Bullish Or Bearish

[thetradingdoctor 10]

Markets move because traders trade. Markets are neither bullish nor bearish, rather it is the combined emotions of over six million people which leads to conditions of either bullishness or bearishness. There are permabears who are always bearish and permabulls who are always bullish. The best traders go with what the market is telling them. The best traders leave any preconceived notions about the market somewhere in the far far distance. The best traders take advantage of what they see right in front of them. This is another way of saying: Trade what you SEE, not what you THINK!

[notouch 10]

At the same time it's a good idea to look at the long-term charts so that you have a bias in a particular market. On the daily chart in the YM for example I'm seeing a topping formation. Just because I see that doesn't mean I'm going to trade it. The weekly charts are making me think that being long in this market is the best option. I think it's a good idea to think before you trade, not just react to whatever you see.

[walterw 10]

Hi Doc, and welcome ¡¡¡ hope you enjoy your time here at TL....

 

I think that what the doc says about thinking its sinonimous to "fantastic predictions"...

 

obviously we have to think before we trade, BUT.... with true technical FACTS and not our predictions without any clear technical clue... would that be it doc ? cheers Walter...

[waveslider 10]

Good point nopoint(?!) - also to know exactly what you are looking for before trading (patterns/threshholds/etc.). Never good to change the plan midstream.

Like you said, when you have a bias, you know what patterns to look for, or which side to lean towards..

For example, if markets are ranging, you might want to fade the range only in direction of previous trend in anticipation of the trend re-asserting itself..

[walterw 10]

At the same time it's a good idea to look at the long-term charts so that you have a bias in a particular market. On the daily chart in the YM for example I'm seeing a topping formation. Just because I see that doesn't mean I'm going to trade it. The weekly charts are making me think that being long in this market is the best option. I think it's a good idea to think before you trade, not just react to whatever you see.

 

So notouch you are a "permabul" on this moment ?

[thetradingdoctor 10]

Excellent comments and good to see that you are thinking! It is critical to know your time frame and to trade from that time frame. THere are so many different market opinions, many of them based on the timeframe of the chart being discussed. Scalpers work on different time frames from day or swing traders who work on different time frames from "investors." So, always know yourself, i.e. what you trade and the time frame in which you are trading. Also, if you do not have a trading strategy AND a trading plan, I strongly suggest that you work on one as soon as possible. Trading without a plan is like driving blindfold in rush hour traffic in a car with no breaks. Or worse! In any case, always plan your trade and then always trade your plan. That sounds simple ( and it really is pretty simple) but it is not at all easy.

 

Good remarks from all...Keep them coming!

 

Thanks!

 

Doctor Janice

[walterw 10]

Nice nice doc.... Having a plan absolutely... should we add that the plan has to be simple ? because having a so complex plan its similar to the mambo of not having one... cheers Walter.

[notouch 10]

So notouch you are a "permabul" on this moment ?

 

I wouldn't say permabul I just have a long bias so even if I was expecting range trading I would still concentrate on taking longs at the bottom of the range and closing them at the top but not taking shorts. I think having a bias based on the long-term charts gives you an edge and keeps you out of bad trades. I could change my bias if I saw bearish developments in the weekly charts.

[walterw 10]

I wouldn't say permabul I just have a long bias so even if I was expecting range trading I would still concentrate on taking longs at the bottom of the range and closing them at the top but not taking shorts. I think having a bias based on the long-term charts gives you an edge and keeps you out of bad trades. I could change my bias if I saw bearish developments in the weekly charts.

 

 

I perfectly understand what you mean notouch.... overall trend context... could you share some charts (maybe on a diferent thread, this is doc`s thread) of your long term trend determination bias... it would be nice to learn that... cheers Walter.

[TheBramble 10]

Markets move because traders trade. Markets are neither bullish nor bearish,

Traders trade because markets move. The more a market moves, the more traders trade.

 

And markets most definitely ARE either in a state of bullishness, bearishness or consolidation. There are strategies to use to piggy-back the current mode and to fade the current mode.

 

You can't not look at a chart if you're a TA bod and NOT see which mode your instrument is in. That's the whole point of TA. Which ties in perfectly with your quote of the famous 'trade what you see' mantra. But to suggest markets do not have a mode and traders move markets is erroneous. Market-Makers move markets too and they're not necessarily in trader-mode when they do that.

[TinGull 10]

Traders trade because markets move. The more a market moves, the more traders trade.

 

What she's saying here, I believe, is that markets themselves do not move unless traders trade. If there were no traders at all...just one day everyone said let's boycot trading...then the markets would not move. Markets don't move themselves, traders move the markets. When traders come in large numbers, that'll bring more in and move it even faster.

 

So the above statement is somewhat false, but I see what you mean. Traders will trade because a market is moving, but the market is moving because traders are actually trading. Without the trades, the market would stand still.

[TheBramble 10]

Nope. The markets not only would and could move without traders. The markets DO move without traders. That's what Market Makers do for a living - they entice traders to trade by moving the market.

[PYenner 10]

It is strange reality that both an argument and its counter-argument can be equally true, you just have to look at each argument from its own perspective.

 

It remains that only trading will shift prices.

The other aspect is, to what extent do prices honestly represent market sentiment and to what extent does price manipulation by the big money misrepresent market sentiment?

 

In Forex RSB, the Royal Scottish Bank, has been the most successful trader among the big boys, imo they have monopoly control of prices and can and do misrepresent market sentiment to their advantage. That is how they got to be winners and it is how they stay winners, by staying in control of the prices we rely on for interpreting market sentiment.

