Guys, I will try to reply to other posts in this thread tomorrow or on Saturday, and will also talk a bit about recent market behaviour examples where a trader with relevant market knowledge could have extracted very nice profits with limited risk.
Just a bit of advice, for anyone, for free
- #103
- Edited 6:58pm Oct 1, 2015 5:59pm | Edited 6:58pm
- | Commercial User | Joined Apr 2013 | 4,366 Posts
hi wp3vv, as promised, just wanted to correct some of the things you spoke about {quote} What do you mean by swap-auction market? Not quite sure what that term stands for. Spread / commission business in FX is not that lucrative for banks anymore, because first, liquidity is bad in general (which impairs the ability of market maker to recycle risk quickly and earn the spread), and the reason why liquidity is bad is are post GFC regulations (Basel III in Europe, Volcker, Dodd-Franck etc.) which are putting rules on capital / reserves adequacy / requirements....
Thanks for giving us the current lay of the land. That post would have required some deep thought and I really appreciate it. It pays to have a forward observer in this market. Thanks for the guidance. :-)
- #104
- Oct 2, 2015 1:59am Oct 2, 2015 1:59am
- Joined Dec 2010 | Status: Foook Bollinger-dr.Kegel knows! | 9,794 Posts
- #108
- Oct 2, 2015 5:03am Oct 2, 2015 5:03am
- | Commercial User | Joined Apr 2013 | 4,366 Posts
Rules and regulations have a limited impact on what bank makes the most of their profit - swaps. .
I can understand that it would be quite easy for a genuine difference of nuanced opinion in this complex and massive marketplace. I really look forward to more of these sneak insights from both of you into the mysterious land of institutional finance.
FF is a great place and it would be fantastic to get more contribution in here from the pro's as we all need a good dose of reality from time to time.
Katrooo, good to hear you're doing well bud. If you want to start setting records straight around here, you'll need patience of a latter day saint but I salute you giving it a go.
I was really hoping that I will never have to reply to your post again. That's why I tried to be really nice when replying to your 1st post and explaining why it was 90% crap in a non-offensive way. What a waste of time that was. Now I will waste my time once again (and the last time on you) just because I see many traders reading your posts and believing them (oh, what a mistake guys). You are a PERFECT combination of points 9 and 11 which are on my list in the first post on this thread. What is even worse is that you actually believe what you are saying which makes it even more dangerous, as you confidently write things as if they were facts, while there is such a massive ammount of BS and wrong information I've not seen in a while. As someone wise once said, arrogance and stupidity is a deadly combination.
I will not respond to another posts by you, and there is a good chance I will get them deleted from this thread if you try posting again. Why? I will reply to everything you said below, but for those lazy to read it all here is a short summary:
1. You are spreading a lot of false information, wishy washy conspiracy theories, with 0 facts and no background to support any of your claims
2. You do not even understand the instruments you are talking about
3. I do not intend to waste any more time to replying to your posts and fixing the damage you cause to others' perception of the market's structure
4. It is my thread, I am not selling anything, I don't need to prove anything to anyone, so it is my decision and I will let others to make up their own mind
How do I know that 90% of your claims are false? It is simple. I do not only trade FX for almost 10 years, but I have been doing it on a high end institutional level for last 4-5 years. First 2 years as a market maker / proprietary trader (FX spot and FX options) at a bank and last 2-3 years as a portfolio manager / trader co-running a hedge fund strategy which is several billions USD of AUM. That is in London, which is the center of the FX market, trading big tickets 10+ hours a day for several years. I personally know and hang out with 30+ sell-side (bank) FX traders from most top tier banks on the street (GS, Citi, DM, JPM etc.). So tell me, how is it possible that I do not even understand / can't "translate" what you are saying in at least 50% of the things you mentioned? Am I such a slow learner, or are the things you are talking about a complete BS? From what you said so far I can say with 100% confidence that you have never seen an institutional trading floor in your life, not even from distance. And if you did it must have been 20 years ago, otherwise I have no idea where you came up with such a big ammount of wrong / not-possible-to-understand statements.
