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The Really Useless Thread

  • #134,581
  • May 3, 2015 1:46am May 3, 2015 1:46am
Quoting Pharm0r
https://www.youtube.com/watch?v=gofJrNfBSbo
Already relaxed.

D.P.
Hunting High and Low
  • #134,582
  • Edited 7:00pm May 3, 2015 6:46pm | Edited 7:00pm
perhaps there is some support to be had in the euro near 1.1152....ditto in the yen at 119.42...
Look Sharp/Trade Tight
  • #134,583
  • Edited 11:01pm May 3, 2015 10:47pm | Edited 11:01pm
after looking at the chart some more, gonna try some longs in the euro then at 1.1152, aim for 1.1223...

bbl...
Look Sharp/Trade Tight
  • #134,584
  • May 4, 2015 5:07am May 4, 2015 5:07am
USDOLLAR D1:
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Don't be a hero. Don't have an ego. Always question yourself
  • #134,585
  • May 4, 2015 5:41am May 4, 2015 5:41am
Quoting PayTheLimit
after looking at the chart some more, gonna try some longs in the euro then at 1.1152, aim for 1.1223... bbl...
bastards went to 23 first, damn it, cost me 15....
Look Sharp/Trade Tight
  • #134,586
  • Edited 10:19am May 4, 2015 6:19am | Edited 10:19am
Quoting infinitus
{quote} Hi Misspips, great charts and research. I did similar a few weeks ago but not with rates but with QE (which itself is kind of rate decrease). You can read here: http://www.forexfactory.com/showthre...01#post8199001 One can not stress enough: the oftentimes advocated correlation plays do not exist (at least not constantly). When one, as a trader, bet on it, how high is the chance to be right? 50:50? And as our charts show, when rate hikes (-decreases) come, one simply can not say when and if this event will kick in into...
Thank you. As it so happens I read those the first time. That is where I got the idea of posting a graph from, since I noticed that so few people had downloaded them, and I thought that this was important information.

Here's one that shows it even better, and for a longer period. Blue is fed, red is DXY, yellow boxes are periods of serious divergence.

(Sorry Mr Hatch, while I also have some issues with Infinitus - some of his non-trading posts sound like he forgot to put on his tin foil hat and the aliens got to him, especially that last one to you- he knows his stuff when it comes to economics.)
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  • #134,587
  • May 4, 2015 6:30am May 4, 2015 6:30am
Quoting Pharm0r
Wasn't sure if I was going to hold over the weekend, but that close was damn decent, so I kept. {image}
This went to shit by the way after china news
  • #134,588
  • Edited 8:57am May 4, 2015 7:13am | Edited 8:57am
Quoting sisse
{quote} First , 2 thumbs up for that post. Increasing the level of the argument cannot only make these boards better but we all may learn a few things in the process. Second, for the real deal (je je je). This is going to be a long post so I may split it in a couple of them. You argument can be analysed from 2 completely different views: One is the academic/economics point of view and the other from a trading point of view. I am going to just quickly cover the first one because we may get too much in details, bored to dead in the technical parts...
Sigh. I knew I made a mistake when I picked my username, two seconds after I did it. I normally ignore ad hominum, but this is the second time.

As it happens, I have a degree in economics, with honors and from a good school. (My dormmates included the future senior VPs of a large Swiss bank, a large German bank, a large American bank, and a very close relative of the man who became, arguably the world's most famous (or infamous, depending upon your point of view) central banker. A future president attended a few years after me. And those are only the ones from my dorm, and those from my dorm that I know what happened to. This actually was probably the best part of my education, since the milieu that the big boys are from - none of these future bankers started from scratch, they were all from similar families - and the way that they think was quite unfamiliar to me, as I was there on scholarship. Ever since then, I've believed that the notion that people make economic choices rationally is not necessarily true (although people like Dan Arielly and Daniel Kahneman hadn't yet popularized that theory) that the 'big boys' do in fact, think differently from most of the rest of the herd, and that one of the ways that the herd gets suckered is by following conventional wisdom. ) My thesis, insofar as I can recall it (it's been more decades ago than I care to think about) was on the effect of Fed monetary policy on the bond market, and obviously I used econometrics when I wrote it. Now, I'll admit that I only worked for about the first third of my career as an economist and after that I switched to high tech, where I worked in technical communication, UI and UX, and I may be rusty.

