Fundamentals or is it funnymentals.

Discussion in 'Systems and Methods' started by Peterma, Nov 6, 2015.

  1. Computater707

    Computater707 Well-Known Member

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    As usual your comments aroused my curiosity since I can't trade Gold I don't follow it but I climbed outside my box and took a quick peek. USDX EURX and Gold have been convergent in up trends since early December. What can it mean? How long can it last? Most importantly to me what might Strong Money engineer to profit from this unusual situation.

    Finally when might they pill the trigger. What do you see?

    EURX trend looks intact but USDX is highly suspect
     

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  2. Peterma

    Peterma Well-Known Member

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    Yeah, gold tends to blow in the wind, sometimes with risk, sometimes anti usdx and sometimes it remembers that it is a commodity, so only because that my trade was small I allowed a SL hit, usually with gold its best to take the profit and run.

    In big risk moves like recently it can be good indicator - I like that term strong money.

    Not sure about more stock selling, but might keep a little long going on the euro for a few days, suspect those strong guys wanted in down early today for one reason, to take it up ☺
     
  3. Peterma

    Peterma Well-Known Member

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    Talking about how the market is thinking, I left that arrow on the S&P chart, thought it looked nice, anyways seems some other guys had an arrow there too, maybe some strong guys at that.

    But the interesting thing is the poor old Gold traders, they just cannot figure whether it's a rebound or just a pull back, they'll likely wait until the writing is on the wall.

    Oh - and Usd/Jpy is a risk on/off trade as well, always buy the Yen in times of panic, so focus on this past 3 days, sell the Yen, buy the S&P and dither on Gold.

    So back to right side of chart, which way will the wind blow, more risk on, or more panic.........

    Hmmm.... I'm like the Goldies, in a dither, but no fence sitting allowed, I smile when I see a post saying 'if price goes above x then the bulls have it, but if price falls to Y then it's the bears'.

    I'm jumping onto the risk-on side, but not first thing Monday morning, hangover time.

    S&P with that same beautiful arrow, well I think it's beautiful.
     

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  4. sqa

    sqa Village Scribe

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    S&P500 correlates highly with the USDJPY during the New York hours. After the Japanese stock exchange closes, there's a very definite control-board change for the currency. (There's also the issue that all of the SE Asian Central Banks close up their bank order book for the "day", as most of the USD & EUR liquidity is run through the JPY.) So, after the hand off, normally around 4 am EST, the Index and the Pair will generally move in tandem.

    A lot of that having to do with the 1+ Trillion USD in US Equities owned by the Japanese Pension Systems.

    But the Yen has been a "safe haven" currency since 2002. At least per a very long report I read from the IMF some years back. Which is also why things have been running a little out of correlation lately. Chinese actions also have effect on the Yen during Asian hours. Makes for a wacky time.
     
  5. Peterma

    Peterma Well-Known Member

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    The risk play on Yen has been the subject of much research in recent years, much like the Euro risk play of recent times various commentators, economists, academics, general experts and us traders have all sought explanations.

    It all began from the market perception that the Japanese as a nation are generally a nation of canny savers who, like all investors, like to see a decent return and will seek out risk in times of risk on.
    The perception, over the years, is that in times of risk-off they will want to take their money home.

    Some studies have shown that it doesn't actually happen that way, but such studies are irrelevant, like Garry said elsewhere, the market is right, and I suppose what the market perception is that counts.

    It's getting into that perception that can maybe lead into the 'zone'.
     
  6. Peterma

    Peterma Well-Known Member

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    Here is a nice wee quote from a guy I like, the only reason I like him is because he has the spunk to admit when he is wrong.

    I'm not going to link to his and his partner's site because they sell all sorts of..., but I still love this quote he has just put out, what he calls the three dumbest words in trading:

    "News doesn't matter."

    Anyways, right or wrong, Larry Williams, who also sells what he sells, so I'm not really going to link there either, says that this is a thinking man's (also woman's) game, so BK's words are food for thought.

