EPTYou could easily make a 10 - 15% run on these sectors if you buy on the dip and sell when the paradigm begins to shift.
Trading thread - Page 9
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AZN)Boy
United States57 Posts
You could easily make a 10 - 15% run on these sectors if you buy on the dip and sell when the paradigm begins to shift. | ||
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BrTarolg
United Kingdom3574 Posts
This time i really expected it to take a hard fall on friday but there seems to be huge support for european banks I'm talking about stoxx here but the markets are very correlated regardless Also part of it was a very technical setup for a potential rally, which i didn't actually believe would happen But either way i have no real viewpoint for the next coming weeks yet - in the long term i still believe we are in a bear market, but i have no idea how long this particlar section of the bear market rally would last, whereas previously i was pretty sure they would be over after a day or two edit: and yes partly of course, due to just large losses within a short period of time My shorts absolutely killed me, and the hedges i had against them just completely underperformed despite the rally Clearly the beta within my hedge was wrong or something but i havn't worked out why the spreads went so bad in particular yet. Either way i've got all weekend to analyse it but i'm taking a break right now | ||
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AZN)Boy
United States57 Posts
I agreed with you that all markets (FTSE, DOW, NIKKEI, HANG SENG) trade in the same pattern. And these indexes will likely experience a major pullback as the global economy headed into a major contraction due to a drop in demand, high unemployement accross Europe and the US. However the Federal Reserve can step in an inject major liquidity into the system. This will be very bullish for commodities. | ||
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iansanew
New Zealand86 Posts
so we can talk about statistical theory in relation to future equity curve predictions? i ended up having to teach a friend from scratch so that i could keep my mind from wandering too far. perhaps i should go to the local technical analysis meetings once a month for some trading buddies. | ||
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BrTarolg
United Kingdom3574 Posts
I'd like to learn about price action when I get there at least, but that'll be in a years time once i'm done with my masters | ||
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iansanew
New Zealand86 Posts
going to test it live this week, hope for the best! | ||
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searcher
277 Posts
I think as a student one should trade options, if you are mathematically inclined. You definitely learn the most of any asset class available to the general public. Knowing your greeks is something that it is important to any trader. On the other hand, knowing your "technicals" is not. That is one problem with trading FX. You get the idea that technicals matter. The obvious reason why technicals are used so frequently in FX is that it is almost impossible to have an edge in vanilla FX, with it having some of the most liquid markets in the world (people don't use technicals in Treasuries because it is more of a hedging market than FX spot). Spot FX is seen as a rather unappealing seat on the trading floor because you can't get an edge. You may think you do trading at home in these rather interesting times, but maintaining it consistently is difficult. Just think about how many people trade exactly the same thing, know everything you know (and plenty more if they're at an investment bank, including the positioning of large players in the market). You can't even be "fundamentally" right in an exact sense because there is no financial model that gives a "fair value" for currencies that will one day be realized (unlike with stocks, bonds, rates and derivatives). Also, it is not easy to scale your performance at home to the level that makes you valuable at a bank or hedge fund given the price impact you'll be having when you trade hundreds of millions. So in summary I think it's good to trade as a student, at the very least to get used to the psychology, learn about the processes and inner workings of financial markets. One of the mistakes people new to trading make is that they try and find out great "strategies". This usually means technicals or some stock screen. Forget that nonsense, just learn about how financial markets work instead, it is much more rewarding and will ultimately benefit you more. Finally, if you want to learn the most and potentially make the most money as a student, trade options. If you are so in love with your currencies, trade FX options. | ||
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iansanew
New Zealand86 Posts
what makes trading fx at home not scalable? if i had sufficient (so far ive seen min $1milUSD at hotspotfx) capital couldnt i just utilize institutional brokerage? "That is one problem with trading FX. You get the idea that technicals matter" so technicals dont matter? if technicals dont matter, then what kind of statistical arbitrage do you intend on performing in the fx markets? im assuming statistical analysis is a form of technical analysis. | ||
Plexa
Aotearoa39261 Posts
note: later i might post some useful resources as to how to form your own opinions and general "rules" of trading - though these are usually things you can just find online or whatever I have nothing better to do at the moment - any good place to start? | ||
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BrTarolg
United Kingdom3574 Posts
You can take FX views, but my FX views are long term, fundamental positions, that i intend to hold for several months. As such i've only had a single FX "trade" for the last 2 months and i intend to keep it going for another 3-4 months more, maybe even longer depending Simply put i had a view, and in this case the best way to express that view was in terms of an FX trade (long USD index) --- In terms of options, as fun as they are, i think the transaction costs for retail within options are extremely limiting. Though i calculated IGIndex options to be underpriced for a short period of time (highly because i suspect they skew their book in their favour since they can just pick the price they want) - in general you are facing some heavy transaction costs, especially if you want to start delta hedging or trading skews etc. Atm i have no opinions, i'm totally flat and have no trades on. I'm waiting to see what happens, and will probably take action sometime on wednesday AFTER fomc. | ||
