I also lost a couple of pips due to this fall. Had a long with a few + pips. This drop killed it. Gladly I have moved my SL to further up due to + pips. Now waiting for retracement to sell pair.
The volume is minimal. It is being marked down now to be accumulated later. So I am looking for the buying opportunity now.
Sorry to all those who lost on GBP it was a tricky pair with the media touting better inflation for a possible rate hike, a long position was tempting. All said and done, there will be other opportunities. Stop loss is the most important thing…Remember if it doesn’t feel right get out. Live to fight another day.
Trust your instinct, I read your earlier post and that was your get telling you to get out. Trust human instinct it has been developed over billions of years of evolution to protect us from danger.
Hope you recover. Hope you didn’t loose too much either…
Thanks for your commnets brothers, Actually, very difficult to think back to forex once again.
Sorry to hear this bro. I myself on the verge of losing my account but trying my best to protect it and can only hope that the pair finally bounce back. I can understand what you are feeling.
I hope you have not lost much and come back to Forex with new spirits. Best of luck for whatever you are doing.
Hello traders,
and hello Kashif!
I have been a little quieter since going back to work this week (Tuesday)…
I have just prepared this analysis on the GBP/USD (hourly) chart going back to the big sell-off last week (13th August);
I hope this helps you to see not only the relationship between volume and price moves, but also how each round-number
level (1.68, 1.67, 1.66) has been broken thanks to the presence of high trading volume behind the moves…
The accumulation phases are getting shorter, and the volume on each break is getting smaller, which would SUGGEST
that the sell-off is becoming weaker, as my esteemed colleague Emeraldorc (who is looking quite dashing in his new
profile photo, if I may say so) has already quite correctly identified…
However, there is no telling what the future holds, and that is not what trading is about… so, kashif, be prepared to manage
further losses AS MUCH AS a rebound to the upside and in your favour…
Happy trading!
Yes pip the fall is definitely coming to an end and is likely going to be accumulated again. What is astonishing is that the selling on this pair is institutional and it has been aided by traders being sucked into weak buying by creating those expectations around inflation. Anybody who looked closer would see that wages contracted a day before those figures, this will indicate that demand was naturally weak and inflation was going to fall, normally in winter the inflation figures higher as more energy is consumed in this case we are still a month or two away from the heaters. The fact the market moved GBP lower on that figure tells me that greater forces are at work.
First off Carney needs Sterling lower if he is to raise rates which he will and he will likely use the higher inflation in winter to do this spring/summer 2015. It was inconceivable that the UK will damage its drive to be a Germany by risking an expensive Sterling above 1.7000, also not forgetting that the trade balance that would naturally see an increase in imports from the stronger Sterling. Most Europe have embarked on a degree of protectionism from Chinese imports.
That’s the fundamental picture.
The technicals are also saying that Sterling has seen its highest volume since August 2013 I believe… A pair that is rarely political unlike the Euro. With the volume that piled in, you must take notice that the momentum will mean a serious mark down. We have seen the initial move up correct in a matter of days note the move from 1.6500 took months, secondly the second up move from 1.6460 is also being corrected. My guess is it will rebound a bit but long term if rates are to rise Sterling must correct at least below 1.6480 ensuring it can be gradually restored to confidence eventually back to those highs but this time including any rate rise in its climb.
This is not the first time the market has tried to force Carney to raise rates by buying up Sterling, it was the same thing when it made that 1.6900 high, then Carney came out and said, I need to see unemployment below 7% so the market cooled off and sold Sterling 1.6700, and now this… It’s a broken record.
Yes final word Don’t buy before 1.6460 especially if the rate talk starts again. However there will be short term buying opportunities.
Emerald,
that was a BEAUTIFUL post…
I hope everyone else is reading it…
A great dissection of this rate hike/hype,
from its very beginning.
THANK YOU
PipMeHappy Thankyou for that schematic chart, totally crystal clear and it is new information for me.
I gave up looking at volumes when I did a cross check of volumes by different brokers and found several things
completely different. It looks like I threw the baby out with the bath water.
