Fact-Based Trading - page 4
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Banks use stops, if you have never seen a bank with a stop, it is because they did not want to show their cards, or they were buying and selling in the physical market, you cannot forget that money is a product just like the panties some of you guys buy right off the shelf, you have tons of banks and central banks that are buying dollars and collecting the cash to buy Oil and raw materials from other countries, they never sell them back to the market, so if China needs a billion barrels of oil, they have their bank buy U.S dollars and they sell their Yuan cause you can only buy Oil in Dollars( not for much longer) but they never buy their Yuan back.
As traders we buy and we have to sell it back, or we sell and have to buy it back, some banks never offset that position so the contracts trade with no stop until expiration or they may hedge their position in the Spot market with no stop to hedge a position in the cash market, so their is a strategy behind what they are doing, they don't simply just not use stops cause they got big fat balls..
I use to trade for a very large firm that basically was a bank, their was a guy that use to call to my euro trading desk from another department and he would tell us where JP Morgan, Goldman, Merrill, Citi and all those guys had their stops and we would short or buy the hell out of those numbers if the market went any where near their, and further more to validate that, I could see my counter party trades, so if I were scalping shorts off resistance and I check my counter party trades, I could see that almost every single trade I was buying back was being sold to me by another bank that matched the information from the informant.
Banks use stops, if you have never seen a bank with a stop, it is because they did not want to show their cards, or they were buying and selling in the physical market, you cannot forget that money is a product just like the panties some of you guys buy right off the shelf, you have tons of banks and central banks that are buying dollars and collecting the cash to buy Oil and raw materials from other countries, they never sell them back to the market, so if China needs a billion barrels of oil, they have their bank buy U.S dollars and they sell their Yuan cause you can only buy Oil in Dollars( not for much longer) but they never buy their Yuan back. One cannot argue with how and where the money goes, although one should not use the word "NEVER" --- for example, simply refer to the carry trade and which way it moves and when. Unfortunately for your conclusions, NOT ALL THE MONEY DOES THAT but as a mere mortal and NOT a Bernakie or Greenspan, I can only DEAL WITH THE FOREX MARKET as I am allowed to trade it ! When you refer to banks using stops, they are using what can be called EXIT stops as opposed to the "safety" stops retail traders use, because of the great load they deal with --- Whereas, using any of the available indicators so easily available for MT4, anyone can call a top to a timeframe, the only problem being WHEN THE PRICE REACHES THAT POINT. Its almost physically impossible for a trader to watch and cover that amount of trades in a 24 hour timeframe, so an exit stop is set that will speed up taking profit. Continuing the above, anyone can set a tp that is "timeframe dependent". Often I will set an overnite trade off of the H1 or H4(overnite for the USA anyway) that takes 12 hours to conclude ---- for me, waiting for the conclusion is nothing, especially if i sleep thru it, but for a bank, aside from holding a trade for a year, its a lifetime ! I differ from the banks in that I can sit back and put a trade on "auto" for a 12 hour period As traders we buy and we have to sell it back, or we sell and have to buy it back, some banks never offset that position so the contracts trade with no stop until expiration or they may hedge their position in the Spot market with no stop to hedge a position in the cash market, so their is a strategy behind what they are doing, they don't simply just not use stops cause they got big fat balls.. If you check my "methods" you will notice TWO distinct and constant situations ----- HEDGE and NO STOPS. Once one LEARNS how forex moves in its different timeframes, be it intraday, daily, weekly or longer, Forex becomes a fun place to be because MOST retail traders will never figure it out, simply because they go broke before they reach that educational point. Im one of those "old coots" and on days Im feeling a bit frisky, ill trade ALL the timeframes possible, which of course has any number of my trades LONG and any number of my trades SHORT ---- all at the same time. Where i may not be the highest dollar amount trader in the world, SOMEONE IS ALWAYS BUYING OR SELLING AGAINST ME --- now multiply that action by all the banks, and THERE WILL ALWAYS BE SOMEONE BUYING OR SELLING AND OFFERING A COUNTER TRADE TO YOUR TRADE ! I CERTAINLY HOPE YOU UNDERSTAND, CAUSE ITS JUST SO SIMPLE ! I simply put forth some of the "inner workings" of the Forex market, hoping that some will understand, observe it on their charts, and that down the road the lightbulb goes off and the "eureka" portion of the program sets in ! I use to trade for a very large firm that basically was a bank, their was a guy that use to call to my euro trading desk from another department and he would tell us where JP Morgan, Goldman, Merrill, Citi and all those guys had their stops and we would short or buy the hell out of those numbers if the market went any where near their, and further more to validate that, I could see my counter party trades, so if I were scalping shorts off resistance and I check my counter party trades, I could see that almost every single trade I was buying back was being sold to me by another bank that matched the information from the informant.
