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Trading Like A Dealer: Treasury Management With High Risk

  • #21
  • Dec 21, 2014 7:15pm Dec 21, 2014 7:15pm
Some great general market information..........

This end of the year might prove to be a challenge to you from a volatility and profit generating perspective (but it really depends on your trading strategy) but I look forward to keeping an eye on your trading log as it progresses.

It should be interesting come the "busy" times again in 2015.

I'm keen to see how your "applied" market analysis moves your trading account!

More so in terms of high leverage and I'd assume better you call it "controlled" high leverage.

Are you setting a goal ($X or X% over X months) you wish to reach?

Or is your plan to put into action what you have learned and fine tune your trading as you progress?

I wish you success in your endeavor.

Good trading,

Masterrmind............
Master your Mind then Master your Trades
  • #22
  • Edited 8:52pm Dec 21, 2014 8:29pm | Edited 8:52pm
Hi Masterrmind,

Thanks for stopping by with a reply.

Quoting Masterrmind
This end of the year might prove to be a challenge to you from a volatility and profit generating perspective (but it really depends on your trading strategy) but I look forward to keeping an eye on your trading log as it progresses.
This is on point. Really, I'm more or less looking forward to trading in the new year more than anything. The last week of December probably won't see much action, but if I see a set up I like I'll consider it. I'm not expecting to make much, but I'll take what I can get. The biggest gain more than anything will be giving people an idea of how I manage my exposure in the market.

FOR ALL TRADERS: December is generally book closing month for dealers. Those who have made their budgets will likely ease off from trading, and those who haven't will try to do whatever they can to not lose their jobs. Other participants will also lower their exposure in the markets so as to not give back any profits already booked. Expect market volatility to be low, but choppy. December is usually one of the worst months to trade, so be careful out there.

Quoting Masterrmind
It should be interesting come the "busy" times again in 2015.
I'm hoping so since the busier it gets the better I generally perform. FX is really starting to become more and more attractive again as we move closer to interest rate hikes in the US and UK. When there is a big divergence in interest rates and the carry trade takes hold, volatility should see a nice spike. We are already seeing a small rise in volatility in E/U, U/J, and other pairs due to the different outlooks in each country. It's a good sign.

Quoting Masterrmind
More so in terms of high leverage and I'd assume better you call it "controlled" high leverage.
Controlled high leverage is a great way to put it. For those who don't know what they are doing, leverage is a killer. For those who know how to use it properly, leverage is a huge benefit.

Quoting Masterrmind
Are you setting a goal ($X or X% over X months) you wish to reach?
I haven't set any specific goals just yet. I would like to test and see how the strategy is performing and an average of what I can expect before setting goals. Ideally, in two months time (January + February) I would like to achieve ~100%+ return. Anything less, although still great, will be sort of a let down as it would mean I'm battling with more losers than I should be. This is quite reasonable based on past experience and the new high leverage, but it will also depend on volatility of my pairs. Only time will tell. Let me also add that this 100% is based on what I have deposited with my broker. Since I am reluctant and only depositing 10% of the total cash value set aside for this account, in reality this would end up translating to 10% return. I am actually expecting more closer to 20-30%+, and if the broker and my system turns out to be good and I deposit the rest I will be expecting around 200-300%.

Quoting Masterrmind
Or is your plan to put into action what you have learned and fine tune your trading as you progress?
This will also have to come into play. I have already set lot sizes and a structured money management plan to grow my book, but adjustments may be necessary although probably nothing major. I think for the most part my money management is pretty good for the leverage I will be employing.

Quoting Masterrmind
I wish you success in your endeavor.
Thanks man, and be sure to stop by with any comments or trading views!

-FXMasterSK
  • #23
  • Dec 22, 2014 1:10am Dec 22, 2014 1:10am
Great! .... it sounds like the wheels are in motion.

Now make it happen.........

Once you start posting your trades I hope you don't mind some constructive criticism along the way.

