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  • #101
  • Aug 21, 2014 4:18am Aug 21, 2014 4:18am
Quoting phdmonster
You are right, Proximus. How do we decide if the currency is overvalued or undervalued? And even if we do we will have to be able to do that constantly because the undervalued currency may becore overvalued or it's value could just decreas a bit. That has to be measured too. And every currency or currency pair responds somewhat differently to affecting factors. So the sensitivity has to be taken into account as well. And Buffet always had crazy ideas :-D
Supply and Demand relationship, we need to find the events which alter the Supply-Demand ratio, because that will certainly alter the price itself too.

Supply>Demand price decrease

Supply<Demand price increase

Now its not this easy, because you could say that inflation is the dilution of money therefore it increases the supply of a currency, however its manifested wrongly.Because after an inflation raise the currency value usually goes up not down, whereas by common sense it should go down.It's mosly because traders anticipate rate hikes due to inflation increase, so they buy it now before it becomes overvalued.

So we also have to include trader sentiment, because ultimately what the market thinks, will happen, not what old economy textbooks say about what should happen.

But i suggest as a square 1 we should start from the Supply/Demand point of view
"There's a sucker born every minute" - P.T. Barnum
  • #102
  • Aug 21, 2014 4:33am Aug 21, 2014 4:33am
Quoting Proximus
{quote} Supply and Demand relationship, we need to find the events which alter the Supply-Demand ratio, because that will certainly alter the price itself too. Supply>Demand price decrease Supply<Demand price increase Now its not this easy, because you could say that inflation is the dilution of money therefore it increases the supply of a currency, however its manifested wrongly.Because after an inflation raise the currency value usually goes up not down, whereas by common sense it should go down.It's mosly because traders anticipate rate hikes...

Okay, but Supply and Demand can change without any event occuring. After all it's their nature to go towards equillibrium. We are the tards that distrupt that balance with almost all of our human activities and profetions. At least i see a problem here. If you don't, please explain why. An event can drive the price only for so long, not forever.
Yes, trader sentiment has to be considered as well
  • #103
  • Aug 21, 2014 4:49am Aug 21, 2014 4:49am
Stanley Druckenmiller made a lot of money trading fundamentals for the Soros Fund, from what I remember when reading J. Schwager's "Market Wizards" book series, including on currencies. If we have a system that could generate such massive returns, perhaps it's okay to wait for some unusual and high impact event or series of events to base trades on, in the direction of our overall sentiment for a particular currency.

JPY has been interesting over the past year due to the consumption tax (the equivalent of VAT or sales tax) increase from 5% to 8%.
The last increase was in 1997 (to 5% from 3%). Almost immediately afterwards, Japan plunged into a deep recession with a lasting impact: the country has struggled to escape the trap of deflation, or decreasing prices, almost yearly every since. Perhaps there still is an opportunity there?

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  • #104
  • Aug 21, 2014 5:00am Aug 21, 2014 5:00am
Quoting Ethlao
Stanley Druckenmiller made a lot of money trading fundamentals for the Soros Fund, from what I remember when reading J. Schwager's "Market Wizards" book series, including on currencies. If we have a system that could generate such massive returns, perhaps it's okay to wait for some unusual and high impact event or series of events to base trades on, in the direction of our overall sentiment for a particular currency. JPY has been interesting over the past year due to the consumption tax (the equivalent of VAT or sales tax) increase from 5% to 8%....
Wasn't there a finantial crysis 1997-1999? These things don't happen very often. Unusual event don't happen very often too, or they do but are not big enough to influence the market enough... Although a friend of mine one said that crysis like that will start occuring more and more often with less time between each other. (he was a statistics teacher)



I think looking for higher timeframe Tops and Bottoms would be a better idea, but we need to find a way to know for sure that the top or bottom we are looking at is really a top or a bottom and not a middle stage that will fuck us up later.

I agree though that fundamentals should be included into the system somehow. We need to find a way to do that :-)
  • #105
  • Aug 21, 2014 5:41am Aug 21, 2014 5:41am
Quoting phdmonster
{quote} Okay, but Supply and Demand can change without any event occuring. After all it's their nature to go towards equillibrium. We are the tards that distrupt that balance with almost all of our human activities and profetions. At least i see a problem here. If you don't, please explain why. An event can drive the price only for so long, not forever. Yes, trader sentiment has to be considered as well
No the supply & demand is always shaped by the events that occur, the price is which goes to equilibrium not the S/D.The price will adjust itself to the S/D relationship.

