I see I'm being summoned to this thread. The 30NLs still matter. In fact, they make up 98% of my trading. The NLs do far more then just give you bias, they also describe the type of market environment you are in and provide relative value information. As has been said countless times, they are not signals. Can they used for daytrading? Absolutely. But they are used as a filter, not as a signal. For example, if the ES is confirmed long, I would only look to enter failed A downs. I would NOT be shorting the market. Two, the 30NLs tell you where to focus. Say bonds are confirmed long and Gold is confirmed short. Then why the hell would you daytrade the ES? LOL. Buy dips in bond and fade rallies in Gold. No secret sauce here.The purpose of the NLs is to find markets that are "acting well" or "acting poorly". Any other controversies?
This is very close to my mentality. It is easy to get lost in a sea of NLs and price levels and think there is some secret to be found, but in reality the best we can do is try and discern what big money is doing. Even if we do manage to do that, it doesn't mean they are right lol. ACD is definitely getting me closer and closer to being in tune with current money flow, and I believe that analyzing NLs and monthly levels is an art form and also dependent on big picture understanding. Every time Mav or some of the other true pros on here post some explanation it makes me realize how little I understand fundamentals and what drives the markets. I know that is kind of rambling but I guess what I am getting at is it isn't a question of NLs or price levels "work" because they are just tools.
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You can sometimes see propositioning before rate decisions and major data not after, ACD gives you the lens to see it. I am not gong to come out and say if x = y then buy c etc and this is not the way that ACD works. Its like Mav says it all about relationships and relative value. ACD is great at revealing relationships that are not necessarily apparent to others. Its this attribute of ACD that allows you to see when certain instruments stop following regular rules and gives you a clue as to what may be occurring behind the scenes.
I won't disagree with your general proposition, just point out that sometimes pre-positioning ignores all this. Actual case in point. I track indices on the majors as well as composite NLs like commodity currencies, risk off currencies (I know some insist JPY is not risk off, but it sure as hell strengthens when that is the climate, so I call it that) and even relative strength to gold,something I picked up from Ashraf Laidi's book that Mav recommended. I use this to get a general feel before honing in on a particular pair, and I prefer to use the generic 'pair' rather than split hairs about pairs and crosses and exotics. NZD has had a good run, I made money off it, but momentum was tapering and all my numbers pointed that way. USD has been weak, I mentioned it earlier in this thread when the index fell below the 200D EMA and again I had made a buck off it. JPY has been strong against USD, a move I missed because I somehow manage to not trade 5 days a week, and didn't chase because I never do. FOMC announced balance sheet reduction Wednesday, bullish USD. NZ had poor GDP, bearish NZD. Murmurs of Trump being under investigation for obstruction of justice, pointing to more JPY strength. All my short term numbers pointed to a NZDJPY short on Thursday, indeed if you look at an hourly chart of NZDJPY it had already started moving down post-FOMC. BoJ rate decision Friday morning in the Asian session, they've used up all their bullets, magazine is empty, about the only thing they can announce is a balance sheet unwinding at some unspecified future point just to have something to talk about, like the SNB they have so much tied up in equities and ETFs it beggars belief. The Bernanke put may have passed, Kuroda and Jordan shop the supermarkets now. I don't hold positions into a rate decision NORMALLY, but short NZDJPY early on Thursday in Asia, what could go wrong, at the least I'd make a quick buck before Friday and the rate decision and Kuroda speech. I went short. I might as well have sat on a canister of fireworks on the 4th of July, my next holiday I'm looking forward to. After some early juice, my backside got lit up so fast I didn't wait for my stop to get hit, I closed out. After putting on the trades I couldn't have screen time Thursday and Friday, just tracking on my mobile best I could. Well I couldn't believe the way JPY weakened into Friday and the no news rate decision. I couldn't do the full post-mortem Saturday, just looking on my mobile I'm sure my ignoring the 30D completely got me big time, but it wasn't ever meant to be anything other than a short term trade. I trade off the 5D derivatives, and if I was trying to pick a bottom to short, I was pretty bloody close. I had the joy of watching all the gurus on Twitter saying stay out, keep your powder dry, avoid the pre-positioning and the market nonsense going into the BoJ rate decision and quad witching nonsense. I pulled the plug early, saved a few bucks, about the only good decision I made in this trade. Hence my new filter, no trades on the day before a major event for a specific currency. Don't give a damn what all my wonderful numbers tell me. Maybe JPY just had finished its run for the time being and was due for a pullback, I don't know, I'll have to find a way to analyse that in Excel while I am learning how to code.
I think we are using similiar derivatives because I saw the short signal on NZDJPY too. I don't know if you track currency futures too but I like to follow them and see agreement or at least neutrality before I take a trade on a cross. In this case I ruled it out because I saw a buy on the 6N same day along with overall NZD strength and ended up taking positions in GBPJPY and USDJPY instead. They went against me too, but if you look at the charts they are looking much more promising after Friday close vs NZDJPY and the NLs are looking favorable for some selling next week. With the nature of currency markets and 24hr trading days across multiple markets I think it really helps to get multiple looks from as many relevant products as possible. I know when analyzing currencies for time of day signifigance it was a lot more vague than equities, futures etc...
I track more than a dozen futures, alas not the currencies. Might make sense to drop the stuff I don't trade but track in case I want to, and track the futures as related to what I trade.
Mav Would this comment also apply if you were only trading intraday? Or would you be only looking at say 5NLs rather than 30NLs? Or are you saying that regardless of timeframe you traded NLs would still be the key component even though the actual NL used may vary?
If I were daytrading, I would ONLY trade products that were confirmed. Let me ask you this, if Gold had a +30 NL and all it did every single day was close on the highs and the ES had a 30 NL of +2, why would you choose ES over Gold. Gold is telling you to buy every dip. ES is telling it's directionless. Look, a big part of this business is being in the right products. Even if you have a +30 30NL trading is hard, we know that. But sure is a lot easier then trading something that has no direction. Look at the Mexican Peso. It's confirmed negative. First confirmed back in Feb. How hard do you think it would have been to fade every rally in this product the last 4 months? Don't make this any harder then it already is.