But that is why I posted those charts, because as Infinitus correctly points out, the majority of the studies that he posted show that the link between interest rates and foreign exchange rates is tenuous at best, and since I noticed that very few people had downloaded those studies, as a technical communicator I decided to present it in a way that was a bit more entertaining. (As you point out, econometrics can get boring). Even the one study he posted that did find a connection, found it only a the business cycle frequency, which may or may not be useful for traders.

Here's an example of what I've written above, as it relates to the stock market, where conventional wisdom tells us that when interest falls, stocks rise, and vice versa. In the first chart we can see a clear connection between interest rates and the stock market. Interest rates drop from unprecedented highs to unprecedented lows and the market does the exact opposite, if we look at it from a long enough perspective. But if we zoom in, as traders (even very long term traders following the daily charts, we'll see the exact reverse. That is (at least for the last two cycles) it's when the fed rates plateau and start falling that you better get OUT of the market not INTO the market. For entries, a rise in rates has also worked for the last two cycles, although not as well. (Dark red lines are where you'd start thinking about exiting if you were watching the fed, orange lines if you were watching the daily techs. Light blue lines are where you'd enter from watching the daily techs, dark blue from watching the Fed.) This cycle looks quite different, though for reasons that I'll speculate on in a different post, as this one is getting long.

And lastly, all of this doesn't have much to do with how I trade, because I'm a very short term trader. That's why I posted over here ( http://www.forexfactory.com/showthre...99#post8238399 ) that I was going to short 85-95 if it got there before the close, even though I thought the bullish candle bar meant something. I just go by what the charts are telling me, day to day, hour to hour, and minute to minute.

For me, the economic speculation is just for sport and entertainment, and because I am genuinely curious as to what might be the reasons that the Euro rose for the last month, but it isn't going to effect how I trade. If the chart says short, I'm gonna short, and vice versa. I am looking forward to reading your views on that and your post on the trading aspects, as I enjoy hearing your views.
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  • #134,589
  • May 4, 2015 7:29am May 4, 2015 7:29am
Quoting MissPips
... Dashed lines are where you don't get the expected effect. Second chart, same as first except I replaced the graph of the Fed with the DJIA, which is black. Marking for the changes in interest rate cycles is the same. Very interesting idea.
Quoting sisse

2. From a trading point of view

...i will continue later because here is the meat of the discussion and will address some of your points in your charts and answer some of the questions I have received via pm lately about the same...
...
...to continue
...well to wrap up the last post...

2. From a trading point of view

The only and KEY problem with those charts is that you are analysing the correlation in a linear and STATIC correlation.

 

  1. When TRADING (FUNDAMENTALS or MACRO MOVES) we TRADE EXPECTATIONS NOT FACTS. It can be STOCKS or FOREX or anything,
  2. We want to buy/sell the future forecast VALUE buying lower/selling higher. We buy/sell PRESENT value with the EXPECTATION of a Higher/lower FUTURE VALUE.
  3. By the time the ACTUAL FACTS, call it Earnings, valuations, merger, R&D, bankruptcies, interest rates hikes/cuts, defaults, etc etc etc, THE PRESENT VALUE of the underlying is ALREADY NEAR or VERY CLOSE to the INITAL OF FORECASTED FUTURE VALUE a good investor/trader was aiming when he took the initial trade...

Thats why, those charts are wrong/useless for trading because you are ASSUMING that when the ACTUAL policy happen, the markets supposedly need to react to prove the correlation, when almost certainly in most cases THE OPPOSITE would happen because most players already have ridden the meat of the leg !!!!....

