Starting with gold - break the 1700 level, then hit the 200MA and jump back up tick
Stoxx - false rally and come off hard tick
USD - touch 200MA, have rally of lifetime, tempeorary swing low to add to longs tick
So for those of you following this and trading with me, congratulations you are now swimming in money!
Well, i am at least.
But seriously, if you have a pension fund or savings that follow stocks, liquidate it now into cash or safe bonds or something. Don't tell me i didn't warn you!
----- After seeing a few economics and other threads pop up about the economy etc, and being vastly dissappointed at the quality of them (random arguments about nothing, major conspiracies about NWO lol), i wanted to open a thread where people can put their money to their mouth.
Please note that as a disclaimer, trading, spread betting or other similar financial activities are RISKY and should only in general be done with the advice of a professional. Anything you see in this thread is the personal opinion of users only and should NOT be taken as trading advice. I am not responsible if you lose money for other peoples bad decisions or advice!
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I've been interested in trading for a long time, in particular, i see it as a culmination of understanding of economics, psychology, mathematics and political science.
I don't trade to make money, i only do it to express my views about the markets and how it moves. Eventually yes, one day i would like to trade to make vast sums, however i am a long away off that.
I personally do not "day trade" - i believe these are clever ways of you making as many bets as possible and basically paying the spread each time. The positions i take can be for all sorts of reasons - some long term, some short term, some (very) short term. Whenever i make a trade, i do so because i've compiled a list of reasons, either supporting or rejecting a view i have on the market. In particular, i'll keep looking at the news, what information is coming out, and constantly reassess my view, and as a result, my position to what i feel about the current market.
You don't neccessarily have to be an active trader to post in this thread (i certainly don't make much money out of it!) - but it would be good to know what your experience is when you post.
I've created this thread for people to share their specific views and trade ideas in the market. I have NOT created this thread so that people can argue whether the fed is controlling the world or whether its all a big conspiracy to take over our lives. So go ahead, post your trade ideas, your current positions. It would be good to hear specifics (levels, maybe even limits and stops) - tell us WHY you have done a particular trade.
Other forums tend to be full of bots advertising their companies and full of trash in that it rarely has peoples actual opinions in it. Trading is about information gathering, and i'd like to hear your actual views.
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
Can you explain what you mean by you trade to express your views??
also, i'm curious why you'd do gold over silver if you're not clunkin down serious change. I'm pretty sure both will go up a bit more. Just make sure you're strapped when you go to cash in because the world will probably be ending
On September 14 2011 05:02 Hawk wrote: Can you explain what you mean by you trade to express your views??
also, i'm curious why you'd do gold over silver if you're not clunkin down serious change. I'm pretty sure both will go up a bit more. Just make sure you're strapped when you go to cash in because the world will probably be ending
I trade to basically keep my brain fresh. I just have a passion for trying to understand and follow markets. By making trades i am basically putting (a small) amount of money to where my mouth is. If my views are correct, i make money, if they are wrong, i lose money.
In terms of gold - firstly i use spreadbetting platforms so there is no issue in terms of the nominal amounts i am buying - you can control your leverage to exactly dictate how magnified your wins or losses may be per point move in gold or silver. That isn't the only reason though - i do gold because everyone is focusing on gold and there is more speculative money in it. In a way, i understand gold better than i do silver.
If banks really are dumping gold - there is only a limited amount they can hold the price down since gold is finite unlike money. I believe markets are going to turn out VERY ugly in the next few weeks so the best way to trade this view is to long gold. Silver has a lot of other aspects to it, for example, it is also used as an industrial metal. These are thing's i don't want to factor into my view, so it would be best for me to avoid silver in that case.
So why exactly will gold be worth anything if the economy completely collapses? Gold has no inherent value in an emergency. It only has the value given to it by society, just like paper currency. In a complete economic meltdown, I would expect gold to be fairly useless.
How is your gold stored? I assume if it's intended to be a hedge against economic disaster, you have physical possession of it, yes? Otherwise, how do you intend to collect it when you need it?
And no, I'm not trolling, I seriously want answers to these questions, although I doubt they'll make sense.
On September 14 2011 05:20 JingleHell wrote: So why exactly will gold be worth anything if the economy completely collapses? Gold has no inherent value in an emergency. It only has the value given to it by society, just like paper currency. In a complete economic meltdown, I would expect gold to be fairly useless.
How is your gold stored? I assume if it's intended to be a hedge against economic disaster, you have physical possession of it, yes? Otherwise, how do you intend to collect it when you need it?
And no, I'm not trolling, I seriously want answers to these questions, although I doubt they'll make sense.
In an apocalyptic, zombies invade, etc.... scenario yeah you have a point. Going long on gold tends to be the right move since it has historically anti-correlated with inflation. Given the Federal Reserve's behavior regarding markets and given the stability of the economy, inflation is a pretty plausible bet. So to make money off of inflation, you go long on gold.
What BrTarolg was talking about, betting on spreads, is you can combine puts and calls to essentially bet that the price of an asset or equity will fall into a targeted range.
These 3 spreads are the most common since you're essentially having a very controlled bet that the price is going to be above an amount, below another amount, or between two values. Another possible spread is like the reverse butterfly, where you bet that the price ends up not in an interval.
When you trade in gold, you typically trade using options or futures. If you're doing any kind of real trading it would be absurd to actually buy the physical yellow metal.
On September 14 2011 05:20 JingleHell wrote: So why exactly will gold be worth anything if the economy completely collapses? Gold has no inherent value in an emergency. It only has the value given to it by society, just like paper currency. In a complete economic meltdown, I would expect gold to be fairly useless.
How is your gold stored? I assume if it's intended to be a hedge against economic disaster, you have physical possession of it, yes? Otherwise, how do you intend to collect it when you need it?
And no, I'm not trolling, I seriously want answers to these questions, although I doubt they'll make sense.
In a total economic meltdown, gold has value because people THINK it has value. It's no different from most currencies. Certainly it might be that gold has a big crash because it is full of speculative money, though i feel that is quite a long way off - certainly in the current economic climate. I will have gotten out of my gold position by that point be sure of that! If everyone thinks it has value then you will be sure i will be there to buy it all the way up, and sell it when everyone thinks it has no value. Certainly this is a good way to make a lot of $$$ (the buy low sell high strategy) Then it could be the next thing, who knows. Speculate on corn or oil, that might retain its value relative to everything else maybe
If you genuinely, and truly believe that gold is totally worthless in an economic meltdown, now is a GREAT time to short gold. People are willing to give you thousands of $$$ which you can trade for useful things, and then you go "haha, gold is worthless now, you just gave all of that to me for free" Like i said - you have a view - turn that into a trade idea and make money out of it.
Just FYI the way spreadbetting (or any kind of leveraged financial bet) works is that for every dollar move in gold, i either gain or lose x dollars/GBP/currency on my account. There is no physical trade or hedging (unless i am a huge client or smth)
edit: note, i DONT trade options or bull/bear/butterfly spreads. Spreadbetting means something else! I do like doing a lot of research on options, however trading them requires ALOT of mathematical knowledge (in particular theres a whole range of stuff you need to know about - delta hedging, what all the greeks mean, volatility skew and smiles, implied volatility premiums etc.etc.) - this kind of stuff is for the absolute professionals only
Ok, maybe my straightforward, analytical mind just doesn't function in the right direction to understand this...
You're telling me that to survive an economic meltdown, you buy a piece of paper that says you think gold will be worth a certain amount of money when that certain amount of money becomes worthless?
I mean, wouldn't investing in canned goods and a generator make more sense than buying something that has the potential to revert to being a shiny rock?
Bear in mind, these questions are coming from the rather practical mind of an ex-soldier, who thinks about food and water as priorities.
On September 14 2011 05:20 JingleHell wrote: So why exactly will gold be worth anything if the economy completely collapses? Gold has no inherent value in an emergency. It only has the value given to it by society, just like paper currency. In a complete economic meltdown, I would expect gold to be fairly useless.
How is your gold stored? I assume if it's intended to be a hedge against economic disaster, you have physical possession of it, yes? Otherwise, how do you intend to collect it when you need it?
And no, I'm not trolling, I seriously want answers to these questions, although I doubt they'll make sense.
In a total economic meltdown, gold has value because people THINK it has value. It's no different from most currencies. Certainly it might be that gold has a big crash because it is full of speculative money, though i feel that is quite a long way off - certainly in the current economic climate. I will have gotten out of my gold position by that point be sure of that! If everyone thinks it has value then you will be sure i will be there to buy it all the way up, and sell it when everyone thinks it has no value. Certainly this is a good way to make a lot of $$$ (the buy low sell high strategy) Then it could be the next thing, who knows. Speculate on corn or oil, that might retain its value relative to everything else maybe
If you genuinely, and truly believe that gold is totally worthless in an economic meltdown, now is a GREAT time to short gold. People are willing to give you thousands of $$$ which you can trade for useful things, and then you go "haha, gold is worthless now, you just gave all of that to me for free" Like i said - you have a view - turn that into a trade idea and make money out of it.
Just FYI the way spreadbetting (or any kind of leveraged financial bet) works is that for every dollar move in gold, i either gain or lose x dollars/GBP/currency on my account. There is no physical trade or hedging (unless i am a huge client or smth)
In a "total" economic meltdown, I doubt most people think gold would have inherent value. In the situation where inflation explodes, gold may have a lot of speculative value because of its historic role (e.g. bullion). But in terms of liquidity, cost of carry, intrinsic value (i.e. industrial use), gold would not be the money of choice in a zombie apocalypse. I'm thinking anything energy-related would be better.
On September 14 2011 05:33 JingleHell wrote: Ok, maybe my straightforward, analytical mind just doesn't function in the right direction to understand this...
You're telling me that to survive an economic meltdown, you buy a piece of paper that says you think gold will be worth a certain amount of money when that certain amount of money becomes worthless?
I mean, wouldn't investing in canned goods and a generator make more sense than buying something that has the potential to revert to being a shiny rock?
BrTarolg is sort of using lay men's terms when he is talking about being right or wrong. When you buy a piece of paper that you think gold will be worth a certain amount of money, you are betting that other people will THINK that gold will be worth a certain amount of money. You can have views regarding the stock market or about zombie apocalypses, but ultimately the payoff of your bet goes through the channel of the price of that gold, which is determined only based on what people are willing to pay for it and sell it for. In a perverted example, you can live in a world of retards where you have insider information that a commodity X is going to explode in price because you know a hurricane is going to hit the main producer of X. You can still lose the bet if the hurricane hits, if everybody is retarded and the producers of X suddenly decide they are willing to sell for LESS.
On September 14 2011 05:33 JingleHell wrote: Ok, maybe my straightforward, analytical mind just doesn't function in the right direction to understand this...
You're telling me that to survive an economic meltdown, you buy a piece of paper that says you think gold will be worth a certain amount of money when that certain amount of money becomes worthless?
I mean, wouldn't investing in canned goods and a generator make more sense than buying something that has the potential to revert to being a shiny rock?
Bear in mind, these questions are coming from the rather practical mind of an ex-soldier, who thinks about food and water as priorities.
Indeed if you have this kind of view, you should certainly make a bet that is long useful, traded commodities. I mean, there is nothing stopping you going long corn or agriculturals - one might say that is not such a bad trade right now
I am only expressing my own PERSONAL view, you don't have to believe it
I guess my issue with the whole concept of buying theoretical commodities vs. physical commodities is this: What good does your piece of paper do you when the green pieces of paper you can trade it for are suddenly only good for kindling?
In other words, if the dollar suddenly becomes federal issue toilet paper, what good does your thousands of dollars worth of gold you can't take possession of do you?
I wouldn't mind understanding, I just don't yet. Maybe I'm looking at too black and white of an economic situation. But it seems that if currency becomes useless, having something you can trade for currency would likewise be useless.
On September 14 2011 05:41 JingleHell wrote: I guess my issue with the whole concept of buying theoretical commodities vs. physical commodities is this: What good does your piece of paper do you when the green pieces of paper you can trade it for are suddenly only good for kindling?
In other words, if the dollar suddenly becomes federal issue toilet paper, what good does your thousands of dollars worth of gold you can't take possession of do you?
Because gold has an exchange rate to every currency, not just the dollar. If the dollar collapses and an OZ of gold suddenly costs 10 million dollars, it will still probably cost whatever it cost before in Euros (unless the Eurozone also collapses, which if the dollar collapses is probably pretty likely too).
On September 14 2011 05:41 JingleHell wrote: I guess my issue with the whole concept of buying theoretical commodities vs. physical commodities is this: What good does your piece of paper do you when the green pieces of paper you can trade it for are suddenly only good for kindling?
In other words, if the dollar suddenly becomes federal issue toilet paper, what good does your thousands of dollars worth of gold you can't take possession of do you?
Because gold has an exchange rate to every currency, not just the dollar. If the dollar collapses and an OZ of gold suddenly costs 10 million dollars, it will still probably cost whatever it cost before in Euros (unless the Eurozone also collapses, which if the dollar collapses is probably pretty likely too).
Yeah, but you're going to get ripped off by people in those other countries, because they can rip you off. Why should they give you what the gold is worth there when they can just wait until you're desperate to eat and give you half what the gold is worth?
Kind of like pre-union labor in the US. People who had jobs available didn't have to pay much, because the people they hired were willing to take anything, once they got hungry enough.
I think I'm just too cynical to see the value of this sort of thing for economic collapse.
On September 14 2011 05:41 JingleHell wrote: I guess my issue with the whole concept of buying theoretical commodities vs. physical commodities is this: What good does your piece of paper do you when the green pieces of paper you can trade it for are suddenly only good for kindling?
In other words, if the dollar suddenly becomes federal issue toilet paper, what good does your thousands of dollars worth of gold you can't take possession of do you?
Because gold has an exchange rate to every currency, not just the dollar. If the dollar collapses and an OZ of gold suddenly costs 10 million dollars, it will still probably cost whatever it cost before in Euros (unless the Eurozone also collapses, which if the dollar collapses is probably pretty likely too).
