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  • #441
  • May 23, 2014 7:22pm May 23, 2014 7:22pm
Quoting mikkom
{quote} That might be true in equities but not in fx (there is no book on fx) - also, with dark pools there is no real "level 3" in equities either anymore and even if there would be, hedge funds would not see it (there are rumours but that's it). Also, if you work in as high frequency as possible, it doesn't matter if you have level 2 or 3. Non-high frequency funds don't operate on this level anyway. There are big players who will execute after certain rules. Stop cascades will trigger those rules after that their order filling algos will go to...
many reasons for quick cascades in price,many mentioned in posts here,but the algos certainly play a part in this.

I watched an excellent documentary on this,if I can find it ill post it here.
  • #442
  • May 23, 2014 10:45pm May 23, 2014 10:45pm
Quoting Proximus
{quote} Can u elaborate further what exactly happened at those trend line changes, and not the big trend the Obama-Bush change, but the smaller ones? Like there were elections in the EU aswell. And i remember from economy class that there are economic cycles, which are relevant in the market too. My question is: What triggers it, and when it gets triggered? (Reversal of the monthly trend) Please respond, thank you
Sorry to have taken so long. Sometimes it is obvious, like the JPY program. They are hell bent on depreciating their currency (at 240% debt to GDP ratio they have no choice) So looking to sell JPY has been something I have been doing for the last year and half. USD closing up QE3 will be another if and when it happens. Other things though may not be so obvious. I handle it by simply watching the monthly charts. If I am in an UT and price moves up above the monthly open, I can go down to the lower charts and look to enter back into the trend. If price moves below the Monthly Open then you can see if it continues.

Someone once wrote that there was a survey of traders in Forex that if they had one indicator what would they use?? The answer surprised me but it was the 200 MA line. At the time I looked at it and said what the crap is this?? Later on as I got into higher end charts I began to understand its value. It showed the change of direction. Now I use the 240 MA average on a 4H as one of my main trading tools. It approximates the 2MA on the monthly chart. 2x4=8 or weekly. 8x5=40 or daily. 40 x 6 (4H periods in a day) = 240. So it is close to the 200. So that is what I use to determine the long term trend the 240MA on the 4H chart. You could use the 200 and get a similar result. The key being whether I know the main driving fundamental or not the 240 was my guide that direction seems to be changing on the monthly. If it does, sure enough I begin to see the stories talking about the change of direction on such and such a currency. So that is how I handle it.
  • #443
  • May 24, 2014 1:38am May 24, 2014 1:38am
Quoting mikkom
{quote} That might be true in equities but not in fx (there is no book on fx) - also, with dark pools there is no real "level 3" in equities either anymore and even if there would be, hedge funds would not see it (there are rumours but that's it). Also, if you work in as high frequency as possible, it doesn't matter if you have level 2 or 3. Non-high frequency funds don't operate on this level anyway. There are big players who will execute after certain rules. Stop cascades will trigger those rules after that their order filling algos...
Surely 50 mil is nothing. Even on EurCzkYes been saying this. MM dynamically hedges their big future exposure as he does when they sell a big chunk of optionsAlgos do the trading comulatiing one currency they need or dumping it on inter bank marketDeutsche bank has the most liquid machine and they play 25% of the market
  • #444
  • May 24, 2014 1:58am May 24, 2014 1:58am
Quoting bewayopa
{quote} Agree with you! GOOD MONEY MANAGEMENT IS THE SECRET!!!!!
Haha lol you think MM is the secret ? And what does MM mean exactly: 2% account risk, 2:1 RR and maybe a trailing stop, or moving the SL to breakeven ?

Is that the holy grail , wow you just revealed the biggest secret of the forex trading that nobody knew until now!!!!!! This one was the biggest secret eveeeeeeeeeeeeeer and you just revealed it to us

.....However strange because through my 2 year experience and research to the markets , i`ve tested every possible strategy thats outthere,i`ve tested this one too, and made not a single dime with it .Wow not so useful after all.

Now i think the 2-3% account risk is crucial,no doubt.

But the 2:1 RR and the trail stop, and the SL to breakeven, or scaling out, and other stuff is just plain bull excrement.Useless piece of sh*t information used by novice traders who dont know nothing about the markets.

No offence meant to you but thats just it, with this strategy its impossible to make money long term.

You can see many guys on youtube or any site preaching about the 2:1 or 3:1 BS, yet none of them make money consistently, or just want to sell you some cr*ap.No serious trader who want to be profitable on the long term would use this nonsense.

