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Position Trading - F it, lets start a thread

  • #1
  • First Post: Edited Nov 5, 2015 11:24am Oct 30, 2015 8:18am | Edited Nov 5, 2015 11:24am
Was going to post this in the interactive discussion because I don't want it to just be me posting - but it turns out I can't

Within the past year I have had decent sized winners on USDJPY (long) and EURCHF (short) - should have been more though on USDJPY.

However trading this past 6 months has been hard, no real directional moves in many of the currencies, and my account has given back some of those gains. 6 months of flat trading, or small losses is a real pain and in the midst of it all you have to wonder at times is this really worth it? Yes is the answer, but not at all costs.

I have had what seems like positions ready to run, only for a 600 pip pullback to wipe out gains. You always try to take something off the table, but is 500 pips really the goal when trying to capture huge fundamental shifts and dramatic changes in pricing? - for me personally, no.

Failed positions included several attempts to get long USDCAD, short NZDUSD and SP-500. I think I am too late perhaps to the former 2 pairs, and blatantly still too early for the SP-500. I took some money off the table for each covering the costs but wanted more, the markets however just isn't ready to give more which is frustrating.

Times like these where I feel we are just waiting for some kind of catalyst, and in the boredom I thought I would create this thread and see if anyone agrees.

One thing I don't much like is everyone spamming their technical analysis everywhere, I don't care, and I suspect most position traders don't care for your particular type of technical analysis either. I am of the opinion that how you enter a trade is not nearly as important as some make it out to be. But by all means post your chart, what you see etc.

What would be appreciated is a more thoughtful discussion on fundamentals.


Pardon my grammar and spelling.
  • #2
  • Oct 30, 2015 9:06am Oct 30, 2015 9:06am
Quoting verv
Was going to post this in the interactive discussion because I don't want it to just be me posting - but it turns out I can't Within the past year I have had decent sized winners on USDJPY (long) and EURCHF (short) - should have been more though on USDJPY. However trading this past 6 months has been hard, no real directional moves in many of the currencies, and my account has given back some of those gains. 6 months of flat trading, or small losses is a real pain and in the midst of it all you have to wonder at times is this really worth...
timing. most people forget this is very important part of trading. markets range and trend. from tick to daily/weekly time-frames all have ranging and tending periods. as above, so below.
no range or trend will continue forever. great that you got into trading HTF during trending period but do not expect it to trend until the end of the time. if a trader does not adapt to changing market conditions, he will end giving up all profits back.
do not forget, the only constant thing in the universe is CHANGE.
now, about fundamentals. fundamentals are not created in one day or with one occasion/news/report. it is a combination of all. the extreme of this claim is that even the most crucial release from central banks alone can not change the overall direction of the price IF it is not supported by the market conditions which obey the global economic cycles. for example SNB's last "surprise". And i guess, the other is coming from Japan.
All the changes in fundamentals are depicted in charts. charts offer better visualization of the events and i was going to post some charts as proof but respect your request not to the thread with charts.
As Above, So Below
  • #3
  • Edited 11:40am Oct 30, 2015 10:41am | Edited 11:40am
Quoting tashkent
{quote}All the changes in fundamentals are depicted in charts. charts offer better visualization of the events and i was going to post some charts as proof but respect your request not to the thread with charts..

Post all the charts you want. It's not my thread, I just opened it and it would be incredibly boring if we all had the same opinion. Most threads on here just get bogged down with meaningless charts with their own spin of TA, personally don't see the point in that.

I believe the markets are forward looking, so very often price moves before the actual fundamentals move... i.e. markets moving in anticipation of an interest rate change then when the rate finally changes the market doesn't react because it is already priced in. Normally though such fundamental moves are broadcast well before, and that is what the market is responding to, so the fundamentals are still moving price. Eurusd last year comes to mind, euro moved before QE started. Buffett talks about moving where the puck is going, rather than where it has been. That is essentially what the market does taking as much liquidity as it can in the process.