Yeah, but you're going to get ripped off by people in those other countries, because they can rip you off. Why should they give you what the gold is worth there when they can just wait until you're desperate to eat and give you half what the gold is worth?
Kind of like pre-union labor in the US. People who had jobs available didn't have to pay much, because the people they hired were willing to take anything, once they got hungry enough.
I think I'm just too cynical to see the value of this sort of thing for economic collapse.
You seem to think there is no middle ground between a smoothly flowing economy and a zombie apocalypse. In a zombie apocalypse, nothing holds. Everybody is for themselves; that piece of paper is worth nothing.
In a case where the dollar inflates beyond usefulness, people in the US will just use other more stable currencies for trading. Much of Russia uses dollars, for example, to shield themselves from the instabilities of the Russian native currency.
On September 14 2011 05:41 JingleHell wrote: I guess my issue with the whole concept of buying theoretical commodities vs. physical commodities is this: What good does your piece of paper do you when the green pieces of paper you can trade it for are suddenly only good for kindling?
In other words, if the dollar suddenly becomes federal issue toilet paper, what good does your thousands of dollars worth of gold you can't take possession of do you?
I wouldn't mind understanding, I just don't yet. Maybe I'm looking at too black and white of an economic situation. But it seems that if currency becomes useless, having something you can trade for currency would likewise be useless.
Yes, in the case you describe, money is totally worthless.
But! This thread is about making money - sorry! I don't want to derail any further so i'm going to put up one of the trade ideas i've had for a bit
My thought is to go long dollar at 7625. In terms of technicals, its a pretty strong fibb level and on top of that its the 200 day MA, so i expect to see some strong support here
Last time we saw this was... 2008! In 2008 DOLLAR was at its all time 3 year low, and then began to consolidate and rocket skyhigh
This time i think we are seeing the same thing. Dollar at its all time low, and its consolidating, and we are seeing the beginning of its upswing. I think its totally superman rally in the last bunch of days has exhausted a bit, so i expect it to drop down through the 7700 level. Once it hits 7625 i'm going to go long again and i think it will start a new upwards cycle
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The great thing about this thread is you can look into past posts and find out just how wrong or right me or other people are! Hopefully in a few months time i'll look back at these posts and pat myself on the back for making good trades haha
On September 14 2011 05:41 JingleHell wrote: I guess my issue with the whole concept of buying theoretical commodities vs. physical commodities is this: What good does your piece of paper do you when the green pieces of paper you can trade it for are suddenly only good for kindling?
In other words, if the dollar suddenly becomes federal issue toilet paper, what good does your thousands of dollars worth of gold you can't take possession of do you?
Because gold has an exchange rate to every currency, not just the dollar. If the dollar collapses and an OZ of gold suddenly costs 10 million dollars, it will still probably cost whatever it cost before in Euros (unless the Eurozone also collapses, which if the dollar collapses is probably pretty likely too).
Yeah, but you're going to get ripped off by people in those other countries, because they can rip you off. Why should they give you what the gold is worth there when they can just wait until you're desperate to eat and give you half what the gold is worth?
Kind of like pre-union labor in the US. People who had jobs available didn't have to pay much, because the people they hired were willing to take anything, once they got hungry enough.
I think I'm just too cynical to see the value of this sort of thing for economic collapse.
You seem to think there is no middle ground between a smoothly flowing economy and a zombie apocalypse. In a zombie apocalypse, nothing holds. Everybody is for themselves; that piece of paper is worth nothing.
In a case where the dollar inflates beyond usefulness, people in the US will just use other more stable currencies for trading. Much of Russia uses dollars, for example, to shield themselves from the instabilities of the Russian native currency.
Yes, I've seen this in action. The problem is, when you get the first influx of those currencies, you won't get full value for goods or services. Everybody will try to short people, because they have the currency with worth, so they can determine, locally, what goods and services are worth. And everybody will end up getting shorted by the "real" value of that currency, leaving them with virtually nothing.
Not trying to derail, just to understand. I see it for making money short term, but for long term, it doesn't really seem any more stable than any other theoretical.
OP on your last trade you gave technical reasons, which I can't dispute, and also pointed to 2008 for the uptick. But don't you think the market wasn't able to price in the meltdown in 2008? I mean few people thought Lehman was actually going under. Whereas now, as soon as you see the 9.1% unemployment, the market tanks but not nearly as much as in 2008, because a lot of the fear is priced in. Where do you think a new spike in gold will come from? Are you trying to price in 10% unemployment for September?
On September 14 2011 05:41 JingleHell wrote: I guess my issue with the whole concept of buying theoretical commodities vs. physical commodities is this: What good does your piece of paper do you when the green pieces of paper you can trade it for are suddenly only good for kindling?
In other words, if the dollar suddenly becomes federal issue toilet paper, what good does your thousands of dollars worth of gold you can't take possession of do you?
Because gold has an exchange rate to every currency, not just the dollar. If the dollar collapses and an OZ of gold suddenly costs 10 million dollars, it will still probably cost whatever it cost before in Euros (unless the Eurozone also collapses, which if the dollar collapses is probably pretty likely too).
Yeah, but you're going to get ripped off by people in those other countries, because they can rip you off. Why should they give you what the gold is worth there when they can just wait until you're desperate to eat and give you half what the gold is worth?
Kind of like pre-union labor in the US. People who had jobs available didn't have to pay much, because the people they hired were willing to take anything, once they got hungry enough.
I think I'm just too cynical to see the value of this sort of thing for economic collapse.
You seem to think there is no middle ground between a smoothly flowing economy and a zombie apocalypse. In a zombie apocalypse, nothing holds. Everybody is for themselves; that piece of paper is worth nothing.
In a case where the dollar inflates beyond usefulness, people in the US will just use other more stable currencies for trading. Much of Russia uses dollars, for example, to shield themselves from the instabilities of the Russian native currency.
Yes, I've seen this in action. The problem is, when you get the first influx of those currencies, you won't get full value for goods or services. Everybody will try to short people, because they have the currency with worth, so they can determine, locally, what goods and services are worth. And everybody will end up getting shorted by the "real" value of that currency, leaving them with virtually nothing.
Not trying to derail, just to understand. I see it for making money short term, but for long term, it doesn't really seem any more stable than any other theoretical.
As OP stated. If money is worthless, there's not much to talk about. Let's continue this thread with the assumption that we are looking to make money.
edit: lol too much gold - i wrote GOLD instead of dollar so i'll correct that. Maybe thats what confused you
You've got a good point - i think a lot of people didn't realise how bad 2008 was going to get.
I would say part of it is the market is currently very technically driven - HFT's and algos and speculators are running a large part of the show, so in a way right now isn't such a bad time to follow the technicals.
Part of it is i feel that governments and europe in particular are still trying to print the lie that "its all OK" and i'm willing to trade against them and take them up on it.
If we see 2008 all over again, then probably once things get into full gear then gold might lose a lot of its speculative value (buy the rumour sell the fact wee) but tbh i'm not totally sure
I'm not a professional in the market so my views certainly arn't perfect, but i do like putting them out there for critique
On September 14 2011 06:20 BrTarolg wrote: edit: lol too much gold - i wrote GOLD instead of dollar so i'll correct that. Maybe thats what confused you
You've got a good point - i think a lot of people didn't realise how bad 2008 was going to get.
I would say part of it is the market is currently very technically driven - HFT's and algos and speculators are running a large part of the show, so in a way right now isn't such a bad time to follow the technicals.
Part of it is i feel that governments and europe in particular are still trying to print the lie that "its all OK" and i'm willing to trade against them and take them up on it.
If we see 2008 all over again, then probably once things get into full gear then gold might lose a lot of its speculative value (buy the rumour sell the fact wee) but tbh i'm not totally sure
I'm not a professional in the market so my views certainly arn't perfect, but i do like putting them out there for critique
I'm skeptical of technicals for the very reason you gave. Speculating against fulltime speculators or algos that have instantaneous access to those technicals and instantaneous execution has a losing expectation. Like in SC, if you're playing a mirror build against Jaedong, you're going to have a very hard time.
I think the best way to make money is to have a founded, but contrarian viewpoint and put money behind that viewpoint. Hope you get lucky and think of something (or have access to nonpublic indicators! >_<) the algos don't take into account or take into account wrongly
-edit Oh you posted USD/Euro, okay that actually makes sense to me, since I'm betting on a lot of Euros being printed, etc. Altho.... the trade is saying the US will relatively print less dollars, which I dunno, QE3 baby!!!
What are your thoughts on the chance of collapse in Greece/Italy/Spain? Equally important is how big the contagion effect will be?
According to seekingalpha (http://seekingalpha.com/article/293152-europe-on-the-brink), Greece 10-yr yields are almost 20%, which is pretty ludicrous, but don't you think Merkel eventually HAS to bail them out? Germany can't risk the whole Euro collapsing because of a few countries.
Basically what I'm saying is that Germany will do what the US has been doing, guarantee debt and print a ton of money. This works for quite a long time. It will increase the value of Gold but spikes don't happen because of inflation, only sudden crisis. Were you planning on holding onto Gold for a while?
BTW I don't trade macro, I just try to look for value-bargains in this climate. I guess I believe in Fundamentals and think technicals are just coin flipping. I also think putting money in companies and letting them grow is better than assets with no intrinsic value.
I think greek 1yr yield is above 100% right now. CDS prices are showing above a 95% chance of default
I think its pretty certain that greece is totally going to default. In terms of the rest of europe, i'm not really too sure how its all going to unwind. I think if it wasnt for greece then the rest of piigs wouldn't have gotten into too much trouble in the first place. Probably say hello to the return of drachma and re-evaluate my position once that happens
I guess my exit on gold is just a psychological/techincal one - i'll cut some just before 2000 and i'll cut some again at 2090. But in general i think it is fundamentally strong to be bullish gold
edit: yeah with the USD/EUR trade im basically betting on short term euro depreciation. Like i said, i'm pretty fuzzy on holding that much longer than what i've shown because of the dollar exposure.
Pretty interesting thread, even though I'd say TL's general public is not much into this kind of deal, I still hope we can get this somewhere.
I have a question for you. You stated that you're actually not buying the "yellow metal" directly but 'options' or 'futures' (which in my completely pedestrian understanding, sounds like you are just trading some sort of 'checks' that hold gold value): how do you actually do it? I've been pondering for a while go buy some gold, since it seems logical that with all the economic storm it will only rise in price, but buying an actual piece of metal and keeping it under my pillow doesn't quite sound like the best option.
What I'm asking here is: can you do it yourself, maybe via internet, or do you need to go through some sort of third party agents like a bank or a more specialized institution?
On September 14 2011 08:17 Ender985 wrote: Pretty interesting thread, even though I'd say TL's general public is not much into this kind of deal, I still hope we can get this somewhere.
I have a question for you. You stated that you're actually not buying the "yellow metal" directly but 'options' or 'futures' (which in my completely pedestrian understanding, sounds like you are just trading some sort of 'checks' that hold gold value): how do you actually do it? I've been pondering for a while go buy some gold, since it seems logical that with all the economic storm it will only rise in price, but buying an actual piece of metal and keeping it under my pillow doesn't quite sound like the best option.
What I'm asking here is: can you do it yourself, maybe via internet, or do you need to go through some sort of third party agents like a bank or a more specialized institution?
Either you do it through a broker, which facilitates financial transactions for you - for each transaction you pay a commission fee. Brokers are generally what people use for buying stocks or making investments etc
You can also do it via spreadbettors or CFD (contract for difference). With these guys you generally trade derivatives which can be leveraged. You don't pay commission with these guys, instead you pay spreads (buying and selling price are different) They tend to be popular nowadays since they have lower "real" commission and give you a lot more flexibility in terms of your leverage and bet sizes. They make trading a lot easier for a common person, but as a result they make losing your money a lot easier. What does that mean? A derivative is a financial product which has its value derived from the underlying asset. So the price of a future is usually derived from the price of the actual thing. For all intents and purposes, if you want to be long gold, you can long gold. If you want to buy a gold option, you can do that too Leverage basically lets you magnify your gains and losses. Since you dont expect gold to move much more than say, 300 dollars EVER, it is somewhat unreasonable that in order to profit from owning gold you have to pay 1800 dollars for an ounce of it - your gains or losses are small relative to your investment. So instead of buying an actual ounce of gold, you trade a derivative of gold (so you arn't buying the actual thing, you are just betting on its value). I can say that for every 1 dollar move in the price of gold, i want to gain 10 dollars - at the same time i will loose 10 dollars for every 1 dollar gold moves down. To make this kind of trade you have to deposit a "margin" to cover your potential wins and losses. The margin required is usually much smaller than the nominal amount of gold you are buying - to be long say, 5 oz of gold (or 5 dollars a point), you only really need maybe 200 dollars margin. This margin can increase however if the market moves against you - but it means you can use the rest of the money in your account to make other trades
In reality, spreadbets are simply useful because they are clean ways of trading your view, and you can control exactly how much you want to win/lose. Just be careful because most people find it TOO easy and start trading willy nilly and lose all their money
There are plenty of spreadbetting companies and brokers willing to facilitate your business haha. In general, i would be extremely careful about your investments, and always talk to a professional. By no means are my spreadbets actual investments for me, these are speculative bets i make
My main investment is me sticking my cash in a bank account, maybe buying some UK gilts - i.e the safest investments possible. Perhaps i could say, spend 10% of that on buying gold, however that would be nominal gold, and not spreadbet (i.e for every oz of gold i want to own, i have to pay the full amount)
In a spreadbet instead i would only have to pay 40 dollars to "own" an oz of gold, as i am trading the difference between the opening price and the closing price.
Looks like europe is really going to take a hard hit soon. On top of that, correlation between indexes has risen to 92% - so basically there is very little difference between buying asian, european or american stocks right now - they are all moving up and down in unison I guess thats a sign just how much people are reacting to the news and just how on the edge of their seat everyone is about europe
Who knows how exposed the rest of the world is to europe right now. Certainly we know china has a fair amount of exposure, though they still have trillions on their balance sheet.