Ok, so let's start one by one:
Banks make the most profits on swaps. That's Ridiculous. First of all, what swaps exactly are you talking about here? Are you talking about interest swaps or FX swaps? FX swap is just 2 FX forward trades, you buy one forward and you sell the other one, just with different maturities (they will have different price depending on the forward points curve), so effectively there is no impact on the spot price. That means that it is an easy profit for the bank as the market maker earns the b/o spread on both FX forwards, has no directional spot exposure, and only has an exposure to moves on the forward curve which he has to hedge out on STIR / money market. Is it a profitable business for the bank? Yes. Is it the most profitable business? Hell NO! Just to give you an idea, I have traded hundreds of billions USD of FX swaps since I moved into buy-side, as I do it every time I am rolling my FX forwards positions.
What are you talking about ...? What auction process, what public forum / can't comment crap are you coming up with? Things you say make no sense. There is NO auction for any FX swaps, neither interest rate swaps. Both are OTC products, "made to measure" and not traded on exchanges.
What is your "source" of information? Judging from your posts, it must be some very exotic source my friend. My source of information is real experience from the environment you are trying to teach me about. Where did I say that spread = commission? What does "capital trade" stands for in your world? Sorry I am confused.
Who has said that retail type of trading has been the bread and butter for banks? I was talking about proprietary trading / in-house hedge funds, which used to be one of the main profit generators for some investment banks. Proprietary traders at banks would rarely trade the same way as retail traders do (i.e. trading small intraday moves) but that's something I already explained before. Talking about HFT, again you have no idea what you are talking about - What do you think all these electronic trading platforms they operate do? Every single top tier investment bank has own electronic platforms for most asset classes (Citi Velocity, BARX, and others) and the way these work is on a HFT principle. You even have eTrading desks with eTraders (who have strong quant skills) who are in charge of all the algorithms. And yes, market making = providing liquidity in general.
"they make market for spot retail industry", well yes they do, which is probably around 5% of their market making activity. But they also make market for my 50 bucks tickets when I trade around
The same way they make market to other market participants, whether it is a corporate, real money, a hedge fund, or somebody else either in FX, or in any other asset class. Liquidity can be challenging, but without banks making markets (as you are suggesting) there would be 0 liquidity and therefore no markets. "No prop on banks" *** please, are you going to teach me about something you have no idea about? What have I been doing when I was a bank trader? A lot of prop trading. What are my 30 friends from top tier IBs doing for living? A lot of prop trading. Full stop. "Trading desks are for swaps my friend" First of all we are not friends, second of all, what do you have with all these "swaps"? If we take an average investment bank as an example, all the FX swaps would be traded by FX forwards trading team which would be maybe 5-8 traders for G10 (EMFX guys normally trade spot And forwards, as it is not separated as in G10). This average bank has maybe 200-300+ traders across asset classes. If all the big money made by banks is in your magic "swaps" why only such a low percentage of traders is doing swaps then? You would have couple of more guys doing interest rate derivatives where you also have interest rate swaps - but don't think you understand those much.
Oh oh oh, I am really getting tired and will skip this BS. What "retail trading room" are you talking about? .... I was talking about dedicated prop trading desks / in-house hedge fund every single investment bank had before GFC in 08. And no, I am not talking about hedge funds, but about banks.
Blah blah blah, seriously I am struggling here a lot. Good luck with your squawk box, must be very "useful". These sounds like so much conspiracy theories that I can't take anymore. You should buy a ton of bricks, that's a real asset by your definition.
"FX forwards and FX options belong to futures market". This is getting more and more interesting. You should seriously consider some "Finance for Dummies" class on Investopedia. FX forwards and FX options have nothing to do with futures market! FX forwards, swaps, spot, options = all 100% OTC markets, full stop.
No, I am talking about banks. Again, you are trying to teach me about something I live every single day. That is ridiculous seriously. What is really funny is that I 100% know you are totally wrong, and still you write things with such a confidence that it is even scary .... And don't forget what I already explained to you. There is nothing like "bank is going to dump big cash", bank's FX positions are managed by the FX trading team which is comprised of human traders. There is also Asset & Liability management (ALM) / Treasury department which would also manage bank's positions, but that's mostly related to interest rate risk of the banking book as a whole, and mostly relevant for banks with big retail banking footprint.
