Has anyone traded at the forex market and made money?

[Jumpinjack]

Probably because most people were able to attend school from a young age for free (to them at least) and so they are used to it. But anyway, I don't think this 'info for free' idea is always the case. Time is costly, more for some than others. To post a question on a board and read through replies and try to learn is not expecting anything for free, it is just asking for help.

You could be right there.. I guess its a bit like women who expect babies for free..they grow up playing with dolls from a very early age, and think nothing of getting a real one for free..!

 

[TraderNumber7]

My understanding is that TA guys do not make a living trading.

That's been the problem all along here.... your understanding. And, there you go again, casting a false premise and generalizing about what TA is all about.

I do however understand and have outlined why many people look to TA.

Your over-generalized 'outline' was perfect. It was perfectly wrong. You did not accurately articulate the reasons WHY some use TA, nor did you accurately articulate why some do not. You gave an over-generalized preemptive assumption that was flat out perfect......... perfectly wrong.

You are an engineer and so are looking for the finite and repeatable.

If you can't see by now, the problem with this statement, then you never will. Over-generalization is your calling card. You just incorrectly equated Finite with Repeatable. Do I need to explain why that is a total contradiction?

What does the Fundamental Trader look for? How does the Fundamental Trader make a decision about whether to go Long, Short or stay Flat the market? Scenario 1: U.S. Rates are Low. U.S. Economic Reports turn High. The Market begins to move the USD higher. Why? Why does the market do that? Scenario 2: U.S. Rates are Low. U.S. Economic Reports turn High. The Market begins to move the USD lower. Why?

In both scenarios, the over-generalized bet would be for the USD to go higher, but in the second case it actually went lower. Why? To understand WHY, you would have to go inside the numbers an properly account for the internal relationships between all underlying Economic Reports that influenced the market's final decision about where the USD should go. That is how you derive the best trading decision based on Fundamental Analysis. And, that is precisely what a System does.

It analyzes data, filters data, interprets data and then makes a determination about what to do based on the data. Approaching the market (any market without insider information) in any way that ignores the analysis, filtering and interpretation of data before a decision is made about taking a market position, is not trading at all - it is flat out guessing.

Fundamental based trading is a system of trading, whether you know and/or appreciate it or not. In fact, Fundamental trading is indeed a technical system. Why? Go back to the above questions. When the Fundamental Trader is forced to go inside the numbers on each Economic Report, that Trader must weigh the differentials between each report before making a decision about which trade to make.

In fact, I have built a News Database that does precisely this and it runs at about 82% accuracy, so I do include it into my overall numerical based system. It takes as input, each Economic Report relative to the pair placed into the decision filter and then calculates the estimated market response to the Economic Report once it is released. It uses as three (3) primary inputs (among dozens of others), the Previous Number, Consensus Number and the Expected Number. I can Tune-Up or Tune-Down both the weight that each input is given as well as the underlying dynamics for how each input is calculated, depending on a variable input value that I determine based upon how I "feel" about what the market is "really thinking." I use a combination of Technical System integrated with a Fundamental System, to derive the best alternative signal output from both worlds.

What is fascinating is your incredulity that someone would doubt you.

I'm not interested in your doubts. I'm interested in how my accounts have grown over the past 8 years in this business. What you think about my methods is moot. All I'm pointing out here (for the benefit of the OP) is that an attempt to explain that which is not fully understood, is pointless. I don't find that incredible, I find that humorous! :cheesy:

I am one of few on this site that holds these opinions....

That my indeed be true, however, if you want to truly understand this topic, you will have to go inside the data mathematically. Sitting here, trying to explain what the Grand Canyon looks like without having been there, is futile. You can go out and buy Microsoft Flight Simulator and fly a Boeing 747-400, all day long on your computer, but unless and until you obtain your Private Pilots License, Instrument Rating, Multi-Engine Rating a 74 Jet Type Rating, you will never understand what operating several hundred thousand pounds of the most beautiful aircraft ever designed, is really all about.