It seems that (as usual) the banks are getting hit hardest the first. Soc gen, bnp, credit agricole are all taking massive hits and rumours are that they will be downgraded.
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No new trades in my mind atm. Dollar printed its exhaustion candle so i am still looking to buy when it drops down again. Gold seems very reluctant to move, though they could be some big swings in the next few days so sit tight
Since I'm brand new into this, do you have any suggested reads for a beginner like me? I'm a physics major so my understanding of economics is very thin and generic. I understand trading is mostly about information management and risk assessment (much like poker xD), but I'd greatly help to have some sort of lingo dictionary for those of us unfamiliar with the terms being used in the discussions.
Uploaded with ImageShack.us Purely a "hooray chart patterns" trade. Probably no professional would ever do this but it worked last time. The first red circle is where i sold and then i bought at 1.3600 Now i'm selling again at the second red circle
Sue me if i just believe in trend channels haha.
I'm only putting a very small amount of money on this, its more just a chart patterns exploration thing more than anything else.
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On a side note, i'm looking for a good opportunity to short euro stoxx sometime this week, and this will be a fairly long term hold
On September 14 2011 20:02 Ender985 wrote: Hey, thanks for the info, much appreciated.
Since I'm brand new into this, do you have any suggested reads for a beginner like me? I'm a physics major so my understanding of economics is very thin and generic. I understand trading is mostly about information management and risk assessment (much like poker xD), but I'd greatly help to have some sort of lingo dictionary for those of us unfamiliar with the terms being used in the discussions.
I got interested in trading back about 4 years ago due to a combination of my father's occupation and also because the market was doing a bit of moving, which I thought was exciting. At the time I was just a student with little to no concrete economic knowledge beyond some econ classes and what I had gained reading a few news and wiki articles (so basically what you described as "thin and generic"). So I started with that - news and wiki articles.
I began reading every single article (and I mean EVERY article) on major news sites like money.cnn.com, money.msn.com, finance.yahoo.com, reuters.com/finance, bloomberg.com/news/finance, etc. It almost got habitual and addicting to the point where I was averaging 4 to 5 hours a day reading articles. When I looked at graphs, I began to wiki everything I didn't understand, and I searched the definitions of all the technical indicators and buttons. With that in mind I was still aware of the fact that investing is not much better than gambling, and that most investment professionals don't do much better than a chimp would in picking positions. Things like mutual funds will give you broad market coverage and a relatively high level of safety, but that wasn't what I was planing playing around in the market for.
I started doing some virtual trading to test my hand at things, and I was pretty satisfied with my results. So I went to my old man and got some real money to play around with. By this time the economy was tanking, and I was eager to "ride it down". Needless to say I began shorting like a madman, capitalizing off the financial sector and the auto industry. Had quite a bit of success in big oil since their movements are a bit more predictable, and I even got ballsy enough to play around with leveraged ETFs in energy. I figured international trade would suffer from the recession, so I bet against it. Housing market was obviously in trouble, so I bet against it. You get the point.
Essentially a person just needs to take the time to research what is going on in the international markets, and think about what kind of effect it will have on certain industries and in what time frame. It is also important to recognize bad advice (I just stayed away from formal advice in general), and to recognize when information is irrelevant to your investment strategy. Plenty of sensationalist journalists were trying to convince people that the price of oil would be well over 200USD two years from that time. If you took the time to dissect their reasoning, you would see that 90% of it was conjecture, and the other 10% of it was based on what OPEC was doing next week. I used the information about what OPEC was doing at their next meeting, but I sure as hell wasn't going to believe any garbage that journalist had to say about something two years away. On top of that, the long term projection for oil was of little use to me since I was a trader, and while that information is useful for predicting trends, trends don't do jack if you need to know what oil is doing 24 hours from now. For that you have to research information on meeting dates, upcoming mergers and acquisitions, recent price shocks in other industries, new technology purchases, any major discoveries, any shakeups in the company management, any government policy changes directly affecting the industry... etc. Some market reactions are more arbitrary than anything (it is important to remember that perceptions are a huge driving force). Amusingly the market will almost always drop in the hours after a politician opens his mouth, with rare exceptions such as the announcements on QE back when the economy as a whole was in deep shit and any news was good news.
All in all, I would say that investing doesn't require much work or knowledge to produce modest returns. Trading, however, requires an enormous amount of work to produce very respectable returns (if you're interpreting information well), but the slightest bit of slacking can tank your portfolio. I could only take about 4 months of it before I took my gains and called it quits. It's a fun experience, but you need to be willing to throw the time into it and keep your head straight when things don't go your way.
Hopefully my little personal story gave you (and others I suppose) some sort of insight into how to go about learning these things and what "getting involved" requires. It wasn't exactly a formal way of going about learning this stuff, but I'm of the opinion that the best exposure is by diving into the thick of it and just exploring. I know I kind of went beyond your question but hopefully it helped.
On September 15 2011 00:11 TheDraken wrote:Hopefully my little personal story gave you (and others I suppose) some sort of insight into how to go about learning these things and what "getting involved" requires. It wasn't exactly a formal way of going about learning this stuff, but I'm of the opinion that the best exposure is by diving into the thick of it and just exploring. I know I kind of went beyond your question but hopefully it helped.
Thanks a lot for the great read. It sounds exactly as what I tend to do when I become interested in a new subject, basically do the research and teach myself. I guess this is one of the reasons why I became a PhD student. But over the course of the last few years, I also learned that directly asking the people who have been on the field for much longer than you can save you some months of trial and error and, more importantly, set you on the right direction.
I'm specially interested in the "virtual trading" you mentioned. I heard that there are some programs that let you play 'virtual' money in the real trade market, using real-time data. It sounds like a great exercise and something that can teach you a lot, but I think these kind of programs are usually restricted to the trading compaines, ie you can not get your hands in one unless they hire you. Is that true?
Also, you said to "stay away from formal advice in general". I understand in this business it is more true than ever that "information is power" and that there is plenty of naively wrong or plain misleading information around, so it is fundamental to trim the good info from the bad. So you mean to stay away from the general press, the specialized press, the official statements by the 'big players' or something different alltogether?
All in all, to dive into the real trade market really sounds like it would take far too much time for me, this is why I was thinking of simply investing in the gold market, where I think trends are going to be generally positive and there is a lot less uncertainty involved. Maybe then I'll feel the thrill and want to get more involved, but for now I think I'll start on the safe side.
On gold - gold seems to refuse to budge and seems to be printing a downwards triangle - bad technical to see
However recent markets have been rallying like crazy, and i personally feel this is irrational. All the indicators are pointing to a false rally and an impending market crash - europe is totally doomed and no matter how much rumours or "we will bail ourselves out" news there is, they literally cant stop greece from defaulting, as they have run out of money. Not only that, any austerity measures that have been attempted have totally and utterly failed, and it looks like china is beginning to pull out of what they see as an obviously losing trade
Gold seems to have a fair support at the 1800 level, and resistance is slowly squeezing in, so i think within a few days we are going to see some kind of breakout The superman rally that stocks have seen in the last week and a bit i think simply can't last. My hope is that one this news of collapse my gold trade will come into proper fruition
If we end up stagnating instead then i will reconsider my position and look for something else
On stocks, we see SnP500 in its trend channel and is printing what looks like to be its 4th daily cycle. I expect it to reach around 1230 at which point i will be putting on a short
Morning guys, hope you had a good sleep on your books
I think our turning point is coming around - within the next few working days we are going to see the swing high's of stocks before the big crunch. When i cant exactly predict.
Dollar is coming back down from its swing high, and as i said, i will be looking to add around the 200 MA
Gold is really getting squeezed now at the 1805-1800 level. I personally still expect to see strong support at this level, and as usual am hoping for a breakout within the next few days
I still expect to see some stocks highs today, despite sp500 running through 1.2k and back again.
I'll leave you with a fairly interesting article (swing trading for dummiez!). I do like reading this guys blog, you can find it at http://likesmoney.dojispace.com/. His analysis seems to be a> non professional b> therefore worth more than professional analysis
The dollar rallying out of a three year low has provided a consistent blueprint to set expectations with. Black arrows in the above chart point to the previous three year lows.
It is worth noting the rallies that ensue following the three year lows.
The similarities between the previous three year low in 2008 and now are worth noting:
Back in 2008
1) Three year low 2) 16 week consolidation (shortened intermediate cycle) following three year low 3) Explosive rally on first daily cycle following consolidation 4) A quick breather before the swing high of first daily cycle 5) Shallow daily cycle dip 6) Another explosive daily cycle UUP.
Now let’s see where we are today …
1) Three year low — Check 2) 15 week consolidation (shortened intermediate cycle) following three year low — Check 3) Explosive rally on first daily cycle following consolidation — Check 4) A quick breather before the swing high of first daily cycle — Check 5) Shallow daily cycle dip — Possibly currently unfolding. 6) Another explosive daily cycle UUP —— Maybe
Currently, I am waiting on a daily cycle low on the dollar to add. The dollar formed a swing high yesterday. Due to the strength coming out of the 3 year low, I expect the dollar to hold above the 200 MA as the dollar seeks its daily cycle low.
Once the daily cycle low is in, I expect the dollar to continue to follow the blueprint
On September 14 2011 04:56 BrTarolg wrote: Please note that as a disclaimer, trading, spread betting or other similar financial activities are RISKY and should only in general be done with the advice of a professional.
No, it should be done BY professionals ^^
As I work in a related field, I used to try to discourage people to try to make money if they aren't professionals. But a friend recently convinced me that the point isn't to make money, but to "have fun". I'd like to say one thing though, if this isn't fun or interesting to you, I really don't recommend it. As an individual you just get far too screwed by market makers, and even if you didn't trying your luck in the markets without any kind of edge seems suicidal to me.
But anyway, if you enjoy it by all means, GL & HF!
On September 14 2011 20:02 Ender985 wrote: Since I'm brand new into this, do you have any suggested reads for a beginner like me? I'm a physics major so my understanding of economics is very thin and generic. I understand trading is mostly about information management and risk assessment (much like poker xD), but I'd greatly help to have some sort of lingo dictionary for those of us unfamiliar with the terms being used in the discussions.
If you're interested in this sort of thing the old Market Wizards books are good and fun reads to get an overall look at different aspects of trading. Then once you get a more precise idea of what you want to do you can start looking at more technical stuff.
Not strictly about finance, but I would recommend Nassim Taleb's books Fooled by Randomness and The Black Swan to get the right mindset.
Ok guys, so i've been waiting for the big moment, dun dun dun! There are two possible fibb levels, one at 2150 and one at 2168. To be safe, i'm going for the second one
I'm gonna be shorting at 2168. If the market moves against me, then i might cut my position and re-short at the next higher level, but i highly doubt its going to get that high
Me and my prop trader friend (and a lot of other traders) think this rally is totally bullshit Levels are a bit clearer on SNP, but i want to be short europe right now since the whole rally is totally unjustified - europe is royally screwed and merkozy wont come up with anything to save it
Some news will be coming out later today which might affect things - depending on the numbers, and how the market is moving, i will be very careful about tweaking my levels and stops here
I'm going to keep a very close eye on this trade and probably make a lot of changes as the next two days goes
WOW holy shit gold just slammed straight through the 1800 level, i cut my position and took a fairly large loss here.
I'm planning to be long again at some point, either at the 1700 level or if i'm feeling bullish again. But that was very painful
edit:
more news, my stoxx short got filled, but i cancelled it because it was basically coordination to supply liquidity to banks so bank shares are going to go mental v soon
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.
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.
Welcome to the world of Internet/Software based trading. Everyone has tick-by-tick data, 30 charts, 20 indicators, and 7 news feeds and 4 pod casts going at the same time. No one holds a position for more than 2-3 days. And with the volatility in the market these days, combined with the inexperience of most at-home traders and wide use of electronic stops/limits, you can make a lot of money intraday if you have the stomach for it.
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
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
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.
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
You might say, technical analysis schmalysis (obviously QE3 will factor in at some point) But looking at that, and specifically at 2008
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.
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?!?!
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.
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 )
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
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.
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
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.
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!
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%
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.
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
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
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.
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!
Also you shouldn't trade on good news after 1 day of announcement. In a test for semi-strong EMH CAARs [cumulative abnormal average returns] were tested around the date of good news, and only day -1 [generation of private information or insider trading/violation of semi-strong] and day 0 [validation of semi-strong] had |t|>1.96 CAARs, i.e. you're not +EV if you buy on day 1, 2, 3, 4 on good news at t=0. You're EV = 0 basically if you trade on t >= 1.
Although you're clearly not EV=0 if the stock has a positive alpha, I'm just saying ... ceteris paribus.
P.S. in response to OP request, I have 0 trading experience. I just have many interests.
a> market sentiment - people think it works. On a short term at least, people look at technicals and it forms levels and entries
b> more importantly, it is a model of human psychology. it models how humans "do things" - for example, triangles are an expression of 2 groups of people squeezing their valuations together, and then when one group has their valuation no longer hold, they are forced to reconsider their position
c> we don't live in a random variable efficient market - if we did then TA would not work at all. However this is not the case - stocks, currencies etc. are MODELED on random variables, but are most certainly not random! - fundamental changes in an asset are often reflected by technical indicators sparking off.
Let me give you an easy, empirical show of when technical analysis is obviously useful
Like i said, fundamental changes in the market are reflected by technical indicators (sometimes). So as an investor, if you buy when the 50MA is above the 200MA, and sell otherwise, you would have made a mindblowing amount of money on the SNP500
And well, what are we seeing right now? Exactly that, the 50MA has crossed the 200MA and so it's time to sell and be short stocks
Now, there are a whole bunch of fundamental reasons to be short stocks, and you could go really in depth into what makes up each index and do price earnings analysis on each one, but you are still going to be short stocks
On September 19 2011 18:45 BrTarolg wrote: TA works because of:
a> market sentiment - people think it works. On a short term at least, people look at technicals and it forms levels and entries
b> more importantly, it is a model of human psychology. it models how humans "do things" - for example, triangles are an expression of 2 groups of people squeezing their valuations together, and then when one group has their valuation no longer hold, they are forced to reconsider their position
c> we don't live in a random variable efficient market - if we did then TA would not work at all. However this is not the case - stocks, currencies etc. are MODELED on random variables, but are most certainly not random! - fundamental changes in an asset are often reflected by technical indicators sparking off.
