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why have you accepted the price-predictability assumption?

  • #1,461
  • Jan 10, 2014 6:24am Jan 10, 2014 6:24am
Quoting Rap Skallion
The big old NFP is likely to move the market in favor of the USD. USD will rise moderately against the JPY sending a pending buy into profit.And the GBP/JPY will fall sending a pending sell into profit. If NFP disappoints, the pending trades can be removed wihout harm. Sound reasonable? USD/JPY +, USD/GBP -, -> GBP/JPY - Use good money management. don't get too greedy. give breathing room between CMP and the pending trades Take the pending entries off if NFP dissapoints. wish me luck!
Of course that only works if one moves disproportionally more than the other, relative to the GBP/JPY. Be careful.
  • #1,462
  • Jan 10, 2014 6:52am Jan 10, 2014 6:52am
Quoting GEfx
{quote} You and diceman were talking currency correlation a few posts ago, which caught my eye. When a FA hits the news wires, the currencies quickly react. Depending on the magnitude of the FA's impact, an opportunity can open when traders begin to re-evaluate their holdings in longer terms, and work through the process of "re-balancing". Understanding this as it happens gives you the advantage of trading the right pairs, and offers an explanation of what is happening in the market as it develops. This isn't a price predictability thing, but is...
Certainly doesn't stop me...
  • #1,463
  • Edited 7:14am Jan 10, 2014 6:58am | Edited 7:14am
Quoting GEfx
{quote} You and diceman were talking currency correlation a few posts ago, which caught my eye. When a FA hits the news wires, the currencies quickly react. Depending on the magnitude of the FA's impact, an opportunity can open when traders begin to re-evaluate their holdings in longer terms, and work through the process of "re-balancing". Understanding this as it happens gives you the advantage of trading the right pairs, and offers an explanation of what is happening in the market as it develops. This isn't a price predictability thing, but is...
hi Gefx,

i could write pages and pages on this topic,and it does make me smile the way its dismissed through no understanding,and thats fine by me.

theres an effect across all these pairs,the fact the market thrives to be efficient is the very reason why inefficiency happens,one of the ways to see this is through the correlations .unfortunately nobody is looking in the right places.

one small example of this was todays cable news today,cable dropped 60 pips immediately.i was watching euro it responce was slow and naturally not as severe but one could have taken a very safe short for 20 + pips.i keep saying its not the value as in pip for pip its the cross effect ,the eur pound effect to use a simple example.this happens all the time and quickly adjust . this is one simple example and the most unused by myself.this perspective can tell you more than every indicator ever coded.

just to add to that particular senario ,the fall during the news is because the liquidity is pulled,so we have two possible outcomes.price will create one of proximus boobs and quickly fill back up,or the related pairs will adjust to compensate the inefficiency.the liquidity pull due to news is the inefficiency cause
  • #1,464
  • Jan 10, 2014 7:02am Jan 10, 2014 7:02am
Quoting GEfx
{quote} Of course that only works if one moves disproportionally more than the other, relative to the GBP/JPY. Be careful.
That is pretty much the basis of the prediction.

If it loses, I was mistaken.

This is a high-risk market, and I reject the certainty of this prediction (or any other). I promise to let you know how I did. Either way.

'Gloat, Gloat' means I did okay.

"Wah! Awa-ah!" means I did not.
  • #1,465
  • Jan 10, 2014 7:04am Jan 10, 2014 7:04am
im not mathematical enough ,but i believe those inclined could prove the market has a predictable trait that can be found in the correlated market.or i should say high probability to bias
  • #1,466
  • Jan 10, 2014 7:50am Jan 10, 2014 7:50am
Quoting diceman555
im not mathematical enough ,but i believe those inclined could prove the market has a predictable trait that can be found in the correlated market.or i should say high probability to bias
I stated in my previous post, that incorrect usage of correlations doesnt give you any advantage, however there could be one method, which i didnt tested.

The dollar index (usdx) which is , quoting wikipedia:

http://en.wikipedia.org/wiki/U.S._Dollar_Index

Which could theoretically give you an edge, it would be easy to construct this into an indicator in MT4:

Inserted Code
double USDX= iClose( "EURUSD", 0, 0) * 57.6/100 + 1/iClose( "USDJPY", 0, 0) * 13.6/100  ....

