How do i start trading in foreign currency and how do i make money of it - page 3
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I would most definately agree =)
I (and most definately others) have tried to make various filters to detect market conditions in an attempt to avoid inappropriate market conditions for different ea´s trading-style.
Unfortunately also this type of market condition filtering has its huge limitations, much of it probably because of what were recently mentioned in another thread, lagging indicators.
Once price has started to trend again (or entering ranging conditions from vice versa) it is often too late to get in.
Instead it more often than not seems (even though it is probably just an illusion, or simply murphy's law) as if everyone detects this new market condition at the same time resulting in a price reversal or spike just enough to reach the obvious stoploss-levels before continuing the new market state.
You as an highly qualified market participant, would you say that these intraday price movements could be based upon such behaviour to a great extent?
I mean could there be a negative effect created by technical indicators exploited by bigger players on a regular basis?
Of course I already know and have heard about Stoploss-hunting, but do you think it has a major role in intraday trading?
/ McKeen
Regressional grab skype and contact me aims.tradingfloor during London session. I'll take 5 minutes to explain, have a MT4 open and ready, a nice clean one with nothing on.
Your correct on most counts. You are witnessing very common market factors in at least two dimensions.
1. Price reversals can be market makers providing liquidity, the famous stop loss hunt, its not as nasty and mean as you think, it can be sometimes cough SNB and soon to be BoJ, liquidity is normally the key issue not your couple of k SL.
2. A natrual reaction to the myth that pops up is 80-90% of the market get it wrong. Again in part its true. With boring you I'll highlight a typical scenario that can be applied from minute 1 charts to eon charts
and I'll add 3. Your Broker is playing games with you. Without naming names, I worked for a dodgey (hey I needed the money) broker in lets say an Off-shore (to the UK) country on a deal desk, trust me you stand no chance. Not all brokers are bad, most are ok, some excelllent, some oh my its a crime.
The market changes trend from a long to short example scenerio 1. A long trader has been in trade and realises he/she is now facing a short market. The options are that he will wish to take profits onto balance somewhere near the the topping, we shall call them Group A, A is now waiting for the topping to reoccur. Enter stage left famous names such as Double tops, triple tops, head and shoulders etc etc
2. Group B, the silly sod's, went long at the top of the trend, wally, and is now dreaming of the day that the price goes back to at least somewhere close to the price so he can get out with minimal lose and change direction.
3. C, the clever folk who know what the are doing, Are already into the new trend having swapped long to short or hedged off cover at prime price (you and I, of course), they see price is heading slowly back up to the entry(ish), his thinking yeah baby I'm gonna lump it again!
In this simple scenerio we have three very normal human reactions and distinct groups ABC that are advertising the fact they would perfer a better price (prime price) and they are going to trade short, the simple fact that humans are involved is enough to tell you that greed and fear are in play and that after the shock/knee jerk/panic prime move which the length of is determined by the stress placed on price Senitment/News event/psychological numbers/Technical position it will return as people normally don't buy at the top (some do, wally) or sell at the bottom (some do, wally).
Note: finding prime price or spotting reversal is a Science and an art and out side of this post.
So in short, yes of course price will come back, the market rarely moves in stright direct lines, obviously recent events (last few years) we have seen panic linear lines, but price does come back, some hour/day/week/month. Mr Charles Dow explains this extremely well, its also the basis of Elliot Wave Thoery, they explain this much better then I.
Now all you have to understand is when will it return and where too? Support becomes resistance and resistance becomes support lalala, btw the angular R&S carries the weight of the entire trend, the Horizontal R&S only holds up the last Fibo-R Frame (Need I explain more?) When, standard diviation is a good start, regressional diviation another, where too, well the average of course. Which average? the million dollar question, but If I made a trading desicion on a minute 15 chart, I'd take the minute 15 average.
A common day trade deployed uses the averages like this, I'm going to assume we have a news event free(ish) day, a non non-farm payroll day, find two pairs in fx that are Corr-negi watch for an average, lets say 100SMA, wait until both are below the 100SMA even better if they are on the outter walls as we disscused above, simple trade both the suckers long, simple statistical trade, lets say EURUSD vs USDCHF both below the 100, both will find the average sometime, its a simple hedge off. It's not as simple as that, but the basics are there. We do have to do some calculations on wider pictures etc of course.
Why mention this? Well the average and its relationship to its diviations are key, light good news close to assumed in a risk market will touch up side, Risk-A and the bugger will at least attempt to break bottom, serious dude I'm out market type market, it'll snap it like a twig. Then come back to the average, have another go or back to the break R becomes S and S becomes R RBS-SBR
These are only examples and as with any market there are no out right systems (I´m lying) that are suited to all markets, hense traders continue to be employed, its a scenerio of common value that should not be traded with out study and understanding, again I'll preach DOW Theory.I'm seriously thinking I'm talking to much and wonders if my boss is on this damn forum. Lets just say I'm "coming out" lol, my ex-boss was a crook of high degrees riping clients off daily and I don't like this. Plus she had a sales background, trader my arse.
