Futures Biases

[Xymox]

durable goods is out this week, lets see how it behaves with durable goods, but since positions are weighted dollar short, I would anticipate some large players might remove dollar short positions as FOMC nears.

they will used durable goods to run some stops quickly to the downside, if they get a chance, and then quickly run back up.

edit: it probably will shoot below 9640...probably close to 9600 .. then quickly ramp back up to top edge of channel.

look what the market did, pretty much inline..

 

[n00b7r4d3r]

look what the market did, pretty much inline..

nice call

 

[Xymox]

124-110.
Most of the time historically it spends above 115, and it makes short spurts below only to come back up. I look at pips in terms of hundreds of pips, so if my upside reward is possibly 1000 pips but downside is perceived to be at most 400.

historical time spent above and below 115

 

[n00b7r4d3r]

what do you think is the shortest timeframe that you can trade forex with any degree of possible edge before you get into complete brownian motion?

 

[Xymox]

what do you think is the shortest timeframe that you can trade forex with any degree of possible edge before you get into complete brownian motion?

with increased volatility you can trade tic timeframes, as volatility drops off you approach brownian motion at the highest level in the smallest timeframes, but dissipates as you get into large timeframes.

thats why mutliple screens are used to display different timeframes, for the same instrument at any given time, the brownian motion will be seen usually on the smaller timeframes, in most instances, because the volatility is usually not at high levels most of the time.

 

[Xymox]

high degrees of volatility imply progressive movement second to second that is directional in nature, thus the edge.

volatility increases at market turning points, since turning points ensue from battles waged by differing sides in the marketplace, creating the volatility.

 

[Xymox]

Bonds - down
Equities - up
Lumber - down
Crude - up
Vol - down
Gold - up
Yen - down

eveything... moving with long term expectations. Lumber turning the corner.

 

[n00b7r4d3r]

usdcad 2 hour: this is what i see... what do you see?

just thought i would post the outcome to my previous prediction for anyone who may be reading through this thread. Looks like im a great contrarian indicator.

 

[Xymox]

see how it broke out of the channel, that channel was basically 'gamed' since market was probably betting a bounce at the edge, instead the MM's ran the stops at the edge.

 

[Xymox]

its tempting to pick tops and bottoms but if you had to spread your investments in 40 different things.

picking the ones with predefined long term trends, probability works in your favor.

 

[Xymox]

over extended money pools needs cap revitalization.

 

[jacson101]

see how it broke out of the channel, that channel was basically 'gamed' since market was probably betting a bounce at the edge, instead the MM's ran the stops at the edge.

Actually what happened was MM's across town were buying the rumour selling on the fact... I seen a nice whipsaw with compression that was being worked for about 15 minutes after the fact!
... stop's needed to get hit as to mitigate loss by maximizing gains...contagion from bond boys...

 

[Xymox]

one of the most important things you will find in any derivative, stocks, futures,... are the linear up and down patterns that have the least amount of noise in price. Its tempting to fade these patterns, but over the years you will realize how powerful these are and what it implies in terms of psychology and dynamics of orderflow in the marketplace.

don't bet against linear ups or downs in the timeframe your trading, the probability is implied to be against you on the trade.

 

[Xymox]

http://en.wikipedia.org/wiki/Linear_regression

information value in a series of numbers.

 

[Xymox]

linear regression of a series of numbers yields a line with a slope with a upward bias or downward bias. The degree of variability in the series of numbers is basically the noise of the trend.

 

[Xymox]

the best markets are the ones with the least amount of noise with a nice slope upward or downward.

least amount of noise implies that stops will rarely get hit when placed with the trend.

 

[Xymox]

noise or 'variance' in a series of numbers.

http://en.wikipedia.org/wiki/Variance

http://en.wikipedia.org/wiki/Statistical_dispersion

regression and variance are dependent on timeframe, a intraday timeframe can have high degree of variance, but the daily chart could have a very low degree of variance.

 

[Xymox]

australian dollar market, looks very trendy grossly, but if position sizing rules aren't adhered to for account size, a nice trending market can blowout a small account just based on the variance.

we can only assume that the variance around the regression will continue to be small for markets that have a low degree of variance. And variance will continue to be high for a market that already has a high degree of variance.

 

[Xymox]

notice the feeder cattle chart, yearly range bound, but intrayear trending situations. So a high degree of yearly variance, but a low degree of intrayear variance.

where as the australian dollar market has a low degree of yearly and intra year variance, so basically markets with the lowest degree of variance around the regression are the best markets to play trending situations.

 

[Xymox]

the concept of parabolics. Parabolics are a function of psychology on the timeframe being traded.

initially a market with a low degree of sponsorship will gain a following, then more adherents, as one side is destroyed in multiple fashion, the market continues to gain onesided followers. A good example is the Oil market.

then a parabolic curve is created and slope increases greater and greater till buying capitulation.

http://en.wikipedia.org/wiki/Parabola

noone can call a top on a parabolic curve, and many are taken outback and shot when attempting to.