dec 10, 2013 1:22am Dec 10, 2013 1:22am
Quoting nv_trader
So if you ask you will get a response but it may take some time.
No prob nv, it's all good.
  • #132
  • Dec 10, 2013 1:49am Dec 10, 2013 1:49am
This thread is a breath of fresh air. H4 is the way to go. Well done
  • #133
  • Dec 10, 2013 7:19am Dec 10, 2013 7:19am
Dear NV,

It's great to have someone spreading some honest words and above all supporting them with a trader explorer for everyone to see and study.

I will not wish you good luck as you don't seem having any need of it. As everyone as already understood, you know what you are doing.

Very interesting reading anything here and I hope you will continue for long giving us a chance to learn something from you.

Thanks for all done and thanks in advance for all coming.

Off course, subscribed !
BT
Simplicity is the Ultimate Sophistication.
  • #134
  • Edited 8:45am Dec 10, 2013 7:53am | Edited 8:45am
Found some downtime to get through the questions, market is just meandering about. Back this evening with the Daily update.

Quoting 21vs7
The Laandan Cocksuckers. (all the traders im working with based in Laaandan) Why LCS? As the whole Europe seems to wait and shake untill those bastards start the machines at 9 oclock my time. This name is purely a recognition of high respect for the boys at their desks. Visited lots of banks there, talked to lots of traders there. All good chaps. Especially guys in Barclays. All pretty much good drinkers. Concerning market making role. You explanied it very nicely there mate. One wants all of it to be eaten by the machine and it naturaly evens out...
Dear 21vs7,

Thank you for you kind comments. As mentioned in the market making post I want to avoid going in to too much detail about market making activities because they bear absolutely no relevance to the way I trade now and therefore this thread. However as you asked so nicely I will give a short explanation but I really don't want people here to get confused and think any of this makes the blindest bit of difference to how I trade now.

1. Just a quick background for those less familiar with market making activities (feel free to ignore this post if you wish as it has nothing to do with my trading). Market makers use a wide variety of instruments and methods to hedge out their risks. If a client enquiry is for small volume the dealer can lock in profit by quoting a bid/offer slightly wider than what he sees on his screens (interbank). Take the order, immediately sell the position through his screens, job done.

It's the larger risks that build up where he cannot use this simple process (due to lack of liquidity on his screens) that he will look to hedge over time, introducing potentially problematic basis risk. Of course this decision on timing will depend on what the reason behind the client flow was (speculation vs business transaction etc) and the market makers perception of the immediate liquidity risk and medium term basis risk, if he decides to hedge over time using other instruments. Quite often they will use FX Forwards (increased interest rate risk, lower basis risk attributable to time) or hedging using cross currency plays as 21vs7 mentioned. To answer the question they are free to look at multiple cross currency plays but it is likely they would not do that as the basis risk would start to multiply dramatically. This is one reason, amongst others, why the desks of various currencies are kept separate. Usually the cross currency play to use is obvious anyway. The decision will be based on the market makers perception on the correlation of the economies in question but this will of course be much more prevalent in circumstances where the currencies the trader is responsible for are illiquid or have thin volume. This would be quite typical when trading European currencies such as USDNOK, USDSEK, USDDKK. An obvious example would be using EURUSD to hedge out one of these positions, let's say USDNOK, which would simply leave exposure to EURNOK (resulting in significantly less basis risk compared to the original USDNOK position). The increased transaction costs would be offset to some extent by the reduction in liquidity risk. I don't see the benefit in introducing other cross currency plays, it's debatable whether the basis risk would be reduced to enough an extent to justify the hedge. There are some exceptions to what I have said but it starts getting very complicated and I don't want to digress off the thread too much so I have tried to give you as generic an answer as I can.

Note to everyone: This has absolutely nothing to do with how I trade it's completely pointless to my style of trading. In future I will not be taking questions on these subjects (market making) please stick to the points of the thread. Why don't we just ask James16 about these things. Just kidding.

2. Everything I do is based on statistics, numbers and facts. I tested my model/approach on many currency pairs and over a decade long period these were the most profitable in terms of risk to reward not only individually but also when including portfolio effects, in particular diversification benefits (profit to peak/trough drawdown ratio). The number 7 was also optimal. I found if I had anymore, yes I would have more pips in the bag but the diversification benefits started to reverse resulting in higher profit overall but a worse profit to drawdown ratio and therefore a less favourable shaped equity curve. I found EURUSD AND EURJPY to be terrible pairs for medium term trending strategies like the ones I employ although I find them to be very profitable on short term strategies (day trading) although it doesn't suit my personality to be watching the market at all the opens and using smaller time frames. I think part of this is to do with the sheer volume of trading in these pairs intraday but medium term there simply isn't enough "meat" in the trends of these pairs compared to the more illiquid volatile pairs that I follow. Similarly I think the thin markets in the pairs I follow make them extremely difficult to day trade. Just what my studies suggested.


