as an outsider you’ll get your meals served, but you don’t know how it’s made. to me, this is FX.
only 1% of the news you know about. you don’t know the games between the banks/big players or the game of big player only. after between 5-10k hours of FX, it’s more unpredictable as ever. the only time you’ve got a chance is when the market is quiet=no news, no strange algo’s, enough volume. but even then, it’s very hard to make consistent money. you know the price, but you don’t know how the price is made of. to bad, i’m a customer not a cook.
You don’t have to know and understand everything in a certain environment in order to be a participant and (hopefully) a beneficiary. So you don’t know how to bake bread, but does that stop you getting a sandwich?
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HAve you really sat and watched the charts playing for 5 hours a day, 5 days a week for 5-8 years ? I’d have thought you would be able to see by now .
I’m afraid from your post, I agree to an extent - you’re not the cook, I don’t think you’re the customer either though, it seems to me you’re likely to be the meal !
This same problem has been the subject of so many discussions and dissertations by so many since teh markets first opened. The works of WD Gann and “Elliott waves” are attempts to make sense of teh markets, Taylors trading technique and Bradley SIderograph are simplified and esoteric versions respectively. People have suggested teh markets are always right because they represent “Perfect knowledge” and others have written books like “A random walk down wall street” However, the one I favour is the one called ;
“Where are the customers yachts.?” - This suggests that in the bigger picture, we are but fodder for the industry. They give us an illusion of independence and freedom, but we are so handicapped by spreads, commissions, interest and lack of level 2 information, that most of the time we are massively handicapped amateurs betting against the professionals and their computers The odds are against our success.
Yet still we soldier on !
SOme systems work in Trends, some work in Ranges and some work at picking tops and bottoms. So NONE works all of the time.
Hours and learning, spending hours watching and hours reading and watching videos. Choosing a method which suits your personality, are all I can suggest. The method you choose, how well the method suits your own personality and your psychological response to the “Flight fight” dilemma are what will eventually see you succeeed or leave the arena.
Learning to cook well is so much easier than what we are trying to do here !
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@Falstaff
making hours in FX are not only watching charts. some days it’s more about thinking about the moves you’ve played. charts are a part of it. but i must admit, after all those hours. i feel the market is more unpredictable as ever. yes, it took a long time to find your own game. thought i found it, worked for months on end. but the market is the market and ever changing. as i said, as an outsider, you’ve only got a chance when there is no news, no strange things, but “normal” behavior. i must admit, i work from 1d,4h,1h,15m and when i really make a choice, the 1m charts. my favo charts are the 1m ones, so there is more unpredictability. but still, which chart you choose, prices have a story. i don’t know the story of the prices. i only make a prediction.
If you’re talking about the “Reports” on Bloomberg and in the “News” - Don’t worry about it ! - “They” haven’t got a clue either - They just make up a story to fit what the prices do AFTER it has done it and sometimes the "Story " has to relate to some very obscure stuff when the main news was opposite to the move.
Prices don’t go in response to news - just look at alll the “Don’t trade the news!” threads. Prices just go up and down ! There are some patterns which we recognise and seem to repeat. these usually have been explained in terms of “psychology” (of teh traders) That psychology of the individuals and of teh group and the crowd are the real driving forces.
@Falstaff
i don’t know about bloomberg and co. and i don’t believe these people will ever tell the story at the same moment. but what i do know. when the day is done. afterwards, you’ll read the story of that day and you can see the moves why it happened. it’s mostly news which make the markets go up/down. without news, markets don’t move much.
trading when there is big news, is deadly for outsiders/humans. calendar news=algo-time… 
i’ve used patterns, it was my strategy and thought and it worked, patterns are the answer. but they are only the answer when the market “behaves” and it’s volumes are normal. you have to wait for those quiet moments, and even then. well, the market is ever changing. the irony, after watching endless/countless patterns. i came to the conslusion there are no patterns. ok, perhaps sometimes you see them, but those are not every day. at this moment/today i have less feel of the market than 6-12 months ago. i thought, i would “feel” the market better when putting 1000’s of hours watching and thinking about the charts. i would see it’s patterns and its deviations. but the market isn’t predictable. if it was, besides the banks, also the outsiders are making money.
Unlike Stock exchange, foreign exchange is a decentralised market. There is no Kitchen. FX is more like modern day online shopping, whereby there is numerous online shop to purchase goods from. Different online companies compete against each other in terms of services and reliability for a reasonable cost.