The reason you see everything as a system that must adhere to a fixed ruleset is simply that you are an engineer and this is the way engineers think. I should know, i'm an engineer too.

Awesome! Then you should already know the fallacy of your statement. As an Engineer, you should already understand the concept of variability within complex systems and how to cope with their long-term effects. Every School of Engineering that I am aware of, teaching this concept at some point. And, precisely what tool is brought to bear on the problem of complex systems & variability? Mathematics. You are not attempting to describe Love, mathematically. That would be a miserably daunting challenge.

The market is composed of Price over Time (Price/Time) within two (2) Dimensions. And, as Tina Turner said, "What's Love Got To Do With It? If there are repeatable patterns in the market, then they will show up somewhere in the Time or Price dimension, or both. Within the dimension of Price, exists the sub-dimension of Magnitude.

Within the dimension of Magnitude exists "other" dimensions that I will not name here (proprietary knowledge) that gives rise to larger concepts such as Trends. Once you know what the Trend is composed of, you then have a good idea about the condition of the Trend (continuance or reversal). But, if you cannot see inside the Trend, because you don't know what its component parts look like, then how can you judge that all TA is alike? Answer: You cannot.

The Human body, is a system. Planet Earth, is a system. We live in what's called The Solar System - remember? Our Milky Way Galaxy, is a system and the entire known Universe, is likewise, a system. That's on the scale of Cosmology. In the exact opposite direction we have the Quantum scale where the Atom, is a system. The Nucleus (proton or neutron) is a system. The Hadron, is a system. Quarks, are systems. The orbiting Electron, is a system. The Gluon arrangement, is a system.

So, from the cosmic scale to the quantum scale and everywhere in between, no matter where you look, you find: Systems. We live inside a mechanistic universe, like it or not, where the laws that govern our existence here in the physical realm, can be articulated using the language of mathematics. To forget that mathematics is in fact a language and that it does have a voice, is to delude ones self.

So, when was the last time you actually put raw market's data under a mathematical microscope to see what patterns were actually present and accounted for? Something tells me that you have not. And, that begs the question: If you are an Engineer, why have you not already seen the patterns that are so amazingly visible and viable to the rest of us Engineers who participate in the market? I expect one schooled in the sciences, to at the very least, be able to admit that the market has repeatable patterns. To say that you are an Engineer, yet deny the existence of market patterns, is quite frankly, mind blowing in and of itself.

The question is not, do patterns exist, or whether or not those patterns repeat; the question is whether or not you can find the patterns with the highest cycle number and be able to identify when the market has the highest probability for demonstrating high continuity towards a specific pattern at any given moment within the dimension of Time.

You act like the market MUST conform to the historical cycles, at some point in the future to 100% continuity, in order for patterns to exist or be viable for trade. That's a total failure to understand: a) How to profit from market patterns, and b) What a market pattern is to begin with! You do not need 100% cycle conformity, in order to profit from high probability continuity. All you need to do, is set revenue goals that fit the continuity mean. Hello?

Once you have calculated and solved for the a continuity mean, then you run a probability filter against the historical series of aggregate continuity mean, to filter out noise AND to increase the overall signal strength. If you simply knew how to think about solving the problem, you would have done so by now, because the problem is soluble.

In other words, don't trade the "pattern." Trade the high probability continuity mean of the pattern. I don't actually trade market price, I trade into the high continuity mean of multiple pattern synergy and optimized probability structures.

The fact is that smarter people than you managed to blow up LTCM with these models....Black Scholes

You still don't get it - or you are trying to bend it. Either way, you are incorrect in your assumption.

Statistical Arbitrage has nothing (and I mean nothing) to do with Pattern Recognition. How do the two relate to each other - can you explain that? I mean, if you are going to use a premise to bolster your argument or defeat another argument, at the very least, make sure the premise has relevance. Black Scholes? You might as well have said Black Holes, for what its worth! LOL! Again, where is the relevance to to High Continuity Cycles?

My cycles are Delta based - not merely Price based! I don't care about the actual Market Price per se. What I care about is the Location of market price at any given Time.

