Market theory - page 152
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You can't do that.
You always have to look for an arbitrage trade. Something to buy and something to sell, so that together you can make a profit
But what Yusuf is trying to describe is directed trading. We should help him in this ;)
Arbitrage is certainly great! Thank you!
But it is directed trading that Yusuf is trying to describe. We need to help him with that ;)
We'll try to help.
I didn't ask about stocks for nothing.
In one particular stock, in a not particularly mature market, the main drivers for movement are earnings news (dividends) and merger/acquisition.
As the info spreads through the market, the market crowd gets on one side. Yes, from time to time there are those who want to fix profits, but in general the market drives the price to the target (there are quite trivial and working models for calculating the price). This is where Yusuf's interpretation might well be appropriate.
But if to take for example Apple, besides basic ideas and small noises from scalpers, there is a whole train of ideas, which move the share, as an example Apple enters global indexes and it is bought/sold by ETFs, depending on the investors' capital inflows/outflows, which depend more on the pay day than on the company's results.
Apple also enters industry indices, which arbitrageurs can already trade, buying for example banks and commodity companies while selling pharmaceuticals and high tech. The same arbitrage can be on the level of a couple of stocks. Or even without fundamentals, just on correlations.
My point is that there are dozens if not hundreds of mathematically sound reasons to buy and sell Apple stock.
With Eurodollar pair the situation is even more complicated. Because I only trade the pair in Metatrader. A huge turnover is generated by the professional participants who execute clients' orders unrelated to the dynamics of the Eurodollar. As a result, the macro factors that drive the pairs work on a quarterly horizon.
Since we are dealing with an almost random process, I see the advantage only in terms of risk and money management.
If the theory has pleased the author so much, I would recommend to change the object of research, namely, to choose some type of raw materials instead of currency pairs. Coffee or sugar, there are really several players in this market and they form the price.
We'll try to help.
I didn't ask about stocks for nothing.
In one particular stock, in a not particularly mature market, the main drivers for movement are earnings news (dividends) and merger/acquisition.
As the info spreads through the market, the market crowd gets on one side. Yes, from time to time there are those who want to fix profits, but in general the market drives the price to the target (there are quite trivial and working models for calculating the price). This is where Yusuf's interpretation might well be appropriate.
But if to take for example Apple, besides basic ideas and small noises from scalpers, there is a whole train of ideas, which move the share, as an example Apple enters global indexes and it is bought/sold by ETFs, depending on the investors' capital inflows/outflows, which depend more on the pay day than on the company's results.
Apple also enters sector indices, which arbitrageurs can already trade, buying for example banks and commodity companies while selling pharmaceuticals and high tech. The same arbitrage can be on the level of a couple of stocks. Or even without fundamentals, just on correlations.
My point is that there are dozens if not hundreds of mathematically sound reasons to buy and sell Apple stock.
With Eurodollar pair the situation is even more complicated. Because I only trade the pair in Metatrader. A huge turnover is generated by the professional participants who execute clients' orders unrelated to the dynamics of the Eurodollar. As a result, the macro factors that drive the pairs work on a quarterly horizon.
Since we are dealing with an almost random process, I see the advantage only in terms of risk and money management.
If the theory has pleased the author so much, I would recommend to change the object of research, namely, to choose some type of raw materials instead of currency pairs. Coffee or sugar, there are really several players in this market and they form the price.
Here is a specific example how theory may help in trading. Pound/Dollar pair. A very simple indicator that will be built on the basis of the theory is as follows:
Now, the principle of its construction is as follows: Parallel to the standard candle of the current price (OHLC), there will be another candle of the market price with its (OHLC) different colour. Everything!
Here is the situation at the opening of the session on 06 07 15, which means that the pound should move down, because the Market (Cpr) is up:
But, 06 08 15. The price did not obey the market and went up, which was immediately followed by a crushing response from the market at the opening of the 07 07.07.15 session, meaning that the price should now move down quickly because the market will get a strong strike, which happened subsequently. Under these conditions, the trader should enter the SELL with all the power of the deposit:
The situation at the opening of the session 08 07 15, indicating that the price, indeed, went down rapidly and it is instructed to still go down, because, the Market itself has positioned above the Price:
The situation at the opening of the session on 09 07/15 confirms everything:
Now, the Market has gone up, which is the reason to close the Sell. But, the fact that, surely took a profit from the sell, gives hope, that the theory is able to help the trader. This was a simplified form of the indicator. Here is its full-fledged form:
Dear programmers, please help to build at least a simplified form of the indicator:
Parallel to the standard candle of the current price (OHLC), there will be another candle of the market price with its (OHLC) different colour. That's it!
I will give you a concrete example,
Now, the market went up, which is the reason to close the sell. But, the fact that it confidently took a profit from the sell, gives hope that the theory can help the trader. This was a simplified form of the indicator. Here is its full-fledged form:
Dear programmers, please help to build at least a simplified form of the indicator:
Parallel to the standard candlestick of the current price (OHLC) there will be another candlestick of the market price with its (OHLC) different colour. Everything!
Out of 3 days the price went according to your theory only once, on the sixth. Twice the market was deaf to your estimated price.
Today the pound seems to rise according to your theory. Anyway, 50/50 as always.
Can your theory predict the amplitude? On days when the market is right the market goes much weaker than when the theory is wrong.
Out of 3 days, the price followed your theory only once, on the sixth. Twice the market was deaf to your estimated price.
Today the pound is sort of rising on your theory. So it's 50/50 as always.
Can your theory predict the amplitude? The market goes much weaker on right days than when the theory is wrong.
What do you think and when do you think the theory was wrong? It was only marginally wrong on 06 07 15, but, this Sell is justified subsequently:
06 07 - Sell at 1.55399;
07 07 - Sell at 1.56018, drawdown = - 61.9 pips;
08 07 - SELL at 1.54588 profit = 81.1 + 143 = 224.1p;
09 07 - Close at 1.5358 profit = 181.9 + 243.8 + 100.8 = 526.5p.
Well done Yusuf, he has given us some food for thought.
Thanks for the support, I am sure the indicator will help traders to learn the market and get additional profits. I dream of a time when the terminal will be simultaneously producing market candles, along with the standard ones! This will be a super indicator that reflects the true pulse of the market ...
What do you think and when do you think the theory went wrong? It was only marginally wrong on 06 07 15, but, this Sell is justified thereafter:
06 07 - Sell at 1.55399;
07 07 - Sell at 1.56018, drawdown = - 61.9 pips;
08 07 - SELL at 1.54588 profit = 81.1 + 143 = 224.1 pips;
09 07 - Close at 1.5358 profit = 181.9 + 243.8 + 100.8 = 526.5p.
...
Parallel to the standard current price candle (OHLC) there will be another market price candle with its own (OHLC) in a different colour. That's it!