I think you have made a grand entrance into the arena and fairly soon you will have to face the tigers.

Good trading,

Masterrmind...........
Master your Mind then Master your Trades
  • #24
  • Dec 22, 2014 6:40am Dec 22, 2014 6:40am
Quoting Masterrmind
Once you start posting your trades I hope you don't mind some constructive criticism along the way. I think you have made a grand entrance into the arena and fairly soon you will have to face the tigers. Good trading, Masterrmind...........
Constructive criticism is welcome! I would love to hear others opinions on what I can do to improve, and if it helps my game any than go for it!

I wasn't able to post interactively today since I have been battling these markets. I built up a short position averaged @ 1.2255 on E/U, but when I realized that correlations weren't holding between U/J, G/U, and E/U and we were going to continue the range from the start of London I went into rescue mode. I used two rescue entries to close out my positions and averaged 1.2262 on those and was able to get out of the market with a measly gain, pretty much breakeven. Today would of much better suited quick scalp positions on 1M than trying to look for a breakout, but at least I'm out and now will wait for existing home sales data from the US before battling again. I think this data may be able to fuel the next move as volatility right now is dead. If not, then I'll look for quick in and out scalps of the market to take what I can get. For now I will remain squared and keep watching until data comes out. I'll post a review of the trading day at the end of the day when my broker sends me a confirmation email of my trades.

Keeping your losses small and your gains big is the game. We'll see what happens next.

-FXMasterSK
  • #25
  • Dec 22, 2014 7:02am Dec 22, 2014 7:02am
Quoting FXMasterSK
{quote} Constructive criticism is welcome! I would love to hear others opinions on what I can do to improve, and if it helps my game any than go for it! I wasn't able to post interactively today since I have been battling these markets. I built up a short position averaged @ 1.2255 on E/U, but when I realized that correlations weren't holding between U/J, G/U, and E/U and we were going to continue the range from the start of London I went into rescue mode. I used two rescue entries to close out my positions and averaged 1.2262 on those and was able...
Everyone is already in holiday/Christmas mode so you can expect the market to start to wind down pretty quick over the next 1-2 days.

Minimal if any trades for me from now on I'm afraid.

It's really great how you present your information....great reading and its all relevant.

You need to be aware of all angles in this game.

It's what helps to keep us alert and motivated.

Good trading,

Masterrmind............
Master your Mind then Master your Trades
  • #26
  • Dec 22, 2014 10:46am Dec 22, 2014 10:46am
Quoting Masterrmind
{quote} Everyone is already in holiday/Christmas mode so you can expect the market to start to wind down pretty quick over the next 1-2 days. Minimal if any trades for me from now on I'm afraid. It's really great how you present your information....great reading and its all relevant. You need to be aware of all angles in this game. It's what helps to keep us alert and motivated. Good trading, Masterrmind............
Hey Masterrmind,

Yeah seems like everyone is already done and ready for the festivities. In battle today the terrain was rough and I barely have anything to show for it. I am going to follow you and stop trading for the rest of this month. I just came home this past Friday to see my family and I will be spending more time with them rather than trying to get something out of this dead market. Today was a good example of how low volatility gets and choppy the market becomes. A good trader knows when to step away, and we retailers have the advantage of not having to be in a trade.

Therefore, in my free time I will focus on posting some of the things that go on in my head while trading and maybe some newer traders can learn a thing or two. After New Year's, the game will be back on and we can all focus on making this a good, profitable new year!

Good luck and happy holidays!

-FXMasterSK
  • #27
  • Dec 22, 2014 11:13am Dec 22, 2014 11:13am

~Post-Trade Analysis~

Week of 12/21/14


------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
After every trading day, I track the trades I took in my journal so I can keep an eye on the progress of my trading book and what needs improvement. I save charts and draw/write on them, which really helps keep me focused and know what to look for. Good traders need to do this in order to improve their game. When you've been trading for a while, you realize that with trading you never stop learning. The market just keeps on teaching you lessons, so rather than trying to fight her, learn from her so that you may perform better next time. Keep track of your progress and you will know in no time whether you are cut out to be a trader or not.
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Attached below are the excel files for my journal and daily totals log. I will also attach pictures for those who don't care to download them so you can get an idea of what it looks like.