Go back to the orbiting electron, because you are sorely missing the point, here.

What happens when you measure for the presence of an orbiting electron about its nucleus? You should already know the answer to this. The answer is that the electron appears to simply "shows up" in the "location" and at the "point" where you took your measurement. Now, remove the electron microscope. Can you see the electron now? Of course, not - not with the naked eye. Now, go back and apply another EM reading and measure for the presence of that electron again - this time in a different location - where is it now? That's right - it is precisely where you pointed your electron microscope the second time, of course.

Now, what can you say about these two measurements: Can you say that the electron moved from one location to another? Yes, absolutely because you observed it in two different locations. However, can you say with any degree of certainty that the electron followed a specific path from p1 to p2? No, you cannot with any degree of certainty.

Now, take additional random EM measurements totaling 1,000 where p1 is not repeated. That gives you data in the form of: p1 : p1000. Now, here's where it gets interesting. You now have 1000 p-vals and each one of them represents a completely different location in both Time and Space. Time and Space outlines the boundary layer for p1 : p1000. Though you cannot predict the precise path taken for each instance of p1 through p1000, you canpredict the shape and the pattern that is formed by the range of p1 : p1000 about the nucleus.

This is what gives the atomic structure its 'rigidity' in space. It is called the electron probability pattern which is an extremely difficult pattern to break-down, absent radio active decay. To do so, you would have to literally split the atom. Ok, let's move on.

If the electron is located (at the Time of measurement) at say, measurement p500 AND I know that during the previous measurement (Time interval) the electron was measured at least once (observed) at all points p1 : p500 AND that no observations during that same previous measurement (Time interval) revealed the existence of the electron between the range p501 : p1000 AND I know that I'm not dealing with an atomic structure undergoing radio active decay; THEN I also know that there is a high probability (a virtual guarantee) that at least one of the next locations of "p-val" will be inside the range of p501 : p1000.

Did you get that? If not, re-read until you do. Missing that point, will cause you to not understand the rest.

Thus, my next trade will be in the direction of p501. Why? Definitely not because I'm a genius, but simply because I understand the concept of Probability Patterns. If I know the underlying structure of Price is very resistant to breaking down (not undergoing market decay) and I know the current location of Price as well as the previous locations of Price over a Time interval of special interest (not to be disclosed), then I end up looking straight into the face of a high probability continuity in pattern repetition. This tells me Direction. All Deltas between each pairing of p-val, where each pair's Delta is known as: p1-p2, p2-p3, p3-p4, etc., out to p999-p1000, tells me Magnitude.

Thus, when I enter my p500 position, I do so already knowing the mean Magnitude and can then adjust downward my pip expectation until the target level matches a high frequency continuity patter for price. Notice the trade profile that I posted in this thread. Each trade had a very specific target number. That number is the highest frequency target given by the continuity optimization, NOT of Price, but of the Structure of Price. Price is NOT what it appears to be.

Right now, the EURUSD (at 1613 hrs GMT) shows up on a chart as $1.3727. That is false. That is NOT what Price actually looks like on the EURUSD. The "real" Price of the EURUSD (given the same time/date stamp) is actually $1.3888 $1.3664, was my entry into that continuity on 2/5/2010 (as outlined in my trade profile) and you can see that the profile's target has already been struck, but more importantly, you can see that the profile's target fell on the In-The-Money side of the actual Continuity Price of $1.3888. That's called Target Optimization.

Very straight forward. Very easy to understand and very difficult to argue against.

You can continue to attempt to define me and belittle me and tell me how much I don't understand.

No one is belittling you. You were the one who initiated the over-broad generalizations about what TA means and how ALL practitioners of TA were alike. All I did was correct the record.

The fact is - your model will work - until it doesn't because of something you didn't foresee or take into account.

Again, huge over-broad conditions are used here. Define "work?" How do you know what "work" means to any one individual? How can you possibly know that? Is the system targeting 23 pips or 673 pips - or some variable number in between? What "works" for you, may not mean much to me. I don't slam Fundamentalists, but you sure do have an axe to grind with Technical Traders.