In Fx, being part of a big institution doesn’t guarantee profitability. There may be good strategist in the institution to fall back on for good advice. Still i do not believe that is going to make you a more profitable trader. End of the day, it boils down to each indivdual trader’s ability to actualize sound Trade Management.
trade management is very important. it took me 1.5 years to find my sl. tp was somehow more easy to find. but more important is to predict. thought patterns were the answer. unfortunate, there are endless patterns. the only way to understand price movement is the story of it. this story you only know, when everything is done. when the meal is served. well, the banks have their libor, their newsalgo’s,etc. these extras, we, as an outsider never have. it’s only price and “volume”.
I beg to differ, how many times have the fundamentals fool us? Trading fundamentals can be rather tricky. Even though some fundamentals may gives us an extension of ’ POSSIBLE ’ Q1, Q2, Q3 or Q4 direction of a particular currencie. It is the future outcome we are talking about. It can always change at a moment’s notice or market structure have change (like the price movement have already been so called “priced in”) For example, let’s say you have insider information, that Bank of England is going raise interest rates. You are 100% sure of the reliability of that information. Just look at what happen to the recent price of the Sterling? Sound trade management is still the key to success and not insider information. Especially so for decentralised market like Spot Fx exchange.
the secret to trading is “trade whats hot”. you cant make sense of a market that has moved and is now in consilidation. those consolidation times are 70-80% of the timespan. you trade one market and have 2 good months with your “system” and then 10 bad months.
why?
because your system worked in those 2 months and the other 10 it didnt work.
people still keep thinking that trading is like a job or a business. find a market get to know it and trade it.
this view is so wrong it couldnt be further away from the truth.
the truth is “trade whats hot”. you cant make money in consolidation unless you are a swapper.
just immagine it like this: in trading you are like the lion. move with the prey and dont wait till it comes back again somewhere next year.
or from another point of view (lion again) when the elephants departured to their winter reservoir hunt whats available (gnus, zebras or whatever) untill next year your favourite prey (elephant) is back and available again.
or another one: in desperate times the devil eats even the souls of flies and cokroaches.
learm to go with the action. markets dry up and become calm. when that happens you must switch to another.
example: in the summer months global stock markets are calm and barely moving but commodities are in the price finding time.
instead of forcing yourself to trade (and make losses) in low volume summer stocks simply switch to commodities for the time.
the trick is to be in the volume/volatility and not to marry one specific pair and then sit around 80% of the time trying to make sense out of consolidations times.
there is so much more to trading than to set your favourite pair to eur/usd learn some indicators and a strategy and trade it. thats only the very beginning out of which most people do not evolve any further than that. they find limited knowledge online but get it presented like its all you need to know. but it isnt. its only the very beginning. the real stuff is simple. so simple that people put little weight in it and ignore it. doing the same mistakes over and over again and not knowing whats wrong.
the most simple thing and in same time hardest thing to learn is “when to trade and when to do nothing or to move into another field”.
when you mastered the “when its better to stay out” you will find the profits and you will never again say “the markets dont make much sense lately i feel confused”
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Having the most accurate focus is of utmost importance.
TRADE WHAT YOU SEE!
- Price Action Trading on tick charts (BOX BREAKOUT)
- VIPERS Country Store (COMPRESSION BREAKOUT)
The 2 links above are the best examples
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@alphahavoc
fundamentals are only a part. i’ve seen many times, fundamentals ok, but still disappoint or there was other news in between which dictates the price. there is mostly news, you don’t know of, which dictates the price movement. it’s not only the 100 pips movement price changes, to me 30-50 point movement is also alot. my tp is 10 pips. i’ve noticed you have more chance with small movements than the big ones. so to me, the micro waves are very important. also the trend at the larger frames, but in the end, 1m
@WestBam
my tp is 10 pips gbp-jpy, so consolidation or not. i’m not targetting trends. just small movements. what i’ve noticed, volume is very important. change in volume is change movement of price, it has another dynamic. also important at which time to trade. i prefer london lunch time. 1.5 hours after london open and close 1 hour before wallstreet open. each moment in day, has a different flow.
i also don’t like to switch from pair to pair, or commodities. because those have different flows, traders, movements. and you have to learn to feel those. also news has different effects. to trade well, you also have to know about those little small things.