A small example, is that imagine a chicken farm which produces eggs, and lets say they produce 1000 eggs/day and the consumers consume 1000 eggs aswell, so you satisfy the customers.Now if you expand your farm and produce 2000 eggs, will the consumers buy more egg? Hell no, it will just half the egg price.

What you are trying to say is the equilibrium of the price, which is, that it would lie flat, if there were no events, obviously, if there were no events that would move the market, the price will be constant and nobody would trade that because you cant make money on a fixed market.But luckily thats not an option, there are always news to trade.

Yes we the speculators disrupt the balance, and its fine, because the market will adapt itself, besides a floating market is more realistic than a fixed market.
"There's a sucker born every minute" - P.T. Barnum
  • #106
  • Aug 21, 2014 5:51am Aug 21, 2014 5:51am
Hmm... Yes, you are right :-)

We should start thinking of a way to include the fundamentals. Be it by measuring their influence or some other way. If of course we decide to include them.

What do you say? I mean that we have to plan things out - not only share ideas and opinions, but do things as well.
  • #107
  • Aug 21, 2014 5:53am Aug 21, 2014 5:53am
Just look how stupid is to maintain a fixed market

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The EUR/DKK is a fixed market, and those spikes are only due to spread fluctuations, but its a very stupid concept because the Danish CB has to pull extra resources to maintain a peg, so every time a big trader tries to distort the market, the CB has to put in big money to reverse it, which costs Denmark a lot of money, which is wasted.Now it probably has economic reasons why it is pegged, but in my view its just a silly idea.

I think an open floating market is more efficient than a fixed one, after all free trade gives a better economic reputation to that country than mercantilism.
"There's a sucker born every minute" - P.T. Barnum
  • #108
  • Aug 21, 2014 6:02am Aug 21, 2014 6:02am
Quoting Ethlao
Stanley Druckenmiller made a lot of money trading fundamentals for the Soros Fund, from what I remember when reading J. Schwager's "Market Wizards" book series, including on currencies. If we have a system that could generate such massive returns, perhaps it's okay to wait for some unusual and high impact event or series of events to base trades on, in the direction of our overall sentiment for a particular currency. JPY has been interesting over the past year due to the consumption tax (the equivalent of VAT or sales tax) increase from 5% to 8%....
Yeah sales tax increase is really a bitch, it only discourages consumption which is plain BS, every economist know that you must have consumption in order to have GDP increase, yet some politicians dont get it.In my view the sales tax is the stupidest tax that exists on the face of the earth because it has absolutely no reason, it only hurts the GDP in the long term, in my view it should be abolished in every country

Anyway, from a trading perspective ,yes viewing taxes is a really good leading indicator for GDP, but it usually needs time to adjust, i think there is atleast 6-12 months lag between the tax modification and its impact on the economy.So it should be used only for long term analysis.

Here is a nice site where you can view all economic data of all countries: http://www.tradingeconomics.com/

But on that particular event i agree with phdmonster i dont think that a 3% increase caused that harm, it was probably a crash back then.
"There's a sucker born every minute" - P.T. Barnum
  • #109
  • Aug 21, 2014 6:07am Aug 21, 2014 6:07am
Quoting Proximus
Just look how stupid is to maintain a fixed market {image} The EUR/DKK is a fixed market, and those spikes are only due to spread fluctuations, but its a very stupid concept because the Danish CB has to pull extra resources to maintain a peg, so every time a big trader tries to distort the market, the CB has to put in big money to reverse it, which costs Denmark a lot of money, which is wasted.Now it probably has economic reasons why it is pegged, but in my view its just a silly idea. I think an open floating market is more efficient than a fixed...
Yes it is stupid because all the other markets are not which defuses the idea of a fixed market :-D It is like Communism and Capitalism... Communism can't exist if there is another system that fucks it over...

My main lap top burned... I had some very interesting trend indicators there.. I hope it gets fixed soon so i can share them here.
  • #110
  • Aug 21, 2014 6:10am Aug 21, 2014 6:10am
Quoting phdmonster
{quote} Yes it is stupid because all the other markets are not which defuses the idea of a fixed market :-D It is like Communism and Capitalism... Communism can't exist if there is another system that fucks it over... My main lap top burned... I had some very interesting trend indicators there.. I hope it gets fixed soon so i can share them here.
Well in economy its actually called the Mercantilism VS Free Trade concepts, where the Mercantilist idea is the Government controlled market in every aspect of it, even the price, and heavily regulated, while the Free Trade is the non-regulated free market where you can do whatever you want and the market will decide the price, by supply & demand relations.