Part of your problem here is that you seem to think that system = rigid. That's a huge mistake to make and it blinds you to the reality of how optimized trading systems work. Good systems are extremely flexible and not rigid. The best systems learn and adapt. Your body is a system, yet it learns and adapts to its environment. So, what makes you think that a trading system is unable to also, learn and adapt to its environment?

You are not thinking outside the proverbial Box on this matter.

TradeSMART. Manage your position. :smart:

 

[sun_wants]

Yes - it is possible to derive long-term profitability by trading the currency markets. The primary reason why newbies to this particular market lose in such high percentages, has everything to do with: a) The failure to study the market and the data that it generates and b) Their misunderstanding of how to correctly apply Leverage and Money Management against what they learned about the data the market has to offer.

Then come the excuses and the failed attempts at solving the problem. Namely, people who slam FX after having lost their money, while never attending to "A" and "B" above. Then comes the Government. Namely, the proposed CFTC Ruling that all Retail Traders be limited to 10:1 leverage - or similar attempts to Regulate Success. Then comes the Bucket Shop Spread Manipulating FX Intermediaries (mostly taking the form of a 'Broker') who use their Dealing Desks to milk the Uneducated Newbie Trader in ways that include widening of the spread near stop levels - all the way to blocking traders from being able to log-in to their accounts - and every other dirty trick in the book.

Unethical Intermediaries. Uneducated Traders. Unwise Bureaucracies. These are the three giants to overcome, if you you plan to be a long-term successful Retail trader of the Forex. It can be done. It is being done. But, you must first be aware that the problem even exists, before you can solve it.

1) Educate yourself about what drives this market.

The best traders in this business are Pattern Traders. Why? Two reasons: a) There are virtually an unlimited number of trade-worthy patterns that have yet to be discovered. b) Discovery of your OWN trade-worthy patterns makes them unique and less vulnerable to broad or generalized attack by Retail Intermediaries using tactics designed to target those using most conventional trading techniques. Some of the best patterns, have yet to be discovered. You Educate yourself by studying the Price Behavior (market data) and learning what patterns repeat, why they repeat and when they have the highest probability for repeating.

2) Hunt for a reliable Retail Intermediary.

Unless you have $25 Million, you won't be able to open an account with Deutsche Bank and start trading on their AutobahnFX platform and truly engage the Interbank market directly. Unless you can open an account with Barclays at between $300k to $1 Million, you won't be able to use their BARX FX platform. You need millions to open up accounts at UBS, USBC and Standard Chartered Bank, as well - all for the privilege of trading directly with the Interbank system. Therefore, before you become highly successful in this business, you must learn how to cut your teeth at the Retail level which means finding yourself a least of squares Broker or Intermediary with a good platform and No Dealing Desk Intervention. They do exist, but they are definitely in the vast minority.

3) Create a repeatable Edge and stick to it.

Whatever you do to determine when to enter the market, you must do so with an Edge that few others have or know about. This requires homework on the data. Your Edge is what keeps you ahead of the crowd and better than the average 60% win rate. A good Edge will place you in the 80% win rate category and the best Edges out there will place you into the 90+% accuracy rate.

4) Exhibit Discipline within a Systematic Approach.

Trading without discipline is exactly like driving while drunk. You stand no more than a 50% chance of success. Execute discipline while implementing the Edge in number 3 above, that you developed as a direct result of your Education in number 1 above. Everybody is a Systems Trader even those who think they trade purely on Fundamentals. If you trade on Fundamentals, then your "system" is to trade "with fundamentals," it is just that simple. You systematically use Fundamentals to execute trades - that's still a system. So, don't let anybody tell you that just because you don't have a PhD.D in Applied Mathematics and are not an Object Oriented programmer, that you somehow are not a systems trader. Any rule that you apply to trade execution and/or trade logic - is by definition, a Trading System. It can be manual or it can be automated, but it is still a systematic approach to trading based on decision making and decision making is nothing more than a set of protocols which is nothing more than a system.