OF COURSE -- you werent buying from me cause my account, decent as it may be, does not match Citi, even with the troubles they have presently.
JUST READ WHAT I POSTED ABOVE --- IT ANSWERS THIS QUESTION !
ALL trades have to be countered by "someone" or there would be no trade --- you would be sitting on a street corner, with an applebox full of cash, yelling like any other street vendor "new dollars for Yen" and waiting for some grandmother to trade her handful of yen for dollars !
Your points are well taken, but like most academic explanations leaves out a whole lot of "reality" and that "reality" area is where we play our games of 3 dimensional chess, trying to second guess the intraday buying and selling that you claim doesnt happen, but seems to be going on at a fantastic pace !
having read what you post, I find little to agrue against --- simply that you may not have fully understood what you were seeing at the time or perhaps misinterpreted it, as it was obvious that you and the banks were buying/selling to each other, so automatically that question is gone ---- all that remains is the use of stops, and you state that they are and are not used, but you also dont supply the information as to when they are used and why, which i do supply.
Once again, I must remind (especially the newbs) that I am a "REALITY" based trader ----- that is, I honor the REVERSALS during the day, the normal up and down activity that flows constantly, a lack of stop losses when trading the trend and a hedging technique that just seems to continue to work.
I dont ask ANYONE to follow me, and advise NO NEWB even try it (it requires a few years of education, especially when everything turns against you and you have seconds to make a decision!) BUT I ask you to watch how it works on your charts, see if it starts to make sense and add it as "one more thing" to your arsenal of weapons to play in the forex arena @
enjoy and trade well
mp
I simply put forth some of the "inner workings" of the Forex market, hoping that some will understand, observe it on their charts, and that down the road the lightbulb goes off and the "eureka" portion of the program sets in !
I have had my own epiphany with the markets, everyone that has a working system, or profitable I should say, thinks they have the inner workings of that market figured out, and it will never change and they wish people could just see what they see, hell I feel the same way you do sometimes. This is what makes trading kind of an art, we all see an inner working of some sort...
The market is a whore and it is sleeping with us all, we all have our own individual relationship with her, and we think it's so special, some get seduced over and over by her and she takes all their money with no remorse what so ever, some think they have her figured out and wrapped around their fingers and she will never leave, and some just take what they can get for as little money expended as possible. The market only responds to how people react to it, it is neutral, their is no inner workings, that is an illusion that you have projected on the market as if it works independently of the traders that facilitate it, if anything you have only figured out the inner workings of a bunch of other people.
JUST READ WHAT I POSTED ABOVE --- IT ANSWERS THIS QUESTION !
ALL trades have to be countered by "someone" or there would be no trade --- you would be sitting on a street corner, with an applebox full of cash, yelling like any other street vendor "new dollars for Yen" and waiting for some grandmother to trade her handful of yen for dollars !
I somewhat agree with you on the fact that their has to be a counter party for everytrade, but I have my suspicions, maybe you can answer this question for me, What happens to all the spill over contracts being arbitraged from Euro futures into the spot, or from the SP500 pit and into the E-mini's?
I watched guys in the pit Buy sp500 contracts and then they have their buddy sell them off in the E'mini's at his computer, so the contract zero's out as far as cash goes when the exchange reconciles the trades, but what happens to the emini's, they never get bought back?