You absolutely "killed" me with this one. The only thing which comes to my mind is Mark Twain: "Never argue with stupid people, they will drag you down to their level and then beat you with experience."
So you are some kind of an "old school" retail trader who used to trade marks over the phone. Congratulations. This reminds me of an example where you have a guy who used to be into computers 20 years ago, doing some experiments at home, who comes to current Apple engineer and tries to teach him about the business, computers and how the world works ....
I was giving real FACTS in every single post I've made. You are talking in a wishy washy conspiracy theorist way, I've seen 0 facts from you, and nothing about where you get that your ridiculous information from.
That's absolutely ridiculous, I would have never said that. If you claim something like that at least provide a reference. And this "Possibly in futures on stocks, not in forex" just proves how incompetent you are. Try to move stock futures by trading 1 lot, if you do it I might buy you a new house ....
Finally this is over. Thanks for stopping by, please never come back around. Bye.
I will not respond to another posts by you, and there is a good chance I will get them deleted from this thread if you try posting again. Why? I will reply to everything you said below, but for those lazy to read it all here is a short summary:
1. You are spreading a lot of false information, wishy washy conspiracy theories, with 0 facts and no background to support any of your claims
2. You do not even understand the instruments you are talking about
3. I do not intend to waste any more time to replying to your posts and fixing the damage you cause to others' perception of the market's structure
4. It is my thread, I am not selling anything, I don't need to prove anything to anyone, so it is my decision and I will let others to make up their own mind
How do I know that 90% of your claims are false? It is simple. I do not only trade FX for almost 10 years, but I have been doing it on a high end institutional level for last 4-5 years. First 2 years as a market maker / proprietary trader (FX spot and FX options) at a bank and last 2-3 years as a portfolio manager / trader co-running a hedge fund strategy which is several billions USD of AUM. That is in London, which is the center of the FX market, trading big tickets 10+ hours a day for several years. I personally know and hang out with 30+ sell-side (bank) FX traders from most top tier banks on the street (GS, Citi, DM, JPM etc.). So tell me, how is it possible that I do not even understand / can't "translate" what you are saying in at least 50% of the things you mentioned? Am I such a slow learner, or are the things you are talking about a complete BS? From what you said so far I can say with 100% confidence that you have never seen an institutional trading floor in your life, not even from distance. And if you did it must have been 20 years ago, otherwise I have no idea where you came up with such a big ammount of wrong / not-possible-to-understand statements.
Ok, so let's start one by one:
Rules and regulations have a limited impact on what bank makes the most of their profit - swaps. Still non-regulated.
Banks make the most profits on swaps. That's Ridiculous. First of all, what swaps exactly are you talking about here? Are you talking about interest swaps or FX swaps? FX swap is just 2 FX forward trades, you buy one forward and you sell the other one, just with different maturities (they will have different price depending on the forward points curve), so effectively there is no impact on the spot price. That means that it is an easy profit for the bank as the market maker earns the b/o spread on both FX forwards, has no directional spot exposure, and only has an exposure to moves on the forward curve which he has to hedge out on STIR / money market. Is it a profitable business for the bank? Yes. Is it the most profitable business? Hell NO! Just to give you an idea, I have traded hundreds of billions USD of FX swaps since I moved into buy-side, as I do it every time I am rolling my FX forwards positions.
As for the auction process, unfortunately that's a line I can't comment as this is a pubic forum. I apologize to disagree but swaps are the most lucrative business they have, still on 2015. That's a fact. Liquidity bad? Not a chance, . The day liquidity runs thin on the banks I assure you, we'll be in deep trouble. besides, central banks won't let that happen despite the dodd-frank act.
What are you talking about ...? What auction process, what public forum / can't comment crap are you coming up with? Things you say make no sense. There is NO auction for any FX swaps, neither interest rate swaps. Both are OTC products, "made to measure" and not traded on exchanges.
You must review your source of information is way-off. Spread, nothing to do with commissions at the interbank trade. Regulations were made with the idea of "too big to fail" Again nothing to do with capital trade. As I said, still non-regulated and traded over the counter.
What is your "source" of information? Judging from your posts, it must be some very exotic source my friend. My source of information is real experience from the environment you are trying to teach me about. Where did I say that spread = commission? What does "capital trade" stands for in your world? Sorry I am confused.
