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Jay's High Probability Setups

  • #421
  • Oct 8, 2016 3:01pm Oct 8, 2016 3:01pm
Quoting Hmsr
EURUSD is at a 2 month low. It would be motivation for a buy whilst considering the US NFP is due. If FXJAY is right, it's going to be a good month. {image}
Not seeing a new high on USD by mid Tuesday, is a confirmation that Friday's top was the high for October.
Given the latest NFP numbers & the market's reaction, we're most likely not going to see a new high, but let's wait a couple more days to officially call the top.

Best part is that all of this was called few weeks ago

It is going to be a very good month
  • #422
  • Oct 8, 2016 4:37pm Oct 8, 2016 4:37pm
hi

wow thanks
  • #423
  • Edited 3:05am Oct 9, 2016 2:08am | Edited 3:05am
Quoting FX-Jay
{quote} Hey Simnz, Thanks for your message. I'll do my best to get a little more involved in sharing some MM tips in the future. I'm even considering taking this one step further & sharing the current real test account for everyone to see me managing the trades in real time. This is probably going to happen once I have stabilized the DD at a low enough level that will be safe & professional in order not to encourage any reckless trading behaviors. Best, Jay
Hi Fx-Jay,
Sharing your current real test account will be great. I thank you for responding to my request.

I am relatively new to fx spot trading. My major experience is with directionless fx options where I don't predict direction or even watch news events.

Only one strategy - OTM strangles - is executed. If strangles get out of control or the premium yielded by adjustments (rolling over positions) is not able to cover the drawdown, then the strategy is changed to ITM strangles to milk more yield of premiums. If all this fails, then time is bought by rolling over to next options expiry period. Obviously, this kind of continual risk management needs buffer margin not only to cover high volatility (expansion of margin levels) but also to execute extra contracts. At one point of time (rarest of rare event), when EURUSD experienced consecutives rises, I had to build up to 7 contracts (from contract 1) to ensure the books are balanced. Drawdown turned into a good profit at the expiry period of the options. This kind of trading is possible only in EURUSD and USDJPY because of their predictable duration of mean-reverting tendency. This strategy does not really require stoploss use.

Coming from this background, I started spot fx trading in GBPJPY a year ago. Employing no stoploss, for adverse positions, I averaged them by using constant lots at every 200 pips drawdown up to 5 times and made lucrative profits ultimately when the recovery of DD happened. But I recognised that unlike options, fx spot positions averaging was exerting pressure on the equity line, my psyche and now I am in a dilemma.

Is it worth doing it? Had I not made profits in the first few trades, would I have allowed a 25% drawdown in my equity? What kind of a psychological pressure it would have exerted on me had I faced the drawdown during the first trades itself? Some sort of unknown fear started haunting me.

By continuous adjustment of strangle options repeatedly for years, I have learned to balance the books without fear. With the one-year spot fx trading experience the lesson learned is: you have to give enough breathing space for the positions to work. But at the same time exercise prudent margin control if fear is to be overcome.

Or else, you have to have an extra-ordinary trading sense of judging peak and bottoms to employ stop loss efficiently. I have come across such traders but the performance is not more than 15% annually. If I have to do this way, then I am better off with low-stress options trading.

Having tasted 20% monthly performance in spot fx during the first few trades, I am keen to learn from traders, like you, who don't frown upon big drawdowns and employ ways to tame them. Hence, the request was made to you.

How will you be using lots - constant or varying? Will you be using averaging or not? Will you be depending upon accumulating revenue to balance equity line by varying choice of symbols to trade? Will it be a mix of high and low ADR yielding pairs? Will you be hedging with negative co-related pairs? How will you be handling periods of multi-year adjustments? Will you be employing an equity line stoploss?

I would be earnestly looking forward to learn by seeing the way you manage drawdown in real-time.
Practice makes a person perfect
  • #424
  • Oct 9, 2016 4:21pm Oct 9, 2016 4:21pm
hello HMSR, can you please share that Currency power dashboard on your post 416. I really fancy it for quick scan.
  • #425
  • Oct 9, 2016 5:32pm Oct 9, 2016 5:32pm
http://www.forexfactory.com/showthread.php?t=545718
HMSR
  • #426
  • Oct 9, 2016 5:50pm Oct 9, 2016 5:50pm
USD/JPY risk
https://www.efxnews.com/story/34280/...morgan-stanley
HMSR
  • #427
  • Oct 12, 2016 5:00am Oct 12, 2016 5:00am
USD strength wave coming in late? damn this is really hurting the DD
HMSR
  • #428
  • Oct 12, 2016 10:40am Oct 12, 2016 10:40am
Major daily uptrend line being tested by eur/usd, let see if it holds. FOMC meetings might break it or reverse it.
  • #429
  • Edited Oct 13, 2016 1:10am Oct 12, 2016 6:51pm | Edited Oct 13, 2016 1:10am
Quoting Hmsr
USD/JPY risk https://www.efxnews.com/story/34280/...morgan-stanley
Morgan Stanley have been recently putting out some decent predictions. They've been hitting the nail on the head every single time in the recent future.
Luckily (?!) I was on the same side of their predictions so far ... but this one is where we differ