Then you have banks, which create money out of thin air, they loan and exchange cash they do not physically have, that is like a-sexual reproduction, you are missing a counter party their.. Now mix that up with Forex and you can start to see the magnitude of the issue, I am not losing sleep over it but I have still always been curious to what happens to the arbitraged trades.
If you check my "methods" you will notice TWO distinct and constant situations ----- HEDGE and NO STOPS.
Off the top of my head I have thought of a few possible strategies using no stops and hedges, I have not actually ever thought about doing that and it sounds tempting, I have been doing this long enough to be open minded. it just seems so inefficient, I would be interested in seeing how you do this..
Your points are well taken, but like most academic explanations leaves out a whole lot of "reality" and that "reality" area is where we play our games of 3 dimensional chess, trying to second guess the intraday buying and selling that you claim doesnt happen, but seems to be going on at a fantastic pace !
I do not see where you got this out of what I said.. and how do you figure my "Academic explanation" is lacking in reality?
When you refer to banks using stops, they are using what can be called EXIT stops as opposed to the "safety" stops retail traders use, because of the great load they deal with --- Whereas, using any of the available indicators so easily available for MT4, anyone can call a top to a timeframe, the only problem being WHEN THE PRICE REACHES THAT POINT. Its almost physically impossible for a trader to watch and cover that amount of trades in a 24 hour timeframe, so an exit stop is set that will speed up taking profit.
BANKS USE STOPS, even though they have large loads they will put stop losses in a range, like maybe a 50 pip range, they have algorithims that are programmed to exit large positions in illiquid markets, the algo will figure out from the volume how much to unload at any given time and it can adjust the volume up or down as needed, then they have another algo for entries also.. Unless they are doing a carry trade, or a hedge, the bank implements standard risk procedures just like any other trader, Banks have stacks of floors in Sky scrapers with 100's of traders, some are just execution traders and they all sit and wait for signals from strategies being produced by the quants upstairs, then they have seasoned guys that just trade proprietary funds for profit for the bank, then the bank has CTA's and advisors that manage money for the depositors, their is a lot going on in a bank, the use of standard vanilla stoplosses are expected in that environment or else some of those guys could bring down the house. I would have to say that you are speaking of one or several kinds of other strategies the bank is using and I am not familiar with and/or we are arguing different points.
The market is a whore and it is sleeping with us all, we all have our own individual relationship with her, and we think it's so special, some get seduced over and over by her and she takes all their money with no remorse what so ever, some think they have her figured out and wrapped around their fingers and she will never leave, and some just take what they can get for as little money expended as possible. The market only responds to how people react to it, it is neutral, their is no inner workings, that is an illusion that you have projected on the market as if it works independently of the traders that facilitate it, if anything you have only figured out the inner workings of a bunch of other people.
Yes, the market is like women, appearing calm at times, volatile at other times, rational on the one hand but then illogical on the other. And just like women, we cannot possibly hope to understand "how the market works". The best we (men) can hope for is to be able to fine-tune our radars to pick up on signals that tell us when trouble might be brewing and we best stay out.
(Unfortunately, the market does not respond to flowers like women do.)
Personally, I don't want to "figure out" the market, I just want to make money from it. I don't care what it does or who's doing it, just as long as my equity graph shows an uptrend.
I am with you on that....... I gave up trying to figure that out a long time ago.
When i talk about "figuring out the market", I am not referring to an art form or even a partial explanation --- the market is driven by greed (forget fear for the moment) and the idea is to MAKE A PROFIT, no matter what !
has anyone ever experienced a currency doing 180 degrees of what it SHOULD DO based on the news that has been released ? Do we know why ?
SURE WE DO, and glancing at the week before, the relationship of the currency to its 3 main channels and its 10 day channel tell us, mere mortals, what the banks (the smart money) will be doing ---- we do it daily, those i trade with and some students ---- its rather simple, if you just remember PROFIT at any cost !
