|submitted by BeerBellyFatAss to ethfinance [link] [comments]|
|submitted by towjamb to ethtrader [link] [comments]|
|submitted by Crypto-Economy to cryptoeconomynet [link] [comments]|
|submitted by guo1241 to Bitcoin_Future [link] [comments]|
|submitted by n4bb to CoinPath [link] [comments]|
|submitted by n4bb to CoinPath [link] [comments]|
submitted by olahdonat3 to CryptoCurrencyTrading [link] [comments]
|submitted by Ranzware to BitNewsLive [link] [comments]|
Welcome to the third and final part of this chapter.submitted by getmrmarket to Forex [link] [comments]
Thank you all for the 100s of comments and upvotes - maybe this post will take us above 1,000 for this topic!
Keep any feedback or questions coming in the replies below.
Before you read this note, please start with Part I and then Part II so it hangs together and makes sense.
Squeezes and other risksWe are going to cover three common risks that traders face: events; squeezes, asymmetric bets.
EventsEconomic releases can cause large short-term volatility. The most famous is Non Farm Payrolls, which is the most widely watched measure of US employment levels and affects the price of many instruments.On an NFP announcement currencies like EURUSD might jump (or drop) 100 pips no problem.
This is fine and there are trading strategies that one may employ around this but the key thing is to be aware of these releases.You can find economic calendars all over the internet - including on this site - and you need only check if there are any major releases each day or week.
For example, if you are trading off some intraday chart and scalping a few pips here and there it would be highly sensible to go into a known data release flat as it is pure coin-toss and not the reason for your trading. It only takes five minutes each day to plan for the day ahead so do not get caught out by this. Many retail traders get stopped out on such events when price volatility is at its peak.
SqueezesShort squeezes bring a lot of danger and perhaps some opportunity.
The story of VW and Porsche is the best short squeeze ever. Throughout these articles we've used FX examples wherever possible but in this one instance the concept (which is also highly relevant in FX) is best illustrated with an historical lesson from a different asset class.
A short squeeze is when a participant ends up in a short position they are forced to cover. Especially when the rest of the market knows that this participant can be bullied into stopping out at terrible levels, provided the market can briefly drive the price into their pain zone.
There's a reason for the car, don't worry
Hedge funds had been shorting VW stock. However the amount of VW stock available to buy in the open market was actually quite limited. The local government owned a chunk and Porsche itself had bought and locked away around 30%. Neither of these would sell to the hedge-funds so a good amount of the stock was un-buyable at any price.
If you sell or short a stock you must be prepared to buy it back to go flat at some point.
To cut a long story short, Porsche bought a lot of call options on VW stock. These options gave them the right to purchase VW stock from banks at slightly above market price.
Eventually the banks who had sold these options realised there was no VW stock to go out and buy since the German government wouldn’t sell its allocation and Porsche wouldn’t either. If Porsche called in the options the banks were in trouble.
Porsche called in the options which forced the shorts to buy stock - at whatever price they could get it.
The price squeezed higher as those that were short got massively squeezed and stopped out. For one brief moment in 2008, VW was the world’s most valuable company. Shorts were burned hard.
Porsche apparently made $11.5 billion on the trade. The BBC described Porsche as “a hedge fund with a carmaker attached.”
If this all seems exotic then know that the same thing happens in FX all the time. If everyone in the market is talking about a key level in EURUSD being 1.2050 then you can bet the market will try to push through 1.2050 just to take out any short stops at that level. Whether it then rallies higher or fails and trades back lower is a different matter entirely.
This brings us on to the matter of crowded trades. We will look at positioning in more detail in the next section. Crowded trades are dangerous for PNL. If everyone believes EURUSD is going down and has already sold EURUSD then you run the risk of a short squeeze.
For additional selling to take place you need a very good reason for people to add to their position whereas a move in the other direction could force mass buying to cover their shorts.
A trading mentor when I worked at the investment bank once advised me:
Always think about which move would cause the maximum people the maximum pain. That move is precisely what you should be watching out for at all times.
Asymmetric lossesAlso known as picking up pennies in front of a steamroller. This risk has caught out many a retail trader. Sometimes it is referred to as a "negative skew" strategy.
Ideally what you are looking for is asymmetric risk trade set-ups: that is where the downside is clearly defined and smaller than the upside. What you want to avoid is the opposite.
A famous example of this going wrong was the Swiss National Bank de-peg in 2012.
The Swiss National Bank had said they would defend the price of EURCHF so that it did not go below 1.2. Many people believed it could never go below 1.2 due to this. Many retail traders therefore opted for a strategy that some describe as ‘picking up pennies in front of a steam-roller’.
They would would buy EURCHF above the peg level and hope for a tiny rally of several pips before selling them back and keep doing this repeatedly. Often they were highly leveraged at 100:1 so that they could amplify the profit of the tiny 5-10 pip rally.