Let me give you an easy, empirical show of when technical analysis is obviously useful
Like i said, fundamental changes in the market are reflected by technical indicators (sometimes). So as an investor, if you buy when the 50MA is above the 200MA, and sell otherwise, you would have made a mindblowing amount of money on the SNP500
And well, what are we seeing right now? Exactly that, the 50MA has crossed the 200MA and so it's time to sell and be short stocks
Now, there are a whole bunch of fundamental reasons to be short stocks, and you could go really in depth into what makes up each index and do price earnings analysis on each one, but you are still going to be short stocks
Well, I'm not doubting that it works. There are empirical studies that validate it as holding predictive ability for certain equity indices. [Bessembinder 1995, Neely, Weller and Dittmar 1997]. but that graph isn't an empirical demonstration of the effectiveness of TA. Remember there are huge transaction costs for any TA strategy that need to be factored in, and you'd need a huge i.d.d. drawn sample size.. but im not claiming that you're trying to claim that that's good empirical evidence, i'm just saying.
What's interesting is that actively managed funds can deliver returns in excess of passively managed funds, but passively managed funds are BETTER because ,after netting for costs, their returns are higher! ,
First i have a large sum which i invest. These are my life savings, and i put them in whatever i can to insure wealth preservation. Indices are fine in bullish markets, in a bearish market like this, i've actually pulled out and its sitting in cash right now. Maybe i would invest in something purely to retain value with inflation but thats it. This is what funds are for Having said that, most funds can be terrible at managing your money. There are however, good funds to invest in. Just do your research basically. Personally i hope that when i have a much larger sum to invest, i would invest wisely myself without a fund
Then i have my trading funds - this is exceess capital that i play around with and try and make high return, risky investments Most of it is tied up in poker investments (lol) but the idea is these are funds that i am willing to risk and trade with
Also, most of the technical indicators i look at are fairly long term indicators (a lot of this thread is months if not years of a technical indication) - dollar long is both a fundamental trade, but you could have easily done it on purely technical reasons - it only crosses the 200MA rarely and you see big moves when it happens for long periods of time
On September 19 2011 19:44 BrTarolg wrote: Of my money, there are two things i do
First i have a large sum which i invest. These are my life savings, and i put them in whatever i can to insure wealth preservation. Indices are fine in bullish markets, in a bearish market like this, i've actually pulled out and its sitting in cash right now. Maybe i would invest in something purely to retain value with inflation but thats it. This is what funds are for Having said that, most funds can be terrible at managing your money. There are however, good funds to invest in. Just do your research basically. Personally i hope that when i have a much larger sum to invest, i would invest wisely myself without a fund
Then i have my trading funds - this is exceess capital that i play around with and try and make high return, risky investments Most of it is tied up in poker investments (lol) but the idea is these are funds that i am willing to risk and trade with
Also, most of the technical indicators i look at are fairly long term indicators (a lot of this thread is months if not years of a technical indication) - dollar long is both a fundamental trade, but you could have easily done it on purely technical reasons - it only crosses the 200MA rarely and you see big moves when it happens for long periods of time
interesting that you're using your life savings. How long have you been doing this for and what do you estimate your p.a. returns to be? Has it been much more lucrative than what you'd get in a savings account? What is the volatility like for you [w.r.t. capital gains]?
live automated account performance (minimum contracts) for 5th august to 9th september i collaborate with a private speculation firm i developed this myself, 100% technical analysis. i majored in stats
Never really been a fan of technical analysis in times of such volatility, a mere whisper of news and all trends, data and indicators are trumped by market sentiment and consumer confidence; but it definitely has its place
I work for a financial planning company and investing in an index fund is pretty much a waste of time; active management may be more costly but it's worth it. Research is generally the key; there is a ton of information out there, it's just being prudent enough to read and understand it. I hope this thread remains what these 4 pages have been
backtested strategy performance forward tested strategy performance, same results on live (i have multiple accounts for different strategies)
i suppose this is some evidence that technical analysis is viable. my opinion is that it is viable (behavioural finance basis) and you can quote all the theories you want but the assumptions used in those theories are not "real" . you cant prove that technical analysis does not work without performing detailed analysis of specific conditions and even then you only found evidence against those conditions.
EDIT: similar to analysing the whole market using all the information available (no filters), can you find pockets of time where you have an edge?.
Forgive me if I seem stupid here. I realised that while I have no interest in trading myself, it was important to me to gain a greater understanding of the way the markets work in order to consider myself an informed citizen. I'm learning at a pretty fast rate, and while there is a vast number of concepts i'm still unfamiliar with.. I'm unable to really appreciate the point of forex and commodity trading in particular, making personal wealth at the expense of others aside.
Particularly with respect to this quote here:
On September 18 2011 06:07 lightman wrote: -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.
If it isn't gambling (like a game of poker say), what exactly are you investing in? What good is any of this doing the world? Aside from being a small cog in the machine that sets the 'fair' market price for a given commodity that is. An investor buying stocks is providing the capital for that company to grow, and for them to produce new goods or whatever. Its obviously horrendously more complicated than that, but at the heart of all.. thats what it 'does', right? What do any of the practices discussed in this thread contribute to society? If it all stopped tomorrow, what would we lose?
I'm not trying to be insulting here. I just want to understand.
On September 19 2011 20:46 Alethios wrote: Forgive me if I seem stupid here. I realised that while I have no interest in trading myself, it was important to me to gain a greater understanding of the way the markets work in order to consider myself an informed citizen. I'm learning at a pretty fast rate, and while there is a vast number of concepts i'm still unfamiliar with.. I'm unable to really appreciate the point of forex and commodity trading in particular, making personal wealth at the expense of others aside.
On September 18 2011 06:07 lightman wrote: -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.
If it isn't gambling (like a game of poker say), what exactly are you investing in? What good is any of this doing the world? Aside from being a small cog in the machine that sets the 'fair' market price for a given commodity that is. An investor buying stocks is providing the capital for that company to grow, and for them to produce new goods or whatever. Its obviously horrendously more complicated than that, but at the heart of all.. thats what it 'does', right? What do any of the practices discussed in this thread contribute to society? If it all stopped tomorrow, what would we lose?
I'm not trying to be insulting here. I just want to understand.
the service you provide is providing liquidity to the market so that people who need to hedge their positions can hedge at a price closer to the current listed price. also for those who are entering and exiting positions, reduces slippage and gapping. liquidity is actually important and the markets would look pretty crazy without speculators/market makers
On September 19 2011 20:46 Alethios wrote: Forgive me if I seem stupid here. I realised that while I have no interest in trading myself, it was important to me to gain a greater understanding of the way the markets work in order to consider myself an informed citizen. I'm learning at a pretty fast rate, and while there is a vast number of concepts i'm still unfamiliar with.. I'm unable to really appreciate the point of forex and commodity trading in particular, making personal wealth at the expense of others aside.
Particularly with respect to this quote here:
On September 18 2011 06:07 lightman wrote: -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.
If it isn't gambling (like a game of poker say), what exactly are you investing in? What good is any of this doing the world? Aside from being a small cog in the machine that sets the 'fair' market price for a given commodity that is. An investor buying stocks is providing the capital for that company to grow, and for them to produce new goods or whatever. Its obviously horrendously more complicated than that, but at the heart of all.. thats what it 'does', right? What do any of the practices discussed in this thread contribute to society? If it all stopped tomorrow, what would we lose?
I'm not trying to be insulting here. I just want to understand.
the service you provide is providing liquidity to the market so that people who need to hedge their positions can hedge at a price closer to the current listed price. also for those who are entering and exiting positions, reduces slippage and gapping. liquidity is actually important and the markets would look pretty crazy without speculators/market makers
and..... most 'speculators' lose money
Ah ok, thanks. That gives me a framework to look further into it.
My advice to everyone here is to stay away from trading. Its not a cost effective activity. Day trading is an almost full time job, meaning your day job WILL be affected, and if you do day trading without proper coaching, prepare to be bankrupted.
If you want to make money off the stock market, do conservative long term leveraged investing instead. Its Warren Buffet's technique.
Oh, and to lightman, trading is NOT investing. If you disagree, go argue away with the entire finance faculty of my university.
On September 19 2011 20:55 Setev wrote: My advice to everyone here is to stay the fuck away from trading. Its not a cost effective activity. Day trading is an almost full time job, meaning your day job WILL be affected, and if you do day trading without proper coaching, prepare to be bankrupted.
If you want to make money off the stock market, do conservative long term leveraged investing instead. Its Warren Buffet's technique.
Oh, and to lightman, trading is NOT investing. If you disagree, go argue away with the entire finance faculty of my university.
lol such an angry person.
i believe its up to the individual to make an informed decision. its hard to start and it takes a special mindset to be successful.
On September 19 2011 20:46 Alethios wrote: Forgive me if I seem stupid here. I realised that while I have no interest in trading myself, it was important to me to gain a greater understanding of the way the markets work in order to consider myself an informed citizen. I'm learning at a pretty fast rate, and while there is a vast number of concepts i'm still unfamiliar with.. I'm unable to really appreciate the point of forex and commodity trading in particular, making personal wealth at the expense of others aside.
On September 18 2011 06:07 lightman wrote: -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.
If it isn't gambling (like a game of poker say), what exactly are you investing in? What good is any of this doing the world? Aside from being a small cog in the machine that sets the 'fair' market price for a given commodity that is. An investor buying stocks is providing the capital for that company to grow, and for them to produce new goods or whatever. Its obviously horrendously more complicated than that, but at the heart of all.. thats what it 'does', right? What do any of the practices discussed in this thread contribute to society? If it all stopped tomorrow, what would we lose?
I'm not trying to be insulting here. I just want to understand.
It's not just equity funds making money but contributing nothing.... The actively trading strategies you're referring to achieve excess alpha [market beating returns as measured by CAPM] but don't achieve risk adjusted profits net of all costs, in fact they perform worse than passive funds on average. Transaction costs and search costs cancel out the excess alphas delivered by these funds.
So there's not much to worry about here. The market is efficient in the Jensen sense: efficient with respect to privately generated information so long as economic profits, net of all costs, cannot be made on this information.
On September 19 2011 19:44 BrTarolg wrote: Of my money, there are two things i do
First i have a large sum which i invest. These are my life savings, and i put them in whatever i can to insure wealth preservation. Indices are fine in bullish markets, in a bearish market like this, i've actually pulled out and its sitting in cash right now. Maybe i would invest in something purely to retain value with inflation but thats it. This is what funds are for Having said that, most funds can be terrible at managing your money. There are however, good funds to invest in. Just do your research basically. Personally i hope that when i have a much larger sum to invest, i would invest wisely myself without a fund
Then i have my trading funds - this is exceess capital that i play around with and try and make high return, risky investments Most of it is tied up in poker investments (lol) but the idea is these are funds that i am willing to risk and trade with
Also, most of the technical indicators i look at are fairly long term indicators (a lot of this thread is months if not years of a technical indication) - dollar long is both a fundamental trade, but you could have easily done it on purely technical reasons - it only crosses the 200MA rarely and you see big moves when it happens for long periods of time
interesting that you're using your life savings. How long have you been doing this for and what do you estimate your p.a. returns to be? Has it been much more lucrative than what you'd get in a savings account? What is the volatility like for you [w.r.t. capital gains]?
zzz people are constantly misreading what i type
I said my life savings are SAVINGS which i am currently keeping in CASH
My TRADING is excess funds which i trade and try and make a return on
I think arbitrageur would make a great academic, unfortunately academics aren't exactly in touch with the realities of trading. a professor told me they are definitely lagging behind, but thats a limitation of academia.
Operation twist basically sells short term treasuries (increasing their yield) and lowers long term treasuries (decreasing their yield). This will flatten, or invert the yield curve, making short term yields higher than long term yields An inverted yield curve usually indicates that people are willing to settle for lower long term yields NOW because they expect future recession
On that chart, the shaded area is where recessions have happened in the US. Note that EVERY SINGLE recession in the past 50 years has been preceded by an inverted yield curve.
So what are we seeing: 50 200 MA cross check head and shoulders S&P500 check dollar rallying from 3 year low like in 2008 check ISM, CSI and other economic indicators at lows check Put call parity ratio trending upwards check advance decline breaking its 50 200 MA check bond yields going crazy low check inverted yield curve ????
so, where do you think the economy (and as a result, stocks, commodities, currencies and everything else) is heading?
End of day, WOW this has been an absolutely fantastic week for me. As someone who was net short, and then i went shorter and shorter, markets have definitely been good to me. Let the mayhem continue!
For those of you who followed my dollar trade, well done! Dollar is up by a significant amount! We are still looking for a target of at least 81, but potentially higher depending on future information, so hold onto your dollar longs
In other news, gold took a MASSIVE beating, crashing all the way to lows of 1720. For cycle traders, this represents a daily low, though it could be a lot of margin calls and a lot of technical traders getting stopped out. It doesn't make sense for gold to tank so badly when stocks are crashing. Price action technicals suggest now might be a good opportunity to long gold. (I have added a very small position at this level)
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For those of you who like long term investing, i really hope you have sold off your stocks and shares. I would suggest hold it in cash. If you are a bit more daring, invest in SNP inverse tracker. I know you americans arn't usually allowed to trade more complex instruments like we are. If you are a buffet style investor, i'd say you're going to want to wait for a loong time before re-investing in stocks.
Treasury bonds have had an incredible rally on the news, though you might want to buy more bonds regardless if the government is going to buy some in the future anyway. Its a safe investment and yields are going to be low for a few years
Gold is taking an even bigger beating, and cleaned the 1705 level (i cut my long at this point - minimal losses)
I'm now officially bearish gold for the next couple weeks as its broken right through the 50% fibb level.
Likely the next opportunity you will see a gold bull is when dollar finishes a 2-3 week rally. Current short term trends show a bear after breaking that level - banks selling, possible coordinated action and double top
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In other news, the level to look at today is snp 1110. If we break this, all hell breaks loose!