    Btw, any guys/gals learning, no need to pay any smart ass, either in money or time, always take what is on offer, if there is some particular style or discipline you wish to learn then apply the time, once learned then dump the source.

    There are no gurus in this business, some may look like a guru, sound like a guru, maybe they are older, maybe not so old, maybe they espouse profound knowledge, maybe they won all sorts of stuff back in the time, maybe they continue to make all sorts of material available on the net, but remember this - all these guys live in the past, in the left side of the chart, so use them and drop them.

    I know this may sound mercenary, but hey, welcome to the world of capitalism.

    http://news.forexlive.com/!/the-three-dumbest-words-in-trading-20160123
     
  7. Peterma

    Peterma Well-Known Member

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    Btw, applies very much to this thread also, use, apply and then dump (but maybe give a little back before you do):)
     
  8. pipmart

    pipmart Well-Known Member

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    Great Point Peterma.
     
  9. Peterma

    Peterma Well-Known Member

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    Hangover day over, one thing I have learned, when gazing into the right side I like to visualize what will be, but rule one is be flexible.

    I visualized some risk appetite for yesterday, but as soon as I saw oil tripping over the step on Mon morning then I figured end of that particular theory, and so played it simple and bought the Euro.

    The big plan here is to attempt a trade today with a minimum loss SL, so need a little cushion to help.

    The next big plan is to go with the flow (if there is any, market still in dither mode).
     

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  10. Peterma

    Peterma Well-Known Member

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    Update: pure risk play in action for the last couple of hours, s&p futures up, caused by Ftse up, caused by oil up.

    In FX, USD/JPY up and Eur/Usd down.

    Net result is that my cushion is diminishing, the driver is oil, so a continued increase could cause a risk switch, this is the reason for the cushion in the first place. (Kuwait comments likely cause of some oil buying, but could be just a blimp)

    Little short on cable, if Eur/Usd goes south then reasonable chance that cable will follow along, so master plan is to simply dump the long on Eur...........risk on, risk off, risk on....whatever way the wind blows, doesn't really matter to me, mama ........everyone sing along.

    Clear switch in risk, oil still driving, exit long, no point in waiting for a sl hit.
     
  11. Peterma

    Peterma Well-Known Member

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    Busy day, BoJ has added a little excitement, surprise.

    A couple of days ago I mentioned that I had two 'money lines' cooking. The 2 lines are the old favourites, the 50 and 200 sma, and a certain Joseph Granville, back in my time, the swinging sixties, and his 'Golden Cross'.

    Usually a bullish sign when you can see a chart setting itself up to do just that, today confirmed as our American cousins came into play.

    The trade here is also a buy on USD, via a sell on Eur/Usd and Gbp/Usd.

    Note the mid Asian level yet again.

    Have a nice weekend guys.
     

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  12. Peterma

    Peterma Well-Known Member

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    All now closed up for the week, the one time to buy a double top is when the wind is behind you, the sells just help the boost up.

    On FX, Shops divergence indicators were calling the short, so too Williams. Cable is great for trying to create the double top, like I said before, it's what they do, divergence usually gives the heads up that they are on a spoof trip, kinda like a breadth indicator on a stock index.
     

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  13. Computater707

    Computater707 Well-Known Member

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    Tx peterma your posts have introduced me to shops system and I am incorporating it into my personal system - the banter this week on various forums here gave me some additional insights into shops divergence and fib expansion.
    It helped me see how to continue to develop and use a consistent methodology. I have been doing chart studies to verify its potential and begin to use it to trade. I have adapted some of the mt4 fib tools- particularly the fib channel to break a channel into 10 1/8 divisions lines. Also the fib expansion tool to form a pivot entry and risk reward meter.

    I did not trade that night but the London Open displays a common problem I have.