I just remembered a quote from my old master, "pips ain't gonna buy you a pint mate, cash does" insert strong Scottish accent. What he was saying and It's very true: why trade 100 pips at 10USD when you can take the first 10th of the trade at 10pips for 100USD and go and have a pint in the pub for the rest of the afternoon, Time equals risk. If you are sure enough to apply risk for 100 pips surely you are sure enough to apply risk at 10 pips, his so right.
Your correct on most counts. You are witnessing very common market factors in at least two dimensions.
1. Price reversals can be market makers providing liquidity, the famous stop loss hunt, its not as nasty and mean as you think, it can be sometimes cough SNB and soon to be BoJ, liquidity is normally the key issue not your couple of k SL.
2. A natrual reaction to the myth that pops up is 80-90% of the market get it wrong. Again in part its true. With boring you I'll highlight a typical scenario that can be applied from minute 1 charts to eon charts
and I'll add 3. Your Broker is playing games with you. Without naming names, I worked for a dodgey (hey I needed the money) broker in lets say an Off-shore (to the UK) country on a deal desk, trust me you stand no chance. Not all brokers are bad, most are ok, some excelllent, some oh my its a crime.
The market changes trend from a long to short example scenerio 1. A long trader has been in trade and realises he/she is now facing a short market. The options are that he will wish to take profits onto balance somewhere near the the topping, we shall call them Group A, A is now waiting for the topping to reoccur. Enter stage left famous names such as Double tops, triple tops, head and shoulders etc etc
2. Group B, the silly sod's, went long at the top of the trend, wally, and is now dreaming of the day that the price goes back to at least somewhere close to the price so he can get out with minimal lose and change direction.
3. C, the clever folk who know what the are doing, Are already into the new trend having swapped long to short or hedged off cover at prime price (you and I, of course), they see price is heading slowly back up to the entry(ish), his thinking yeah baby I'm gonna lump it again!
In this simple scenerio we have three very normal human reactions and distinct groups ABC that are advertising the fact they would perfer a better price (prime price) and they are going to trade short, the simple fact that humans are involved is enough to tell you that greed and fear are in play and that after the shock/knee jerk/panic prime move which the length of is determined by the stress placed on price Senitment/News event/psychological numbers/Technical position it will return as people normally don't buy at the top (some do, wally) or sell at the bottom (some do, wally).
Note: finding prime price or spotting reversal is a Science and an art and out side of this post.
So in short, yes of course price will come back, the market rarely moves in stright direct lines, obviously recent events (last few years) we have seen panic linear lines, but price does come back, some hour/day/week/month. Mr Charles Dow explains this extremely well, its also the basis of Elliot Wave Thoery, they explain this much better then I.
Now all you have to understand is when will it return and where too? Support becomes resistance and resistance becomes support lalala, btw the angular R&S carries the weight of the entire trend, the Horizontal R&S only holds up the last Fibo-R Frame (Need I explain more?) When, standard diviation is a good start, regressional diviation another, where too, well the average of course. Which average? the million dollar question, but If I made a trading desicion on a minute 15 chart, I'd take the minute 15 average.
A common day trade deployed uses the averages like this, I'm going to assume we have a news event free(ish) day, a non non-farm payroll day, find two pairs in fx that are Corr-negi watch for an average, lets say 100SMA, wait until both are below the 100SMA even better if they are on the outter walls as we disscused above, simple trade both the suckers long, simple statistical trade, lets say EURUSD vs USDCHF both below the 100, both will find the average sometime, its a simple hedge off. It's not as simple as that, but the basics are there. We do have to do some calculations on wider pictures etc of course.
Why mention this? Well the average and its relationship to its diviations are key, light good news close to assumed in a risk market will touch up side, Risk-A and the bugger will at least attempt to break bottom, serious dude I'm out market type market, it'll snap it like a twig. Then come back to the average, have another go or back to the break R becomes S and S becomes R RBS-SBR
These are only examples and as with any market there are no out right systems (I´m lying) that are suited to all markets, hense traders continue to be employed, its a scenerio of common value that should not be traded with out study and understanding, again I'll preach DOW Theory.I'm seriously thinking I'm talking to much and wonders if my boss is on this damn forum. Lets just say I'm "coming out" lol, my ex-boss was a crook of high degrees riping clients off daily and I don't like this. Plus she had a sales background, trader my arse.
I just remembered a quote from my old master, "pips ain't gonna buy you a pint mate, cash does" insert strong Scottish accent. What he was saying and It's very true: why trade 100 pips at 10USD when you can take the first 10th of the trade at 10pips for 100USD and go and have a pint in the pub for the rest of the afternoon, Time equals risk. If you are sure enough to apply risk for 100 pips surely you are sure enough to apply risk at 10 pips, his so right.
Thanks for your response Rob, very interesting information!
/ McKeen