Repricing in currency markets takes time because no matter what the fundamentals are up to do there is always going to be a buyer or seller at a certain price because there are people/companies who just need to move currencies around and don't much care where price will be in a few months, they just need the transaction done now. Stocks by comparison can reprice on zero liquidity which is why you can have 90% drops in a single day.

So when people look at a chart and say all the fundamentals are already factored in, I can't really accept that as truth. Markets cannot be efficient at all times.


Quoting tashkent
{quote} now, about fundamentals. fundamentals are not created in one day or with one occasion/news/report. it is a combination of all. the extreme of this claim is that even the most crucial release from central banks alone can not change the overall direction of the price IF it is not supported by the market conditions which obey the global economic cycles. for example SNB's last "surprise". And i guess, the other is coming from Japan.
I agree with that. What do you see happening with Japan, I see that carry trade unwinding. I could also see Abenomics unwinding to.

As it stands they are increasing the money supply in Japan by 30+% a year. Hard to ignore that too.

Really don't know what I make of the yen right now, and the market doesn't seem to know either.
  • #4
  • Oct 30, 2015 11:49pm Oct 30, 2015 11:49pm
hello verv,

can understand your frustration if you are a long-term trader.

would you be able to adapt to a changing market and trade the shorter-term trend trading or range trading on the daily chart?
as in: go long near bottom or go short near top so to speak after a little confirmation that the direction is changing.

you might need more skills in other areas.

do you watch the softs, metals, energy, meats, like sugar (nice downtrend and going up recently), copper (nice downtrend, flattening out now), coffee (going down slowly), cocoa (nice trend, flattening now)?

hope its some help to you.......
  • #5
  • Edited 3:31pm Oct 31, 2015 2:25pm | Edited 3:31pm
Quoting yonnie
hello verv, can understand your frustration if you are a long-term trader. would you be able to adapt to a changing market and trade the shorter-term trend trading or range trading on the daily chart? as in: go long near bottom or go short near top so to speak after a little confirmation that the direction is changing. you might need more skills in other areas. do you watch the softs, metals, energy, meats, like sugar (nice downtrend and going up recently), copper (nice downtrend, flattening out now), coffee (going down slowly), cocoa (nice trend,...
Hello, yes I watch many markets but I only really trade those where I understand the move.

I have been watching sugar, and I gotta say, I don't really understand why it has went on this latest run - thus no position. I feel much better know why something is moving, gives you the conviction to do or die. I should look into that more actually - thanks for reminding me . The commodities cannot get beaten down forever, they will have their time again and we should be on the lookout. Copper looks interesting, nice tight range at the bottom, a punch above might be worth a long. Hard to know what to do the energies right now, doesn't seem to be any let up right now, and I think fundamentally the energy markets have changed forever. Can't trade cocoa or coffee I'm afraid, don't have a futures account, looked into it in the past but never bothered opening, therefore I am at the mercy of the CFDs on offer to me at Oanda.

Regarding intraday - I can't really because I work. With intraday your life revolves around charts, I never liked that, and I have never found it more profitable that position trading.

With range trading, again there is a reason why I don't do it. Ranges are often too tight, and from any backtesting I have done, low R multiples cause trouble in the long run. I have had success by fading liquidity hunts at swing highs and lows, problem with that is you need to be chart watching to catch those quick sharp moves.

Here are a few EOD screens I look at:
Commodities - http://stockcharts.com/freecharts/ca...LVER,$GOLD|D|0
Currencies - http://stockcharts.com/freecharts/ca...GD,$NZDUSD|C|0
Equities - http://stockcharts.com/freecharts/ca...RTSI,$BVSP|C|0
  • #6
  • Edited 5:55pm Oct 31, 2015 2:35pm | Edited 5:55pm
http://www.ft.com/cms/s/0/3ed5bae0-7...#axzz3qArihnCA

On the topic of commodities.