RR should be adjusted to the price and your analysis, 2:1 wont be better by a single dime than 1:2 if you dont know how to use them.So i think that RR should be adjusted to the market, and not force the 3:1 BS to the market.
"There's a sucker born every minute" - P.T. Barnum
  • #445
  • May 24, 2014 2:43am May 24, 2014 2:43am
Quoting SupraSense
{quote} If you want an answer to this you have to define what you mean by random. If you mean that at all times it is 50-50 to go up or down, then no it is not that type of random. We have proof it is not by the staggering returns of various traders that demonstrate money can be made. You need to prove it to yourself too. If you mean that it is not completely predictable, then yes, it is random, because nobody can tell you exactly what price will do with certainty. Consider the following. Suppose you are not an english speaker, you can't read english...
A great post here!

Just that sometimes market post in Russian (the effect of the volatility clustering). The good thing is that when it does so you can bet the next answer has a good chance to be in Russian too. Until someone post that he gets nothing and revert to English.
No greed. No fear. Just maths.
  • #446
  • May 24, 2014 7:23am May 24, 2014 7:23am
Quoting PipMeUp
{quote} That's a valid explanation. When I was reading Osler's paper I thought that if I had the money to push the market I would perhaps try to enter a swing just a few pips before the S/R the opposite traders are targetting. If I get a slippage their TP will push me back on track and if not but they see their target missed by a few pips they may close manually by fear and I get pushed as well. This makes all the thing even more like a chess game.
Can you explain a more bit? What is difference price on R/S or other significant area for tp?
  • #447
  • May 24, 2014 7:58am May 24, 2014 7:58am
Quoting diceman555
{quote} YEP ,,,,, if you are able to read the market in such a way.the problem being ,understanding a chosen language is the result of many years schooling ,the meaning of a sentence can mean 2 very different things to different persons,depending on there knowledge and ones understanding of the person making the statement. the simple true statement you made is only simple because you understand its complexity .
A lot of learning a language comes outside formal education, you learn as a baby from your parents for example. You learn a lot by doing it. The same is true in trading, and the good news is you can do it for free on a demo account. You can backtest and forward test your ideas, you can trade a demo account alongside live prices or use market replay. There's not enough of this done by traders. Of course there are different pressures when trading with real money, just as there are different pressures communicating when trying to chat up a girl, or give a public speech, but nobody thinks it's wrong to prepare a speech in advance, to practice it and to check it and make sure your language is good. Yet for some reason a lot of traders think demo trading is a waste of time. They are wrong.

Then as you say there is schooling, structured learning. Not so easy to find much of that online for trading, because a lot of things out there are people trying to take advantage of others or just don't know themselves. Money management is a bit of a pre-requisite, so a bit like learning to identify individual letters to take the analogy of language on, but after that one of the key lessons is to do with directional bias in the longer term. One person above has already mentioned what they use for this, the 200 Moving average. There are lots of ways to do this, maybe better, maybe worse.

A lot of traders that I speak to on forums don't even have a directional bias before they trade. They just look for a setup. Now while an expert trader can trade both ways, just as an expert poet or writer can disobey the rules of grammar and punctuation, a beginner who is learning and not yet successful should probably not be doing this. You should have a clear idea of which direction is favoured in the longer term. Again, to be clear, if you're successful already you know when you can go against the longer term trend, this is not for you, this is part of the basics of learning trading for those who aren't successful.

I don't use the 200MA for directional bias but nanningbob does. Take a daily chart of the DOW plot the 200MA. Now nanningbob's method suggests there is an upward bias, the 200 MA suggests there is an upward bias, because it's sloping up and price is above it. Moreover, aside from the odd day here and there, and a couple of periods of a few months or so when it was below, it has been hinting up for the better part of 4 years! If you'd taken and held any trade long in that time, you'd be close to all time highs. If you applied the 200MA to a weekly chart, you'd find price has barely closed below the 200MA in over 3 years.

This is a starting point for your learning. It's not without dangers. Price will at some point reverse back through that 200MA and take a massive dive, so you can't just keep adding to losing positions and hoping an MA will save you. But it's a start and gives you a directional bias. Will it change as soon as you get in? Maybe lol, but in the main it's been right for the majority of the past 4 years. You'll still need good money management and you'll still want a good strategy to manage on the short term within this long term trend to minimise your risk. That's just the beginning of your learning.

