Mav I'm still trying to get the why? The back end steepened when people thought the new administration would be expansionist on the domestic front. That hasn't changed, the whole world knew the rate increase was coming, still the front end has steepened and the back end flattened. What is going to trigger another steepening of the back end? When people see inflation coming in? Several rate hikes in a year? Rate hikes are supposed to stave off excessive inflation, if done in a timely manner, but I reckon they are a lagging indicator because they are applied in response to data. In the absence of NLs, what would be the 'tell' here?
This post has been at the back of my mind since I read it. Paris apparently has a rodent problem, let me talk about the roaches before they become a problem. All correlations going to one is the sort of thing you see in a crash. On a smaller scale, in FX land, this can happen every time someone important starts yapping away. Let me explain. For example, my number lines tell me I should go long GBP.AUD, and I do have an entry signal separately. So I start the day by looking at what is happening with the GBP pairs. To make this easy I have set up the Quote Spreadsheet in Sierra Chart so that all the GBP pairs are grouped together, so too the EUR pairs and the CAD pairs and so on. Thus, rather than just jump in I watch what is happening early in the London open. Say GBP.AUD is slow to take off and then GBP weakens across the board against other currencies. That tells me something is happening with the GBP, so I wait and see. It could be someone said something about Brexit and so the pound is falling. That's not to say that I won't enter on that day, I would still expect that GBP.AUD would be a good trade, it was stronger than the rest, and a major event apart, I'll just wait for it to stop falling before I go long. Another scenario would be all the other GBP pairs are moving up, but not GBP.AUD, so in this case I'll look at the AUD complex, maybe there is something happening with the Aussie. Again, I ask myself if this is a game changer and I don't take the trade, or a blip and I wait and fade. To facilitate this I have 3 minute A levels and my regular A levels entered into the Quote Spreadsheet. Since I'm using the old spreadsheets, I still have colour formatting to flag the action, when I switch I'll have to use IF statements. Not as good, but no choice there. No I obviously don't score off the 3 minute charts but those serve as a sort of early warning of what is happening with the pound early into the London open., or whenever; the canary in the coal mine. If you have the Quote Spreadsheet set up, rather than try to watch a couple of dozen charts, you have all the critical stuff in one place, so you look at one 'page' rather than chase around. And you'll see a bunch of A downs or ups on the 3 minute levels before they hit the longer period chart levels. This on a smaller scale is the roaches in action. I don't actively trade stocks, but you can do the same thing there, grouping them by sector so that you can see what's happening with the rest of them before you jump in to a particular stock. I don't do this with futures because there aren't that many items to group, at least those I trade.
I reckon by the very nature of the way we trade, many of you would have enjoyed the movie Moneyball. I certainly did, even though I know very little about American sports. Well, I was digging around and came across this so I figured I'd share. Course starts tomorrow, but you have till the 24th to sign up. If you want the full experience and certificate, it's $49, or you can go for the free option if you don't want assignments that will be graded, etc. I know all the Excel stuff they mention, but I'm interested in how they apply to sports, and maybe get some ideas for trading. Those of you who bet on sports might be interested, watch the introductory video where he touches on this. https://www.mooc-list.com/course/math-behind-moneyball-coursera
Here are my thoughts. I think the bond market is starting to feel that the Trump stimulus might be a little over blown. For one, there is talk in the House now that Paul Ryan will block the stimulus and might even block the tax cuts. One of them has to give. We cannot cut taxes AND do fiscal stimulus. THAT is what was going to drive the long end of the yield curve. It appears now that House Republicans are going to block this and the bond market has responded in kind. The other question that must be grappled with is can we really have steep inflation while the rest of the world deflates? What is happening in Europe right now is very deflationary. If France pulls out of the Euro the Euro is done...period. I think the bond market really needs to see how this plays out.