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searcher
277 Posts
On October 09 2011 22:23 iansanew wrote: searcher, what makes trading fx at home not scalable? if i had sufficient (so far ive seen min $1milUSD at hotspotfx) capital couldnt i just utilize institutional brokerage? "That is one problem with trading FX. You get the idea that technicals matter" so technicals dont matter? if technicals dont matter, then what kind of statistical arbitrage do you intend on performing in the fx markets? im assuming statistical analysis is a form of technical analysis. $1million USD is nowhere near the scale you need to be successful in an actual bank. You are right to catch me on that point though. Statistical arbitrage in a strict sense IS a form of technical analysis, but I'd argue that some forms of it are justified. In my opinion, which is the opinion I think of most practitioners, you can trade a particular technical strategy if there is some reason why it should work. Why should Fibonacci ratios give levels at which prices turn around? There is absolutely no reason except if everyone follows Fibonacci ratios. Ditto almost all such "technicals", like moving averages, support and resistance levels, bollinger bands, candlesticks, etc. Until the vast majority of traders follow a single one of these strategies they should not interest you. On the other hand, statistical arbitrage, which general exploits the covariant properties of similar assets, does have a reason. Companies in the same industry perform in a broadly similar manner, so sales traders will, in their haphazard and inexact ways, buy and sell stocks to reflect that. Statistical arbitrage simply measures and exploits these tendencies. The approach is different. If you bring up your data feeds and run some mining algorithms and find some patterns, then find real life reasons why these patterns should exist, then backtest them, then trade them, I will call you a statistical arbitrageur and I think your method is justified and "value-adding". The framework gives the strategy a lot more justification than simply choosing out of a book of fad ideas like Elliott Wave Theory and hoping for the best. It is probably not possible to do stat arb in FX since there just aren't that many liquid pairs to trade, and few of them are correlated in a useful sense. But I'm not an expert, perhaps some people have found a way. We are not doing stat arb in FX, only in stocks/futures. | ||
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BrTarolg
United Kingdom3574 Posts
For example - long USD/EUR Heading into a recessionary deflationary period expecting recession in europe/possibly US Expecting europe to have to print a lot more money Theres a limit on how much USD can be printed now China reversing their bid market for EUR Dollar safe haven trade Other save havens (CHF, JPY, gold) no longer present a safe haven due to intervention and volatility No technicals required edit: Btw im ultra glad im 100% flat right now lol, markets are totally nuts. Like i said already, i expected a short term bull (how much i had no idea) - but i'll have a clearer idea after fomc on wednesday This could be a lot of pricing in an expected qe3 | ||
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Blix
Netherlands873 Posts
On October 11 2011 00:32 BrTarolg wrote: There are fundamental ways to trade FX too guys lol For example - long USD/EUR Heading into a recessionary deflationary period expecting recession in europe/possibly US Expecting europe to have to print a lot more money Theres a limit on how much USD can be printed now China reversing their bid market for EUR Dollar safe haven trade Other save havens (CHF, JPY, gold) no longer present a safe haven due to intervention and volatility No technicals required Maybe it's a matter of definition. What you are describing, is what i would call a trade based on a macro-economic speculation (i agree with the direction, but it's a speculation nonetheless). What i would call a fundamental trade, is some method to determine the 'value' and take a position based on whether the price is above or below this 'value'. From that perspective i'd agree that it's at least very difficult to say what is the fundamental value of a euro. (the closest thing to a fundamental valuation i have, some time ago i was in the us and it seemed that 1dollar buys about the same as 1 euro) | ||
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BrTarolg
United Kingdom3574 Posts
I expect most stuff to try and at least test the technical levels we broke through before (50MA's etc.) but this marks two things a> stocks will probably try to have a run for their 200MA b> gold gets another chance now My view is i expect things to come off and correct a little, and this will be a chance to swing-trade and buy on the touches This probably marks a pricing in of lots of good news that will be coming out, until the next country rolls over and sparks off more volatility Certainly a lot of yesterday was a heavy short squeeze also, so that will cause a little correction I will be turning bullish on the correction I will still be careful about slovakia today (this could help us with pushing us down to test the technicals again) but mostly people are expecting FOMC to be bullish --- That is, buy gold on its swing low, bullish stocks on its swing low It could be till december or january when we see a recession | ||
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iansanew
New Zealand86 Posts
