Survivalist Forum banner

1 - 20 of 171 Posts

·
Society lied to me...
Joined
·
70 Posts
Discussion Starter #1
I've done a quick forum search and noticed there's not much on Forex (Foreign Exchange Trading). After speaking with a couple of members, it occurred to us that Forex speculation offers a unique way to potentially make money while tucked away just about anywhere with internet service.

With that said, Forex speculation is extremely volatile and is probably poorly suited for anyone uncomfortable with trading and/or losing huge amounts of money. Again, I fully realize this type of activity is not for everyone.

I wanted to start this thread as a place where the few Forex traders on survivalistboards.com can bounce ideas off each other.

I'll start it off.

I am a Forex speculator and mainly focus on trades that appear to be overbought, oversold, or ignore macro-data.

Today's trade, for example, I felt the NZDUSD pair had gone too high and NZ would want to do something to devalue their currency (ignoring macro-data). So I entered a short position in the NZDUSD. Luckily, I was correct as the NZ Central Bank says maybe no more rate increases for the time being. The NZDUSD promptly lost almost 100 pips.



I was able to capture 61 of them. [end bragging] :)



I am also looking at two other possible trades.

First, I've noticed an inverse correlation between the USDCAD and the price of oil. It follows that as the price of oil rises, the USDCAD falls. The correlation is not perfect, but it looks like the Forex trade is a pretty good proxy for playing the price of oil. (Keep in mind the leverage used in the Forex trade when looking at the graph)

The USDCAD "buy" in the above pic shows me closing a short position and was a 17 pip gain.



Secondly, the USDHKD pair interests me as a "holy heck China is sinking the US dollar" trade. The HKD has been officially pegged to the USD and trades in a very narrow range. Some believe if the HKMA (Hong Kong Monetary Authority) were to allow free trading of the pair, the HKD would quickly devalue. I don't agree with that assessment and believe the HKD would appreciate given its importance in trade (I think it will become MORE relevant in the future).

Here's that narrow trading range (7.75 to 7.85)...this is 10 years. Notice how it looks like it wants to go lower before the HKMA steps in by selling the HKD and buying up reserves.



Any thoughts on this one???
 

·
Registered
Joined
·
4,638 Posts
First off, good job deciding to create this thread! A few have suggested that I might consider doing this but you were first to take the initiative so thank you. :D:

I got into this when the markets were in meltdown mode back in 2008 and 2009. That episode was eye opening for me on several levels and that was when I began to take interest in monetary policy. I put a lot more thought into the interconnectedness of the markets and a lot less thought into looking for the next stock that might jump 20% or whatever.

Forex has helped me to make some good stock calls with regards to durable goods. Aircraft, heavy machinery and automobile plays have been pretty obvious at times over the last few years. Boeing and Cat are going down, Honda is going up, etc (illustration, not a current call).

Generally I'm trading AUD/JPY, EUR/USD, USD/JPY and EUR/CHF. I'll mix it up a bit if something interesting is happening though.

The markets have been odd this year with much less volatility and fewer break outs than I'm accustomed to. Any thoughts on that? I'm sure a good deal is because of goings on with the major players.

Your statement about CAD and oil reminds me of the typical relationship between EUR/USD and oil, XAG and XAU, i.e., EUR/USD down = XAG, XAU and oil down. This relationship was still pretty clear up until last year but the charts have become much noisier as of late.

HKD? Hmm that one is tricky. I went short USD/CNY last November with the intention of holding it through this year or next. Like many, I was expecting big moves as the renminbi was expected to be allowed to appreciate naturally. I closed out my position in 1st quarter with 150 pip profit since I was sensing a reversal. I'm so glad I chose to act on that. That being said, PBOC has been striking some interesting swap deals lately so maybe they are looking to float, albeit at a greatly reduced pace.

I took a 50 pip profit on a EUR/USD short this morning at 02:00.
 

·
Registered
Joined
·
10,053 Posts
I don't do FOREX or any stock trading, but it sounds like the FOREX market is parallel to the other markets where the old rules don't work any more. All of the old relationships are gone and replaced with ultimate manipulation from those in charge.

Great ideas for the Currencies trading thread and I hope you all share plenty of your trading ideas.
 

·
Registered
Joined
·
4,638 Posts
I don't do FOREX or any stock trading, but it sounds like the FOREX market is parallel to the other markets where the old rules don't work any more. All of the old relationships are gone and replaced with ultimate manipulation from those in charge.

Great ideas for the Currencies trading thread and I hope you all share plenty of your trading ideas.
I can only speak from the retail side (would love to hear other perspectives) but it seems to me that one has to be willing to play with rules that are changing mid game. This is in no way unique nowadays but it has to be immensely frustrating for tons of people, based on commentary you read online. That is completely understandable of course but there isn't a darn thing one can do about the current state. You take the good with the bad I guess.


If anyone is interested, many brokers will allow you to paper trade on their platform with no obligations.

PMs are getting pummeled this morning. :eek:
 

·
Bushidoka
Joined
·
2,902 Posts
Great Idea to Have Some Forex Input!

