BlowFish

Hey kvn, Actually you don't need to use any 'TA' -- reading Price action round these levels can get you in just as easily. You know that is one of my quests....better identifying S/R. That takes a couple of forms, distinguishing the major areas from minor and when you have an area trying to get a 'tighter' area that you expect to contain price and/or determing which edge that it will react too. However, deep down I know this is kind of a fools errand (searching for a grail that does not exist). It's important to remember trading is a game of probabilities rather than absolutes. Having said that as another poster said take a good look at the Whycoff area and DBPhoenix's blog. You might find his rectangles interesting. There is also another thread on S/R somwhere. Oh and the thread 'busy day tomorrow' has some good currency examples amongst the chit chat. One of the nice things about Traders Laboratory is the large number of people here that use basic principles like S/R & PA to trade rather than the wierd wonderful and slightly esoteric that you tend to get in forums. An ideal place for your approach. Cheers, Nick

Always appreciate your input GJ - thanks- its probably worth saving up the 'tricky' questions rather wasting your time on this "fluff". By transparent I mean that the prices are not 'interfered with' in any way, so like light passing through a transparent medium. Basically the quotes they get are passed on to me without skewing them in price or time. Something that the bucket shops do if it suits there purpose. Talking of messing with prices I found this made me :shocked: and . MT4 is a very common platform amongst the bucket shops. http://www.forexfactory.com/showthread.php?t=70582 Basically a software agent to ensure you get the worse price possible.

I have to say even in a centralised market (like Liffe or Eurex) unravelling what's going on from the order book is (for me) as often as not an exercise in futility. In a distributed environment where furthermore you don't get to see all the participants orders....well good luck with that too. As I mention (often) I don't trade FX and the 'wild west' loosely regulated nature (for a retail trader) is once of the reasons. DMA for retail traders seems like its in it's infancy but it seems like its a move in the right direction. So if I should shoot out an email to Interactive brokers is asking where they get there liquidity and whether the prices are completely transparent a good opener? Cheers.

Guess I should have stuck to calling them ECN's, just trying to be more descriptive. Does Interbank liquidity make more sense? You have to be so carefull talking to these FX guys ;-) EFX (who MBT bought) used to claim that they where connected to several of the major ECN's and I believe they use to list them. So you may be wrong on that . Seems things have become opaque again on the MBT and EFX websites so who knows? Could be I mis remembered what was on EFX's website which is also just as likely. To me the main advantages of 'real access' is not so much the liquidity but 'transparent' pricing and the fact that the 'broker' is not the counter party with complete access to the order book. Those two combined are an opportunity for conning the client that must be irresistible. As I don.t trade FX its more academic. I will email IB and see if I can find out a bit more about there setup.

Yes, I think of it as beeing like the Nasdaq where you have a network of networks. It's a ECN type setup. I understand that MBT have 'good access' to these Interbank networks. Interactive Brokers don't seem to be too bad with there "IdealPro" set up. Thats from casual observation the last few weeks. Cheers.

MBT (who bought EFX) offer 'real' spot FX (rather than bucket shop) and IB do now as well (if I understand there blurb correctly). They have an order book DOM type deal.

The DAX is quite thin and very fast at times. You will get slippage at times. A tick or two obviously more common than 6 If you buy into selling climaxes sometimes you get 'positive' slipage.

Imho one of the key metrics you can know about your trading is the risk of ruin. To really trade without irrational fear in its many manifestations you need to know and accept your RoR. http://www.traderscalm.com/ror0.html Is a great little site that deals with RoR and how trading within a comfortable zone can lead to trading calm.

Don't worry a lot of us can't understand either There are a few currency guys and galls that share an office and seem to have developed a kind of secret language. Actually a lot of the currency people in general seem to have adopted this patois (slang). Milliard has a particularly interesting vocabulary. As to where to post why not start a thread in the Forex laboratory? That seems as good a place as any.

Well I am glad Tradeguider have someone competent helping out on the education front. Nothing against "professional trader" Gavin as he now bills himself. (actually that's not strictly true I'm pretty sure he's simply a huckster) I thought your recent MSFT analysis was in a different league to anything anyone at TG has done. My worry is that people will realise that Tradeguider adds little to the VSA mix and you will be asked to tone it down a bit and big up the software. Time will tell.

Thanks JW.....now you have made me look all lazy :sleep: I was expecting one of the users just to say yes/no hehe.

Very good points Chris. Actually it would be churlish to argue with any of them. I guess a mentor should help guide you to the correct questions to be asking yourself rather than offer 'answers'.

I found the presentation of the data kind of interesting too. For a discretionary trader how data is presented is pretty important imho. Mind you there was a recent thread about that. That was why I wanted to know whether the OP's objective was automation or 'decision support' (I don't like that term despite it being kind of functional).

Is OEC meant to import easylanguage? I am certainly down for a test drive if it does.