Then this happened.
Something that changed FX markets forever
The SNB suddenly did the unthinkable. They stopped defending the price. CHF jumped and so EURCHF (the number of CHF per 1 EUR) dropped to new lows very fast. Clearly, this trade had horrific risk : reward asymmetry: you risked 30% to make 0.05%.
Other strategies like naively selling options have the same result. You win a small amount of money each day and then spectacularly blow up at some point down the line.
Market positioningWe have talked about short squeezes. But how do you know what the market position is? And should you care?
Let’s start with the first. You should definitely care.
Let’s imagine the entire market is exceptionally long EURUSD and positioning reaches extreme levels. This makes EURUSD very vulnerable.
To keep the price going higher EURUSD needs to attract fresh buy orders. If everyone is already long and has no room to add, what can incentivise people to keep buying? The news flow might be good. They may believe EURUSD goes higher. But they have already bought and have their maximum position on.
On the flip side, if there’s an unexpected event and EURUSD gaps lower you will have the entire market trying to exit the position at the same time. Like a herd of cows running through a single doorway. Messy.
We are going to look at this in more detail in a later chapter, where we discuss ‘carry’ trades. For now this TRYJPY chart might provide some idea of what a rush to the exits of a crowded position looks like.
A carry trade position clear-out in action
Knowing if the market is currently at extreme levels of long or short can therefore be helpful.
The CFTC makes available a weekly report, which details the overall positions of speculative traders “Non Commercial Traders” in some of the major futures products. This includes futures tied to deliverable FX pairs such as EURUSD as well as products such as gold. The report is called “CFTC Commitments of Traders” ("COT").
This is a great benchmark. It is far more representative of the overall market than the proprietary ones offered by retail brokers as it covers a far larger cross-section of the institutional market.
Generally market participants will not pay a lot of attention to commercial hedgers, which are also detailed in the report. This data is worth tracking but these folks are simply hedging real-world transactions rather than speculating so their activity is far less revealing and far more noisy.
You can find the data online for free and download it directly here.
Raw format is kinda hard to work with
However, many websites will chart this for you free of charge and you may find it more convenient to look at it that way. Just google “CFTC positioning charts”.
But you can easily get visualisations
You can visually spot extreme positioning. It is extremely powerful.
Bear in mind the reports come out Friday afternoon US time and the report is a snapshot up to the prior Tuesday. That means it is a lagged report - by the time it is released it is a few days out of date. For longer term trades where you hold positions for weeks this is of course still pretty helpful information.
As well as the absolute level (is the speculative market net long or short) you can also use this to pick up on changes in positioning.
For example if bad news comes out how much does the net short increase? If good news comes out, the market may remain net short but how much did they buy back?
A lot of traders ask themselves “Does the market have this trade on?” The positioning data is a good method for answering this. It provides a good finger on the pulse of the wider market sentiment and activity.
For example you might say: “There was lots of noise about the good employment numbers in the US. However, there wasn’t actually a lot of position change on the back of it. Maybe everyone who wants to buy already has. What would happen now if bad news came out?”
In general traders will be wary of entering a crowded position because it will be hard to attract additional buyers or sellers and there could be an aggressive exit.
If you want to enter a trade that is showing extreme levels of positioning you must think carefully about this dynamic.
Bet correlationRetail traders often drastically underestimate how correlated their bets are.
Through bitter experience, I have learned that a mistake in position correlation is the root of some of the most serious problems in trading. If you have eight highly correlated positions, then you are really trading one position that is eight times as large.
Bruce Kovner of hedge fund, Caxton Associates
For example, if you are trading a bunch of pairs against the USD you will end up with a simply huge USD exposure. A single USD-trigger can ruin all your bets. Your ideal scenario — and it isn’t always possible — would be to have a highly diversified portfolio of bets that do not move in tandem.
Look at this chart. Inverted USD index (DXY) is green. AUDUSD is orange. EURUSD is blue.
Chart from TradingView
So the whole thing is just one big USD trade! If you are long AUDUSD, long EURUSD, and short DXY you have three anti USD bets that are all likely to work or fail together.
The more diversified your portfolio of bets are, the more risk you can take on each.
There’s a really good video, explaining the benefits of diversification from Ray Dalio.
A systematic fund with access to an investable universe of 10,000 instruments has more opportunity to make a better risk-adjusted return than a trader who only focuses on three symbols. Diversification really is the closest thing to a free lunch in finance.
But let’s be pragmatic and realistic. Human retail traders don’t have capacity to run even one hundred bets at a time. More realistic would be an average of 2-3 trades on simultaneously. So what can be done?
