Let's cut the BS, no-one here has a magic system

[bbmac]

Re post above

You look at the 1hr/4hr candle leading down to point b, it suggested very heavy selling...and they both closed as strong bearish candles...but there were 3 potential support factors there known to be used by a wide section of market participants, The previous near-term imbalance of supply/demand manifesting as obvious previous near-term swing hi's on both 1hr and 4hr, the fib and the trend line...so a confluence of potential support factors....add this to the confluence of repeating set-ups on 1 and 5min, that make up my trading edge, (see 1min chart below) and this was tech confluebce...despite the momentum of price, - it suggested to me that if buyers emerged at this level they could overwhelm the sellers howsoever temporary, ie bullish divergence in 1min oscillator suggesting such as well as a band deviation pattern showing that shorter term volatility on that t/f had changed and was now less than loonger term volatility on same t/f...and on 5min the Rev Extr set-up suggestinbg that price was heavily oversold on that t/f and in respect of band deviation price has reached it's max point of elasticity...all repaeting tech phenomena to add to the confluenbce of potential support factors and fashio a hi-probability trading opp from the 1min price action trigger whichg was close of the 1444pm bullish belt hold candle,,,the buying at points a and b on that chart showing that buyers were in the area...

Not magic, just confluence sof tech phenomena that forms repeating patterns at pre-identified potential support, uggesting a higher probability of price moving in one way over another, howsoever temporary. This confluence told me something that price alone could not....but that's a whole new debate - Lol !!

I'm going to bed.

G/L

 

[bbmac]

I remember that show they had on TV the other year, training up regular folk to become professional traders. I distinctly remember the head trading in one of the episodes saying ..... price has no memory. Where does that leave our concept of support & resistance?

Price has no memory but market participants that drive price do.

 

[FX Bandit]

I remember that show they had on TV the other year, training up regular folk to become professional traders. I distinctly remember the head trading in one of the episodes saying ..... price has no memory. Where does that leave our concept of support & resistance?

Didn't see it and don't know who he is. But what's the problem in any case? There are any number of ways of approaching the markets, and different (even opposing) views are not necessarily wrong. It depends how you implement your beliefs.

What matters is how you see the market and what you do about it. Two traders can pursue completly contrary strategies and both win. At the same time, two traders can take the same entries, one lose and one win.

If you have a conviction that you have arrived at through reason and experience, don't worry about about a contradictory view. If it appears that it might have merit, consider it and apply the same process of experiment and reason. Then make your decision.

 

[DionysusToast]

To WallStreetWarrior87

What you are alluding to on your posts (I think) is the ability to see beyond the chart and create a hypothesis based on the price action development as you see it. Whilst you do use charts, you see every chart as unique as a fingerprint. The difference between you & someone using TA is that a person using TA will try to fit the price action to a known pattern and trade it accordingly whereas you are building a 'story' behind the price action in order to come to some conclusions about the final goal or next move. Your mention of order flow has some thinking you can't be referring to a chart itself but I think this is not the case.

If I am right or close, then you are doing something a number of people on the board have done before, in terms of mentioning the use of such methods of assessment.

In the past, people that have gone down this path have used their techniques as a stick to beat other members with and not much more. With other posters describing such techniques, we have heard how great they are and lots of "Can't you see it?" but little in the way of helping people to understand how they embark on this path. You know the saying - "Teach a man to fish and you have fed him for a lifetime, beat him over the head with the fish and he'll attack you on the interweb".

In some cases, those members have had problems with empathy. It is not easy to write in such a way that you put yourself in the readers shoes to ensure someone without your level of knowledge actually gets it. Their perspective and the writers perspective differ in ways the writer cannot reasonably be expected to understand. There can be a number of interpretations when loose descriptions are made and it's hard to ensure the right one clicks. I would say that the late, great Socrates had this issue to some degree.

So - what is your plan here? Do you plan to share some insight into helping people use these techniques or are you just here to tell people there's stuff 'out there' in the hope they'll come across the right stuff ?

Cheers

DT

 

[robster970]

@DT - Don't you think this boils down to the problem I alluded to earlier with my driving analogy that there is an expectation to descirbe the 'method' even though it is formed as a cognitive skill? On that premise alone, anybody trying to do this is doomed to failure nomatter how articulate and detailed in their thinking they are.

