my journal 3

Yen Bounces After Touching Multi-Year Lows
Today’s rally is not likely to be anything more than a small correction after the huge downfall. Nothing fundamentally has changed for the currency. The Japanese government is still keen on weakening the currency and a new Bank of Japan Governor will likely be even more aggressive that the current BoJ leader Masaaki Shirakawa (who himself is not shy of easing the monetary policy to boost growth and push the currency down).

Some of the current yen’s strength is likely coming from the uncertainty about the eurozone. The political and financial instability makes traders less willing to risk and that adds premium to safe currencies, including the yen.

Yeah, all these guys are very good at telling us what the trend has been until here and that it will continue forever. Very easy. Especially if they're investing nothing. Practically explaining the market with a delay of a week. Can't go wrong like that.

I remember these guys, these commentators, maybe traders or not even traders. They just comment in favor of the trend, and when it reverses, they say it is just temporary, even when it isn't. Anything that goes against the trend, they say "it is just a temporary correction". Then, when the "temporary correction" becomes the new trend, because it keeps going for weeks, then they pretend they've been saying it all along, and speak about the uptrend just the same way they've been speaking about the downtrend. They are always right, except always late 2 weeks. Even worse are the regular economic journalists, who always find a reason to explain ("weakness due to comments by x politician", "due to" or "despite", is usually what they say).

Yesterday, as I was falling asleep, I was thinking about how a currency, or any asset, rises and falls.

Well, first of all, there's as many buyers as there are sellers, so let's not make that mistake most people make.

To make it fall, people selling are more interested in selling than people buying.

So let's picture it. As best as we can.

There's this crowd of people who have the yen. And there's these guys who don't have enough and want to buy more.

The guys with the yen want to sell them? Ok, let's try this.

The guys who have to buy them aren't that interested.

"1.4? Ok, for today, but tomorrow I want lower, or I won't buy any."

Ok, so the yen keeps falling.

But then all of a sudden all these guys who wanted to sell the yen, who were afraid, or needed to sell it... they don't have any more yen to sell.

And, as the yen falls, there's more and more people willing to buy it.

Right?

So, how can it just keep on falling, week after week, for 13 straight weeks?

Well, it does, and my comparison and simplified explanation ain't going to tell when it will stop falling.

But hell... I tried to understand what's going on.

Damn, I wish I could be in the mind, for just one day, of every person buying and selling yen.

Just for once, to understand what's going on. And why it rises and falls at once, instead of going up and down like the other currencies.

...

Ok, while I waited and wrote... JPY rose again, and now I am at 20k again. I should get out and I usually would get out after being so scared stiff... but I can afford, mentally, to wait a little longer. Especially after what i just said: the yen rises and falls all at once, for days and days, and even weeks and weeks.

I could make a fortune with these 4 contracts, if I just kept them a little longer. I am talking dozens of thousand of dollars.

5000 dollars every 100 ticks.

And it could easily rise 300 ticks.

Do I have the balls and recklessness?

Don't know.

Just have the balls to risk blowing out, but it seems I never have the balls to let my profits run.
 
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There is one important player when it comes to currencies - the government.

Japanese government is interested in yen falling in value. This is good for Japan's exporters and their debt obligations.
 
Oh, and how do they make it happen? How can they keep selling yen to make it happen? How does the government manipulate the price of the currency?

In simple words please. I just need a simplified synthesis of 2 sentences. From trader to trader, down to earth language.
 
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What are the chances of this beast falling another week?

Monthly candles:

m.png


Weekly candles:

w.png


I should really stay long on these 4 contracts until I make 15k of profit.
 
I Got A Name (Jim Croce) - YouTube

Like the fool I am and I'll always be
I've got a dream
I've got a dream
They can change their minds but they can't change me
I've got a dream
I've got a dream
I know I could share it if you want me to
If you're going my way I'll go with you

My dream is a bounce of 200 ticks, that'll give me 10k (with 4 contracts):

dream.png

That's it.

I've done it.

I removed all takeprofits on both GBP and JPY.

