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  • #721
  • Edited 12:14pm Apr 19, 2015 10:21am | Edited 12:14pm
Quoting traderbola
{quote} Hello Skenobi Thanks for sharing your insides .... One questions always wonders me, who trades during the weekends?
Idiots, maybe?

Quoting traderbola
We always see gap up or down when market opens on Monday.
Gaps happen. I think you should get over it and move on. The solution is simple: If you don't like gaps when Monday opens, don't trade Monday opens.

Quoting traderbola
If institutions trade during the weekend so basically traders do not have weekend off? I'd appreciate your response. TB
Interbank traders in general don't work weekends. I know some Middle Eastern bank traders do come in to work on weekends (because they don't work [much] on Fridays) but I don't think they form a major factor in moving markets at Monday opens.
I'm not trying to convince anyone. I'm not in the "convincing" business.
  • #722
  • Apr 19, 2015 10:22am Apr 19, 2015 10:22am
Quoting Magix
A longer look, but much the same idea. 5 points on the chart, yellow line being the Monthly Open on EURUSD. 1. Support is tested and holds. 2. Support is tested and folds. 3. Once support is lost, it gets tested as resistance. 4. Resistance is now tested and fails. 5. Once resistance fails, it gets tested as support. 1 line, structure of the candle. Supply and demand in a nutshell. {image}

+1
I'm not trying to convince anyone. I'm not in the "convincing" business.
  • #723
  • Apr 19, 2015 10:28am Apr 19, 2015 10:28am
Quoting skenobi
{quote} Idiots, maybe? {quote} Gaps happen. I think you should get over it and move on. The solution is simple: If you don't like gaps when Monday opens, don't trade Monday opens. {quote} Interbank traders in general don't work weekends. I know some Middle Eastern bank traders do come in to work on weekends but I don't think they form a major factor in moving markets at Monday opens.
Thank you Skenobi
But who sets that gaps? I mean if there is no demand or supply during the weekend how that gaps happen? or it happens within seconds when market opens on Monday?
Journey is more important than destination
  • #724
  • Edited 12:11pm Apr 19, 2015 10:39am | Edited 12:11pm
Quoting traderbola
{quote} Thank you Skenobi But who sets that gaps?
The first person in the office who trades the Sydney/Wellington open. And yes, it really is as stupidly simple as that. By the way, who sets the gap is not nearly as important as to whether the gap will actually close again. Failing which, you COULD then ask what happened over the weekend or that morning that would have caused the trader to trade away from Friday's close, but personally I wouldn't bother.

Quoting traderbola
there is no demand or supply during the weekend how that gaps happen? or it happens within seconds when market opens on Monday?
If trades were actually transacted at the gapped prices, then you can't really say there was no demand and supply. When there's a willing buyer and a willing seller (no matter how bone-headed at least ONE of them is), there is demand and supply.
I'm not trying to convince anyone. I'm not in the "convincing" business.
  • #725
  • Apr 19, 2015 10:46am Apr 19, 2015 10:46am
Quoting skenobi
{quote} The first person in the office who trades the Sydney/Wellington open. And yes, it really is as stupidly simple as that. By the way, who sets the gap is not nearly as important as to whether the gap will actually close again. Failing which, you COULD then ask what happened over the weekend or that morning that would have caused the trader to trade away from Friday's close, but personally I wouldn't bother. {quote} If trades were actually transacted at the gapped prices, then you can't really say there was no demand and supply. When there's...
Thank you very much Skenobi. Now I got it
Journey is more important than destination
  • #726
  • Apr 21, 2015 1:08pm Apr 21, 2015 1:08pm
Thanks for the THREAD.. and now .. i know the truth..
And when you have decided, then rely upon Allah.
  • #727
  • May 13, 2015 2:27pm May 13, 2015 2:27pm
I wonder if any of our esteemed Institutional Traders can help me with this quandary:

I am at a complete loss to understand why a system that I have been using effectively and that has worked very well for a few months has now stopped working and is generating losses.

Everything is the same; same strategy, risk management, psychological control, time-frames, times of day, sessions, currency pairs etc.