By the 21st century most countries realized that free trade is better, yet it has its drawbacks too, unregulated markets attract scammers and con artists unfortunately.
"There's a sucker born every minute" - P.T. Barnum
  • #111
  • Aug 21, 2014 6:25am Aug 21, 2014 6:25am
Well anyway lets get back to topic, this was pretty oftopic.

So i can see that the majority of traders vote for:

 

  1. Timeframe/Duration: INTRA-DAY (I agree)
  2. Trend: TREND-FOLLOWER (I agree)
  3. No Sentiment indicators (I disagree)
  4. TRADE NEWS or CONSIDER NEWS BASED SENTIMENT (I agree)
  5. ANALYZE HIGHER TIMEFRAMES FOR LONG TERM BIAS (I agree)
  6. Can we trade agains swap? YES, IF THE PROBABILITY IS GOOD (I disagree)

The other questions are at a tie, so please vote more, especially i`m curious what Risk you want guys, i just modified my vote and now i support <5% risk/balance, and still look for high returns
As for now these questions are voted with a confidence however i disagree with 2, the sentiment indicators which are pretty important to gauge trader sentiment, and the swap which is the interest rate behind a currency.We could trade against it theoretically but why risk it, and especially when we are charged a swap + the loss when we are wrong, it just not worth it

Anyways keep on voting more, and in a few days we can start design the system, also share your ideas guys we are open minded here

"There's a sucker born every minute" - P.T. Barnum
  • #112
  • Aug 21, 2014 6:30am Aug 21, 2014 6:30am
Quoting Proximus
A small example, is that imagine a chicken farm which produces eggs, and lets say they produce 1000 eggs/day and the consumers consume 1000 eggs aswell, so you satisfy the customers.Now if you expand your farm and produce 2000 eggs, will the consumers buy more egg? Hell no, it will just half the egg price.
This example isn't very good. Now your farmer sells 1000 eggs to the consumers and throws away 1000 eggs nobody wants. He's got 1000 more useless hens to feed and sell off his eggs half the price. He doubled his cost and halved his income. If he isn't broke by the end of the year one could bet he lives in Europe and is financed by the Common Agricultural Policy ROFL...
No greed. No fear. Just maths.
  • #113
  • Aug 21, 2014 6:34am Aug 21, 2014 6:34am
Quoting Proximus
Can we trade agains swap? YES, IF THE PROBABILITY IS GOOD (I disagree)
If swap was a problem carry trade would make money.
No greed. No fear. Just maths.
  • #114
  • Edited 7:00am Aug 21, 2014 6:40am | Edited 7:00am
Quoting Proximus
Well anyway lets get back to topic, this was pretty oftopic. So i can see that the majority of traders vote for: Timeframe/Duration: INTRA-DAY (I agree) Trend: TREND-FOLLOWER (I agree) No Sentiment indicators (I disagree) TRADE NEWS or CONSIDER NEWS BASED SENTIMENT (I agree) ANALYZE HIGHER TIMEFRAMES FOR LONG TERM BIAS (I agree) Can we trade agains swap? YES, IF THE PROBABILITY IS GOOD (I disagree) The other questions are at a tie, so please vote more, especially i`m curious what Risk you want guys, i just modified my vote and now i support <5%...

What do you mean by intra-day... Timeframe bellow D1? Or higher then D1.... I have always wondered about this. I'd vote for H4 timeframe if it mattered though. Seems to have best of both worlds imho.

Trading against SWAP is unnecessary losses... I'd like us to avoid them if possible. I agree with the other rules :-)
  • #115
  • Aug 21, 2014 7:01am Aug 21, 2014 7:01am
Quoting PipMeUp
{quote} This example isn't very good. Now your farmer sells 1000 eggs to the consumers and throws away 1000 eggs nobody wants. He's got 1000 more useless hens to feed and sell off his eggs half the price. He doubled his cost and halved his income. If he isn't broke by the end of the year one could bet he lives in Europe and is financed by the Common Agricultural Policy ROFL...
Haha thats not really likely to happen because he wants to empty his inventory, because the eggs will rot and lose the money & work he put in them.The market has always a tendency to drop price when there is a surplus in supply.Its imperative for the producer to always empty his stock, its just how it its, even if he has to drop the price below his cost to just get rid of it, because if he doesnt he loses way more.Also stupid consumers will buy more if they see a discount, because they are just brainwashed by media to buy their @ss off .Thats why discounts and "get 3 for the price of 2" happen in supermarkets.
Quoting PipMeUp
{quote} If swap was a problem carry trade would make money.
Why do you think it doesnt?