This is only one narrative.
  • #7
  • Edited 4:43pm Oct 31, 2015 4:31pm | Edited 4:43pm
hello verv,

if you would like to trade more commodities, you might like FXChoice.
they accept US residents and there is a thread here on FF about them.
they let you trade other cfd`s not offered by Oanda like coffee and cocoa.

you didn`t get into sugar, because you didn`t understand the story behind it.
I would say that you will miss a large part of any trend if you wait for the news to be on the front page.

and no, I don't trade intra-day either. don't want to sit in front of my computer half the day.
I was actually talking about the daily TF and trading on what you see on the chart.

always go long at the bottom of the range after a few days of price going up.
if it shoots through the top of the range and continues, you're in with the trend.
if not, you might close out for a small profit. the opposite for shorts.
now you know how you could trade sugar the next time.

oops, sorry, you didn`t want any technical analysis.
  • #8
  • Oct 31, 2015 4:47pm Oct 31, 2015 4:47pm
Quoting verv
http://www.ft.com/cms/s/0/3ed5bae0-7...#axzz3qArihnCA On the topic of commodities. This is only one narrative.
...sorry, seems that the link you provide it is only for subscribers.
  • #9
  • Edited 6:12pm Oct 31, 2015 5:45pm | Edited 6:12pm
Quoting yonnie
hello verv, if you would like to trade more commodities, you might like FXChoice. they accept US residents and there is a thread here on FF about them. they let you trade other cfd`s not offered by Oanda like coffee and cocoa. you didn`t get into sugar, because you didn`t understand the story behind it. I would say that you will miss a large part of any trend if you wait for the news to be on the front page. and no, I don't trade intra-day either. don't want to sit in front of my computer half the day. I was actually talking about the daily TF...
Hello Yonnie,

Thanks again, I will check FXChoice out.

Please by all means post your charts. I have found through backtesting that entries methods aren't that important. Exits are more important for position trading imo. Entries are just prodding the market with leveraged positions to see if the market can take you on it's wave. Anytime I have gotten good positions into the market I don't even have to work that hard. I find that if I am working hard, then there is something wrong.

You are completely right btw about missing out on moves, I am ok with that. Price gives you a reason to start investigating. Everyone needs the conviction to hold a position, if I only have a technical conviction I don't bother, it is just in my DNA. Understanding why something moves is another edge, better to have as many edges as possible imo.

For me there has to be an alignment of several things. To quote Michael Marcus:
''The best trades are the ones in which you have all three things going for you: fundamentals, technicals, and market tone. First, the fundamentals should suggest that there is an imbalance of supply and demand, which could result in a major move. Second, the chart must show that the market is moving in the direction that the fundamentals suggest. Third, when news comes out, the market should act in a way that reflects the right psychological tone. If you can restrict your activity to only those types of trades, you have to make money, in any market, under any circumstances''

Of course that isn't the only way to 'position trade.' But what MM gives us all in that quote is a bull print for making money for all times. Just what I am comfortable with.

Quoting loureed10
{quote} ...sorry, seems that the link you provide it is only for subscribers.
Doesn't allow direct link.

Follow this instead: http://lmgtfy.com/?q=Weary+commodity...e+end+of+slump (sorry easiest way to do this).

Alternatively google, 'weary commodity investors see end of slump'

Seems you can access the article if you come directly via google
  • #10
  • Oct 31, 2015 5:50pm Oct 31, 2015 5:50pm
Thanks.
  • #11
  • Oct 31, 2015 8:42pm Oct 31, 2015 8:42pm
Quoting tashkent
{quote} timing. most people forget this is very important part of trading. markets range and trend. from tick to daily/weekly time-frames all have ranging and tending periods. as above, so below. no range or trend will continue forever. great that you got into trading HTF during trending period but do not expect it to trend until the end of the time. if a trader does not adapt to changing market conditions, he will end giving up all profits back. do not forget, the only constant thing in the universe is CHANGE. now, about fundamentals. fundamentals...
Hi T
Please do provide charts.I love to see it.
Thank you
In trading, you have to be defensive and aggressive at the same time
  • #12
  • Nov 1, 2015 9:25pm Nov 1, 2015 9:25pm
sure. these charts are for usdjpy and we could be in the beginning of wave 3. just pure speculation.

