I don’t really like the term ‘bias’ because its not really a ‘bias.’ A ‘bias’ would indicate to me a wrong way of thinking. What the market comes down to is buying and selling, and I am looking for buying and selling. How do I do it? Read valid news, look at various charts, check calendar releases, logically process them together to form a picture of what is happening and whether buying/selling is happening and whether you can take advantage of it. Its your ability to filter and interpret the data thats important here.
Also I tend to dislike the word fundamentals as most retail traders tend to use it to mean “not something that they can see on a chart” (rather like how Monkey D Luffy in One Piece (great show that PureMuscle here led me to watch) refers to anything he doesn’t understand as a ‘mystery mountain/plant/hill/island,’ many retail traders term anything they can’t draw on a chart as ‘fundamentals’ or even worse ‘fundies’ (groan)). After all, like I mentioned in my other thread, 1000 backpackers travelling to the USA from the UK is neither fundamental or technical but will have an effect on the market. What is ‘fundamental?’ I think its not a very good term, but anyway…
Easiest example of using ‘fundamentals’ recently was Obama saying that he would take action against Syria which led me to buy oil. Of course there are steps in between that logic that you need to know (why does the price of oil go up when Obama threatens action against Syria) rather than jumping to a conclusion which actually complicates it slightly more (its not just WAR = OIL UP, I think you need to learn the steps why).
Haha that’s one of my brother’s favorite animes. Maybe I’ll check it out. It’s long though…
I see. It’s so hard to talk about trading as different terms could mean different things to different people. To me, after you filtered and interpreted the data, your decision would equal your bias, as it may not be 100% accurate but I get you. To me, fundamental would relate more towards investing rather than trading, because something has altered the “true value” of an instrument. I could be wrong but I don’t think you can use fundamentals to scalp. The Obama example is kind of like economics, which can be complicated. Would it be correct if I assumed you spend a lot of time reading forex related news?
Its not that useful to judge about the ‘fundamental value’ of the currency in the same ways as a company because there is a balance sheet for companies. Although there is a central bank balance sheet, they are not the only players in the market. Perhaps you can judge the value within 500-800 pips by the balance sheet but its not really tradable from a daily/weekly maybe even monthly perspective.
I don’t really read ‘forex related news’ because it is unfortunately amateurish and generally poorly reported from 2nd/3rd hand sources and has a lot of opinion and poor technical analysis (that I have mentioned many times I do not like). I just look over the financial sections of respectable publications.
I have been frustrated of late because I was betting that the USD would fall significantly in value since the zero QE cut was announced, and it had only moved significantly. Having said that, I am still expecting it to happen. Its a bit more of a confusing subject because the weaker than expected trade results from Europe seem to indicate that the Euro has risen too quickly to be competitive (perhaps why it hasn’t shot up). It certainly makes me think that if the EURUSD was 1.4/1.42 a real selling opportunity will occur. In the near term, the debt crisis is on everyones thoughts, but in my mind, raising the debt limit, or failing to raise the debt limit can really only have one effect.
I probably exaggerated this statement unintentionally because I wanted to wrap things up. The way I see it (and I could be wrong, and things change on a daily basis) is that if a debt limit is agreed - this will mean that US can borrow more, increasing the supply of bonds etc. If the debt limit is not agreed, then the effect will be a loss of profits, jobs etc. Both have a similar effect on the US dollar, but one is shorter term and one is longer term. You also need to figure whether the buying/selling will occur stock market first or in the bond market first. This unfortunately means that nothing really moves in straight lines - which is why my statement about just one direction is misleading - more accurate to say at the moment I have one thought about it. However, note what I said about the trade balances in Europe so there is going to be a limit to it, and also note the intentions of the Fed to end QE by mid 2014. Greater emphasis or urgency or further developments will change things, but that’s my thoughts now (this thread has the purpose of journaling thoughts - please note that this is not a signal service).
Bloomberg, Wall St Journal, Financial Times, Reuters. Wall St Journal is more ‘junky’ than the rest. You don’t need to read end to end, just skim read the important points - should take 5 minutes per publication per day once you are used to it although it might take you longer in the beginning. Critical reasoning is a very important skill to have if you are going to get anything out of it.
Currently the market seems to be fixated on the Fed, and I think its not too good to exclusively focused on them - especially as they have not really released a significant statement since they didn’t cut QE last time. There has been a lot of talk/speculation that qE will continue forever, but I notice that much of this comes from the lay press and not reputable sources - just worth bearing in mind. EURUSD is approaching 1.4 around which I would be happy to look for dollar longs (though not necessarily with the euro) if there is any indication that there is dollar buying.
