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  • #281
  • Nov 8, 2015 2:12pm Nov 8, 2015 2:12pm
Quoting alphaomega
{quote} COT is a lagging indicator so you can hardly find any real edge in it. Also the fact that it shows the exposure in the futures markets makes it even more useless. In FX the spot market is the main driver. The futures are almost irrelevant. The same info can be found in the retail exposure published by some of the retail brokers. In general any published volume/exposure related information in fx is incomplete useless and deceiving. You can actually make much better guess just by looking at the price action and the fundamental contex. FX is...
Now that was a first class scalp.
  • #282
  • Nov 8, 2015 3:00pm Nov 8, 2015 3:00pm
Quoting GEfx
{quote} Okay. Not many in my group trade the E/$, but I have lots of notes on it because other Euro crosses are frequently traded. I'll pick a time to start: August 2015. From a fundamental perspective, what was the sentiment on the E/$ on August 8? What fundamental changes occurred during the month? At the end of the month, what is the overall sentiment (i.e., for the drivers of the pair)?
Hey there friend, I think by now I have been clear on my position that T/A alone does not give you and edge as far as using historical data to accurately predict future movement. T/A being any kind of visual representation of BID/ASK price and any derivative there of. To reiterate my position that the market is random = stochastic process as far as distribution of returns, not that there is no intent behind the decisions of placing orders.

I do believe that what you do, what Hanover pointed out, Copernicus mentions drift ... to which i further illustrate how I model my strategy which i believe is some what close to his philosophy. I hope I am clear in my position of what I mean by randomness ... Goodfella has demonstrated incredibly well the challenges with using T/A as they occur in random data.

Having said all that, I will go ahead and do the challenge you have put forth ( not because I disagree that F/A are drivers but because I use a similar process in decision making and would like to explore it, I will attempt to prove it wrong as that would prove me wrong)

AUGUST 8
Rate hike likely projected for September
positive US Data

Then the month was possibly driven by China concerns and Possible hikes

at the end of the month Hikes seemed unlikely ..... there was a correction at the end of the month from a bullish wave, I do not remember if there were any factors that triggered that.

Attached Image (click to enlarge)
Click to Enlarge Name: August GFEX exercise.jpg Size: 222 KB
AVT INVENIAM VIAM AVT FACIAM
  • #283
  • Nov 8, 2015 3:39pm Nov 8, 2015 3:39pm
reading the latest comments one can conclude that most traders agree market is non-random and i am glad to learn that price can be predicted and sometimes TA is sufficient to be profitable. i would have never thought that future is predictable. thanks to everybody.
As Above, So Below
  • #284
  • Nov 8, 2015 3:41pm Nov 8, 2015 3:41pm
Quoting the redlion
{quote} Hey there friend, I think by now I have been clear on my position that T/A alone does not give you and edge as far as using historical data to accurately predict future movement. T/A being any kind of visual representation of BID/ASK price and any derivative there of. To reiterate my position that the market is random = stochastic process as far as distribution of returns, not that there is no intent behind the decisions of placing orders. I do believe that what you do, what Hanover pointed out, Copernicus mentions drift ... to which i further...
The whole summer we had constant rumors that Greece will have to default, doom and gloom in every financial media, and uncertainty about the potential deal with the creditors.
For 2-3 months, everyone and their mother was short the EUR with target the parity..Then the chinese stock crash came and this was the trigger........So what else do you expect to happen when everyone is selling? Of course it will go up until all stops are cleared ..........Classic pump and dump market makers game....... I already posted about this situations many times but people still don't get it.....It's the same pattern every time. Just watch what will happen if FED decide to rise the rate in december....the EUR bears will have to suffer alot!
  • #285
  • Nov 8, 2015 3:52pm Nov 8, 2015 3:52pm
"reading the latest comments one can conclude that most traders agree market is non-random and i am glad to learn that price can be predicted and sometimes TA is sufficient to be profitable."

Yes, the majority of retail traders believe the market is non-random and that TA can predict future price. That's why they're all millionaires who drained Goldman Sachs and Deutsche Bank of their coffers. Oh, wait a second, what's that you say? They're not rich and they consistently blow their accounts and Goldman routinely hunts their stops?