Trade Journal

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Here I track the date of each trade, symbol, entry direction, lot size, entry, exit, and profit and gain factors. The position type is more for me and you can ignore that. The reason for it is every trading day I act like I am going to battle (because you are literally fighting to take a piece out of the market, and for every winner there must be a loser). Scouts are the first position I enter, and then I send in a checker which gives me an averaged price and builds up my initial position. When the market is trending, I send in up to 3 attack positions on retracements and when the trend exhausts, I exit all at profit. Sometimes I must rescue positions in which the position was good, but timing was off. Rescues are ONLY done with the trend. I allow up to two rescue positions, sometimes three depending on lot size I used. Sometimes, the market isn't really trendy and doesn't know where it wants to go. These are times where I get my game on and do some highly leveraged quick scalps, usually on the 1M TF (you need a broker with small spreads to do this on 1M, otherwise use a higher TF). This is not for the faint-hearted because if you do not know what you are doing, your losses can quickly snowball out of control and take a chunk out of your book. My strong understanding of order flow, liquidity vacuums, momentum, exhaustion, etc. allows me to time my entries pretty well and take a few quick pips out of the market. When I employ this strategy, I have a mental stop loss that if hit, I will be out no matter what, and my risk/reward ratio must be better than 1:1. I have shown a little bit of my scalping examples in the following threads: http://www.forexfactory.com/showthre...97#post7887497 and http://www.forexfactory.com/showthre...21#post7896121

Daily Totals

Attached Image


Here I track the total made for the day and week. I keep track of how many pips I made, percentage gain, and dollar profit.

Like I wrote above, I will not be trading for this month anymore. Instead, when I get free time I will try and write up a little bit more of my understanding of markets. Everyone has their own view and I hope that sharing some of mine will help others develop their own.

Hope you all have wonderful holidays!
Attached File(s)
File Type: xlsx Daily Totals.xlsx   9 KB | 521 downloads
File Type: xlsx Trade Journal.xlsx   10 KB | 547 downloads
  • #28
  • Dec 22, 2014 3:58pm Dec 22, 2014 3:58pm
Quoting FXMasterSK
{quote} Hey Masterrmind, Yeah seems like everyone is already done and ready for the festivities. In battle today the terrain was rough and I barely have anything to show for it. I am going to follow you and stop trading for the rest of this month. I just came home this past Friday to see my family and I will be spending more time with them rather than trying to get something out of this dead market. Today was a good example of how low volatility gets and choppy the market becomes. A good trader knows when to step away, and we retailers have the...
Yes thats a good idea and just because you hang up the terminal for a little while doesn't mean you have to stop analyzing and learning..... It's a great time to go over any trades you have made and work out what went right and what went wrong and talk to like minded traders about it. It will help you.
No one ever stops learning no matter what level you are at....but the hope will always be that one becomes smarter.

Good trading,

Mastermind..........
Master your Mind then Master your Trades
  • #29
  • Dec 22, 2014 7:56pm Dec 22, 2014 7:56pm

Applying Newton's Laws of Motion to Trading

Part I

=================================================================================================================================
I was reading an interesting article not too long ago on Business Insider about using Newton's three laws of motion to increase productivity and improve your life. For those interested, check it out here: http://www.businessinsider.com/how-t...tivity-2014-12. Newton's laws of motions can be applied to a variety of different things, but can we really apply quantum physics to trading? A member here named CrucialPoint would tell you that you could do just that. So let's find out how.
=================================================================================================================================

First of all, some of us may not remember the three laws of motion so lets review them first.