Once you truly learn these lessons, then you'll be browsing these types of forums looking to share this same or similar advice to other people asking the question: Who is making money trading the currency markets?

Answer: People that have learned these lessons.

TradeSMART. :smart:

Great Reply!

 

[TraderNumber7]

Methinks your numbers are way off for the equity markets. For example yesterday INTC traded about 70 mil shares. Thats > $1.3 bil for INTC alone in one day. SPY traded ~330 mil shares. Thats > $35 billlion for one day for SPY.

Your numbers are seriously wrong.

Yea, no doubt.

DJIA, NASDA and Amex, all conspired to produce approximately 3,014 Bln in Volume today, 10 Feb 2010 at the closing bell. Multiple that by the aggregate price per share for all three exchanges and you still don't even scratch the daily turn-over surface of nearly $5 Trillion per day in the Forex.

That's the point, typos included.

 

[TraderNumber7]

Don't be silly, who uses ATR's of periods pf 50 or 100 years? And even if they did, they would give an extremely lopsided picture of the risk of ruin in a "black swan" scenario. It's the "Average" bit of ATR that is the problem.

The level of misunderstanding the premise on this forum is untold and epic.

The reference to ATR has nothing to do with "who uses it." ATR is the market as far as price action is concerned or did you not already understand that fact?

Show me a price point that exists OUTSIDE the ATR and remains there. Don't bother - you can't because in order for ATR to be ATR, the aggregate of Price MUST be contained therein. Otherwise, it is not ATR. ATR does not project anything, it simply tells you where the aggregate of all Price points have been (past tense).

 

[MrGecko]

in order for ATR to be ATR, the aggregate of Price MUST be contained therein. Otherwise, it is not ATR. ATR does not project anything, it simply tells you where the aggregate of all Price points have been (past tense).

Well done for explaining ATR.

I agree w/dcraig1, anyone who uses 50yr or 100yr ATR is a moron.

 

[TraderNumber7]

TraderNumber7,

You sound to me like you are selling something.

Can you point to exactly what is being sold, so I can find out what the heck it is myself. LOL, you people are amazing. Its almost like you are running from a nuclear bomb detonation or something. Get a grip - no one that I know is trying to sell you anything. Furthermore, if somebody does try to sell you something, don't you have enough self-control to Just-Say-No? It worked for Nancy Reagan, maybe you can find some worth in such a solution. Unbelievable! Oh! Look out! Somebody is going to sell me somthing - Paranoia.

Look, be concerned (not paranoid) about Iran and their Nuclear Weapons program. Be concerned (not paranoid) about North Korea's continued medium range missile program. Stop the presses, if you see somebody getting on your commercial flight with C4 strapped to every inch of their body, having somehow (by some miracle) passed through concourse security without being detected and stopped. If a a Real Estate agent swears on their parents grave that the active volcano sitting 1,000 feet from the backyard of the house they are trying to "sell you" has not a single chance in Mars of ever erupting and if it did, the lava would never flow in your direction. Be just a little concerned about these things, but for McDonald's sake and a $2.99 Happy Meal, don't waste a solitary neuron on the idea that somebody can actually sell you something over the "internet" of all places UNLESS you want to be sold - where in such a case, you will HUNT down Red October yourself, to find the item you are looking for on the web.

Wow! You guys are something else. :-0

A little humility would be in order.

A little what? I answer the OP's question directly, get told that I'm basically a liar and that I'm a liar because I use a form of technical analysis the accuser can't possibly know anything about and you throw humility in my path? What thread are you reading exactly? Surely not this one.

You do not know everything you claim to know

How the heck can you possibly know what another individual knows? Are you psychic?

...about trading, otherwise you would not be confusing John Ehlers with Euler.

Confused what? Are you dyslexic too? Can you not read. I expressly stated an opinion about Mathematics and Fourier Transform, which is derived from Fourier Analysis, which itself came from Joseph, not John. I was then told that "Ehlers" never made money trading [essentially] with "mathematics," which is a clear example of the lack of humility by the one who gave rise to the wrong analogy to begin with.