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As Above, So Below
  • #13
  • Nov 2, 2015 3:49am Nov 2, 2015 3:49am
Quoting tashkent
sure. these charts are for usdjpy and we could be in the beginning of wave 3. just pure speculation. {image}{image}{image}{image}{image}
When you see the multi decade trend in the USDJPY, puts into perspective how small the swings we are seeing now are in comparison to those decades past.

Presuming that is the business cycle and where countries are on it right now?

Interesting.
  • #14
  • Nov 2, 2015 8:27am Nov 2, 2015 8:27am
Quoting verv
{quote} When you see the multi decade trend in the USDJPY, puts into perspective how small the swings we are seeing now are in comparison to those decades past. Presuming that is the business cycle and where countries are on it right now? Interesting.
yes, we are looking at the greater picture. this is a fractal-holographic universe (my personal belief) and everything is made of fractals, including the trends in the markets. if i sell usdjpy and you buy right this moment and both claim that we are trading with the trend or against, both of us will be right at the same time. the difference is our reference point/time frame we are looking at.

i am not too much into fundamentals, but there are some serious work done on relationship between the business cycles and exchange rate fluctuations. here is an example where authors analyze this topic in Japan's example. it never hurts to keep an eye on long term fundamental changes and economical/financial cycles but if somebody asks me if they are tradeable, my answers is neutral. I guess, i would prefer to trade the daily fluctuations in the direction of monthly trend.
As Above, So Below
  • #15
  • Edited 10:18am Nov 2, 2015 10:02am | Edited 10:18am
Quoting tashkent
{quote}i am not too much into fundamentals, but there are some serious work done on relationship between the business cycles and exchange rate fluctuations. here is an example where authors analyze this topic in Japan's example. it never hurts to keep an eye on long term fundamental changes and economical/financial cycles but if somebody asks me if they are tradeable, my answers is neutral. I guess,...
Hello.

For me trading fundamentals is entirely possible. First you have your bias, based on hopefully logical reasoning, and then you use price to filter your bias (basically technical reasons for entering). If price isn't confirming your bias, you shouldn't be trading that bias.

What do I mean by that - if you believe that the USDJPY should go up, because the BOJ continues to increase the monetary supply by 30% per year, you have sound reasons for going long and imo you should only be buying when price is up. The reason why I say that is because if price moves lower that negates your bias, if you fundamental view is for price to move higher then why is price moving lower? Relatively simple idea.

Jesse Livermore used very simple price action to trade stocks. He had pivot points (not the indicator, basically major S/R levels), he was long above a resistance pivot point, and short below a support pivot point. Personally I think we should use price in that way and coordinate it with fundamentals. Paul tudor Jones use the 200 m/a, short if price is below 200 m/a, long if price is above 200 m/a - same sort of idea as Livermore.

-Fundamentals is the reason
-Price is the filter
-Enter whatever way you want - there are edges with entry, but I really don't believe the entry matters a huge amount

There are other sentiment filters as well I believe, how price reacts to certain news, and how strong those reactions are tells you about what the 'market' things.

I'm envious of guys who have the conviction to take positions purely off TA, there is something in my nature which resists that kind simplicity.

Thanks for the link btw - will get to it later.


