It was a "good" day for me in the sense that I followed my entry and exit triggers properly. I went short-long-short. I managed to overcome my directional biases and didn't go into insane mode as the Beast switched directions and nice chunk of the profits were left on the table due to trailing stops. The first short had and MFE of 18 ticks and I got stopped out at b/e+1 ticks. The long had an MFE of 42 ticks and I got stopped out at +13 ticks. Overall, it was a good mental exercise day for me today
Wow, I was just watching charts and TV and the futures spiked 30 points on extremely low volume around 2:10 am EST. I think the extra volume was < 50 contracts!!!
Some interesting comment from Deutsche Bank today: EUR USD (1.2825) Yesterdayâs EUR-Sentiment Survey* produced one of the most remarkable results of the year: the biggest one-week fall in optimism among medium-term traders and the biggest one-week rise in the euro. The medium-term crowd must have been selling like at no other time this year, but these sales made not a blind bit of difference to the runaway advance. Indeed, the only pause in the rally came just ahead of our former 1.2660 resistance, so it is there that we assume that most of them bailed out. Given that short -term players were on the sell side during those days too, we also assume that a massive long-term buying interest was present in the market. This means that these euros have effectively disappeared (not forever, but, crucially, for a period of time that goes beyond the investment horizon of those that sold). The current target is 1.3040. With bullishness near to its yearâs low, the speculative crowd is now rather badly prepared for further advances. Those who have simply liquidated longs will rue foregone profits if the single-currency continues to march higher. But for those who have sold short, a long-term buyer is a decidedly unwelcome counterparty, as he does not re-sell. If the euro makes a new all-time high, these speculative shorts may need to be hastily unwound and this would provide the fuel for further upside impulses. We set the risk-reward to the bullish scenario at 1.2645/50. Expect intermediate support at 1.2750. So there would be some good upside yet according to them. From yesterday's special: Todayâs result is a record-breaking one: the EURSentiment Survey reveals this yearâs biggest week - on-week slump in overall optimism among medium term traders accompanied by the biggest weekly rise in the euro spot price. Apart from its low in mid-July, the Bull/Bear-Index® hasnât been weaker since May 2003. It appears that the vast majority of the mediumterm crowd opted for profit taking, i.e. for selling the single-currency within the last five sessions. Given that day-traders were also on the sell side, at least in the last two sessions of last week, the current puzzling task is to identify the source of demand that pushed the euro beyond $1.28. One can only speculate about the buyersâ identity, but it is clear that we are dealing with long-term players, who currently wield enormous power in the market. Presumably, these forces are not sensitive to the euro´s future development. Rather, they might be dollar-based investors (interested in private equity or bonds, for example), who are simply buying the euro as a byproduct of their principal investment activity. Unlike the speculative crowd, these market participants will not necessarily appear on the offer again simply because the euro rises a couple of percent. Effectively, these euros have disappeared from the circulation. Ironically, despite the already impressive rally, we now observe an environment in which the singlecurrency appears in pretty good health. Importers, the natural bulls will probably look wistfully at any further euro gains and regret missed opportunities. The reluctance of exporters to hedge, on the other hand, means real losses. If they are later forced to play âcatch-upâ we are likely to see their demand at lower levels or, if there is no dip, see them give the euro a boost at higher prices. Seems consumer confidence number is pegged against a re-election of Bush too (a president hasn't been elected on this low numbers since the 60s - according to Bloomberg).
Well, I got into trading at the european close today. It was a little slide down to the 1.2740s, but nothing worrisome. I have a long bias as well, so better use it well. Still, 13 ticks on 2 trades - a long and a quick short until now. I am trading very carefully on the EuroFX, while I am long bias from 1.2775 and 1.2740 on spot demo with around 80% max leverage on the demo. (I said the gains there were totally unrealistic - esp. because of the leverage that would have been stopped out by the nice counterpart spot FX dealers). The demo is up to 190 000 from 50 000 in 3 weeks - but it doesn't help me getting into more position-type trading yet. I'm still practicing, though.
You got to trade the demo like real money. 190K is WAY TOO MUCH leverage - you know that . We hit 2700 before 2900 but trend is up - UNTIL Kerry wins then it will be USD Bullish.
How about those stops run over 1.28 overnight ... ? I too agree that one can say that the 1.2740 stops would be tested - especially when we are consolidating the high levels now. The problem is taking advantage of this analysis with correct entry and sizing,scaling so that one comes out with profits and does not get stopped out. That's why I'm still sticking to scalping. Yesterday was very predictable with regards to conditions during EuroFX US RTH - choppy - and only energetic in asian and european sessions (EURUSD that is). A shame I have been so extremely occupied the last days, I would have liked more time analyzing this interesting breakout. I guess I will have to replay all the action later. Yup, I know. I just do it for kicks some times .. and sort of exemplifying my "mental trades" that I do some times in my head - just taking an entry point and watching it like a trade. Have to stay in shape and up-to-date to trade these markets.
That's my opinion now as well. I think it got a "life" of it's own now with the medium-/short-term trader rotation like Deutsche Bank mentioned. We have definitely broken out of the previous range and need to adapt to new market conditions as they are being shaped amongst us all. The characteristics of the conditions and trading during the previous capped ranges was waning, and is now starting to fade completely. Trying to linger will quickly get oneself out-of-sync with markets, and stubborness now is more dangerous. My â¬.02 I thoroughly enjoyed Jack Bouroudjian's (sic?) comment from the CME floor on how the news and "crisis" are "playing havoc technicals right now going into the election". A prime example of what I am talking about. Everyone needs to recalibrate. As for the substance of the Norwegian oil workers strike being averted to the markets - I think it's very exaggerated. It seems that everyone were "so completely upset" with Venezuela rising taxing on oil produced there (16% extra I think it was), while the strike in Norway - where companies pay (I think it is) 28% taxes, additional 50% sur-tax and other taxes for various emissions etc - and costs created by the strike produces no out-cry at all. Really stupid, but it's what the popular talk goes, and the effects that are important when analyzing markets. Everyone quickly needs to adapts to thinking like a less-intelligent common-sense person when having to predict market reactions. It's just wearing the "dumb,ignorant goggles" to predict impact of market news - keeping it really simple.