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Yamato
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All right, all right.
I am ok in my single. The new colleague hasn't moved in yet. So I am ok.
Despite:
1) Woke up at 5.44 AM and didn't even try to go back to sleep, so I only slept 5 and a half hours and feel pretty bad
2) Boss has treated me like ****, more or less like an idiot - but it's ok. I can take it, because I don't feel like an idiot. Plus: he has always been extra nice to me, so I am not going to get into any arguments with my favorite boss of ever.
3) I cut myself with paper while working in the archives, getting some suspicious transaction reports from 2007.
Being in this single, without any noises, voices, radios to deal with puts me in a good mood. Awesome! I am happy just because I am all alone here. Regardless of anything else. A colleague asked me just an hour ago, and I told him exactly this: I am happy because I am alone in my room, regardless of anything else.
At the same time, the GC (automated) trade was making me lose 600 this morning before I left home. But now it's coming back. I am down only 200 (long 1 on GC). I can't wait to get home and trade my (maybe delusional) statistical arbitrage system on the EUR and GBP futures. I feel good about it. Tonight's going to be great. If I can make another easy 200 dollars, it will mean that my system is... it will bring more evidence to the fact that the system might make some sense.
I am ok in my single. The new colleague hasn't moved in yet. So I am ok.
Despite:
1) Woke up at 5.44 AM and didn't even try to go back to sleep, so I only slept 5 and a half hours and feel pretty bad
2) Boss has treated me like ****, more or less like an idiot - but it's ok. I can take it, because I don't feel like an idiot. Plus: he has always been extra nice to me, so I am not going to get into any arguments with my favorite boss of ever.
3) I cut myself with paper while working in the archives, getting some suspicious transaction reports from 2007.
Being in this single, without any noises, voices, radios to deal with puts me in a good mood. Awesome! I am happy just because I am all alone here. Regardless of anything else. A colleague asked me just an hour ago, and I told him exactly this: I am happy because I am alone in my room, regardless of anything else.
At the same time, the GC (automated) trade was making me lose 600 this morning before I left home. But now it's coming back. I am down only 200 (long 1 on GC). I can't wait to get home and trade my (maybe delusional) statistical arbitrage system on the EUR and GBP futures. I feel good about it. Tonight's going to be great. If I can make another easy 200 dollars, it will mean that my system is... it will bring more evidence to the fact that the system might make some sense.
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Yamato
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Oh, man... is this automated system good or what? The GC position that was losing 600 this morning has been closed at a profit of... of... none. I did lose a couple of hundreds. All right. I am ok with it. I can take a loss like that. Especially cause I am in a single. Oh yes.
Yamato
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Sorry I hadn't seen your post. Unfortunately I am at work so I cannot see your youtube video: I will watch it once I get home, thank you.
By what you wrote, it's someone taking a shot and then playing blues. I can only think of Clint Eastwood. I'll find out once I get home. Thanks for your contribution.
Yamato
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Wow, a bunch of readers today, whom I am all "befriending". I like befriending best those with 0 posts, because they proved their wisdom by saying nothing. I am very unwise in talking so much.
"Befriend", "befriend"... Most from the United Kingdom. Some of them have been reading my journal for hours. I wonder if they are interested in the trading part or in the music and movies. I have no idea. Wow, I'm so popular. I've got 26 friends and counting. I just add anyone that I catch reading my journal. Yes, because they deserve credit for doing so.
"Befriend", "befriend"... Most from the United Kingdom. Some of them have been reading my journal for hours. I wonder if they are interested in the trading part or in the music and movies. I have no idea. Wow, I'm so popular. I've got 26 friends and counting. I just add anyone that I catch reading my journal. Yes, because they deserve credit for doing so.
Yamato
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Ok, since my boss is away, at lunch, and he's planning on working for an hour next to me, like soon, in about 30 minutes, and I am all done with all tasks, I will now talk some more about my "statistical arbitrage possibly delusional system on the EUR and GBP futures".
Recapitulating the whole thing once again.
Tonight I'll get home and at about 19.00 CET I will start looking for some trading opportunity on the EUR and GBP futures. Hopefully they'll be diverging more than 50 ticks.
Then, when I'll see that the shape of one of the two charts looks like there's about to be a reversal, I will go for it, opening the opposite position on the other one (2 contracts if it happens to be the GBP).