Edit - also I seen you commented in the TheRealDeal thread. Like you I believe there is something going on there. There was some suspicion that TheRealDeal was Pipeasy, or TheRealThing when he first posted in the millipede thread, in part based on how his posts were constructed. I think if you look at the posts he is making now, and compare them to those he initially made, there is a significant difference - if I may, I do believe the mask has slipped. It is obvious to me that TheRealDeal is neither the TheRealThing or Pipeasy despite attempts (even down to the 'Who is John Galt' avatar) at mimicry.
  • #16
  • Nov 2, 2015 11:08am Nov 2, 2015 11:08am
Quoting verv
{quote} Hello. For me trading fundamentals is entirely possible. First you have your bias, based on hopefully logical reasoning, and then you use price to filter your bias (basically technical reasons for entering). If price isn't confirming your bias, you shouldn't be trading that bias. What do I mean by that - if you believe that the USDJPY should go up, because the BOJ continues to increase the monetary supply by 30% per year, you have sound reasons for going long and imo you should only be buying when price is up. The reason why I say that is...
By no means I am questioning what works or not. it is just a personal preference. looking at the same chart 2 traders may have opposite opinions about the trend and it is no different for the supporters of the fundamental approach. there are scholars/professionals who think the gold price will continue it's down trend or others like Peter Schiff think gold will only go up due to global economic conditions. He has been advocating to buy and hold gold for many years, yet price keeps falling. so it is not just about trading the fundamentals or the chart. the markets are a complex system which is consisted of many other complex components. a few fundamental data can not provide the trader with an edge. in order to predict the correct direction, one need to have sufficient amount of data, understand the interconnections among all market components, how they effect each other etc. even after all the research, markets will never stop surprising us to drive the price in opposite direction hundreds of pips against our projections. then there are black swan events, flash crashes, etc which do not always favor the direction of the fundamentals. these are just my basic reasons why i just prefer to trade the price i see in my chart. I guess, trading the fundamentals is more like investing. trading is mainly speculating on the short term fluctuations.
I believe you have serious reasons behind your trading method and i would love to hear and learn from you about your perspective regarding the fundamental direction of any pair(s) you are trading.
PS. TRD has many valid points in his thread but he and his partner have raised enough red flags for me to be concerned about. they are in my ignore list not interested what they are writing/alleging or claiming.
As Above, So Below
  • #17
  • Nov 2, 2015 6:39pm Nov 2, 2015 6:39pm
Hi Tashkent, I will reply to you tomorrow, I think I have something to say on what you just commented, might be interesting. Regarding TRD, yeh he speaks sense about some things markets hunt liquidity, but so what, something is off with him and his friend.


Right now I'm not sure if forex is the game in town I should be playing, I think the entire market is holding its breath for the Fed, which may not come anytime soon. The short side argument for the US stocks is very compelling right now, there are numerous things pointing to a sell off
-weak breadth
-corporate issued bonds yields rising
-nyse margin debt decreasing
-divergence with small caps

This is in top of an expensive market, with lofty growth expectations.

Lots of signs, but doesn't mean we roll over. It is quite hard to short the market, I have learned from experience lol. I think long dated puts are the best bet, you might even be able to run some kind of spread to help cover the costs.

Anyone else see this, or a flip side to this?
  • #18
  • Nov 2, 2015 8:08pm Nov 2, 2015 8:08pm
Interesting opinions from all of you, always trying to keep an open mind. Good ideas to put into practice, very good info and useful.
  • #19
  • Edited 8:16am Nov 3, 2015 7:15am | Edited 8:16am
Quoting tashkent
{quote} By no means I am questioning what works or not. it is just a personal preference. looking at the same chart 2 traders may have opposite opinions about the trend and it is no different for the supporters of the fundamental approach. there are scholars/professionals who think the gold price will continue it's down trend or others like Peter Schiff think gold will only go up due to global economic conditions. He has been advocating to buy and hold gold for many years, yet price keeps falling. so it is not just about trading the fundamentals...
Hello again,

Forming a bias using fundamental data only means that you believe there exists a mispricing today compared to at some point in the future. One single data point usually is not sufficient to form a bias, though it sometimes is, which is why many of those who consider themselves fundamentally orientated call their bias a thesis. Having a fundamental view that there is a mispricing really doesn't mean you can predict when that mispricing resolves.

