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I'm quiting trading but can someone elighten me on this?

  • #21
  • Jan 8, 2016 2:49pm Jan 8, 2016 2:49pm
You know what's funny, back in 2013 everybody was saying the markets are untradeable, volatility is too low, nobody can make money until currencies start moving again. Now they are moving again, people are complaining about the volatility and pining for the good old days of 2013.

If you are looking at a currency cross like GBP/NZD and trying to apply technical analysis to it, you need to stop trading and go back to basics - start by learning what a currency cross is, and how it's price is calculated - Hanover gave you a big clue in post #9. GBP/NZD is derived from the current price of the Pound and the current price of the Kiwi.

TA is based on the belief that the price of an instrument will somehow respond to, or repeat, its own history. But GBP/NZD isn't even a tangible instrument ... GBP is a financial instrument, which is driven up and down by a range of factors ... what NZD has done in the past isn't really one of those factors. NZD is a financial instrument which is driven up and down by a range of factors - GBP's history isn't really one of those factors.

So to expect GBP/NZD to react to it's own past price action is a trap ... if GBP is moving down, it won't stop and reverse because it hit some level vs the Kiwi, because it is always hitting some level against some other currency. If NZD is moving up, it won't stop and reverse just because it hit some level vs. the Pound, because it is always hitting levels against all the other currencies too.

This post probably doesn't make sense to most traders. It will, if you stop trying to analyze "pairs" of currencies and start analyzing currencies individually - if you decide GBP is bearish, sell it. If you decide NZD is bullish, buy it.
si hoc legere scis nimium eruditionis habes
  • #22
  • Jan 8, 2016 2:52pm Jan 8, 2016 2:52pm
Quoting Volk
{quote} Short-term and long-term trading are exactly the same. Price action is basically the same on most time frames...
You might wanna question that, what it seems by your sentence construction, a general rule...
Also you might wanna define the wording "basically" the same on "most" time frames...
  • #23
  • Jan 8, 2016 2:53pm Jan 8, 2016 2:53pm
Quoting Volk
{quote} Short-term and long-term trading are exactly the same. Price action is basically the same on most time frames...

Price action may appear similar on most timeframes, but the driving forces behind that price action are wildly different. The reasons why price does what it does over a period of weeks/months, are very different from the reasons why price does what it does over a few minutes. The question we need to ask ourselves, is which of those reasons can we best read and anticipate? The answer to that question should dictate whether you trade short term or long term.
si hoc legere scis nimium eruditionis habes
  • #24
  • Jan 8, 2016 3:15pm Jan 8, 2016 3:15pm
Quoting numbnuts
{quote} Price action may appear similar on most timeframes, but the driving forces behind that price action are wildly different. The reasons why price does what it does over a period of weeks/months, are very different from the reasons why price does what it does over a few minutes. The question we need to ask ourselves, is which of those reasons can we best read and anticipate? The answer to that question should dictate whether you trade short term or long term.
The driving forces are always the same for every timeframe: Liquidity required VS Liquidity available. When price moves up on a montlhy chart, it means that the auction process is controled by buyers, nothing more. This kind of control exists for every timeframe.
  • #25
  • Jan 8, 2016 3:24pm Jan 8, 2016 3:24pm
Quote
The reasons why price does what it does over a period of weeks/months, are very different from the reasons why price does what it does over a few minutes.

No, there are exactly the same. Buyers buy and sellers sellers and they both trade with Liquidity providers.

