Was just reflecting on the weekly cot data, in times gone by I used to be amazed that the commercials were always wrong - price going up and they were selling, going down and they were buying - just figured they were plain stupid, could they not see that price was falling - so please sell.
My own business has a strong seasonal trend, in winter we are quieter, in spring and summer it’s all go.
In winter when prices are making lower we buy - it’s called ‘winter stocking’, in spring and summer the prices are rising we sell - at a profit - now the cot makes sense.
The extremes:
in winter, when suppliers have their absolute ‘best’ price, we know they will/cannot go lower, we finalize our last purchases, we know from then on prices will rise, buying is finished from that point, soon as the price rises we are selling.
in autumn prices have peaked, we know the discerning customer is now looking for bargains, our prices start to fall, we begin to think of buying for next season …
New Zealand and southeastern Australia have returned to Standard Time as of today.
All of the kill zones and session times shown in this Table have changed for traders in New Zealand and s.e. Australia. Beginning now, New Zealand traders should refer to the line labeled GMT+12. Australian traders in New South Wales, ACT, Victoria and Tasmania should use the line labeled GMT+10. Traders in Queensland should continue to use the GMT+10 line in the Table.
For traders in all other parts of the world, the session and kill zone times in this Table remain unchanged.
This update to the Table will be effective through September 27, 2013.
So I spent the last two days developing a proper trading plan and back testing 1 month of data on the Euro for March 2012… I did this using MT4’s EA but did manual trading using excel. I found that back testing, for me, really helped me focus on the importance of having a sound trading plan, not only in how you analyse the market, but where your TPs and SLs are.
I hope this is useful!
(PS: I am officially EXHAUSTED LOL)
[B]Starting equity[/B]: $10,000 (this is what I plan to start with)
[B]Risk per trade[/B]: 2%
[B]First Profit Target[/B] - At SL level (if SL is at 20 pips, my first profit target is at 20 pips. I don’t trade if the SL is greater than 35 or 40 pips depending on market volatility and time). This is 50%, to break even.
[B]2nd Profit Target[/B] - 1.5 x the SL (if SL is 20 pips, my 2nd TP is at 30 pips). This is a further 30%. I also move my SL to half the position size (eg from 20 to 10, or from 30 to 15).
[B]3rd Profit Target[/B] - Either 2 x Original SL level or I let it run based on market structure. For the purposes of back testing I closed it at 2 x profit target level.
[B]Return/Risk Ratio[/B] - 1.15. Its not great, I don’t know how to improve this based on my trading style.
[B]Time Frame used for Back Testing[/B]: 15 min
Here were my results:
Total trades - 36
Winning Trades - 19
Losing Trades - 14
Break Even Trades - 3
I may have some tips to help you improve RR. Ofc I don’t know your system as well as you do, so I’m just speaking in general.
One thing you can try is to split and move your tp levels. Instead of for example 1/3 off at tp1, 1/3 off at tp2, and 1/3 off at tp3, you could consider 1/4 off at tp1, 1/4 off at tp2, and 1/2 off at tp3. Another thing you can look into is moving tp levels and being more aggressive. Again, I don’t know specifics, but in my day trading experience I use something like a 20-30 pip sl max, usually more like 15-25. 2:1 here is 50 pips tops. So what happens when the market moves in your favor by 100-120 pips? you’re missing out on a large portion of the move. I don’t have to be right all the time, but it’s nice to be able to capitalize and be rewarded when your analysis is correct.
Here’s a quick example. Lets say currently you hit 1.5 RR 60% of the time, and of that 60%, you’re hitting the 2:1 50% of the time, effectively 30% of the time. So .61.5+.32=1.5 if you split 50:50 at each tp you need to divide by 2, so expected return is .75. However lets say you could hit 4:1 just 25% of the time. This would give you a return of 1. In reality there is a lot to look at; specifically how you manage trades to BE, and your % chances to hit each profit target. Hitting the 4:1 isn’t so hot if you’re losing your whole position every time you don’t manage to hit tp. Run some more testing, play with the numbers, and gl (:
hii guys iam newbie and i heard alot of things about inner circle and i watched some videos to him until they deleted , i think here now him better than anybody is it enough just to follow his videos and anlysis to reach to the land of real traders , i am still confused one day i deside to read a book another day to follow threads thank you
since you guys definitely caught my interest with the US10Y-USDX div… I started to look at it just very recently.