    I see the divergence on macd and it indicates a reversal on 1hr but will it be a stop run to a double bottom and another measured move up? I want to be able to have a calculated risk of 3R so I can close 1/3 at the first 5 min close above or below 3R and have a risk free trade on 2/3 of my initial position if it turns out to be a stop run or retrace against my position. A 15 pip stop and 45 pip initial target would be about ideal. A push to retest the daily high or low is always a likely possibility; so what to do? Here is what I have come up with and will continue to develop.

    Use the 30 min time frame to screen for possible signals Sto above 80 or below 20 with macd signal beginning to show histogram divergence along with confirming Price action like channel MA price level indicates a strong potential signal.
    Then drop to a lower time frame and look for a potential low risk entry with acceptable reward to risk.

    I left the channel and expansion tool attach points visible to remind me how I set them up.
     

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  14. Peterma

    Peterma Well-Known Member

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    Comp, lots of guys talk about divergences, whether on an indicator (normally correlated to it's instrument's price), or maybe it's divergence between two correlated but separate instruments, or whatever.

    But very few ever think about the why, 'sure it works so why care about the why', is the usual comment.

    The why is the key, will post later, as Piper says, enough yakking for now. (must look up what a yak is)
     
  15. Computater707

    Computater707 Well-Known Member

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    I have thought about it particularly the math behind macd which is why I have assumed "It works some times and or to late so why bother?" Look forward to hear your input.

    Hope this helps >> if I remember tovarish it is short for Yakovlev: a Russian plane manufacturer since WWII :)
     

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  16. Peterma

    Peterma Well-Known Member

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    It's not a biggie, just my key to getting into the zone.

    The market is not 'efficient' in the same way that a successful business is, the business uses supply/demand, the market is influenced more with fear/greed.

    Wyckoff lamented how many otherwise successful businessmen lost their money on Wall St, Ireland's richest businessman, self made, lost it all in the market a few years ago.

    Supply/demand is difficult to manipulate (not impossible), fear/greed is easier.

    Bottom line is that in fx is there no means to determine breadth, all there is is correlation in all it's forms.

    To manipulate a specific pair the spoofer would have to manipulate the entire currency to maintain breadth, possible only in a very short burst, but difficult to maintain momentum in the wrong direction - thus divergence on a momentum indicator can be a sign 'manipulation at work'.

    Some crosses are a little more susceptible, cable is one.

    Right now, USD is in lock step with US10yr, so if I see divergence in momentum confirmed with divergence with the lock step I would suspect manipuation, so I look to where likely they are taking it.

    (there is none right now, so looking right side I expect a little pull up on 10yr, little pull down on cable, then on we go for tomorrow, also happens i like William's willspread for momentum, but that's just moi)

    That was a lot of yakking, kept it to a mimimum, it's a long story.
     
  17. the golden gun

    the golden gun RINSE & REPEAT

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    "The less I say, the more I know"
     
  18. Peterma

    Peterma Well-Known Member

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    GG's right, I'll let the chart do the talking, divergence during Asian - same chart, same divergence.

    Watch for even bigger action in the next two days.
     

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  19. Golden Bull

    Golden Bull We got cookies

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  20. Peterma

    Peterma Well-Known Member

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    Tomorrow was yesterday, cable panned out much as expected with a little bonus thrown in today with some USD selling.

    I switched sides to accommodate the end of the little pull back, and was on 3 when luck hit. That's the thing about luck, do you make it yourself.

    An example was last Jan in was in a chf trade. A trader mentioned how great it was to have a cb on your side, I should have considered 'what if they are no longer' but I was not that smart. But I did exit before the fan became contaminated, I applied an old Livermore theory, if a trade is going sideways then apply a time stop, no return on risk or tied capital is useless.

    So did I make my own luck? - who knows, though I still felt lucky.

    The reason for the long wasn't shop's indie, although in hindsight it looks that way, no I was of the opinion that cable would rise because it is likely to fall tomorrow, more doves and glum speak perhaps.

    For something to fall it has to rise first I suppose, anyways, exit time on the longs and now to watch out for the magic diversion - if it happens then great, if not might jump in anyway, will see tomorrow.
     

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