I will document it all live right here. It will also help me do things better, and make me more aware of what I am doing, because I'll be explaining it here.
Ok, let's look at a few potential situations.
Say the GBP is at +180 like yesterday, and the EUR is at +140 ticks. Say it looks like there's about to be a reversal (it almost always looks like that to me, unless the reversal has already taken place, and this may be why this system is good for me).
Ok, so, say GBP +180 and EUR +140 ticks and it looks like a reversal is approaching. Then I go short 2 contracts on the GBP and long 1 contract on the EUR, because the GBP has risen too much and the EUR has not risen enough. I'll do that, planning to close my position, no matter what happens, as soon as I see a profit of 200 dollars.
Now possible outcomes:
1) the GBP starts falling and the EUR keeps or starts rising: I make money on both. Party time! Excellent! Then I close both positions in profit.
2) the GBP wasn't going to reverse and it keeps on rising, so I lose money on that. In the meanwhile the EUR keeps on lagging behind, sleepy. That way I won't make enough money to outweight the GBP's losses. Not good. This is the only situation I have to watch out for. But how likely is it? As far as I could understand, according to a friend I met here, this method doesn't have any edge whatsoever. It's close (not the same but close) to trading just the EUR/GBP future. So if he's right (and if I am right in understanding what he said), this outcome will happen enough to make my method not profitable, because I have never been profitable as a discretionary trader. Maybe if this method makes me profitable it can still be attributed to merely a psychological edge due to the system - but not to a technical edge due to the statistical arbitrage ingredient. We'll see. Of course if I make money, I'll be quite happy already, and worry about why later.
3) So #1 was I make money on both, #2 was I lose money on GBP but don't make enough on the EUR to outweigh that loss. #3 could be even worse, that is I lose money on both. That's totally unlikely, I can bet my ass on it, because those two usually move together. So I won't even worry about this outcome. It could happen for a while, but not for long. If I hold my positions for longer than half an hour, the chance of both of them losing money at the same time is almost zero. Of course WB might disagree on this as well. But I am not a Math whiz, so I go by my gut instinct, every once in a while. And it's worked quite well as far as automated trading, and surprisingly, because it is all about formulas.
4) #1 was I gain on both, #2 was I lose on one and don't make enough on the other, #3 was I lose on both, now #4 has to be I lose on one and make more than that on the other. How would this happen? These ****ers in the room next to mine are being loud. I wish them death. Die, you *******s! Anyway. Die, die, die.
Anyway. I was saying. Die, *******! Mother ****er!! Die, die, die!!!
I can't focus like this. With these *******s.
So how does it happen? The GBP reverses, and I make money on that. But the EUR reverses as well, obviously. That's the most likely outcome. So they both start going down. Now. The GBP had risen more, so most likely it will fall more than the EUR. So I will make more money on the GBP than I'll lose on the EUR. That's what I am counting on. (Or it could also be that the GBP rises but not as fast and the EUR catches up, so I make money with the EUR, and lose less on the GBP).
Now with GBP falling faster than EUR, as I said, I'll make money. One would say, but what is the advantage of not just going short on the GBP and forgetting about the EUR? I am still wondering about that. Let's forget about a psychological advantage that applies to just me, also because it's hard to evaluate. Let's focus on the edge, the real edge by doing this pair trading thing.
Ok, maybe I got it. The advantage is that I am summing up 2 edges in one (double) trade. The edge from the impending reversal (mitigated though by the opposed trade on the EUR), and the edge from the divergence between the EUR and the GBP which must sooner or later be filled.
Plus maybe a third edge: the zigzagging of markets, which usually bothers you because it kicks you out of a trade via your stoploss, in this case may prove beneficial. The zigzagging of EUR and GBP will make it so that at some point it will be favorable to me (showing me a profit) and I will be able to exit right there and then. I can stay in it forever because I got to opposed positions. But I can take advantage of the zigzagging that sooner or later will go in my favor.
Now as I write all this I am thinking of WB's possible objections. Couldn't I be doing this just on the EUR/GBP future? The zigzagging is there as well. I don't know yet how to explain why not, but I don't think it's the same. On the other hand, forces within me, at a subconscious level, are telling me that I am just an idiot and that he's right and I am just imagining things and edges. But if this idiot makes money, I'll be ok with it. Recapitulating, possible edges I am (possibly in a delusional state) seeing:
1) impending reversal
2) divergence between GBP and EUR
3) zigzagging that will go in your favor sooner or later, without scaring you in any way because you're always covered
What do you say? Anyone in favor? Anyone else thinking I am just getting confused with all the forex mechanisms?
