edge init

[Shakone]

Scose, why is it a concern for you whether various institutional traders are betting directionally or not? Is this for understanding the markets in general, or because you think that we ought to be doing what they're doing?

 

[scose-no-doubt]

Anyway the point of all this nonsense is that for the non arb principles to be correct or for the process of OTC transacting to be efficient on an opportunity cost basis, someone, somewhere has to bring the two i.e. exchange prices and otc prices in line. How that happens I do not know but I assume the associated shenanigans are the reason they put up Chinese walls.

@ Shakone we just got sidetracked mainly. You may not of noticed but I'm quite pedantic. Anyway the initial point is that I don't believe that looking at a chart, regardless of whether you're "reading" it or not, can provide an edge. If you're profitable, the edge comes from something else - some other understanding or competence, money management, or your trading results are simply variance.

 

[robster970]

Anyway the initial point is that I don't believe that looking at a chart, regardless of whether you're "reading" it or not, can provide an edge.

A chart is a discrete, visual representation of price as it moves through time.

People derive edges from looking at the behaviour of price.

Ergo an edge can be derived from looking at a chart if you know what to look for.

 

[scose-no-doubt]

A chart is a discrete, visual representation of price as it moves through time.

People derive edges from looking at the behaviour of price.

Ergo an edge can be derived from looking at a chart if you know what to look for.

Listen Sagaboopy we'll have none of your price behaviour nonsense in here.

Anyway, I'd imagine people who derive edge from the behaviour (changes in price) as displayed in a chart actually analyse the changes themselves and not the information therein, no? S'wat I'd be doing.

Strange how people's brains, functionality and logical processes can differ so violently.

 

[robster970]

for punters, edges are found by reading the behaviour of people (participants) and their intentions. Not price, tho sum people mistake one for other.

The absolute price is irrelevant to me - I can't determine what is value or not. I will participate at certain price because I believe other people will behave in a certain way at that price. Is that what you mean?

 

[scose-no-doubt]

yeah I've been waffling on for ages now. Only posted this so I get to 3999. Gonna make 4k special

 

[ChocolateDigestive]

To do this research you must only concern yourself with transparent markets.
.

it's quite hard to find transparent markets though. look at stocks and all the dark pools huge volume, look at FX, dont even go there!

any suggestions for transparent markets to look at? a few months back I was researching stock markets in developing countries, places where there are few algos and no dark pools developed. At least there you can see the tape and no its pretty much all the volume.

 

[ChocolateDigestive]

thanks for posting this Scose, I knew OTC was big but didn't know it was that big. geez.

 

[Shakone]

yeah I've been waffling on for ages now. Only posted this so I get to 3999. Gonna make 4k special

Proof that people care about Big Round Numbers. Perhaps if we're lucky, the hare will come along and tell us if they exhibit useful statistical behaviour in trading :cheesy:

 

[the hare]

Proof that people care about Big Round Numbers. Perhaps if we're lucky, the hare will come along and tell us if they exhibit useful statistical behaviour in trading :cheesy:

I honestly don't know, other than some stuff on fibs, I've done very little work in that sort of area.

David Osler has a paper on S&R and IIRC it might include 00 and 50 levels in addition to a bunch of levels he was given by various banks etc.

http://www.ny.frb.org/research/epr/00v06n2/0007osle.pdf

I cant even be arsed to read that kind of stuff these days, its about as relevant to trading as .... well T2W

 

[ChocolateDigestive]

on my travels I happened upon an oil trader who works for an investment bank. to open up trading conversation I asked him if he traded front month WTI or Brent. He looked a little surprised and said they rarely take a punt (his words) on contracts of oil, they would only consider this if it was really quiet. He then added 'I prefer to trade where I have an edge'. I naturally asked him where this was and he explained they had access to order flow information, which oil was coming in from where, who had bought what and how much. With this info they could trade spread contracts with an edge.

found an interesting article here

Electronic trading comes to OTC oil swaps - FT.com

interesting how the oil traders are resisting a move from voice brokerage to electronic for their OTC operations.

lets consider 3 oil traders:

trader 1 - armed with IGindex spread bet account

trader 2 - armed with Xtrader and retail brokerage handling exchange traded oil futures

trader 3 armed with access to OTC data and real time information as well as all the info trader 2 has.