Trading as we know in the retail world, hasn't been the bread and butter for banks. Not in their risk tolerance. Yes they do trade in a minor scale, with a high level of risk- controlled rules. HFT- too risky for a bank besides they don't need it. You're talking about market making as, providing liquidity? Man this is 2015. Long way gone.
Who has said that retail type of trading has been the bread and butter for banks? I was talking about proprietary trading / in-house hedge funds, which used to be one of the main profit generators for some investment banks. Proprietary traders at banks would rarely trade the same way as retail traders do (i.e. trading small intraday moves) but that's something I already explained before. Talking about HFT, again you have no idea what you are talking about - What do you think all these electronic trading platforms they operate do? Every single top tier investment bank has own electronic platforms for most asset classes (Citi Velocity, BARX, and others) and the way these work is on a HFT principle. You even have eTrading desks with eTraders (who have strong quant skills) who are in charge of all the algorithms. And yes, market making = providing liquidity in general.
yes, they do make the market for the spot retail industry, other than that, not anymore to any other market whatsoever.. No prop on banks . Never. None. Trading desks are for swaps my friend , not for retail trading.
"they make market for spot retail industry", well yes they do, which is probably around 5% of their market making activity. But they also make market for my 50 bucks tickets when I trade around
The same way they make market to other market participants, whether it is a corporate, real money, a hedge fund, or somebody else either in FX, or in any other asset class. Liquidity can be challenging, but without banks making markets (as you are suggesting) there would be 0 liquidity and therefore no markets. "No prop on banks" *** please, are you going to teach me about something you have no idea about? What have I been doing when I was a bank trader? A lot of prop trading. What are my 30 friends from top tier IBs doing for living? A lot of prop trading. Full stop. "Trading desks are for swaps my friend" First of all we are not friends, second of all, what do you have with all these "swaps"? If we take an average investment bank as an example, all the FX swaps would be traded by FX forwards trading team which would be maybe 5-8 traders for G10 (EMFX guys normally trade spot And forwards, as it is not separated as in G10). This average bank has maybe 200-300+ traders across asset classes. If all the big money made by banks is in your magic "swaps" why only such a low percentage of traders is doing swaps then? You would have couple of more guys doing interest rate derivatives where you also have interest rate swaps - but don't think you understand those much."Traders" the proper word would be "clerks" must meet strict guidelines concerning risk, they don't trade ala retail mode. That's a fact. I believe Barclays had a trading retail room but that was back in the 80's. They soon realized the risk was beyond their comfort zone. What you're describing above is not a bank my friend, possibly a hedge fund.
Oh oh oh, I am really getting tired and will skip this BS. What "retail trading room" are you talking about? .... I was talking about dedicated prop trading desks / in-house hedge fund every single investment bank had before GFC in 08. And no, I am not talking about hedge funds, but about banks.
If you really have traded futures before, especially on the floor, you should know how they stack contracts in the order book. I mean, you should really know. Supposedly you have knowledge on futures. They do hunt stops. Sometimes reading the tape in your terminal is not enough. This is why I keep my subscription to the squawk box(not to be confused with CNBC program). Banks have runners trading on the floor, were big volume is still traded.. That's a fact. Again, the real flow from bank and yes, some fundies are form swapping currency over the...
Blah blah blah, seriously I am struggling here a lot. Good luck with your squawk box, must be very "useful". These sounds like so much conspiracy theories that I can't take anymore. You should buy a ton of bricks, that's a real asset by your definition.
Correction FX forwards and Fx options belongs to futures market. Banks have no jurisdiction whatsoever. FX Swaps = banks bread an butter. FX spot = that's the currency traded over the counter.
"FX forwards and FX options belong to futures market". This is getting more and more interesting. You should seriously consider some "Finance for Dummies" class on Investopedia. FX forwards and FX options have nothing to do with futures market! FX forwards, swaps, spot, options = all 100% OTC markets, full stop.