Quote
The question we need to ask ourselves, is which of those reasons can we best read and anticipate? The answer to that question should dictate whether you trade short term or long term

Short-term and Long-term are just words. A weekly chart's trader is a Short-term trader for a yearly chart's trader. Also a Short-term trader nowadays is the not trader he was in 1960 where scalping and HTF did not exist yet: Short-term trading meant keeping traders for days back then. It shows that those terms are just strictly subjective.
  • #26
  • Jan 8, 2016 3:27pm Jan 8, 2016 3:27pm
Quoting Volk
The driving forces are always the same for every timeframe: Liquidity required VS Liquidity available. When price moves up on a montlhy chart, it means that the auction process is controled by buyers, nothing more. This kind of control exists for every timeframe.
Liquidity isn't really the driving force behind the value of a currency, it is a function of the mechanism by which currencies move up and down.

example: When Shinzo Abe won the election in 2012, and declared he would do "whatever it takes" to raise inflation, JPY moved 4,000 pips over almost two years. Sure you could argue that JPY pairs kept moving higher on shorter timeframes because of liquidity gaps - and you wouldn't be wrong - but that wasn't really the driving force behind JPY weakness.
si hoc legere scis nimium eruditionis habes
  • #27
  • Jan 8, 2016 3:53pm Jan 8, 2016 3:53pm
Quoting Crimson
What the F!@K happened this morning? Im trading the GBP/NZD and there is no major news that should affect this pair but guess what, it did and even the non farm payroll for USD also somehow managed to cause some volatility on this pair. my broker even widened the spread to over 200 pips for 10 mins. I have attached a screenshot of GBP/NZD on 1H timeframe....as far as im concened, this pair was ranging and breakout was going to happen at some point but this huge boost for GBP or weakness for NZD despite no economic news is suspicious. i had checked...
GBP/NZD is

(GBP/USD) / (NZD/USD) ==> All is traded against the USD even the CROSSES.
  • #28
  • Edited 4:14pm Jan 8, 2016 4:00pm | Edited 4:14pm
Quoting Crimson
What the F!@K happened this morning? Im trading the GBP/NZD and there is no major news that should affect this pair but guess what, it did and even the non farm payroll for USD also somehow managed to cause some volatility on this pair. my broker even widened the spread to over 200 pips for 10 mins. I have attached a screenshot of GBP/NZD on 1H timeframe....as far as im concened, this pair was ranging and breakout was going to happen at some point but this huge boost for GBP or weakness for NZD despite no economic news is suspicious. i had checked...
Technically, I don't see anything wrong. Good short opportunity now, bouncing perfectly off confluence of trend line, s/r level and 50 fib. I find a lot of pullbacks hit the 50 fib. Am I missing something?
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  • #29
  • Jan 8, 2016 4:27pm Jan 8, 2016 4:27pm
Quoting numbnuts
{quote} Liquidity isn't really the driving force behind the value of a currency, it is a function of the mechanism by which currencies move up and down. example: When Shinzo Abe won the election in 2012, and declared he would do "whatever it takes" to raise inflation, JPY moved 4,000 pips over almost two years. Sure you could argue that JPY pairs kept moving higher on shorter timeframes because of liquidity gaps - and you wouldn't be wrong - but that wasn't really the driving force behind JPY weakness.

Price goes up because Buy Market orders take over Sell limits while Sell market orders can't take over buy limits. Liquidity required (market orders=aggressivity) VS Liquidity available


If every trade consists of an equal amount of buying and selling, how can a trade be classified as either buying or selling? This is the reason for the confusion that many new traders encounter when learning about market price movement.
The answer is that every trade is classified as a buying trade or a selling trade based upon how the trade affects the order book, and therefore the current market price.
The order book is composed of bid prices, ask prices, and the last price (i.e. the current market price). The bid prices are the...






