Hunting secrets revealed

[Black Swan]

Lets look at a recent example of 'footprints of the big beast'.

Please everyone bring up a chart of EUR/CHF, daily candles if you will. Now take a gander at March 12, and June 24, what do you see? For anyone that trades forex you should immediately know that this isn't just a footprint, this is a herd of elephants jumping up and down screaming 'shoot me'. Yes it's central bank intervention by the SNB.

This is the most glaringly obvious example of recent times, and it made a lot of people a lot of money. Also by the way it's an interesting example of what happens when 4-5 yards are dumped on the market with no regard to iceberging etc

This kind of footprint, and many other types of footprint are found all the time, on every market, you just have to be a good hunter

I preferred USD/CHF from 10/12/2008 - 17/12/2008...triggered, kinda obvious, didn't have to be in at the 'b of the bang'...thanks for the 'heads up'/thought provoke though.

 

[Black Swan]

V,

Thankyou for this informative post. Now, it is obvious that you are a seasoned practitioner of the 'game',

Paul.

He went long on gold in 1982... :whistling

 

[virtuos0]

You can be assured that when the time comes for that, I shall not hesitate to start a fluff-free thread for that purpose.

Now - you seem to have put some meat on the bone of this thread, and as such, I shall not interfere by taking it off on a tangent you hadn't intended. Have some empathy though - not all will have read into the analogy what you expect.

Thanks Pedro, I look forward to your thread and I hope I can learn something from it. (no sarcasm intended)

 

[virtuos0]

V,

Thankyou for this informative post. Now, it is obvious that you are a seasoned practitioner of the 'game', and you may well know all the traits, signatures and habits of the beast and it's multi-faceted personality, but hold on for a second. What may be glaringly obvious to your good self, may not be so obvious to the blind player. The blind player may have been involved with the game for some years, but if that person has been concentrating on the pseudo mechanics instead of the real structure of the beast, then you may as well be talking about playing golf with a tennis racket. Hunting and tracking the market movers is a hard pill to swallow for some.



Paul.

Thanks Paul, you're spot on here. It's very easy in the market to assign cause and effect incorrectly. What a real trader is striving to do is gain insight into the market in order that the true cause and effect becomes tradable.

 

[virtuos0]

I preferred USD/CHF from 10/12/2008 - 17/12/2008...triggered, kinda obvious, didn't have to be in at the 'b of the bang'...thanks for the 'heads up'/thought provoke though.

Mr Swan,

This is another interesting point to pick up on. USD/CHF was also tradable in this instance I agree, however..and this links back to my original analogy.. It's always important to pick the most fruitful forest!

 

[tenbobtrader]

One of the Oldest Hunters on the planet

I like listening to the jungle drums

I like to think about how this drum beat might benefit the larger slow moving hunting parties

glance at my hand drawn map of the local topography

check the diary for interesting dates

off to the nearest waterhole, narrow gorge or white water river crossing to set up my camp

check kit, line of fire and the escape routes

relax and wait

WATCH

take a bite

 

[Paul71]

I like listening to the jungle drums

I like to think about how this drum beat might benefit the larger slow moving hunting parties

glance at my hand drawn map of the local topography

check the diary for interesting dates

off to the nearest waterhole, narrow gorge or white water river crossing to set up my camp

check kit, line of fire and the escape routes

relax and wait

WATCH

take a bite

TBT,

Fantastic image there. Image the croc as an old informed type, institutional or whatever. Now imagine the prey to be an MA cross-over system follower.....WALLOP! Ironed out, cleaned out and moaning on T2W that thier 'edge' has stopped working.


Paul.

 

[tenbobtrader]

good post Paul

 

[pedro01]

TBT,

Fantastic image there. Image the croc as an old informed type, institutional or whatever. Now imagine the prey to be an MA cross-over system follower.....WALLOP! Ironed out, cleaned out and moaning on T2W that thier 'edge' has stopped working.


Paul.

I still think you are barking up the wrong tree with this analogy.

Institutions risk millions & billions. People that follow MA xovers risk 100's. If you think the institutions or central banks are ploughing money into the market to wipe out some guy spread betting in his moms bedroom, you are wrong.

It's like getting hit by a herd of rampaging elephants and claiming they were on the rampage to squash you. That's not the case - you were just in the way.

What you don't want to be doing is thinking that there's a bunch of people out there that are smarter than most. What they are is better funded than most.