Just take every pair, which has its base currency on it, or if its the quote currency 1 by that pair, i`ve seen indicators which reconstructed the Dollar index on the MT4 forum.

It would be a very good idea to predict EUR/USD ,because the USDX is the inverse of the EUR/USD,so if someone is up tho the challange to analyse it, unfortunately i`m too busy to make it myself but if anyone is up to the challange, i welcome it.

Here you go, an example of the USDX as a MT4 indicator:

Attached File(s)
File Type: mq4 Dollar Index.mq4   3 KB | 233 downloads
"There's a sucker born every minute" - P.T. Barnum
  • #1,467
  • Edited 11:11am Jan 10, 2014 8:13am | Edited 11:11am
Quoting Rap Skallion
{quote} That is pretty much the basis of the prediction. If it loses, I was mistaken. This is a high-risk market, and I reject the certainty of this prediction (or any other). I promise to let you know how I did. Either way. 'Gloat, Gloat' means I did okay. "Wah! Awa-ah!" means I did not.
I would gloat gloat but the reaction to the news was so explosive just about every body backing the right way made a ton of money.

If you followed my prediction and traded on it, you should have made a ton.

This day is too extraordinary to prove anything, I think.
  • #1,468
  • Jan 10, 2014 9:13am Jan 10, 2014 9:13am
I`m curious how news traders can predict the market, i mean suppose a non-farm report in the US, it can be forecasted by some genious economists, but they dont always get it right.

So we cannot know the results of a nf report before its released, 1 method would be to make your own analysis of the economy, and you can also see the what will be the next result of it, then trade it correspondingly.

For example, if a crisis starts, then 100% that people will lose their jobs, so a nf report will always have smaller values until the crisis is over, but not in all cases.Probably a few guys made a fortune from 2007-2012 by trading the NF reports.

But what about us, technical traders?

We can use 2 pending orders in both directions to anticipate the news, but not always the best method, since not all news will result in huge candles and might not trigger the pending order + the widening of spreads, let me know what do you think about this

Any news traders, please respond to this, i`m curious how news traders can "predict" the market, while this being said.
"There's a sucker born every minute" - P.T. Barnum
  • #1,469
  • Jan 10, 2014 9:14am Jan 10, 2014 9:14am
Quoting Rap Skallion
{quote} I would gloat gloat but the reaction to the news was so explosive just about every body facking the right way made a ton of money. If you followed my prediction and traded on it, you should have made a ton. This day is too extraordnary to prove anything, I think.

I prefer to jump on the momentum after the event, rather than pick top / bottom values.

GA if you'd of picked that boob @1.8485 area, SL over previous high think 1.8510 then you'd be +120 pips currently.

GU had a easier entry with trend above 1.6450 worth 40pips.

EU same as GU really worth 70-80 pips.



Too fast and too high risk for my likings though.
Nothing to it, but to do it!!! Stick to the plan FOOL!!!!
  • #1,470
  • Jan 10, 2014 10:04am Jan 10, 2014 10:04am
Quoting jmn5611
I left options alone in my stock trading days because you have to be right in both price AND time. I would buy calls only to watch the underlying move, but the option not at all. I found options to be pure gambling at that time. But if you can trade them, congrats!
On the other hand, far out of the money options are inherently underpriced by options models, so pretty much by default you are getting a good deal.

Quoting jmn5611
Oddly, ForexFury, I think redlion confirmed his original premise. The price predictability assumption was assumed for.............no reason at all.
On what basis did Redlion confirm that the market is efficient? Certainly not based on anything in this shitheap of a thread (no fault of his own).

I'd surmise that at this point there's far more real-world evidence that market pricing is inefficient-- which means there are times when the probability of a given result is significantly higher than would be predicted by an efficient market. See: bubbles, crashes, seasonal effects, behavioral patterns (which really covers each of the former), etc. etc. etc.