The second part which is a bit more complex to analyse applies to RATES:

  1. When you analyse rates policy you need to understand the FLOW in time and inflation/portfolio implications of the policy.
  2. In simple words, you need to mark in your charts how macro players are reacting to the CB comments way before the actual hikes/cuts and how the macroeconomic numbers (employment, and core macro numbers and inflation) are playing out every month/quarter. That is WHEN markets/charts reflect the moves (e.g ECB conference, FOMC, NFP, GDP, etc etc ) NOT WHEN THE actual policy is finally openly announced!!!!.

I used to publish in FF some Fundamental Charts with the European Debt Crisis, if you are interested you can check them up so you can have a glance how you could mark your charts for rates, etc.

To wrapped up and also in STRONG disagreement with Markus (I think he is absolutely WRONG in this particular case), your charts are not useful for trading because you are using after the fact moves to analyse the correlation.

Quoting infinitus
{quote} Hi Misspips, great charts and research. I did similar a few weeks ago but not with rates but with QE (which itself is kind of rate decrease). You can read here: http://www.forexfactory.com/showthre...01#post8199001 One can not stress enough: the oftentimes advocated correlation plays do not exist (at least not constantly). When one, as a trader, bet on it, how high is the chance to be right? 50:50? And as our charts show, when rate hikes (-decreases)
Instead of analysing static correlations after the fact, why don't you try to just mark up (the last couple of years for example) on how markets have/are reacting to the FED or the ECB live on expectations when announcements (fomc, conferences, etc) or hints are MADE and also when macro numbers (especially Inflation) are starting to form a trend in a series of consecutive prints!!!.

You WILL be surprise on how close the correlation is !!! especially when the MAIN factor in play ARE rates in the next few months (it will never be 100% direct because there are other factors in play, like risk, equities, bond markets, commodities correlation, etc).

I know is not an easy task. You really need to track markets properly, be very informed and also be very systematic marking your Fundamental charts but the payoff of having a clear knowledge of the macro DIRECTION it will not only put you thousands of miles ahead of the rest but it will DRAMATICALLY improve your winning % and reduce your drawdowns and risk!!!!....

sisse
Pending conversations? PM for a chat...I am mainly in OTM now
  • #134,590
  • May 4, 2015 7:50am May 4, 2015 7:50am
Quoting MissPips
{quote} Thank you. As it so happens I read those the first time. That is where I got the idea of posting a graph from, since I noticed that so few people had downloaded them, and I thought that this was important information. Here's one that shows it even better, and for a longer period. Blue is fed, red is DXY, yellow boxes are periods of serious divergence. (Sorry Mr Hatch, while I also have some issues with Infinitus - some of his non-trading posts sound like he forgot to put on his tin foil hat and the aliens got to him, especially that last...

Hi MissPips,

thank you for your efforts. Again nice chart. Have saved it for further reference.

What do you think after seeing this all? When I read FF, I still think that people think that it is a given, that price will simply follow the rate differentials. Some say it will at least follow after a while. So what do we make of this? How do we define this time? How much drawdown can people withstand? Are we able to formulate an universal trading advice? I think not.......

Sorry when I have annoyed you with my rant to Hatch. But what do you expect? I had no issues with Hatch for quite a long time (and he even posted some times in my thread). Out of the blue he set me on ignore. OK, that is really not important for me. For each his/her own. But when I responded to your post, Hatch showed up and told the people to remind him to ask Ken to shut me out of this thread. All I thought was: WTF. I mean, when he has issues with me, he should behave like a man and talk to me, and not behave like an Internet Sissy. He can even come to my home and knock on my door. But do not expect me to offer my right cheek when he already hit my left one., or to expect that I am silent.