I don't know how long my resolve will last, especially if tomorrow I see +4000 of profit or similar.

But if it gains 200 ticks overnight, then I'll be ready for it.

I removed all takeprofits.

And now I am going to sleep.
 
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Oh, and how do they make it happen? How can they keep selling yen to make it happen? How does the government manipulate the price of the currency?

In simple words please. I just need a simplified synthesis of 2 sentences. From trader to trader, down to earth language.

People used to borrow yen for the carry trade because it was 'cheap'. Now with global rates also at 'cheap' levels (eg. swissy) no one needs the yen anymore hence the ongoing fall in yen.

Voila.
 
Ok, I am back. I woke up. It's 7 am.

I turned TWS on.

And now I will check if I am losing thousands or making thousands.

It's not likely to be at zero.

Let's go.

I am scared.

Let me check first if there's a margin call email.

Nope, no emails.

But this still doesn't mean that it didn't go down. It just means it didn't go down by 200 ticks.

...

Indeed!

I am down 2000 dollars, but not 5000 dollars.

Pretty disappointing.

Wow. The JPY lost everything it had gained yesterday.

I am doomed most likely. Of course I still won't exit it, given that I didn't exit it yesterday at break-even. And of course I regret it. No, not really, given that it was a conscious decision, and I might have learned not to regret my decisions by now.

However, there is some good news, and it is the fact that it didn't fall 200 ticks, but just 40 ticks. It might indeed be a bottom, or it might lose 200 ticks in the few next hours.

Snap1.jpg

When are we going to have a proper bounce like the previous ones? How about bouncing 250 ticks instead of just 90 ticks?
 
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Oh, and how do they make it happen? How can they keep selling yen to make it happen? How does the government manipulate the price of the currency?

In simple words please. I just need a simplified synthesis of 2 sentences. From trader to trader, down to earth language.

Quantitative easing, in other words; money printing. Printing more Yen will dilute the current supply, thus reducing it's value compared to other currencies (they're all doing it in reality), which is why everyone's heading for the exits.
 
Oh ok, in that case I am screwed, because the Yen can indeed keep falling as much as they wish, given that it's not the same Yen that it was 4 months ago.

Of course there's a whole bunch of theories on the table now: yours, D70, jazeonli's. And they all might be different.

According to yours, the Yen now at 1.07 is the same that it was at 1.4, because it has been diluted, so there'd be no hope for a bounce.

Of course then the problem becomes measuring these theories, assessing the money printing, assessing the other things... and... can we really measure these things and verify if they're taking place?

And if we could, what's there to stop us (stop you) from owning the world in just a few months?

I am therefore assuming that you are proceeding by estimates, and these estimates could be wrong. But you could be approximately right. But then I'd also expect you to be investing based on your estimates.
 
Yes, it's Japanese govt policy:

Japan's prime minister Shinzo Abe declared a "monetary regime change" on Tuesday as the central bank bowed to government pressure, setting a 2pc inflation target aimed at helping the country emerge from its prolonged bout of deflation.
By Telegraph Staff and agencies
8:52AM GMT 22 Jan 2013

"This opens a passageway toward bold monetary easing," Mr Abe told reporters after the Bank of Japan (BoJ) and government jointly announced the inflation target and plans for "open-ended" central bank asset purchases similar to the strategy followed by the US Federal Reserve.

****Mr Abe began lobbying the central bank to ease monetary policy even before he took office late last month****, saying more aggressive action was needed for the world's No. 3 economy to escape from years of falling prices that can dull consumer spending and business investment.

Bank of Japan governor Masaaki Shirakawa vowed to achieve the inflation benchmark "as soon as possible," but said that bold efforts were also needed from the government in order to achieve the target.

Mr Shirakawa told a news conference that the two BoJ board members, Takehiro Sato and Takahide Kiuchi, who dissented on setting the 2pc target argued that it far exceeded the pace of price growth that could be deemed sustainable in Japan, and that efforts must first be made to boost Japan's growth potential.

He also said that the Japanese government understood and had incentives to respect the bank's independence.