To me, the academic attempts to prove efficient markets are literally laughable because of the inherently false assumptions that come with them. EMH is a nice thought, and a nice theory, but markets aren't driven by rational logic; they're driven by human behavior, and human behavior is driven by emotions, which is why markets trend longer than they hypothetically should, overextend on euphoria and cognitive dissonance (e.g. ignoring all negative news in a bull market), and crash faster than they should.
  • #1,471
  • Jan 10, 2014 11:26am Jan 10, 2014 11:26am
Quoting Turveyd
{quote} You ignore everything that goes against, how you think or what you think, you have no concept that you yourself might be wrong, your totally close minded therefore you will never learn and it's impossible to debate with you. Same goes to Magix and Nubs. Your ownly input to this whole thread isv" I'm a millipeder" I'd put money on you don't trade.
See Turv? This is why you are a troll.

And, as far as your money goes, you would lose it again, just as you always have.

I am not the one who cannot be bothered to put up a TE. See how silly you sound?
If you are good at something, never do it for free--Joker
  • #1,472
  • Jan 10, 2014 11:36am Jan 10, 2014 11:36am
Quoting Proximus
I`m curious how news traders can predict the market, i mean suppose a non-farm report in the US, it can be forecasted by some genious economists, but they dont always get it right. So we cannot know the results of a nf report before its released, 1 method would be to make your own analysis of the economy, and you can also see the what will be the next result of it, then trade it correspondingly. For example, if a crisis starts, then 100% that people will lose their jobs, so a nf report will always have smaller values until the crisis is over, but...
I have tried bracketing the market the way you suggeswted and did not find much success. True, as in today with many pairs, you could have made money on both entries.

But a more usual result for me was to find one entry opened, closed into stoploss, and then the other entry.

There are two ways I have made money on the news:
1. I have a trade in progress and feel that if I leave it open, the news reaction will close it in profit. (A Gamble)
2. I put an entry fairly close, with a tight, scalping type of tp and watch the market push right through into profit.
(if the market goes the other way, I remove it. No harm. If it comes this way, chances are better than 50% it will take my tp as well as my entry point, sometimes in seconds.)

Other than that , It is best to wait at least until the spreads come back to normal and assess the situation.
You may reasonably judge that the market has overreacted as it frequently does, and put a pending entry on going the other way.

I do sometimes enter a direct trade but normally I like to leave a little space for the market to change its "mind" before committing.

The big advantage of trading the news is that with a little skin in the game, you pay a little more attention and come away with a better sense of the markets expectancies.

If you only pay attention at news time though, you will miss the times when the market moves big time with no news announcements anywhere on the horizon. Those times really fascinate me.
  • #1,473
  • Jan 10, 2014 11:41am Jan 10, 2014 11:41am
Quoting Rap Skallion
{quote} I have tried bracketing the market the way you suggeswted and did not find much success. True, as in today with many pairs, you could have made money on both entries. But a more usual result for me was to find one entry opened, closed into stoploss, and then the other entry. There are two ways I have made money on the news: 1. I have a trade in progress and feel that if I leave it open, the news reaction will close it in profit. (A Gamble) 2. I put an entry fairly close, with a tight, scalping type of tp and watch the market push right through...
But if you can trade news well, then its guaranteed volatility at set times, so 30mins around news times few times a week could add upto big $$$$$$'s.
Nothing to it, but to do it!!! Stick to the plan FOOL!!!!
  • #1,474
  • Jan 10, 2014 11:59am Jan 10, 2014 11:59am
Quoting Rap Skallion
{quote} I have tried bracketing the market the way you suggeswted and did not find much success. True, as in today with many pairs, you could have made money on both entries. But a more usual result for me was to find one entry opened, closed into stoploss, and then the other entry. There are two ways I have made money on the news: 1. I have a trade in progress and feel that if I leave it open, the news reaction will close it in profit. (A Gamble) 2. I put an entry fairly close, with a tight, scalping type of tp and watch the market push right through...
Quote
But a more usual result for me was to find one entry opened, closed into stoploss, and then the other entry.

I experienced that one too , that is why you have to make sure the volatility will be huge, so the news must have a nice impact, the best way it to put a tight pending order before the news when the spread is still normal, lets say if we trade on M1, then 2-3 candles before the news come, and pray that the the news candle will rocket in either direction making a huge long candle, and hitting your TP in either end before it retraces to your SL.

