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On September 15 2011 22:24 drsnuggles wrote:
The way you change directions every few hours based on trends that change every hours/days because you only look at short-term gains makes me cringe, this all seems rather haphazard.
haha well always good to hear criticism
I decided to not go through with the short because of two reasons
a> don't wanna get owned by short term news
b> my prop trader friend told me to cancel it as soon as it got filled, and i value his advice
In the long run (over the next few months) i do want to be net short stocks though
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you should delta hedge its numero uno way to abuse arbitrage
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On September 16 2011 02:33 Caller wrote:
you should delta hedge its numero uno way to abuse arbitrage
As fun as it would be to trade options and delta hedge and be long gamma, I have a feeling you would much rather be a market maker and not have to pay rediculous costs to do that.
I don't really know of any decent platforms to trade options on, you'd want to easily be able to see all the greeks and be able to hedge off your portfolio easy. I'm pretty sure without direct access to the exchange it would be almost impossible to make money
But its ok caller, i love you too haha
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I work for a small commodity trading firm, and the other day, we were Short 725mb ULSD basis and Short HO Spreads. We do alot of trading based off pump cycles at pipelines at Oklahoma and Houston.
Alot of decisions our traders make are based off predictions in Europe and New York, specifically growth and decay in Pull. Lately, most markets seem to be living on fear and greed and there is absolutely no medium ground.
I would wager to guess though that after this, things will find a more fair value level and baring storm fears this market settles way down as we move into October from a volatility perspective.
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![[image loading]](http://img153.imageshack.us/img153/7682/dolarz.png)
Good news everyone!
Dollar hit its 200MA and is now bouncing back off. Tbh, with the way stocks are acting atm, i'm kind of thinking it might come back down and touch it again, so it might form its final low on monday, but who knows
Dollar crossing the 200MA is not a very common event, i borrow this wonderful chart from my favourite blog to emphasize the meaning of this
![[image loading]](http://img710.imageshack.us/img710/6680/13year.png)
You might say, technical analysis schmalysis (obviously QE3 will factor in at some point)
But looking at that, and specifically at 2008
Where do you think the dollar is heading?
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China403 Posts
It's more like a blog in here, fun read though.
![[image loading]](http://image.dfdaily.com/2011/8/18/634492358797666250818a252c3.jpg)
We have ze technology
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My friend buys and sells gold on the forex market. He plays with 1/100 leverage, and plays with security deposit. I watched him at his house - for a couple of seconds he won like 15,000 euro. He says it is big gambling, but he does a lot of research, plays very safe, and knows how the trends are. with 10K deposit he made about 100K in a week with ups and downs.
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On September 17 2011 00:44 Holdinga wrote:
My friend buys and sells gold on the forex market. He plays with 1/100 leverage, and plays with security deposit. I watched him at his house - for a couple of seconds he won like 15,000 euro. He says it is big gambling, but he does a lot of research, plays very safe, and knows how the trends are. with 10K deposit he made about 100K in a week with ups and downs.
lol and who was the guy who called me haphazard in the thread?!?!
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I have some questions. I have recently paid off my student loans, and I'm looking for options to invest, likely to save for a down payment. However, the cost of a basic condo here is around $300k, unless you want to live out in the burbs. I've done some reading and I cant believe how bad the banks scam you if your down payment is low. Ideally I would like to get 20% before I get a mortgage. So I basically need to find $60000, but this is a ridiculous amount of money to save from my salary alone. Assuming my income remains stable, I could save for that in about 6 years. But, to me, that seems too long. I'd like to invest and see if I can't cut that down to 4-5.
First question: am I being realistic?
second question: you guys are trading in commodities, but typically most of the stock my friends own is business stock. This part worries me a lot because i might want to invest in say, oil, but you can't invest in oil, you have to invest in an oil company. Imagine investing in BP before the spill. Adding to that, the amount of fucked up things companies do to their stock, outside manipulations, etc, I have no confidence that a small player like myself won't get drowned in a tidal wave. If it was as simple as betting on the price of something, I would feel a lot more confident.
So yeah, I am a complete noob and I really need to go sit down with my bank while they explain everything. Don't worry, I don't trust them either.