On October 11 2011 00:02 searcher wrote: $1million USD is nowhere near the scale you need to be successful in an actual bank. You are right to catch me on that point though. Statistical arbitrage in a strict sense IS a form of technical analysis, but I'd argue that some forms of it are justified. In my opinion, which is the opinion I think of most practitioners, you can trade a particular technical strategy if there is some reason why it should work. Why should Fibonacci ratios give levels at which prices turn around? There is absolutely no reason except if everyone follows Fibonacci ratios. Ditto almost all such "technicals", like moving averages, support and resistance levels, bollinger bands, candlesticks, etc. Until the vast majority of traders follow a single one of these strategies they should not interest you. On the other hand, statistical arbitrage, which general exploits the covariant properties of similar assets, does have a reason. Companies in the same industry perform in a broadly similar manner, so sales traders will, in their haphazard and inexact ways, buy and sell stocks to reflect that. Statistical arbitrage simply measures and exploits these tendencies. The approach is different. If you bring up your data feeds and run some mining algorithms and find some patterns, then find real life reasons why these patterns should exist, then backtest them, then trade them, I will call you a statistical arbitrageur and I think your method is justified and "value-adding". The framework gives the strategy a lot more justification than simply choosing out of a book of fad ideas like Elliott Wave Theory and hoping for the best. It is probably not possible to do stat arb in FX since there just aren't that many liquid pairs to trade, and few of them are correlated in a useful sense. But I'm not an expert, perhaps some people have found a way. We are not doing stat arb in FX, only in stocks/futures. "$1million USD is nowhere near the scale you need to be successful in an actual bank." are the only successful fx traders located in banks? "then find real life reasons why these patterns should exist" this concept is interesting as it has many flaws, you wont know for sure why the patterns exist and it is pretty easy to do some theory fitting. as for data mining, yeah i agree pattern finding and backtesting as well as unseen data testing is essential in stat arb, but this is all based on statistical theory unlike theory fitting. | ||
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iansanew
New Zealand86 Posts
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BrTarolg
United Kingdom3574 Posts
It seems efsf will find a way to bribe slovakia I think the next turning point will be the 75WA on snp (1220) so keep an eye. Dollar is in an intermediate decline now (esp with the random china stuff going on) - so when that ends and we see a reversal of the stocks, we can go back to happy days | ||
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BrTarolg
United Kingdom3574 Posts
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searcher
277 Posts
On October 12 2011 07:18 iansanew wrote:+ Show Spoiler + On October 11 2011 00:02 searcher wrote: $1million USD is nowhere near the scale you need to be successful in an actual bank. You are right to catch me on that point though. Statistical arbitrage in a strict sense IS a form of technical analysis, but I'd argue that some forms of it are justified. In my opinion, which is the opinion I think of most practitioners, you can trade a particular technical strategy if there is some reason why it should work. Why should Fibonacci ratios give levels at which prices turn around? There is absolutely no reason except if everyone follows Fibonacci ratios. Ditto almost all such "technicals", like moving averages, support and resistance levels, bollinger bands, candlesticks, etc. Until the vast majority of traders follow a single one of these strategies they should not interest you. On the other hand, statistical arbitrage, which general exploits the covariant properties of similar assets, does have a reason. Companies in the same industry perform in a broadly similar manner, so sales traders will, in their haphazard and inexact ways, buy and sell stocks to reflect that. Statistical arbitrage simply measures and exploits these tendencies. The approach is different. If you bring up your data feeds and run some mining algorithms and find some patterns, then find real life reasons why these patterns should exist, then backtest them, then trade them, I will call you a statistical arbitrageur and I think your method is justified and "value-adding". The framework gives the strategy a lot more justification than simply choosing out of a book of fad ideas like Elliott Wave Theory and hoping for the best. It is probably not possible to do stat arb in FX since there just aren't that many liquid pairs to trade, and few of them are correlated in a useful sense. But I'm not an expert, perhaps some people have found a way. We are not doing stat arb in FX, only in stocks/futures. "$1million USD is nowhere near the scale you need to be successful in an actual bank." are the only successful fx traders located in banks? "then find real life reasons why these patterns should exist" this concept is interesting as it has many flaws, you wont know for sure why the patterns exist and it is pretty easy to do some theory fitting. as for data mining, yeah i agree pattern finding and backtesting as well as unseen data testing is essential in stat arb, but this is all based on statistical theory unlike theory fitting. Of course there are difficulties in "theory fitting" and it is vulnerable to all sorts of biases, but that's the nature of speculation. Your criticism applies to any investment strategy except one where you identify a statistical hypothesis at random and trade on it. And of course there are successful FX traders outside of the institutions, but ultimately trading at a financial institution is the most interesting way to trade, and anyone who wants to take their trading seriously should try to experience it at some point. Of course many institutions breed all sorts of incompetence but generally that's offset by an environment that offers far more in people, information, products and systems. Furthermore, to make the amounts of money that many traders aspire to you need to be managing a lot of money, at which point you're either at a financial institution or you've become one. My point was only that if that's what you're aspiring to do one day, don't be misled by your successes at home, because it doesn't reflect the experience on a bigger stage. | ||
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BrTarolg
United Kingdom3574 Posts
still bear markets are v difficult to make money, hard to predict stuff and extremely volatile Still havn't opened any trades yet - i was tempted to do snp but i didn't wanna do a purely technical trade despite it being correct Could easily rally past and break for no reason in the next few days keep an eye out anyway | ||
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