Currency Trading Dec 11th-15th

Offshore Trader said:

It would be nice if Cable and EUR/USD could follow the Swissy lead and break out of the range. Euro has tested and bounced. Will it make it next time?

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you are right.

Why o why do I have to be obsessed with cable and not trade the patterns i see in other pairs

Oh dear, I'll try again when I have another gem!

jacinto said:

that has nothing to do with charts, rather with lack of discipline and trading based on emotions.

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Morning all.
Jacinto, thought you were talking about me .

In my humble opinion, a trader can be more disciplined and control their emotions better than others some of the time, but once in a while one could lose their focus, and that's when it could become deadly.

jacinto said:

I would say that is correct. IMHO 90% is discipline and self control, and 10% is technical ability

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By the way: Richard Dennis stopped trading several years ago, after he lost half of his trading capital in a few days.

This is getting quite frustrating now, 1 long stopped at b/e, 1 long stopped on the other side of the BO, now short at 650. Come on! Make your mind up cable!

Baruch said:

I said most, not all, technical traders lose. Most small traders use only charts - and 95% of them lose. Why?

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I realised after you said most. My fault. I dont know how they know the figure, but i guess 90/95% could be accurate.

Why? good question Barauch.

My reasoning to why is that there are two types of techinical analysis. One method based on prediction, ie, using oscillators and past price history to predict future price, example, RSI above 70/80 then sell. This is the rule what the books say. But of course it doenst work like that.

Another one is chart patterns which techincal traders have read about in the text books. Again the assumption is that if pattern x forms then this should be the outcome...again it doesnt work like that in real life.

The other reason I think alot lose is that they may be using a system which has been developed by someone else, or a system they read about inb a magazine or a popular trading book. Again they are using a system that wasnt developed by themselves. They have accepted it on blind faith maybe. Again blind faith is no faith.
The other downfall of using these easily conceived systems and popular systems is that they dont know the underlying market philosophy behind them. They dont know why the system works or why it doesnt. This means its harder to have confidence in when times are bad. This is why a great number of commercial systems dont work.

Another reason I think might play a role in this losing number is that a great deal of technical traders day trade. I m not saying you can t be successful this way. But lets say you trade 10 times a day, with a 4 pip spread. This is like starting at -40 pips. Its very difficult. And the pairs with the bigger daily ranges have bigger spreads. Whereas look at the medium term trader , afew days to a few weeks, one trade at 4 pip spread and a win of 400 pips.

Now I said there are 2 types of TA. The other one isnt based on price prediction, but rather price action, and I think this is IME and IMO the way to use TA successfully. I ve totally accepted i can t make any predictions about markets direction.
I think the system needs to be developed by yourself systematically and logically, by moving from what you to know to the unknown. Step by step. The system should be the quantified rules derived from your beliefs about the markets.

For example I believe that the longer a market stays in a range the probability of a breakout increases. This a simple belief. But is it true? How to define if its true? What intruments can confirm this?
But then I have to ask wHat is a range? How is this defined per se? Is a range the same in all markets? How do you measure range? Is there more than one way? In waht time frame?

The questions go on. The only way to answer these is through looking back over a long period and then observation in the present. If and when you answer each questuion backed by sound logic and proof, then move on to the next question.An answered question usually poses another unknown. This is what I mean by moving from the known to the unknown. A bit like the unkwon X in algebra. Then that knowledge becomes your own, because you investigated it by yourself. Now thats where the confidence gets rooted inside, when you dont worry about the losers.

Once you answer any questions you need to know, and you have formed certain beliefs about the market, then you have to form rules from these. My belief is that what market is doing is the most important thing...but what instrument can I use to tell me what the price is doing. Candles, MA, EMA? etc etc

I ve found this method of research to be helpful for me because i gain confidence this way and its not a black box system.

Sterling is really strong but so is the dollar, what will give first?

Major option expiry tomorrow - causing cable to play silly buggers.
Protected levels will hopefully give way for better PA.