Again, you're probably describing a hedge fund or prop firm. Traders doing their own thing? Trading their own way?. Even a hedge fund has hefty rules on risk control. Everything on the institutional level is controlled and monitored. Retail trading mode at a bank level is very minimal. Their risk models don't allow for that Do You think a bank is going to dump big cash because a moving average is crossing over or EUR-USD is at a round number?. Sorry but that's too far away from their risk models. Yes they do but not at the extent you think they...
No, I am talking about banks. Again, you are trying to teach me about something I live every single day. That is ridiculous seriously. What is really funny is that I 100% know you are totally wrong, and still you write things with such a confidence that it is even scary .... And don't forget what I already explained to you. There is nothing like "bank is going to dump big cash", bank's FX positions are managed by the FX trading team which is comprised of human traders. There is also Asset & Liability management (ALM) / Treasury department which would also manage bank's positions, but that's mostly related to interest rate risk of the banking book as a whole, and mostly relevant for banks with big retail banking footprint.
I sincerely admire you into trying to "fix" what I have "wrong". I don't see that as a bad thing. Most of the information you have brought is obviously researched, which is a good thing. Unfortunately, some of it is faulty and way off. My post was based on facts. I was not trying to be philosophical or speculate based on faulty information. I brought some relevant information for the benefit of traders in this community which has been bombarded with half-truths and misinformation. You're mixing a lot of non-related stuff. Bonds, equities, spot forwards,...
You absolutely "killed" me with this one. The only thing which comes to my mind is Mark Twain: "Never argue with stupid people, they will drag you down to their level and then beat you with experience."
I stand on all the remarks I made on the past post because I have lived through the process of currency exchange for years. I know what is to call at 9:00 PM EST to a runner at TSE swapping Marks for Yens, way before the euro's inception in 99. The runner calling out REAL interbank price with volume traded by price, all over the phone. something now extinct. Trading currency was a lot easier back then.
So you are some kind of an "old school" retail trader who used to trade marks over the phone. Congratulations. This reminds me of an example where you have a guy who used to be into computers 20 years ago, doing some experiments at home, who comes to current Apple engineer and tries to teach him about the business, computers and how the world works ....
You feel like giving back to the community as you described in your first post? Give them facts.
I was giving real FACTS in every single post I've made. You are talking in a wishy washy conspiracy theorist way, I've seen 0 facts from you, and nothing about where you get that your ridiculous information from.
One last thing - I saw somewhere you said something about 1 lot can move the price in forex. That's far, far away from real. Possibly in futures on stocks, not in forex. I'll explain.
That's absolutely ridiculous, I would have never said that. If you claim something like that at least provide a reference. And this "Possibly in futures on stocks, not in forex" just proves how incompetent you are. Try to move stock futures by trading 1 lot, if you do it I might buy you a new house ....
Finally this is over. Thanks for stopping by, please never come back around. Bye.
- #112
- Oct 3, 2015 12:08am Oct 3, 2015 12:08am
Congratulations to Katroo for a wonderful thread. My hats off to you my friend. This discussion is healthy and I would like to add some thoughts with all respect to the OP. The foreign market exchange AKA FOREX. is not a trader's market. Forex is in essence, a swap- auction market where banks are trading currency to acquire inventory and make some gravy off spreads. That includes some big shot hedge funds like UBS , Morgan Stanley etc. Futures market IS a trader's market, despite some big shots dump some serious cash occasionally, to hunt stops....
- #113
- Oct 3, 2015 10:09am Oct 3, 2015 10:09am
- Joined Oct 2007 | Status: Trader | 1,200 Posts
{quote} Now I finally understand what you meant by this my friend. Already terrified about how much of a ridiculous wishy washy BS I have to reply to. Even worse is when the people 100% believe they know and understand but they don't have a clue what they're talking about ....
I got a bit distracted by all the nonsense from one of the posters here. Replying to that kind of things have wasted a Lot of my time and energy as I was replying to those in the evenings, as I work 10+h every day. On top of that my anger management skills got challenged as well which made me sleep very badly (which is a normal thing associated with my health condition), and that in turn made me feel more sick. At some point I just thought I would stop contributing as I have already done once in the past, quite frankly there is nothing much more I can gain / learn here, and it is just pure sharing from my side. But on the other hand it gives me kind of a "social" feeling here, which is something I've been lacking in my real life in the past 2 months. So I will give it a one more chance
From now on I will just ignore anything resembling that kind of behaviour, because what I can't stand is stupidity combined with arrogance and overconfidence. Otherwise I am more than happy to reply to any ideas, concepts and questions. I will reply to other posts in next few days and will also try to add some new stuff, depending on how much free time I find.
