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Using WM/Reuters Benchmark Rates in trading

  • #41
  • Feb 11, 2015 3:55pm Feb 11, 2015 3:55pm
Quoting GreatNorth
Now that we have the monthly charts I will provide examples of how to continue drawing fibonacci levels within these levels to see how the price behaves and will use EURGBP as an example. See how the price behaves around the fibonacci levels? You can go as far as 1minute to see how it behaves if you want more proof of how professional traders trade. {image} {image} {image}
again...


Can I see the whole chart from the beginning cause I get different levels? Can you just show the first original fib level on EURGBP from where you draw inner fibs?
  • #42
  • Feb 11, 2015 3:59pm Feb 11, 2015 3:59pm
Quoting Stu Effex
{quote} HI GN Not being an ass here but if I use the benchmark rate as you have and select different swing points for the 100% level, I could circle lots of other swing points which coincide with the fib levels on the left of the chart. In order to give some merit to your prior posts perhaps it would be prudent to suggest where the next swing point is likely to be on the right hand side of the chart. Why did you select 138.750 as your 100% level ? Do you anticipate next swing point to be 137.831 ? No offence intended but I can move fibs all around...

Oh I see how you could be confused. This is for EUR/JPY.

1. So on December 31, 1998 the official WM/Reuter Benchmark was 132.455. That was the Start.
2. The next swing high on the EUR/JPY Chart was in early 2000 at 89.341
3. the 138.75 that you are referring to is a FIB level from these numbers (It is the 14.6% circled in GREEN on the chart)
4. I used the 138.75 and 132.455 fib from there that you are referring to.

I hope this makes it clearer. Below is the MONTHLY Chart.
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  • #43
  • Feb 11, 2015 4:09pm Feb 11, 2015 4:09pm
Quoting airmac
{quote} again... Can I see the whole chart from the beginning cause I get different levels? Can you just show the first original fib level on EURGBP from where you draw inner fibs?
For EURGBP

The WM/R rates started in June 1989 and sadly my chart does not go that far back, but here is the Monthly.
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  • #44
  • Feb 11, 2015 4:18pm Feb 11, 2015 4:18pm
Ok. So you can show bounces at certain fib levels. Let's say this is completely accurate. How can you trade this though? It passes through fib levels, bounces off them, reverses, etc... I can't see a discernible pattern for trading though. What's the pattern you're suggesting?
  • #45
  • Feb 11, 2015 4:23pm Feb 11, 2015 4:23pm
Quoting GreatNorth
{quote} Oh I see how you could be confused. This is for EUR/JPY. 1. So on December 31, 1998 the official WM/Reuter Benchmark was 132.455. That was the Start. 2. The next swing high on the EUR/JPY Chart was in early 2000 at 89.341 3. the 138.75 that you are referring to is a FIB level from these numbers (It is the 14.6% circled in GREEN on the chart) 4. I used the 138.75 and 132.455 fib from there that you are referring to. I hope this makes it clearer. Below is the MONTHLY Chart. {image}
Yes Thanks GN it is now clear how you have established 138.750 as 100% level. However it would be nice if you could confirm what you anticipate next on the right side of the chart 61.8 has just cleared but then again if it were to turn here for example would it be fine to circle it at some point in the future as though it reacted to the 61.8 ? If you are satisfied the 61.8 has passed are you now anticipating a swing at 137.831 ? As you are attesting to the professional efficacy of this level it would be nice for you to commit before the level is here rather than discuss or circle at some later point in time.
Once You See, You Can't Unsee But You Will Get The Odd Poke In The Eye
  • #46
  • Feb 11, 2015 4:24pm Feb 11, 2015 4:24pm
Quoting GreatNorth
{quote} Oh I see how you could be confused. This is for EUR/JPY. 1. So on December 31, 1998 the official WM/Reuter Benchmark was 132.455. That was the Start. 2. The next swing high on the EUR/JPY Chart was in early 2000 at 89.341 3. the 138.75 that you are referring to is a FIB level from these numbers (It is the 14.6% circled in GREEN on the chart) 4. I used the 138.75 and 132.455 fib from there that you are referring to. I hope this makes it clearer. Below is the MONTHLY Chart. {image}
Thanks this makes it much clearer. Could you show a similar picture for EUR/USD please ? I cant find any major high at 1.348 on my monthly eurusd chart. Which broker do you use for charting ?
  • #47
  • Feb 11, 2015 4:25pm Feb 11, 2015 4:25pm
Quoting chsortman
Ok. So you can show bounces at certain fib levels. Let's say this is completely accurate. How can you trade this though? It passes through fib levels, bounces off them, reverses, etc... I can't see a discernible pattern for trading though. What's the pattern you're suggesting?
Well, if one didn't have these FIB levels before they were trading blind. Now there is a roadmap. Having a Map is helpful.