I do have a very basic question, it might be a stupid question but it does bug me a lot:
then I assume the data to be showing Bond prices and NOT yields? right?
But it was always my understanding that Money flows to higher yields… so if this is correct wouldnt that mean that USDX should be inversely related to US10Y?
( I have a feeling Im going to get a “duh” moment once I get some reply to this… which is a good thing!;))
First of all, I keep emphasizing the fact that when you trade you are using TWO currencies so you should be keeping an eye on at least TWO interest rates.
I like to use the terms: Risk Aversion and Risk Appetite instead of risk on risk off because it is clearer.
If sentiment is risk appetite, then money will flow to the country that has an increasing interest rate differential.
(For example, EUR I.R. - USD I.R.) 0.75-0.25 = 0.5 differential, if eur where to lower i.r. to 0.5 then the differential would be 0.25, so comparatively money would flow into USD. If eur where to increase i.r. to 1%, then the i.r. differential would be 1-0.25 = 0.75, so money would flow to euro. If they both increased i.r. by 0.25%, then the i.r. differential wouldn’t change so that would be a wash.
If sentiment is risk aversion, then money will flow to the safe haven currency. (In this case USD)
Breaking news is the kicker that often throws the market into risk aversion.
If you just consider yields you can remember that money seeks higher Yield
If you just think of price, you can remember demand is higher when price is lower, (Think of the Demand/Supply Curve in Econ 101 hahaah)
OH YEA and investing.com actually shows two different charts i believe one for yields one for price for the US 10 year Lol.
thanks mate.
so just to clear this up:
peterma and co, if you are watching US10Y vs USDX, and expect USDX to catch up to US10Y… are you looking at US10Y or US10Y YIELDS?
cheers
hehe You got me I’m still learning and that was pretty much the extent of my understanding.
I believe so, but risk adversion would mean people want to get out of risky currencies and into safe haven currencies, no? In any case to buy us treasuries you have to buy usd first.
Your thoughts?
Here’s a discription of risk appetite / risk aversion that I really like. It takes into consideration intermarket analysis with risk sentiment.
Here’s someone’s description of Risk appetite vs. aversion I found a while ago that I REALLY like.
[B]Risk appetite/Risk On = [/B]market believes global economy is going to perform well and thus growth is going to be strong, commodities are going to be in demand and people are more willing to put on Risk trades. Risk trades mean people are much more willing to buy up the commodity currencies as they expect interest rates to go up – AUD, NZD, CAD. When risk appetite is present money tends to flow into the carry trades so generally the JPY gets sold and people buy AUD/JPY, NZD/JPY etc. Sometimes with Risk on depending on what the interest rate outlook for the U.S. is the USD gets sold as well. Equities tend to rally, emerging markets, commodities do well.
[B]Risk Aversion/ Risk off [/B]means the opposite of Risk appetite. People tend to take profits on their risk on trades causing AUD,NZD, CAD to fall. IF people believe the global economy is going to slow then they tend to sell commodity currencies. Sometimes the EUR,GBP will fall as well. Carry trade tends to unwind as well. If there is a full blown crisis aka second half of 2008 and everyone is scared of a global meltdown then the risk aversion happens but on a massive scale as people Buy JPY(carry trade unwinding) and USD (safe haven). Equities tend to drop, emerging markets drop , commodities drop as well.
“…[I]USDX is for the most part positively related to US10Y yields and inversely related to US10Yprice…”[/I].
When risk is ‘off’ demand for safe haven currency (i.e. in this case US$'s) increases to enable market participants to buy safe haven bonds - US bonds. This generally sees a rise in USDx as more US$'s are demanded to buy bonds. As demand for bonds increases their prices increase. As bond prices increase - yields decrease. Therefore there is a negative correlation between USDx and Bond Yields.
Your chart Fred shows bond prices.
To clarify and not confuse anyone - I was addressing Skratchs comment (copied from his post in quote marks). The relationship between Bond Yields and USDx is negative (inverse is a better term for it). The relationship between Bond Prices and USDX is positive.
I think I know where Skratch was coming from in general economic supply and demand theory but I dont really think we as currency traders need to worry too much about yields. Follow bond prices and know that when bond prices rise they are usually accompanied by rising demand for US$'s therefore USDx rises. Therefore as Bond prices and USDx go up we have an additional indicator that fibre and cable may go down.
I personally look at yields because it makes more sense in my head xDDD
In any case to buy us treasuries you have to buy usd first.