OK, back to trading for you, back to climbing for me Where is my tin-foil-hat? Shall I wear the big one today, or more the small one?
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  • #134,591
  • May 4, 2015 8:00am May 4, 2015 8:00am
Quoting MissPips
{quote} Sigh. I knew I made a mistake when I picked my username, two seconds after I did it. I normally ignore ad hominum, but this is the second time. As it happens, I have a degree in economics, with honors and from a good school. (My dormmates included the future senior VPS of a large Swiss bank, a large German bank, a large American bank, and a very close relative of the man who became, arguably the world's most famous (or infamous, depending upon your point of view) central banker. A future president attended a few years after me. And those...

really great response

I also have issues with Sisse's response to you. I will outline it later........
  • #134,592
  • May 4, 2015 8:01am May 4, 2015 8:01am
Quoting MissPips
{quote} Sigh. I knew I made a mistake when I picked my username, two seconds after I did it. I normally ignore ad hominum, but this is the second time.
I posted the last one without reading your last post....

.... je je je ... you are not the only one... but after so long in these boards I really don't pay much attention to the usernames ...in a couple of post we almost have a decent degree of certainty of who is who and how they trade and become easier to filter the Bs from the rest....

Quote
As it happens, I have a degree in economics, with honors and from a good school. ( I just go by what the charts are telling me, day to day, hour to hour, and minute to minute.

Good, i mentioned that because the majority of posters around don't necessarily have an economics degree so too much mumbo jumbo economics technical talking make some v good traders run away before they get to the point ....

Quote
For me, the economic speculation is just for sport and entertainment,

For me is the opposite, is my bread and butter. I love talking markets and on top it serves me when trading ...

Quote
and because I am genuinely curious as to what might be the reasons that the Euro rose for the last month

FED killed rates in June on the FOMC in MARCH, US numbers collapsed in the last 6 to 8 weeks and european numbers have steadily improve (especially deflation started to clear out of the way). In simple words, take profits, positions higher to ride the pig later....

Quote
but it isn't going to effect how I trade. If the chart says short, I'm gonna short, and vice versa.

In my case it is going to ..... Not that i don't use charts or technical reason to place trades, but if I am blindfolded in macro direction, I lose the core of my trading edge, my w% goes down, my drawdowns increase and the usual inner demons start to appear more often than not (overtrading, machine gun approach, jumping from market to market looking for "charts" opp, etc ,etc). Basically without that I become a very average trader ...and as you know, most of the average traders don't survive for long in the markets ...

In any case, nice to meet you and sure keep it open for a healthy discussion. Technical or Fundamental, I am always up for a good challenge ...

sisse
Pending conversations? PM for a chat...I am mainly in OTM now
  • #134,593
  • May 4, 2015 8:12am May 4, 2015 8:12am
Quoting sisse
{quote}{quote} ...well to wrap up the last post... 2. From a trading point of view The only and KEY problem with those charts is that you are analysing the correlation in a linear and STATIC correlation. When TRADING (FUNDAMENTALS or MACRO MOVES) we TRADE EXPECTATIONS NOT FACTS. It can be STOCKS or FOREX or anything, We want to buy/sell the future forecast VALUE buying lower/selling higher. We buy/sell PRESENT value with the EXPECTATION of a Higher/lower FUTURE VALUE. By the time the ACTUAL FACTS, call it Earnings, valuations, merger, R&D, bankruptcies,...
Very valuable information sir. However, It's clearly proven that many of us just wanna take the easy ride mainly because we don't believe in our inner self strength that we can do it. It's probably easier to assume that "what the heck" I'm not an economist, I just wanna collect some pips here and there and call it the day.
And before anyone get mad at me, I might be describing myself more than anyone else.
By the way, I'm tracking your posts on FF and collecting all of the ones that don't have a special event as the subject. If you're ok with it, I might attach it as PDF some time once it's done.
Best, Andrew
  • #134,594
  • May 4, 2015 9:16am May 4, 2015 9:16am
Quoting MissPips
{quote} I am genuinely curious as to what might be the reasons that the Euro rose for the last month
One reason may be that most of the small traders were short on Euro. In EUR/USD, while there clearly exists a general macro direction, big movements do correlate inversely with the small traders' sentiment. Actually, what often happens is the irrational response whereby majority of small traders try to "catch the falling knife", or increasingly align themselves opposite of the strong move, which just increases its momentum. It may be the case in other instruments as well, but the sampling of the small traders' sentiment may be far from sufficient at the usual places where one can check (FF, Myfxbook, Oanda).