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On September 17 2011 11:09 ToxNub wrote:
I have some questions. I have recently paid off my student loans, and I'm looking for options to invest, likely to save for a down payment. However, the cost of a basic condo here is around $300k, unless you want to live out in the burbs. I've done some reading and I cant believe how bad the banks scam you if your down payment is low. Ideally I would like to get 20% before I get a mortgage. So I basically need to find $60000, but this is a ridiculous amount of money to save from my salary alone. Assuming my income remains stable, I could save for that in about 6 years. But, to me, that seems too long. I'd like to invest and see if I can't cut that down to 4-5.
First question: am I being realistic?
second question: you guys are trading in commodities, but typically most of the stock my friends own is business stock. This part worries me a lot because i might want to invest in say, oil, but you can't invest in oil, you have to invest in an oil company. Imagine investing in BP before the spill. Adding to that, the amount of fucked up things companies do to their stock, outside manipulations, etc, I have no confidence that a small player like myself won't get drowned in a tidal wave. If it was as simple as betting on the price of something, I would feel a lot more confident.
So yeah, I am a complete noob and I really need to go sit down with my bank while they explain everything. Don't worry, I don't trust them either.
These guys aren't investing. They are simply placing bets on short term trends in whatever. Be it dollars, gold or jockstraps. Like a casino, this type of behaviour is entertainment, not investment. You can win big but it is unlikely, just like a casino.
First off, pretty sure you can invest in oil and don't have to go the stock route. Understand your goals and the difference between "investing" and "trading" though. An investor will say "I see a bright future for oil because of the worlds population growth and increasing energy demand". A trader (or these guys) will say "hey there might be a storm in the gulf tomorrow that shuts refineries down for a few days casuing a short term price rise"
Sure, you could trade, get lucky and have that condo tomorrow but I am leery of all this get rich quick crap. The only people I see getting rich from it are the ones scraping a commision off the trades (ie the banks / trading houses).
You mentioned BP. Huge disaster, bad press and massive costs to fix things. 18 months later their price is down 1/3 from $60 to $40. Thats not terribad for a worst case scenario. It's also wy you don't put all your eggs in one basket.
I guess the tl/dr version of this is that you need to understand your needs (you are well on the way) Then you need to manage expectations. Check out Berkshire Hathaway and how they have done over the past 3/4 years. Some of the best minds in the world at investing there. Take their rate of return and apply it to your savings and see how long a deposit would take at that rate of return. Chances are it will be a few years. Thats ok, a condo is probably one of the biggest single purchases you will make in your entire life, it sort of makes sense a bit of graft is involved in getting there.
Then check out all these internet dudes who are making $85k in a week. Are they smarter than Warren Buffet or are they lucky? You decide.
I'll leave you with the thought that you never hear people tell you how much they lost at a casino, only which jackpots they won )
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for thoose interested in trading i can recommand the site "trade2win" wich i found a verry good forum and source of information on all aspects of trading
i have no trading positions atm, beside cash
Personally i dont believe trading stocks can be profitable unless you have expensive equipment fast acces, low transaction costs
wich would allow you to buy on the bid and sell on the ask at same time for 1 cent profit
luckily on the verry long term the stockmarket has a bias to the upside wich allows for a verry simple buy and hold strategy and currencys have clear trends wich last multiple months and can be traded relativly safely
(no hedgefund manipulation can reverse major currency trends, contrary to their playing with stock prices)
the time now seems decent to start buying (euro stocks i am talking about btw, not usa) and am looking to maybe buy some stocks for the verry long term starting buying in december with the aim to keep for 10 year+
,this would not realy classify under trading though
with currencys i think its a good time to go short euro against the dollar for the coming 6-12 months with a verry tight stop and target say 120
for trading i would only use futures btw, not options or spreadbetting
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On September 16 2011 02:33 Caller wrote:
you should delta hedge its numero uno way to abuse arbitrage
This is not arbitrage; arb opportunities don't linger and there's a reason for it. If it were that simple the arb would close in about a millisecond. Just to be clear the unit of measurement is not an exaggeration. If this was sarcasm I apologize in advance 
On September 17 2011 00:44 Holdinga wrote:
My friend buys and sells gold on the forex market. He plays with 1/100 leverage, and plays with security deposit. I watched him at his house - for a couple of seconds he won like 15,000 euro. He says it is big gambling, but he does a lot of research, plays very safe, and knows how the trends are. with 10K deposit he made about 100K in a week with ups and downs.
Tell your friend to stop doing this, even the most experienced traders cannot control this level of leverage. Compulsory stop-loss on retail fx platforms will eventually catch your friend and force him to put up further margin for his trade or wipe him out entirely.