The BoJ has so far failed to achieve even its 1pc inflation target, with price rises hovering below 0.5pc for the past two years despite surges in energy costs.

The higher inflation target "would also have to be backed up by substantial policy measures to achieve it, otherwise the Bank of Japan might simply end up missing an inflation target of 2pct rather than, at present, missing one of 1pc," according to analysts at Capital Economics.

Stock markets were broadly flat after the announcement, while the yen rallied from near its weakest level in more than two years as investors expressed their disappointment at the delay in open-ended purchases.

Markets have rewarded Mr Abe's campaign pledges with a rally in the benchmark Nikkei 225 stock index, which has gained nearly 22pc in the past year, mostly in the past few months.

As expected, the central bank pledged to expand its asset purchases, buying about 13 trillion yen (£91bn) in assets per month from January 2014 including Japanese government bonds and treasury bills. Its current asset purchase scheme will continue until the new plan comes into effect.

In an apparent acknowledgement of concerns over Japan's soaring public debt, which is more than twice its gross domestic product, the joint statement said that the government would "establish a sustainable fiscal structure ... to ensure the credibility of fiscal management."

It also promised reforms to improve the competitiveness and "growth potential" of the economy, such as investing more in research and development and adjusting tax policies.

Critics of the government's strategy of pushing for more inflation argue that it will do little to stimulate real demand in the economy if it pushes up prices without accompanying gains in purchasing power.

Bundesbank President Jens Weidmann said on Monday that the BoJ's independence was under threat and warned that government interference in monetary policy could spark a currency war.

“Already, alarming attacks can be seen, for example in Hungary or in Japan, where the new government is interfering massively in the affairs of the central bank, pressuring for a yet more aggressive monetary policy that’s threatening the end of central bank autonomy,” said Mr Weidmann, who also sits on the European Central Bank’s Governing Council, in a speech in Frankfurt last night.

“A consequence, whether intended or not, could be the increasing politicization of the exchange rate.

“Until now, the international monetary system has come through the crisis without rounds of competitive devaluations,” Mr Weidmann said. “I very much hope it stays that way.”

Germany's finance minister Wolfgang Schaeuble has also expressed "concern" over Japan's liberal money printing policy.

Mr Schaeuble said there was an "excess of liquidity" on the global financial markets, which is being fuelled by a "false understanding of central bank policy".

Source:
Japanese PM Shinzo Abe hails 'monetary regime change' - Telegraph
 
My only point to add to the above is that central banks are notoriously bad at dabbling with their exchange rate. The market is bigger and better. Politicians generally just talk it up (or down), like persuading a bull to move field. It'll only go if it wants to go.

Hence why I have my theory of the carry trade 'unwinding'.
 
Thanks to Fintrader for the article, which seems to agree with Benj1981 (among the many other interesting things that it says):
Germany's finance minister Wolfgang Schaeuble has also expressed "concern" over Japan's liberal money printing policy.

Thanks to D70, too, for adding details to his analysis. Ok, so the markets take it wherever they want. This would seem to agree with my rough analysis that we can't exactly measure the government's action nor predict their effect on the currency.
 
Oh ok, in that case I am screwed, because the Yen can indeed keep falling as much as they wish, given that it's not the same Yen that it was 4 months ago.

Of course there's a whole bunch of theories on the table now: yours, D70, jazeonli's. And they all might be different.

According to yours, the Yen now at 1.07 is the same that it was at 1.4, because it has been diluted, so there'd be no hope for a bounce.

Of course then the problem becomes measuring these theories, assessing the money printing, assessing the other things... and... can we really measure these things and verify if they're taking place?

And if we could, what's there to stop us (stop you) from owning the world in just a few months?

I am therefore assuming that you are proceeding by estimates, and these estimates could be wrong. But you could be approximately right. But then I'd also expect you to be investing based on your estimates.

What's going in is a currency war, as in; a race by countries to devalue their own currencies in order to inflate away debt, keep interest rates down (if they rise too much so does their debt exponentially), and give their export business a boost (not much good if you have to import your raw materials though!). Of course, this kind of central bank/government intervention always makes the initial problem much worse, due to unintended consequences as a result of their interfering.