Good thing i'm still short the market!
This has been an extremely profitable week for me, I hope it has been for you too!
I've had an extremely profitable week, i will put up screenshots of my trades a little later (different computer).
On another note I quote from an interview with peter brandt (one of the earliest hedgers)
"Samuelson kind of half justified it by saying “Well, random walk is true for the vast majority of money managers, and only a tiny handful are smart enough to beat the markets long term, so the theory might as well be taken as true.” But that still makes it grossly dishonest to go out and preach random walk as gospel, when he himself didn’t practice it."
The founder of random walk and efficient markets was an investor in commodoties corp. and warren buffet!
Pretty hilarious and a shame to all those efficient market theorists.
Short stoxx50 since 2150: continue shorting, no goal set yet Long dollar since 7625: continue long until minimum 81, look for a cycle reversal Short EUR/USD since 1.375 (i was a little late on this, but small position only) - minimum until 1.3, could go even to 1.2 in the long term. Keep an eye on drachma/eurozone unfolding Short gold since 1695 (broke the 1705 level - everyone is liquidating) - short term position, might take profit in a couple days
Here are my waiting positions long JPY 76.04 (almost made it there, went to 76.11. Would have went long if i was at a screen)
Here are my failed positions: Gold long at 1730, increased when it tested low 17xx and bounced - tanked to 1700, tested the 1705 and failed and so i reversed my position
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These are positions that i don't have personally, but i know some of my trader friends have on
long soybean 1300 (probably cancelled since it dropped to 1280) long what 630 long gold/silver ratio
I'll usually consider my time frame and goals with the strategy so that i don't lose more than 10-15% of my bankroll in one trade. Like, if i lose more than that, i entered at the wrong time/had bad risk management/set my levels too big etc.
There are some trades i make that tend to have very little downside (like the long dollar trade).
On September 26 2011 06:50 iansanew wrote: Hmm there was so much discussion when the thread didnt have enough content. Now that we only have quality content no one likes to chip in?
seems a little weird, maybe i should make a huge claim to get some opinions going.
returns of 100% per annum are real.
lol don't be so disappointed by weekend markets. Btw that looks like a very cool strategy. Whats with the timeframes? What are the main technical indicators you're looking at to initiate/close trades? (don't need to share too many secrets haha)
Tbh i find it very usual on TL if i manage to post something of actual substance then interest dies out fast. Regardless its good to see there may be a few real traders around, i'd love to hear opinions.
As of now, 24hr market open is usually quite tame, but eyes to keep open are CSI on tuesday. Currently i'm continuing to hold all of my positions. Also in terms of gold, i am keeping my position small, but i intend to short until the 200MA and i'll expect a rebound from there. I think this picture that another trader drew gives an accurate description of what i reckon it could end up like Whether gold really will decline past the 200MA i am not sure, but i am almost certain it will act as a heavy support.
there is a horizontal support level at 1550 which adds to the likelyhood of a bounce.
I use moving average conditions to determine entry, exit is just an optimised set distance away from the entry. i also use other filters for entry which are very important. all i can say is the strategies ive made so far all capture retracements, in the direction of the long and medium term trend.
the timeframe used up top are range bars. a new bar will form only if price moves a specified distance from the low or high of the current bar. eliminates time biases like tick charts and the bars are a lot more consistent (stable patterns).
Either way i'm out, i missed the opportunity to profit from a rally so i'm going to not touch gold again for a while, until maybe it hits 1700 mark again
Yeah I've been watching GLD for a while, and it seemed pretty clear that it wouldn't stay that high for long after the double peak. It will bounce back in the near future I'd bet. I feel the previous highest peaks were not very solid, so it could take a while to get back there and higher up. This analysis has been brough to you by a 1-week experienced future-trader, so don't sue me if you loose money for following it xD
I've been looking around for ways to invest in the trade market, but being in Spain, it seems rather difficult for me. There is nothing equivalent to GLD in our trade market (and there is where I'd like to start), but since you guys are not from the US either, I am wondering how do you do it. Do you have some american bank account and trade with that, or are there some other ways to do it from outside of the country?
Basically stocks had a HUGE rally today over the EFSF trying to come up with some magic drug to save the world. Personally, i think the plan fails on 2 reasons firstly there is no "life saving" plan secondly, the plan they are implementing isn't strong enough regardless
Dollar looks like to be consolidating a bit atm, so i'd say give it another day or two to lower. I might be adding to my longs at around 77.8-77.9 if it hits that area.
So market seems to be rallying on bullshit rumors that the world is going to be OK and its fine we will create a crazy debt money printing package to save everyone
For you traders that means that we are likely to see a little bit more of this short term rally, but it presents a very good opportunity for those of you who wish to enter a short. I would say within the next day or two is within a decent timing band to enter
For those of you long dollar, hooray! Dollar is keeping its strength through all of this bull and we are still very deep in the money. I'm still expecting it to consolidate slightly but overall we are still in huge profit since buying at the 200MA
wow nice one... but im watching eur strengthen against the usd by about 160 pips in the last 5 hours...
i just realised some sad news. range bars without tick resolution are slightly less accurate. even 1min resolution makes me a little uncomfortable. so in order to minimise my risk... im trashing the strategy posted above using range bars and going back to time charts. fortunately this was my alternative strategy:
10k contract size 81%success rate $21:$55 profit:loss ratio average $7.15 per trade profit profit factor of 1.69 (gross profit/gross loss) spread and slippage included. 612 trades (pretty decent sample).
this is actually better but i dont know why i preferred the psychological 1:1 ratio type stuff. lol traders mindset has an effect even in automated trading.
(incase anyone is confused, i have multiple eurusd strategies + this new one ill be trading next week)
On September 27 2011 23:25 Miniput wrote: Any recommendations on trading books?
Nice thread btw
from what the guys at the firm say,
#1 Trading in the zone- mark douglas.
#2 market wizards- jack schwager i think the guys name is.
i havent actually read any trading books, but these are highly rated.
@ender: you can trade using online brokers. trading with banks is a big no unless you intend to hold real assets and have voting rights to shares. and pay commissions until you are broke.
i would like to point you in the right direction for brokers, but i dont think i am allowed. definitely dont go with cmc markets they are turning into complete trash. their new platform cant even perform stop entry orders hahaha. when i started trolling their customer service asking why i cant perform such orders, they didnt even know you could enter with stop orders and kept thinking i was talking about limits.
most large brokers are alright for newcomers, when you grow as a trader some brokers will meet your criteria a lot better than others.
IGindex is the one i use, though etx give you 250£ of free money
Ok so i closed some of my shorts on the rally for stoxx and re-shorted at 2185.
Dollar taken a beating of course, so for those of you who arn't long dollar yet, sometime either near the end of today or tomorrow morning is going to be a reaaaly good opportunity for you
hmm fundamental analysis confuses me. why wouldnt it already be priced in? i believe in psychology and chart patterns generated by this more than publicly analysed fundamentals.
someone convince me otherwise! lol i believe in chart patterns more than fundamentals. if i go back 1 year and tell this to myself i wouldnt believe it.
Fundamentals of 2008 - CDO's and random shit is overpriced. Just had to wait for the rest of the market (which is sometimes populated by noobs) to realise this
fundamentals of 2000 - tech stocks produce no income, but people irrationally buy anyway. short
On September 28 2011 06:09 BrTarolg wrote: Fundamentals of 2008 - CDO's and random shit is overpriced. Just had to wait for the rest of the market (which is sometimes populated by noobs) to realise this
fundamentals of 2000 - tech stocks produce no income, but people irrationally buy anyway. short
ah yeah thats right, i get short sighted sometimes. too much brainwashing with efficient market theory lol
great to see this kind of a thread on TL. i worked as an analyst at a small hedge fund this past summer (back in school now) -- finance and global econ is fascinating stuff. i would be doing personal investing if i had enough capital to splash around, but unfortunately i don't. i suppose that's good though, as it's a pretty shitty time to get into the market.
personally i like to base valuations and decisions on fundamentals more than technicals, but that is a point always up for debate.
will post more later when i have time, good luck to everyone!
Personally I am well hedged and I also had good risk management this time around, so i am currently handling my losses. I intend to hold, as fundamentally i am still extremely bearish on the market over the next month
Dollar has tanked past its previous resistance level which is a worrying sign however, though it still has a long way to go before it tanks all the way to where i first bought
Stoxx is now showing losses for me, although minor. I feel my upside is greater than my downside here, good risk management is currently saving my ass and i intend to hold most of my position However i AM reducing my position slightly since we are now breaking technical levels and there is a possible chance of a 100-200 tick rally further from here which would begin to breach my risk management - i intend to hold a position which can withstand that.
As a result i'm rebalancing my book by reducing my stoxx shorts and increasing my dollar longs
---
note: me and a ton of other traders think this rally is the biggest load of absolute BS
This is what is known as "buy the rumour sell the fact" - market is rallying on a plan that isn't going to do jack shit and when facts come to light we expect a large selloff in the market
I am new at this. 24 years old and investing through my Roth IRA for the time being. Professionally I am in real estate and am quite knowledgeable about investing in commercial and residential real estate. I have liquid funds that I may want to turn to the stock market since deals in my area in real estate have slowed enormously due to factors I will elaborate on below and I have been getting good returns on my money simply trading obvious dips in the market.
However, where does one begin to get to the level of you guys? It seems you are mostly into trading forex? I don't understand half the shit you guys are talking about. My financial knowledge, despite going to a top univ., is all self taught and mostly through the field of Real Estate. My stock knowledge is from reading the Intelligent Investor (not done with it yet) and watching CNBC at lunch most days recently. So.. not much knowledge. I frequent Seeking Alpha lately also.
I only have two holdings right now in my IRA and they are Apple and Alcoa. Long on Alcoa and Apple I will sell whenever it spikes again as it went to 419 recently. I had bought at 333 earlier in the year and am happy with how it is progressing.
Spurred on by the thread about the trader on BBC and my own fears in the market as seen through my eyes in real estate I want to take an active role in making money during the recession and the more than likely future double dip to come. If any of you are curious, despite any good news in the real estate markets that have come out in the past two days it is far from good overall. Until the administration and banks starts selling off troubled assets and stop letting people live in their homes for free without foreclosing on them we will not have a recovery of any sort. Short sales and loan mods are rarely successful due to banks not being adequately staffed and trained in these matters. I handle REO (bank owned properties) assets for a living so we deal directly with banks on these things and they are terribly slow right now. Since the robo signing fiasco and the moratorium on foreclosures last year the market has slowly crawled to a halt when it comes to foreclosures. While it may seem good to some that there are fewer foreclosures it isn't good as people still aren't paying their mortgages. We made a killing last year and us along the with the other top rated brokers in our area are all scared to death at how slow it has become. No one has seen this in a long long time and I am surrounded by the most experienced brokers in my area.
Anyways, that is my tidbit contribution so far and it may help some of you predict where the markets will go.
If you have any advice for someone getting into it at this time and would like to point me in a direction on where to start let me know. Also, if you are mostly involved in forex where is a good place to start learning about those markets and how they are operate? All i've heard about forex is that it is quite risky unless you are very knowledgeable. But then again, so is almost every investment.
I REALLY like when the stock market crashes... everyone else loses a lot of money and we(people who just started investing) WILL gain a lot when it rebounds
On September 29 2011 03:08 LostDevil wrote: Hello!
I am new at this. 24 years old and investing through my Roth IRA for the time being. Professionally I am in real estate and am quite knowledgeable about investing in commercial and residential real estate. I have liquid funds that I may want to turn to the stock market since deals in my area in real estate have slowed enormously due to factors I will elaborate on below and I have been getting good returns on my money simply trading obvious dips in the market.
However, where does one begin to get to the level of you guys? It seems you are mostly into trading forex? I don't understand half the shit you guys are talking about. My financial knowledge, despite going to a top univ., is all self taught and mostly through the field of Real Estate. My stock knowledge is from reading the Intelligent Investor (not done with it yet) and watching CNBC at lunch most days recently. So.. not much knowledge. I frequent Seeking Alpha lately also.
I only have two holdings right now in my IRA and they are Apple and Alcoa. Long on Alcoa and Apple I will sell whenever it spikes again as it went to 419 recently. I had bought at 333 earlier in the year and am happy with how it is progressing.
Spurred on by the thread about the trader on BBC and my own fears in the market as seen through my eyes in real estate I want to take an active role in making money during the recession and the more than likely future double dip to come. If any of you are curious, despite any good news in the real estate markets that have come out in the past two days it is far from good overall. Until the administration and banks starts selling off troubled assets and stop letting people live in their homes for free without foreclosing on them we will not have a recovery of any sort. Short sales and loan mods are rarely successful due to banks not being adequately staffed and trained in these matters. I handle REO (bank owned properties) assets for a living so we deal directly with banks on these things and they are terribly slow right now. Since the robo signing fiasco and the moratorium on foreclosures last year the market has slowly crawled to a halt when it comes to foreclosures. While it may seem good to some that there are fewer foreclosures it isn't good as people still aren't paying their mortgages. We made a killing last year and us along the with the other top rated brokers in our area are all scared to death at how slow it has become. No one has seen this in a long long time and I am surrounded by the most experienced brokers in my area.
Anyways, that is my tidbit contribution so far and it may help some of you predict where the markets will go.
If you have any advice for someone getting into it at this time and would like to point me in a direction on where to start let me know. Also, if you are mostly involved in forex where is a good place to start learning about those markets and how they are operate? All i've heard about forex is that it is quite risky unless you are very knowledgeable. But then again, so is almost every investment.
Any direction would help. Thanks
Hey there welcome
If you are just a normal investor, and you are dealing with something as important as your life savings, you want to basically work out what level of risk you are willing to take and understand what that means and what returns you would get.
For example, i'm taking the highest possible amount of risk, trading all sorts of complex derivatives through a spreadbetting/CFD platform.
