[daedalus]

Awesome discussion gents!

I thought I would chime in on what i've been reading and researching. I've ended up down a road I never thought I would walk.

I ended up stumbling onto the 101 basket trading thread after reading more and more of the author of the M W thread and his "hedging" strategies (which really aren't hedges at all).

Heres the original 101 thread: Simple Trading Method with trader101 @ Forex Factory

And heres an interesting more recent revival and re-evaluation of that idea (goes a lot into explaining the core ideas and was very helpful in getting me to understand some of the logic): T101 basket trading system - math analysis - Forex-TSD

There is a strange simplistic logic about this idea. Do any of you have experience with this strategy? It seems like a lot of people are able to generate a LOT of pips with it in a short amount of time but as the 2nd thread builds on, it still requires some kind of signal in general terms whether or not to buy or sell all the pairs.

Anyway, i'm only partially through the first thread so there is a lot to learn but for me, this is something I never thought to look at and its generating a whole lot of ideas I never considered before.

Cheers!

[KeyToTheCastle]

Originally Posted by cornhusker »

To illustrate this, lets look at EU and yesterdays strong bearish move. What caused EU to drop like it did? Leave fundamentals out of the answer and explain it in the context of orders, asymmetric information, adverse selection, fear, and greed. I leave logical things like FA out because I consider it pre-trade stimuli; fundamental info is aggregated into price later down the chain of events via orders and quote adjustments.

I invite anyone to take a crack at the question.

Regards,

Cornhusker

Ok here's my opinion as to what facilitated the euro sell off.

Evidence in the order flow would suggest that demand caused by shorts capitulating fueled the move up to 13000 in July. Smart $$ used that range extension above 1.3000 level to cover longs deep in the money as well as to begin establishing short positions.
On the subsequent push up to 13300 levels this past week smart sellers, seeing weak demand, defended their newly initiated shorts as well as adding new shorts. Then throw in late to the party weak longs selling to cover and we have a nice sell off.

Once the initial heavy demand caused by shorts getting squeezed was taken out of the mix the whole dynamic of the order flow changes which set the stage for this sell off.

My anyway.

[SIUYA]

has anyone ever heard a news reporter, or tv presenter say anything other than
"the market selloff was due to profit takers"
why cant a market sell off be due to other reasons.
eg; loss takers (I guess this is a short squeeze), short initiators, fundamentally crappy value, panicky longs

As this answer is normally reserved for equity sell offs, I wonder how they apply it to FX which is a relative bet. (even though equity investment could also be defined as a relative bet between being long/short equities v short/long cash or some other investment).

eg; in a EURUSD - is it the shorters getting squeezed or the longs capitulating..... i guess its a matter of perspective.
I actually know a fund manager who claims he only ever takes long positions in currencies.....(and in case you are wondering - he had share classes in his fund that were based in multiple currencies)

[OsbourneCox]

As far as the video on motivation goes, this is a much better version:

YouTube - RSA Animate - Drive: The surprising truth about what motivates us

YouTube - RSA Animate - Drive: The surprising truth about what motivates us

[Kiwi]

I enjoyed both Macdfx's video and yours Osbourne. Its the sort of thing worth exposing yourself to slightly different perspectives on.

It is b funny that the Aussie polis are busy promising to fix public education by rewarding the best performing teachers. Kinda like the "leave no little sod behind" that you guys have over there for screwing up education to no good purpose. Another stupid election campaign with pork being offered to all who will vote for them.

On topic though I came across a post by Hanover on a different web site beware, rubbish often spoken here

[SIUYA]

On a similar vein for those more interested in management and motivation a good read is
"hard facts dangerous half-truths and total nonsense profiting from evidence based management" - Jeffery Pfeeffer, Robert Sutton......it looks at the evidence and not the myths behind a lot of corporate ideas. One of them is the financial rewards carrot and stick gospel/baloney.
This is also relevant to trading as it gets you to focus on the evidence and not on the hype and myths.