If a system that has taken months to formulate and then trade successfully suddenly stops working, does that mean that every couple of months I have to go back to the drawing board and come up with yet another system, which then presumably only works for another couple of months, and so on?

If the market (whilst being random in nature) still displays patterns that can be interpreted and traded sensibly to yield a statistically consistent edge, can the efficacy of a system just change? If so, what is the hope of devising a system that can generate consistent returns over a prolonged period (short-term ebbs and flows aside).

My apologies for the negative tone of my question but I am experiencing frustration at an industrial level.

Your valued opinions will be very much appreciated.

Kind regards
Robert
  • #728
  • Edited 3:13pm May 13, 2015 2:53pm | Edited 3:13pm
Quoting RobertBazil
I wonder if any of our esteemed Institutional Traders can help me with this quandary: I am at a complete loss to understand why a system that I have been using effectively and that has worked very well for a few months has now stopped working and is generating losses. Everything is the same; same strategy, risk management, psychological control, time-frames, times of day, sessions, currency pairs etc. If a system that has taken months to formulate and then trade successfully suddenly stops working, does that mean that every couple of months I have...
I'm not an "institutional trader" but I'll toss my view in.
Markets can be trending for several months then go into months of sideways "consolidation" so your strategy might have worked in one particular type of market & now the market conditions have changed. The same problem usually exists for most indicators too. They work well under certain market conditions then are pretty poor when the conditions change. You might need to look @ a long time-frame chart & see if the market condition has changed from when you were trading your "system" successfully. Are you adjusting your TP/SL when the volatility increases? You might be getting stopped out in your trades if volatility has increased since you first started trading your system so may need bigger stops & bigger targets to allow for the increased volatility.
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  • #729
  • May 13, 2015 3:15pm May 13, 2015 3:15pm
Quoting srt
{quote} I'm not an "institutional trader" but I'll toss my view in. Markets can be trending for several months then go into months of sideways "consolidation" so your strategy might have worked in one particular type of market & now the market conditions have changed. The same problem usually exists for most indicators too. They work well under certain market conditions then are pretty poor when the conditions change. You might need to look @ a long time-frame chart & see if the market condition has changed from when you were trading your "system"...
Dear srt

Thank you for your response. Actually, when I say "system", I mean 2 strategies, one for ranging markets and one for trending.

I currently trade 1Hr time-frames because they fit in with my work schedule.

Can I take it from your answer that, as long as a system works in, let's say, a ranging market, it should continue to work in a ranging market. This is the main core of my frustration, in that a system that was working well in a particular market, no longer works in the same type of market.

I was wondering if that is usual and, if so, what does that say about long term consistency?

Kind regards
Robert
  • #730
  • Edited 3:43pm May 13, 2015 3:30pm | Edited 3:43pm
Quoting RobertBazil
{quote} Dear srt Thank you for your response. Actually, when I say "system", I mean 2 strategies, one for ranging markets and one for trending. I currently trade 1Hr time-frames because they fit in with my work schedule. Can I take it from your answer that, as long as a system works in, let's say, a ranging market, it should continue to work in a ranging market. This is the main core of my frustration, in that a system that was working well in a particular market, no longer works in the same type of market. I was wondering if that is usual and,...
Hi Robert,

The same applies to any timeframe. The market will trend for extended periods of time then consolidate for periods of time. It can be difficult to figure out when the market condition changes from trend to consolidation until after a period of time. The chart below is a 1 hour chart zoomed out to show a good length of time. About 75% of the time it was trending & 25% consolidation. One method to watch for the change in conditions is to mark highs/lows to see if it's making HH/HL consistently or if there's no pattern to the highs/lows. Also, try zooming way out on the 1 hour chart so you can see the big picture. The "visual" is probably as good a method as any to see if it's ranging or trending. Looking @ the chart below, it's pretty clear you'd use your trending system now until the "visual" changes. As for the point about always working in a ranging market, hard to know as it would depend upon what indicators/signals you're using. As an example, if the market is ranging in a 100 pip range, your system might work good but if the range drops to 50 pips maybe your system doesn't work good because by the time you get in the market is turning in the opposite direction. Both conditions are a "ranging" market but have different conditions that might require different entries/TP/SL.
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  • #731
  • May 13, 2015 11:46pm May 13, 2015 11:46pm
I think srt's replies pretty much covered all bases.