Newton's Laws of Motion

1. An object at rest will remain at rest unless acted on by an unbalanced force. An object in motion continues in motion with the same speed and in the same
direction unless acted upon by an unbalanced force. (This is also referred to as the law of inertia).

2. Acceleration is produced when a force acts on a mass. The greater the mass of the object being accelerated the greater the amount of force needed to accelerate the object. (That is, F=ma)

3. For every action there is an equal and opposite reaction.

So, how does this even apply to trading? Below I will list the same laws of motion and include some trading factors as they relate to Newton's three laws.

Newton's Laws of Motion Applied to Forex

1. An object (price) at rest will remain at rest unless acted on by an unbalanced force (strong one-sided order flow). An object (price) in motion continues in motion with the same speed and in the same direction unless acted upon by an unbalanced force (induced contrarian order flow). This process is also known as price discovery.

2. Acceleration (momentum) is produced when a force (strong one-sided order flow) acts on a mass (liquidity, or in this case lack of liquidity). The greater the mass (liquidity) of the object (currency pair) being accelerated the greater the amount of force (strong one-sided order flow) needed to accelerate the object.

3. For every action (price movement) there is an equal and opposite reaction (price leaving behind a gap in the order book and therefore creating a liquidity black hole/vacuum).
  • #30
  • Edited Dec 23, 2014 7:55am Dec 22, 2014 7:59pm | Edited Dec 23, 2014 7:55am

Applying Newton's Laws of Motion to Trading

Part II

====================================================================================================================================
Law 3: For every price movement, there is a leftover gap in the order book which creates a liquidity black hole/vacuum.
====================================================================================================================================

So what exactly is a liquidity hole/vacuum/gap/etc. anyways? You see when price moves up or down, it leaves behind a temporary vacuum as it eats up the available liquidity on its way. When price finally finds equilibrium again, it is exhausted on one side but on the other side there is much less resistance since the liquidity has been eaten up. Once a vacuum has formed, it will take a lot less effort for price to turn the other way and fill it versus continuing in the direction it has been moving. Sometimes we will even see price overshoot the original place it started from due to the fact that less effort is required push it the other way. Lets look at how this would look like on a price chart.

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Now it should be noted that many vacuums are closed in a matter of seconds or less. News and some other factors can create larger vacuums, but you really need to sit there and watch price to see this concept materialize. Nevertheless, these vacuums can offer some good predicting abilities and I use them a lot when I am scalping the 1M TF to get an idea of buying/selling pressure. Of course, I also use a lot of other concepts. Use it as any other tool, don't rely too heavily on it.

Equally important is what happens in these vacuums. If a vacuum has been created and we see that price is having a tough time filling it, this is signaling a clue that there is strong buying/selling pressure there. Let's look at a chart example.

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Now another thing we should note is that sometimes you will see price having a tough time filling a vacuum, but eventually that strong buying/selling pressure exhausts and we get a vacuum fill. This is when trade management comes in handy and is just the nature of markets. Price will always go in the direction of least resistance. Also, take into consideration time. As more time passes by more orders will be entered into the markets and more relevant information will be shown on the charts. Like I said, this is just the nature of markets. Don't get choked up on some old vacuum. Always look for clues in the newest price developments.
  • #31
  • Dec 22, 2014 8:04pm Dec 22, 2014 8:04pm
I think that is enough posting for now. I will continue on with this subject tomorrow when I get the time. Have a good night (or day depending on where you live) everyone!

-FXMasterSK
  • #32
  • Dec 22, 2014 8:07pm Dec 22, 2014 8:07pm
Quoting Masterrmind
{quote} Yes thats a good idea and just because you hang up the terminal for a little while doesn't mean you have to stop analyzing and learning..... It's a great time to go over any trades you have made and work out what went right and what went wrong and talk to like minded traders about it. It will help you. No one ever stops learning no matter what level you are at....but the hope will always be that one becomes smarter. Good trading, Mastermind..........
You are very right! Trading alone gets too boring anyways. But I always keep an eye on the markets. If I can't watch the charts, the Bloomberg or Reuters news app on my phone will let me know what went on.