Tonight I'll do the whole thing live, at about 19.00 CET.
Recapitulating the whole thing once again.
Tonight I'll get home and at about 19.00 CET I will start looking for some trading opportunity on the EUR and GBP futures. Hopefully they'll be diverging more than 50 ticks.
Then, when I'll see that the shape of one of the two charts looks like there's about to be a reversal, I will go for it, opening the opposite position on the other one (2 contracts if it happens to be the GBP).
I will document it all live right here. It will also help me do things better, and make me more aware of what I am doing, because I'll be explaining it here.
Ok, let's look at a few potential situations.
Say the GBP is at +180 like yesterday, and the EUR is at +140 ticks. Say it looks like there's about to be a reversal (it almost always looks like that to me, unless the reversal has already taken place, and this may be why this system is good for me).
Ok, so, say GBP +180 and EUR +140 ticks and it looks like a reversal is approaching. Then I go short 2 contracts on the GBP and long 1 contract on the EUR, because the GBP has risen too much and the EUR has not risen enough. I'll do that, planning to close my position, no matter what happens, as soon as I see a profit of 200 dollars.
Now possible outcomes:
1) the GBP starts falling and the EUR keeps or starts rising: I make money on both. Party time! Excellent! Then I close both positions in profit.
2) the GBP wasn't going to reverse and it keeps on rising, so I lose money on that. In the meanwhile the EUR keeps on lagging behind, sleepy. That way I won't make enough money to outweight the GBP's losses. Not good. This is the only situation I have to watch out for. But how likely is it? As far as I could understand, according to a friend I met here, this method doesn't have any edge whatsoever. It's close (not the same but close) to trading just the EUR/GBP future. So if he's right (and if I am right in understanding what he said), this outcome will happen enough to make my method not profitable, because I have never been profitable as a discretionary trader. Maybe if this method makes me profitable it can still be attributed to merely a psychological edge due to the system - but not to a technical edge due to the statistical arbitrage ingredient. We'll see. Of course if I make money, I'll be quite happy already, and worry about why later.
3) So #1 was I make money on both, #2 was I lose money on GBP but don't make enough on the EUR to outweigh that loss. #3 could be even worse, that is I lose money on both. That's totally unlikely, I can bet my ass on it, because those two usually move together. So I won't even worry about this outcome. It could happen for a while, but not for long. If I hold my positions for longer than half an hour, the chance of both of them losing money at the same time is almost zero. Of course WB might disagree on this as well. But I am not a Math whiz, so I go by my gut instinct, every once in a while. And it's worked quite well as far as automated trading, and surprisingly, because it is all about formulas.
4) #1 was I gain on both, #2 was I lose on one and don't make enough on the other, #3 was I lose on both, now #4 has to be I lose on one and make more than that on the other. How would this happen? These ****ers in the room next to mine are being loud. I wish them death. Die, you *******s! Anyway. Die, die, die.
Anyway. I was saying. Die, *******! Mother ****er!! Die, die, die!!!
I can't focus like this. With these *******s.
So how does it happen? The GBP reverses, and I make money on that. But the EUR reverses as well, obviously. That's the most likely outcome. So they both start going down. Now. The GBP had risen more, so most likely it will fall more than the EUR. So I will make more money on the GBP than I'll lose on the EUR. That's what I am counting on. (Or it could also be that the GBP rises but not as fast and the EUR catches up, so I make money with the EUR, and lose less on the GBP).
Now with GBP falling faster than EUR, as I said, I'll make money. One would say, but what is the advantage of not just going short on the GBP and forgetting about the EUR? I am still wondering about that. Let's forget about a psychological advantage that applies to just me, also because it's hard to evaluate. Let's focus on the edge, the real edge by doing this pair trading thing.
Ok, maybe I got it. The advantage is that I am summing up 2 edges in one (double) trade. The edge from the impending reversal (mitigated though by the opposed trade on the EUR), and the edge from the divergence between the EUR and the GBP which must sooner or later be filled.