For you, you just need to understand the barebone basics - having a world view (ok so we think its gonna crash) - and how this affects different kinds of assets. In general, stocks in the stockmarket are expected to go down, and safe assets (such as cash and bonds) will go up in value.
So if you want a no brainer, goto your bank account or broker and say "i want to buy some bonds" - US treasuries are a good option here. Or if you live in the UK, or any other safe haven zone, then you can buy your respective government bonds. We have gilts and cash ISA's as well as bond ISA's and other goodies which provide a very safe, low return. These kinds of safe returns reflect their nature in that they vastly hedge you against a falling market
Now - these are the kinds of things that PROTECT your assets. Lets say you actually want to make some money from the market! Well, along with this comes more risk, and at the same time requires a bit more finesse and knowledge
For this you would approach a broker who would be able to facilitate financial transactions. Usually most brokers will let you go long only, and only in shares and ETFs. But thats OK! - This is what delta-one products are for! There are many ETF's which are designed to mimick certain trading strategies. In particular, a very good ETF to invest in would be the dollar index fund, which tracks the value of the dollar. This is probably the safest investment you could make for a medium amount of money Then if you want to take a little more risk, you can invest in the inverse SNP/STOXX ETF's that mimick shorting the market. If you want to take even more risk, then you can invest in the more risky ETF's, there are various leveraged ones out there.
Now, if you want to take it a step up, to the trader level, you'll need to open a margin account with your broker, or use spreadbetting/CFD platforms if its legal in your country. Now you'll get a whole wide access to short anything you want, and often access to a lot of derivatives like futures and options. This is the most risk, provides the highest return, and also requires the biggest amount of work.
---
For you, i would suggest the following:
Hold some of your money in local cash, take advantage of whatever special offers your bank gives you (we get ISA's in the UK for example) Hold some of your money in cash. Preferably the US dollar Hold some of your money in Bonds - safe ones (not european/greek ones) Take a SMALL percentage of your savings, and invest these into some ETF's (such as a dollar index fund, or inverse SNP/eurostoxx) - ETF's designed to benefit from falling market Lastly, if you want to take on large risk, take some excess cash and trade with it!
I keep the vast majority of my funds in savings at the moment due to IRA deposit restrictions. You can only deposit 5k per year and I am young so it isn't much. I also keep it liquid in case there are real estate opportunities to invest in but right now the pipeline is very slow for good deals in my area.
I will look into the ETF strategies you proposed. I am willing to take some risk at my age but will not do anything stupid.
I would like to get into it more to the point where I could take a small amount of money and trade with it on my own. I'll hang around and try to learn some more.
So (late at night) basically dollar has recovered a lot of it's position - i added to my long on the swing low, and i hope you did too!
For those of you wondering what i mean, i added right here
On the eurostoxx world, after freaking us out with the highs, it seems to be coming back off a little. Though anything could happen with the news, but a nice little chart might give you an idea of the upcoming movements
For those of you looking at gold, we are seeing as usual, the ultra-volatile picture
I have no self induced opinion on gold - however swing traders are currently expecting a selloff that might break the 200MA (1530~) and actually dip below that into november before coming back up. VERY dangerous - do NOT go long gold. I would say your next good opportunity to enter gold is somewhere around mid/late november.
However, i have no personal opinion. If you are feeling risky, you can long if it touches the 200MA again (this is literally the only trade i did where i shorted at 1700 and rebought at 200MA because of technical levels - and i took a very small position due to the extreme volatility)
On September 29 2011 06:14 LostDevil wrote: Thanks for the reply.
I keep the vast majority of my funds in savings at the moment due to IRA deposit restrictions. You can only deposit 5k per year and I am young so it isn't much. I also keep it liquid in case there are real estate opportunities to invest in but right now the pipeline is very slow for good deals in my area.
I will look into the ETF strategies you proposed. I am willing to take some risk at my age but will not do anything stupid.
I would like to get into it more to the point where I could take a small amount of money and trade with it on my own. I'll hang around and try to learn some more.
when i started i had 0 dollars.
infact theres no reason you couldnt practice trading with 0 dollars.
you should take a risk when you are confident you can beat the market, or risk enough that you dont feel the pain haha.
oh and remember that if you can double your capital (lets say $5000) with good risk management and low variance in a year, you can double $500,000. or 5 million on the forex market.
the week is almost coming to an end. quite profitable thanks to usd cad . it had a few more trades later that day.
also, the thread about "traders shocking interview", that thread is so hilarious. im suprised none of non-sense posters have come here to degrade the thread.
lol i just noticed i havent actually posted anything useful, only results. i dont read anything, i only datamine patterns pretty much.
It can pretty much be summed up as "long dollar, the ultimate safe haven trade" - as dollar appreciated i've been getting longer and longer and making more and more profit, and i expect those of you reading this to do the same!
I expect next week to be a REALLY big crunch in stocks - already we saw them come off in friday evening, but i am setting up some SERIOUS shorts
So many risk factors, like if MS suffers liquidity issues etc. or china liquidity, it only takes one little tidbit (like nonfarm payrolls or ISM) to kick it all off. this is NOT a time to be long
If you are a serious investor, you should be looking to pick up stocks cheaply but hedging them to be absolutely net-neutral
This is going to probably sound really stupid. Does going "long on the dollar" as a US citizen mean just holding cash in my bank account? I guess I dont understand how I can invest in the dollar when I am paying for it in the same currency.
On October 01 2011 10:54 Tiamat wrote: This is going to probably sound really stupid. Does going "long on the dollar" as a US citizen mean just holding cash in my bank account? I guess I dont understand how I can invest in the dollar when I am paying for it in the same currency.
you can buy dollar index futures.
you can also sell every other currency cross and buy usd. i mean... go short eur/usd, short nzd/usd, short aud/usd, long usd/jpy, long usd/chf etc etc
Starting with gold - break the 1700 level, then hit the 200MA and jump back up tick
Stoxx - false rally and come off hard tick
USD - touch 200MA, have rally of lifetime, tempeorary swing low to add to longs tick
So for those of you following this and trading with me, congratulations you are now swimming in money!
Well, i am at least.
But seriously, if you have a pension fund or savings that follow stocks, liquidate it now into cash or safe bonds or something. Don't tell me i didn't warn you!
Banks arn't allowed to have their traders disclose any relevant information, and certainly they cant trade their own money
Funds are generally the same
We might see a few guys from prop shops post here as they do a lot of intra-day stuff but for any long term views they could just do it at home
I've worked at a few different banks but only on a summer basis. I do know a few prop traders both intra and long term and a couple of retired traders whom i regularly ask for advice. I met most of them just working at different banks and chatting
Best way to learn imho is just to find out what other people are doing and why
Can you guys maybe share some of the technicals you use?
I have just gotten into trading and have been a big fan or MACD, RSI, the fib's, various channels, and good ole patterns and trendlines. What do you guys use, if any?
Also, do you guys have any tips for trading forex? I opened a practice account on Oanda the other night, but a lot of the currencies seem to be stuck sideways, or my technical indicators have not been offering much assistance.
Maybe for myself and all the other lurkers, can someone maybe go step by step thru an entire trade? From picking a candidate, to setting an entry/exit, etc.
as for technicals that i use, i use pretty much all of them (that you mentioned) when i was manually trading, fibs are actually pretty crazy. amazing how fibs work really.
as for line drawing i only used horizontal support and resistance, trend lines and channels were a bit too subjective for me.
on the automation side, rsi and macd are completely useless for me. ive found they are total trash and cant reliably filter anything. its just noise. but i didnt use them in any convergence/divergence related way so that could be their discretionary value. i also havent found much with respect to overbought and oversold rsi.
On October 04 2011 20:39 BrTarolg wrote: Banks arn't allowed to have their traders disclose any relevant information, and certainly they cant trade their own money
Funds are generally the same
We might see a few guys from prop shops post here as they do a lot of intra-day stuff but for any long term views they could just do it at home
I've worked at a few different banks but only on a summer basis. I do know a few prop traders both intra and long term and a couple of retired traders whom i regularly ask for advice. I met most of them just working at different banks and chatting
Best way to learn imho is just to find out what other people are doing and why
recently at university during a careers event i asked one of the recruitment advisors for a bank, he said you can trade at home. you just cant trade during work. although they mentioned they might be able to make exceptions to automated trading while at work.
Also, I am currently beginning to apply jobs and I was wondering where you think someone interested in trading should apply? I've been looking at prop trading firms (but they all require a proven track record and I don't have enough capital to trade, only invest :[ ) and I want to stay away from operations as I've heard it's impossible to transition to the front office and you become a lifer..
Should I try trading forex lightly or just forget about the prop trading firms.
And I'll try to throw some trade ideas up soon so I don't hijack the thread. Thanks again.
Avoid anything intra-day unless you are experienced enough to create strategies revolving around including transaction costs which as a retail trader are extremely high
Thats pretty much it - personally i think its important to learn a fundamental understanding of market economics and psychology
Also in terms of technicals, i pretty much look at key moving averages (200 day MA is a big one) fibb levels I also draw trend channels and trendlines
hmm i was browsing around today and i may have found a direct access broker, but there are many brokers who claim true direct market access. ill email them to confirm this is true. if it is, jackpot.
edit: forex, futures has direct market access as a standard
On October 05 2011 07:50 iansanew wrote: yeah transaction costs are the only thing you are trying to beat. you arent trying to find strategies that work (without costs) because thats easy.
as a retailer, if you can succeed intraday, you are better than the majority of bank traders.
i wish i had direct access to interbank, the things you can do.... but that means i need to work from 6-6....
You can goto a prop shop and pay a 4-10k a month desk fee and you will get direct access. You can ask them to set it up so it connects to your home also.
Essentially the prop shops i'm applying for have this as their business model as they start up. It is only in recent times they actually financially back people and produce traders - originally they just provide a platform with direct access.
You also still pay some transaction costs (i think they are very small though, like 1$ a trade)
After our fantastic week, stocks saw a HUGE rally yesterday when bernanke opened his mouth. We also saw dollar drop quite a bit also.
This was quite an unexpected movement, and its setting up some ugly rally technicals - fundamentally i'm still very bearish, however we could be seeing a bear market rally
I have no opinion on the next few days, so i think i might reduce all my positions and just see how the market moves - i'll be very careful about the NFP numbers coming out on friday however! This could be a turning point where we begin to see the big selloff or the false rally.
So for now, i'm going to take a little bit of profit and keep my positions small until i have a bit more conviction.
Hi, it's nice to see people sharing their opinions on the market or experience they have had. Are there any websites or forums on trading that anyone could recommend? OP is right in that it's best to learn from looking at what others are doing (and the reasons behind their actions). Thanks for all the great insight so far.
I still think we're breaking below the bear flag (or what used to be a bear flag and is now some grotesque H&S). These rallies are coming with such little volume... it's only a matter of time unless something epic comes out of Europe.
On October 05 2011 07:50 iansanew wrote: yeah transaction costs are the only thing you are trying to beat. you arent trying to find strategies that work (without costs) because thats easy.
as a retailer, if you can succeed intraday, you are better than the majority of bank traders.
i wish i had direct access to interbank, the things you can do.... but that means i need to work from 6-6....
You can goto a prop shop and pay a 4-10k a month desk fee and you will get direct access. You can ask them to set it up so it connects to your home also.
Essentially the prop shops i'm applying for have this as their business model as they start up. It is only in recent times they actually financially back people and produce traders - originally they just provide a platform with direct access.
You also still pay some transaction costs (i think they are very small though, like 1$ a trade)
nice, ill check it out. alternatively i was thinking of setting up with an institutional broker but i would need 1million usd minimum deposit lol
Stoxx is getting close to topping out, i'll be putting my short on soon. After reducing my origional shorts at 2140 and then flattening out at 2160, i'll be looking to put it on before jobs numbers
I'm pretty sure that jobs numbers are going to come out lower than consensus, so theres a lot of $$$ to be made there
On October 05 2011 01:10 Sweepstakes wrote: Also, I am currently beginning to apply jobs and I was wondering where you think someone interested in trading should apply? I've been looking at prop trading firms (but they all require a proven track record and I don't have enough capital to trade, only invest :[ ) and I want to stay away from operations as I've heard it's impossible to transition to the front office and you become a lifer..
Should I try trading forex lightly or just forget about the prop trading firms.
And I'll try to throw some trade ideas up soon so I don't hijack the thread. Thanks again.
I currently trade Forex at a small prop firm on Wall st. Do you understand the business? Let me know if you need advice. I've been at several prop firms so far in my career. Most prop firms will let you join as a junior trader, where you trade your own account. After proving competence you typically will be promoted to trading the firm's or a client's account. As far as prop or retail... you should seriously ask yourself if you want to pursue a career in the markets. If you are positive that you do then you should most definitely go prop, you will learn a lot more and actually meet people. If you just want to dabble then just stick to retail.
I request that this thread be renamed "I think I am smarter and faster than people whose entire careers are literally built on being physically closer to Wall Street so that the Ethernet cords are shorter so that their requests get there faster in order to be first and get first bite at the apple."
On October 07 2011 00:35 MangoTango wrote: I request that this thread be renamed "I think I am smarter and faster than people whose entire careers are literally built on being physically closer to Wall Street so that the Ethernet cords are shorter so that their requests get there faster in order to be first and get first bite at the apple."
Life is about competition and every career path involves facing up against people who are a lot more experienced than you. Its the only way you progress. But you understand this otherwise you wouldn't be a troll.
On October 07 2011 00:35 MangoTango wrote: I request that this thread be renamed "I think I am smarter and faster than people whose entire careers are literally built on being physically closer to Wall Street so that the Ethernet cords are shorter so that their requests get there faster in order to be first and get first bite at the apple."
Does anyone see the last few up days being a result of a short squeeze, the longs who got stopped out coming back in, and other cash coming in due to the recent up moves? I can't see how the market can keep this up knowing what kind of shape Europe is in.
I have a Greek friend who lives in Athens and he's been telling me how bad it is there. All transportation striking, energy department striking, new tax that is equivalent to one month's pay, etc. Having lived there for the 1st half of this year there is no way they are getting out of this unscathed. Europe is essentially screwed.