In the case of a central bank intervention in the example provided by Virtuos0, there's no way any amount of technical analysis will let you know that's about to happen.

First of all, you have to understand the market. I'm not a Forex guy but I do understand the Forex market as I regularly exchange currency and suffer/benefit from losses/gains in currency as a natural side-effect of having customers in other countries.

A lot of forex volume is simply businesses paying invoices.

Next start to factor in things like the economic position of a country. In Thailand for instance there was a steady influx of money to invest in businesses here for a number of years. The place was growing, people wanted a part of it. To invest in Thailand, you need to buy Thai currency. Supply & demand being what it is, this makes Thai currency more valuable.

Then look at things like interest rates. If interest rates are higher in one country, people will plough money in to take advantage of that. Again, supply & demand dictates that the item being brought goes up in value. Also - as this reverses and the money is pulled out, people will sell that currency and thus reducing it's value.

Central banks as in the example above do tend to intervene in the currency. Thailand have done it a number of times. They may, for instance, use their foreign currency reserves to start buying up their currency to attempt to prop up it's value. A lot of the time, this fails. It is indeed quite a gamble. There's no easy way to know when the government will do that but again, in the case of Thailand, there are often rumours in the press etc prior to these things happening.

This is not even scratching the surface of people that have the resources to play against governments in this marketplace.

Now - I do not trade forex. I am sure there are a lot of additional nuances and things to learn. I am sure I may have things wrong. If you are trading forex and any of the above is new to you, then you are doing yourself a disservice by not understanding how your market works and what the drivers are behind the market.

WIthout knowing how the market works, the explanation you may arrive at when your trade fails is that someone took you out when in fact you could have been an ant standing in the way of a freight train with it's bells ringing and never know what really hit you.

 

[pedro01]

Thanks Pedro, I look forward to your thread and I hope I can learn something from it. (no sarcasm intended)

Well, if we stick to Forex, I can quite confidently say that you won't learn a thing from me.

 

[Paul71]

I still think you are barking up the wrong tree with this analogy.

Institutions risk millions & billions. People that follow MA xovers risk 100's. If you think the institutions or central banks are ploughing money into the market to wipe out some guy spread betting in his moms bedroom, you are wrong.

It's like getting hit by a herd of rampaging elephants and claiming they were on the rampage to squash you. That's not the case - you were just in the way.

What you don't want to be doing is thinking that there's a bunch of people out there that are smarter than most. What they are is better funded than most.

In the case of a central bank intervention in the example provided by Virtuos0, there's no way any amount of technical analysis will let you know that's about to happen.

First of all, you have to understand the market. I'm not a Forex guy but I do understand the Forex market as I regularly exchange currency and suffer/benefit from losses/gains in currency as a natural side-effect of having customers in other countries.

A lot of forex volume is simply businesses paying invoices.

Next start to factor in things like the economic position of a country. In Thailand for instance there was a steady influx of money to invest in businesses here for a number of years. The place was growing, people wanted a part of it. To invest in Thailand, you need to buy Thai currency. Supply & demand being what it is, this makes Thai currency more valuable.

Then look at things like interest rates. If interest rates are higher in one country, people will plough money in to take advantage of that. Again, supply & demand dictates that the item being brought goes up in value. Also - as this reverses and the money is pulled out, people will sell that currency and thus reducing it's value.

Central banks as in the example above do tend to intervene in the currency. Thailand have done it a number of times. They may, for instance, use their foreign currency reserves to start buying up their currency to attempt to prop up it's value. A lot of the time, this fails. It is indeed quite a gamble. There's no easy way to know when the government will do that but again, in the case of Thailand, there are often rumours in the press etc prior to these things happening.

This is not even scratching the surface of people that have the resources to play against governments in this marketplace.

Now - I do not trade forex. I am sure there are a lot of additional nuances and things to learn. I am sure I may have things wrong. If you are trading forex and any of the above is new to you, then you are doing yourself a disservice by not understanding how your market works and what the drivers are behind the market.

WIthout knowing how the market works, the explanation you may arrive at when your trade fails is that someone took you out when in fact you could have been an ant standing in the way of a freight train with it's bells ringing and never know what really hit you.

You are right, my example should not be thought of in an individual context. Think of Colin the Crafty Croc, as a group of similar participants and think of, Pete the Prey, as a pool of weak liquidity in a really vunerable area. Does this make more sense to you?

 

[virtuos0]

I still think you are barking up the wrong tree with this analogy.