Keynes said that the markets can stay irrational longer than you can stay solvent, which is to say that on a long enough time line every single instrument reverts to generally it's fundamental value but you cannot know when or how. Therefore how you implement your beliefs about mispricing is important, investors and traders might hold exactly the same view but implement their bias differently with the intention of remaining solvent during times when the market is ''irrational''.

Investors generally don't use leverage, don't try and time the market, and are prepared to hold significant drawdown, even adding to losing positions for better value because they believe, at some point in the future the mispricing will resolve itself. Investors don't need to be correct instantly, some investors intend to hold positions for eternity, so price fluctuations against their positions, flash crashs and black swans, provided it doesn't alter the fundamentals of whatever instrument they trade doesn't much matter, in fact it can provide an opportunity. If the mispricing doesn't resolve itself then the chances are that the investor has missed something extremely important, in other words their bias is wrong. Investors usually cover their risk through position sizing, diversification, or taking senior claims against a company rather than owning common stock.

A trader who believes there is a miscpricing acts in a different way. They use leverage and because of that it means they must to at least some degree be market timers. The price a trader gets right now matters, and the direction price moves immediately afterwards matters. It matters because highly leveraged position have a cost of holding, and can wipe out accounts very quickly if price moves strongly against the position. Black swans, and flash crashes do matter, and it is important to have your stops ready. A trader therefore needs some structure to get in and out of the market whilst they attempt to establish positions, i.e. buys only when price is up, risk not more than x% of your account, cut losers, run winners - those are my rules, and many share them. Others might combine significant technical analysis with their fundamental bias, in fact I believe that even the most technically orientated successful traders have fundamental outlooks. The obvious example that comes to mind is Ed Seykota, though he is thought of as only a technical trader he has actually published a book on his fundamental view and you can be sure he intends to trade that view: http://www.trendfollowing.com/2014/0...llowing-radio/. Others like Bruce Kovner and Michael Marcus are traders who take positions based on fundamentals - you should check out their sections in market wizards, imo the best sections.

One of the reasons why holding a fundamental view for a trader is potentially dangerous is because people can get sucked into believing that a move against your fundmental view is better value - that makes sense only for an investor who uses no leverage and has a longer outlook, they can afford to average down, afford to hold and wait for the mispricing to resolve. But for a trader I personally believe you must resist the urge to buy or sell as price moves against you, every tick against your bias might appear to be better value, but what it can result in is that you just keep averaging down until your account is blown. Which is why I only like to buy when price moves in sync with my bias, because it is confirming for me right now that I am correct, and for a trader that matters. Others might only take bullish m/a crossovers - consider it another layer of risk management.

I do both trading and investing, I have significantly more in investing actually. I see perhaps both sides of the argument and have often watched with amusement as traders and investors face off arguing that they are doing it wrong when their method requires different approaches - I'm not suggesting you are doing this btw but I want to make the approaches clear.

Schiff is talking about investing, well I think their is a fair degree of speculation in his thesis too. I don't have much time for the man because he has a very large axe to grind. But consider that for your example above there are two approaches to gold. You can invest, or you can trade. And you better know the reasons why you are doing one or the other before you even take a position.

Just my opinion.
  • #20
  • Nov 3, 2015 11:18am Nov 3, 2015 11:18am
i am not sure what makes you believe that it is correct to use the word "mispricing" in regards to define market behaviour. i also do not understand what people mean by "fake" when they refer to a specific movement. then the question is what is "real"? what is the "correct pricing"? how do you calculate the correct price?
actually the word "price" itself is misleading and inappropriate to use as synonym of "exchange rate".
As Above, So Below
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