I dont have all the answers, but i have enough to know when to enter a short or long and the time of day to do it, when to expect news to move a currency up or down and the rest, well thats simple trading and something that is learned, stirred but never shaken !
I dont know everything and have never stated such, but to me, 90% of trading is simply having some idea of what the banks are doing, and forex has got to be the easiest game in town to figure out !
a woman responds to love, affection, stimulation, honesty, purchasing power and feeling most needed ---- some whores are that way also, but I see the market not as a woman or a war, not as a test of my manhood (the McGiver sisters do that constantly !) or intelligence, but simply a series of problems to be overcome, and LEARNING is the tool that overcomes these problems.
Do you think the pro traders, working for the institutions are gods of any type --- heck no, theyre PROFESSIONALS --- they know how to do their job and my concept of "real time" trading is simply the same information the pros are working with and most especially the TIMES to take certain trades !
they been doing it for years and years and years --- some of their supposed "secrets" have long ago leaked out of those hallowed halls of greed and money, and are available for us, the poor schnooks who represent the retail trade and who are also referred to as the "dumb" money !
I JUST WANT TO MAKE SOME DUMMIES A BIT SMARTER !
enjoy and trade well
mp
I have had my own epiphany with the markets, everyone that has a working system, or profitable I should say, thinks they have the inner workings of that market figured out, and it will never change and they wish people could just see what they see, hell I feel the same way you do sometimes. This is what makes trading kind of an art, we all see an inner working of some sort... I shall visually show you that ANYONE can see what I see, which is NOT the inner workings, as I am not privy to each and every traders thoughts BUT i am privy to how they go about getting from point A to point B and WHEN ! That is so easily taught, that epiphanies have naught to do with it, only the simplest of observations ! The market only responds to how people react to it, it is neutral, their is no inner workings, that is an illusion that you have projected on the market as if it works independently of the traders that facilitate it, if anything you have only figured out the inner workings of a bunch of other people. WELL YEAH, OF COURSE -- the market is like a lump of Pastrami --- its useless without a steam table, someone to carve it and place it on rye bread with mustard, and someone to EAT it !!!
While I have not the info on inner workings of ALL the traders out there, I DO KNOW WHICH DIRECTION THEY ARE GOING AND WHEN TO BE LONG AND WHEN TO BE SHORT --- people are people, they herd and follow, they seek a currency with momentum, no matter its direction, they follow rumors, advice and what the local butcher says --- they seek PROFIT ---- these are UNIVERSAL TRUTHS that do not change, and the market moves by the collective directions these people trade in. BUT, the market has intraday movements, reversals and trend changes that are completely visible, chartable and showable, and that is what "reality trading" is all about --- simply trading the REALITY of the intraday market ! I somewhat agree with you on the fact that their has to be a counter party for everytrade, but I have my suspicions, maybe you can answer this question for me, What happens to all the spill over contracts being arbitraged from Euro futures into the spot, or from the SP500 pit and into the E-mini's? IF NO COUNTER PARTY, THEN THERE IS NO TRADE !!! IF YOU ARE TRADING, YOU ARE TRADING AGAINST SOMEONE OR SOMETHING !! IF NOTHING OR NO ONE WILL TRADE AGAINST YOU, THE MARKET STANDS STILL !!!!!!! I can and will explain how "brokers" handle this situation, reversing a long at the 5pm rollover period, or moving a currency strongly on the first opening day after the friday close, while not opening their trading till an hour after they do their own trading ---- this way, if the market closed strongly long, they now short like mad, make back the longs and have much cheaper currency to sell to those retail traders who come rushing in on sunday afternoon and monday morning ! I watched guys in the pit Buy sp500 contracts and then they have their buddy sell them off in the E'mini's at his computer, so the contract zero's out as far as cash goes when the exchange reconciles the trades, but what happens to the emini's, they never get bought back? Someone, somewhere HAS TO -- NO COUNTER TRADE, NO MOVEMENT see below ! Then you have banks, which create money out of thin air, they loan and exchange cash they do not physically have, that is like a-sexual reproduction, you are missing a counter party their.. Now mix that up with Forex and you can