 

Following their "smart money" seems the logical analytical method to me.

So now there is a third argument that splits market forces into leaders and followers, getting one step ahead of the leaders is my goal. Following the followers seems futile to me, like walking into a sucker trap.

 

Is it logical or merely cynical to follow the "smart money" rather than the price/market?

[walterw 10]

It is strange reality that both an argument and its counter-argument can be equally true, you just have to look at each argument from its own perspective.

 

It remains that only trading will shift prices.

The other aspect is, to what extent do prices honestly represent market sentiment and to what extent does price manipulation by the big money misrepresent market sentiment?

 

In Forex RSB, the Royal Scottish Bank, has been the most successful trader among the big boys, imo they have monopoly control of prices and can and do misrepresent market sentiment to their advantage. That is how they got to be winners and it is how they stay winners, by staying in control of the prices we rely on for interpreting market sentiment.

 

Following their "smart money" seems the logical analytical method to me.

So now there is a third argument that splits market forces into leaders and followers, getting one step ahead of the leaders is my goal. Following the followers seems futile to me, like walking into a sucker trap.

 

Is it logical or merely cynical to follow the "smart money" rather than the price/market?

 

 

Very interesting quote about Royal Scottish Bank (thats new to me), my question Pyenner is how can I follow them ? how can I know what are they doing (buying/selling).... would apreciatte that information.... cheers Walter.

[PYenner 10]

WalterW

 

Find your input on many threads to be solid and constructive, thanks for the work.

 

RSB is worth a good long Google, much is out of date but still informative.

RSB London has been #1 forex trader since way back.

Net profit flow is from all other international banks into RSB London.

Used to be lots of Sirs on the board.

 

I can only offer input on spot forex which has the advantage of having 10 pairs within the majors. Essentially 8 must be monitored to understand the state of play in the 2 RSB sucker trap pairs. Unfortunately it gets complicated before it begins to get simple, I suspect from your motto that you already know that.

 

I looked at the VSA thread but while I have not used that indicator, it appears to rely on transient volumes which to me seem to be frequently misleading. Such moves often appear to get dissipated to no obvious gain shortly afterwards so I suspect they may be just more manipulated signals.

 

I follow the longer trends in the prices relative to each other, not in absolute prices. Trends in the 8 "arm and leg" pairs tell me what the bank is doing.

Often it provides no more information than to tell me where prices are within the swing ranges of the two sucker trap pairs and the only trade available is to wait for a bigger movement then trade back towards centre of the range.

 

Sometimes a recognizable pattern shows up that can be traded longer term or with at least some awareness of the longer trend when scalping swings.

 

There are some whole new ways of thinking involved, one is about the mechanics of forex trading at bank level, that is the bank's weakness, its actions are visible for the most part. It counters that by building years of trading expertise and tactics into the trading software, they know how traders think and stay one step ahead of them. Even when you know the long term trend you still have to think tactically, their tactics aim at burning both bulls and bears, that can mean 100-300 pips in drawdown but a nice bonus swing trade if you have been undertrading with that opportunity in mind.

 

The four Franc pairs are the easiest place to start, you will find a one to one relationship.

Two pairs apply only to GBPJPY, two apply only to EURUSD. After that it gets more complicated. This is not the place, nor is it yet the time no get into it.

Nor do I have the time or ability to answer questions from what might become a feeding frenzy. Sufficient thought will be rewarding I believe.

 

If a Franc based account makes a buy in GBPJPY, it shows up as a pip movement and volume one in GBPJPY and also in GBPCHF (crudely). Footprints are left that can be followed. Only banks trade Francs

 

When you are dealing with a con, ignore the words, the suit and the haircut, keep your eyes on what the hands and legs are doing under the table.

What they do is what they are, what they look like is not what they are.

[TheBramble 10]

It is strange reality that both an argument and its counter-argument can be equally true, you just have to look at each argument from its own perspective.

From an academic perspective, yes, you can objectively consider both side of any argumant. But in trading, you can't make any profits taking both views.

 

It remains that only trading will shift prices.

Untrue. Trading (volume) does move prices. But so too do Market-Makers and Specialists - without 'active' (volume-based) trading.

 

The other aspect is, to what extent do prices honestly represent market sentiment and to what extent does price manipulation by the big money misrepresent market sentiment?

Immaterial. Who cares about sentiment and representation? It's what IS happening and what is most likely to happen that's important. Not a subjective or even roughly objective view of why what is, is.

 

Following their "smart money" seems the logical analytical method to me.

So now there is a third argument that splits market forces into leaders and followers, getting one step ahead of the leaders is my goal. Following the followers seems futile to me, like walking into a sucker trap.

 

Is it logical or merely cynical to follow the "smart money" rather than the price/market?

One step ahead of the leaders? How can you be one step ahead of the leaders? They are, by definition, ahead of everyone else - hence, leaders.

 

Following the leaders is absolutely the name of the game. Not cynical at all - just plain smart. It of course makes you a follower, but don't deride that status. So few are really followers. They are miles behind and are affectionately knows as stragglers or 'The Public'. There are enough of them to make it worthwhile for us Traders.

[PYenner 10]

TheBramble

 

I like the way you think, like a hunter

We are actually in agreement on most points.

The leaders are driven by a profit motive, understanding where and how they make their profit is the key to predicting their moves.

They are traders too, they follow profit/risk rules.

They are potentially predictable and exploitable just as "the public" are, because they follow trading rules.