Of course the spread can be so huge if you put the pending before the news, it may not be triggered since it activates when the spread is huge, so have to consider that too, and the other thing is, even if you expect the spread, lets say 4 pips for a non farm report, you put then a 4.5 pip sized SL in both side, and a 5 pip TP in both side, with a pending and plus 4,5 pips from the open point so, you really have to expect atleast a 10 pip sized candle to win this, and have to be quick, if your candle stalls at 9.8 pip and doesnt hit your TP you must have an automatic close system which closes the trade immediately before it retraces back to your SL.

So its very tricky to trade the news, and very risky too, the brokers have increased their spreads on news trading so its very hard to trade it profitably, but not impossible.

But if i mention my pattern which i talked about it, its easy to trade the news that way, but actually trading the pullback which is the side-effect of the big long news candle, rather than trading the news.

So its more cunning to trade like this, we wait until the guys battle eachother, and strike only when the odds are in favor, and collect a few pips after the battle.
"There's a sucker born every minute" - P.T. Barnum
  • #1,475
  • Jan 10, 2014 12:31pm Jan 10, 2014 12:31pm
Quoting Proximus
I`m curious how news traders can predict the market, i mean suppose a non-farm report in the US, it can be forecasted by some genious economists, but they dont always get it right. So we cannot know the results of a nf report before its released, 1 method would be to make your own analysis of the economy, and you can also see the what will be the next result of it, then trade it correspondingly.
Even if you knew the numbers 100% beforehand, that doesn't guarantee anything.

Hell, stocks jumped on the poor NFP numbers this morning, and virtually every article I read was suggesting that stocks jumped because a dismal jobs number means more stimulus likely, which would be good for the stock market.

One hour later, stocks tumbled down into the negatives for the day, and the new reason was that disappointing NFP numbers caused the drop. Talk about post hoc analysis. It's this very reason I never trust news analysis; it's pure make-believe half the time.



There's an old tale (possibly true, but maybe not) that one morning a big FX player came into his office early to do some analysis before the trading day began. He saw an article from the Economist talking about Japan and some expected central bank moves, and off the back of this article he began immediately buying yen. Other traders saw him aggressively buying yen, and for fear of missing the move, also started buying yen. The yen starts appreciating, more people jump on, and this trader eventually closes his positions for a healthy profit. His director asks him how he knew to start buying yen, and he explains his rationale based on the Economist article. His director pulls the magazine, and says "this article?" He responds yes, and his director points out to him that the magazine he was looking at was over a year old.

Efficient markets... yuk yuk yuk
  • #1,476
  • Jan 10, 2014 3:04pm Jan 10, 2014 3:04pm
For a solid take-down of EMH, see Robert Shiller, "From Efficient Markets to Behavioral Finance" in the Journal of Economic Perspectives (2003).

Here's the TLDR summary for those who don't want to read it (it's only about 25 pages): efficient markets fit into early theoretical models of markets in the 70s, when economists were trying to quantify and fit financial markets into a strict box. While efficient market theories were still popular in academia throughout most of the 70s, they were already falling out of favor with real-world professionals, and even Fama himself began providing evidence that tended to diminish the theory of efficient markets (although he often downplayed it). By the 80s, academia was beginning to present some very difficult evidence for efficient market theorists to swallow: notably that there was 'excess volatility' in financial markets that none of the forms of EMH (strong, weak, semi-strong) could explain. By the 90s, behavioral finance became a hot topic, which presented further evidence refuting efficient markets, notably feedback models. Ironically, feedback models probably predate theories of efficient markets by hundreds of years (anonymous accounts of Tulipmania in the 17th century describe feedback models verbatim). Tulipmania, South Sea bubble, Dot Com bubble, 2000s housing bubble-- all show evidence of feedback and irrational exuberance (and subsequent busts). The same feedback models driven by human behavior to create whole market bubbles which occur over years are evident no matter the time frame, leading to fractalized markets. Bubbles can happen on weekly or monthly charts just as often as they occur in hourly or minute charts.
  • #1,477
  • Jan 10, 2014 3:07pm Jan 10, 2014 3:07pm
Quoting smittens4212
{quote} Even if you knew the numbers 100% beforehand, that doesn't guarantee anything. Hell, stocks jumped on the poor NFP numbers this morning, and virtually every article I read was suggesting that stocks jumped because a dismal jobs number means more stimulus likely, which would be good for the stock market. One hour later, stocks tumbled down into the negatives for the day, and the new reason was that disappointing NFP numbers caused the drop. Talk about post hoc analysis. It's this very reason I never trust news analysis; it's pure make-believe...
Ok we have to make a difference between the actual meaning of the news and the interpretation of the news by the average people.