On top of this there's the fx market itself which is not kind to "market-timing." A good example is the 1.2 floor set by the SNB recently for the CHF, a lot of people thought it could happen, but no one called the exact level nor the date. (good chart, note the time intervals: http://av.r.ftdata.co.uk/files/2011/09/snb_EURCHF.png)
edit: on original topic, I have some money in a mutual fund and got long GOOG, XOM sometime ago and haven't looked back (my only major holdings). Clearly one has done better than the other. I work in the space, but actively managing my own account always seems like gambling/too much of a hassle.
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A few things i'd like to mention
Trading is not just some "casino activity". Its a genuine skill and form of managing your money. The vast majority of people lose all their money for exactly the same reasons they lose all their money in poker - they suck at it, have bad risk management, make bad decisions that have no reasoning behind them etc.etc.
This is a TRADING thread, not an investors thread. If you want investment advice then go buy the hang seng and close your eyes for 10 years, or buy some UK gilts or something.
On EURCHF timing, you might want to have a look at this
![[image loading]](http://a6.sphotos.ak.fbcdn.net/hphotos-ak-ash4/s720x720/293490_10150285495354542_675714541_7822993_1037952058_n.jpg)
Nice "timing" eh?
I'll never TRADE on short term news, but that doesn't mean i wont hedge my risk against it. If some kind of news happens and stuff happens to my trades, then i'll be there to check if everything is going to blow up in my face or not. That is precisely why i cancelled my STOXX short as soon as it got filled
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On final notes, on top of being long dollar, im also long USDEUR for a fairly long term. EUR had been on a fairly strong rally since the 11th which started to come off yesterday and reverse it's movement, which presented a good short opportunity.
Since gold is so volatile to be a safe haven, the genuine safe haven now is dollar, given lack of CHD and JPY. Not to mention we are seeing tons of technicals in dollar's favour, and a total repeat of charts from 2008.
We can be bearish euro as a response to my view on bearish europe.
Thing's i'll be watching out for on this trade are when greece defaults, and how the rest of european middle classes react to that, and what this does to markets.
![[image loading]](http://img143.imageshack.us/img143/9175/eurodollar.png)
For those who are a fan of their charts, we are basically seeing the end of the top of their yearly cycle and the recent rally presents a good opportunity to short.
A good target would be around 1000-1500 pips here
For those of who you want to just stick with USD index (since a large portion of that is euro anyway) - i'd stick a target around 76-->81. Alot of money to be made there!
Have a good weekend and happy trading!
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i understand investing is not trading, but if investing for a 50% return in 6 years is not feasible, perhaps i need to consider trading :p
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On September 18 2011 01:17 ToxNub wrote:
i understand investing is not trading, but if investing for a 50% return in 6 years is not feasible, perhaps i need to consider trading :p
7% return a year
Go buy something that returns exactly 7% then
Probably some ABS is a good shot since they are very unpopular due to their 2008 connotations, but obviously the ratings are much better indicator now than they were back then
for a BBB rate you can get 15% so i'd guess you can get A- for 7%
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Good initiative from OP and those who have followed. I am going to state a few things to contribute to it. I am a professional and ceritifed Forex trader and I have been working for a private investment firm for six years now, soon to be seven in January 12. Man, it's amazing it's been that long.
I started trading back in March 2003 on my own, then I attended several courses from a few institutions who were also IBs (Introducing Brokers) for a couple of Brokers, FXCM and Gain Capital. After losing a lot (and I mean, a lot) of money, my trading started to slowly come together, and I slowly started to become profitable. After almost a year of consistent profits, I was noticed by one of the IB firms and they offered me a position managing funds, and that's what I have been doing ever since. I also manage money from private investors (friends, friends of friends) who do not like/do not wish to engage in business with firms.
To clear up a few things:
-Trading IS NOT a form of gambling. It is a form of investing. Gambling is putting money on the Miami Dolphins, or Real Madrid or a certain Horse in the track. Investing is either making educated decisions or allowing someone to make educated decisions about your money.
-Trading does require skill, however, these skills are more emotional, and about discipline than what you may actually think talent is needed. The interpretation of the charts IS NOT that hard; after all, a cost value can only go "up or down", so there is not much room to choose.