I can see how the opportunity for edges to be found and acted upon could be more abundant for trader 3 however this is not to say that trader 2 and trader 1 cant also trade with an edge.

there are so many ways to play this game.

 

[scose-no-doubt]

4000 celebration drunken scosey

https://vimeo.com/44866284

 

[scose-no-doubt]

Proof that people care about Big Round Numbers. Perhaps if we're lucky, the hare will come along and tell us if they exhibit useful statistical behaviour in trading :cheesy:

GBP/USD @ 1.550000 = USD/GBP @ 0.6451612 - where's the significance on that side?

Saul Blx

 

[scose-no-doubt]

found an interesting article here

Electronic trading comes to OTC oil swaps - FT.com

interesting how the oil traders are resisting a move from voice brokerage to electronic for their OTC operations.

lets consider 3 oil traders:

trader 1 - armed with IGindex spread bet account

trader 2 - armed with Xtrader and retail brokerage handling exchange traded oil futures

trader 3 armed with access to OTC data and real time information as well as all the info trader 2 has.

I can see how the opportunity for edges to be found and acted upon could be more abundant for trader 3 however this is not to say that trader 2 and trader 1 cant also trade with an edge.

there are so many ways to play this game.

The big battle is with attempting to get all OTC stuff on exchanges
They say it's for the sake of transparency and stability but I know I'd be long if they do it

 

[scose-no-doubt]

1st thing I thought: tottenham riots.

Whilst Scose's youth was spent in teh hood, teh streetz, teh realz, he's a gentleman now. A refined and elegant gentleman. His violent conduct is limited to sports hall/dojo and his involvement in mass criminal destruction of property never surpasses that of the lulz spectator who wanders around the flames with smiling eyes.

Scose even wears waist coats casually.

 

[wackypete2]

GBP/USD @ 1.550000 = USD/GBP @ 0.6451612 - where's the significance on that side?

Saul Blx

How many people are actually trading USD/GBP for there to be any significance to that number? Flipping a number upside down means nothing because no one trades it that way.

Peter

 

[BeginnerJoe]

I am getting edgy with this BS market. Any stories on why EUR is going flat ?

 

[scose-no-doubt]

How many people are actually trading USD/GBP for there to be any significance to that number? Flipping a number upside down means nothing because no one trades it that way.

Peter

Everyone with dollar revenue/deposits etc and UK activities I'd assume.

 

[wackypete2]

So lets say we have 1000 traders who think they have an edge. Of those 1000 lets say that 95% of them who think they have an edge...do not have an edge, or at least an edge that is sufficiently rhobust to make them consistently profitable.

Food for thought...
How many of those in the 95% category do actually have an edge BUT do not have the discipline to follow it.

Take 1000 traders, arm them with a documented, verifiable, time tested method for success (in any activity in life) and still 95% of them will fail.

Trading is not an activity where there is only 1 winner. You don't have to be better than everyone else, you just have to be good enough to claim your share.

Peter

 

[the hare]

Take 1000 traders, arm them with a documented, verifiable, time tested method for success (in any activity in life) and still 95% of them will fail.

I'm constantly told that there are mechanical methods that have stood the test of time, although to be honest, most of the ones I've seen don't really hold up to scrutiny.

Maybe I'm missing a trick somewhere, but in order to get an edge I had to go well outside of the sort of thing that you'd typically see being promoted on a forums, in fact, as part of that research I discovered that most of the stuff that is promoted is actually quite damaging. I'd probably go as far as to say its a deliberate campaign of disinformation.