Oh well, easy come, easy go...
  • #286
  • Nov 8, 2015 3:56pm Nov 8, 2015 3:56pm
Quoting tashkent
reading the latest comments one can conclude that most traders agree market is non-random and i am glad to learn that price can be predicted and sometimes TA is sufficient to be profitable. i would have never thought that future is predictable. thanks to everybody.
*snigger*.....troublemaker. You would be fun at the pub. :-)
  • #287
  • Nov 8, 2015 4:01pm Nov 8, 2015 4:01pm
Quoting alphaomega
{quote} The whole summer we had constant rumors that Greece will have to default, doom and gloom in every financial media, and uncertainty about the potential deal with the creditors. For 2-3 months, everyone and their mother was short the EUR with target the parity..Then the chinese stock crash came and this was the trigger........So what else do you expect to happen when everyone is selling? Of course it will go up until all stops are cleared ..........Classic pump and dump market makers game....... I already posted about this situations many...
Although I somewhat agree with what you say.... I disagree to the extent of the impact you purport market makers, Dealers, Hedge funds, Asset class managers etc ...."Big money" has on the Market.

first of all not all of them have the same interests, prop trading is not the main purpose for the Foreing exchange markets, Second of all you are leaving out the impact Big Corporations, exporters, and all other economic activity in the country.... which is why the market is efficient to the extent that it is. How about the central banks?

if the market could be manipulated to trap bears, to extract profit, and it was all a conspiracy to depart retail traders from their money..... statistical tools would see clear patterns, if clear patterns existed. As it's stands the most we can say is some element of inefficiency and expectation with persistent volatility which are auto correlated and can sometimes be accurately predicted via GARCH models.....but nothing of the sort can be said of the actual direction of price movement.....which continuous to move in random -like way.
AVT INVENIAM VIAM AVT FACIAM
  • #288
  • Nov 8, 2015 4:04pm Nov 8, 2015 4:04pm
Quoting gravitist
"reading the latest comments one can conclude that most traders agree market is non-random and i am glad to learn that price can be predicted and sometimes TA is sufficient to be profitable." Yes, the majority of retail traders believe the market is non-random and that TA can predict future price. That's why they're all millionaires who drained Goldman Sachs and Deutsche Bank of their coffers. Oh, wait a second, what's that you say? They're not rich and they consistently blow their accounts and Goldman routinely hunts their stops? Oh well, easy...
A bear jumps out of a bush and starts chasing two hikes. They both start running for their lives, but then one of them stops to put on his running shoes.
His friends says, "What are you doing? You can't outrun a bear!"
His friend replies, "I don't have to outrun the bear; I only have to outrun you!"

No one can beat tho whole market, and nobody can predict the price accurately especially long term over a few days. That's why professional traders do not chase imaginary big trends. Instead they scalp a few points here, a few points there.... many times every day, every week, every month......small consistent steps. Smooth equity curve and compounding with discipline. No predictions!
  • #289
  • Nov 8, 2015 4:09pm Nov 8, 2015 4:09pm
Quoting alphaomega
{quote} A bear jumps out of a bush and starts chasing two hikes. They both start running for their lives, but then one of them stops to put on his running shoes. His friends says, "What are you doing? You can't outrun a bear!" His friend replies, "I don't have to outrun the bear; I only have to outrun you!" No one can beat tho whole market, and nobody can predict the price accurately especially long term over a few days. That's why professional traders do not chase imaginary big trends. Instead they scalp a few points here, a few points there.......
are you saying tick, or one minute charts are more predictable than daily charts?

****let me rephrase that, candles or time frames are nothing but representations of the BID/ASK price cut into different time periods..... so I don't want to get into a time frame discussion.