These are massive markets, 4 trillion a day according to reports. Do people really think when there is that much money on the line that it will be allowed to be just completely random? Think about how laws are changed, tax avoided for big companies, wars perhaps for oil or resources and many other things that are done for billions. Yet this is trillions per day on the line.

As you guys in this thread have said, it's still random in some sense, but there's also a lot of order. So ask the right questions. If you want the sentiment, ask what is going to happen next in a big way, not just what is the next bar on a 5 minute chart likely to be, but where are we heading? Are we going to test for new highs. In whose interest is it that price goes up or goes down, what are they after etc? These are advanced topics.
  • #448
  • May 24, 2014 8:53am May 24, 2014 8:53am
Great post SupraSense.

Now a few thoughts that were prompted by other postsposts.

I have been trading for 11 years so please take the following with that in mind. I know there are traders here that have more experience and skill than me. I am not going to tell you what is or is not BS in trading. I have a tool kit filled with TA that I know how to use. I spent time learning how and when to use each tool, rather than time reading research and papers on why tools don't work. I understand the tools I use pretty well, but also know that other traders use other tools that I know nothing about. I would never suggest they are wrong to use those tools, nor would I ever state the those tools were BS. It would be ignorant and arrogant for me to make such a statement. My only suggestion is that everyone find the right combination of TA and FA in their trading. Every big banker I know...and I know quite a few...have done just that.

Money management (MM) is really important. I look for 2 or 3 pips for every pip I risk. I look for places to add to my trade in an effort to press my winning trades. If those things are not available, I shift my MM accordingly. This is what I do. It is not the only way to trade, and I am always interested in hearing how others approach MM.

These are a few things that I do in my trading. I am not a nube or novice trader. I've been making money trading this way for years. I trade with a group of traders who, by in large, trade the same way I trade. We've been making money for a long time doing it this way. There has been no need to test or try other trading approaches, although we are always open to new ideas.

I am not here to preach about anything, only to suggest. I have nothing to sell and am not offer any help outside what I occasionally post here. But here is an observation about FF: people who speak in absolutes tend to be full of crap. Not all of them and not all the time. But most of the time.
  • #449
  • Edited 9:52am May 24, 2014 9:36am | Edited 9:52am
Quoting GEfx
Great post SupraSense. Now a few thoughts that were prompted by other postsposts. I have been trading for 11 years so please take the following with that in mind. I know there are traders here that have more experience and skill than me. I am not going to tell you what is or is not BS in trading. I have a tool kit filled with TA that I know how to use. I spent time learning how and when to use each tool, rather than time reading research and papers on why tools don't work. I understand the tools I use pretty well, but also know that other traders...
I agree with what you've posted. You need to take tools and use them in your own way as you have said. The tool alone is inanimate, it can't 'work' on its own, it needs you to make it work. As you progress you realise that what you thought was a useful tool is often not the best thing for the job and you replace it or find a better way.

In terms of absolutes there are not many, except that trading is something that requires committed effort, time and money. You have to find an individual way that you understand, and you need to practice and work on improving. Not so different to most things in life. But if you're learning, there are certainly things you need to learn, like MM. When you know what you're doing, many of the rules can become 'flexible'.

I have noticed some crap on this forum. There is someone claiming 200-300% per week gains, and when questioned, the questioner is attacked and the person claiming ridiculous returns is defended. It's a mad place from my short experience here, but it's nice to chat with some other traders who take this thing seriously and have good ideas. There's always someone who knows more than I, so hopefully we get good discussion.

To papaphrase a well known trader...market inefficiencies are often more detectable via a trading system than statistics. In other words a sufficiently profitable trading system proves that the market is not completely random, by virtue of the results being so many standard deviations away from what they would be if it were random.
  • #450
  • May 24, 2014 9:58am May 24, 2014 9:58am
Quoting SupraSense
{quote} A lot of learning a language comes outside formal education, you learn as a baby from your parents for example. You learn a lot by doing it. The same is true in trading, and the good news is you can do it for free on a demo account. You can backtest and forward test your ideas, you can trade a demo account alongside live prices or use market replay. There's not enough of this done by traders. Of course there are different pressures when trading with real money, just as there are different pressures communicating when trying to chat up a...
I COULSD NOT ADD TO THAT
  • #451
  • May 24, 2014 11:17am May 24, 2014 11:17am
Quoting GEfx
Great post SupraSense. Now a few thoughts that were prompted by other postsposts. I have been trading for 11 years so please take the following with that in mind. I know there are traders here that have more experience and skill than me. I am not going to tell you what is or is not BS in trading. I have a tool kit filled with TA that I know how to use. I spent time learning how and when to use each tool, rather than time reading research and papers on why tools don't work. I understand the tools I use pretty well, but also know that other traders...
I think this was meant partially for me.I mean no disrespect for anyone here, but explain me how does the 3:1 Reward -Risk matter in any shape or form in trading ?