Quoting mosah
Hi NV, Thanks again for your effort. Could you post charts about the 2 possibles trades (GBPUSD & EURAUD) for today Monday?
Thank you for your question. I will try to post something this weekend as I don't have much time during the week to draw the charts as it takes a lot of time to copy the waves from my model by hand on to a chart. Stay posted.

Quoting biker883
Hi NV, Can you describe how you decide that a wave is finished? What is your definition of a new valid high/low to draw a valid wave? Thanks
Good question, the million dollar question, how do I exit . The methods I use to decide are well outside the scope of this thread. If I told you anything else I would be feeding you with BS I do not use any traditional methods you may see here on FF. In basic terms I use a model that takes into account the relative length of the preceding waves and also the length of the waves of the higher and lower degree time frame data points and based on those factors plus some others, including time, gives me a warning that statistically the move is likely to be coming to an end. Of course it's not always perfect but it works well enough to put paper into my account. I apologise I know it's not what you want to hear but if I told you anything else i.e. I use some Fibonacci extension, candle, break of high/low, S/R or moving average I would be feeding you horse sh##.


Quoting nichess
Ni NV, thank you for sharing your view and method of trading. It is very interesting, to follow your concept of fractal relationships. When reading your posts some random thoughts come up to my mind: It sounds like you invented/found some sort of allometric model for forex. Inside of a H4 candle there may be some waves on lower timeframes, but they are limited - otherwise it is a straight line. Therefore, there is a restriction of waves - at least on the upper or lower end :-). Could those waves per timeframe ratios give me some overview of how...
Thank you for the kind words. If I may quote from one of my earlier posts. "How you define those waves is where the modelling techniques come in and is beyond the scope of this thread. I have a feeling I am going to be repeating the last line very often. "


I do not want to sound rude or arrogant, I do understand what you are saying about an allometric model but I am intentionally refraining from opening any can of worms surrounding the more complex methods I use to define the market structure. I have tried to be upfront about that from the start to avoid anyone getting upset or disappointed. What I will say is I do not agree that the time frames lower than H4 have limited waves. The fractal relationship repeats itself all the way down to the tick chart. I just have a preference and found good profitability sticking to the 5 TF cutting process I use. Part of that will be less frequency of trading so less transaction costs and of course less unpredictability as the lower you go the more you will have to take into account all the timeframes above yourself that are influencing your shorter term data points. Traders using the monthly chart weekly chart will be influencing the movements on those very low time frames and takign all of that into consideration starts to become very cumbersome from a modelling perspective. I will try to talk more about this at a later date. I start with monthly and there is not really any other TF above that so I feel like I am using the optimal combination.


Quoting dvanderlinde
I like to see visual examples so I drew out what I saw. Is this what you are seeing as well nv_Trader? Thanks Orange = entry Red = SL {image}
This is very good yes.


Quoting Quidsey
Ditto. Nearly file:///C:Usersclip11clip_image001.gif{image}
Good attempt. Almost. See the chart by dvanderlinde. ii cannot be below c otherwise you are still in a correction as oppose to trading back into the impulse of the higher degree TF. Double check any q's just shout me on skype/email or here.


Quoting NJaNeer
Hello NV, I have some questions for you. I am trying to understand what the big boys are thinking at certain times. 1. When the market moves opposite of strong fundamental data like the US had last week, are the big guys taking advantage of this to make money or does it have to do more with keeping price at a certain level because of hedged positions (options, other)? I just find it hard to believe that fund managers would buy Euro with the fundamentals given. 2. From my understanding the four biggest banks control nearly 50% of the market. When...
HI NJaNeer, thank you for your questions. What I am about to say you may think I am saying to be difficult or horrible. It is not, maybe further in your trading career you will realise I am trying to do you a huge favour. Have a re-read of my market maker and manipulation posts. As I say in there please try not to concern yourself with things you will never be able to use for your edge in trading over a consistent period of time. I promise you will drive yourself crazy trying to figure out how the "big boys" play and it will not help you one iota. I have been there on the inside believe me it is irrelevant I don't use any of that information here. Forex is an OTC market you have zero idea EVER of any flows that occur inside the bank or what their tactics are, it is highly confidential anyway. I strongly believe it is as useful trying to figure this information out as it is to use the EMA 20/50 crossover - pointless.

Second point, I do not use fundamentals. The last time I even looked at a fundamental calendar was over 1 year ago, and that was by accident. The only calendar I am looking at is the one that tells me today's date. I f I can give you some more practical advice. Start focusing on building a key edge and then developing it into a strategy which can be tested thoroughly. If you still want to know about this market making just send me a skype and maybe one day when I have time on a Sunday then I can answer some of those questions above, but I can guarantee you it will not help you become a better trader, if anything it will make a you a paranoid trader, i.e. even worse.

Quoting IRISH37
This thread is a breath of fresh air. H4 is the way to go. Well done
Dear IRISH37, Thank you for your comment. Great to have you on board.