Institutions risk millions & billions. People that follow MA xovers risk 100's. If you think the institutions or central banks are ploughing money into the market to wipe out some guy spread betting in his moms bedroom, you are wrong.

It's like getting hit by a herd of rampaging elephants and claiming they were on the rampage to squash you. That's not the case - you were just in the way.

What you don't want to be doing is thinking that there's a bunch of people out there that are smarter than most. What they are is better funded than most.

I absolutely agree with the gist of your post.

I may have said it somewhere else in this thread, I forget, but retail trading makes up (ballpark) 2% of trading in the forex market, and so it isn't even a consideration in the eyes of banks or institutional traders. No one is out to get you.

However.. many of you trade with bucketshops, in which case you probably do have reason to be paranoid, and there probably is someone out to get you! But that has nothing to do with the market itself. Going back to Livermore again (this is becoming a habit) anyone 'spreadbetting' should read this and realise that not much has changed.

In the case of a central bank intervention in the example provided by Virtuos0, there's no way any amount of technical analysis will let you know that's about to happen.

I have in my mind the image of a retail trader opening a short before the bank intervention and getting wiped off the face of the earth, screaming at their monitor "BUT MY STOCHASTIC SAID IT WAS OVERBOUGHT, HOW CAN THIS BE!!"

First of all, you have to understand the market. I'm not a Forex guy but I do understand the Forex market as I regularly exchange currency and suffer/benefit from losses/gains in currency as a natural side-effect of having customers in other countries.

A lot of forex volume is simply businesses paying invoices.

Next start to factor in things like the economic position of a country. In Thailand for instance there was a steady influx of money to invest in businesses here for a number of years. The place was growing, people wanted a part of it. To invest in Thailand, you need to buy Thai currency. Supply & demand being what it is, this makes Thai currency more valuable.

Then look at things like interest rates. If interest rates are higher in one country, people will plough money in to take advantage of that. Again, supply & demand dictates that the item being brought goes up in value. Also - as this reverses and the money is pulled out, people will sell that currency and thus reducing it's value.

Central banks as in the example above do tend to intervene in the currency. Thailand have done it a number of times. They may, for instance, use their foreign currency reserves to start buying up their currency to attempt to prop up it's value. A lot of the time, this fails. It is indeed quite a gamble. There's no easy way to know when the government will do that but again, in the case of Thailand, there are often rumours in the press etc prior to these things happening.

This is not even scratching the surface of people that have the resources to play against governments in this marketplace.

Now - I do not trade forex. I am sure there are a lot of additional nuances and things to learn. I am sure I may have things wrong. If you are trading forex and any of the above is new to you, then you are doing yourself a disservice by not understanding how your market works and what the drivers are behind the market.

WIthout knowing how the market works, the explanation you may arrive at when your trade fails is that someone took you out when in fact you could have been an ant standing in the way of a freight train with it's bells ringing and never know what really hit you.

Amen.

 

[pedro01]

Paul, Virtuoso - seems we have reached an agreement. Means I'll probably have to annoy someone else now.

Thing is - in my insomnia brought on by a 4pm Thai coffee, I started to look through some threads that seem to be popular but I haven't partaken in. This one caught my eye...

http://www.trade2win.com/boards/forex-discussion/48102-im-shorting-euros-208.html

In particular Pippy5000 who seems to be a prolific poster. He may well be extremely successful but it seems that the whole thought process in placing this trade will be a combination of support & stochastics with no mention of the economic situation both UK & US currently find themselves in, no reasoning on why a bounce would occur as opposed to one side potentially dropping away. To me, this seems odd. This thread has thousands of posts. Not all in the same pure technical vain but this recent one I found interesting.

Then on another thread that I participated on - http://www.trade2win.com/boards/energy/71506-natural-gas-how-low-can-go.html where I really wanted some input on ideas of the prospect of a shut down of a couple of ETFs potentially causing flight of that money elsewhere. Effectively, no replies. Perhaps because what I wrote was bull**** (I'm not generally a commodities guy). Perhaps because it's dull & no-one's interested. Perhaps though it's because I didn't have a picture on there with lots of lines & oscillators.

I'd like to be able to discuss things like this. If UNG goes the way of DXO, there is potential opportunity there and it'd be nice to discuss with traders in that area that have an alternative opinion.

Perhaps it was me writing b0ll0cks which put people off. Generally speaking though - people aren't afraid to tell me when I am full of shlt.

 

[virtuos0]

Paul, Virtuoso - seems we have reached an agreement. Means I'll probably have to annoy someone else now.

