I still think patterns are valuable knowledge. If a pattern xyz appears n times over 10 years and causes a reversal 60% of the time in my books that’s a trade opportunity.
I don not believe in patter trading.They are useless for me.I have tried several times but have been unsuccessful.
Good post, Something you need to learn is being able to identify deceivement…
What you see, and whats really happening can be 2 different things… When traders say" trade what you see", you have a 50/50 chance of being wrong. And just my personal feelings, you dont want those odds… But if your able to see thru the wool the MM are trying to cover your eyes with, you can maximize your chances of being right…
THIS, is why you need hours and hours of chart time… You either have a system, and redundently follows thru steps and checkdowns, or you trade by visual recognition of what is about to unfold in the near future, simply by following the jabbin flows of the price…
News is a whole nothing ball game…
Because they have enough money to move the exchange rates in their favor.And then if pro traders see an initiative for the contra move they join it quickly,by this causing a huge spike in the other direction,and usually retail traders are slow and not that pro they will miss it or/and not quit quick and lose cash.
You can have a RR of 1:100 if they have a 10-15% win rate…:56:
Yep I agree with you.
I try to think like a market maker but there isn’t much information… Can you share more on the wool cover details?
What I do think is that for every trade I buy the mm has to sell and will have to at some point make money, not always though, but make money from all these positions to the other side of the market. I see market accumulation taking place and can see when to expect the whipsaws.
Wish I knew more on this subject for sure.
I do believe that news, aside from major event earthquake or bomb etc, translates well to a higher timeframe. A daily or higher chart shows recovery or depreciation of currency just by drawing trend lines.
But hey, I still trade with news in mind and besides… it gives a reason to read FT and means I can sound 'cool’at when out with friends talking about GDP etc. haha
I presently am selling eur, buying gbp, -the actual currencies - not a notional contract, I’m delighted to see the 86.00 support that many exporters were patiently waiting for, that same level that I posted about when price was at 84.50 and we could see all sorts of pin bars etc telling us that price would fall (check out some of my earlier posts)
I export from UK to EZ - so think, why would I sell when eur/gbp rises?
The retail ‘broker’ is not a broker, he is a bookie, when you see all retail short on Aud the ‘broker’ will hedge - thus retail enters the market.
Check out Clint’s posts on the liquidity money chain.
Also check out the cots for non reports - some of which represents retail
Why the hell do you think I used casino references in my comparison?
I know the money chain.
Spare me the remedial condescension.
Again, retail RARELY if EVER registers on the radar of large money market makers, or large bank operations.
They don’t “help” liquidity, or at least not as often as you made it sound, nor do the big guys “run stops” to take out someone’s $0.01 pips.
The point of this entire thread was the importance of chart patterns. And most of the posts I’ve read here seem to think that they fail more often than not. It needs to be known that the failure of patterns aren’t aimed at screwing over retailers. It’s just the fact that they don’t matter in the grand scheme of things.
Simple enough.
Since you know well the money chain then you know why the cftc refer to rfed’s, you also know well which side of the trade they are on - so tell me how they don’t add to liquidity?
I don’t make any ‘sounds’, I just tell it like it is 
BTW you are wrong about the radar - ask some of the guys in London at lunch time do they look for the dumb money.
Discussion finished from me.
have you read any information about forex - forexmarket is about $4,000 billion a day that like 20X most market
not one market maker / bank or investor can make the market move in a a direction
the no such thing as and this is Forex basic
the market will always move in the direction it want to due to supply and damn
well do u just flip a coin and make a guess ? with out even knowing , you are trading some type of patten , either candle stick patten , ma PATTEN , even trading news is a patten
I’m very curious to know which guys in London you’re referring to?
& how often do you actually speak to them over the course of a typical week to compile this information.
RFED - retail foreign exchange dealer, so termed and regulated in US by the cftc.
Commercials - businesses that have to be the fx market, not by choice but by necessity.
We have one primary aim, that by use of the fx market we do not lose money or competitive edge as a result of currency fluctuations.
To attain that goal we have to buy gbp and sell euro if our net sales exceed net purchases in EZ (Eurozone), i.e. net exporters.
Like any business we make our purchases of any product, including currency, when prices are cheaper - so as the price of GBP falls (eur/gbp rising) we sell that cross - i.e we sell our accumulated euros for the now cheaper gbp.
We need someone to take the other side of this trade, the fx market takes care of that.
Companies such as Toyota, BMW, AEG are just bigger versions of what we do.
Hence the commercials are the ‘driver’ of the market so to speak.
‘Dumb’ money is a nasty term used by some who doubtless regard themselves as ‘smart’, when using it they refer to retail traders/investors.
Warren Buffett quote: "when ‘dumb’ money acknowledges its limitations, it ceases to be dumb.”