Plus maybe a third edge: the zigzagging of markets, which usually bothers you because it kicks you out of a trade via your stoploss, in this case may prove beneficial. The zigzagging of EUR and GBP will make it so that at some point it will be favorable to me (showing me a profit) and I will be able to exit right there and then. I can stay in it forever because I got to opposed positions. But I can take advantage of the zigzagging that sooner or later will go in my favor.
Now as I write all this I am thinking of WB's possible objections. Couldn't I be doing this just on the EUR/GBP future? The zigzagging is there as well. I don't know yet how to explain why not, but I don't think it's the same. On the other hand, forces within me, at a subconscious level, are telling me that I am just an idiot and that he's right and I am just imagining things and edges. But if this idiot makes money, I'll be ok with it. Recapitulating, possible edges I am (possibly in a delusional state) seeing:
1) impending reversal
2) divergence between GBP and EUR
3) zigzagging that will go in your favor sooner or later, without scaring you in any way because you're always covered
What do you say? Anyone in favor? Anyone else thinking I am just getting confused with all the forex mechanisms?
Tonight I'll do the whole thing live, at about 19.00 CET.
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GladiatorX
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Sorry Travis but it actually doesn't make sense; what WB said is correct.... Think of it this way;
You go LONG EUR/USD
You go SHORT GBP/USD
What you've done is
1. Long Euro
2. Short Dollar
1. Short GBP
2. Long USD
So you are hedged against the dollar...
Therefore
Long EURO
Short GBP
= Long EUR/GBP
Yamato
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Thanks, mb325. This video you posted really belongs here, with us sick maniacs. This guy is a sick maniac, isn't he. Sick maniac, perfectionist... all the same to me. Great work. Keep it up.
Yamato
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I am glad that finally someone is disagreeing with me and especially people who show so much intelligence in their arguing like you and WB. I still cannot grasp fully what you two explained to me so many times. Can someone really be this dumb and have built 42 profitable systems? This was going to be my 43rd. I can't believe how dumb I am, or maybe I'm just really burned out from work and my life in general. I think both.
Listen, whether I am being delusional, or whether it has a placebo effect, and a psychological edge, this system seems to work. First I'll find out if it works, and then I'll take a sabbatical year from work (if it works), and apply myself for a whole year to understanding this thing you're trying to explain to me. In one full year I should be able to figure it out. But first I need to make money with it. I am gonna pray God that it works. I am atheist, but they say that God listens to our prayers anyway.
Man, that sonuvabitch, my dad just told me we had to fix some drawers, that had like the slightest problem, and I told him "are you concerned at all about the shower that has a much bigger problem?", and then he said "ciao" and he left for three days. He'll be away for the weekend. What a sick maniac he is.
Yamato
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Regarding my "delusional" system, we're one hour away from trading it at 19.00 CET, but right now the difference between EUR and GBP is none (only 1 or 2 ticks!) so it makes no sense to trade it at all. Besides they're not even oversold or overbought towards the dollar. Whatever this all means, since I am being delusional.
Oh, great. I just turned from being a Senior Member to being a Veteran Member. Veteran is ok, because I feel younger than Senior. Maybe I am missing one leg from combat, but I am younger. Besides, it suits me better because travis was a Vietnam veteran. Now I must not exceed 1000 posts or I'll change to an unsuitable member status.
Oh, great. I just turned from being a Senior Member to being a Veteran Member. Veteran is ok, because I feel younger than Senior. Maybe I am missing one leg from combat, but I am younger. Besides, it suits me better because travis was a Vietnam veteran. Now I must not exceed 1000 posts or I'll change to an unsuitable member status.
Yamato
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The good news is that my father most likely left for the next three days and will come back on Monday night. The bad news is that he put me in a bad mood that will last at least 2 hours. Just by telling me we had to fix the drawer and interacting with me for 1 minute. All the bad memories came back. He never beat me up, but he was always criticising me, my whole life, for the smallest things. Like sitting on a bed and not tidying it up after getting up. I remember when I was 8 he told me "you must always leave the room the way you find it". He recommended to me not to leave the mark of my ass on the bed, after sitting to make a phone call. Such things I cannot forget. Lately, I can't stop wondering if I'll miss him or not once he'll die. I keep wondering about that. I think I shouldn't, but I might become irrational about this. I hope not. If everyone agreed that he's a sick maniac, I could take his behaviour much more easily. But the fact is that everyone says he's a great man, and so his behaviour bothers me twice as much.