Frustratingly, the euro appeared to top off at 1.385 as opposed to 1.4 which led me to watch the dollar buying this week. I do have a habit of picking arbitary points and expecting prices to reach there - I recall I did the same thing earlier in the year. I should be more flexible in the future.
I am in the process of moving my tested automated system to my main account, and will be making my myfxbook private this weekend to stop people figuring out my edge on an otherwise fixed system. I may reopen the myfxbook in the future but am likely to keep the history private as if someone copied my edge could be diminished in less often traded pairs.
Why would you go private when you have openly asked for a public retail account. I’m not to sure what to make of this, and I enjoyed following your performance - as you know mate. But come on, we both know that no retail trader, or group of retail traders are going to diminish you edge, let alone have any skills good enough to try and counterproductive your own trading approach?
Lol agreed. No one on babypips is going to care enough about your myfxbook to try and reverse engineer your EA… And if your EA is simple enough where it actually could be reverse engineered by just knowing entries and exits then it is as good as worthless anyways lol. Sounds to me like someone is not confident enough about the EA to show its performance being forward tested. Easier to take it down and make a lame excuse now then to explain losses
Suggesting it’s worthless is not what I was saying, in fact Goldenmember has some of the best (and consistent) results I have ever seen on a public account - and it’s only because of this that I was perhaps knocked to one side by the statement relating to why he has gone private (which is his own choice). I would be very much surprised if any retail traders even knew how to successfully reverse engineer a trading system, let alone take up any liquidity in even the least liquid pairs. This is the FX markets we are talking of, not Penny Stocks which can be moved by a single individual.
I don’t think goldmember actually thinks he would lose any edge by posting his myfxbook for his EA. from his posts he seems like he’s got a firm enough grasp of market concepts to be past that nonsense. So that really only leaves us with the conclusion he isn’t confident enough to show forward testing results live.
I’ve already had a few months testing live - I have my reasons to assume that some people are willing and capable to attempt to reverse engineer automated systems which you are not aware of.
Looking ahead, it appears as if the combination of ECB rate cut, possibility of tighter policy from the Fed will have some effect for weeks/months unless there is a Fed style reversal of expectations. USDJPY longs, EURUSD shorts which were the vogue earlier in the year appear to have high probability set ups.
The automated system had a reasonable monthly performance so I will be continuing with it. Looking at December, last year I traded very little, and I intend to do the same this month unless there is something really stand out that I would take, although I will be hoping that the automated system makes enough money to get by.
Friday’s action was quite confusing as the USD lost ground and stocks went up on data that would indicate that the Fed should cut QE. If you recall Ben in July (about 5 months ago) he did say by the time unemployment reached 7.0% he would have stopped QE (he hasn’t even started reducing it). October’s Fed meeting also stated that most Fed members agreed that tapering should start this year (2013) if the job outlook remained positive. With GDP exceeding expectations with the job numbers being better than expected, if the Fed minutes are to be believed then QE should be reduced at this December’s meeting. However, on the other side, Ben has had a habit of ‘shocking’ the market - and this is his last real meeting so there’s always the possibility of going out with a bang.
I’m switching off my automated system over the Christmas period, but it has performed surprisingly well. I may still switch it on after the Christmas period just before New Years, but I would estimate that it has netted me 5% this month (with about 75% operating time) whereas last month it netted about 2% (with 25-30% operating time) with results excluding rebates. I will comment more once the month has closed.
Market wise I see the Fed actually did what it said it would do. I also listened to Bens testimony and it seemed likely that they predicted QE finishing towards of the end of next year, and the first rate rise the year after. This would fit in with many of the central banks estimated of the XXX/USD price unless something unexpected happens next year.
Even though others havent been commenting, thanks for the update. I get emailed weekly when there are updates in this thread and I appreciate the commentary. Gives me hope while I try to come up with my own edge worth automating.
I am restarting trading over the weekend, avoiding the low liquidity environment that typically appears around Boxing Day and New Years. Looking at prior low liquidity periods I had noticed that either the market is massively flat and ranges within a very small pip range (which is not ideal for trading) or whipsaws wildly over minutes or this year over days. Neither situation is particularly good at the methods I employ because I can’t really apply a logic to whipsaws/whether it will whipsaw.How is the whipsaw generated? Is it market makers, or simply a big company that is needs to move currency and it is the only one significant one in the market? Unfortunately without an order book its very difficult to know and for me worth avoiding. However, I am aware that plenty of people make money from these situations.
I have had issues with the new MT4 build since some of my EAs are actually modified decompiled code which has been tricky. I am now looking for an MT5 account to shift my attentions to because I assume that the metaquotes people are gradually trying to shift people away from their old MT4 platform to the new platform (which does actually seem better, but old habits die hard). The only issue I have with that is that I will have to close my trading record when I switch, and leave that as a legacy and hope to restart with a fresh MT5 account.
