Ha ha… I have learnt enough about the markets to not believe in it, do you believe in father christmas, the tooth fairy and that news release numbers are not known beforehand by those who move the markets ? Tom Williams is man enough to tell it like it was in his time, so was Jesse Livermore, and I believe it to be no different now, just more computerized.
True, but by thinking this way I am seeing why price moves the way it does more so that anything else I have ever read.
Ok this is something I keep hearing so in true conspiracy form I’m going to dis-believe it, if you believe it answer me this… if the Retail trader is truly so insignificant, then would that not leave just the Banks, Businesses/Investment/Hedge Funds to trade amongst themselves, so how do all these “businesses” stay in business ? who’s money is it they are all taking in order to stay in business ??
Ha ha… what’s a floor trader… but seriously… a floor trader should be more worried about tripping over an ever increasing number of tumble weeds blowing on through.
Most traders will probably not believe what Tom Williams and Jesse Livermore have to say, but then again most lose at this game too.
Well, that’s Wednesday over and the pair has made another high although it fell a few pips short of taking out 1.5300. Right now it’s hanging around about the 1.5260 mark. It also rallied yesterday too. Interestingly the sudden increase in the ratio of retail traders short to long that jump from around 1.5:1 to around 2:1 that I wrote about yesterday happened much earlier on in the day yesterday than when I wrote about it and it PROCEEDED the rally.
[I][B][U]So what going on guys?[/U][/B] Number of small retail traders that are short jumps from around 1.5 to 1 to 2:1 and bang the market rallies about 300 pips in two days! Yesterday’s low was about 1.4964 and yesterday the ratio of traders short to long reached around 2:1 yesterday. [/I]
Their is no belief required in the COT report. It’s a statement of facts produced by a governing body in a regulated industry. The COT report is a statement of irrefutable facts, not something that takes faith or belief to accept.
As far as your business question, you and I are trading with our respective broker/dealer. We’re not trading with billion dollar hedge funds, world banks, or governments. And the money lost in forex from the retail side is keeping the broker/dealers happy. The US or any other major player could care less how much I win or lose a day in this multi trillion dollar a day industry.
Ok this is something I keep hearing so in true conspiracy form I’m going to dis-believe it, if you believe it answer me this… if the Retail trader is truly so insignificant, then would that not leave just the Banks, Businesses/Investment/Hedge Funds to trade amongst themselves, so how do all these “businesses” stay in business ? who’s money is it they are all taking in order to stay in business ??
I would think they are taking each others money. I think it is rare in this day and age that people agree so while some will be long others will be short. Most of the money that moves in forex has absolutely nothing to do with speculation at all!!!
Honestly there is no conspiracy about retail traders being just a little blip on the screen, it is reality and all you have to do is think about it logically. Think about what forex is and why it exists. It has existed for some time now yet retail trading has only been available for a few short years (mostly due to electronic trading) So how did forex ever exist before us???
OK so if the bank traders are making money and they need losers in order to do so, and the losers are not retail traders then all I can think of is the Banks customers and businesses that need to exchange currency and do so through the banks are the losers… so to speak.
Also it’s not always mentioned but the COT report in only a snap shot of 1 day, not a week. I noticed even in the school section on this site this was not mentioned.
1.53 and 1.54 were both taken out today as retail traders piled on more and more shorts. DailyFX also reported an increase in retail traders going short.
I have some ideas that I’ll post as to why they do this when I have time (probably at the weekend) but I’d like a few people who believe that retail traders are usually wrong about the market (if there are any people here who like me actually believe that) to post some of their ideas as well if anyone would be so kind?
Retail traders still loading up on the short positions which, if the ratio holds, suggests further GBPUSD gains. I’ll take another look at this again in the morning and maybe make a call then.
OK the number of traders short GBPUSD has eased off slightly, I’ll look for a decent entry point to enter long next week and if I find one I’ll try and post as soon as I do it.
Looks like tweezer tops forming on the daily, I will be watching this pair next week for a short entry as well. After a 1200 pip run up, its reasonable to expect a retrace of 4-500 pips
Considering Daily/Weekly/Monthly still look bearish to me, this could be setting up a run to new lows. Obviously I am just looking at the charts to make this assumption as opposed to trading the “opposite” of the majority.
Why would you want to go short when the long-term trend appears to be up? The market is making new highs and retail trader sentiment indicates more GBPUSD gains as most retail traders are still short even though the ratio wasn’t quite as extreme as it was.
Why would you take a position against the direction of the long-term trend? When a trend gets started it takes a lot to stop it, when the shorter-term trend is moving in a direction to the long-term trend it’s usually a correction rather than the start of a reversal and the long-term direction usually ‘wins’.
If you enter in the direction of the long-term trend at a decent price and the market moves against you as it did when I entered at 1.4731 providing the trend remains in your favour if you hold the position you’ll likely end up in profit (although just don’t hold on once the trend has reversed).
Why would you go against this by shorting the market?