Yamato
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My dad is silent. The door is not opening, that door... that always made my heart jump when I heard my dad opening it. It was like the beginning of an unpleasant experience. So the opening of the door always, still today, makes my heart jump.
Anyway. The divergence between EUR and GBP has increased to 20 ticks, and that's good for the delusional system. What's not good is that neither of them is nearly oversold/overbought to the dollar. So we'll have to wait, and maybe today won't be a good day.
The delusional system of the hard working dummy, that's what I'll call it.
Anyway. The divergence between EUR and GBP has increased to 20 ticks, and that's good for the delusional system. What's not good is that neither of them is nearly oversold/overbought to the dollar. So we'll have to wait, and maybe today won't be a good day.
The delusional system of the hard working dummy, that's what I'll call it.
Yamato
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Ok, let's get ready for my trade though, because it's only one hour away or so. What I'll do is most likely go LONG on EUR 1 contract and go SHORT on GBP two contracts, because the EUR is falling much more than the GBP. But still far from falling enough. Then I'll proceed to monitoring overall profit and exit at a 200 dollar profit. If it doesn't happen I'll allow the position to run all the way to 22.30 CET. Then I'll close it. I bet you anything that this method will make money 8 times out of 10, including of course my discretionary input because it's not entirely automated and it won't be for a while, until I figure out if it works discretionary. If it does, then it might also work automated (usually it's the opposite, but I sense a psychological edge in this system).
Yamato
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Hey, screw this. I was bored and I started two positions just now. I went long 1 eur at 1.4853 and short 2 gbp at 1.6560. I'll close as soon as I see 200 dollars profit.
Losing 50 dollars after just a few minutes.
Making 15 dollars now.
Making 40 dollars now (I am writing every few minutes).
Breaking even now.
Basically I am now hoping for the EUR to rise more than the GBP. That's all. Oh ****: which just means the EUR to rise towards the GBP. Right, those fellas had told me... what the hell is wrong with my mind?!
Hey, I'll just be happy if I find out that this system is total ****, because i am tired of having to test and automate new systems every weekend. But maybe this "go long and go short" trading will keep me busy and away from other more dangerous discretionary trading ("go long, and double up if you are losing" trading), so this illusion of having a great system could be a great thing in itself. It'd be certainly great to trade all day long and only lose commission and spread costs.
Oh-oh... but what am I saying...? I am now making money on both positions, so it's not like the spread between is getting smaller and I am losing less on the GBP than what I am making on the EUR. It's more like the EUR is going up and the GBP is going down. This is the hand of god.
I'll tell you what. I am being so lucky that I will exit if I can grab a profit of... 100 dollars.
That's it. Done. I grabbed 100 dollars. Right now at 18.36 CET. Check your numbers if you wish. All right. Let's be precise. I exited the GBP exactly where I had entered it, at... "I went long 1 eur at 1.4853 and short 2 gbp at 1.6560". I exited the EUR at... 1.4861. So that is indeed 100 dollars if you get rid of commissions. How can I not be happy about it. I'm going to do this every day. At around this time.
Losing 50 dollars after just a few minutes.
Making 15 dollars now.
Making 40 dollars now (I am writing every few minutes).
Breaking even now.
Basically I am now hoping for the EUR to rise more than the GBP. That's all. Oh ****: which just means the EUR to rise towards the GBP. Right, those fellas had told me... what the hell is wrong with my mind?!
Hey, I'll just be happy if I find out that this system is total ****, because i am tired of having to test and automate new systems every weekend. But maybe this "go long and go short" trading will keep me busy and away from other more dangerous discretionary trading ("go long, and double up if you are losing" trading), so this illusion of having a great system could be a great thing in itself. It'd be certainly great to trade all day long and only lose commission and spread costs.
Oh-oh... but what am I saying...? I am now making money on both positions, so it's not like the spread between is getting smaller and I am losing less on the GBP than what I am making on the EUR. It's more like the EUR is going up and the GBP is going down. This is the hand of god.
I'll tell you what. I am being so lucky that I will exit if I can grab a profit of... 100 dollars.
That's it. Done. I grabbed 100 dollars. Right now at 18.36 CET. Check your numbers if you wish. All right. Let's be precise. I exited the GBP exactly where I had entered it, at... "I went long 1 eur at 1.4853 and short 2 gbp at 1.6560". I exited the EUR at... 1.4861. So that is indeed 100 dollars if you get rid of commissions. How can I not be happy about it. I'm going to do this every day. At around this time.
