Know your opponent

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SilverArrow00
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Know your opponent

Postby SilverArrow00 » Thu Sep 30, 2010 9:09 pm

So.. being a true tourist regarding forex trading, I thought I would invite for a discussion about who is actually trading this market.

The two categories are: Professional & private.

The private dudes include folks like me (tourist) and TRO and MO and all other people posting at this site + like 100 times more people lurking and not posting, no need of discussing that.

But the professionals? Who are those cats? How much of the volumes are caused by them versus the private traders. Whos money are they trading with? Am I missing a category here..

Let's shed some light!

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flinux
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Postby flinux » Thu Sep 30, 2010 9:40 pm

"Money Masters" are in the Professionals category :)

The majority of trades is performed by automated systems using pattern recognition algorithms to open and close positions.
To be more precise, these systems are partly semi-automatic.
The most obvious example that comes to my mind was the short selling made on Procter & Gamble stock. Who did this sale has caused a chain reaction in all markets. On that day, for example, the daily range of the EUR/JPY was 1000 pips!

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Central banks can also significantly affect the market.
For example day 15/09/2010 the central bank of Japan has purchased several billion dollars in order to weaken their currencies against the dollar.
So faith, hope, love remain, these three; but the greatest of these is love. - 1 Corinthians 13:13

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Postby SilverArrow00 » Sat Oct 02, 2010 9:45 am

Hmm.. VERY interesting!

So if I understand you correctly, there are teams that develop pattern recognition "software" and trade with them accordingly? These teames work for companies solely trading forex? For banks?

Of course central banks are a big part of it also, but there actions must be even harder to predict, since they "speculate" very long term.

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Postby SilverArrow00 » Sat Oct 02, 2010 11:12 am

After reading this: http://en.wikipedia.org/wiki/Algorithmic_trading

and this: http://en.wikipedia.org/wiki/High_frequency_trading

How does anybody on this forum and other forex forums think they can trade and win=be profitable?

The proffesionals have such an advantage that it seems really hard to see what kind of egde "we" have?

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Postby prochargedmopar » Sat Oct 02, 2010 7:44 pm

SilverArrow00 wrote:After reading this: http://en.wikipedia.org/wiki/Algorithmic_trading

and this: http://en.wikipedia.org/wiki/High_frequency_trading

How does anybody on this forum and other forex forums think they can trade and win=be profitable?

The proffesionals have such an advantage that it seems really hard to see what kind of egde "we" have?


My "guess" would be to find a pattern that you see happen every day on a larger time frame and trade it.
#1BODY in direction of profit #2INCREASE lot size Obsessively
My Losses cause me Great Laughter!
Trading Bible here> therumpledone/the-ideas-that-i-trade-by-t3256/page1670

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Postby newschool » Sat Oct 02, 2010 7:44 pm

SilverArrow00 wrote:How does anybody on this forum and other forex forums think they can trade and win=be profitable?


If there is movement in the price, a profit can be made.

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Postby The_Snowman » Sun Oct 03, 2010 2:58 am

SilverArrow00 wrote:After reading this: http://en.wikipedia.org/wiki/Algorithmic_trading

and this: http://en.wikipedia.org/wiki/High_frequency_trading

How does anybody on this forum and other forex forums think they can trade and win=be profitable?

The proffesionals have such an advantage that it seems really hard to see what kind of egde "we" have?


Do you ever buy a lottery ticket? Why? Do you think you will win? Now you are delving into the psychology of the markets; is that where you want to go?

It is human nature to always think the best. You don't go into the city and think you will get hit by a bus. We are all wired to put that to the back of our minds, we all think it won't happen to me.

As you mention, you need to find that "edge" and run with it, see my feeble attempts, 71 winners in a row - that's why I think I can win; what is your edge?

PS - your thread title is incomplete, it should read "Know your opponent, know yourself"
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Postby SilverArrow00 » Sun Oct 03, 2010 10:20 am

Thanks for your contributions guys.

What strikes me is that algos rule the forex market, that we actually are trading against some sort of scripts.

The positive thing about this is that the trading becomes mechanical (hopefully), and in that way some reoccuring patterns can be seen.

Perhaps the thread should have been called "Know you opponent, know the algos".

The_Snowman: do you mind posting some charts of your trades so I can try to see what you are seeing.

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Postby The_Snowman » Sun Oct 03, 2010 3:08 pm

@ SilverArrow00

I've got my own thread going over here, check it out, charts and all -

http://kreslik.com/forums/viewtopic.php?t=2735&start=10

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Postby SilverArrow00 » Sun Dec 12, 2010 2:03 pm

If algorithms stand for the most part of forex trading, which means computers trade automatically with more or less no human interaction.

Why are we then talking about phych lines??

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