They believe that the bottom is in place for UJ, and it's going to be heading towards 110

While I believe that the bottom is not in yet, and we will be seing a new low soon
  • #430
  • Oct 12, 2016 7:02pm Oct 12, 2016 7:02pm
Quoting Hmsr
USD strength wave coming in late? damn this is really hurting the DD
Not really late. If we see more USD strength next week, then yeah I'll call it late, but so far so good.

If you are feeling the DD 'pain' from this relatively little move in the last 2 days, then I can assure you that you are waaay over leveraged

Think of it this way:
If you're getting nervous/scared as the market is going against you, then you are either over leveraged or don't believe in your analysis
If you believe in your analysis & correctly manage your risk, you will view every move the market makes against you as a bonus opportunity to add to you position.
Of course this doesn't apply to all trading methods, but at least that's how you should be looking at medium to long term trades
  • #431
  • Oct 12, 2016 7:08pm Oct 12, 2016 7:08pm
Quoting kornrogers
Major daily uptrend line being tested by eur/usd, let see if it holds. FOMC meetings might break it or reverse it.
One more leg down in EU would be nice, but not 'needed' like 1.1105 was.

Quoting FX-Jay
{quote}... I personally believe that a drop to 1.1105 is needed & will happen, but a shake out all the way to 1.0950 is not out of the picture.... Over leveraged traders at this point are scratching their heads as their MC approaches. Most likely they will get stopped out or cut their losses. In the same time the 'parity' lovers that are most likely stuck with old shorts at much lower levels will pop out and start calling for Eu to go to 0...
Breaking a major trend-line would be the best incentive for the masses to come out chanting for parity once again. Once that happens I'm almost certain that EU will reverse instantly
  • #432
  • Oct 12, 2016 7:51pm Oct 12, 2016 7:51pm
Quoting simnz
{quote} Hi Fx-Jay, Sharing your current real test account will be great. I thank you for responding to my request. I am relatively new to fx spot trading. My major experience is with directionless fx options where I don't predict direction or even watch news events. Only one strategy - OTM strangles - is executed. If strangles get out of control or the premium yielded by adjustments (rolling over positions) is not able to cover the drawdown, then the strategy is changed to ITM strangles to milk more yield of premiums. If all this fails, then time...
Hey Simnz,

I will reply to you in details over the weekend.

Best,
Jay
  • #433
  • Oct 12, 2016 11:33pm Oct 12, 2016 11:33pm
Quoting FX-Jay
{quote} Morgan Stanley have been recently putting out some decent predictions. They've been hitting the nail on the head every single time in the recent future. Luckily (?!) I was on the same side of their predictions so far ... but this one is where we differ They believe that the bottom is in place for UJ, and it's going to be heading towards 100 While I believe that the bottom is not in yet, and we will be seing a new low soon
They are talking about upside and not new low.
Practice makes a person perfect
  • #434
  • Oct 13, 2016 1:10am Oct 13, 2016 1:10am
Quoting simnz
{quote} They are talking about upside and not new low.
Exactly, they believe the bottom is in place and they are predicting upside, while I believe the bottom will not hold and we will be heading lower.

I believe the confusion is because of a typo I made (it's 110 instead 100*) - original post now edited

I see it below 99.5 , they see it above 110
  • #435
  • Oct 13, 2016 1:19am Oct 13, 2016 1:19am
Now it's clear. I am a CME futures trader and CME quotes JPY/USD unlike the normal quotes of USD/JPY.

If Euro has to go up, who else except JPY will drag USD down? Will Eur, GBP and JPY drag USD down?