It's nice to have people to talk to as you trade. I took a quick look at your profile and noticed you trade many other markets besides FX. What instruments do you usually keep your eye on?

-FXMasterSK
  • #33
  • Dec 22, 2014 9:57pm Dec 22, 2014 9:57pm
Quoting FXMasterSK
{quote} You are very right! Trading alone gets too boring anyways. But I always keep an eye on the markets. If I can't watch the charts, the Bloomberg or Reuters news app on my phone will let me know what went on. It's nice to have people to talk to as you trade. I took a quick look at your profile and noticed you trade many other markets besides FX. What instruments do you usually keep your eye on? -FXMasterSK
Based on a planned portfolio distribution I spread capital amongst what's hot in the market.

Hot doesn't always mean highest return either but can include safer investments which of course are generally low yielding.

I have traded all that is mentioned in my profile and hold multiple shares in the ASX mainly as well as Options trading.

I trade gold mainly in terms of the metals but also silver when the timing is 'right'.

I do enjoy trading the FX market though....it's challenging and very rewarding!

Good trading,

Masterrmind..........
Master your Mind then Master your Trades
  • #34
  • Dec 23, 2014 7:41am Dec 23, 2014 7:41am
Quoting Masterrmind
{quote} Based on a planned portfolio distribution I spread capital amongst what's hot in the market. Hot doesn't always mean highest return either but can include safer investments which of course are generally low yielding. I have traded all that is mentioned in my profile and hold multiple shares in the ASX mainly as well as Options trading. I trade gold mainly in terms of the metals but also silver when the timing is 'right'. I do enjoy trading the FX market though....it's challenging and very rewarding! Good trading, Masterrmind..........
Smart way to trade. That's exactly how I want to invest once I quit day trading. Imagine having sold E/U and gold near the top and having bought U/J and DJIA from the bottom. Much less stress, less having to watch the charts and just keep an eye on macro factors, and make some great returns. The best part is the huge reward vs. initial risk ratio. Of course that also requires enough capital to invest in your portfolio. And a longer waiting time.

So holding ASX shares, you must be from Australia?

And do you also trade FX from a long-term perspective? Or more medium/short-term?
  • #35
  • Dec 23, 2014 1:25pm Dec 23, 2014 1:25pm

Applying Newton's Laws of Motion to Trading

Part III

=================================================================================================================================
Law 1: Price will remain the same unless acted upon by strong one-sided order flow on limited available liquidity. As price moves it will continue to move with the same momentum and in the same direction unless acted upon by induced contrarian order flow as it moves in that direction.
=================================================================================================================================

Now I started off with the third law because that was the one I thought would create most confusion and wanted to give people a chance to ask any questions before we got off of this topic. But now, let's take a look at understanding the first law.

This law is fairly simple. When buying pressure and selling pressure are equal or near equal, price will remain relatively unchanged.

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When there is strong buying pressure for whatever reasons and limited available liquidity at that level, price must move up in order to accommodate that buying pressure and search for liquidity. On the other hand, when there is strong selling pressure for whatever reasons and limited available liquidity at that level, price must move down in order to accommodate that selling pressure and search for liquidity.

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This is what leads to trends or ranges, and staying on top of market moving events and things that will generate enough order flow can keep that book growing and even create some great market inefficiencies that can be exploited. Market prices are fractals. Here is the definition of a fractal from Wordnik: A geometric pattern that is repeated at ever smaller scales to produce irregular shapes and surfaces that cannot be represented by classical geometry. On any time frame, you will see the same cycle of trend to range to trend to range.

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Markets are so complex. They are an ongoing process of factoring in new orders and liquidity to come up with the price you see on your chart. It's their fractal nature that makes patterns you see on the daily chart even show up on a 1M chart. Here is a page from Babypips School of Pipsology.

Attached Image


Here's this pattern formation on a daily chart of AUD/USD.