So, which forum thread are you reading?

John Ehlers has applied digital signal processing techniques to trading to produce indicators for such things as cycle length, cycle signal to noise ratio, trend etc.

No he did NOT. Anyone can read a website and get it dead wrong. If you understood the subject matter than you would know that what John "applied" was not "digital signal processing" - he applied his own discovery of Maximum Entropy Spectral Analysis, which produced the digital signal that was then later "processed" in another module. You don't even understand the process behind the technique, yet want to correct somebody on the subject matter and conclude that they need more humility? That's arrogance personified.

You can buy his MESA software....

In this entire thread, YOU are now the ONLY human being to have suggested that somebody go out and buy something. I thought you were paranoid about being sold, yet here you are, attempting to sell. That's hypocrisy and arrogance combined.

LOL! Some of you are just too much.

 

[TraderNumber7]

I don't know how many retail traders make serious money in fx.

Then maybe you should get out more often, LOL!

I suspect not many.

Because, you've actually traded FX and you know all about it, right. LOL!

But I do think that talk of some mathematical purity in the price time series because of some claimed stability in the fundamentals hardly constitutes a reason to prefer fx over equities markets.

Stability in the fundamentals? Man you are dyslexic - case closed. You don't even understand your own argument - what's the point of rebutting your nonsense.

Go get a correctly stated premise and I'll continue the debate - otherwise, merely showing up is not enough. You bring a butter knife to a gun fight. Not wise.

 

[TraderNumber7]

Black underpants Could also ask TN7 about no stop losses as I thought that was a crucial part of trading, unless i'm missing something!

Yes, you are.

If the market you trade has enough depth, breadth, liquidity, instruments with par return values (instruments with the same approximate per unit of movement return value) and a stable Price Structure (as I defined it), then there is absolutely no need to trade with a stop.

To wit: Have you tracked my 17 pair trade profile in this thread? Do you see a loss or a gain on the profile? Do you see any stops in that profile - no - not one.

I am the stop.

 

[TraderNumber7]

Reading through these threads makes things quite, no, very difficult for a newbie,(me), to know where to start when trying to learn forex, I think a brain transplant is needed.
TN7 I could agree, knowing pretty much nothing, with the view on The Big Dogs using TA to get my stop losses hit more times than not, although no stop loss would seem to be p*****g into the wind..

See the above post.

If you are going to P**** then I would suggest not doing it into the wind. That's the same thing as trading a single pair. It leaves you naked and exposed to ruin when things go wrong.

There is safety in numbers - a basic axiom so easy to understand, that even a Cave Man could apply it. As a newbie, your first task is to discover as many Deltas in the price action that you can get your mind around.

A price action Delta is simple: Open to High, that's a Delta. High to Low, that's a Delta. Low to Close, that's a Delta. Open to Low, that's a Delta. High to Close, that's a Delta too. These are the most Cave Man like Deltas in the business, but there are literally a myriad more to discover. And, that is where research comes in handy. There are more PAD (Price Action Deltas) then you will live long enough to discover and fully explore. And, you don't need to find them all. Just find some that work for you on a consistent basis and then develop trading rules around them (called a Logical Wrapper - aka: Algorithm).

Having done so, your "TA" system will be based on something that 99+% of all other TA systems out there are NOT based on and THAT will be your strategic Edge. Your tactical Edge, will be in how you implement your signals, execute your trades and manage your money.

The rest is history, literally....history, simply repeating itself. Time, after time, after time, after time.

The problem with these Neo-wanna-be traders, is that thy don't understand that this is ALL: "just a little bit of History repeating."

[youtube_browser]Z020ax4_mXg[/youtube_browser]

 

[dcraig1]

No he did NOT. Anyone can read a website and get it dead wrong. If you understood the subject matter than you would know that what John "applied" was not "digital signal processing" - he applied his own discovery of Maximum Entropy Spectral Analysis, which produced the digital signal that was then later "processed" in another module. You don't even understand the process behind the technique, yet want to correct somebody on the subject matter and conclude that they need more humility? That's arrogance personified.