I'm just gonna add my own tiny contribution here...

Quoting RobertBazil
I wonder if any of our esteemed Institutional Traders can help me with this quandary: I am at a complete loss to understand why a system that I have been using effectively and that has worked very well for a few months has now stopped working and is generating losses. Everything is the same; same strategy, risk management, psychological control, time-frames, times of day, sessions, currency pairs etc.
Back when I coached my junior traders, more often than not the problem is usually in the bolded phrase above.

Quoting RobertBazil
If a system that has taken months to formulate and then trade successfully suddenly stops working, does that mean that every couple of months I have to go back to the drawing board and come up with yet another system, which then presumably only works for another couple of months, and so on? If the market (whilst being random in nature) still displays patterns that can be interpreted and traded sensibly to yield a statistically consistent edge, can the efficacy of a system just change?
If the Edge is logical and patterns can be observed in the wild to prove that the Edge is still viable (even during or after your series of drawdowns), I don't think there's any question of efficacy loss.

The nature of the Beast (i.e. the Markets) is always evolving. No one can change or stop that.

"Edges" however tend to be evergreen. When an Edge appears to break down on you, I think you can do one of only two things:

1. Change your personal circumstances to suit your chosen Edge i.e. either vary your position sizes, vary your R:R policies, screw R:Rs, change TFs, look at other currency pairs, "stay out of the market for a while", re-assess and being realistic about your account growth targets, re-look at your Edge to make sure you were not being lazy with the rules that were working fine earlier, etc etc.

2. Keep searching for an Edge that doesn't force you to change.

Personally, I think Number 1 is waaaay easier to do and less prone to disappoint. But that's just me.

Quoting RobertBazil
If so, what is the hope of devising a system that can generate consistent returns over a prolonged period (short-term ebbs and flows aside).
If you're looking for consistency, you're in the wrong line of work.

Quoting RobertBazil
Actually, when I say "system", I mean 2 strategies, one for ranging markets and one for trending.
Ranging markets switch into trending and vice versa frequently, and annoyingly always when you already have a position based on one kind of market. You're already in trouble right there if you can't adapt to changing conditions.

Quoting RobertBazil
I currently trade 1Hr time-frames because they fit in with my work schedule. Can I take it from your answer that, as long as a system works in, let's say, a ranging market, it should continue to work in a ranging market. This is the main core of my frustration, in that a system that was working well in a particular market, no longer works in the same type of market. I was wondering if that is usual and, if so, what does that say about long[/highlight]...
What's wrong? You're expecting long term consistency from doing the same thing all the time on a market that is always evolving. Nothing wrong with having a TF preference because of job (or other personal) restrictions. But if the market changes, find another market i.e. you can refer to suggestion number 1 above.

Good luck!
I'm not trying to convince anyone. I'm not in the "convincing" business.
  • #732
  • May 14, 2015 12:24am May 14, 2015 12:24am
Thank you to both srt and skenobi for the valuable advice.

I will absorb this and I am sure, benefit from your experience.

Once again, thank you very much for the time to respond to my post in such detail.

Kind regards
Robert
  • #733
  • Jun 8, 2015 6:08pm Jun 8, 2015 6:08pm
Good Evening Skenobi....
I have read this thread from page 1 to end. You are very knowlegeable & thanks for sharing your wisdom & time!
what is your personal opinion of the BBG Terminal & reuters EIKON?? Are either of the two useful to a retail forex trader?
  • #734
  • Jun 8, 2015 7:18pm Jun 8, 2015 7:18pm
Quoting CFTRANZfx
Good Evening Skenobi.... I have read this thread from page 1 to end. You are very knowlegeable & thanks for sharing your wisdom & time! what is your personal opinion of the BBG Terminal & reuters EIKON??
Eikon is much better than the crap 3000 Reuters had earlier. Absolutely love the Bloomberg terminal.