As I have said many times, the price usually bounces at 85.4/14.6 and 61.8/38.2

Here is my 1 Minute Chart for the EUR/USD that is just happening. You can see how 85.4% is acting as resistance. And how on my earlier EURUSD chart it bounced from 1.12799
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  • #48
  • Feb 11, 2015 4:43pm Feb 11, 2015 4:43pm
hi, curious match today again

http://www.rba.gov.au/speeches/2015/...015-02-12.html
The only constant is change
  • #49
  • Feb 11, 2015 5:02pm Feb 11, 2015 5:02pm
GreatNorth, I was interested to read your assertion in Post #1 that there is no 50% Fibonacci level. Yet the Wikipedia page you reference states that "The 0.500 ratio is derived from dividing the number 1 (second number in the sequence) by the number 2 (third number in the sequence)". Nevertheless, I have taken your advice not to include the 50% level when drawing the Fib lines between the WM/Reuters Rates.

However, I attach the same EURGBP H1 chart that you presented in Post #2 but with the 50% level added as a red line. It is interesting to see how price paused at this level on several occasions. I also attach an M15 chart of GBPUSD for today (Feb 11, 15) that shows price reacting to two in-between 50% levels.

A mere two examples do not prove anything but perhaps do suggest that there may be value in exploring the use of the 50% level when drawing the fibs within fibs.
BTW, I have gone over your posts carefully and am confident that I have drawn the levels correctly but do please tell me if I am wrong.

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TheLazyForexTrader
  • #50
  • Feb 11, 2015 5:19pm Feb 11, 2015 5:19pm
Quoting srt
{quote} As STU asked, can anyone predict which line is going to hold & which is not? The monthly chart of EJ you posted had 14 lines on it with your circles showing where the fibs "appeared" to act as S/R. I took the same chart & just marked off every 2nd line from the "grid" then removed the grid. Notice how many times the "grid" lines appeared to act as S/R and I had just 8 lines compared to your 14. If it works for you then use it but I don't see any more advantage than just evenly spaced lines on a chart or just mark off all the "obvious" S/R...
The only difference is that your lines are random, mine are not.

Thanks for reading my thread though! Have a great day :-)
  • #51
  • Feb 11, 2015 5:42pm Feb 11, 2015 5:42pm
Quoting invicta
GreatNorth, I was interested to read your assertion in Post #1 that there is no 50% Fibonacci level. Yet the Wikipedia page you reference states that "The 0.500 ratio is derived from dividing the number 1 (second number in the sequence) by the number 2 (third number in the sequence)". Nevertheless, I have taken your advice not to include the 50% level when drawing the Fib lines between the WM/Reuters Rates. However, I attach the same EURGBP H1 chart that you presented in Post #2 but with the 50% level added as a red line. It is interesting to see...
It is true that it says that, but the 50% uses a different mathematical formula then the one that is used for the other ratios. Because it uses a different formula, it is not a true fibonacci ratio. It is a derivative. It would skew the charts in a way that would make the ratios with the ratios off because you would be introducing a different mathematical level. Also, it hasn't really been as effective on my charts.

I've provided the EURGBP chart with fib within the major fibs so you can see that it's actually the 61.8/38.2 ratios that work better than the 50%

I also believe your GBPUSD chart is drawn incorrectly, Ive included a monthly chart so you can see if your levels match.
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  • #52
  • Feb 11, 2015 5:44pm Feb 11, 2015 5:44pm
Quoting Stu Effex
{quote} Yes Thanks GN it is now clear how you have established 138.750 as 100% level. However it would be nice if you could confirm what you anticipate next on the right side of the chart 61.8 has just cleared but then again if it were to turn here for example would it be fine to circle it at some point in the future as though it reacted to the 61.8 ? If you are satisfied the 61.8 has passed are you now anticipating a swing at 137.831 ? As you are attesting to the professional efficacy of this level it would be nice for you to commit before the...
Hi GN would be nice if you could reply to this earlier post. It is very helpful I agree to look at the past for clues to the future but without you stating what you anticipate next I feel that SRT's random levels have just as much credence as your pre-determined fib levels. Due to the current 4hr drop on E/J I have now been able to place a fib which matches this current bounce, would have been nice to know it in advance though rather than after the fact. Are you looking to short 137.831 in the similar fashion to how "Professional Traders Trade" ?

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Once You See, You Can't Unsee But You Will Get The Odd Poke In The Eye
  • #53
  • Feb 11, 2015 5:50pm Feb 11, 2015 5:50pm
I'm sure I'm stupid, but I downloaded the excel reuters exchange template and I can't for the life of me figure out where these benchmark prices are represented? What does ER, EO, EB stand for?

I did open it with numbers... so maybe that's screwing it up?
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  • #54
  • Feb 11, 2015 5:53pm Feb 11, 2015 5:53pm
Quoting Stu Effex
{quote} Hi GN would be nice if you could reply to this earlier post. It is very helpful I agree to look at the past for clues to the future but without you stating what you anticipate next I feel that SRT's random levels have just as much credence as your pre-determined fib levels. Due to the current 4hr drop on E/J I have now been able to place a fib which matches this current bounce, would have been nice to know it in advance though rather than after the fact. Are you looking to short 137.831 in the similar fashion to how "Professional Traders...