The key thing is to start thinking about a portfolio of bets and what each new trade offers to your existing portfolio of risk. Will it diversify or amplify a current exposure?
Crap trades, timeouts and monthly limitsOne common mistake is to get bored and restless and put on crap trades. This just means trades in which you have low conviction.
It is perfectly fine not to trade. If you feel like you do not understand the market at a particular point, simply choose not to trade.
Flat is a position.
Do not waste your bullets on rubbish trades. Only enter a trade when you have carefully considered it from all angles and feel good about the risk. This will make it far easier to hold onto the trade if it moves against you at any point. You actually believe in it.
Equally, you need to set monthly limits. A standard limit might be a 10% account balance stop per month. At that point you close all your positions immediately and stop trading till next month.
Be strict with yourself and walk away
Let’s assume you started the year with $100k and made 5% in January so enter Feb with $105k balance. Your stop is therefore 10% of $105k or $10.5k . If your account balance dips to $94.5k ($105k-$10.5k) then you stop yourself out and don’t resume trading till March the first.
Having monthly calendar breaks is nice for another reason. Say you made a load of money in January. You don’t want to start February feeling you are up 5% or it is too tempting to avoid trading all month and protect the existing win. Each month and each year should feel like a clean slate and an independent period.
Everyone has trading slumps. It is perfectly normal. It will definitely happen to you at some stage. The trick is to take a break and refocus. Conserve your capital by not trading a lot whilst you are on a losing streak. This period will be much harder for you emotionally and you’ll end up making suboptimal decisions. An enforced break will help you see the bigger picture.
Put in place a process before you start trading and then it’ll be easy to follow and will feel much less emotional. Remember: the market doesn’t care if you win or lose, it is nothing personal.
When your head has cooled and you feel calm you return the next month and begin the task of building back your account balance.
That's a wrap on risk managementThanks for taking time to read this three-part chapter on risk management. I hope you enjoyed it. Do comment in the replies if you have any questions or feedback.
Remember: the most important part of trading is not making money. It is not losing money. Always start with that principle. I hope these three notes have provided some food for thought on how you might approach risk management and are of practical use to you when trading. Avoiding mistakes is not a sexy tagline but it is an effective and reliable way to improve results.
Next up I will be writing about an exciting topic I think many traders should look at rather differently: news trading. Please follow on here to receive notifications and the broad outline is below.
News Trading Part I
Disclaimer:This content is not investment advice and you should not place any reliance on it. The views expressed are the author's own and should not be attributed to any other person, including their employer.
|submitted by AutoNewspaperAdmin to AutoNewspaper [link] [comments]|
|submitted by AutoNewspaperAdmin to AutoNewspaper [link] [comments]|
|submitted by AutoNewsAdmin to BANGKOKPOSTauto [link] [comments]|
|submitted by AutoNewsAdmin to BANGKOKPOSTauto [link] [comments]|
submitted by hayatmemat to besiktas [link] [comments]
submitted by 3xpendableyouth to business [link] [comments]
|submitted by herospark to besiktas [link] [comments]|
submitted by Maxvelgus to Finance_analytics [link] [comments]
Weekly US dollar fundamental analysisMarkets are just like people. They follow their hearts from time to time and forget about common sense. Investors like the idea of the division in the Congress and the Democratic president. In this scenario, the risks of tax hikes and high tech companies' strict regulation are much lower. This fact supports the stock indexes. The S&P 500 has been up by 1% and more during four consecutive trading sessions, which has been for the first time since 1982. In percentage terms, those days have been the best since early April. Markets consider Joe Biden to be a better president than Donald Trump, which allowed the yuan to gain back more than 50% of the losses faced during trade wars. The EURUSD tested the resistance at 1.186-1.187.
The growing chance of Biden’s victory encourages investors to spend the cash, which they have been accumulating ahead of the US presidential election. They are buying stocks and bonds. However, traders forget about other factors, such as the pandemic, uncertainty around the new fiscal stimulus, and Donald Trump’s willingness to reject the voting results. It looks like an attempt to give out desirable for valid. According to TD securities, there should not be any concerns about challenging the voting results, which has pushed the risky assets up and weakened the US dollar. DZ Bank believes that the greenback is falling because the voting results were reported earlier than some had expected. I do not think the above arguments to be strong.
I suppose traders are following their hearts. They invest the capitals in the securities as they worry not to miss the uptrend, which sends the S&P 500 up, fuels global risk appetite, and weakens the US dollar against a basket of currencies.
Dynamics of world's currencies versus the US dollar
Source: Financial Times
How long can it be going on? It depends. People in love are passionate during different periods. However, common sense should win sooner or later. The USA performs better than the euro area at the current stage of the economic cycle. The Fed is not willing to boost the monetary stimulus while the ECB tends to increase the current QE pace. According to Bloomberg’s leading indicators, the largest euro-area economies face a deeper drawdown in the PMIs because of the new lockdowns. The euro-area bond yields fall, which signals that the markets expect the ECB to take active measures in December.