Thanks guys for jumping in with this thread.

Being only about 4% of the world economy, Canadians probably tend to focus on international relationships more than most Americans. I am almost out of US stocks now, while still holding on in Europe, Australia, Japan, and Mexico.

All of us dwelling in the oilpatch are aware the CAD rises and falls against the USD with the price of oil (and I might also add gold and other minerals). As well the central bank has said they want to keep the CAD low to favour exports.

I am not a currency trader, and I'm sure I can learn a lot from those who are. I just hold cash in different currencies, so something is always up when I need it.

Right now I am long USD, AUD, GBP, and short EUR. I have not really focussed on HKD, SGD, or JPY, but want to learn more. Also interested in NOK.

Look forward to seeing what others are thinking and doing.
 

·
Registered
Joined
·
4,638 Posts
Expect to lose money when you're getting started. That is the reality. It takes most people time to figure out how to gracefully make an exit when they need to. Many start out risking entirely too much and then struggle to cut loses. I can't imagine this behavior is unique to currency traders.

Markets wouldn't exist if everyone lost money all of the time. :)

Talk about low volume right now, EUR/USD has been stuck in a 5 pip channel for the last 3 hours.
 

·
Registered
Joined
·
4,638 Posts
Have any of you read The Profit Magic Of Stock Transaction Timing by JM Hurst? It was written by an aerospace engineer turned trader. I'd be interested in your thoughts if this is something you've read.
 

·
Society lied to me...
Joined
·
70 Posts
Discussion Starter #11
Thanks everyone for chiming in!

I'm in two trades currently. Here they are along with my reasoning.

#1: I'm short the USDCAD. Reasoning is oil is not reacting to world events like "I" think it should be. I think the price should be higher, so I've bet accordingly...so far, the market disagrees with me and I'm down ~20 pips. I'm getting positive roll from this trade...so I'm comfortable holding pat...at least for now. :)

#2: I'm long the AUDUSD for the positive roll and no news events. This is another trade where the market has moved against me and I'm down ~15 pips after doubling down on the position. :eek: I don't think the market will move that far as it would have to fight a positive roll to do it.

@Spam. Check out the congestion around the 1.3450 on the EURUSD on the daily chart...and then nothing below it. :eek: I wonder if the EUR will dig in its heels or blow right through it? I may be looking at a trade somewhere in that area myself...lol...just not sure which direction.

@Ambos. That's a pretty good idea holding on to different currencies...!

And yeah, losing money is a given. The best advice I ever got was to quit trading a play account and learn with a live account (real money)...lessons are remembered soooooo much better with real money. :D:
 

·
Society lied to me...
Joined
·
70 Posts
Discussion Starter #12
I don't do FOREX or any stock trading, but it sounds like the FOREX market is parallel to the other markets where the old rules don't work any more. All of the old relationships are gone and replaced with ultimate manipulation from those in charge..
I tend to agree with you. Check out this 4 hour chart of the AUDJPY and the "tails" sticking out.



To me, that looks like stops are being run right before a move occurs. It makes sense that the algos would stop someone out of a position before that position becomes profitable. For example, if you were short, the algo would run the price higher until your nearby stop was hit. This accomplishes two things. First, you take a loss (just like where the casino collects from you rather than paying you) and second (and more importantly), since you were forced to "buy" to close your position, the algo gets to "sell" to open their position at the top of the move...which then begins in earnest. At the bottom of the move, the whole process is repeated.

Of course, while this pattern lasts, it could also be used as an indicator of when to open a position.
 

·
Registered
Joined
·
4,638 Posts
I finally made my exit from my EUR/USD short this morning, ahead of the 08:30 reports. Closed out at 1.3444 for 25 pips. This week was very kind to me, I netted more than 100 pips and gained 5.2%.

Indicators I'm using? Price action followed by stochastics and 10 day SMA.
 

·
Registered
Joined
·
4,638 Posts
@Spam. Check out the congestion around the 1.3450 on the EURUSD on the daily chart...and then nothing below it. :eek: I wonder if the EUR will dig in its heels or blow right through it? I may be looking at a trade somewhere in that area myself...lol...just not sure which direction.
Honestly, I'm astonished EUR/USD hasn't landed somewhere in the 1.2xx range this year. There was a 1000 pip drop in the first quarter of last year. We've spent nearly 7 months in a 500 pip range.
 

·
Registered
Joined
·
4,638 Posts
I tend to agree with you. Check out this 4 hour chart of the AUDJPY and the "tails" sticking out.



To me, that looks like stops are being run right before a move occurs. It makes sense that the algos would stop someone out of a position before that position becomes profitable. For example, if you were short, the algo would run the price higher until your nearby stop was hit. This accomplishes two things. First, you take a loss (just like where the casino collects from you rather than paying you) and second (and more importantly), since you were forced to "buy" to close your position, the algo gets to "sell" to open their position at the top of the move...which then begins in earnest. At the bottom of the move, the whole process is repeated.