I wouldn't draw the Fibs the way you have, I've included how I would draw them.

You can see how the 61.8 level at 136.345 has rejected the price on the daily--as it has done before as per the chart.
I don't trade the EURJPY, but a rejection at this 61.8 would be a good place to short. However if it does get to 137.831 I would really consider shorting. With proper MM of course.

As I have said before, price reacts strong at 68.1 and 38.2. So Yes, there is credence in these pre-determined fib levels. These levels are from a decade ago.

I hope this helps. You can see on the chart how the price is rejected at the levels I have pointed out. These levels were there since 2000.

I'm happy to answer your questions if you need more clarification.
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  • #55
  • Feb 11, 2015 6:00pm Feb 11, 2015 6:00pm
finally some truth. nice thread, thank u GreatNorth.

F.
To break the rules you must first master them.
  • #56
  • Feb 11, 2015 6:10pm Feb 11, 2015 6:10pm
Quoting chsortman
I'm sure I'm stupid, but I downloaded the excel reuters exchange template and I can't for the life of me figure out where these benchmark prices are represented? What does ER, EO, EB stand for? I did open it with numbers... so maybe that's screwing it up? {image}
There is a tab on that spreadsheet labelled "WM Reuters Spots." Those are the START dates of when the benchmark started. For the actual Benchmarks you have to pay hundreds of dollars for Thomson Reuters. None of us can afford that.


Most Universities have the Thomson Reuters Datastream database and you can access it if you are a student. I had a friend get them for me.

These are the same Benchmarks that made worldwide headines last year because they were being manipulated. These Benchmarks are VERY VERY important otherwise why would they be on the news for manipulation. Banks paid 1.7 Billion dollars in fines and criminal charges were laid. Why would do they go to all that trouble? Makes you wonder what is really going on.

This is from Wikipedia (http://en.wikipedia.org/wiki/Forex_scandal)

" Market regulators in Asia, Switzerland, the United Kingdom, and the United States began to investigate the $5.3 trillion-a-day foreign-exchange market after Bloomberg News reported in June 2013 that currency dealers said they had been front-running client orders and rigging the foreign exchange benchmark WM/Reuters rates by colluding with counterparts and pushing through trades before and during the 60-second windows when the benchmark rates are set. The behavior occurred daily in the spot foreign-exchange market and went on for at least a decade according to currency traders."
  • #57
  • Feb 11, 2015 6:13pm Feb 11, 2015 6:13pm
just so you know "WM/Reuters Benchmark Rates" is just one benchmark. Agreed it is the most common one since most corporations give WMR benchmark orders to banks. This is the benchmark which banks are accused of manipulating as well.

Also other common one is BFIX (Bloomberg fix). I have access to both and more benchmarks that are commonly used.

you can get some of the fixings at http://www.bloomberg.com/markets/currencies/fx-fixings/. both these have 30 mins and hourly fixes btw (depending on the currency pair).

And your theory that FIB level on benchmarks is how professional trades is not correct at all.. just saying because i would know :-)
Think : Trade : Live Life
  • #58
  • Feb 11, 2015 6:17pm Feb 11, 2015 6:17pm
Quoting GreatNorth
{quote} I wouldn't draw the Fibs the way you have, I've included how I would draw them. You can see how the 61.8 level at 136.345 has rejected the price on the daily--as it has done before as per the chart. I don't trade the EURJPY, but a rejection at this 61.8 would be a good place to short. However if it does get to 137.831 I would really consider shorting. With proper MM of course. As I have said before, price reacts strong at 68.1 and 38.2. So Yes, there is credence in these pre-determined fib levels. These levels are from a decade ago. I hope...
Thanks GN for replying at least you have now stated you would attempt the short in line with what you see. Do have an issue however with using the 4hr chart then saying it has rejected on the daily. It went beyond your 61.8 by 30+pips and of course again it is easy to see now that has happened. Incidentally I make an income from trading currencies, maybe your way is not how all professional traders trade ? This simple line Aug Close/Sep Open could also be how professional traders trade ?

Attached Image (click to enlarge)
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Once You See, You Can't Unsee But You Will Get The Odd Poke In The Eye
  • #59
  • Feb 11, 2015 6:18pm Feb 11, 2015 6:18pm
So are you just pointing out with that document that the inception of the benchmark rates was a fixed point in time?

You base the fib levels off current benchmark rates though?

How often do they release the benchmarks?
  • #60
  • Feb 11, 2015 6:24pm Feb 11, 2015 6:24pm
Quoting chsortman
So are you just pointing out with that document that the inception of the benchmark rates was a fixed point in time? You base the fib levels off current benchmark rates though? How often do they release the benchmarks?
This should explain a bit mate.

http://www.bloomberg.com/news/articl...it-off-clients
Once You See, You Can't Unsee But You Will Get The Odd Poke In The Eye
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