Afternoon all,
Another day of whipping yesterday. Well down to Chow for grabbing some pips! I'm currently short and hoping for a bit of follow through as usual.

I thought that I would post this chart as a possibilty of what may happen. If the market is making an ABC correction then this would make a target of 1.9350 at the start of the new year.

JER08 said:

Morning all.
Jacinto, thought you were talking about me .

In my humble opinion, a trader can be more disciplined and control their emotions better than others some of the time, but once in a while one could lose their focus, and that's when it could become deadly.

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no mate, was talking about me

Oh Jesus, Mary, Mother of God! I thought cable had left home and was headed for a journey south. But no, it's back again. If this hits my stop, I'm taking my ball home and not playing any more.

Baruch said:

By the way: Richard Dennis stopped trading several years ago, after he lost half of his trading capital in a few days.

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Thats one actaully not 100% factually true. He lost 10% of his own capaital, which was lost over 1987/88, not a few days and not half, but 10%.

Another fallacy is that it was the investors who came in on the last year of his managed fund that lost. However the investors who went in on the first year would have made $3833 for everyt $1000 dollars invested.

This is one trader. What about all the other traders who didnt lose and are techical traders, Henry, Abraham, jones, J Parker.

Also if you look at the CTA records of the turtles they ve had phenomenal success. They were trained by Echardt and Dennis.

Dennis stopped trading to focus on charity and political stuff, he had more than 400 million i the bank, so he wanted to put it to another use.

tradewinds said:

Thats one actaully not 100% factually true. He lost 10% of his own capaital, which was lost over 1987/88, not a few days and not half, but 10%.

Another fallacy is that it was the investors who came in on the last year of his managed fund that lost. However the investors who went in on the first year would have made $3833 for everyt $1000 dollars invested.

This is one trader. What about all the other traders who didnt lose and are techical traders, Henry, Abraham, jones, J Parker.

Also if you look at the CTA records of the turtles they ve had phenomenal success. They were trained by Echardt and Dennis.

Dennis stopped trading to focus on charity and political stuff, he had more than 400 million i the bank, so he wanted to put it to another use.

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Richard Dennis closed his fund because it had lost around 50% of its capital.

George Soros never looked on a chart. And he was the world greatest forex trader.

Baruch said:

George Soros never looked on a chart. And he was the world greatest forex trader.

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Soros (& Buffet) also have access to the kind of information & contacts you'd only dream about.

They take their fair share of losses. They also have a closet full of fundamental & technical lieutenants beavering away in the background.

Difference between those types of traders/investors & the foot soldiers in the markets is, when they get on the right side of a position they lump on big style, & continue to do so.

You're not really comparing like for like when drawing conclusions to everyday decision making.

Exactly...

5 min charts

Stop fighting guys :cheesy:


Two breakouts today - North and South. Makes up for the non productive days somewhat

Stopped at b/e again.......I'm not playing any more. bye.

Try again tomorrow when the US CPI might get things moving.

Baruch said:

Richard Dennis closed his fund because it had lost around 50% of its capital.

George Soros never looked on a chart. And he was the world greatest forex trader.

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As I mentioned earlier R Dennis was only one trader. I gave other examples. Of course its human nature to pick out the anomalie. The finance media pick up more on Denis losing his managed accounts. However as I said already he lost 10% of his own money.

This is a fact you can check it out.

Richard Dennis and many other traders have actaully had better percentage trading gains than George Soros. The end capital isnt a measure.

I wasnt actaully comparing Soros and DEnis and dont know how thats relevant. The original query was that there are many techical traders who trade without fundamentals. I gave you some examples. I wasnt comparing Soros and Dennis.

Actaully I thought Bill Lipscutz has the title of "the sultan of currencies"

cheers.

I'm sure someone has made loads today but personally I found cable really hard today. It's very difficult when EUR/GBP follows Cable as you tend to get some big retracements. Really wish I'd done Swissy or EUR today

jacinto said:

Why o why do I have to be obsessed with cable and not trade the patterns i see in other pairs

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seconded OT. probably tomorrow.