A better question would be ... do you think if you reduce your holding time you increase your winning ratio? I think most traders can at least concede (even researchers and economist concede) that there might be an element of persistence in the time series, how would a 2 pip spread and a lot less holding time take advantage of this phenomenon to the extent that it exists? would it not be the case that the less your holding time the more you are subjected to random orders moving the price?
AVT INVENIAM VIAM AVT FACIAM
  • #290
  • Nov 8, 2015 4:13pm Nov 8, 2015 4:13pm
Quoting Copernicus
{quote} *snigger*.....troublemaker. You would be fun at the pub. :-)
if we ever meet, i would prove that actually you are not mistaken about the fun part, btw all drinks are on me. lol.
As Above, So Below
  • #291
  • Nov 8, 2015 4:26pm Nov 8, 2015 4:26pm
Quoting the redlion
{quote} are you saying tick, or one minute charts are more predictable than daily charts? ****let me rephrase that, candles or time frames are nothing but representations of the BID/ASK price cut into different time periods..... so I don't want to get into a time frame discussion. A better question would be ... do you think if you reduce your holding time you increase your winning ratio? I think most traders can at least concede (even researchers and economist concede) that there might be an element of persistence in the time series, how would a...
Definitely the intraday price action is a lot more predictable than long term price action. I personally have never been able to make consistent profit on the longer time frames.
You see, the main problem with large time frames is that you just cannot manage risk properly. You have to trade very small, with large stops and you have to hope that the market will produce some huge trend that eventually will bail you out of the drowdown which is caused by low win rate..... its absolutely hopeless strategy.
If you want to trade for a living but you don't have millions of risk capital you have to learn to scalp. There is no other way. You need constant cash flow. How else are you going to pay the bills? Are you going to sit and wait for the big trend while the drawdown gets bigger and bigger?
  • #292
  • Nov 8, 2015 4:31pm Nov 8, 2015 4:31pm
Quoting alphaomega
{quote} Definitely the intraday price action is a lot more predictable than long term price action. I personally have never been able to make consistent profit on the longer time frames. You see, the main problem with large time frames is that you just cannot manage risk properly. You have to trade very small, with large stops and you have to hope that the market will produce some huge trend that eventually will bail you out of the drowdown which is caused by low win rate..... its absolutely hopeless strategy. If you want to trade for a living but...
Hi AO

I think you are getting down to the crux of the debate when talking in terms of levels of sufficient capital and expectations relating to cashflow. Projecting cashflows is inevitably uncertain in nature and my stance in this is to use trading for wealth creation as opposed to income yield. If I am after income yield I use alternative instruments in different asset classes and methods. If you can derive sufficient income from a relatively small stake in the forex world then I must take my hat off to you....but I think we can probably count the likes of you on one hand....or perhaps a couple of digits. It's not that I haven't tried as I have spent significant effort striving for regular income yield with only minimal success when adopting a multi-time frame apprach to trading with a bit of statistical robustness,,,,but to-date....no cigar for me unless I ramp up trade capital to levels that would not be regarded as 'normal' in this retail world.:-)
  • #293
  • Nov 8, 2015 4:57pm Nov 8, 2015 4:57pm
Quoting Copernicus
{quote} Hi AO I think you are getting down to the crux of the debate when talking in terms of levels of sufficient capital and expectations relating to cashflow. Projecting cashflows is inevitably uncertain in nature and my stance in this is to use trading for wealth creation as opposed to income yield. If I am after income yield I use alternative instruments in different asset classes and methods. If you can derive sufficient income from a relatively small stake in the forex world then I must take my hat off to you....but I think we can probably...
Hi,
It's very tough to trade for a living! Most people imagine that once you turn the corner, it all becomes sunshine and rainbows....and you make gazillions of dollars..... But the reality is a lot different. It's a constant struggle. You have to fight every day..... Even if you have relatively large capital, sometimes you are just not on top of your game,... or the market is dead and there is no good opportunities....for days and even weeks.
No matter how good as trader you are, it's always good to have second source of income like a rent or some stock dividends. It just keeps you out of trouble during the tough periods.
  • #294
  • Nov 8, 2015 5:38pm Nov 8, 2015 5:38pm
Quoting the redlion
{quote} I disagree to the extent of the impact you purport market makers, Dealers, Hedge funds, Asset class managers etc ...."Big money" has on the Market. first of all not all of them have the same interests, prop trading is not the main purpose for the Foreing exchange markets, Second of all you are leaving out the impact Big Corporations, exporters, and all other economic activity in the country.... which is why the market is efficient to the extent that it is. How about the central banks? if...
Watch this! It's an old classic, and every trader should watch it. The whole manipulation game(the pattern) is shown in this short documentary. 3 decades later it's the same game. Nothing is changed! It's just all electronic execution now, so no more phones calls ......its all buttons and algos. ( Oh, and no more smoking in the office )