Those bloggers or average guys who know nothing about macroeconomy or business economy, or just economy in general put their shit observation about the news doesnt give them validity, they are probably some idiots who are just bored and will write a crappy article about something they know nothing about.

But experts of the economy, economists, who know how to interpret the news are usually giving good hints about it.So if a trader knows nothing about fundamentals, he should either learn to interpret them by himself, or find a reliable and trustful source who does it for him.

Believing bunch of bloggers and charlatans about anything, is not a wise idea, not when it comes to your own money and trades.

I know economy and i know how to interpret the news, but this still doesnt give me a huge edge, because its hard to quantify it, and with a limited resource as any retail trader has, its just impossible.Banks hire entire teams to interpret fundamentals and quantify every news and impact on price, so this is nearly impossible to a trader like myself.

However big news can still give any trader a good overview of the markets, so its a mistake to just ignore them.

As for candlestick trading the news, on the spot, who knows, we need a good broker with tiny spread and lightning execution speed for that probably
"There's a sucker born every minute" - P.T. Barnum
  • #1,478
  • Jan 10, 2014 3:18pm Jan 10, 2014 3:18pm
Quoting smittens4212
There's an old tale (possibly true, but maybe not) that one morning a big FX player came into his office early to do some analysis before the trading day began. He saw an article from the Economist talking about Japan and some expected central bank moves, and off the back of this article he began immediately buying yen. Other traders saw him aggressively buying yen, and for fear of missing the move, also started buying yen. The yen starts appreciating, more people jump on, and this trader eventually closes his positions for a healthy profit. His...
I dont know how true this is , but still interesting, although i think this one works just better for stocks.

The FX market is made up of only a small percentage of speculators, since the instrument of the FX is the currency that all people have, then any transaction where someone or something exchanges money could be classified as a trade.Not necessarly all speculators.

By speculators i mean people who make profit from markets: retail traders,investment banks, investment funds, similar...

The huge chunk of the FX market is made of non-speculators, but are still active participants: government money/debts in foreign currency, international transactions, commercial transactions,etc

So you see, a bubble like this happens more rarely in the FX, so probably on lower timeframes it can be plausible where the scalper speculators are more concentrated, but on high timeframes, probably the interest rates are the fuel of the market, not the speculators

I`m sorry thats just how FX is, its way more objective and mechanical than the stocks
"There's a sucker born every minute" - P.T. Barnum
  • #1,479
  • Jan 10, 2014 3:36pm Jan 10, 2014 3:36pm
Quoting smittens4212
For a solid take-down of EMH, see Robert Shiller, "From Efficient Markets to Behavioral Finance" in the Journal of Economic Perspectives (2003). Here's the TLDR summary for those who don't want to read it (it's only about 25 pages): efficient markets fit into early theoretical models of markets in the 70s, when economists were trying to quantify and fit financial markets into a strict box. While efficient market theories were still popular in academia throughout most of the 70s, they were already falling out of favor with real-world professionals,...

Can you sum this up?

lol

Money Can't Buy Happiness. Poverty Can't Buy SHIT! You Choose!
  • #1,480
  • Jan 10, 2014 3:44pm Jan 10, 2014 3:44pm
Jmn5611 answer to question I hope. How many people speak about football/sports (armchair experts). Or people who do play sport talk up their game (me) its human nature. Just like on line forex pros lol. I did have losing trades never weeks but I would never tell how I traded a loss yet every one knows how I traded. Online we will always have bullies and prima donnas
SEE LINE,TRADE LINE..PRICE HAS TO GO SOMEWHERE,,, PRICE WILL GO SOMEWHERE.
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