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Yamato
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Uh-oh...!
I just saw it! One more point in favor of my strategy that those two fellas do not see!
The chart figures. If I see a couple of favorable figures (meaning "chart patterns") on those two EUR/USD and GBP/USD charts, I can open my positions based on those, whereas I certainly could not see 2 favorable figures on just 1 chart. Can you disagree with this? No, sir. Oh yes! And that is exactly what I saw on the EUR that made me go long on it: the chart looked good. I would not have seen that on the EUR/GBP. Oh yes!
I am not dumber. I can sense things! Things that are beyond reasoning. My conscious is dumb but my subconscious is smart. I am telling you one more time guys: trading the EUR/USD and the GBP/USD is not the same as trading the EUR/GBP. I can sense it, even though I can't explain it. And of course it's not just a psychological edge that I am talking about.
I just saw it! One more point in favor of my strategy that those two fellas do not see!
The chart figures. If I see a couple of favorable figures (meaning "chart patterns") on those two EUR/USD and GBP/USD charts, I can open my positions based on those, whereas I certainly could not see 2 favorable figures on just 1 chart. Can you disagree with this? No, sir. Oh yes! And that is exactly what I saw on the EUR that made me go long on it: the chart looked good. I would not have seen that on the EUR/GBP. Oh yes!
I am not dumber. I can sense things! Things that are beyond reasoning. My conscious is dumb but my subconscious is smart. I am telling you one more time guys: trading the EUR/USD and the GBP/USD is not the same as trading the EUR/GBP. I can sense it, even though I can't explain it. And of course it's not just a psychological edge that I am talking about.
Yamato
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Recapitulating the edges I see as summed up in my strategy (thereby making it superior to just trading one instrument):
1) impending reversal pattern as noticed on one of the two charts (two charts = more patterns to spot)
2) divergence between GBP and EUR to filled up (same as overbought/oversold, except you have it on your side in both areas: vs the USD and vs the other currency)
3) zigzagging that will go in your favor sooner or later, without scaring you in any way because you're always covered: combination of zigzagging currencies will increase the chances of zigzagging going in your favor
There must be something making sense out of all these things I am sensing/seeing. They can't be all mirages. But if they actually are: I am ready to apologize and admit I was stupid.
1) impending reversal pattern as noticed on one of the two charts (two charts = more patterns to spot)
2) divergence between GBP and EUR to filled up (same as overbought/oversold, except you have it on your side in both areas: vs the USD and vs the other currency)
3) zigzagging that will go in your favor sooner or later, without scaring you in any way because you're always covered: combination of zigzagging currencies will increase the chances of zigzagging going in your favor
There must be something making sense out of all these things I am sensing/seeing. They can't be all mirages. But if they actually are: I am ready to apologize and admit I was stupid.
GladiatorX
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Travis; your 'delusional system' could still work as a good system; the fact that you are just the same as EUR/GBP longing doesn't invalidate the setup = Which are their own conditions...
Its just an observation that buy placing TWO trades your increasing costs, when you could do the same trade on EUR/GBP - that doesn't mean you don't have a genuine setup though -
IF GBP is overbought against the dollar; Maybe you expect the currencies to revert to normal through reduced demand for the pound and increased selling of the pound
&
If EUR is oversold against the dollar; Maybe you expect the currency to revert to its mean through increased demand and decreased selling
- Therefore you have a potential profitable situation you could play by going long EUR/GBP because you deem them, in comparison to the dollar to be at other ends of the cycle and should revert back to middle ground (Normal market fluctuations)
In other words; what me and WB are saying doesn't invalidate the setup itself, just the way of trading it because it is possible that if GBP is overbought against the dollar, that it, as a currency is overbought and therefore is more likely to revert than not for example.
A alternative idea could be; wait for GBP/USD to be oversold... (The dollar oversold) AND EUR/USD to be oversold ... Now the Dollar is oversold against TWO different currencies (Meaning the dollar itself is likely oversold rather than the individual currencies being weak) from increased demand and reduced supply ... Then you BUY GBP/USD and EUR/USD.