On October 07 2011 02:23 Sweepstakes wrote: Does anyone see the last few up days being a result of a short squeeze, the longs who got stopped out coming back in, and other cash coming in due to the recent up moves? I can't see how the market can keep this up knowing what kind of shape Europe is in.
I have a Greek friend who lives in Athens and he's been telling me how bad it is there. All transportation striking, energy department striking, new tax that is equivalent to one month's pay, etc. Having lived there for the 1st half of this year there is no way they are getting out of this unscathed. Europe is essentially screwed.
Sweepstakes, the market is waiting for the NFP numbers tomorrow morning. It is the most volatile monthly economic release and will probably break us out of this range. Many traders are waiting for this triple top in the vix to break before shorting the living hell out of the market. We need another sizable down leg in the market for there to be a short squeeze.
On October 07 2011 02:23 Sweepstakes wrote: Does anyone see the last few up days being a result of a short squeeze, the longs who got stopped out coming back in, and other cash coming in due to the recent up moves? I can't see how the market can keep this up knowing what kind of shape Europe is in.
I have a Greek friend who lives in Athens and he's been telling me how bad it is there. All transportation striking, energy department striking, new tax that is equivalent to one month's pay, etc. Having lived there for the 1st half of this year there is no way they are getting out of this unscathed. Europe is essentially screwed.
Sweepstakes, the market is waiting for the NFP numbers tomorrow morning. It is the most volatile monthly economic release and will probably break us out of this range. Many traders are waiting for this triple top in the vix to break before shorting the living hell out of the market. We need another sizable down leg in the market for there to be a short squeeze.
I'm still waiting for stuff to top out, but i'm pretty sure NFP numbers will be below consensus - it's gonna be the big one for sure
I'm already long various tbills and bonds, and i will be adding to some short stoxx/snp given the right timing
On October 07 2011 00:35 MangoTango wrote: I request that this thread be renamed "I think I am smarter and faster than people whose entire careers are literally built on being physically closer to Wall Street so that the Ethernet cords are shorter so that their requests get there faster in order to be first and get first bite at the apple."
lol
most inaccurate post i've ever seen in my life
it is the only way to trade. no other profitable method of trading exists. guys did you know that the only way to make money is mechanical arbitrage?
also, we should give up now because we cant beat high frequency traders at their own game. BrTarolg you have it all wrong, swing trading is about getting tick precision at <10 millisecond speeds. also, all you people who make a living out of trading discretionary obviously have too much brain lag to compete with the bots. give up now.
Warren buffet needs to keep up with the times, i bet hes losing money to people whose entire careers are literally built on being physically closer to Wall Street so that the Ethernet cords are shorter so that their requests get there faster in order to be first and get first bite at the apple.
On October 07 2011 00:35 MangoTango wrote: I request that this thread be renamed "I think I am smarter and faster than people whose entire careers are literally built on being physically closer to Wall Street so that the Ethernet cords are shorter so that their requests get there faster in order to be first and get first bite at the apple."
lol
most inaccurate post i've ever seen in my life
it is the only way to trade. no other profitable method of trading exists. guys did you know that the only way to make money is mechanical arbitrage?
also, we should give up now because we cant beat high frequency traders at their own game. BrTarolg you have it all wrong, swing trading is about getting tick precision at <10 millisecond speeds. also, all you people who make a living out of trading discretionary obviously have too much brain lag to compete with the bots. give up now.
Warren buffet needs to keep up with the times, i bet hes losing money to people whose entire careers are literally built on being physically closer to Wall Street so that the Ethernet cords are shorter so that their requests get there faster in order to be first and get first bite at the apple.
So according to your assumptions every hedge fund, mutual fund, proprietary trading firm and investment bank that hold positions in any of the cash or derivative instruments for more than a split second are losing? Bots can't trade with discretion, and discretionary traders shouldn't be competing with bots by trying scalp, unless you design your own bot. And finding a broker who's servers are co-located at the exchange is not hard.
On October 07 2011 02:23 Sweepstakes wrote: Does anyone see the last few up days being a result of a short squeeze, the longs who got stopped out coming back in, and other cash coming in due to the recent up moves? I can't see how the market can keep this up knowing what kind of shape Europe is in.
I have a Greek friend who lives in Athens and he's been telling me how bad it is there. All transportation striking, energy department striking, new tax that is equivalent to one month's pay, etc. Having lived there for the 1st half of this year there is no way they are getting out of this unscathed. Europe is essentially screwed.
the first couple of up days were definitely a short squeeze IMO, but I think because people saw 2 days up the market jumped on the hope bandwagon today. There is nothing of material coming out of the Eurozone talks that actually mean something so for now it's all risky risky speculation.
I'm in all cash at the moment... for me it's more about cash preservation than trying to make a couple of bucks playing company low's and highs.
One of the stocks i'm personally keeping an eye on is CAT... I work in the manufacturing world and based on the demand they place on our company, they are set to explode as soon as the bulls gain traction again.
On October 07 2011 00:35 MangoTango wrote: I request that this thread be renamed "I think I am smarter and faster than people whose entire careers are literally built on being physically closer to Wall Street so that the Ethernet cords are shorter so that their requests get there faster in order to be first and get first bite at the apple."
lol
most inaccurate post i've ever seen in my life
it is the only way to trade. no other profitable method of trading exists. guys did you know that the only way to make money is mechanical arbitrage?
also, we should give up now because we cant beat high frequency traders at their own game. BrTarolg you have it all wrong, swing trading is about getting tick precision at <10 millisecond speeds. also, all you people who make a living out of trading discretionary obviously have too much brain lag to compete with the bots. give up now.
Warren buffet needs to keep up with the times, i bet hes losing money to people whose entire careers are literally built on being physically closer to Wall Street so that the Ethernet cords are shorter so that their requests get there faster in order to be first and get first bite at the apple.
So according to your assumptions every hedge fund, mutual fund, proprietary trading firm and investment bank that hold positions in any of the cash or derivative instruments for more than a split second are losing? Bots can't trade with discretion, and discretionary traders shouldn't be competing with bots by trying scalp, unless you design your own bot. And finding a broker who's servers are co-located at the exchange is not hard.
Combined with the unexpectedly (wtf) high profits of one of the shares i was shorting as a hedge, and having my longs kill me, i've managed to wipe out a lot of my profit from the last few weeks very quickly lol
I've cut off the vast majority of my trades, sitting pretty flat atm
After having gilts and hedges get owned yesterday, to get double owned by NFP is pretty pain. I have no idea where they managed to conjure up such numbers but fwiw i guess i'll be bullish in opinion for stocks until they hit their 75MA probs
On October 07 2011 00:35 MangoTango wrote: I request that this thread be renamed "I think I am smarter and faster than people whose entire careers are literally built on being physically closer to Wall Street so that the Ethernet cords are shorter so that their requests get there faster in order to be first and get first bite at the apple."
lol
most inaccurate post i've ever seen in my life
it is the only way to trade. no other profitable method of trading exists. guys did you know that the only way to make money is mechanical arbitrage?
also, we should give up now because we cant beat high frequency traders at their own game. BrTarolg you have it all wrong, swing trading is about getting tick precision at <10 millisecond speeds. also, all you people who make a living out of trading discretionary obviously have too much brain lag to compete with the bots. give up now.
Warren buffet needs to keep up with the times, i bet hes losing money to people whose entire careers are literally built on being physically closer to Wall Street so that the Ethernet cords are shorter so that their requests get there faster in order to be first and get first bite at the apple.
Not sure if huge troll or utterly stupid...
You don't seem to have a single clue about trading. Stop stating painfully stupid things please.
On October 07 2011 00:35 MangoTango wrote: I request that this thread be renamed "I think I am smarter and faster than people whose entire careers are literally built on being physically closer to Wall Street so that the Ethernet cords are shorter so that their requests get there faster in order to be first and get first bite at the apple."
lol
most inaccurate post i've ever seen in my life
it is the only way to trade. no other profitable method of trading exists. guys did you know that the only way to make money is mechanical arbitrage?
also, we should give up now because we cant beat high frequency traders at their own game. BrTarolg you have it all wrong, swing trading is about getting tick precision at <10 millisecond speeds. also, all you people who make a living out of trading discretionary obviously have too much brain lag to compete with the bots. give up now.
Warren buffet needs to keep up with the times, i bet hes losing money to people whose entire careers are literally built on being physically closer to Wall Street so that the Ethernet cords are shorter so that their requests get there faster in order to be first and get first bite at the apple.
Not sure if huge troll or utterly stupid...
You don't seem to have a single clue about trading. Stop stating painfully stupid things please.
On October 07 2011 00:35 MangoTango wrote: I request that this thread be renamed "I think I am smarter and faster than people whose entire careers are literally built on being physically closer to Wall Street so that the Ethernet cords are shorter so that their requests get there faster in order to be first and get first bite at the apple."
lol
most inaccurate post i've ever seen in my life
it is the only way to trade. no other profitable method of trading exists. guys did you know that the only way to make money is mechanical arbitrage?
also, we should give up now because we cant beat high frequency traders at their own game. BrTarolg you have it all wrong, swing trading is about getting tick precision at <10 millisecond speeds. also, all you people who make a living out of trading discretionary obviously have too much brain lag to compete with the bots. give up now.
Warren buffet needs to keep up with the times, i bet hes losing money to people whose entire careers are literally built on being physically closer to Wall Street so that the Ethernet cords are shorter so that their requests get there faster in order to be first and get first bite at the apple.
Not sure if huge troll or utterly stupid...
You don't seem to have a single clue about trading. Stop stating painfully stupid things please.
s&p 500 went on a short-cover or rally yesterday on speculations of euro bailout, for like the 12th time
take short position on spx dia qqq or the direxon bull or long the direxon bear thursday 3pmish, stocks will fall friday 2%+. cover before mkt closes friday, = profit
On October 07 2011 23:32 BrTarolg wrote: One of the reasons im shaken is since wednesday this rally seems a lot more genuine than the previous ones
As a result i'm gonna hold off until i think its gone too far
Lol. You must not be talking about the S&P. Over here it is trading in a very obvious 100 point channel. How does this shake you? Are you a very short term trader? And what do you mean by 'genuine'? As in... it crushed your expectations?
Well previously i thought the rallies would not last more than a few days each so i was able to adjust my positions each time to take advantage of the range
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
Technically we're still in a recession. All the indexes point to high volatility and uncertainy in the market.
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.
nice to see a lot of opinions. any automated systems traders out there? 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.
I am a prop trader at an investment bank, trading all Asian equities and equity derivatives (and some FX forwards and rates). We do fundamentals, index arbitrage, ETF arb, dual-listing arb, and are expanding into high frequency/stat arb.
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.
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.
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?
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.
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.
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
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
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)
Well after the hero run, i think that marks the start of what is going to be an intermediate cycle bear rally
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
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.
"$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.
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
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.
"$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.
Well, snp touched 1220 and bounced back off so i guess thats our technical level, and as i said earlier since nonfarms, we are seing a v fierce bear market rally
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
strategies still running strong, the original ones i posted at least. lost 70 on the new set of strategies i was running. i think ill move them to simulation until they have a few weeks of results.
Well this was a boring week for me, stayed totally flat
Fwiw, snp is testing the 1220-1225 level for the THIRD time - i've got a short here with an extremely tight stop purely for that reason
When stuff gets too high and the bears are ready to move in, i'll be moving in with them But for now, no point fighting the upward trend. I'm not gonna go long cause things can blowup at any second though
Can anyone give me some tips for getting started in trading? So far I've just been learning about options and various simple and more advanced (iron condor, etc.) strategies. I'm a total, total, total, complete, I-had-no-idea-what-an-option-was-15-days-ago newbie, so I'm looking for advice on learning strategies, etc., and trying to focus my studies.
Read the FT every day, read bloomberg every day, look at some charts
See how the charts react to stuff that happens. First you need to understand why markets do what they do fundamentally If the dollar goes up, what does that to do gold? If we have a recession, what does that do to everything else etc. What kinds of economic happenings would affect markets in what kinds of ways?
Understanding trading products is not too important - they are just ways of isolating what you want out of a trade
First you need to understand how things affect each other - and then eventually you become more experienced and develop views and opinions on what will happen, and how that is going to affect markets
On October 16 2011 08:36 Ingenol wrote: Can anyone give me some tips for getting started in trading? So far I've just been learning about options and various simple and more advanced (iron condor, etc.) strategies. I'm a total, total, total, complete, I-had-no-idea-what-an-option-was-15-days-ago newbie, so I'm looking for advice on learning strategies, etc., and trying to focus my studies.
Thanks!
My advice to you is do tons of reading and seek to understand as much as possible about economics, accounting, finance, etc. I'd start with understanding the equities market before jumping into options and other derivatives. Derivatives are for the most part pretty advanced trading mechanisms that properly harnessed can mitigate risk as well as expose you to more (leveraging).
Secondly anyone who tells you they have a surefire strategy to make money in markets are lying or doing something illegal. If you want to win big go the casino. given todays economic climate you will probably have better odds at a craps table. lastly...
Their really isn't any good reason to be in equities (and their derivatives) right now, With the poor conditions in europe volatility is too high and the outcome of europe is still unpredictable. Why would you want to be in equities when most investors will tell you they are trying to liquidate and wait for greener pastures. The market is so volatile and rallies and selloffs so sudden that you could leave your computer to take a piss break and be back and see everything deep in the red. Not only is the volatility high but the risks are systemic meaning you can't engage in stock speculation when the stocks are all going the same directions due to news from the eurozone or bad economic data from the fed.