You haven't a clue what digital signal processing is. Read the papers. Implement the code like I have and you might find out something, instead of telling the world how clever you are. Any type of spectral analysis performed on a digital computer IS some form of digital signal processing. Period. End of story.

 

[TraderNumber7]

I dont know what else there is!

And, that is precisely the problem. An honest admission, but still, a problem nonetheless. Read my last two posts up to find out where "else" lives.

Your Edge lives inside your MIND. And, no. You are not any less smart than anyone else. You just need to expand your mind to include other concepts that exist outside the same old 40 year Box of convention, with respect to traditional TA. My reply two posts UP, should help you step into another dimension. The Delta dimension.

It is a world where amazingly, precious few people go or understand. But, once you "get it" you will have a very hard time turning around and going back to convention. In fact, if you learn how to use Deltas properly, they can help you put a Leading Edge on the Trailing Edge of many conventional TA indicators. And, once you can do that, then you are in and out of the market, before most Neo-Traders even know there is a move worth trading.

In other words, there is Undergraduate trading and Doctorate trading. All the Doctorates understand clearly that history loves to repeat itself and they get into position before it does. All the Undergrads sit around waiting for history to repeat itself and get in during the cycle of repetition. This is why so many Undergrads suffer Whiplash and induced Coma related injuries while trading.

Don't be a victim. Be a Ninja or a Jedi trader, or even better: be BOTH.

TradeSMART. Manage your position. :smart:

 

[dcraig1]

Yea, no doubt.

DJIA, NASDA and Amex, all conspired to produce approximately 3,014 Bln in Volume today, 10 Feb 2010 at the closing bell. Multiple that by the aggregate price per share for all three exchanges and you still don't even scratch the daily turn-over surface of nearly $5 Trillion per day in the Forex.

That's the point, typos included.

The point is that you are plucking numbers out of thin air.

The old 5 tril argument for fx is utterly without merit. Who cares? What does it matter if the market one is trading has sufficient liquidity?

And while we are on the subject of liquidity there is far more liquidity in equities markets such as SPY or ES than there is or is ever likely to be from any fx bucket shop.

And whats more your broker doesn't take the other side of your trade.

 

[TraderNumber7]

I think the answer to that is yes and no.

The answer is a resounding no! You need not trade with a stop IF you know what you are doing and my last reply on this subject spells it out for you.

Let's say you trade a pair of instruments that are normally correlated but may have diverged. You place trades on each of the pair to take advantage of them reverting to mean. This is a form of arbitrage called pair trading.

Which is one of the most dangerous and volcanic forms of guessing I've seen sold to the trading community. Unless you can place this concept under the umbrella of a real options derivative strategy and absorb the shock an awe from guess turned into a nightmare, by distributing the draw-down across a steep region of out-of-the-money strikes on both ends, then you really set yourself up for probabilistic failure or at the very least, un-optimized trade performance.

Long before I traded currency pairs, I traded equity derivatives and did nothing but spread trades. They are easy. In fact, they are too easy to make money with. The real problem with equity derivative based spreads is the limitation on trade (read: profit) optimization and by extension, capital appreciation, according to my schedule for growth. With pair trading, there are too many holes in the equation that cannot be plugged in terms of ways to lose capital per trade.

I don't recommend pair trading to anyone, unless they have very specific knowledge about at least one (1) of the instruments returning to mean. Without that kind of detailed insight, leave it alone - its not worth the time or the frustration.

However, pair trading is not Multi-Pair Trading and the risk curve with my Multi-Pair Trading has a rise that fits well within my tolerance for pain. In fact, the way I trade, risk never exceeds a factor of more than 7% probability. Something I can sleep well on, no doubt.

 

[dcraig1]

The level of misunderstanding the premise on this forum is untold and epic.