I see how a good mentor can help you help you find and refine your style and of course deal with the real issues (behaviour). But if you where lets say a VSA trader I am not sure why you would get involved with mentor who practised MP or Fib or point and figure and I can't see that they would change to teach you. That does raise an interesting point does a mentor need to even be a practitioner themselves? I say yes where as a coach does not. It's kind of picky semantics I guess.

Hi Urma, How do you assign a block as a buy block or sell block? Most exchanges have a mechanism for blocks to be negotiated outside the normal continuous auction process and then be reported later as a transaction on the tape. They never actually hit the order book. Globex I believe has this mechanism Eurex certainly does. What about iceberg orders? Does this effect your block analysis? Before we get into the quant stuff it would be intresting to know the data you are using and the assumptions you are making about it. Do you actually use some sort of algorithm to try and assign volume to one side or the other? I am not sure if you saw my question a few posts back about whether you do order book analysis particularly looking at blocks that get pulled? Final question do you use these tools to make discretionary trading decisions or is automation your goal? Cheers. EDIT: How do you define a 'block' I kinda made and assumption which is bad.

There is a series of video blogs on MP over at http://my.wallst.net/referral/fbutera101/Blogs might be of interest. I'd be interested what the MP pros thought. I think I concidered his course at some time....don't remember for sure. Usual disclaimer ...I have no affiliation....do your own due diligence, hell I don't even use MP

I would agree that it is flawed. In fact at turning points the reverse tends to be true it seems to me. Do you do any sort of order book analysis? I have not, but have a hunch that looking at pulled orders as well as filled orders may be useful in determining short term direction. Do you use volume over fixed time frames or over variable periods determined by market structure?

Interesting post. May I ask how you attempt to detect buy and sell pressure and order flow? I am guessing some sort of volume analysis or maybe looking at volume@bid/ask?

You got it. They are bucket shops where they are the counter party to any trade and they quote the prices and can see the order book. Pretty much like most forex 'brokers' in the US. The big advantage in the UK (where they are popular) is that winnings are tax free. I have never got on with them but if your trade frequency is low and your holding period longish the punitive spreads and slipage may be manageable.

Interactive Brokers. They have a really broad range of products.

Thanks Atto, I think it's probably better to look for swing trades that make sense and be mindful of the cost of carry rather than the other way round. Still need a lot more chart time especially during 'extreme conditions'. Mind you most instruments, especially the thinner ones, can get a bit weird now and then. Cheers.

Yes, thats another way of looking at it Atto. It has to be at least a day to get the interest of course. That may be a better way of looking at things. Look for a swing trade in a suitable pair and take the carry as a bonus, a 'dividend' if you like. I guess something like AUD/YEN would be a good pair to look at and maybe CHF and something? I was thinking taking a couple of positions in fairly uncorrelated pairs might help minimise 'blips'. Does anyone publish correlation figures or is it a job for excel?

Thanks GJ, food for thought. A Kllienwort analyst wrote "when the 'unstoppable force' of cheap yen is about to hit the 'immovable object' of the economic slowdown. Whiplash is likely in the months ahead.” That was two years ago but possibly even more relevant now. 1) This is the big thing to watch out for in my naive eyes. It's kinda pointless making a $100 a night from the interest if the yen advances 100 pips against the majors. I guess the interest rate differential is one of the key drivers for a pair but there are all sorts of other things (apart from a change in one of the interest rates) that could cause things to unravel pretty quick. This is the big thing for me to get my head round. I guess I would still be trading just aiming for positions in pairs where carry works for me rather than against me. It seems naive to suppose that long NZD.JPY is a better proposition than short based on interest alone but it must be a fairly big part of the equation? 2) I kind of figured the real milk and honey days might be over. There still seems to be a good differential in some rates but that's no good if the pair isn't pumping along in the right direction as you mentioned in item 1. 4) & 5) I think I should be OK here (but its something to check) My broker is offering rates that look fairly close to central bank rates. In fact there sterling rate looks better than Libor which is weird? Actually must be a mistake thinking about it. I don't plan to be moving stuff between brokers that sounds complicated At the moment the majority of my funds are in sterling which gets OK interest but I have sat idly by and watched the GBP following the USD down the wazoo. I just figured I should be more pro active with my capital maybe I should just be moving it around a bit rather than specifically looking for carry trades? Is being short one currency and long another (i.e. holding a position) any more risky than just being 'long' a single currency (i.e. having money on deposit)? I am not sure to be honest. Anyway thanks again GJ

Is the carry trade as popular as it once was? I wonder if it has a role in the small traders arsenal. I was not thinking as a highly leveraged trade but more as a way of making capital work that sits idle in a variety of brokerage and bank accounts, more of a short term 'investment' with minimal leverage. Does this sound plausible? I guess the chief thing to be wary of is interest rate changes (particularly un expected ones) in one of the pairs. Would a small basket (maybe 2 or 3) of preferably loosely correlated pairs help? I guess so but at a cost. Any other tips and tricks or more importantly pitfalls to be aware of? Thanks.