Well you’ve said why I guess, you believe the bias is still down. I believed it changed to up around the time I posted this thread here. What exactly makes you believe it’s still bearish?
Its a matter of perpective, the daily/weekly/monthly charts still tell me we are still in a down trend. Price is still sitting between the 38.2 and 50 fib on the daily, barely at the 23.6 on the weekly… Price could retrace all the way to 1.68 and still we are in a downtrend.
In my opinion the GU strength is rubbish, and its only a matter of time before it turns and falls a 1000 or 2.
I agree the shorter time frames are bullish, but the long term trend is still down.
So taking a strategic short can be a good idea, as I’m sure you know price doesn’t go straight up, and the GU is due for a correction. I wouldn’t be surprised to see 1.54 to 1.49 next week or the following.
The last two posts have been great…I’ve been bearish the pound (fundamentally) for about a year… and donated a lot of pips to the market for trading my beliefs not my charts.
When it printed a bullish b-fly I went long. My first target is 1.58. I have no idea what could possibly be so great about the pound that we could see 1.58. Nor do I care.
I would love to short this thing, but my trade has rules and the rules stand. Worst case scenario I make 400 pips intead of 1400.
I don’t believe the pound is in a any sort of long-term uptrend, but I’ll take what I can get.
I would love to short this thing, but my trade has rules and the rules stand. Worst case scenario I make 400 pips intead of 1400.
Me too. My emotions are yelling at me to short the thing, my head says no bloody way. If you read back this thread you’ll notice that I was at the point where I was considering closing the position about a week ago but didn’t. Judging by the long/short ratios of several Forex brokers I wasn’t alone either! The retail traders poured on the shorts (and believe me I could understand why they wanted to) and bang the pair rallies 300 pips. I’ll write about why I think this happens later, but I’d like someone else to give me their opinion first, but if nobody offers theirs I’ll still tell you my theory…
Its a matter of perpective, the daily/weekly/monthly charts still tell me we are still in a down trend. Price is still sitting between the 38.2 and 50 fib on the daily, barely at the 23.6 on the weekly… Price could retrace all the way to 1.68 and still we are in a downtrend.
And there’s the answer as to why we disagree right there - not so much time perspective but methods for determining the trend, you’re into fibos. I don’t touch them, except maybe the 50 percent (middle one). That’s not to say I don’t believe they can have some validity, it’s just that they’re a lot more deceptive than they appear to be after the event. It’s the same with trend lines really. When you see them after the event they look so obvious, but they’re not. Take the current setup. As I said a week or two ago on this thread a triangle was forming with a fairly flat resistance line and a slopping support line. The flater the trend line is the stronger it is, so it was more likely than not that the support, not the resistance broke first. And it did. But the price didn’t quite fall past the previous low and it formed a parallel channel. Then the resistance was taken out. I wrote then that the support was probably weaker than the resistance but still believe we were in an up trend - reading the trend lines is, like fibos, pretty damn difficult.
In my opinion the best indicators for the trend are sentiment and price. In the following order of importance they are -
Price making a higher high or lower low than x number of days ago. A new 20 or 30 day high or low is nothing much. A new 80 or 100 day high or low is pretty significant. But you gotta use your judgement on each case.
Sentiment. Retail Forex is usually wrong.
Movement sizes. Look for the BIGGEST candles, not the most frequent candles. For example, say there were 7 down candles and 3 up candles in a 10 day period. If the 3 up candles were huge it would, I believe, indicate that the big players were bullish and waiting several days for the market to fall before putting on huge positions to take out all the stops - hint as to why retail traders are usually on the wrong side.
Long wicks. Long wick means the market tests a level and really wasn’t comfortable with it. As someone put it, a long wick is a sign the market was ‘spooked’.
EDITED -
the picture attached (hopefully) explains my thinking, well, that and the retail sentiment.
Ok I’ll try. I attended this webinar, one speaker named Stephen Leahy did a talk called “think like a dealer” in it… if I recall correctly, he mentioned he worked for a dealer, might have been FXCM, and he said, like others have said in this thread, that the average trader has more winning trades than losers but they still lose money. This means to me that they cut their winners short and let their losers run. So when the price is rising and SSI is showing lots of shorts it maybe cause the longs have exited for a small profit and the shorts are still hanging in there.
(sorry moderators I can not seem to post a link in text only, it keeps changing it back to a link.)
Also in this blog there are 15 minute charts of the SSI, has anyone got this platform and if so is it updated live every 15 minutes. I email FXCM and they say they only have daily updates but I don’t think the sales men know their own product.
OK, I’m out of here. He posted a useful link only to have it edited out by a bunch of control freak editors. I’m of to a more ‘reasonable’ website. Can’t be arsed with this crap…
The link is still usable just not click-able anymore, but yeah a bit control-ish especially as I checked in the FAQ and I could find nothing about posting links.
Anyway Todd Krueger just sent out an interesting video on how to notice the possible bottom of this last GBP/USD up move.