Attached Image


Now let's see this pattern on a 1M chart of AUD/USD.

Attached Image


Look at this chart below and notice the range. It's a 5M chart of AUD/USD.

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Now going up to a higher time frame, doesn't it look a lot like the images above when price was moving sideways in a range? It is s the same area, but on the 1Hr chart.

Attached Image


This is why I take into considerations multiple time frames to assess likely price movements. You see, when you just look at one time frame (mainly for short-term and medium traders) you are hindering yourself and blindly trading. The market doesn't just stop after a 15 minute close and then start up again. The FX market is a 24/5 market of constant dealer quotes to each other at the Interbank level. It is these quotes that decide the price where our currencies trade at. Time frames can be an illusion, but this one will be for a later discussion. For now, let's just stop here.
  • #36
  • Dec 23, 2014 11:34pm Dec 23, 2014 11:34pm
Quoting FXMasterSK
{quote} Smart way to trade. That's exactly how I want to invest once I quit day trading. Imagine having sold E/U and gold near the top and having bought U/J and DJIA from the bottom. Much less stress, less having to watch the charts and just keep an eye on macro factors, and make some great returns. The best part is the huge reward vs. initial risk ratio. Of course that also requires enough capital to invest in your portfolio. And a longer waiting time. So holding ASX shares, you must be from Australia? And do you also trade FX from a long-term...
The ASX shares were a bit of a so so affair but far better than bank interest but require a bit of a juggling act at times just to keep the gains reasonable.

You still have to keep up with your portfolio shares and make sure they are on track or not but far less work than day trading the FX market.

I do trade FX over the longer term with several positions however I make most of my gains from fast turn around trading (read this as small pip TP's and higher lot sizing).

Longer term needs to be defined I guess because I usually have a target price/level in mind and if my analysis changes for a given pair then its very possible that I'll either start tightening up my trailing stop if its in profit or whatever needs to be done on a case by case basis.

What I prefer to do mostly is to get the momentum behind my trade with the direction spot on and take reasonably quick high lot size trades.

This means that instead of say going for a TP of 100 pips (which I certainly do at times...which I'd call intermediate term trading) it might be 1/10 of that but with the same risk per trade. Getting in fast and getting out!

Depending on the setup I might allow a trade to run based on PA and other analysis etc.

If the market appears to want to give you more then let it! If not take your 5-10 pips or whatever off the table and bank that profit.

Every trader has his/her own ideas about trading....some focus on 1 plan and learn to do it well while other traders like me don't really stay fixed in terms of the period of time I trade over. Majority is higher lot positions over smaller TP levels but I take 100 pip trades and I take far longer term trades (the strategies applied are quite different for each case though with different TP's and SL's etc etc).

You have impressed me with Isaac Newton's principles as applied to trading........I'm very familiar with the works of many great math minds of the past and present. Understanding momentum and how it relates to trading is crucial and you could talk about it literally for years and years.

As traders though all we need to know is how it relates, under what conditions, when to apply it and what is the probability of winning that trade.

I'm keen to see how you apply these teachings to your trading........very interested indeed!

Good trading,

Masterrmind...........
Master your Mind then Master your Trades
  • #37
  • Dec 23, 2014 11:55pm Dec 23, 2014 11:55pm
Hello buddy,

I have a feeling soon you will offer some paid service, correct?

what do you plan to offer?
Don't speculate trade with surety.
  • #38
  • Dec 24, 2014 8:03am Dec 24, 2014 8:03am

Applying Newton's Laws of Motion to Trading

Part IV

===================================================================================================================================
Law 2: Momentum is produced when strong one-sided order flow acts on limited available liquidity. The greater the liquidity of a currency pair, the greater the amount of one-sided order flow needed to create momentum in that currency pair.
===================================================================================================================================

Momentum is very important to me as it can signal a number of different things such as a strengthening trend or an exhaustion in trend. In FX, momentum is basically a measure of speed in price change. A faster price increase/decrease means rising momentum and a slower price increase/decrease means falling momentum.

