Market Traders Chewin' The Fat

investment
forex

#41

I am retired, but not quite old enough to get free money from the government. I have a diversified asset base which is my income stream. Two thirds of my income is from dividend paying stocks.

I am not yet proficient in FX trading. I have had moments of genius but those have not been sufficient to counter all the other negative events. However I keep going because of the following:

  • I understand my vulnerabilities and am gradually containing them
  • the FX market provides the means to profit from which ever direction the market moves

FX trading is a get-rich-slowly venture. All the people who give up after they have exhausted their money and patience do so because they don’t understand the risks associated with trying to get-rich-quickly on the FX market. Of course some also give up because they simply do not understand why they are failing, which is a different twist on the “exhaust money and patience” theme.


#42

Primary but hasn’t always been that way.


#43

That is only part of the story. As Stu said there can be a complete lack of participants willing to take the other side. Guaranteed stops is (these days) a figment of the ESMA rules and they only apply to some retail accounts. In practice the broker is taking the risk.

Here are two scenarios of a complete lack of participants willing to take the other side of your order (AKA lack of liquidity).

  • Thomas Jordan of the Swiss Central Bank (the SNB) decided to remove the peg of the Swiss Franc to the Euro. There was an immediate movement of 2000 pips (or was it 20,000 pips). The brokers who were guaranteeing stops all went bust (AFAIK) which is another way of saying that your stop-loss failed because even though your broker might honour the SL they are now bust and you can’t get your money back.
  • you have a position open over the weekend. On Saturday night, for example, Korea test fires a missile which accidentally lands on Japan, or the Saudis blow up the Iranian oil exporting ports, or Russia invades Chechnya (sp?), or there is a Tsunami which wipes out Singapore. When the market opens on Sunday night (GMT) the US$ or the Japanese Yen has moved by 5-cents in a direction which is unfortunate for you and your stop was somewhere in that gap. If you are on an ECN provider your stop is filled at the rate available when trading resumes, and they pursue you for the shortfall, or your guaranteed stop broker freezes your account while the lawyers figure out how they can get out of the situation.

IMHO a good reason to use an ECN


#44

These are reasons I will not leave a trade open over the weekend and don’t like going to bed with a open trade. You make a excellent case for “scalping” – in and out at high risk – and always using a emergency stop loss. Even during an “event”, the market will wiggle several points before a major spike. Also a good reason to trade one of the major pairs where the most liquidity and stability resides.


#45

Stu, I had the same problems being limited to 3 post till you accumulate enough badge credits to be unrestricted.

The algorithms are constantly upgraded to ensure the legal, conglomerate, global bucket shops are profitable. The algos are like a pit of cobras :snake: protecting the looted treasures from raiders like ourselves.


#46

Play out of tune and the cobra bites :joy:


#47

Well done.

I have stocks, bonds, real estate, some metals and no longer have a need to work and only work when I like the customer and the job. Have my own company. No longer have employees so now when I work, I always get paid. I disliked scrambling to find enough work to keep people busy. One day when people said, we need more than the 10k for healthcare as the cost was rising, I was required to pay zero, I decided that I really didn’t need people to work for me. A new day began.

I agreed to do a job in January. Should take less than a week. Might do 10-12 jobs in the coming year.


#48

Entered this trade for 4-6 pips because of the 5 min pin. Got a bad feeling for it and killed it for basically BE. I get out immediately when I think the trade has turned sour. Show this only to demonstrate that if one chooses to scalp you have to learn to make instant decisions. Experts tell you not to do anything by “feel”. That’s also BS. My best tool is a feel for EU == I have learned how it reacts to different stimuli such as news events or a politician yapping.


#49

Currently doing well on this one.

To be honest, I was a little unsure if I was correct and i’m still a little bit wary of the price reversing on me. The 1 minute chart (top) shows an impulsive move down, followed by a monster PB, a period of consolidation and a break north of the consolidation. Hence, it seems that the price is moving back up after it shot down during the news announcement.

The blue line on the 5 minute line is a really nice S/R area so whilst the price is above that I am bullish. The move through it is strong, so while there may be a retracement, I am happy to sit in and watch it flounder about. I would like to get myself a 7 - 10 pip cushion to close one position and set my SL to BE, but let’s see what happens.

The higher timeframes show us that the price is distinctly sideways. Hence, I am expecting a lot of volatile movement on this one and I think I will be ok as long as my nerves hold out.

Edit, closed one at break even and one at 3.6 pips of profit.


#50

SM if you are looking for 7-10 and you think price is sideways further up the chain, does it not make more sense to enter closer to what you deemed as support ? As potentially your entry area could well have bought right into some resistance. Buying at your identified support would have paid by now and be at a comfortable BE+ on your balance.
It scares the shit out of me buying or selling in potential no mans land. If it’s part of your plan ignore what I have said.


#51

Hi Stu.

Yes, and you know, I followed that sort of advice for years and I was a very solid breakeven trader, but after recently changing my entry location to match up with monthly/weekly/daily closes, my performance has improved.

For example:

That doesn’t mean that I am right and I might just be about to eat a huge part of humble pie.

Chris Capre’s teachings place trade location as the least important aspect of the trade. That doesn’t mean that it isn’t important, but he teaches us to situate trades within the market context. First we ought to be looking at the bigger picture and second looking at the market volatility. By trading off of the monthly/weekly/daily closes, I have already decided where I want to enter and now I just need to decide which direction. I know that you don’t like to have a bias, but I have trained myself to see this bias and now it is very difficult to ignore.

Maybe this is simply part of my development. If I can do this without thinking about my trade location, then moving my location to more obvious S/R might improve my results further. I think at the very least, I ought to go through this process.

Back in at the blue line. We now have a double bottom and a micro PB there.


#52

Closed half for 8 pips and SL at breakeven.


#53

As I said if it’s part of the plan fine. I will however always argue with Capre about trade location. Looking for 7-10 some 35 pips into the prior 50 pip swing doesn’t give you too much margin for error.


#54

That wasn’t Capre that said that and I understand what you saying. Capre just said to focus on context and volatility before location.


#55

Well you could argue that when you shop at the right location, volatility, direction, momentum etc isn’t a concern, it’s all there by default.

This isn’t to argue, it really is just to chew the fat over.


#56

Thanks for clearing up the whole liquidity thing. I’ve been trying to make sense of it for a long time now. It still doesn’t make total sense, but whatever, neither do courts. I’ve just learned that trading forex is a trial in greed and fear. You let those emotions get the better of you, you’re going to lose. Get too scared of losing money, and set your SL too close to your trade, you’ll see yourself get stopped out, only to see the market swing back the way you were looking for it to go a couple of hours later. Get too greedy and trade positions that are too big, or set your TP too far, then it misses your target, swings back against you, and your account is in for a world of hurt. Also, NEVER trade exotics. You never know when another African finance minister gets arrested on charges of corruption, and the usd/zar takes off like goddamn rocket.


#57

:+1::joy: Classic line.


#58

Feel fits my pattern also. :+1:
I am re-learning how to listen to my intuition.


#59

Here comes that rumbling, crunching sound…

https://www.bloomberg.com/news/articles/2018-12-06/-sell-all-battle-cries-heard-across-markets-ahead-of-u-s-open


#60

I wonder if that was what budged my trade along to the TP a bit quicker than expected. :grin:
Usd/Cad