I think there was a thread where we debated the RR, Winrate, expectancy issue and came to the conclusion that neither Money Management, nor the 3:1 / 2:1 RR MYTHS dont give an edge.

So whatever strategy you are trading with, and i assume that after 11 years you are profitable, whatever you are doing, its not the 3:1 RR which makes you profitable, but something else.So the edge is not in the TP/SL ratio, but it can be the timing, fundamental analysis, breakout strategy,etc.

What do you think?
"There's a sucker born every minute" - P.T. Barnum
  • #452
  • May 24, 2014 11:31am May 24, 2014 11:31am
Quoting Proximus
{quote} I think this was meant partially for me. I mean no disrespect for anyone here, but explain me how does the 3:1 Reward -Risk matter in any shape or form in trading ? I think there was a thread where we debated the RR, Winrate, expectancy issue and came to the conclusion that neither Money Management, nor the 3:1 / 2:1 RR MYTHS dont give an edge. So whatever strategy you are trading with, and i assume that after 11 years you are profitable, whatever you are doing, its not the 3:1 RR which makes you profitable, but something else.So the edge...
You typically don't know the exact reward you will get from a trade. It may run a long distance it may not. There's no reason to get out of a trade that keeps going your way. However, when referring to risk:reward ratios, I believe that we are talking about likelihood here. A good trade may make a reward of 10xrisk, but when entering that trade would you take such a trade with 20 pip stop if you knew that there was a significant resistance level only 5 pips ahead? The risk reward, which although unknown would perhaps make you reconsider taking a trade that's running into problems so soon. So it's about looking at the risk versus the potential, and in that context, it does matter.

I think the risk reward ratios are a little bit overdone, because as you point out, all other things being equal, simply putting a target 3 times your risk will not turn you into a profitable trader. However, many markets have fat-tailed distributions. This means that it is can be beneficial to run your winners beyond your typical loser. It alone won't mean that you turn from unprofitable to profitable, but it can help your bottom line. And further than that, it can help you psychologically if you're brave enough to take those more frequent losers. It's very damaging mentally to have 10 small winners and lose all that 'hard work' on one loser for example.
  • #453
  • Edited 12:48pm May 24, 2014 12:35pm | Edited 12:48pm
Quoting SupraSense
{quote} You typically don't know the exact reward you will get from a trade. It may run a long distance it may not. There's no reason to get out of a trade that keeps going your way. However, when referring to risk:reward ratios, I believe that we are talking about likelihood here. A good trade may make a reward of 10xrisk, but when entering that trade would you take such a trade with 20 pip stop if you knew that there was a significant resistance level only 5 pips ahead? The risk reward, which although unknown would perhaps make you reconsider...
Suprasense the very fact that you put so much thought into answering that question is an answer itself. I am going to tell you right now there are traders on FF that actually believe that there is nothing to understand in the market, and by just using RR they would always come out on top because based on probability they probably won't lose 3 trades in a row. But I am going to say right now that is bullshit, and it's one of the things that Newbies fall for. That's one of the reasons some people take so long to learn the market because they have to learn the hard way that a lot of what they heard is not true. Unlike stocks and the likes where the Big guys normally are after the same goal, we have banks who are after different goals on different currencies in FX. This market is not one for book fantasies.
Being a trader is lonely, but being a great trader is lonelier still
  • #454
  • May 24, 2014 12:50pm May 24, 2014 12:50pm
Quoting SupraSense
{quote} You typically don't know the exact reward you will get from a trade. It may run a long distance it may not. There's no reason to get out of a trade that keeps going your way. However, when referring to risk:reward ratios, I believe that we are talking about likelihood here. A good trade may make a reward of 10xrisk, but when entering that trade would you take such a trade with 20 pip stop if you knew that there was a significant resistance level only 5 pips ahead? The risk reward, which although unknown would perhaps make you reconsider...
I dont believe and dont care about S/R levels and i dont use SL

So you can see thar RR ratio for me is meaningless, i have a high probability zone of exit which is my reward, and the risk is the difference between the hedge and the open price of the previous order, so its very small or none.