You can teach a man to fish if you stand with him for a long period of time, showing him and making him experience how to fish. You can't do it via words on the interweb. I challenge you to teach somebody to cast a fly well by describing it on here.

Therefore most people default to the premise and description of screentime and hard work to get there and you construct your own world view of how it works, inferring whatever you want in the limited facilities we retailers have at our disposal.

Don't you agree?

 

[Splitlink]

Using 4xpipcounters thread as an example, whilst I would want to ignore the idea of adding to a losing trade, I may learn something useful about his method of analysis for entries. I could choose to adapt it to use stop-losses, and backtest it. And create a variation that suits me.

QUOTE]

This is always the case, with any system, thread, book, anything you like. The bulk you do not like but, perhaps, on one page, you may find some piece of information that makes the whole reading worthwhile.

 

[DionysusToast]

Don't you agree?

Possibly - but I think the surface can be scratched at a little more than has been done so far.

 

[meanreversion]

Ok, I have to confess this "order flow" trading from looking purely at charts is new to me. If you were trading USD/JPY last week, would you have been able to react as quickly as the spot trader in Tokyo who has just been paid by the BOJ in $10mio in what was their first intervention in six years? (if your answer is yes, you are sadly deluded).

So maybe it's something else. You cannot know that a large corporate is in the process of asking a two way in GBP/USD spot in GBP 150mio to RBS London, and by the time you notice the move it's already happened. (Isn't this the definition of flow?)

But whatever. Let's assume that you DO have some sort of predictive ability (ESP? telepathy?). A trade requires 3 elements - entry, position size and exit. "Order flow" trading only gives you the entry. Let's say you KNEW that RBS London was about to get lifted for GBP 150mio, you'd quickly go long, but in how much? Where is the stop? Where is the take profit?

Come to think of it, let's say you knew now what the NFP data was going to be for the next six months. Are you 100 pct certain you could profit from that information by trading in the markets? Sometimes the market does the opposite of what you might expect.

t2w seems to have slipped into a parallel universe. On one thread we have people telling us they have as much information as a big hedgie in Mayfair.. on another thread is a chap who is happy to risk 20% of his entire trading capital on one trade, and thinks nothing of 70% drawdowns because

1. drawdown isn't really a loss until you've closed the trade (!!)
2. his method is always right in the end
3. he has "ice in his veins" (I am not making this up)

The lunatics have taken over the asylum...

 

[robster970]

Possibly - but I think the surface can be scratched at a little more than has been done so far.

Recently, I thought I'd try and write some things to try and put back some of my learnings into the BB in the event that others may find it useful. I gave in after a while because the essence of what I was trying to articulate was too elusive. I could describe the process of how I form a view (part fundamental, part PA) but it would be too static to be effective, as I found myself in my earlier days.

How is it possible to articulate the process which tells you that sentiment is changing, the value traders are coming in and a reversal is likely imminently?

I could say that fundamentals coming out don't match market movement which is liquidity driven by the looks of it (supported by more Fed POMO activity). Net outflow froim mutual funds in US equity markets for the last 22 weeks are $70bn but Sept rallied?? Sentiment 1-2 weeks ago was overstated to the positive. Trade war is looming. QE2 looming with Fed committee members sceptical about its effectiveness. More euro nonsense. Chart shows weakness rather than just a consolidation. There is no obvious resistance of any significance until 1200 area. PA shows the build up of volatility usually seen before a reversal. 20 and 50MA levels on H4 have been breached a couple fo times now. COT shows net short 4.65% on spoo. Therefore I took the short at 1150, place my emergency stop at 1166 and wait for the turn.

It's illustrative but it doesn't get inside my head.

 

[robster970]

The lunatics have taken over the asylum...

They'll be gone eventually. Darwinian. We can just carry on as usual.

Although we all may have different styles we do share one thing in common though and that's we figured out (and I paraphrase because I can't remember the quote properly) the two golden rules:

1) You can only win if you bet.
2) If you run out of money, you can't bet.

 

[Splitlink]

Sure, but you must realize that you're effectively avoiding a perfectly valid challenge that, for your own sake, you should know how to address? Moreover, vague statements that "it's all in the charts" don't exactly offer convincing arguments in favor of the existence of some systematic methodology that works. However, this is neither here nor there...