Its just an observation that buy placing TWO trades your increasing costs, when you could do the same trade on EUR/GBP - that doesn't mean you don't have a genuine setup though -
IF GBP is overbought against the dollar; Maybe you expect the currencies to revert to normal through reduced demand for the pound and increased selling of the pound
&
If EUR is oversold against the dollar; Maybe you expect the currency to revert to its mean through increased demand and decreased selling
- Therefore you have a potential profitable situation you could play by going long EUR/GBP because you deem them, in comparison to the dollar to be at other ends of the cycle and should revert back to middle ground (Normal market fluctuations)
In other words; what me and WB are saying doesn't invalidate the setup itself, just the way of trading it because it is possible that if GBP is overbought against the dollar, that it, as a currency is overbought and therefore is more likely to revert than not for example.
A alternative idea could be; wait for GBP/USD to be oversold... (The dollar oversold) AND EUR/USD to be oversold ... Now the Dollar is oversold against TWO different currencies (Meaning the dollar itself is likely oversold rather than the individual currencies being weak) from increased demand and reduced supply ... Then you BUY GBP/USD and EUR/USD.
Yamato
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Hmm... thanks for the reasoning you offered to me. It's still processing in my head.
I agree with you as far as saying that using two different futures is a waste, and so far we all three agree on this. But I don't think the RP (future on EUR/GBP) has enough volume to be traded advantageously. What do you think? You have any news about this liquidity problem on the EUR/GBP future?
Furthermore, do you agree, as WB maintained, that it could make sense to look at both EUR/USD and GBP/USD charts, rather than just the EUR/GBP chart?
What about my zigzagging point? Does it make any sense to you?
I agree with you as far as saying that using two different futures is a waste, and so far we all three agree on this. But I don't think the RP (future on EUR/GBP) has enough volume to be traded advantageously. What do you think? You have any news about this liquidity problem on the EUR/GBP future?
Furthermore, do you agree, as WB maintained, that it could make sense to look at both EUR/USD and GBP/USD charts, rather than just the EUR/GBP chart?
What about my zigzagging point? Does it make any sense to you?
Yamato
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I just made another 80 dollars with the mentioned "delusional method". I wonder if it is just today, that it's good day for this, and if, as for all my other discretionary trading, I will come across a day when I'll lose everything I've made.
Also, what if the EUR/GBP just go up and down at a given time of the day and that is why I am always getting away with it?
If all they did around this time is zigzagging up and down, then no wonder (thanks to WB for the extra reasoning he made me do on this) I am making money every time I trade them.
By the way, why don't we look for two currencies that just range all day long and trade those? What is the deal with currencies? Tell me about it. I am definitely seeing things I never looked at before.
Let me also say this: I've never made so many profitable and stress-free trades before, in my whole trading career. I am making money on every trade and yet I don't see myself losing such great sums if I were to be wrong one day. You know what I mean? If I went long on the CL, then if I was wrong on it, I would lose like 2000 in a couple of hours with just one contract, but I don't see this happening here.
Don't get me wrong: I know it'd be the same just trading the one EUR/GBP contract: I've realized that thanks to your explanations.
What I am still believing is that there's definitely a psychological edge in trading this way (higher than just trading the EUR/GBP), there's liquidity problems on the EUR/GBP future, and most of all, I still believe that i can spot better opportunities if I look at EUR and GBP charts rather than just RP chart.
But maybe I am wrong. NO wait. I am right.
The EUR/GBP future just tells me the distance between euro and pound. But it doesn't by any means tell me where they stand with respect to the dollar. So we must all agree on this: the dollar exchange rate towards them is an extra data and it has value.
But then again WB said he agreed on this, and you do as well. Let me just sum it up and say this: only thing we disagree on at this point is the liquidity problem.
Can we all agree on this as well, that the RP future is not liquid enough?
Also, what if the EUR/GBP just go up and down at a given time of the day and that is why I am always getting away with it?
If all they did around this time is zigzagging up and down, then no wonder (thanks to WB for the extra reasoning he made me do on this) I am making money every time I trade them.
By the way, why don't we look for two currencies that just range all day long and trade those? What is the deal with currencies? Tell me about it. I am definitely seeing things I never looked at before.
Let me also say this: I've never made so many profitable and stress-free trades before, in my whole trading career. I am making money on every trade and yet I don't see myself losing such great sums if I were to be wrong one day. You know what I mean? If I went long on the CL, then if I was wrong on it, I would lose like 2000 in a couple of hours with just one contract, but I don't see this happening here.
Don't get me wrong: I know it'd be the same just trading the one EUR/GBP contract: I've realized that thanks to your explanations.