Quoting CFTRANZfx
Are either of the two useful to a retail forex trader?
No.
I'm not trying to convince anyone. I'm not in the "convincing" business.
  • #735
  • Jun 8, 2015 7:20pm Jun 8, 2015 7:20pm
thanks for responding!
  • #736
  • Edited Jun 13, 2015 1:24am Jun 12, 2015 4:03am | Edited Jun 13, 2015 1:24am
[highlight=rgba(255, 255, 255, 0)]first off, thank you to those who have been sharing valuable information with us non-institutional folks.[/highlight]

[highlight=rgba(255, 255, 255, 0)]i'm new here; I especially registered to FF because of this particular thread and I have a couple of questions if you would allow me that pleasure: where does the price feed come from for us retail traders? The interbank market through FIX/FAST Protocols?[/highlight]

[highlight=rgba(255, 255, 255, 0)]from my understanding, you i-bankers transact "off-the-market" with block trades; I can't seem to picture how you tier 1 LP guys are making millisecond ticks when you guys transact over the phone. It would make sense if you consider the matter of algorithms, but even then, who are the the algos trading counterparty to and in which "market"? Another explanation is that there are numerous market makers transacting with clients over the interbank market, in which case I guess I am just looking for a confirmation to the validity of this statement.[/highlight] I guess the idea I am trying to grasp is how the Sales and Trading division work, because from my perspective there seems to be such a disconnect between "live trading", where price can fluctuate between 1-30 pips in between seconds, to flow trading, where phone call price quotes and order taking are still taking place; I mean, by the time a quote has been given, price might have already move several times already.

I am not even sure if this is a relevant question or if I even have a clue as to what the forex market truly is. If that is the case, I apologize for wasting everyone's time. Thanks in advance though!
  • #737
  • Jun 12, 2015 8:48pm Jun 12, 2015 8:48pm
Hi Skenobi,

No questions, but finally read all your posts....all 37 pages of them

I found that you're not big on technical terms and you got me in that mindset now. Seems like it's better to trade what I see and use my own "edge". Technical terms don't matter (triangle, shooting star, hammer, etc./ retail shenanigans), better commit screen time and understand the underlying psychological aspect to what these patterns mean and how to use them to your advantage.
  • #738
  • Jun 13, 2015 6:08am Jun 13, 2015 6:08am
Quoting nubbins
first off, thank you to those who have been sharing valuable information with us non-institutional folks. i'm new here; I especially registered to FF because of this particular thread and I have a couple of questions if you would allow me that pleasure: where does the price feed come from for us retail traders? The interbank market through FIX/FAST Protocols?
http://www.babypips.com/school/kinde...f-brokers.html

Take the above information as it is. It is what it is and I don't think it's too complicated to understand. I can't speak for other institutionals but I accept that there are enough interdealer broker shenanigans even in OUR world that similar hijinks in the retail world should be no skin off my nose. From this point on, please expect no further feedback from me to the question "where does the price feed come from".

Quoting nubbins
from my understanding, you i-bankers transact "off-the-market" with block trades; I can't seem to picture how you tier 1 LP guys are making millisecond ticks when you guys transact over the phone.
Tier-1 operators don't JUST trade over the phone. Anyways, it's a good thing that you "can't seem to picture" it. It just means you don't have to know.

Quoting nubbins
It would make sense if you consider the matter of algorithms, but even then, who are the the algos trading counterparty to and in which "market"? Another explanation is that there are numerous market makers transacting with clients over the interbank market, in which case I guess I am just looking for a confirmation to the validity of this statement.
I've never heard of algo funds causing any meaningful and LASTING movements in spot FX markets. 'Nuff said.

Algo funds (like any other hedge fund) trade with LPs i.e. LPs are service providers, the funds are customers (serviced by the LPs' Sales desks most times).

Quoting nubbins
I guess the idea I am trying to grasp is how the Sales and Trading division work, because from my perspective there seems to be such a disconnect between "live trading", where price can fluctuate between 1-30 pips in between seconds, to flow trading, where phone call price quotes and order taking are still taking place;
I've never heard of trading being differentiated that way before i.e. "live" vs "flow". Speaking only for myself (of course), it has always been just about price.