Now a piece of calculating momentum is missing in Forex due to it's decentralized over the counter nature, and that is volume. You could always use tick volume as research has shown that it fairly accurately follows real volume ~70%. Another option is using volume from the futures market. I generally choose to just ignore volume since I mainly just visually eyeball momentum.

So how do we calculate momentum in Fx? Momentum = volume x (distance/time) or if you don't use volume, momentum = distance (in pips)/time (in secs./mins./hours depending on your frame of time). We can even make this a rate-of-change formula by multiplying by 100, so momentum = (distance/time) x 100.

Like I mentioned above, momentum can be important in determining the strength of a trend.

Attached Image (click to enlarge)
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Of course as time passed by and more orders flow in, the strength of a trend may increase even after exhaustion so always keep up to date in new price developments.

One thing to note is behavior of market participants. Sometimes on the short-term time frames you will see a trend exhausting and then all of a sudden a big increase in momentum. Next, rather than the trend continuing price starts ranging or going the opposite way. You see when the big boys are long and a trend is going their way, once the trend starts exhausting sometimes they like to get a last final push out and squeeze in any dumb money they can. So we see trend exhaustion and then momentum all of a sudden increases, only for price to to turn and fill that last impulsive move. I will try to talk about large market participant behavior at a later date, but just be aware of this phenomena for now.

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So what do you think a moving average and all the indicators based on a moving average represent anyways? Moving averages can be used for a number of things such as showing the average price direction over a period of time, or showing momentum. So rather than using a conventional 20-period MA because you read it's common, figure out your own numbers depending on what exactly you want to measure. The only common MA periods you should use that you read about is 50, 100, and 200 on the 1HR+ time frames because so many participants use them and enter orders based on them that it becomes a self-fulfilling prophecy. And even these should only be used to map out potential order flow, don't enter just because price is at an MA level.

Attached Image (click to enlarge)
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Now I personally don't use MA's or mathematical calculations much to measure momentum. You can literally just eyeball it. But don't forget the importance of time. Many traders see the price on the y-axis and date or time intervals on the x-axis but forget to take into consideration that third dimension of price movement over a period of time to measure strength.

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  • #39
  • Dec 24, 2014 8:05am Dec 24, 2014 8:05am
Quoting KingHussain
Hello buddy, I have a feeling soon you will offer some paid service, correct? what do you plan to offer?
Quoting Masterrmind
{quote} The ASX shares were a bit of a so so affair but far better than bank interest but require a bit of a juggling act at times just to keep the gains reasonable. You still have to keep up with your portfolio shares and make sure they are on track or not but far less work than day trading the FX market...
I gotta run to the store real quick. I will reply back to you guys once I get back.
  • #40
  • Edited 8:51am Dec 24, 2014 8:39am | Edited 8:51am
Quoting FXMasterSK
Now a piece of calculating momentum is missing in Forex due to it's decentralized over the counter nature, and that is volume. You could always use tick volume as research has shown that it fairly accurately follows real volume ~70%. Another option is using volume from the futures market. I generally choose to just ignore volume since I mainly just visually eyeball momentum. So how do we calculate momentum in Fx? Momentum = volume x (distance/time) or if you don't use volume, momentum = distance (in pips)/time (in secs./mins./hours depending on your frame of time). We can even make this a rate-of-change formula by multiplying by 100, so momentum = (distance/time) x 100.
Hi, this is a very nice observation. I have myself been using a similar concept, called Weis waves in my recent trading, which basically measures the total volume over a given wave/Zigzag leg, but also taking into account the pip movement and the time (wavelength) with similar conclusions. More details could be found in the book called "Trades about to happen" by D. Weis.

Great thread,
Cheers,
k

(P. S. I also wanted to pedantically mention that Isaac Newton and his laws have little to do with the quantum physics, he lived two centuries before this.)
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