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The similarity system

  • #5,601
  • Aug 14, 2014 9:47am Aug 14, 2014 9:47am
Quoting smallcat
Hallo all, is there problem at 1.3655 ? Thanks

I have one at 1.3694. But lots in between.

Sorry, that should read 1.36394
  • #5,602
  • Aug 14, 2014 9:49am Aug 14, 2014 9:49am
Quoting vlady1974
{quote} Imagine you are buying a house and you are Warrent Buffet. Prices are rising for "The EU" Deluxe, £450K You order 10 of those with a specialist Estate Agent but only if he can secure them at £275K. He comes back and says the supplier will agree on £320K. The order goes on the books. What's the price? EDIT: It doesn't mean the fundamentals have changed either. Buffet (ie. you) is buying because he's researched the area and the fundamentals and he knows he can sell all the units for £1.5M in 25 years. RE-EDIT: LOL The price dropped because...
i think what you are saying is - big players can get better price than the current market price if the dealer they are talking to has inventory to offload and dealer thinks by offloading it in one big chunk, he has less risk of information leakage (mkt finding out his position and run price against him) and thus efficient for him to do a big transaction at a slight discount.

however the flaw in this reasoning is that the public price will not drop in this case. The dealer will keep showing original price even when he just sold a big chunk at lower price to buffet.
Think : Trade : Live Life
  • #5,603
  • Aug 14, 2014 9:52am Aug 14, 2014 9:52am
Quoting tbird2121
{quote} What ? More than 250 pips ??? Hm.... i can say that your calculation is Wrong .....
Quoting LITEchild
{quote} 1.3655??? or did you mean 1.3355??? problem is actually at 1.3349 and 1.3343.
Quoting elen21168
{quote} I don't have at the moment. I think tbird is right ....
Quoting hepsibah
{quote} I have one at 1.3694. But lots in between.
Thank you all ... i think my calculation is still need improving ......
  • #5,604
  • Aug 14, 2014 9:52am Aug 14, 2014 9:52am
Quoting LiquidGenius
{quote} Umm, price = 320k? How does this relate to dissimilarity again? LOL My initial guess is that it has something like buying a huge order will actually be able to create a drop in price? (drop in price=dissimilarity -> positions now long ->long?) Sorry for struggling with this, thanks for taking the time to explain it though
The house sale analogy is crude but simple. Last sale price was £450K and was rising.
Buffet orders 10 bad boys at £320K. That's a price drop on the charts but he was BUYING.
The next sale is processed in some other random Estate Agent at £450K. What would that look like on a chart?

Buyers = Sellers always.

Lower price doesn't mean MORE buyers, nor does Higher price mean MORE sellers.
This event (£320K) is a misprice because it is an outlier. Normal price is £450K but someone managed a deal for cheaper. This would be a pin-bar on a Daily.
A pip is only worth it if you know how much you risked to earn it
  • #5,605
  • Aug 14, 2014 9:54am Aug 14, 2014 9:54am
Quoting stt
{quote} i think what you are saying is - big players can get better price than the current market price if the dealer they are talking to has inventory to offload and dealer thinks by offloading it in one big chunk, he has less risk of information leakage (mkt finding out his position and run price against him) and thus efficient for him to do a big transaction at a slight discount. however the flaw in this reasoning is that the public price will not drop in this case. The dealer will keep showing original price even when he just sold a big chunk...
Of course! I just needed a reasonably simple analogy to show what I mean. LOL
I'm sure he would never transact a house purchase like this!
A pip is only worth it if you know how much you risked to earn it
  • #5,606
  • Aug 14, 2014 10:02am Aug 14, 2014 10:02am
Quoting hepsibah
{quote} I have one at 1.3694. But lots in between. Sorry, that should read 1.36394
i am not sure, may be i have one, about 1.339x ....
  • #5,607
  • Aug 14, 2014 10:03am Aug 14, 2014 10:03am
Quoting dennis681
Newbie Question: Based on the chart setup: {image} I am looking for divergences between the upper and lower charts. So in order to know what's diverging, I'm looking at two things: 1) the relationship between the upper ema1-to-nearest band and 2) the relationship between the lower stoch red line (Main)-to-nearest band. As long as those two relationship remain "similar" (not sure how that quantifies), we think "continuation". However, when those two relationships become dissimilar, we look to enter or exit. Is this correct? What about this is incorrect?...
Dennis, you probably want to add a 30M tf there and compare it to the 1H side by side vertically.
The smaller timeframe will have more peaks and troughs... you want to peaks and troughs to occur at roughly the same time and place.