Let me ask you a question instead. Why and how do you know that "it" - let's call it "edge" - is, in fact, in the charts?

How do we know? If you have an edge you must know where it is when you see it, or you haven't got it. It seems to me that this thread is going round in circles. A chart is the only thing that I have, unless I go into fundamentals. What it has that tells me to enter is price, present and historical. Why and when I enter is often for a completely different reason to anyone else, which is very logical, for most of us, surely? I should imagine that the same is true for a user of the DOM and orderflow.

The "knack" of trading needs nothing more than your perception of what is going to happen when you are in a trade. It can't be taught.

 

[wirraltraders]

Ok, I have to confess this "order flow" trading from looking purely at charts is new to me. If you were trading USD/JPY last week, would you have been able to react as quickly as the spot trader in Tokyo who has just been paid by the BOJ in $10mio in what was their first intervention in six years? (if your answer is yes, you are sadly deluded).

So maybe it's something else. You cannot know that a large corporate is in the process of asking a two way in GBP/USD spot in GBP 150mio to RBS London, and by the time you notice the move it's already happened. (Isn't this the definition of flow?)

But whatever. Let's assume that you DO have some sort of predictive ability (ESP? telepathy?). A trade requires 3 elements - entry, position size and exit. "Order flow" trading only gives you the entry. Let's say you KNEW that RBS London was about to get lifted for GBP 150mio, you'd quickly go long, but in how much? Where is the stop? Where is the take profit?

Come to think of it, let's say you knew now what the NFP data was going to be for the next six months. Are you 100 pct certain you could profit from that information by trading in the markets? Sometimes the market does the opposite of what you might expect.

t2w seems to have slipped into a parallel universe. On one thread we have people telling us they have as much information as a big hedgie in Mayfair.. on another thread is a chap who is happy to risk 20% of his entire trading capital on one trade, and thinks nothing of 70% drawdowns because

1. drawdown isn't really a loss until you've closed the trade (!!)
2. his method is always right in the end
3. he has "ice in his veins" (I am not making this up)

The lunatics have taken over the asylum...

It would seem on the face of it that the retail trader is always at a disadvantage compared to the professionals who may have inside information etc. However recently I have begun to realise however that this may no longer be true. I recently spent a couple of days here with a guy who works for one of the largest Trading Banks in their FX Dept (all of which must remain nameless) and some of the things he told me rapidly confirmed this view.

The fact is that after 10 years of broadband, retail trading is now maturing into a force all of it own. Furthermore I believe that there are emerging Retail Traders who, to put it simply, are clearly much more skilled then their pro contemporaries.

Banks are still routed in Fundamentals more than Technicals. This is great for longer term trades but for shorter term stuff, in some cases they are simply not as skilled with technicals as the best of the Retail Traders. Just an observation..

 

[Black Swan]

Possibly - but I think the surface can be scratched at a little more than has been done so far.

DT, I like your "can you see it yet?" comparison ...Order flow, price action, dark-siding (big LOL for that one) as Peter Kay once said in Phoenix Nights "it's the new garlic bread"...

 

[meanreversion]

It would seem on the face of it that the retail trader is always at a disadvantage compared to the professionals who may have inside information etc. However recently I have begun to realise however that this may no longer be true. I recently spent a couple of days here with a guy who works for one of the largest Trading Banks in their FX Dept (all of which must remain nameless) and some of the things he told me rapidly confirmed this view.

The fact is that after 10 years of broadband, retail trading is now maturing into a force all of it own. Furthermore I believe that there are emerging Retail Traders who, to put it simply, are clearly much more skilled then their pro contemporaries.

Banks are still routed in Fundamentals more than Technicals. This is great for longer term trades but for shorter term stuff, in some cases they are simply not as skilled with technicals as the best of the Retail Traders. Just an observation..

There are some good points here. I did start my original premise by listing the advantages that retail punters DO have.

I also know from experience, having worked for many years on the sell side, that some of the "traders" at banks are borderline clueless. BUT then again, you might think that Gordon Brown wasn't very good at his job - didn't stop him from becoming PM did it? So clearly he had something.

