FX Trading June 4 - June 8

[trendie]

hope you dont mind me starting the weekly thread.

I have been getting through Fooled by Randomness (still) and came across the idea of "Path Dependence of Beliefs"
(how we marry our positions)

"... What characterizes real speculators like Soros from the rest is that their activities are devoid of path dependence. They are totally free from their past actions. Every day is a clean state."

Economists call path dependence "endowment effect".
Suppose you bought a stock at £15. It is now trading at £20.
If you hadnt bought it before, would you buy it now?
The answer should be you would buy it if the circumstances are valid at £20, irrespective of earlier price.
Path dependence occurs when you think it is "too expensive, compared to the perceived missed opportunity when it was £15". Here you are making judgements on the value of a stock based on an earlier lower price.

".. Beliefs are said to be path dependent if the sequence of ideas is such that the first one dominates."

Wow.
As traders, we are constantly defining buys and sells, and evaluating overbought/oversold conditions, but these are by definition relative conditions. (path dependent)

This also affects us in advertising when we can get something for "20% off", when in truth the retailer bought the item at wholesale prices, and would still make a profit, giving us a perception of a bargain, as we are being asked to compare something to an earlier more expensive price.
We are constantly looking for deals to buy something cheaper, whereas we should be looking for the intrinsic value of the item.

Is this too heavy for a Sunday morning? Discuss.

 

[Crap Buddist]

hope you dont mind me starting the weekly thread.

I have been getting through Fooled by Randomness (still) and came across the idea of "Path Dependence of Beliefs"
(how we marry our positions)

"... What characterizes real speculators like Soros from the rest is that their activities are devoid of path dependence. They are totally free from their past actions. Every day is a clean state."

Economists call path dependence "endowment effect".
Suppose you bought a stock at £15. It is now trading at £20.
If you hadnt bought it before, would you buy it now?
The answer should be you would buy it if the circumstances are valid at £20, irrespective of earlier price.
Path dependence occurs when you think it is "too expensive, compared to the perceived missed opportunity when it was £15". Here you are making judgements on the value of a stock based on an earlier lower price.

".. Beliefs are said to be path dependent if the sequence of ideas is such that the first one dominates."

Wow.
As traders, we are constantly defining buys and sells, and evaluating overbought/oversold conditions, but these are by definition relative conditions. (path dependent)

This also affects us in advertising when we can get something for "20% off", when in truth the retailer bought the item at wholesale prices, and would still make a profit, giving us a perception of a bargain, as we are being asked to compare something to an earlier more expensive price.
We are constantly looking for deals to buy something cheaper, whereas we should be looking for the intrinsic value of the item.

Is this too heavy for a Sunday morning? Discuss.

Nice post trendie, now here is the typical situation we have to learn through. Can we or do we know what the circumstances are ? I can see it, huge conflicts, back to does our methods approach fit with the market environment. Im still learning.

And im not happy, if my method is proven to be total nonsense. happy is not the right word, but more work required from me to find the solution to the situation.

I thought cables NFP day was a great market to learn from. I got my **** kicked on the short, just too much lag on my method , which requires me to ignore solid S & R although I can see it.

Anyway traders need to be able to switch when the circumstances say to switch, back to ,do we know the circumstances?, or, is or does the method I use detect, monitor the circumstances efficiently enough for me to be able to compete.

You might be descretionary eyeballing trend changes, volumes or using a method which attempts to do that.

Also depends then if you are just trading for pulse volatility and take the thrust, or do you want to hold for the total trend and let the market take you in and then out.

So I see it , if you / we are daytrading then we have to be able to use a method that highlights the circumstances . Now these sessional circumstances may well change upto 4 times, can we detect that ?

 

[madmax_uk]

Hi Trendie,

Walked into waterstones to get a book for my exam, and walked out with 3 books I didn't intend to buy when I went in, one was "fooled by randomness". Will wait until after exams before I dive into it!!!

Just one of your comments make me think... one book that i was reading said how do you define value/price of forex etc (can't remember exactley what the commodity was... and his answer was "price is the concensus at that given moment, of what someone was willing to pay for it". I thought that was quiet a good definition! but anyway... to my view...