-It takes guts and cold blood to actually pull the trigger when you have real money on the line. Someone mentioned a poker analogy. If you think about it, trading is like going all in on a Queen high draw, with you holding Ace high, but knowing your opponent doesn't have anything. This is a skill that can't be taught. It is learned after countless errors.
-Trading offers different types of time investment possibilities. Someone mentioned people do not hold positions for more than two or three days. This is not true. Some do, and some don't. In fact, there are traders who specialize in holding positions for weeks. This is something you learn by understanding concepts like leverage, carry trade, overnight, and margin equity.
-99% of the websites are rubbish. This is a sad reality. There have been several companies that vow for their knowledge when in reality they know nothing. Like I said before, a chart can only move up or down, so that means almost anybody can predict the next move, as it's pretty much a 50-50 chance of being right against wrong. With minor exceptions, the majority of the people who talk about trading are not good at trading, they're good at talking.
-Someone mentioned winning big like $15,000 or something. Those are very rare cases, but they happen and I have met a few in my career. Nowadays, most Brokers do not allow you to over-trade / over-leverage your account, especially in the US where recently a lot of laws about this have been passed. The majority of people who go through those streaks end up losing the money. Professional traders focus on risk, not on reward. A bank or a firm won't hire you if you over-traded your account by 25%, much less anything above 100%.
-Someone mentioned about using his savings to invest in the market, I think it was someone interested in buying a house. DO NOT do this. Your savings belong in a savings account.
-Personally (and also at the firm where I work with), I advise clients and potential clients always to invest what is called EXCESS CAPITAL, meaning money you don't care to lose or for that matter, end up with less than what you initially had. NEVER invest your "life-time savings" or "savings you had for a project". Past results are not guarantee of future success, and EVERYONE has a losing streak in trading, every now and then. Like I said, good traders try to have the least amount of losing streaks.
-Someone mentioned trading is like gambling and you can lose it all when investing in trading. This is partially true and part false. If you are trading on your own, like I was when I started, you can lose all your money if several conditions take place: 1) being extremely irresponsible, 2) being careless, and the most important one 3) trading with no knowledge and discipline. If you are investing your money with someone or an investment firm, clients are offered what is called a Margin call, which is a percentage the client is willing to lose from his original investment. In my experience, I've seen most people take a 25% margin call.
-Someone mentioned "changing directions being haphazard". Most professional traders do not do this. They would get fired on the spot. Like I said before, there are short term traders, mid term, long term, and so on, and each of those focus on their time frame.
-Someone mentioned the news and how they affect price. If you go to any investment bank or firm, you will find two groups of traders: fundamentalists, who act based on the news and events of the world, and technical who act based on analysis of charting patterns. Normally these two groups DO NOT work together and manage different pots of the portfolio. Fundamental traders do not believe price movements are caused by charting patterns, and technical traders do not believe news affect price movements.
-Someone posted a chart with a label "insider trading". Inside trading is illegal and in my experience it is very rare. Most entities consider it's not worth the risk. What in reality happens is that before a news announcement is coming out, the market "consolidates" in a small range because there is no volume and no one is willing to buy or sell to avoid risk. This is a frequent pattern that happens in every major announcement, and the US unemployment data is considered to be the most important of all news announcements.
I guess I commented on most things addressed in the thread, and I could go on for hours as I enjoy my this at work so much. If you have any further questions, feel free to post them and I will try to answer them as I can. I have been a bit away the TL community, but every now and then I step by.
My advise for those who are starting:
Demo trade for as less as you can. A month max is preferable and open up a real money trading account with a well known broker.
Put a side an amount of money you are willing to lose on this venture and leverage it properly.
Get educated with a well known firm, and study hard.
Good luck!!!