From now on I will just ignore anything resembling that kind of behaviour, because what I can't stand is stupidity combined with arrogance and overconfidence. Otherwise I am more than happy to reply to any ideas, concepts and questions. I will reply to other posts in next few days and will also try to add some new stuff, depending on how much free time I find.
At some point I just thought I would stop contributing as I have already done once in the past, quite frankly there is nothing much more I can gain / learn here, and it is just pure sharing from my side.
You reap what you sow.
great thanks for the info katrooo, i was wondering if you could answer a question i have.
if i was to place a market order to buy, would that order be executed against a limit order to sell.
in other words can a market order to buy be executed against a market order to sell or does it need a sell limit order?
thanks for your help
if i was to place a market order to buy, would that order be executed against a limit order to sell.
in other words can a market order to buy be executed against a market order to sell or does it need a sell limit order?
thanks for your help
- #120
- Oct 7, 2015 7:53pm Oct 7, 2015 7:53pm
- Joined Jan 2011 | Status: Trader | 2,680 Posts
Good Afternoon Katroo, I have a question for you. I have ran statistical studies on the Euro, read many a papers on quantitative and technical analysis. I have been trading on and off for a couple of years with relative success, however It seems to me my equity curve could very well be random, if there is any edge to be had at least perceived on my end it has been. My projections and the educated "guesses" of economists on the central bank decisions as well as macroeconomic factors such as the slow down from china, the imports, NFP etc. Another "edge" if not just perceived as well as using a money management strategy based on the concept of the gambler's ruin.
Using technical analysis seems to me not to be a reliable tool at all, just an approximation of drift "trend", perhaps also to identify price extremes as seen by historical data, and price clustering such at "s/r" mostly as weak indication of range. I cannot see any patterns in the observations to point to T/A profitability, the prob with F/A is that at best it is an educated guess or conjecture.
Let me post some studies I have done
as far as distribution we can see that it is not exactly a normal distribution
but when we run any randomness test such as Auto Correlation Function, Partial Auto Correlation Function, and a Lag plot
here are the serial correlation coefficents for clarity
> cor(first(eurusd.log,-1),na.omit(Lag(eurusd.log,k=1)))
Lag.1
[1,] -0.03489646
> cor(first(eurusd.log,-2),na.omit(Lag(eurusd.log,k=2)))
Lag.2
[1,] 0.03664107
> cor(first(eurusd.log,-3),na.omit(Lag(eurusd.log,k=3)))
Lag.3
[1,] -0.01555399
> cor(first(eurusd.log,-4),na.omit(Lag(eurusd.log,k=4)))
Lag.4
[1,] -0.02438854
> cor(first(eurusd.log,-5),na.omit(Lag(eurusd.log,k=5)))
Lag.5
[1,] 0.03589244
> cor(first(eurusd.log,-6),na.omit(Lag(eurusd.log,k=6)))
Lag.6
[1,] -0.04888615
> cor(first(eurusd.log,-7),na.omit(Lag(eurusd.log,k=7)))
Lag.7
[1,] 0.02816241
> cor(first(eurusd.log,-8),na.omit(Lag(eurusd.log,k=8)))
Lag.8
[1,] -0.01578505
> cor(first(eurusd.log,-9),na.omit(Lag(eurusd.log,k=9)))
Lag.9
[1,] 0.0308901
> cor(first(eurusd.log,-10),na.omit(Lag(eurusd.log,k=10)))
Lag.10
[1,] -0.09174755
> cor(first(eurusd.log,-11),na.omit(Lag(eurusd.log,k=11)))
Lag.11
[1,] 0.06354913
> cor(first(eurusd.log,-12),na.omit(Lag(eurusd.log,k=12)))
Lag.12
[1,] 0.04701442
> cor(first(eurusd.log,-13),na.omit(Lag(eurusd.log,k=13)))
Lag.13
[1,] -0.05073153
> cor(first(eurusd.log,-14),na.omit(Lag(eurusd.log,k=14)))
Lag.14
[1,] -0.001175329
> cor(first(eurusd.log,-15),na.omit(Lag(eurusd.log,k=15)))
Lag.15
[1,] -0.09766266
the data is random, and I will further illustrate my point with brownian motion plots along with the actual movement of the Eur/Usd, can you tell the difference?
the average post here in FF makes the claim that x trader is profiting, or there is y technique, or if one some how is able to learn to trade : there is consistent success at the end. I am afraid perhaps chart Reading and Technical/ Fundamental analysis might not be the way to achieve success.