I think there will be a drop in first few days of the week. Seasonal charts show a sharp drop in 1st week of june. weekly chart also showing downward movement... however if 19885 +- level broken, then think should test $2 mark. thats my view...

anyone else have any views for the week?

 

[oiltanker]

the last cot report said increase in non coms dollar longs and june contract ends soon [ also new french presy sarky wants to weaken the euro] so the pressure looks cable and euro down?

 

[JillyB]

Hi Everyone,

Well the start of another week and I'm looking to go short tonight.

Just got an entry now for a Sell at 1.9820.

I'll update this in the morning.

 

[counter_violent]

hope you dont mind me starting the weekly thread.

I have been getting through Fooled by Randomness (still) and came across the idea of "Path Dependence of Beliefs"
(how we marry our positions)

"... What characterizes real speculators like Soros from the rest is that their activities are devoid of path dependence. They are totally free from their past actions. Every day is a clean state."

Economists call path dependence "endowment effect".
Suppose you bought a stock at £15. It is now trading at £20.
If you hadnt bought it before, would you buy it now?
The answer should be you would buy it if the circumstances are valid at £20, irrespective of earlier price.
Path dependence occurs when you think it is "too expensive, compared to the perceived missed opportunity when it was £15". Here you are making judgements on the value of a stock based on an earlier lower price.

".. Beliefs are said to be path dependent if the sequence of ideas is such that the first one dominates."

Wow.
As traders, we are constantly defining buys and sells, and evaluating overbought/oversold conditions, but these are by definition relative conditions. (path dependent)

This also affects us in advertising when we can get something for "20% off", when in truth the retailer bought the item at wholesale prices, and would still make a profit, giving us a perception of a bargain, as we are being asked to compare something to an earlier more expensive price.
We are constantly looking for deals to buy something cheaper, whereas we should be looking for the intrinsic value of the item.

Is this too heavy for a Sunday morning? Discuss.

Interesting post Trendie.......over on the Dow thread....most are trying to pick the top ......I have no idea why....and niether does Firewalker.....

 

[jacinto]

evening chaps and chapette

back from oysterland....seems like i didnt miss much. got a lot of chart reading to do and i guess it will take till tuesday to get me sorted.

good pips to all :cheesy:

j

 

[Crap Buddist]

Hi all currently long first trade 1.9837.7 stop sub 1.9820 at the mo.

 

[zuke]

Morning all. Cable oversold on hourly, doji on hourly and oversold on stochs has led me to Short 9843, SL 9873, TP1 9803

Not overly bearish on Cable, but have to follow my plan!

Good trading to all

 

[zuke]

Interesting post Trendie.......over on the Dow thread....most are trying to pick the top ......I have no idea why....and niether does Firewalker.....

I can tell you why..its because instead of riding trends, our natural instinct is to believe that "it cant go any higher". Im not being sanctimonious here..I have a large short position (well large for me anyway) on the Dow from 13660, and when I reviewed the decison this weekend, I had to admit to myself that I had opened the position on the basis that the price was "high enough"..something no one can really predict.

 

[Crap Buddist]

Morning all. Cable oversold on hourly, doji on hourly and oversold on stochs has led me to Short 9843, SL 9873, TP1 9803

Not overly bearish on Cable, but have to follow my plan!

Good trading to all

Yeah I was expecting to go short too. same price of my long entry, but wasnt here to take it , but that was short lived and gave a reverse to long . 1.9828/33 on my setup is a zone I expect to see support, if that goes, then likely i'll reverse .

Tight range again though .

 

[a_gnome]

I can tell you why..its because instead of riding trends, our natural instinct is to believe that "it cant go any higher". Im not being sanctimonious here..I have a large short position (well large for me anyway) on the Dow from 13660, and when I reviewed the decison this weekend, I had to admit to myself that I had opened the position on the basis that the price was "high enough"..something no one can really predict.

Interesting. I'm dead against trying to pick tops and bottoms and have increasingly become a trend follower. I've had my backside handed back to me on a plate too many times when I've gone against the trend. In fact I've been reviewing my trading strategy and am moving more and more towards a blind follow the trend come-what-may approach, very similar to wasp's HMA method which just follows the swings blindly, knowing that occassionally you'll catch a big enough move to more than compensate for all the whippy losses. I will aim always to hold a core position in the direction of the trend though I will trade around this position with part of the position.