Of course, while this pattern lasts, it could also be used as an indicator of when to open a position.
Are there any news or data releases occurring at that time? Stops are definitely run by the market makers. I saw one occur 2 nights ago with the euro on London open. There is no doubt it is something to watch for; I've been bit by it a number of times in the past.
 

·
Society lied to me...
Joined
·
70 Posts
Discussion Starter #16
Are there any news or data releases occurring at that time? Stops are definitely run by the market makers. I saw one occur 2 nights ago with the euro on London open. There is no doubt it is something to watch for; I've been bit by it a number of times in the past.
My stops are +/- 400 pips...kinda kamikaze, I know. I didn't check to see if those tails coincided with news events...they probably did for the most part...but still strange for the pair to move the "wrong" way first then take off the other way. :confused:

BTW, I'm getting blowtorched on my two previously mentioned positions. :mad: Have to see what happens and may have to take my licks early next week...still holding over the weekend.
 

·
Registered
Joined
·
2,603 Posts
To me, that looks like stops are being run right before a move occurs. It makes sense that the algos would stop someone out of a position before that position becomes profitable.
Stop loss orders are automatically executed at the market price when the stop price is hit. There is no algorithmic process that looks at your order to see if it is profitable. No one cares about your order.
 

·
Society lied to me...
Joined
·
70 Posts
Discussion Starter #18
There is no algorithmic process that looks at your order to see if it is profitable. No one cares about your order.
:eek:

You forgot the [end sarcasm] tag after your post. :)

Stop loss hunting is commonplace. By definition, a triggered stop loss is, well, a loss. A triggered stop limit is a profit. Ergo, the algos know whether your position was profitable or not.

The algos absolutely care about stop loss positions and use them for profiting as I mentioned above.

Here's some info on the subject. Google will return about 12 million additional articles if you feel so inclined.

http://www.forbes.com/sites/greatsp...re-traders-who-want-to-stop-you-out-of-apple/

http://bclund.com/2011/09/28/3-ways-the-exchanges-screw-with-your-stop-orders/

http://www.zerohedge.com/news/2012-...kets-parasitic-stop-hunt-phenomenon-explained

http://www.zerohedge.com/news/interview-high-frequency-trader

http://www.forexlive.com/blog/2013/...ow-your-orders-stops-losses-22-november-2013/

http://www.forexfactory.com/showthread.php?t=23495

http://scrumology.com/algorithms-on-the-hunt-for-profit/

http://www.fxkeys.com/stop-loss-hunting-by-forex-brokers-what-to-do/
 

·
Registered
Joined
·
2,603 Posts
To me, that looks like stops are being run right before a move occurs. It makes sense that the algos would stop someone out of a position before that position becomes profitable. For example, if you were short, the algo would run the price higher until your nearby stop was hit. This accomplishes two things. First, you take a loss (just like where the casino collects from you rather than paying you) and second (and more importantly), since you were forced to "buy" to close your position, the algo gets to "sell" to open their position at the top of the move...which then begins in earnest. At the bottom of the move, the whole process is repeated.
"It makes sense that the algos would stop someone out of a position before that position becomes profitable."

Why does this make sense to you? This would require that an "algo" have access to the order flow and to your personal account position in order to determine if your position was becoming profitable but they do not have access to your position and cannot determine if your position is profitable.

Think about the mechanics of what you have said above: The algos have no ability to identify the fact that you have a stop. Algos do not have access to your trading account. When you place a stop order it is placed with your broker who transmits a market order at the time the stop is triggered. The fact that you have entered a stop order is not generally available to the order flow system until it appears in the order flow as a market order. Additionally, you said "the algo would run the price higher until your nearby stop was hit." How do you think the algo is going to "run the price higher"?. The only way to "run the price higher" is by buying the instrument in some quantity, do you think that the HF traders are interested in moving the market to your stop by buying instruments just so they can set off your 5 lot stop? That could require buying thousands of contracts just to get to your stop order.

Traders have been triggering stops since stops were "invented". The fact is that the location of stops is pretty easy to deduce by looking at charts since historical price movement is generally a significant factor in setting the value of a stop order.

There is a lot of paranoia and only a little understanding of how algo trading and HFT firms work and the sources of the misinformation you posted are doing a lot of guesswork and fantasizing simply to stimulate their publications. Just because Forbes says something doesn't mean that they are correct. Co-located firms have huge investments in technology and human resources and they are really not interested in setting off public order stops, they are focused on making tens and hundreds of millions of dollars and they don't need your "pips" do do that.
 

·
Registered
Joined
·
4,638 Posts
Here's an example of one of those quick sweeps that occur just prior to a reversal.

One could argue the reversal was caused by a large buyer at 1.3450. Regardless, I made money on this move. It might have been interesting to look at order flow at this particular time to get a better sense for what happened.

These moves happened ahead of any major data releases. GB retails sales came out at 04:30 in this case.

Those long wicks typically signal a reversal so they can represent a possible entry point if you're not getting steamrolled on the way down. They're visible in Church Mouse's chart and mine.
 

Attachments

1 - 20 of 171 Posts
Top