Quoting broketrader
Dear NV, It's great to have someone spreading some honest words and above all supporting them with a trader explorer for everyone to see and study. I will not wish you good luck as you don't seem having any need of it. As everyone as already understood, you know what you are doing. Very interesting reading anything here and I hope you will continue for long giving us a chance to learn something from you. Thanks for all done and thanks in advance for all coming. Off course, subscribed ! BT
You are a gentleman and a scholar. Thank you for the kind comments. Welcome on board.

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

REAL LIVE ACCOUNT:

***http://www.myfxbook.com/members/nv_t...-trader/749457***
  • #135
  • Dec 10, 2013 9:33am Dec 10, 2013 9:33am
Quoting nv_trader
Good attempt. Almost. See the chart by dvanderlinde. ii cannot be below c otherwise you are still in a correction as oppose to trading back into the impulse of the higher degree TF. Double check any q's just shout me on skype/email or here.
of course, has to be HL, thanks.
  • #136
  • Dec 10, 2013 12:19pm Dec 10, 2013 12:19pm
Quoting nv_trader
There are some exceptions to what I have said but it starts getting very complicated and I don't want to digress off the thread too much so I have tried to give you as generic an answer as I can......
Thanks nv trader. Yes, saw few big trading floors and rarely a trader had more than two pairs. Plus, they were not connected at all. Only with corp sales sometimes. Getting the hot potato. Saw one forward trader which was getting a flow onto his desk. Numbers were ridiculous. And he had to close the risk as gently as he could do. Fun stuff.
I thought there were higher position keeping on the makers side. Plus, was really keen on the idea of cross currency plays. Hm. OK, it does not change a thing thou.

Like the Arsenal also. Visited one of the games last time I was in the Citi.

Keep up the good work.
  • #137
  • Dec 10, 2013 12:21pm Dec 10, 2013 12:21pm
Quoting nv_trader
{quote} Dear Hanover, I appreciate your comments. I am well aware of how highly you are regarded on this forum and with good reason. Some of your work is excellent. Having read your material in the past, I knew all about your contributions on FF before I even started this thread and out of all the big names here on FF you are someone I always have plenty of time and respect for. So to see you comment here means a lot to me. Thanks for following. Regards, NV (skype: nv_trader, email: [email protected]) REAL...
NV,

Well, thanks for the kind words, but at the end of the day, forex is about making money, as opposed to engaging in debates on semantics. I'm merely a programmer who dabbles in forex. Hence you're a long way ahead of me.

This is already a very interesting thread, and I look forward to reading more of your comments. Your views on Elliott waves are spot on, for whatever my opinion is worth.

David

PS: My wife and I have two dogs also. Molly is a black lab/staffy cross, and Mimi a Maltese/Pomeranian cross.
  • #138
  • Dec 10, 2013 12:46pm Dec 10, 2013 12:46pm
Hi NV

Wow I have a lot to catch up on; stayed logged in and just come back to the computer after a busy weekend.

Thanks for all your time for all your comprehensive posts; looking forward to digesting it all
  • #139
  • Dec 10, 2013 5:16pm Dec 10, 2013 5:16pm
Analysis for Wednesday 11th December 2013

Hello everyone,

Based on Daily closes, possible:

a) Long GBPUSD (active H4 trade, SL to be managed)
b) Long GBPJPY
c) Long CADJPY
d) Long NZDJPY

A bit quiet at the moment. All the yen pairs are still in the first stages of corrections so I don't envisage any setups in the next 24 hours , but you never know so I keep them on my watchlist. Risk on cable is still negative but a lot smaller than when the trade first started nevertheless it could still go either way. Once the trade initiates no point worrying about how much it will give it really is random no point losing any sleep over what you can't control. The NFP spike made the wave 1 fairly large which has kept the SL at a small minus despite the decent impulse over the past 24 hours. It happens no big deal just wanted to point it out in case anyone is curious.

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

REAL LIVE ACCOUNT:

***http://www.myfxbook.com/members/nv_t...-trader/749457***
  • #140
  • Dec 10, 2013 7:57pm Dec 10, 2013 7:57pm
Quoting nv_trader
HI NJaNeer, thank you for your questions. What I am about to say you may think I am saying to be difficult or horrible. It is not, maybe further in your trading career you will realise I am trying to do you a huge favour. Have a re-read of my market maker and manipulation posts. As I say in there please try not to concern yourself with things you will never be able to use for your edge in trading over a consistent period of time. I promise you will drive yourself crazy trying to figure out how the "big boys" play and it will not help you one iota....

Thank you for the honest answer. The questions didn't have much to do with trading, but I am intrigued on how they manage the risk and what capabilities they have to do that. I completely understand that worrying about how they trade is bad for retailers, but understanding how your opponent thinks is very important to me in a zero sum game. We as traders have to constantly fine tune our trading as the market changes to diminish any edges being used and sometimes the best way to do that is to know your opponent.

Again, thank you for taking the time to post. I will let you get back to what is important here, Trading!

Edit: Please excuse me if my questions sounded irrelevant, my engineering background likes to analyze how things work.
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