I only put TP where my analysis tell that the price will go with the highest probability, if it goes agains me, i will hedge it because it will always come back, its just a question of time.
"There's a sucker born every minute" - P.T. Barnum
  • #455
  • May 24, 2014 1:10pm May 24, 2014 1:10pm
Quoting saneblane
{quote} Suprasense the very fact that you put so much thought into answering that question is an answer itself. I am going to tell you right now there are traders on FF that actually believe that there is nothing to understand in the market, and by just using RR they would always come out on top because based on probability they probably won't lose 3 trades in a row. But I am going to say right now that is bullshit, and it's one of the things that Newbies fall for. That's one of the reasons some people take so long to learn the market because they...
You're right, just changing the risk reward alone won't make you profitable. Be aware though that the people saying this may not realise they are wrong, so don't be too harsh. For example if you monte carlo simulate equity curves for a system with no edge (zero expectation), you'll find plenty of curves which end up profitable over many trades. If you only take one trade per week or month, it may be years before you realise you had no edge and it was just a random occurrence that you were ahead.
  • #456
  • May 24, 2014 1:14pm May 24, 2014 1:14pm
Quoting Proximus
{quote} I dont believe and dont care about S/R levels and i dont use SL So you can see thar RR ratio for me is meaningless, i have a high probability zone of exit which is my reward, and the risk is the difference between the hedge and the open price of the previous order, so its very small or none. I only put TP where my analysis tell that the price will go with the highest probability, if it goes agains me, i will hedge it because it will always come back, its just a question of time.
If you don't use a stop loss, what measures do you have in place to control your risk? Do you purchase options to cover the downside, or have lots of backup accounts in case broker or connection go down and you can't exit manually? What exactly do you mean by hedge in this context?

It is your account and your money, but I would hope you reconsider the statement "it will always come back".
  • #457
  • May 24, 2014 1:15pm May 24, 2014 1:15pm
Quoting PipMeUp
{quote} That's a valid explanation. When I was reading Osler's paper I thought that if I had the money to push the market I would perhaps try to enter a swing just a few pips before the S/R the opposite traders are targetting. If I get a slippage their TP will push me back on track and if not but they see their target missed by a few pips they may close manually by fear and I get pushed as well. This makes all the thing even more like a chess game.
And it's also important to remember that there are participants in the market who want to trigger the stop levels just to get commission for the stops.
  • #458
  • May 24, 2014 1:58pm May 24, 2014 1:58pm
Quoting SupraSense
{quote} If you don't use a stop loss, what measures do you have in place to control your risk? Do you purchase options to cover the downside, or have lots of backup accounts in case broker or connection go down and you can't exit manually? What exactly do you mean by hedge in this context? It is your account and your money, but I would hope you reconsider the statement "it will always come back".
stop loss!!! did you notice many people says, "market just hit my stop loss and tern back at so and so level" . why we see a price move sharply in a support/resistance area for short time and come back,
don't predict direction, but dance with flow of water
  • #459
  • May 24, 2014 2:04pm May 24, 2014 2:04pm
Quoting priceaction1
{quote} stop loss!!! did you notice many people says, "market just hit my stop loss and tern back at so and so level" . why we see a price move sharply in a support/resistance area for short time and come back,
A stop loss is not the problem. If you have a bad trade you can exit manually before the stop loss has been hit and in most cases it's probably a good idea to do just that. The stop loss is there for a sudden move, some breaking news for example or a massive order going through, or because you've lost connection with your broker etc. It gets you out without too much damage being done to your account.
  • #460
  • May 24, 2014 2:12pm May 24, 2014 2:12pm
Quoting SupraSense
{quote} If you don't use a stop loss, what measures do you have in place to control your risk? Do you purchase options to cover the downside, or have lots of backup accounts in case broker or connection go down and you can't exit manually? What exactly do you mean by hedge in this context? It is your account and your money, but I would hope you reconsider the statement "it will always come back".
Hedge the risk, so that it virtually becomes 0.Buy one currency sell he oposite, easy.

Quoting SupraSense
{quote} A stop loss is not the problem. If you have a bad trade you can exit manually before the stop loss has been hit and in most cases it's probably a good idea to do just that. The stop loss is there for a sudden move, some breaking news for example or a massive order going through, or because you've lost connection with your broker etc. It gets you out without too much damage being done to your account.
Stoploss is the problem, if you hedge correctly you never get margin called.
"There's a sucker born every minute" - P.T. Barnum
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