What I am still believing is that there's definitely a psychological edge in trading this way (higher than just trading the EUR/GBP), there's liquidity problems on the EUR/GBP future, and most of all, I still believe that i can spot better opportunities if I look at EUR and GBP charts rather than just RP chart.
But maybe I am wrong. NO wait. I am right.
The EUR/GBP future just tells me the distance between euro and pound. But it doesn't by any means tell me where they stand with respect to the dollar. So we must all agree on this: the dollar exchange rate towards them is an extra data and it has value.
But then again WB said he agreed on this, and you do as well. Let me just sum it up and say this: only thing we disagree on at this point is the liquidity problem.
Can we all agree on this as well, that the RP future is not liquid enough?
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Yamato
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Let me write down more about this, just thinking out loud, as usual.
When the GBP is really high in the chart and it looks like it's about to reverse, if the EUR is far behind it, by 20 to 40 ticks, then it makes sense to short the GBP and LONG the EUR. Because when it will reverse it will fall harder than the EUR, no doubts. And then you'll make money.
If it doesn't reverse, the chances that it will still keep on rising faster than the EUR are really small, and if it doesn't do it, then you'll at least break even for the moment. But then sooner or later it will have to reverse, and when it does you'll still be at breakeven, and then as it reverses you'll start making money, because as i said it will go down faster than the EUR.
There doesn't seem to be a way to lose at this. I'll keep on doing it just like this in the next few days. Then I'll figure out more about the logic behind it. I am already understanding more. By being so dumb and fixating so much about this, I will as usual figure out more about it than all the smart people put together, who didn't persist at it because they thought they had it all figured out from the start. And yes, by "smart people", I am referring to those two... I will show them... who's dumb. Oh yes.
Thanks for telling me to forget about this. Now I'm gonna think about it night and day. Like the beat, beat, beat of the tomtom, when the jungle shadows fall. Like the tick, tick, tock of the stately clock, as it stands against the wall. Like the drip, drip, drip of the raindrops, when the summer shower is through. So a voice within me keeps repeating, you, you, you. Night and day, you are the one. Only you beneath the moon or under the sun. Whether near to me or far, no matter, darling, where you are, I think of you night and day. Day and night, why is it so, that this longing for you follows wherever I go? In the roaring traffic's boom, in the silence of my lonely room, I think of you night and day. Night and day, under the hide of me, there's an oh, such a hungry yearning burning inside of me. And its torment won't be through 'til you let me spend my life making love to you day and night, night and day...
Cole Porter
Fred Astaire
Night and Day
The Gay Divorcee
When the GBP is really high in the chart and it looks like it's about to reverse, if the EUR is far behind it, by 20 to 40 ticks, then it makes sense to short the GBP and LONG the EUR. Because when it will reverse it will fall harder than the EUR, no doubts. And then you'll make money.
If it doesn't reverse, the chances that it will still keep on rising faster than the EUR are really small, and if it doesn't do it, then you'll at least break even for the moment. But then sooner or later it will have to reverse, and when it does you'll still be at breakeven, and then as it reverses you'll start making money, because as i said it will go down faster than the EUR.
There doesn't seem to be a way to lose at this. I'll keep on doing it just like this in the next few days. Then I'll figure out more about the logic behind it. I am already understanding more. By being so dumb and fixating so much about this, I will as usual figure out more about it than all the smart people put together, who didn't persist at it because they thought they had it all figured out from the start. And yes, by "smart people", I am referring to those two... I will show them... who's dumb. Oh yes.
Thanks for telling me to forget about this. Now I'm gonna think about it night and day. Like the beat, beat, beat of the tomtom, when the jungle shadows fall. Like the tick, tick, tock of the stately clock, as it stands against the wall. Like the drip, drip, drip of the raindrops, when the summer shower is through. So a voice within me keeps repeating, you, you, you. Night and day, you are the one. Only you beneath the moon or under the sun. Whether near to me or far, no matter, darling, where you are, I think of you night and day. Day and night, why is it so, that this longing for you follows wherever I go? In the roaring traffic's boom, in the silence of my lonely room, I think of you night and day. Night and day, under the hide of me, there's an oh, such a hungry yearning burning inside of me. And its torment won't be through 'til you let me spend my life making love to you day and night, night and day...
Cole Porter
Fred Astaire
Night and Day
The Gay Divorcee
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