I guess my take on the market is guess extremes, extrapolate drift, and use the charts to attempt to get a favorable price at best as the market will move randomly in infinite number of directions and the hope is to have a weak tendency towards fundamentals long term. I am mostly focused on Risk Management as of late.
what is your take?
Using technical analysis seems to me not to be a reliable tool at all, just an approximation of drift "trend", perhaps also to identify price extremes as seen by historical data, and price clustering such at "s/r" mostly as weak indication of range. I cannot see any patterns in the observations to point to T/A profitability, the prob with F/A is that at best it is an educated guess or conjecture.
Let me post some studies I have done
as far as distribution we can see that it is not exactly a normal distribution
but when we run any randomness test such as Auto Correlation Function, Partial Auto Correlation Function, and a Lag plot
here are the serial correlation coefficents for clarity
> cor(first(eurusd.log,-1),na.omit(Lag(eurusd.log,k=1)))
Lag.1
[1,] -0.03489646
> cor(first(eurusd.log,-2),na.omit(Lag(eurusd.log,k=2)))
Lag.2
[1,] 0.03664107
> cor(first(eurusd.log,-3),na.omit(Lag(eurusd.log,k=3)))
Lag.3
[1,] -0.01555399
> cor(first(eurusd.log,-4),na.omit(Lag(eurusd.log,k=4)))
Lag.4
[1,] -0.02438854
> cor(first(eurusd.log,-5),na.omit(Lag(eurusd.log,k=5)))
Lag.5
[1,] 0.03589244
> cor(first(eurusd.log,-6),na.omit(Lag(eurusd.log,k=6)))
Lag.6
[1,] -0.04888615
> cor(first(eurusd.log,-7),na.omit(Lag(eurusd.log,k=7)))
Lag.7
[1,] 0.02816241
> cor(first(eurusd.log,-8),na.omit(Lag(eurusd.log,k=8)))
Lag.8
[1,] -0.01578505
> cor(first(eurusd.log,-9),na.omit(Lag(eurusd.log,k=9)))
Lag.9
[1,] 0.0308901
> cor(first(eurusd.log,-10),na.omit(Lag(eurusd.log,k=10)))
Lag.10
[1,] -0.09174755
> cor(first(eurusd.log,-11),na.omit(Lag(eurusd.log,k=11)))
Lag.11
[1,] 0.06354913
> cor(first(eurusd.log,-12),na.omit(Lag(eurusd.log,k=12)))
Lag.12
[1,] 0.04701442
> cor(first(eurusd.log,-13),na.omit(Lag(eurusd.log,k=13)))
Lag.13
[1,] -0.05073153
> cor(first(eurusd.log,-14),na.omit(Lag(eurusd.log,k=14)))
Lag.14
[1,] -0.001175329
> cor(first(eurusd.log,-15),na.omit(Lag(eurusd.log,k=15)))
Lag.15
[1,] -0.09766266
the data is random, and I will further illustrate my point with brownian motion plots along with the actual movement of the Eur/Usd, can you tell the difference?
the average post here in FF makes the claim that x trader is profiting, or there is y technique, or if one some how is able to learn to trade : there is consistent success at the end. I am afraid perhaps chart Reading and Technical/ Fundamental analysis might not be the way to achieve success.
I guess my take on the market is guess extremes, extrapolate drift, and use the charts to attempt to get a favorable price at best as the market will move randomly in infinite number of directions and the hope is to have a weak tendency towards fundamentals long term. I am mostly focused on Risk Management as of late.
what is your take?
AVT INVENIAM VIAM AVT FACIAM