Emeraldorc thanks for the analysis hype bash. I think I’m one of those suckers taken in by the hype ready to be fed to the market movers. Fortunately I have my GU trades in a completely separate account. ( am long at 1.66536 )
No problem Aminio. My brush with stocks made me more aware of volume as you can’t trade a stock without it. FX is primarily zero-sum so losers pay winners. Stocks are not zero sum but still work on the law of supply and demand, so if the market is seeing a stock being held, the price is moved higher to tempt those people to sell and when all there is an over supply of the stock the price is marked down to encourage people to buy the stock again, so the preference is really about buying the stock.
You can only detect when a large stock is being bought up when you see the volume increase. This is your cue to buy. As volume is reported at the exchange, this is far easier to observe in stocks, that said the big players use the media create a confusing environment, this allows specialist manipulators to buy or sell gradually in the confusion and hence protect their own positions from moving against themselves too fast after all they want to grab as much stock as possible at a good price before price runs away.
In FX the scenario is much the same but as one currency is paired against the next. Institutions can buy Euros and sell Dollars and sell Euros immediately to buy Yen when the intent was to buy Yen but hid their activity. They could have simply traded USD/JPY and sold Dollars that way.
This in addition to unreported volume makes this market four times the complexity of the equity market. Leverage makes this market more attractive. Tick volume however measures activity, which when compared with the sentiment (bullish or bearish) denoted by the candles, you could provide yourself a 90% accurate picture.
Tick volume activity measures the number of time price changed, if we have a long bullish candle and price changed several times to register a large tick bar then it denotes that bulls had a definitive win and if you thought each tick was worth 1m USD then you can also paint a financial picture of the money going in. Each brokers tick volume will vary because they can only measure activity associated with their own feed provider, it would still from a visual perspective show much the same picture maybe the tick count will be different but the spikes will always be the same from chart to chart hence we can have volume discussions here.
So my friend you only need to know how to act on volume and also compare it to the sentiment and price information on the chart. The rest will come together naturally and you can be more creative with your interpretation, after all men move institutional money even though they are faceless so they cannot always hide their activity. They are simply men…
Thank you, Aminio, What is frustrating is that the FXCM mobile platform does not feature the Real Volume indicator, but there are plans for this to be made available in the near future, which would suit me better because I tend to use my smartphone for most of my trading… I rarely have the chance to be at home on my girlfriend’s laptop, which is the only time/place when I can access the desktop trading platform and see volume data… During the summer months I had time to be at home more often, which meant that I took the opportunity to look at live market moves WITH VOLUME, like Anna Coulling suggested in her Volume Price Analysis book… I think that the ticker tape of Jesse Livermore’s days is what we have in digital form through the Real Volume indicator now: I will definitely try to use it in my trading, if not live then retrospectively…
I hope that you will be able to make use of it too!
Hi Emeraldorc it’s been an education reading your post and it has converted me to looking at tick volumes, it will be interesting to see whether I can build a readable picture by using them. This is probably a stupid question but is the volume available on the charts, tick volume, or does it require a special indicator ? 90% is more than good enough for my bungling, Thanks PMH for mentioning Anna Coulling - I could not see well enough to use a smart phone, was thinking of getting a tablet, I feel over privileged in terms of time & access to screens compared to you ! I’ve ordered her book, but guess it will get lost in the bank holiday madness.
Wow very nice contribution bros. This gave a relief but let me tell you the problem I am facing at the moment. Please bear with me as I tell you this from start. As you know that I am using the EA and it was a set and forget approach. Now when the EA opened 0.33 trade after doubling I realize that my DD is getting huge. I stopped the EA but it started buying from 1.71 when the trend was about to reverse. I closed part of my positions as advised by PipMeHappy worth 668 USD loss to provide more equity in case of a further downfall and as expected the pair moved bearish on and on. I then added 2000 USD in my account in order to prepare for more downfall and to protect my account and positions. I was positive that the pair will bounce back as it is extremely oversold. But I was wrong and even now there is no hope of a nice bullish trend.
