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Forex Dream Chasers - The 90% rule of randomness

  • #421
  • Jan 26, 2016 6:31am Jan 26, 2016 6:31am
So in essence, follow the trend ONLY when there is an event that would move the market.

Putting it all together is the tricky part and it will differ from one person to another due to trading experience, Money management etc.
  • #422
  • Jan 26, 2016 6:37am Jan 26, 2016 6:37am
Quoting Gobigfx
{quote} This is another reason so many retail traders fail. You simply can't code this into and EA because there are always too many factors effecting price movement and too many different players. EA simply can not take all these various factors into account. What is required is sitting down and analyzing the context of the situation. I will try and give you some example of what I mean. At 10 am today Consumer Confidence comes out. Step 1 is to wait to see the numbers. Step 2 is to see if there is any variance in that number = Is that number a...

By the time you have figured out step 1, 2 and 3 the market would have moved 50-100 pips leaving you breathless and frustrated. Entering a position after the market has moved can be risky.

Pending orders above and below the current price before the news event is what i normally do with a bit of success.
  • #423
  • Jan 26, 2016 6:52pm Jan 26, 2016 6:52pm
Its not always this easy but today was a great example of Randomness being overcome by the market reacting to new information.
The reason this was so easy because the market did not price this data in yet and the move was simple.
It gets more complicated when the market has already priced data in.


There is no need for me to trade the rest of the week I made so much money from this trade so now I just wait till I have other conditions correct where Randomness will be overcome again.



See pic below
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  • #424
  • Jan 27, 2016 5:58am Jan 27, 2016 5:58am
Quoting Valor
{quote} Pending orders above and below the current price before the news event is what i normally do with a bit of success.
PLEASE DO NOT DO THIS its a fools game and you will lose a lot of money.

There is no need to guess or gamble as traders we never want to gamble we want to make logical decisions based on facts and understanding how markets work and who is moving them.

Many times after new information hits the market there will be an initial reaction that you will miss and thats perfectly fine because once the initial frenzy of all the Algo's has stopped the reaction will continue and this is when you will catch huge moves.

Remember I told you all.... you are all trading way too much in random noise so train yourself to only trade when you know the market must move to adjust to the new information.
  • #425
  • Jan 27, 2016 6:15am Jan 27, 2016 6:15am
Quoting Gobigfx
{quote} PLEASE DO NOT DO THIS its a fools game and you will lose a lot of money. There is no need to guess or gamble as traders we never want to gamble we want to make logical decisions based on facts and understanding how markets work and who is moving them. Many times after new information hits the market there will be an initial reaction that you will miss and thats perfectly fine because once the initial frenzy of all the Algo's has stopped the reaction will continue and this is when you will catch huge moves. Remember I told you all.... you...
Noted... thank for the advice and reply @Gobigfx
  • #426
  • Jan 27, 2016 10:36am Jan 27, 2016 10:36am
Very good advice Gobigfx! Please keep it coming.
  • #427
  • Jan 27, 2016 8:11pm Jan 27, 2016 8:11pm
Needs to learn more from you Gobigfx...... pls give us more examples ..
  • #428
  • Jan 28, 2016 8:52am Jan 28, 2016 8:52am
FOMC Statement
Situation = The market has had a huge move down in the last 20 days
= Most of the hawkish tone to the statement was priced in
= Short the market BUT not for much or alot and if your so inclined
you could have justified a short term BUY off the lows

The point is there was NO new information that the market needed to adjust too
so randomness can continue and there is no real edge other then range trading.

I personally did not trade the range because I prefer a solid driver that will force the players to adjust.

Just keeping it real I will tell you when I trade and when I won't because I don't want you over trading
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  • #429
  • Jan 28, 2016 4:40pm Jan 28, 2016 4:40pm
Hi Gobigfx, there are 2 green dotted lines in ur graph, are they S/R lines ?? or something else ...?
  • #430
  • Jan 28, 2016 4:48pm Jan 28, 2016 4:48pm
Quoting Gobigfx
{quote} PLEASE DO NOT DO THIS its a fools game and you will lose a lot of money. There is no need to guess or gamble as traders we never want to gamble we want to make logical decisions based on facts and understanding how markets work and who is moving them. Many times after new information hits the market there will be an initial reaction that you will miss and thats perfectly fine because once the initial frenzy of all the Algo's has stopped the reaction will continue and this is when you will catch huge moves. Remember I told you all.... you...
Have a question here, how long do you think a new information will affects the market until the randomness occur again ? only until NY close or will continue for 1-2 days ...... ? Thanks for responding Gobigfx
  • #431
  • Jan 28, 2016 6:12pm Jan 28, 2016 6:12pm
Quoting budim2006
{quote} Have a question here, how long do you think a new information will affects the market until the randomness occur again ? only until NY close or will continue for 1-2 days ...... ? Thanks for responding Gobigfx

If there was an easy answer I would give it to you but a few factors must be taken into consideration.

1. How much of a surprise was the new information in context

2. Are there any other big data releases coming out in the next few days that could influence a continuation of a move

3. What is the market focused on at the moment (Just read Bloomberg everyday and follow what the headlines are talking about)

Some move will run out of steam after 1 day some moves can go on for weeks
  • #432
  • Jan 29, 2016 11:45am Jan 29, 2016 11:45am
@GOBIGFX Please can you shred more light into what institutional traders watch out for? you mentioned the banks get orders from large firms and they execute. You also mentioned they DON'T use charts.

i realized i was using the wrong tools and now i focus all my attention on Price alone after news event has moved the market.