Inserted Video
  • #295
  • Nov 8, 2015 5:53pm Nov 8, 2015 5:53pm
Exchange rate manipulation is going on a daily basis!
I guess some people here have to wake up and open their eyes at some point in order to understand how the game actually works. Here is another proof that market makers and traders from major banks often cooperate during price manipulations and stop hunting
Attached File(s)
File Type: pdf hsbcmisconduct111114.pdf   281 KB | 1,068 downloads
  • #296
  • Nov 9, 2015 2:19am Nov 9, 2015 2:19am
Quoting alphaomega
COT is a lagging indicator so you can hardly find any real edge in it.....
I never said COT data is predictive, or exploitable, or even useful - I simply suggested that its correlation with currency moves is further evidence of non-randomness in forex.
si hoc legere scis nimium eruditionis habes
  • #297
  • Edited 4:13am Nov 9, 2015 3:40am | Edited 4:13am
This is just the tip of the iceberg! https://en.wikipedia.org/wiki/Forex_scandal
The regulators were only able to catch the fix manipulation..
But there is another (new) much bigger game going on right now, and Im sure it will take at least another 10 years for the regulators to catch up and find out what's going on.......The Big money is ALWAYS one step ahead of everyone else!
After the Volcker Rule was introduced, it made it harder for these banks to engage in this type of manipulations but they very quickly found solution. Some of their best traders anounced that they "left" the banks after the prop desks were closed/limited.....in order to start "their own" hedge funds......but that's just bullshit for the media! In reality it's just another global operation...and the whole capital for it still comes from the major banks. They just use different channels to allocate funds to the external operations.....So all manipulations are still here. This stuff is too profitable for them, so they will never give up.
In today's FX market very small part of the intraday price action is a result from corporate demand! At least 90% of the price action(volume) is caused directly by speculative trading, and most of that flow comes from small group of big players who push the mkt up and down all day long.
  • #298
  • Nov 9, 2015 7:07am Nov 9, 2015 7:07am
Quoting alphaomega
Exchange rate manipulation is going on a daily basis!
Of course!

Price manipulation of all kinds in all markets have been taking place for as long as markets have existed.

A robust approach factors in the manipulative tendencies of market participants into the trading method.
  • #299
  • Edited 8:25am Nov 9, 2015 8:13am | Edited 8:25am
Quoting Atokys
{quote} Of course! Price manipulation of all kinds in all markets have been taking place for as long as markets have existed. A robust approach factors in the manipulative tendencies of market participants into the trading method.
That's what I'm trying to explain here, but some people still don't get it.....
If you know what to look for and when, you can clearly spot the manipulation just by watching the price action, and you can piggyback on the wave created by the manipulators.....and grab 5-20 pips usually in few min.
These are very simple setups....nothing complicated about them.
They happen during the most active hours (GMT time)
. usually after the London open and between news events
. 30-60 min after big news event
. in the end of the london session. (mainly around the fix and around the european cash equity close)

But you cannot quantify these things 100%. And you never really know when it will happen. Every time the setup looks differently, and the fundamental context is different. So very hard to automate this thing into some EA or indicator.
You have to develop real skills and instincts to spot these things.

A few technical things to look for:
1. In a ranging market pay attention to the daily high and low prices. At some point they will try to push the market there to run the stops outside the range.. (usualy you will see fast breakout like one during news, but without any news ) The price will run in one direction at least 10 pips and then it will colapse back inside the range, Some times the run can be alot bigger (depends on the condext) In the most extreme cases we have seen stop runs over 200 pips.

2. In a trending context, pay attention to key technical levels of support and resistance. Especially the 00 levels.
When the price begins to approach some key level, the dealers always try to push the price to break it.
For example, on the upside, once the price breaks the 85 level, this is the trading zone all the way up to 20-30! The opposite to the downside( below 15 ). The stops are sitting outside the 00 boundary most of the time.
During the accumulation phase(before the breakout) pay very close attention to the price action.(the devil is in the detail) There is always some unusual "nervousness" in the way price ticks up and down. For example when it approaches the key level, the number of ticks per second will increase and then you start to see 2- 3 - 5 - and even 10 pip single ticks. This is strong indication that very big players push the market (not some ordinary traders).
After the breakout, when all stops are cleared, the market will start to pull back.......
To see all this you don't even need charts. Just look at the bid/offer and the daily high/low. You need some ECN or DMA broker with raw pricing. (The market makers filter the quotes so it's a little bit harder to see the ticks clearly.)

Of course there are many other things and details, but I can't write 100 pages here
  • #300
  • Nov 9, 2015 8:15am Nov 9, 2015 8:15am
Quoting alphaomega
This is just the tip of the iceberg! https://en.wikipedia.org/wiki/Forex_scandal The regulators were only able to catch the fix manipulation.. But there is another (new) much bigger game going on right now, and Im sure it will take at least another 10 years for the regulators to catch up and find out what's going on.......The Big money is ALWAYS one step ahead of everyone else! After the Volcker Rule was introduced, it made it harder for these banks to engage in this type of manipulations but they very quickly found solution. Some of...
1. what is the profit that comes through fix manipulation per transaction for a specific bank?
2. do you think banks also can lose if yes what would you consider "significant loss" for a bank?
As Above, So Below
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