the summer i’ll take a vacation, because volume is too low, which totally change the movement. i was caught in surprise this year it already started begin of june.
the markets make sense, only after the day is done and you’ve red the news. as a said earlier, as an outsider it’s almost impossible to predict it’s movement. but, if you know some little things to think about which have effect on price movement, let me know. every new and specific info is welcome
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"Sell in May and go away - Don’t cme back 'til Labour Day ! "
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Hey Lex and Alph. Years ago I had an opportunity to work alongside some brokers prop desks, on the FX side they traded news, all the time. They did it so much that they considered 29 or more pip Slippage just the cost of doing business. Within these companies they have specialists, (Hmmmmm I think that is what they call the guys on the floor), the larger concerns actually have what they call a “Desk” for different products, and traders there only trade one product, but anyway, some specialized in majors, others in comdolls etc. On the CME floor, traders don’t wander around from on product to another, they specialize. Now, if you are a 30 B$ fund you have loads of traders specializing in different products, and they spread the trading out between them. I can’t imagine someone going from ALI then running to trade EC, you get the Idea. That is one of the advantages big funds have, diversification, but within that, there is Specialization.
As far as Holiday/Vacation, everyone knows that traders go on vacation June-Sept, why? Kids are out of school.
The Ever Commenting VIPER
@TradeViper
i do agree, you have to specialize. every little detail counts. when my system worked, at times after an hour watching the charts you could “feel” the flow. but only on a “normal” day. i could wait 2 hours to make my move, and had my tp in less than a minute. but tooo often there is noise= news, algo-games or i don’t know what. but i loved those “normal” days. mostly swinging around a round number, eg 150, botttom/top 149.800-150.200. it’s like, everybody will get a piece of pie, just wait and have a tea.
but did you learn some specific tricks at a prop desk?
Working around these guys helped me understand how unremarkable they are. This was not an independent prop shop, it was the desk for a big firm. Traders had no size limits, some were moving a yard and a half a month. One of the sales guys told me that’s why the compliance guy was bald heheheheh. I think one of the things that shocked me, was the fact that it was like the wild west, everybody running around trading news, moving massive amounts, I thought there would be way more control
The other thing was they all had salary and bonus, so as opposed to most Retail folks, they really didn’t have to worry about paying the rent, but instead of using a disciplined approach, everyone was a cowboy. The Alpha was lackluster, and of course there were rebate payments for size moved. They were not self clearing, so the clearing house would rebate the shop and then they would give a percentage to the traders. Pretty standard stuff, really didn’t learn much, other than they had nothing special.
The Ever Wide Eyed VIPER
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@TradeViper
so, they didn’t or hadn’t any system? it was only at times when there was news? which channels the news come from? only an bloomberg account, or something else?
too bad everything is algo these days, the market is so “choppy”.
I will tell you, when they were trading news, it was just like some kind of addictive “Spread Betting” they had Bloomie terminals, and paid the premium for no delay, but still lackluster. They all had their “Systems”, but discipline, was not really their forte’. It was that company in Chicago that was owned buy the guy with the Cadillac and hose, so maybe that explains it, but my sales contact said it was pretty standard stuff for the industry.
Choppy generally means lack of liquidity, I think we will never know exactly why, but in uncertain times, the best way to defend your capital, and high water marks is to stay out, and this might explain why the machines have been left to battle it out the past few weeks. Although the EURO has put in a nice appearance today.
The Ever Working For The Weekend VIPER
Reading your article I understand that you are not a cook but I have doubt on are you really a customer. As a trader we don’t need to understand the whole environment if we are able to make profits. The timing you are saying 5-10 hours is a really good timing. If you are really spend this time in forex daily you’d gone be the master of forex trading. Because we have to apply different strategies and planning in different timing based on the situation and demand of market.
@TradeViper
well, these people are algo’s now. i don’t think there are many human traders trading news.
choppy, also when everything looks “normal” sometimes a big player uses it’s algo and are playing games, waves 40-60 points. well during lunch, before and after, volumes are steady. but it’s movements aren’t. it changed, for a time it was the most stable time to go live and have a chance to predict price-movements.
@ethan_jeremiah
i thought also. learning all the patterns and it’s deviations. to trade only at the same time. but i’ve noticed, there aren’t any patterns. sometimes there are, when you lucky. but what i do know, prices have a story, and i can’t predict it’s story. i would love to know the story as it happens.