Trading against the crowd - is there an interested programmer in working together - page 8
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But it depends on where... In Japan, for example, the statistics are 60 to 40 in favour of the "crowd".
Where did I say I thought so? What stock exchange? And what does this have to do with forex? And how does it all interfere with trading against the mood of the crowd?
I have not seen anyone here that would call or force anyone to use this information in trading.
Do you think it is nonsense? Ok, we'll pass it by without delay.
I am in favour of having the ability to analyse any information directly related to the instrument.
Let's take a simple example, let's say the market went down, strongly and rapidly. All of your indicators begin to show the growth of short positions. Suppose that indicators have reached the level of 80% of shorts by 20% of longs. This is a good market imbalance, isn't it? I think so. So you decide to buy this asset. The immediate question is where is the stop? And I am more than confident that trading by this strategy you are more than once faced with the fact that the market kept falling. And this happens because there was not a sharp increase of short positions, but a sharp decrease of longs occurred in the market. And therefore the ratio has changed in favour of shorts, but the open interest has not increased and it's silly to say that the market will turn around.
I have long studied and practiced this possibility in the market. Nothing good has come out of it. Perhaps I'm wrong and you have gone much deeper into understanding this strategy. Then let's trade openly. The market will quickly put everything in its place.
A simple example, let's say the market has gone down, hard and fast. All of your indicators start to show an increase in short positions. Let's say the indicators reached the level of 80% of shorts by 20% of longs. This is a good market imbalance, isn't it? I think so. So you decide to buy this asset. The immediate question is where is the stop? And I am more than confident that trading by this strategy you are more than once faced with the fact that the market kept falling. And this happens because there was not a sharp increase of short positions, but a sharp decrease of longs occurred in the market. And therefore the ratio has changed in favour of shorts, but the open interest has not increased and it's silly to say that the market will turn around.
I have long studied and practiced this possibility in the market. Nothing good has come out of it. Perhaps I'm wrong and you have gone deeper into understanding the strategy. Then let's trade openly. The market will quickly put everything in its place.
Let me answer.
"A simple example, let's say the market went down, hard and fast. All your indicators are starting to show an increase in short positions." - If the market went down, then the percentage of longs should increase, and vice versa, if the market went up, then the percentage of shorts increases. Let's take a recent example, we look at ratios EURUSD and EURGBP, we see that the crowd is going short.
Let's open the charts and look at EURUSD and EURGBP - they are going up well. You may say it is a coincidence. Then go to history and look at what happened on June 2, 2016
Before that reversal there were more longs than shorts.
Of course this is a simple example, which becomes much more interesting when there is a complex analysis, especially before big news, when you can observe more than 20 currency pairs working out in one day.
Let's finally formulate - what is the crowd?
The market is driven by money. Where the money goes, so does the market. Playing against money is equivalent to playing against the market. It's deadly dangerous. If you set out to play against the crowd, you will meet the fate of 95% of traders.
If this same crowd does not move the market, then it is not a crowd at all, but a ripple on the water. What is the sense to play for or against such a crowd?
Those who gamble in the market are people who miss the roulette and slot machines at the casino. They play and lose, and they are the majority.
What they are trying to tell you is that there is no crowd on the forex market - it is a bank market and all these "sentiment indicators" can be used as a folk omen:"When the cobbler tells you to buy stocks because there is good money to be made on them now, it means that it is time to sell them".
Because they don't trade in their market, forex is a big capital market, the players here are well prepared, it's their job, also forex is a less trendy market. In the stock market the statistics are better.
What they are trying to tell you is that there is no crowd on the forex market - it is a bank market and all these "sentiment indicators" can be used as a folk omen:"When the cobbler tells you to buy stocks, because you can make good money on them now, it means that it is time to sell them".
Because they are not trading their market, forex is a big capital market, the players here are well prepared, it's their job, also forex is a less trendy market. The stock market has better statistics.
This is the reason for such statistics of losses. This market is not suitable for speculations, but it is very accessible (minimum deposit, fast account opening, depositing with a dozen of payment systems, high leverage, simple terminal).
All this attracts weak and greedy money, which is quickly lost.
They say that the big leverage and lack of risk management kill. But what risk to talk about and what leverage to take if most of the depo has several hundred dollars.
This market is not suitable for speculation, yet it is very accessible....