I'm still slowly working through the previous posts in this thread while trying to learn and apply stuff. I'm still a noob, so bear with me. It seems like almost everyone here is doing longer-term trades with ACD. I'm going to try to apply it intraday first, then see how it goes. Today I just had my first go at applying ACD to Forex. I find it quite impressive! I modified a few MT4 indicators to give me the daily ORs, A Levels, and pivot ranges. Going over past data, it already seemed that the A levels work very well, both as levels to fade from and for a bullish/bearish bias. Today is the first day I'm trading it live. I traded the GBPJPY in the Asian session, it traded down after the Japanese data was released, went past the pivot but failed at the A-down, then it bounced up and down between the bottom of the pivot and the A-down. I tried to fade both the bounce up and down; my first try was the bounce from the pivot down, I kept trying to move my stop as the price went down but then got stopped out early for only 1 pip profit. Next I faded the 2nd bounce up from the A-down, I had a bad entry point, just had about 4 pips. After that I thought the bounce momentum had winded down, the 3rd bounce was barely into the mid-point. I just waited, it slowly crawled past the A-down. Then when it confirmed the A-down (I use 20 min OR, so 10 minutes below the A-down) I shorted with a stop at the top-end of the pivot. I went to make some coffee and came back, then it went into profit of 5 pips, I just held on to it until the drop started to weaken, only about 15 minutes or so, then closed it off for 20 pips of profit -- I also shorted the USDJPY but was later, so it made about 8 pips. I went out to the gym and came back, it seems I closed it off at a pretty good price since it stalled at that level and traded sideways and seems to be in a sushi roll on the 15-min chart just before the London session (as of the writing of this post). I also tried to trade the NZDUSD but lost about 7 pips on that; it went through the A-Up then broke through the pivot all the way to the top end, but then came back down. I drew a few lessons from this experience: 1. ACD provides excellent stop points, no need to fuck around and be too risk averse -- the risk is minimized if you go by the pivots and A-levels. 2. For FX at least, you need to see the market continue moving in the same direction of the A-level after it breaks the A to confirm. If it breaks through but stalls there, even if it's more than 0.5x OR time, I don't think it's a confirmed A up/down. The same goes for pivots -- you want to see the blade of the sword poke through the man's body, not just the tip. I've also been working the number lines, quarterly, and monthly A-levels. My number lines just start from 1st Dec, I will add to them as I go along. For monthly, I use the monthly ATR from TOS for my calculations. I use the first 2 trading sessions as my OR so to confirm it has to stay above/below the level for at least 1 full trading session. For quarterly, I just used the monthly ATR * sqroot(3) to approximate. I use the first week of the quarter, 1/2 of the half-yearly. It seems to work quite well nonetheless IMO. Like Maverick said somewhere IIRC, it seems that the price usually bounces off the Quarterly A levels -- GOOG failed at and bounced off both the QAup and QAdown according to my levels this month.
Euro construction data was released, above expectations, but the EURUSD and GBPUSD traded down in advance of the news and stuck into my pivot range. I went long on both, but went out after they seemed to be stuck around the same level for 20 mins, time-stop. Loss of 5 pips each. Seems like good news, bad action.
I made a few very stupid mistakes this evening (Asian time). The GBPJPY kept trading down from the Asian session into the Euro and into the start of the US session. I missed the A-down during the Euro session because I had to be away from the computer, during the US, I only got in near the end. It went into 8 pips profit, then reversed completely and went into a loss. I was trying to apply ACD to trading options intra-day for volatile stocks. Today I thought TSLA made an A-down, early on, only after buying a put I realized it didn't spend time under the A-down, just touched it. For GOOG, it did make an A-Up, but idiot that I am, I forgot to draw the pivot on my IB chart (I use TOS for studies but IB for entering orders), GOOG bounced right off the pivot, I went into a big (for me) drawdown on both trades but fortunately the price reversed for both and I closed the TSLA trade for break-even and the GOOG call for a small profit.