Thing is - in my insomnia brought on by a 4pm Thai coffee, I started to look through some threads that seem to be popular but I haven't partaken in. This one caught my eye...

http://www.trade2win.com/boards/forex-discussion/48102-im-shorting-euros-208.html

In particular Pippy5000 who seems to be a prolific poster. He may well be extremely successful but it seems that the whole thought process in placing this trade will be a combination of support & stochastics with no mention of the economic situation both UK & US currently find themselves in, no reasoning on why a bounce would occur as opposed to one side potentially dropping away. To me, this seems odd. This thread has thousands of posts. Not all in the same pure technical vain but this recent one I found interesting.

Then on another thread that I participated on - http://www.trade2win.com/boards/energy/71506-natural-gas-how-low-can-go.html where I really wanted some input on ideas of the prospect of a shut down of a couple of ETFs potentially causing flight of that money elsewhere. Effectively, no replies. Perhaps because what I wrote was bull**** (I'm not generally a commodities guy). Perhaps because it's dull & no-one's interested. Perhaps though it's because I didn't have a picture on there with lots of lines & oscillators.

I'd like to be able to discuss things like this. If UNG goes the way of DXO, there is potential opportunity there and it'd be nice to discuss with traders in that area that have an alternative opinion.

Perhaps it was me writing b0ll0cks which put people off. Generally speaking though - people aren't afraid to tell me when I am full of shlt.

Forums are responsible for creating a monster, and that monster is the retail trader that believes that he needs no knowledge of the markets whatsoever to be successful.

People seriously believe that all you need is good money management, good psychology, and that as long as you have those in place you're golden!

This is why Pippy's thread has thousands of replies and yours got none. C'est la vie, leave 'em too it.

 

[montmorencyt2w]

Forums are responsible for creating a monster, and that monster is the retail trader that believes that he needs no knowledge of the markets whatsoever to be successful.

People seriously believe that all you need is good money management, good psychology, and that as long as you have those in place you're golden!

I have come to the realisation recently that my lack of knowledge of the markets was holding me back (maybe not the only thing, but a factor). I had taken rather too literally the advice often given here to "ignore the news". In fact the same people who give this advice will sometimes make postings indicating that they are perfectly well acquainted (by whatever means) with the relevant market situation and background. Probably, because they are extremely seasoned traders, it has just become second-nature to them to rapidly skim through what "news" there is that they need to know and cut through the crap. It's probably good advice for newbies to ignore the "news" because they wouldn't know how to interpret it anyway. The seasoned "oldies" apply their TA, etc, wizardry to their background knowledge, probably unconsciously. The newbies may be able to learn and apply the mechanics of the TA etc, and may make it work some of the time, maybe even most of the time, but won't be on the lookout for the macroeconomic events that might just wipe them out when least expected.

This is why Pippy's thread has thousands of replies and yours got none. C'est la vie, leave 'em too it.

It's a fun thread and I won't knock it. I'll bet Pippy is one of those "seasoned traders" I was referring to, and factors in the market knowledge as well.

 

[virtuos0]

I have come to the realisation recently that my lack of knowledge of the markets was holding me back (maybe not the only thing, but a factor). I had taken rather too literally the advice often given here to "ignore the news". In fact the same people who give this advice will sometimes make postings indicating that they are perfectly well acquainted (by whatever means) with the relevant market situation and background. Probably, because they are extremely seasoned traders, it has just become second-nature to them to rapidly skim through what "news" there is that they need to know and cut through the crap. It's probably good advice for newbies to ignore the "news" because they wouldn't know how to interpret it anyway. The seasoned "oldies" apply their TA, etc, wizardry to their background knowledge, probably unconsciously. The newbies may be able to learn and apply the mechanics of the TA etc, and may make it work some of the time, maybe even most of the time, but won't be on the lookout for the macroeconomic events that might just wipe them out when least expected.





It's a fun thread and I won't knock it. I'll bet Pippy is one of those "seasoned traders" I was referring to, and factors in the market knowledge as well.

I'm not talking just about macroeconomic conditions, I am talking also about knowledge of the market structure and participants. For example are you aware of how the trading of Options impacts the market? If not why not? You are at a disadvantage to someone that does. Read Natenberg.

I take your point about the Pippy thread. I am not disparaging Pippy himself, I think I've read enough of that thread to realise that he has a decent enough understanding of the market, and macro conditions to turn a profit. It's a shame he feels the need to use his redundant Stochs and MA's, it makes him look like a bit of a noob.