http://daytrading.about.com/od/daytr...PricesMove.htm
  • #30
  • Jan 8, 2016 4:32pm Jan 8, 2016 4:32pm
I will not comment on your particular trade. But every now and then you will see a rally that defy all technicals, and most of the times those rallies are swallowed by opposite rallies. Its perfectly normal behavior of any market. As a matter of fact, I actually caused a similar rally on local stock market by mistake. I had large number of shares for a low volume stock which I wanted to sell. I mistakenly submitted market order instead of limit order and within seconds the price of bullish stock dropped over 20% and then within seconds came back to former price after my order was filled. I lost a lot of money that day, but learned a valuable lesson on those unexplained spikes . Later I found local traders trying to make sense of that spike on a forum, many calling it stop loss hunt. But in reality it was a stupid mistake.
  • #31
  • Jan 8, 2016 4:52pm Jan 8, 2016 4:52pm
Quoting Divergence
the solution stop trading with retail forex brokers who have the ability to control the envirorment switch to the futures market (the real market) and trade against the world
Absolutely correct t.........could add more, but enough said.
  • #32
  • Jan 8, 2016 4:54pm Jan 8, 2016 4:54pm
Quoting jen101
{quote} Technically, I don't see anything wrong. Good short opportunity now, bouncing perfectly off confluence of trend line, s/r level and 50 fib. I find a lot of pullbacks hit the 50 fib. Am I missing something? {image}
Good TA.
D - But can rise more 200 pips.
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  • #33
  • Jan 8, 2016 5:25pm Jan 8, 2016 5:25pm
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  • #34
  • Jan 8, 2016 6:36pm Jan 8, 2016 6:36pm
Quoting Crimson
What the F!@K happened this morning? Im trading the GBP/NZD and there is no major news that should affect this pair but guess what, it did and even the non farm payroll for USD also somehow managed to cause some volatility on this pair. my broker even widened the spread to over 200 pips for 10 mins. I have attached a screenshot of GBP/NZD on 1H timeframe....as far as im concened, this pair was ranging and breakout was going to happen at some point but this huge boost for GBP or weakness for NZD despite no economic news is suspicious. i had checked...
This pair broke North 5 hrs before the "spike" from a mere 2 day "Range" after trending Long all week. No-one should have been short at the time.
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Look Left Trade Right
  • #35
  • Jan 8, 2016 7:02pm Jan 8, 2016 7:02pm
The actual answers to the price movement has been given by hanover and numbnuts, but since a lot of TA posts are going up. I thought I would add a simple one.

On 1/5/16 price confirmed a sushi roll. You can google what that is in relation to trading. There was warning that price was going to move up.
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If you are good at something, never do it for free--Joker
  • #36
  • Jan 8, 2016 10:33pm Jan 8, 2016 10:33pm
Quoting Divergence
the solution stop trading with retail forex brokers who have the ability to control the envirorment switch to the futures market (the real market) and trade against the world
futures market isn't the real market.. its only something like 10% of the volume

i understand what you are saying though, that during NFP retail brokers mark up the spread. but that happens with futures brokers too

people should be going flat into NFP unless they are holding longer term positions and their stops are not going to be hit by the broker widening spreads



GBPNZD is one the least liquid markets for g10 crosses... the only g10 pair that is even less liquid might be AUDNZD and even less liquid would be NZDCAD (which happens to be at a triple top, btw)
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Be hopeful in a winning position, and fearful in a losing position.
  • #37
  • Jan 8, 2016 10:42pm Jan 8, 2016 10:42pm
Quoting Rag2RichesFX
{quote} futures market isn't the real market.. its only something like 10% of the volume i understand what you are saying though, that during NFP retail brokers mark up the spread. but that happens with futures brokers too people should be going flat into NFP unless they are holding longer term positions and their stops are not going to be hit by the broker widening spreads GBPNZD is one the least liquid markets for g10 crosses... the only g10 pair that is even less liquid might be NZDCAD (which happens to be at a triple top, btw) {image}
negative futures brokers don't determine the spread which in reality is non you can go long at the price . there is non of that crap in the futures market plus you don't have to just trade currency. forex has no exchange so no real volume can be measured if you think you can thoroughly succeed with forex brokers then you are dreaming and the money is not secure if the go belly up theres enough risk in trading why add more to your plate.
  • #38
  • Edited Jan 9, 2016 2:09am Jan 8, 2016 10:43pm | Edited Jan 9, 2016 2:09am
Hi Crimson

I sense the frustration in your post but have a think about how an altered mindset might possibly remove that sense of frustration.

There are two broad ways you can approach these markets and each takes a different mindset approach.
1) Process oriented mindset; or
2) Outcome oriented mindset.

The two different mindsets are at significant odds with each other and determine the stance you take in how you deal with profits and losses.