The move down is IMHO unlikely to happen until there will be more than ~50% of small traders being long. So I am still long E/U, with stop orders (to add to winners and cut the losers short) in place.

k
  • #134,595
  • May 4, 2015 9:38am May 4, 2015 9:38am
So you think institutions check FF, myfxbook, Oanda, etc to see where retail is so they can fuck them?
  • #134,596
  • May 4, 2015 10:08am May 4, 2015 10:08am
Quoting Pharm0r
So you think institutions check FF, myfxbook, Oanda, etc to see where retail is so they can fuck them?
Large banks in principle have access to their clients' positions and orders. I suspect that large movements could be attributed to several institutions acting in sync. It could also be that retail brokers sell this as aggregated/anonymized info. Whatever the actual model is (that one could use to establish the causal link), I doubt that for highly traded instruments order books strongly differ from what you can see at, say, Oanda.

k
  • #134,597
  • May 4, 2015 11:10am May 4, 2015 11:10am
Quoting kprsa
{quote} One reason may be that most of the small traders were short on Euro. In EUR/USD, while there clearly exists a general macro direction, big movements do correlate inversely with the small traders' sentiment. Actually, what often happens is the irrational response whereby majority of small traders try to "catch the falling knife", or increasingly align themselves opposite of the strong move, which just increases its momentum. It may be the case in other instruments as well, but the sampling of the small traders' sentiment may be far from sufficient...
hi kprsa,
while I respect your opinion of being a contrarian to small traders, it can never ever be the dominating reason for taking/holding a position.
Just staying/going long because 50% of small traders are not, seems a too simple tactic I certainly wouldn't take.
Don't be a hero. Don't have an ego. Always question yourself
  • #134,598
  • May 4, 2015 11:21am May 4, 2015 11:21am
Quoting sisse
{quote}{quote} ...well to wrap up the last post... 2. From a trading point of view The only and KEY problem with those charts is that you are analysing the correlation in a linear and STATIC correlation. When TRADING (FUNDAMENTALS or MACRO MOVES) we TRADE EXPECTATIONS NOT FACTS. It can be STOCKS or FOREX or anything, We want to buy/sell the future forecast VALUE buying lower/selling higher. We buy/sell PRESENT value with the EXPECTATION of a Higher/lower FUTURE VALUE. By the time the ACTUAL FACTS, call it Earnings, valuations, merger, R&D, bankruptcies,...
Nice analysis. It is true, I am actually gaining more now that I make futuristic projections based on current fundamentals or anticipated fundamentals news events. It actually helps my trade and earnings.
  • #134,599
  • May 4, 2015 11:29am May 4, 2015 11:29am
Quoting USD-Bear
{quote} hi kprsa, while I respect your opinion of being a contrarian to small traders, it can never ever be the dominating reason for taking/holding a position. Just staying/going long because 50% of small traders are not, seems a too simple tactic I certainly wouldn't take.
Hi USD-Bear,
I agree that it is simple, and might not be sufficient for a full blown long-term strategy. It certainly doesn't work all the time, for example when central banks get involved. But it can be used as a filter, and on EURUSD it works quite well.
Check this out:
k

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  • #134,600
  • May 4, 2015 12:01pm May 4, 2015 12:01pm
Quoting kprsa
{quote} Hi USD-Bear, I agree that it is simple, and might not be sufficient for a full blown long-term strategy. It certainly doesn't work all the time, for example when central banks get involved. But it can be used as a filter, and on EURUSD it works quite well. Check this out: k {image}
This is a very interesting chart. Thanks for sharing!
Just wonder the source of the data, net position of the entire market?
The correlation here might imply causality, but the question is which factor is the lead? Can it be that the price starts to go down as all the buyers who want to buy already bought? The absence of the buyer leads to the drop of price? Or some kind of big boys conspiracy?
Well, authorities are indeed investigating FX market manipulation among big banks anyway.
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