As for trading, try and move away from having them as triggers. More like windows of opportunity.
A pip is only worth it if you know how much you risked to earn it
  • #5,608
  • Aug 14, 2014 10:03am Aug 14, 2014 10:03am
Quoting vlady1974
{quote} The house sale analogy is crude but simple. Last sale price was £450K and was rising. Buffet orders 10 bad boys at £320K. That's a price drop on the charts but he was BUYING. The next sale is processed in some other random Estate Agent at £450K. What would that look like on a chart? Buyers = Sellers always. Lower price doesn't mean MORE buyers, nor does Higher price mean MORE sellers. This event (£320K) is a misprice because it is an outlier. Normal price is £450K but someone managed a deal for cheaper. This would be a pin-bar on a Daily....
So given that it is an outlier, what's the usefulness in the information for us? The 320k price is not available to us because we're not buying 10 houses, and at the same time, the price on the house before hand was known to be rising anyway; Buffet's interest in the houses did not affect the price for us. Correct? o_O
There's a blip in the chart due to this, but what to do with it?
"Mrrraggglhlhghghlgh"
  • #5,609
  • Aug 14, 2014 10:09am Aug 14, 2014 10:09am
Quoting vlady1974
{quote} Of course! I just needed a reasonably simple analogy to show what I mean. LOL I'm sure he would never transact a house purchase like this!
i think your analogy is pretty good ((substitute house with 10mm eur and you got a pretty realistic scenario). but my point is, the fact that large client got a deal on the price will not show up in any of the price feeds shown externally (i.e. external price feeds will not show a lower bid/offer). That big client deal will be just known to that client and the dealer who did it. so it wont show as a pin bar on price graph.
Think : Trade : Live Life
  • #5,610
  • Aug 14, 2014 10:22am Aug 14, 2014 10:22am
Quoting stt
{quote} i think your analogy is pretty good ((substitute house with 10mm eur and you got a pretty realistic scenario). but my point is, the fact that large client got a deal on the price will not show up in any of the price feeds shown externally (i.e. external price feeds will not show a lower bid/offer). That big client deal will be just known to that client and the dealer who did it. so it wont show as a pin bar on price graph.
I see what you're saying. I guess that I am heavily implying that a transaction took place that was big enough to cause a price distortion across all brokers. Should the reason behind the distortion become known, then market forces dictate that price will travel back to that price point to restore equilibrium from the arbitrage move.