The reason the post sets out to "cut the BS" is because there is simply too much guff out there.

1. There is no magic system. Your system may work beautifully for YOU, but spend a couple of weeks showing it to someone else, and within a day they will have modified it (I guarantee).

2. Retail punters have no informational advantage. By this I mean - you do NOT know when a large trade is about to go through (but the bank will). You do NOT know there is about to be intervention (but the bank/hedge fund might). You do NOT know that an oil well is about to rupture, causing the company share price to nose dive (but someone on the inside might). If you think you can divine this from looking at charts - well, you're smoking something illegal.

3. Retail punters can trade whatever the hell they want, at low/no commission, whenever/wherever they want. This is amazing. The liquidity/IT/brokerages - well, it's astonishing what you can do.

4. The system is only a small part of becoming successful. Money management is key (which is why 4x is a lunatic) but perhaps the biggest part is the psychology.

5. Every trade needs an entry, a size and an exit. Size and exit together are more important than determining profitability, so why this eternal focus purely on entry?

 

[Black Swan]

It would seem on the face of it that the retail trader is always at a disadvantage compared to the professionals who may have inside information etc. However recently I have begun to realise however that this may no longer be true. I recently spent a couple of days here with a guy who works for one of the largest Trading Banks in their FX Dept (all of which must remain nameless) and some of the things he told me rapidly confirmed this view.

The fact is that after 10 years of broadband, retail trading is now maturing into a force all of it own. Furthermore I believe that there are emerging Retail Traders who, to put it simply, are clearly much more skilled then their pro contemporaries.

Banks are still routed in Fundamentals more than Technicals. This is great for longer term trades but for shorter term stuff, in some cases they are simply not as skilled with technicals as the best of the Retail Traders. Just an observation..

Nope, no and more no...The big players (and I mean big) make the moves and the rules, we ( as the retail punters at the whale 5hit end of the food chain) simply pick over their effluent. They've evacuated their waste product of market metabolism and eat our lunch before we've sat down to pick over the crumbs. Some of these really big players might pay attention to the 200 ma but that's about it. There's a huge amount of players between us and them that use TA and *stuff* but to suggest that we're operating on a level playing field with "the largest Trading Banks in their FX Dept" is risible nonsense...

The only levelling off during recent years is prop shop versus small office/home retail punter...

 

[meanreversion]

You keep on going on about mystical issues or institutional OTC orders, but they are all one of the same, ultimately it gets reported to the exchange, the only difference in OTC is the time taken to report the transactions.

Completely incorrect I'm afraid.

FX is traded 90% OTC and does not get reported anywhere. This is not "mystical", it is simply an unregulated market where participants are NOT required to report their trades. Why on earth did you think otherwise??

 

[wirraltraders]

Completely incorrect I'm afraid.

FX is traded 90% OTC and does not get reported anywhere. This is not "mystical", it is simply an unregulated market where participants are NOT required to report their trades. Why on earth did you think otherwise??

Actually if you trade fx futures ( almost indentical in everyway to fx spot chart wise) - you get an order book. You can then use that order book to trade spot..

 

[meanreversion]

Actually if you trade fx futures ( almost indentical in everyway to fx spot chart wise) - you get an order book. You can then use that order book to trade spot..

Wirral, you're a nice chap but you really don't know what you're talking about.. sorry.

FX trades $4 trillion a day, spot, outright forwards, futures, all added up.

A few years back, futures accounted for 5% of this. Now, due to worries about counterparty and funding risks, FX futures are much more liquid and account for about 10% of the market. (I trade both cash and futures in FX)

So are you telling me that this 10% of the market is the determining factor? Do you think the BOJ traded futures when it intervened? Futures are fine up to 10-20mio but beyond that, it's OTC. The BOJ bought $12 billion last week, to give you an idea.

 

[wallstreetwarrior87]

Meanreversion,

If im incorrect in my analysis of the pound, please correct me!!!!

I dont need to be in an institution or hedge fund to know with a high probability what they are doing.

I put myself in their shoes, there for I can assertain what the game plan is.

Who tells you it cant be done????

Seriously, who tells you, and more fool you for believing them!!!!

 

[wallstreetwarrior87]

BTW its 10.42 am uk time and stops have been taken on pound....... how could I have know that???????