 

[montmorencyt2w]

I'm not talking just about macroeconomic conditions, I am talking also about knowledge of the market structure and participants. For example are you aware of how the trading of Options impacts the market? If not why not? You are at a disadvantage to someone that does. Read Natenberg.

Well I was using that as shorthand. I couldn't quickly think of another short term meaning (to me) all the many other things outside TA....yes, including market structure and participants. That's exactly what I am now (belatedly) trying to get a handle on. You are right; I only have the vaguest notion at the moment of how Options affect the market, but I am trying to find out. Thanks for the pointer. Currently studying the bond market.

 

[Black Swan]

I'm not talking just about macroeconomic conditions, I am talking also about knowledge of the market structure and participants. For example are you aware of how the trading of Options impacts the market? If not why not? You are at a disadvantage to someone that does. Read Natenberg.

I take your point about the Pippy thread. I am not disparaging Pippy himself, I think I've read enough of that thread to realise that he has a decent enough understanding of the market, and macro conditions to turn a profit. It's a shame he feels the need to use his redundant Stochs and MA's, it makes him look like a bit of a noob.

TBH I like Pippy's thread, I don't agree with most of the trading decisions made by the main participants but heh, if it works for them then fine...

What I 'admire' re. the thread is the fact that they actually 'put one on', no ifs, no buts they actually trade. Too many of the trading journal threads here 'muse' rather than actually trade.

Re. TA, in specific stochs/MAs etc...I can only talk from my own success/consistency on Forex; I use a combination ( the current accepted word is confluence ) of indicators to take my entry and exit and it works on any TF. CCI/Stoch/MACD/3 MAs = consistent success. Whilst price action is my next goal atm I simply don't need it. Similarly I don't need to trade 'through it' with a combination of fundamentals...

 

[virtuos0]

TBH I like Pippy's thread, I don't agree with most of the trading decisions made by the main participants but heh, if it works for them then fine...

What I 'admire' re. the thread is the fact that they actually 'put one on', no ifs, no buts they actually trade. Too many of the trading journal threads here 'muse' rather than actually trade.

Re. TA, in specific stochs/MAs etc...I can only talk from my own success/consistency on Forex; I use a combination ( the current accepted word is confluence ) of indicators to take my entry and exit and it works on any TF. CCI/Stoch/MACD/3 MAs = consistent success. Whilst price action is my next goal atm I simply don't need it. Similarly I don't need to trade 'through it' with a combination of fundamentals...

But if you trade entry signals via CCI/stock/MACD/3ma's what you are doing is playing a probability game, not trading.

Imagine two people who agree to play a coin flip game, one takes heads and one takes tails. The winner is the person who has landed the most heads/tails out of 100 flips. It would be quite reasonable to imagine that it could come out as 60 heads and 40 tails. If the person choosing heads didn't understand the situation they might believe that heads was the superior side! Now imagine they decide to play on and reach 200 flips. In the next hundred flips there are just as likely to be 60 tails and 40 heads, hence cancelling out the advantage.

..and so on..

 

[Black Swan]

But if you trade entry signals via CCI/stock/MACD/3ma's what you are doing is playing a probability game, not trading.

Imagine two people who agree to play a coin flip game, one takes heads and one takes tails. The winner is the person who has landed the most heads/tails out of 100 flips. It would be quite reasonable to imagine that it could come out as 60 heads and 40 tails. If the person choosing heads didn't understand the situation they might believe that heads was the superior side! Now imagine they decide to play on and reach 200 flips. In the next hundred flips there are just as likely to be 60 tails and 40 heads, hence cancelling out the advantage.

..and so on..

Ah-ha!! Yes I am and TBH I make no apologies for it. Doubtless we have both read Mark Douglas' - trading in the zone. Yes it's chocker full of NLP, but on several fundamental points I agree with him. My edge is based on the fact that (IMHO) trading (my trading) is all about probabilities. The probability is if I take the trade, with all (or most) of my indicators 'signalling', then the trade will go in my favour. What follows thereafter, from a market perspective, I accept I have absolutely no control over. I can only control my emotions in the trade and the exit; determined by my next set of signals...

I am now at the level were I can clearly see price action, but TBH I can also see it with charts and IMHO it (price action) also 'signals' well on the MACD.

Don't want to divert the thread from the 'hunting' analogy the discussion of which has been fascinating...