Quoting phdmonster
{quote} What do you mean by intra-day... Timeframe bellow D1? Or higher then D1.... I have always wondered about this. I'd vote for H4 timeframe if it mattered though. Seems to have best of both worlds imho.
Forget about timeframes, thats only an imaginary separation, the price flow is a stream of price, timeframe is only meant to group the price into clusters by time periods.
What i meant by intraday is just simply that the trade duration is less than a day, thats it, now you can trade on M1 chart or H4, but the trade duration should be less than a day.
In worst case maybe 2 days, to get the swaps if needed, but should really not expose ourselves to more risk than needed by holding the trade for too long.
"There's a sucker born every minute" - P.T. Barnum
  • #116
  • Edited 7:47am Aug 21, 2014 7:18am | Edited 7:47am
So that is what you meant... Well if we want to avoid negative swap we should be within the day - which means the trades duration is max 23:59 hours for example.
I saw a strategy in a forum that is local to my country.... The strategy was like this.... We open trades before the day ends in the direction of the more positive swap (it can be negative for both short and long but we open a trade for the one that takes less from us). The trade is closed before the end of the next day and we open a new one again at the direction of the better swap. There were 2 tests... One with a stoploss and no take profit and one with take profit but no stop loss.... I can try to translate the thread in english if you think it would be of any interest to out goal.

No Stop loss won the race by a lot.

And we still have to decide somehow when to take/enter a trade... And since it is clustered this way we have to use one of the provided timeframes to do that.
  • #117
  • Aug 21, 2014 8:07am Aug 21, 2014 8:07am
Quoting PipMeUp
{quote} Do you mean that if enough people tell you elephants can fly you'll throw those animals by a cliff until success or lack of elephants? By requiring 1000%/mn and 8% max DD, the constraints impose some of the answers in the poll and these answers contradict each other. You simply need a big RR with a high win rate and a high trading frequency. Each requirement limits the two others. You have to square the circle. {quote} I don't think I'm stupid. I'm quite educated. Yet this litlle question kept me busy for two years and I came up with an...
Funny enough, after 3 years of trading and trying I've come to the same conclusion EMA20 used with Heiken Ashi. I think its about keeping it as simple as possible.
  • #118
  • Aug 21, 2014 8:39am Aug 21, 2014 8:39am
Quoting PipMeUp
{quote} No man 100% of them would fail because, like you, they want a local estimator to tell them when to buy and when to sell in a highly chaotic highly non-linear environement. They will fail because they want to see trading signals popping out of an indicator that has never been designed to do this. This indicator is only designed to estimate the most likely current market state for a given timeframe (it doesn't "repaint" like the MT4 people say). There is one single interpretation of this indicator: a mean, a velocity, an acceleration and the...
This is what i was thinking the other day - if we just stop for a moment, and imagine that there is no indicators - none whats so ever... How would you trade? Ok, the best you can get is any period and type SMA EMA etc. How would you trade? I think that people relay on indicators, EAs, some signal providers, etc while they have no idea what they are doing and why they taking trade. I thing that any indicator, EA or any similar should be treated as 'support tool'.
  • #119
  • Aug 21, 2014 9:18am Aug 21, 2014 9:18am
Quoting ArekJP
{quote} This is what i was thinking the other day - if we just stop for a moment, and imagine that there is no indicators - none whats so ever... How would you trade? Ok, the best you can get is any period and type SMA EMA etc. How would you trade? I think that people relay on indicators, EAs, some signal providers, etc while they have no idea what they are doing and why they taking trade. I thing that any indicator, EA or any similar should be treated as 'support tool'.
There was no technical analysis before the 70's , well there were those candle analysts in Japan, the whole renko bars and stuff which dated back 200 years, but not in the west, and traders just got along very well.Think about it...
"There's a sucker born every minute" - P.T. Barnum
  • #120
  • Aug 21, 2014 12:43pm Aug 21, 2014 12:43pm
Quoting Proximus
{quote} There was no technical analysis before the 70's
What about William Delbert Gann, Ralph Nelson Elliott or Goichi Hosoda to name a few?
No greed. No fear. Just maths.
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