Edit:
What I've never been able to find out in greater detail is if this is misprice is Broker-based or investor/trader based. That's a question for Eurusdd.
There was a brief thread about broker-arbitrage. Can't remember which thread that was in.
A pip is only worth it if you know how much you risked to earn it
  • #5,611
  • Aug 14, 2014 10:23am Aug 14, 2014 10:23am
Vlad, do you think binary options are part of the arbitrage problems too? Eurusdd sometimes says things like "she will close below 1.3xxx after xx minutes". Maybe big players are defending option positions at these prices? Just a thought.
You reap what you sow.
  • #5,612
  • Aug 14, 2014 10:25am Aug 14, 2014 10:25am
Quoting vlady1974
{quote} I don't have the best analogy. But it's kind of like Warren Buffet enters a big Long on EU at 3331 and it's so huge that the price dropped. Because he uses FXCM, any indicator will show an imperfection of that price compared to say IGINDEX, IBFX, etc. Because he placed that trade at US Open, the 4H and 1H can probably show it but it will not mean much on the 5M or 1M. Price then shoots up 100 pips. Market goes WTF!? Goldmans, Deutsche, Morgan Stanley etc get wind of the trade and immediately sell a shitload of reserve EUR to get the price...
Hey Vladik,
I am not sure if i understood you correctly but here is my interpretation: when there is a huge buy/sell transaction, market tries to consume it and adjust to it, hence appears dissimilarity (chaos) in different times frames and among brokers. Price moves in either direction with inertia of the huge order(really does not matter in which direction). soon enough the price returns to the point of DS to restore the equilibrium (order). As soon as we see the chaos, we mark it wait price to distance itself from it and then ride the opposite wave until we reach the order again. just another example of eternal fight between chaos and order
As Above, So Below
  • #5,613
  • Aug 14, 2014 10:27am Aug 14, 2014 10:27am
Quoting Dewachen77
{quote} i am not sure, may be i have one, about 1.339x ....
If she goes up, may be she needs about 1 hour approximately (if she wants) => small probability.
I think more likely (bigger probability) that she will goes down first to reach support area 1.334x , before restore similarity (goes up). This will happened tomorrow or day after tomorrow ...
  • #5,614
  • Aug 14, 2014 10:43am Aug 14, 2014 10:43am
Quoting vlady1974
{quote} I see what you're saying. I guess that I am heavily implying that a transaction took place that was big enough to cause a price distortion across all brokers. Should the reason behind the distortion become known, then market forces dictate that price will travel back to that price point to restore equilibrium from the arbitrage move. Edit: What I've never been able to find out in greater detail is if this is misprice is Broker-based or investor/trader based. That's a question for Eurusdd. There was a brief thread about broker-arbitrage....
i understand the way bank dealers operates (dont ask how) and also how retail brokers make prices. so can answer if there is any specific question via PM. on the forum, i have seen people making all sort of assumptions - some are largely correct while others are totally BS. I do think there is some information content in looking at multi broker price feeds. in fact there are small funds who do just that.
Think : Trade : Live Life
  • #5,615
  • Aug 14, 2014 10:45am Aug 14, 2014 10:45am
Quoting Eurusdd
This up move is not done. There is an error @ 1.33606.
almost there
  • #5,616
  • Aug 14, 2014 10:53am Aug 14, 2014 10:53am
Quoting vlady1974
{quote} The house sale analogy is crude but simple. Last sale price was £450K and was rising. Buffet orders 10 bad boys at £320K. That's a price drop on the charts but he was BUYING. The next sale is processed in some other random Estate Agent at £450K. What would that look like on a chart? Buyers = Sellers always. Lower price doesn't mean MORE buyers, nor does Higher price mean MORE sellers. This event (£320K) is a misprice because it is an outlier. Normal price is £450K but someone managed a deal for cheaper. This would be a pin-bar on a Daily....
Isnt there same price for everyone? Buffet's buy limit on £320K but others cant take advantage of it because buffet buys all offers?
  • #5,617
  • Aug 14, 2014 10:57am Aug 14, 2014 10:57am
Quoting vlady1974
EFFING EU! Lol. Stopped out -10. Re-entered short @ 3406, SL 3412 smaller size. If price back at 3395, will re-enter again with same size to match original order. Target MIDDLE part of range 3375-3380.
Nice, you booked profit now Vlady ...

Edit:
at one of your post, you said about "DS" & "DT". DS is the short for "Dis Similarity" ? What is "DT" ?

Thanks
  • #5,618
  • Aug 14, 2014 11:00am Aug 14, 2014 11:00am
Quoting stt
{quote} i understand the way bank dealers operates (dont ask how) and also how retail brokers make prices. so can answer if there is any specific question via PM. on the forum, i have seen people making all sort of assumptions - some are largely correct while others are totally BS. I do think there is some information content in looking at multi broker price feeds. in fact there are small funds who do just that.
Yeah. I think that's where the gold is.
I wish I had time and resources to pump into that but sadly not as yet.

Having said that, I may PM you to get a better idea of the pricing and dealer pricing... thanks for the tip!
A pip is only worth it if you know how much you risked to earn it
  • #5,619
  • Aug 14, 2014 11:03am Aug 14, 2014 11:03am
Quoting Dewachen77
{quote} Nice, you booked profit now Vlady ... Edit: at one of your post, you said about "DS" & "DT". DS is the short for "Dis Similarity" ? What is "DT" ? Thanks
Yes, I've covered all shorts for 50 pips net.
Yes, DS is Dissimilarity. Can't remember DT... need more context (give me a sentence?) It could be a typo.
A pip is only worth it if you know how much you risked to earn it
  • #5,620
  • Aug 14, 2014 11:33am Aug 14, 2014 11:33am
Quoting vlady1974
{quote} Yes, I've covered all shorts for 50 pips net. Yes, DS is Dissimilarity. Can't remember DT... need more context (give me a sentence?) It could be a typo.
Can not find it at the moment Vlady. Will try to search tomorrow .... Thanks
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