If you are insistent on starting up now buy stocks that are yielding large dividends and are consistent solid earners (for now). Companies like McDonald's, coke, etc. I personally like amazon right now as a real solid long-term investment, while the fire may or may not be succesful, though i think it will. amazon has shown that at 200$ a tablet they can be very aggresive with their pricing something you like to see in a company for long term growth. If someone were to ask you why you chose that stock you should be able to tell a bit about the company and what about that company you believe will make you money. I have a friend who once told me he bought 20 shares of apple stock "because its apple." This logic is bad and will eventually put you at the wrong end. fortunately for my friend he made money on that apple investment from solid quarters and explosive ipad sales. But his initial investment was based in emotions and percieved faith not solid fundamental or technical skills. What if apple crashed like they did in the 90's my friend would have never been able to have seen that coming either. he gambled. You probably already know this too but never put all your money in a couple stocks (especially ones that are all the same sector: (biotech, tech, commodities etc.) you are exposing yourself to a lot of undue risk by doing this.
lastly the best tip "pigs get fat, hogs get slaughtered." Most helpful thing anyone ever told me.
Yo Vince, my diversified macro growth-targeted portfolio is getting wrecked by this Eurozone nonsense. I don't have the time or tools to do the stuff you're suggesting in this thread, but I was wondering if you had any low-maintenance 1-2month positions to suggest that would do well in a stagnant global economy.
I was thinking of doing a long +5, -10% butterfly spread on something like transports. Does that seem reasonable? It seems what I'm betting on in that case is volatility, and I can achieve an arbitrarily safe low-return given the width of my long spread.
I'm sure you have some better more efficient ideas than my kitchen-sink attempt to reduce losses.
Edit: Aww fuck. Since my portfolio is so small, I have to pay retardedly large fees for such advanced trades, so my arbitrarily safe low-return has a starting negative value that I can't break even from unless volatility goes to 0, which is not going to happen cuz of the euro zone.
On October 18 2011 07:32 Gummy wrote: Yo Vince, my diversified macro growth-targeted portfolio is getting wrecked by this Eurozone nonsense. I don't have the time or tools to do the stuff you're suggesting in this thread, but I was wondering if you had any low-maintenance 1-2month positions to suggest that would do well in a stagnant global economy.
I was thinking of doing a long +5, -10% butterfly spread on something like transports. Does that seem reasonable? It seems what I'm betting on in that case is volatility, and I can achieve an arbitrarily safe low-return given the width of my long spread.
I'm sure you have some better more efficient ideas than my kitchen-sink attempt to reduce losses.
Edit: Aww fuck. Since my portfolio is so small, I have to pay retardedly large fees for such advanced trades, so my arbitrarily safe low-return has a starting negative value that I can't break even from unless volatility goes to 0, which is not going to happen cuz of the euro zone.
Are you even allowed to short?
For us people, i'd firstly do the following things
a> find a way to get better liquidity in your portfolio. I feel sick already paying my (tiny) spreads with a spreadbetting account (like, usually 1-5 ticks of spread, 10 ticks for the more complex stuff) b> hold cash
Imho, the best trade right now is hold cash if you cant short. The time to short will come in a few weeks, maybe a month, maybe two, who knows. It will come though
On October 18 2011 07:32 Gummy wrote: Yo Vince, my diversified macro growth-targeted portfolio is getting wrecked by this Eurozone nonsense. I don't have the time or tools to do the stuff you're suggesting in this thread, but I was wondering if you had any low-maintenance 1-2month positions to suggest that would do well in a stagnant global economy.
I was thinking of doing a long +5, -10% butterfly spread on something like transports. Does that seem reasonable? It seems what I'm betting on in that case is volatility, and I can achieve an arbitrarily safe low-return given the width of my long spread.
I'm sure you have some better more efficient ideas than my kitchen-sink attempt to reduce losses.
Edit: Aww fuck. Since my portfolio is so small, I have to pay retardedly large fees for such advanced trades, so my arbitrarily safe low-return has a starting negative value that I can't break even from unless volatility goes to 0, which is not going to happen cuz of the euro zone.
Are you even allowed to short?
For us people, i'd firstly do the following things
a> find a way to get better liquidity in your portfolio. I feel sick already paying my (tiny) spreads with a spreadbetting account (like, usually 1-5 ticks of spread, 10 ticks for the more complex stuff) b> hold cash
Imho, the best trade right now is hold cash if you cant short. The time to short will come in a few weeks, maybe a month, maybe two, who knows. It will come though
Started trading seriously last week, had a small portoflio that I checked on once in a while of Chinese blue chips, now doing more active trading, and getting mostly shafted by the crappy Chinese stock exchange. (At least I didn't get in when Shanghai index was at 6k haha)
Anyhow, got a question about technical analysis, what kind of time frames are useful? I mean, would you trade based on a pattern that lasts several months/1 year/several years?
On October 20 2011 15:06 Mobius_1 wrote: Started trading seriously last week, had a small portoflio that I checked on once in a while of Chinese blue chips, now doing more active trading, and getting mostly shafted by the crappy Chinese stock exchange. (At least I didn't get in when Shanghai index was at 6k haha)
Anyhow, got a question about technical analysis, what kind of time frames are useful? I mean, would you trade based on a pattern that lasts several months/1 year/several years?
Why are you trading Chinese stocks. I've met many Chinese traders that have been burned by China Stocks. Why don't you move into a market that is in a bull market or at least poised for a move? They are a lot easier to trade. Also patterns don't really work in any time frame if they aren't supported by fundamentals, especially in thinly traded stocks. China's economy is mainly export driven. In this current state of USD deflation and global economic contraction I don't see China doing well. I think you should look into commodity currencies like the Australian dollar, or even gold.
guys, too much "this doesnt work, this doesnt work" non-sense going on in here.
the speculation industry is awesome, mainly because there is such a variety in the ways people consistently make money.
mobius, you probably want to stick to liquid markets with low costs when you are starting out. costs are a huge factor if you are going for technical strategies.
On October 20 2011 15:06 Mobius_1 wrote: Started trading seriously last week, had a small portoflio that I checked on once in a while of Chinese blue chips, now doing more active trading, and getting mostly shafted by the crappy Chinese stock exchange. (At least I didn't get in when Shanghai index was at 6k haha)
Anyhow, got a question about technical analysis, what kind of time frames are useful? I mean, would you trade based on a pattern that lasts several months/1 year/several years?
Why are you trading Chinese stocks. I've met many Chinese traders that have been burned by China Stocks. Why don't you move into a market that is in a bull market or at least poised for a move? They are a lot easier to trade. Also patterns don't really work in any time frame if they aren't supported by fundamentals, especially in thinly traded stocks. China's economy is mainly export driven. In this current state of USD deflation and global economic contraction I don't see China doing well. I think you should look into commodity currencies like the Australian dollar, or even gold.
lol ----
And yes, the first thing you want to do is get your transaction costs down, this is free money
Even with a good spreadbetter you can end up paying roughly the equivelant of 15 dollars a lot, maybe an IB would charge you 2-3 dollars a lot If you're at a prop desk you got a 4k desk fee but you'll probably be charged like 1 dollar~ a lot
The thing is, the lower the costs you want, the more you'll have to commit
For example, if i wanna do £10 a pip on dollar index, then i'll be paying like 6-9 pips in spread which can be fairly costly (60-90 or 150 dollars~ For the same amount on a commonly traded spread, it would be more like 1-2 pips (or 30 dollars~) There are some places where you can commit larger amount of money to get lower spreads for a retail trader
This pretty much restricts all my strategies to having to be held for at least a few weeks Thats fine though, i like swing trading and looking at technicals
If i ever move to a prop shop, for sure i'll be doing a lot of price action trading (with no desk fees and a company funded acc of course)
---
In terms of technicals i'll look at moving averages, resistance support levels (i think this is important concept that everyone needs to know) and trendlines Rarely i'll look at fibbonaci
They "come up with a deal" at frickin 4am, and its not gonna work
If i was awake for market open, i'd short on the spike of sentiment over it happening, but i'm not awake, so i'm buying a put option here There is absolutely NO WAY that this level is going to rally much more or hold, all the technicals for reversal are in place
But this is crazy, i really don't think this deal is gonna work but loooool
strategies were down 112.58 last week but this week up 105.3
also secured a deal for an undisclosed amount of capital, but i cant show the numbers so ill stick with my personal account.
im going to be focusing on futures instead of forex now. apparently its more technical.
off topic: finance exams coming up and im going off to sydney for a holiday from tomorrow until a few days before the exams loool. i dont really know why im studying finance, its mostly useless (considering ive completed statistics). could have just gone to the university of wikipedia.
im pretty new to this whole trading thing and i have a basic question: as far as i see it, you only lose money when you sell stocks for less that you bought them. so my question is: why sell them? why not keep them and wait till they go up again, even if that takes some months?
On November 01 2011 05:29 Enox wrote: im pretty new to this whole trading thing and i have a basic question: as far as i see it, you only lose money when you sell stocks for less that you bought them. so my question is: why sell them? why not keep them and wait till they go up again, even if that takes some months?
Traders are jittery, coked up lemmings, that's why.
If do decent research and then buy and hold, generally you come out ahead in the long run (measured in years, not months). If you day-trade in risky IPOs generally you die at 40 of a bleeding stomach ulcer.
isnt there a combination of day trading and holding? i still dont really see the point in selling a stock when you know that it will cost you money. in my naive, unexperienced opinion, id only sell the ones which made profit and keep the others till they make profit
On November 01 2011 06:03 Enox wrote: isnt there a combination of day trading and holding? i still dont really see the point in selling a stock when you know that it will cost you money. in my naive, unexperienced opinion, id only sell the ones which made profit and keep the others till they make profit
Then you have capital held up that could be used to produce profit. If the stock went down, but you need that capital to invest in something else (and it goes up) it'll be a net gain so you've made a good investment.
On November 01 2011 06:03 Enox wrote: isnt there a combination of day trading and holding? i still dont really see the point in selling a stock when you know that it will cost you money. in my naive, unexperienced opinion, id only sell the ones which made profit and keep the others till they make profit
it all depends, many types of traders.
im involved in automated day trading only
There is no certainty that a losing stock will become profitable in a timely manner, therefore your capital may be locked up for too long and generate a low return per annum. You also might need to be unleveraged to sustain the drawdowns which is also pretty terrible and decreases your return p.a.
I've often wondered, do people usually trade on "gut feeling" and watching news events or do they trade using real finance theory (e.g. diversified portfolios, risk-neutral pricing, mean-variance portfolio optimization, delta-hedging, time series forecasting etc)?
Although I'd imagine it might be problematic or difficult to estimate some of the parameters needed in some of the models in finance theory.
And have there actually been any studies on whether trading using these theories makes much of difference to trading on "gut feeling"?
On November 01 2011 22:17 paralleluniverse wrote: I've often wondered, do people usually trade on "gut feeling" and watching news events or do they trade using real finance theory (e.g. diversified portfolios, risk-neutral pricing, mean-variance portfolio optimization, delta-hedging, time series forecasting etc)?
Although I'd imagine it might be problematic or difficult to estimate some of the parameters needed in some of the models in finance theory.
And have there actually been any studies on whether trading using these theories makes much of difference to trading on "gut feeling"?
well there is no single method people use. traders generally dont get deeply involved with diversification as trading is different to investing. there is tons of data out there, optimisation (parameter calculation) is the easy part, finding a consistently profitable strategy is hard. as for 'studies'... none that i know of, academia does not widely accept that trading is viable.
LOL so i went long USD/JPY last friday on suspection of intervention, CHA CHING. annoyed i woke up late though my exit was horrible but i caught most of the move (hey what you cant blame me for living in the uk lol)
Referendum announcement has put dollar back into the picture after what could have been a completely failed daily cycle.
I've been shorting EUR/USD recently on top of that, however i'm flat atm since i don't have a short term opinion on the next few days
I expect NFP to be quite below consensus (60k or less) but i'm not gonna trade into it.
On November 01 2011 05:29 Enox wrote: im pretty new to this whole trading thing and i have a basic question: as far as i see it, you only lose money when you sell stocks for less that you bought them. so my question is: why sell them? why not keep them and wait till they go up again, even if that takes some months?
You lose money whenever you could have made money and didn't. There's no difference between a failure to sell high and a loss. Also tying up your capital waiting for an investment to show a profit stops you from investing elsewhere. A sunk cost doesn't make an investment any more virtuous, making back your losses doesn't make the money any more special than writing them off and making money elsewhere.
On November 01 2011 05:29 Enox wrote: im pretty new to this whole trading thing and i have a basic question: as far as i see it, you only lose money when you sell stocks for less that you bought them. so my question is: why sell them? why not keep them and wait till they go up again, even if that takes some months?
You lose money whenever you could have made money and didn't. There's no difference between a failure to sell high and a loss. Also tying up your capital waiting for an investment to show a profit stops you from investing elsewhere. A sunk cost doesn't make an investment any more virtuous, making back your losses doesn't make the money any more special than writing them off and making money elsewhere.
I dont really agree with that portion. It depends on your model.
the further you predict into the future, the more noisy it gets. therefore a good variance reducing strategy is to have reasonably close targets.
this also means you will often miss the majority of the move. but who cares? if you make money consistently you dont care what happens afterwards
On November 01 2011 05:29 Enox wrote: im pretty new to this whole trading thing and i have a basic question: as far as i see it, you only lose money when you sell stocks for less that you bought them. so my question is: why sell them? why not keep them and wait till they go up again, even if that takes some months?
Traders are jittery, coked up lemmings, that's why.
If do decent research and then buy and hold, generally you come out ahead in the long run (measured in years, not months). If you day-trade in risky IPOs generally you die at 40 of a bleeding stomach ulcer.
HaHa I couldn't stop laughing. I think that it is important for a person to hold on to their stock for a long time. Eventually after a market cycles through for a while they will eventually be up. And if the world ends you won't need your money anymore so you might as well risk it.
On November 03 2011 20:19 RowdierBob wrote: Gah, how likely are the other PIIGS to fall if (when) Greece finally defaults?
It too overly dramatic to say the banking system of many countries will go kaput if Greece is but the first domino to fall?
I have a portfolio and am wavering on whether or not to exit. I'm loathed to sell in a downturn, but am concerned it could get a whole lot worse.
I'd say pretty high. Italy and Spain look to both be in terrible shape. Just look at the Italian-German yield spreads over the past week.
It's even been rumored that the EU is putting on a show to make it look like they're trying to save Greece, while in reality they want Greece out of the EU so they can use all of their bailout funds on Italy lol.
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