Looks like that will be the scenario from 15th onwards.
Practice makes a person perfect
  • #436
  • Edited 2:53am Oct 13, 2016 2:37am | Edited 2:53am
Quoting FX-Jay
{quote} Not really late. If we see more USD strength next week, then yeah I'll call it late, but so far so good. If you are feeling the DD 'pain' from this relatively little move in the last 2 days, then I can assure you that you are waaay over leveraged Think of it this way: If you're getting nervous/scared as the market is going against you, then you are either over leveraged or don't believe in your analysis If you believe in your analysis & correctly manage your risk, you will view every move the market makes against you as a bonus opportunity...
yep, I increased my leverage, because I thought I'd be okay with his kind of DD, which I am not. Highest I've ever had, a screw up.

In relation to the EURUSD, for all those that are already long, be prepared should prices fall down to the 1.08, and then 1.06 (bank forecasts).
HMSR
  • #437
  • Oct 13, 2016 4:36am Oct 13, 2016 4:36am
Hi Jay,

The bank forecasts make sense from my own options trading experience.

The tricky part here is that of the role of JPY. How it will behave? Hope you can make some comments on it.

And what is there in the minds of large market makers? Are they planning to go for multi-year adjustments in this period?

After all, books have to be balanced.
Attached Image (click to enlarge)
Click to Enlarge Name: Last mile volatility cycle.png Size: 135 KB
Practice makes a person perfect
  • #438
  • Oct 16, 2016 9:12am Oct 16, 2016 9:12am
Quoting Hmsr
{quote} yep, I increased my leverage, because I thought I'd be okay with his kind of DD, which I am not. Highest I've ever had, a screw up. In relation to the EURUSD, for all those that are already long, be prepared should prices fall down to the 1.08, and then 1.06 (bank forecasts).
Bank forecasts? I saw some sites do like efx.com Don't follow Bank forecasts ..probability of euro/usd is very much around 1.0900 , if Bank has view of 1.0600 or even 1.04xx no reason to be scary , do you think Bank forecast their trade positions publicly to benefit retail traders from their trades! Bank traders do mistakes ( see ) too. Many banks suffered heavily due to that you may google.

Most of forecasts (paid to confuse) disturb your mindset. Have a look at charts , set your money management , keep patient.
Never Gamble Forex
  • #439
  • Oct 20, 2016 1:39pm Oct 20, 2016 1:39pm
Quoting FX-Jay
Hey guys, I've been getting lots of PMs recently. I promise to read & reply to them all during the weekend. I just want to give a quick update before FOMC for those who showed interest in the last set of 'timing' posts I've made (posts # 398 through 410). Here's the main updates: 1- The bias towards a large USD weakness wave keeps on getting bigger every single day. Frankly, I haven't had such an extreme bias / high probability trade since the beginning of the year, and if you've been following me, you know that I did have some pretty strong biases...
Would be interesting to know whether our bias towards a strong USD weakness still remains, FX-Jay. Or has this changed due to the recent new lows in EURUSD?
Cheers, S.
  • #440
  • Oct 21, 2016 4:48pm Oct 21, 2016 4:48pm
Quoting simnz
{quote} Hi Fx-Jay, Sharing your current real test account will be great. I thank you for responding to my request.... I would be earnestly looking forward to learn by seeing the way you manage drawdown in real-time.
Hi Fx-Jay,

Hey Simnz,

Sharing your current real test account will be great. I thank you for responding to my request.

My pleasure. Apologies for the late reply on this one though.

I am relatively new to fx spot trading. My major experience is with directionless fx options where I don't predict direction or even watch news events.

Only one strategy - OTM strangles - is executed. If strangles get out of control or the premium yielded by adjustments (rolling over positions) is not able to cover the drawdown, then the strategy is changed to ITM strangles to milk more yield of premiums. If all this fails, then time is bought by rolling over to next options expiry period. Obviously, this kind of continual risk management needs buffer margin not only to cover high volatility (expansion of margin levels) but also to execute extra contracts. At one point of time (rarest of rare event), when EURUSD experienced consecutives rises, I had to build up to 7 contracts (from contract 1) to ensure the books are balanced. Drawdown turned into a good profit at the expiry period of the options. This kind of trading is possible only in EURUSD and USDJPY because of their predictable duration of mean-reverting tendency. This strategy does not really require stoploss use.

This sounds real interesting. I haven’t had as much experience trading options as much as I would like, but hopefully will dig into that in the future. My Options use is limited to covering relatively large positions that may be exposed to important market moving news/event over the weekend.

Your type of Options allows you to focus your full attention risk management while keeping emotional biases on the shelf. This is definitely one of the most important thing one needs to be profitable in the long run.


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