Like I said above I was relieved a bit by reading your posts but articles like this made me very worried:
Support for British Pound to Dollar Rate Breaks, GBP/USD Forecast to Head Towards 1.64
Specially this article ruined my day:
UK Pound to Dollar Forecast: GBP/USD Unlikely to Reach an Exchange Rate of 1.72 Again in 2014
Now, as you said that there will be buying opportunities now very soon but you also said that this will be a short term buying opportunity. They say that the resistance is at 1.66 mark so even if the pair will bounce back and reach 1.66 mark I will not be able to protect the losses and here is why:
Clear Large Screenshot: http://oi62.tinypic.com/21o1pqr.jpg
Even my last opened trade was 1.6741 mark so in order to even minimize the loss I need the pair to go to atleast 1.68 level. I can accept the rest of the loss but I cant handle this big loss at the moment.
Now, my main concern and question is this that according to you is it possible that this pair will go down further 1.64 level before going back to 1.68 area? They say that in September is is possible that this may down to 1.61 level and all this reading makes me so much worried. Last night I woke up several times during sleep. Oh man I am too much worried. Please suggest what are my options? Is it better to close all trades and accept the 3000 USD loss right now or will the things get normal soon? I dont mind waiting but my only fear is that what if it goes below 1.64 etc?
Please help.
Thanks a lot.
Nice analysis, Emerald!
PipMeHappy and Emeraldorc: thanks to both for your analysis that is new to me because of new comer to forx. I hope, before one month if i joined with this forum, it would be bright to me for the sake of God.
Hello Kashif,
and thank you for all your comments on the Pound and the volume threads…
I see your predicament, and I would like to use one example from my own trading:
on my demo account, in Nov.2012, I went short on EUR/USD because I believed then
that the troubled single currency would continue downward…
What happened then was that the pair changed direction and by the beginning of 2013
it had nearly touched 1.3750; having entered my short around 1.2750, I was nearly 1,000 pips
under… Eventually, the pair retraced its rise and by April 2013 it returned to 1.2750 before going
higher again; indeed, it has since only touched the 1.2750 level in July of 2013, and has never been
at that low level since…
I actually did not wait until April but quit that trade in February, by accident, which meant that I had
a 200 pip loss, more or less…
So, what I am trying to say is this:
-
nobody can predict the future;
-
sometimes bad trades can turn around but it could take many months;
-
sometimes you may wait and hold on for many months but a negative trade may never turn around in the medium term ( in the above example, had I entered the trade in July 2013 at that 1.2750 level, I would have still beeen waiting, more than a year later, for EUR/USD to return to that level…).
What will you decide, for your GBP/USD trades?
Cheers
This reminds of Jesse Livermore who kept hoping the market would turn and kept buying up more stock as price fell… He was wiped out in a matter of days. Note the market knows that strong longs need to release their Sterling so these guys need to have their stops taken.
This is a major correction, there is panic selling, profit taking from the previous bull move, this is now moving into the higher time frames. This no market to be in let alone buying more.
My advice take the loss, close out and save your account and don’t be a victim of the market. No point holding on. Turn off that EA and delete from your machine and never use it again. Better half your equity than all. It will take time to raise a new stake to come into the market.
Kill the trade. Sterling will go lower. My reckoning is it has to any rebound will be minor for now.
Take a look at this for simple safe trading strategies…
Thanks a lot guys for your continuous support and help. So, now I need your final approval.
1) What you say is that if this is the best time to close all my trades or shall I wait in hoping that it may retrace back even a little to like 1.66 level? What are the odds that this pair will go bearish more without a retracement?
2) Shall I only close GBPUSD or also close EURUSD trades too?
Large Screenshot: http://oi62.tinypic.com/21o1pqr.jpg
Please Help. Even if there is a little retracement chances than please let me know. Please consider yourself in my shoes and my account size and advise what would you have done in my position. Thanks a lot.
Yes Aminio, Anna Coullings book is good I read all the volumes, particular like her volume on fundamentals something I wanted to read, to brush up on my knowledge of the fundmanetals of the currency market all the way back to Bretton Woods.
Tick volume is available as the standard volume indicator in MT4 and all good platforms FREE. You just have to look at the indicator list. You will note that any serious speculator or investor has volume on their chart.
If you have questions feel free.