When asking questions such as 'what happened this morning with GBP/NZD', this clearly infers an outcome oriented mindset that seeks to deal with how to 'forecast or predict' future market conditions. The result is that you take a firm stance that your prediction based on your analysis is right and therefore when market conditions do not result in that prediction eventuating, you take the stance the something was 'wrong' in your analysis. This therefore breeds a sense of frustration when things just don't work out.

In my experience, this is symptomatic of those who might take their incorrect predictions as a sign of failure as opposed to simply being a natural result of dealing with market uncertainty.

We have evolved to adopt this outcome oriented process emotionally and it is the way we survive in this world and measure our success or failure. This mindset is responsible for 'fight or flight' tendencies and one which is instrumental to developing those negative trading symptoms of 'fear and greed and hesitation to pull the trigger'........but in dealing with 'uncertainty', this mindset comes with associated emotional baggage that doesn't help us as traders and has significant shortcomings when dealing with market uncertainty.

A way around this is to adopt methods that are process oriented as opposed to outcome oriented. You may be familiar with this technique that is applied to 'top athletes'. For example a professional golfer who has practiced a 4 foot putt thousands of times over their lifetime and yet can run into the trap, where prize money is at stake, by adopting an outcome oriented mindset, where they simply cannot handle the pressure and they choke. A process oriented mindset however does not fill the mind with 'what if scenarios about the future' and simply focuses on the process itself, recognizing that it is the process that will determine the outcome. There is a story about a world class hurdler who in winning Olympic Gold was asked by a frantic media community "what were you thinking of when you edged ahead in the race?"...or 'when did you realise that you had won the race?" etc. etc etc....where he replied 'to be honest the only thing that was going through my mind was 1,2,3,4....1,2,3,4.....1,2,3,4".

You might find that if you can re-train your mind into a 'process oriented approach', a lot of that frustration can be left behind. For a process oriented trader, you can be right in your process but wrong in your outcome and this is a more aligned mindset to take to the market. Provided you believe your system has an edge in the long term, it is the routine application of the process that is important as opposed to result. It is only the 'now' in which a trader has control. Thoughts about the future or the past affect emotions and hence physiology but are demons to a trader as in reality they have no bearing on the now. You can only control process. In the last tiebreak set of a Tennis Open, if you want to win, focus on process and do not let those demons from the future and past in.

It is not impossible to retrain the mind to think this way, but it does take some effort and commences with a need to gain trust in your system. For example as a trend trader who may only be right say 30-40% of the time, it really helps me to keep this principle in the back of my mind at all times. A good way to start if you are thinking of re-training the mind is to reduce your trade risk % of equity to a point where a loss or even a string of losses is simply inconsequential to you. This will depend on your risk appetite and only you will be able to determine that level. Once the trade risk is reduced to that level, then you simply do not care about that trade but do care about the next 100 to 1000 trades. The subtle shift actually then starts retraining the mind to focus on process as opposed to outcome. Then like the professional golfer you start practice on your system/s until they become standard routine and 'boring in execution'. Excitement and the 'thrill' of a trade are your enemies. 'Boring and repetitious' is a good sign that you are on the right track.

I hope this helps. It is always a shame to see a trader close down shop out of frustration.
  • #39
  • Jan 8, 2016 10:44pm Jan 8, 2016 10:44pm
Quoting Rag2RichesFX
{quote} futures market isn't the real market.. its only something like 10% of the volume i understand what you are saying though, that during NFP retail brokers mark up the spread. but that happens with futures brokers too people should be going flat into NFP unless they are holding longer term positions and their stops are not going to be hit by the broker widening spreads GBPNZD is one the least liquid markets for g10 crosses... the only g10 pair that is even less liquid might be NZDCAD (which happens to be at a triple top, btw) {image}
negative futures brokers don't determine the spread which in reality is none you can go long at the price . there is non of that crap in the futures market plus you don't have to just trade currency. forex has no exchange so no real volume can be measured if you think you can thoroughly succeed with forex brokers then you are dreaming and the money is not secure if the go belly up theres enough risk in trading why add more to your plate.
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