With regards to trading off this information, I don't know how you would measure or quantify the projected price or real value. All countries are engaging in currency debasement, therefore it's pretty difficult to come up with the formulae you're talking about. For myself it gives me a longer term bias for trends, and that's it really, however I just trade off the here and now mainly.
 
666 again:

Snap1.jpg


See, I told you. Price keeps on being attracted by that number. Or maybe rejected by that number I should say. I could say "the devil is with me", today.
 
After all this apprehension while waiting for a bounce, after all these risks taken, there's no way I am closing the trade at break-even. If it bounces, I demand at least 10k of profit.

...

Yesterday's low, at 1.0633, has been resisting for over 24 hours. About 30 hours. Now it's a matter of bouncing to the upside or breaking the low and falling for another 100 ticks. I hope the former obviously. In a situation like this, after so much constant falling, the Yen is not going to stay in a tight range for much longer. It's been lasting 30 hours already.

The only thing keeping the JPY from breaking the low and falling another 100 ticks, and blowing out my account, is my hope, my praying, and maybe the fact that it's been falling for 13 straight weeks.

esigchartspon.png

But now it is only 20 ticks away from the low of... two days ago (US CT time zone).
 
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Anyone here have experience of running systems in TradeStation?

I'm wondering how best to organise the setup.
Multiple desktops or multiple workspaces?
Radarscreen or quote screen.
Portfolio maestro.
Managing positions and margin between strategies.

All that boring kind of stuff. Any advice would be much appreciated.
 
Way off-topic, but requested by Travis, I just sold CAD futures at 1.0049. Will add shots and more details to this post.

MORE DETAILS BELOW:
Here is the 4 hour chart of CAD. I identified a daily supply zone (blue) between 1.0055 and 1.0086 (if you want to know more about demand/supply zones, google for sam seiden). This is a potential inversion zone. As you can see price just entered the zone, and was rejected, for now:
jpk3ms.jpg


When this happens (price enters the zone) I move down to a lower timeframe (in this case, 5 minutes), and hunt for indications that the uptrend is over. In the chart below, the indications I was looking for: low volume on up bars, as opposed to high volume during down bars:
10n858j.jpg


The first of the two indications was good enough to sell, but I was out for groceries, and missed it. Sold on the second one, exactly when I took the shot.

Stop loss over the recent high, at 1.0063, target at 1.0032 where I see a demand zone on the 1 hour chart. I monitor my trades and often get out of them before they hit stop/target, based on price/volume indications.

I will edit this post with my result later, no reason to pollute this thread with more posts.

EVEN MORE DETAILS:
Behind my reasons for taking trades when volume in the recent direction decreases, there's mainly one fact: when this happens, price either moves in a congestion for a while, or makes a retracement of the recent trend, or inverts its direction. Rarely it continues the trend like if nothing happened.
As a consequence, I get a high win rate: many small wins and break-even trades, several small losses, very rare full losses, and occasional big wins.

UPDATE: trade closed at 1.0035. I start to become unstable when my targets are missed by one tick. The recent bars had long wicks below, which also is a signal that the current down move is losing steam.
35dc7pk.jpg

This was a very easy trade. It's not always this easy: I might say this is an exception. This strategy doesn't give many signals, maybe 3-4/week, and there are weeks with no trades (also because I'm not always here).

I would also add more on why I manage my trades (like now, early exit 3 ticks above the target). Let me first say that sometimes I'm right, sometimes I'm wrong, but in the long run I would make more money just "setting and forgetting" my stop/target The fact is that, managing, I can have a better win rate. For example, I can change a series of:
-120
-230
+300
+350
Total +300
into something like
+20
-150
+120
+150
Total +140
The second series of trades is less profitable, but way more acceptable for my insane mind. I worked a lot on this: go for the best system, or go for the "best system for you"? I think this is something that not many people think (going for the best system is apparently a no brainer), but I convinced myself that this is crucial for my success. Like Travis, I blew my account in the past because of my insanity.
 
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