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My insider trade chart was on the EURCHF announcement. Probably a lot of the pre-move is some algo's following the move but, there is almost certainly a fair amount of insider trade there for such a large move just before the news
I disagree with your view that fundamentals and technicals are usually seperated - many of the (extremely profitable) traders i've met will always at least be aware of both
Even if it is blind sentiment, it would be foolish to ignore it if the entire market is going to move on it
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Well i've only got 2 positions on right now, long dollar and long USDEUR. Looking to put in short STOXX next week sometime when the time is right
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On September 18 2011 09:11 BrTarolg wrote:
My insider trade chart was on the EURCHF announcement. Probably a lot of the pre-move is some algo's following the move but, there is almost certainly a fair amount of insider trade there for such a large move just before the news
... or it's the more obvious reason: SNB market ops pre-announcement
Not everything's a conspiracy
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Big gap moves over the weekend, all in my favour - as predicted, shit is kicking off now and most of the trades setup are coming into fruition
EUR took a massive hit as basically fake news that greece "might not" default is totally bull - everyone knows greece is going to default! They simply cannot stop it. As more and more people realise this, europe is going to look continuously gloomy
Dollar also made a massive gap up - following its pattern just like weve seen it before. There is still a loong way to go as i have a preliminary target of 81
STOXX i managed to short on the 24hr just as the market opened before the price literally tanked 50 points
I'm currently hedging this with a partial SNP long, since i expect US to take these bad hits softer than europe, but i am overall net-short
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On the lookout this week is basically to see how badly the greece default is going to turn out. we don't know WHEN it will happen, but there is some large exposure there
A much better trader than me described his opinion on this:
"When Greece defaults, soon after within the hour, drachma will be traded. Instantly, the value of drachma will be halved. That means any person with a Greek Drachma account will have their wealth halved instantly.
Greece middle classes are totally screwed. Moreover, their nation is about to become extremely poor
When this happens, think of the knock on effect - Italian and Portuguese banks and companies basically write off HUGE sums of assets. But on seeing every single Greek lose half of their wealth, what happens?
Every middle class European does a HUGE run on the bank."
So you think northern rock was bad? Lehmans was bad?
We are about to witness what happens, when an entire COUNTRY defaults, and possibly, what happens when the whole of the EU gets squeezed.
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On gold - yeah basically whilst being bullish gold, i really fucked up my risk management and timing so i cut my position previously.
Right now i only have one entry point - at 1705 / 50MA (give or take). If gold tanks this low due to speculative volatility then most technical traders will get stopped out allowing big hedge funds and others to make a big move in. 1705 is a HUGE 50% fibb level and is not to be ignored.
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What's the evidence for TA? I've heard there's some evidence for technical, but if you guys could provide some I'd be really interested (haven't really done research on it!).
For fundamental analysis you should:
- Look for firms with a small Tobin Q (function of investment availability) and high FCFs, and short these firms. Jensen's FCF hypothesis is confirmed empirically and AAR can be made on this [i.e. stat significant alpha not explained after adjusting for beta].
- Long high Tobin Q and low FCF. Empirical studies validate that investors deliver high AARs to stocks that reduce the expected agency cost of equity (by having low FCF and high q).
- Abuse the 3-12month momentum effect and the 3+ year return reversal effect. 2 anomalies not explained under the CAPM framework. The overreaction hypothesis fits the data the best, explaining the post-holding period of a momentum portfolio.
- Invest in small-cap firms whilst shorting large-cap. Small cap delivers excess alpha (alpha = 0.002, |t| > 1.96, 3 decades) after adjusting for higher market Beta. Fama-French 3 factor model internalizes this though. You may just be being compensated for hidden macro-economic risk (F-F correct this by adding another beta to their factor model). recent studies have produced such small alphas for small-cap portfolios I wouldn't even bother with this.
- Invest in high B/M firms. These are empirically proven to generate excess alphas when apposed to CAPM. This does not invalidate EMH because of the joint hypothesis problem w.r.t finding a correct re to perform a DCF on the firm's FCFs. There are others that generate excess alphas, such as P/EBITA, E/P, etc... but B/M is by far the most significant.
- Abuse imputation credits if you're not in the US, this can allow an arbitrage opportunity even with a holding period rule (depending). See: tax clientele hypothesis, dividend capture theory, ex-day price drop theory. Refer to Elton & Gruber (1970). Profits can be made on high dividend stocks, when the market isn't efficient, i.e.
(Pc-Pe)/D = (1-Tp)/(1-Tc)(1-Tg) offers arbitrage.
I would recommend avoiding TA unless you've read empirical studies justifying the technique you're using. I've heard of some stuidies doing just that, but I have no idea how TA funds would compare to small-cap funds or other alpha-target funds. I know of a study of some funds generate 1.3% excess alpha as a mean, violating Fama's EMH, but actually confirming Jensen's EMH (efficient w.r.t. information set Theta, adjust returns - search and transactoin costs). This is very high alphs I'd be hesitant to believe TA can deliver the same. Human primates are prone to fallacious beliefs, even smart people! So don't trust everything you read!
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EPT