The reference to ATR has nothing to do with "who uses it." ATR is the market as far as price action is concerned or did you not already understand that fact?

Show me a price point that exists OUTSIDE the ATR and remains there. Don't bother - you can't because in order for ATR to be ATR, the aggregate of Price MUST be contained therein. Otherwise, it is not ATR. ATR does not project anything, it simply tells you where the aggregate of all Price points have been (past tense).

Complete blather, ATR does not " tell you where the aggregate of all Price points have been". It's a measure of trading range or some sort of measure of volatility. There is nothing to stop tomorrows trading range from being one tenth of ATR(14) or ten times ATR(14). Indeed there will be historical bars where TR > ATR(14) and where TR < ATR(14) or any period ATR care to name except in the trivial case of ATR(1).

Two instruments can have exactly the same ATR be in opposing trends.

 

[TraderNumber7]

I doubt that is not happening. No-one is actually hunting your stops. It's probably just random wiggle.

What? No one is stop hunting? Not even Bucket Shops that use so-called "trade management modules" with functions that have names such as: Stop Out Trade in big Red Neon colors? I have no direct proof of stop hunting, but I sure do have a ton of circumstantial evidence that at least calls it onto the dance floor as a potential date at the Bucket Shop Ball.

I am sure GammaJammer would be able to provide insight.

Why wait on Gamma:

Bank for International Settlements - Triennial Central Bank Survey


An education comes in a thousand forms.

TradeSMART. Manage your position.

 

[TraderNumber7]

Cheers Temp, Dino, what I meant is if everyone is placing the stop around the same area e.g pivot points and such, would that not be hunting season..

Yeah, like fat DUCK hunting season, LOL!

 

[TraderNumber7]

forex is a $2.5 TRILLION market daily. a few people placing stops at similar places is not enough to move the market...

The problem here is that not a few people use conventional TA. :idea:

If everybody is jamming their chart with R1s and S1s, standard Ichimoku Cloud formations, a 20 period MACD, some Bollinger Bands, ZigZags, Andrews Pitch Fork, etc., adnaseum, etc., adnaseum, etc., adnasem; the out of the $5 Trillion per day turn-over, you don't have to catch the entire world doing the same thing, just to dump people out at their stop level. Just a fraction of the business can make you extremely wealthy.

It is an "interesting job" - if you can get it.

 

[TraderNumber7]

TN7 said 95% traders or whatever fail...

Those aren't my numbers. I'm just delivering the message. Check with your local Bucket Shop for further details on who is really winning in the Forex.

What a newbie needs to fully understand is this: Unless you hook-up with the right Intermediary, you won't be trading the Interbank Market - period. You will be off-set on your Intermediary's Deal Book - period. Your Intermediary then goes and off-sets their book (containing many trades from Newbies) with their own pre-arranged liquidity "pool" - often times an incestuous pool. You need an Intermediary that will execute your positions such that off-setting occurs not as a secondary process, but as a primary process with either their liquidity pool, or the real deal Interbank market itself. Precious few retail accounts do this in real-time.

There are places where you can trade and either get direct off-setting or be off-set with an Intermediary that has a reasonably deep channel of access to good liquidity in what I like the call the Intra-bank market, as opposed to the Inter-bank market.

There is Retail Forex (Dealing Desk with in-house Deal Book off-setting - your trade never sees the light of day on the Interbank market). There is Mark-Up Forex (Dealing Desk with batch off-setting against a liquidity pool - your trade rarely sees the light of day in the Interbank market). There is Wholesale Forex (No Dealing Desk - Straight Through Processing directly to the Interbank market via ECN or ECN "type" hub).

The body Forex has three (3) legs, seven (7) heads, four (4) arms and a multitude of eyes. The problem with the Forex right now is that it has no Central Nervous System. However, that is being worked on as we type. In a few more years, that will change, too.

TradeSMART. Manage your position.

 

[TraderNumber7]

Great Reply!

Thanks - I'm glad you read it in context. Most people don't. :clap:

TradeSMART. Manage your position.