start to see the magnitude of the issue, I am not losing sleep over it but I have still always been curious to what happens to the arbitraged trades. Economics 101 --- money runs in a circular motion !!!!!! sorry for the song lyrics, but a bank borrows here, lends there, buys this, shorts that and on forever ---- PART of the incorrect reasoning behind al-qaeda destroying the twin towers was to bring this country to its knees by destroying the financial system ( his fatwa states that he "seeks to bleed America to the point of bankruptsy") and a rather fun result of the SEC trying like mad to get everything back on line was because IT HAD NO REAL EFFECT ON THE ECONOMY, although it allowed some massive shorting to take place, which makes the SAME money as going long ! Kindly re-read this carefully --- what we believe is SO important is more of the "emporers new clothes" and "the wizard of oz", with all the smoke and mirrors, than you can possibly believe ! Basically, the country DID NOT FALL APART without the stock market, and probably never would if it went away forever, AND BOY WILL I GET FLACK ON THIS STATEMENT !! Off the top of my head I have thought of a few possible strategies using no stops and hedges, I have not actually ever thought about doing that and it sounds tempting, I have been doing this long enough to be open minded. it just seems so inefficient, I would be interested in seeing how you do this.. Inefficient from the point of view of an experienced scalper who will one minute be long and the next short, but not for a newbie. But first understand that hedging is always in effect by the banks (i believe YOU mentioned it in this or a prior post), so it is not to be placed in some "unusual" place, but rather a technique in constant use by the banks. Obviously, the best way to do any trade is from the BEST entry point, and hedging does not always produce as many pips as that technique does, but it gives a newb a chance, especially if they havent a clue as to which way the market is moving. Please also understand that I do not advise newbs to hedge, but for a simple little one I do every night that produces some decent pocket change over a weeks period. I do not see where you got this out of what I said.. and how do you figure my "Academic explanation" is lacking in reality? Only because it was an academic examination of a real time situation --- Im not particularly interested where dollar bill number AGX6553AT ends up in 15 years, but rather where my pips are living at this point in time ! When you refer to banks using stops, they are using what can be called EXIT stops as opposed to the "safety" stops retail traders use (the ACTUAL words are BUY or SELL STOPS as opposed to STOP LOSSES !), because of the great load they deal with. Its almost physically impossible for a trader to watch and cover that amount of trades in a 24 hour timeframe, so an exit stop is set that will speed up taking profit in a "range" as you mention. Since its me and a few others trading, we can watch our trades and work with much more risk, especially as we, unlike banks working short term trades, are willing to wait till tomorrow for a conclusion ---- rare is the bank that will do that with an intraday trade ! BANKS USE STOPS, even though they have large loads they will put stop losses in a range, like maybe a 50 pip range, they have algorithims that are programmed to exit large positions in illiquid markets, the algo will figure out from the volume how much to unload at any given time and it can adjust the volume up or down as needed, I agree with you and did so in the above paragraph ---- banks use EXIT stops to handle the large load ---- few retail traders have that problem, and the stops used by retail traders are NOT exit, but SAFETY stops although there is a breed of swing traders in the euities market who use stops for exits --- I think they give too much away, myself !
fact based trading at it's best.......
Can you compare fact trading with newstrading?
Or is it somethig totally different?
Can you compare fact trading with newstrading? Or is it somethig totally different?
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"fact trading" is the briefcase and "news trading" is a folder in that briefcase.
to me anyway, fact or "reality" trading has to do with (duhhhhh) the "realities of the market, ie: when does the currency go up, when does it go down intraday, monthly, weekly, daily, etc ?
it simply deals with HOW the market functions, much as you would describe how to start a car ! ---- insert key in door lock, rotate key 1/4 turn to left, insert first finger to the right of thumb behind "release" on door knob, pull door towards you, remove keys from door lock, etc, etc, etc (modify if you have auto door locks !)
Reality trading tells you HOW to most profitably trade your position for maximum profit, but not how to FIND that trade !
mp