More light in how institutional traders trade would be helpful sir.
  • #433
  • Jan 29, 2016 4:56pm Jan 29, 2016 4:56pm
There was a huge "Non-random" move yesterday after US News, could you share how you see this move according to your rules ? Thanks Gobigfx .....
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  • #434
  • Feb 1, 2016 2:36am Feb 1, 2016 2:36am
That 90% random number does not have any base in reality. And because you did not "make it", no one else ever will? I do not mean to be disrespectful but I think you are extrapolating that because something went bad for you, it will happen for everyone else.

The beauty about forex or any money gambling business (I do not mean gambling as a derogative term here), is that the only metric if someone knows what he is doing or not is wether he has consistently made money out of it. All the books someone has read or all the degrees in a field or how many black cat he owns don't matter because the numbers are the measure of success. So if someone through all the "90% noise" still manages to get money out consistently then he statistically disproved your claim of this being an imaginary dream.
Price-Action Extremist
  • #435
  • Feb 1, 2016 9:05am Feb 1, 2016 9:05am
Quoting budim2006
There was a huge "Non-random" move yesterday after US News, could you share how you see this move according to your rules ? Thanks Gobigfx ..... {image}
So ask yourself the questions in order.

1. How much "new" information was in the data ?
2. Where has the market come from prior to that information ?
3. Has the new information already been priced into the market or is the new information going to cause the institutions to adjust their views on the market and add or remove trades. ?

Then trade accordingly

In this case the information was nothing new so fading the move was the trade.

I personally don't like these trades and prefer to only trade when the news will move the market rather then not move the market and rotate.
  • #436
  • Feb 1, 2016 9:05am Feb 1, 2016 9:05am
Quoting Valor
@GOBIGFX Please can you shred more light into what institutional traders watch out for? you mentioned the banks get orders from large firms and they execute. You also mentioned they DON'T use charts. i realized i was using the wrong tools and now i focus all my attention on Price alone after news event has moved the market. More light in how institutional traders trade would be helpful sir.
Excellent welcome to the millionaires club.

  • #437
  • Feb 1, 2016 9:26am Feb 1, 2016 9:26am
Quoting Gobigfx
{quote} So ask yourself the questions in order. 1. How much "new" information was in the data ? 2. Where has the market come from prior to that information ? 3. Has the new information already been priced into the market or is the new information going to cause the institutions to adjust their views on the market and add or remove trades. ? Then trade accordingly In this case the information was nothing new so fading the move was the trade. I personally don't like these trades and prefer to only trade when the news will move the market rather...

Why fade? GDP was almost in line a bit below consensus and PC was better than expected...so why fade a not really an information that could change the sentiment?
i know that market could have been expecting a bad number..can explain further your thoughts?
  • #438
  • Feb 1, 2016 10:08am Feb 1, 2016 10:08am
Quoting juangecko
{quote} Why fade? GDP was almost in line a bit below consensus and PC was better than expected...so why fade a not really an information that could change the sentiment? i know that market could have been expecting a bad number..can explain further your thoughts?
So Wednesday was the most important data of the week Fed Announcement that was no big surprise and the market stayed rotational as we discussed.
Once we got that out of the way Fridays EUR CPI and US GDP where no real surprise so there is no reason for randomness to be overcome by new information forcing institutions to adjust. The biggest driver on Friday was the BOJ negative rates if anything but even that would not effect the EUR enough to overcome randomness.

Look at the context of the situation is the EUR in any strong trend right now ?

Not really its been balanced between 1.10 and 1.07 in order for this balance to be overcome we must have a strong enough driver so rotation is the trade until we see something fundamentally strong enough to force the institutions to adjust positions.

So till then trade rotations at the extremes and only if something fundamentally changes then just keep trading rotation.
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  • #439
  • Edited 10:50am Feb 1, 2016 10:30am | Edited 10:50am
Quoting Gobigfx
1. How much "new" information was in the data ? 2. Where has the market come from prior to that information ? 3. Has the new information already been priced into the market or is the new information going to cause the institutions to adjust their views on the market and add or remove trades. ? Then trade accordingly
Exactly.

Good thread! Must admit I'd ignored it because I saw the word "randomness" in the title. There have been a zillion threads on randomness and they typically argue that markets are perfectly efficient and that all profit/loss is merely fortuitous. There is more order in the way that prices move, than a lot of folk realize, even if it defies most conventional forms of 'retail' TA.
  • #440
  • Feb 1, 2016 6:57pm Feb 1, 2016 6:57pm
hi gobigfx, It's very nice to meet you, I am not a professional trader but I have the same thought as you. The Fx market is too large and it's become random in 90% of time. 10% left is when the news come out or some Big banks, Big institutions they are hunting the sheeps. That's the way I approach the Fx market, I want to fight the random and that's it. And I have figured it out that Martingale is a good method to deal with it, but you need to combine it with other methods because it's dangerous. I haven't found my best recipe but I know I am on the right way.
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