Recovery of the world’s economies
Yields on the euro-area bonds
Source: Wall Street Journal
Weekly EURUSD trading planLet us be sensible during times of euphoria. Although the EURUSD has rebounded from the resistance at 1.186, the shorts entered in the zone seem vulnerable. It will be relevant to hold down the shorts if the pair goes below the support at 1.179. The S&P 500 rally could push the euro up above $1.188. The EURUSD medium-term outlook depends on whether the bulls can hold the price above 1.188.
For more information follow the link to the website of the LiteForex
In forex, basket trading involves buying and selling different correlated or uncorrelated currency pairs at one time where the market lines up. The aim is that after sufficient time the sum of all open positions is in positive territory and the trades can be closed with a profit. Automated Basket Forex Trading This service allow me to send over the trade signal for open & close the trade for the subcriber. This is best services for those who do not have much time for trading but still want to get some baits in this forex market. For the services, please refer to my blog site at the top right " Forex Trading Signal Services" for more information. ZipSignals Services ... What is Basket Trading Forex? In forex, basket trading involves buying and selling different correlated or uncorrelated currency pairs at one time where the market lines up. The aim is that after sufficient time the sum of all open positions is in positive territory and the trades can be closed with a profit. This means that the sums of all profits and the sums of all losses are positive. Forex Basket EA. June 8, 2013 @ 8:50 pm. by PhD, Hamdi BK. in Wiki Trading Systems. Leave a comment. Report Content. To report this post you need to login first. Everything mentioned and used in these EAs are available here in Forex Factory or on the Web, the idea is to stick to the “ KIS ” idea, and not to clutter the chart with many indicators. There are different EAs mentioned below ... basket trading forex forex basket trading forex basket trading ea basket trading forex forex basket trading method forex basket tra... Forex Basket. Forex relates to the process of exchanging one currency for another with the purpose of making profits off the change in the prices of them. Forex is the largest market in the world by far, bigger than the stock market or any other, and there is very high liquidity in the forex trading market. So, the forex market attracted beginners trader and experienced alike. The total value ... The forex robot has got two types of presets “fast” and “slow” ones. The robot requires the MetaTrader 4 platform, and fast VPS (optional). Trade NightProfit & FX Profit Key Features. There’s a list of provided features: Take Profit ; Stop loss; Lots; Use Equity Stop ; Total Equity Risk ; Use Trailing Stop ; Use Time Out ; Start/Stop Hour; Pip step (Range multiple order) Max Trades ; Say you start off with weak basket of 2-3 pairs, which go nowhere and market starts to move. Seen that many times how the indicator just lights up. If no additional pairs are added you are stuck whatever you got in RB from the get-go, instead of taking advantage of additional pairs. Yes, every new pair brings in potential risk but intraday I have not really withessed it so far. Again, this is ... Forex Basket trading refers to a concept of buying or selling a large number of currency pairs simultaneously. It is a trading strategy that can be commonly used by institutional traders to hold positions in specific sectors and to diversify portfolios.. The strategy gets its name “basket” because a trader can buy or sell multiple assets at the same time, thus creating a “basket” of ... A basket is named in accordance with a base currency (see an example in Table 1). In this case, the basket status is defined by its base currency status. The status parameters include overbought/oversold state and other similar attributes. They are provided by the same means of technical analysis that we use to evaluate ordinary currency pairs. Main currency baskets. Let's divide the entire ...
[index]          
Step by step installation for the Basket Exposure Indicator for Forex Envy Members, this indicator is a updated and costume version of the original indicator... This video is unavailable. Watch Queue Queue. Watch Queue Queue Forex Basket Robot $500-$1000 profit per day - live session! - Duration: 14:26. Elena Av 3,213 views. 14:26. White Coral Ea _Live trading _ three days live trading _part three - Duration: 3:17. ... Forex Basket Trading System - Duration: 14:09. Bang Yo 8,174 views. 14:09. How To Insert Image Into Another Image Using Microsoft Word - Duration: 14:13. Recipes Recommended for you. 14:13 . How ... In this educational video by Market Traders Institute (MTI), Jared Martinez (aka FX Chief) teaches you how to utilize basket trading strategies using Japanese Yen currency pairs utilizing MTI 4.0 ... If you learn this one Forex pattern, you will be better off than 90% of all other traders your competing against. This simple strategy is the difference betw... Les Points d'Entrée Forex Basket Trading - Duration: 2:21. Martial Trader 242 views. 2:21. An introduction to the basics of Forex Trading - Duration: 8:11. ZuluTrade Recommended for you. 8:11 ...