Now def finish of discussion for me
… Yay…
A lot of your intention in trading is to hedge yourself in your dealings. Otherwise, you might make a great sale, but lose money in the currency transaction. Smart money. And yes, as you mentioned that is exactly what Toyota, AEG, Airbus, Caterpillar, Pfizer, GSK, and many other international corporations HAVE to do, but that has NOTHING to do with spot forex. Those moves in futures, and forwards push the spot market around. Most of the time counter to some poor retailer’s freshly spotted “head and shoulders”.
The retailers don’t add much liquidity if any at all, BECAUSE THE TRADES STAY ON THE BOOKS OF THE BROKER. Why do you think they ever got the nickname BUCKETSHOPS?! There is no such thing as the EUR/USD. The movement there is a fictional action created to be a market derivative. You can buy all the euros you want, but you really don’t want them. Tell me how that action adds “liquidity”? Let alone the fact that your money never changes denomination from your deposit currency.
Retail liquidity?
Riiiiight.
I didn’t ask you to quote me chapter & verse from some book or internet forum you’ve read, I specifically asked you which guys in London you personally speak to & how often do you communicate over the course of a typical trading week regarding your reference in the earlier quoted post.
The vast majority of retail orders are warehoused.
These day’s the only occasions those brokers go to the wholesale market will be to net off or balance out their risk exposure, & each firm will work their own bracketed under/over exposure limits.
And of course, size of account or tier of activity doesn’t in any way justify the term “smart” regardless where or who you heard it from.
There’s a plentiful supply of idiot money in the commercial & large speculative community who very regularly experience howlers when participating in the financial markets, but you’d know that if you spoke to the “guys in London (or any other major regional trading hub throughout the world) at lunchtime” on a regular basis.
Goddam Monday mornings argh!.
Forex, what’s Forex? Is that like a type of beer or something castlemain forex?
When a customer hedges an investment by sitting a few hundred million on a currency do you think it affects the market at all?
I giggle every time I see these guys throwing that quote around on here.
I registered a like to this post I spotted on another thread a couple months back & it quite aptly & correctly describes that ridiculous term.
I totally agree, there’s no such thing as a consistent group of smart traders.
MasterTang asked me how?
Real world fx - recently a BdeC in a UK city ran out of Euro cash - major problem - Eur/Gbp being supported with Euro buying in late July/Aug for holiday time. (part of the reason that I could suggest that 86.00 would become support back at end of June)
Some commercials with large euro cash stocks get a good rate, Eur/Gbp falling and get a rising quote - retail just provided liquidity completely unintentionally.
Liquidity?.. riiiiight
Compact - don’t know re the large specs, I do know of one commercial who made the walk over to lge spec and made a ‘howler’ - it’s not easy making that walk, a little like taking your own rhd car over to France, (which I’ve done a few times and know to my cost it’s not easy.)
I def do not know of any commercials who “very regularly experience howlers when participating in the financial markets”, this is a completely new one to me, I cannot figure who possibly can do that and still be in business.
‘Hedging’ is the wrong word, we do not ‘hedge’, we simply average our currency costs so that it becomes a definable figure for the future, thus sales and purchasing decisions can be made - yes futures.
The lge specs are the speculators, they are trying to second guess where price is going, the commercials want to know what their cost will be - there is no room for speculation, second guessing or howlers - only absolutes, specs are the main liquidity providers, commercials are grateful for their risk taking.
The names of ‘dumb’ or ‘smart’ or ‘idiot’ are not in my vocabulary, I always believe that he who thinks he is smart and knows everything knows nothing, he who is prepared to learn will know everything that he can learn.
I think you’ve made three fallacies in one (long) sentence.
First, you say patterns are useless but candlestick formations are “good”. I hope you understand that candlesticks are patterns.
Second, if large traders use patterns to wipe out small traders, why won’t they also use candlesticks to wipe out small traders? It’s not like candlesticks are some unknown trade secret.
Third, if large traders use patterns to wipe out small traders, then you can just trade contrary to the pattern.
Of course patterns have value. If a pattern has 60% predicative value, that shows correlation. And if you’re 60% correct on your trades, you will be very wealthy.
It’s more correct to say that there’s too much subjectivity whether a pattern exists. Is it really a heads and shoulder pattern? Or just a bunch of waves? So that’s the problem with patterns…we tend see whatever we want to see.
Furthermore, the problem with patterns is that the trader either gets too greedy and holds a position too long, or refuses to stop loss when it goes against him. I believe patterns do a good job telling us where price will go. But it doesn’t tell us how long or far.
Lastly, it takes a long time for patterns to form. A trader may make more money flipping burgers than sit in front of a computer waiting for a pattern.