To this end because the hourly trend is up I am long at the moment from Friday, have scaled out some profits overnight and am looking to take more at 849. However the market does seem to be struggling at current prices and has put in 4 doji-like candles in the past 4 hours. I am presuming that this is because of the Fib retracement level that we're currently sitting on.

 

[zuke]

Interesting. I'm dead against trying to pick tops and bottoms and have increasingly become a trend follower. I've had my backside handed back to me on a plate too many times when I've gone against the trend. In fact I've been reviewing my trading strategy and am moving more and more towards a blind follow the trend come-what-may approach, very similar to wasp's HMA method which just follows the swings blindly, knowing that occassionally you'll catch a big enough move to more than compensate for all the whippy losses. I will aim always to hold a core position in the direction of the trend though I will trade around this position with part of the position.

To this end because the hourly trend is up I am long at the moment from Friday, have scaled out some profits overnight and am looking to take more at 849. However the market does seem to be struggling at current prices and has put in 4 doji-like candles in the past 4 hours. I am presuming that this is because of the Fib retracement level that we're currently sitting on.

Picking tops and bottoms is a mugs game,if you are a private speculator imho. Ive had some serious beatings from the market, when Ive tried to do it. all of my mthods are trend following, but the point of my post was that its very easy to slip back into bad habits!

As for Cable today, if we dont make any serious headway below 9834, I will turn and look for longs

 

[a_gnome]

To this end because the hourly trend is up I am long at the moment from Friday, have scaled out some profits overnight and am looking to take more at 849. However the market does seem to be struggling at current prices and has put in 4 doji-like candles in the past 4 hours. I am presuming that this is because of the Fib retracement level that we're currently sitting on.

Got the 849 for the second profit target so I am now down to my core position. I will be looking to re-enter long if I get the right sort of set-up.

 

[counter_violent]

Just to clarify, i'm not so much concerned with "trends" more "price behavior and phases" that ultimately form the trends.... using exhaustion tops and bottoms as reference points only...all time frames...with bias obviously on highest time frames...so without a clear top in sight on the Dow...we have no reference point to make a shorting decision.

C V

 

[trendie]

Picking tops and bottoms is a mugs game,if you are a private speculator imho. Ive had some serious beatings from the market, when Ive tried to do it. all of my mthods are trend following, but the point of my post was that its very easy to slip back into bad habits!

As for Cable today, if we dont make any serious headway below 9834, I will turn and look for longs

its simple greed to want to get all the move. there is the feeling of "missing out" if you didnt get in at absolute bottom, and getting out at absolute top.

but, with trend-following, the signal tends to be "safer", as the move has to some extent established itself, and we are riding the momentum.
(I think I am still looking for bargains when I look for pull-backs on the current trend - getting a "better" price.)

still, it can be heart-breaking to see a spike and follow-through, and get in after the move has gone 100 pips or so ahead.

anyway, anybody monitoring Hulls would be sitting pretty at the moment.

 

[smbtnt]

Morning Guys and Gals,

Scaled out 1 Lot at 9868 from original 9755 position taken last week, 1 to go.

http://www.trade2win.com/boards/showpost.php?p=334394&postcount=121

 

[Crap Buddist]

+38 covered at 1.9875.7 . Thats me done for the mo, off to town, should be back for new york session.

 

[zuke]

I can tell you why..its because instead of riding trends, our natural instinct is to believe that "it cant go any higher". Im not being sanctimonious here..I have a large short position (well large for me anyway) on the Dow from 13660, and when I reviewed the decison this weekend, I had to admit to myself that I had opened the position on the basis that the price was "high enough"..something no one can really predict.

Great start to the week! -30 . My 8000 short on the Dax is doing ok though and the Dow has come of its highs.

I am strictly looking on the long side now on cabl..just gonna wait til a good set up comes.

 

[wasp]

Picking tops and bottoms is a mugs game,if you are a private speculator imho. Ive had some serious beatings from the market, when Ive tried to do it. all of my mthods are trend following, but the point of my post was that its very easy to slip back into bad habits!

I remember a few trades a long while back where you would swim against the tide after a strong NFP move but in fairness, the ones you caught were top notch! Its all about the W/L % though...