Quoting nubbins
I mean, by the time a quote has been given, price might have already move several times already.
In a voice broker situation, every time price moves significantly away from what is "market", the market maker will simply shout "OFF MY PRICE", which is a sign to the customer that he has to ask for a requote. This can happen many times within the space of even a minute, as hard as it may be for you to understand.

I'm sure you can imagine similar arrangements where trades are transacted electronically.

In BOTH cases (voice and electronic brokering), "price moving several times" is not really a problem you should worry about i.e. price will go where it wants to go (and you damned well better have an edge to account for that.)

What you SHOULD be worried about is price SPREADS WIDENING, which is a more annoying and dangerous event that occurs in BOTH our worlds.
I'm not trying to convince anyone. I'm not in the "convincing" business.
  • #739
  • Edited 5:19am Jun 15, 2015 4:47am | Edited 5:19am
Yea, to be honest, the reason why I ask seemingly trivial questions is because I feel like "the devil is in the details"; I strongly believe that one's "edge" has to be holistically internalized, as in you have to not only have the rules and strategy, but a deep understanding of the dynamics and details of the market, as well as the philosophy to one's own trading (sorry to sound like such a theory-crafting nub, but this is what my personal beliefs are when it comes to trading).

Having said that, I have yet to fully go through the whole thread, so I suppose I should have done that first before asking that question. At least now I have a clearer picture of how a typical Sales and Trading division works, but I just think that the trade by phone system seems to be a bit outdated unless: 1) you can work out a strategic and profitable trade with a client-partner with whom you have an established relationship (if these things still happen post-LIBOR, FX and whatever scandals that have happened up to this point), 2) there are still that many clients out there that are just that ignorant and outdated (who are most likely ripped off by their own LPs), or 3) fail-safe against the "fat-finger" problem.

Anyway, it is clear to me now that in the spot FX market, no one Tier-1 LP works their trading in a vacuum (albeit with fragmented information pertaining to market direction, given other MM/LP competitors in the same market), be it in their flow-trading operations or in their prop-trading one, and that they actually work in the same market and not on some dark pool (the reason why I differentiated flow-trading from, quote-unquote, "live trading" was because I thought it operated on a dark pool).

I guess the questions I had can perhaps help those who want to get into institutionalized S&T regardless. That is not to say I am inclined to do so myself and that there are superior advantages to trading for an institution, but it wouldn't hurt for me to know those technical details if I ever do find myself in a networking situation where I am at least able to carry out a convo that is on the same wavelength with a institutionalized trader irl. Besides, I don't think you can never know too much.

Before I end this post, a question just occurred to me: can you explain the Black Swan event from a former institutional trader's POV? Is it wrong for me to just assume that it is as simple as all Tier-1 LPs decided to widen the spread for "price-finding" reasons by over 2-4000 pips (or a more likely scenario would've probably been one LP decided to take the first step to list such a ridiculously marked-up price and then had a transaction on it...)?
  • #740
  • Jun 15, 2015 7:45am Jun 15, 2015 7:45am
Quoting nubbins
Yea, to be honest, the reason why I ask seemingly trivial questions is because I feel like "the devil is in the details"; I strongly believe that one's "edge" has to be holistically internalized, as in you have to not only have the rules and strategy, but a deep understanding of the dynamics and details of the market, as well as the philosophy to one's own trading (sorry to sound like such a theory-crafting nub, but this is what my personal beliefs are when it comes to trading). Having said that, I have yet to fully go through the whole thread,...
nubbins, you are absolutely right that if you want to successful trader you must know how the big guys thin and act. From my experience I can tell you that they care only about the bonuses. For a lot of them this is the larger part of the income. If you get this, you will not be surprised by "strange"price moves, stop hunts, etc.
Most of the deals are done electronically. As risk manager, I've done more complex hedging deals via phone. I doubt that soon we can see streaming quotes for TRFs 'with KI barriers for example.
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