Chat Script from Nov. 7, 2006 on Forex Trading

[Soultrader]

Chat log from Nov. 7, 2006. Forex Chat Seminar by Feb2865 (Raul). Many Thanks.

[feb2865] 11:57 am: the big boys in forex are Deutsche Bank, UBS and Citigroup
[feb2865] 11:58 am: in that order
[feb2865] 11:58 am: write this down please because this is what you're trading against
[feb2865] 11:58 am: or in favor
[Trading Room]: JayRemy has left at 11:58 am
[feb2865] 11:59 am: after that you'll have corporations, hedge fund managers, some ocasional
central bank intervention etc
[feb2865] 12:00 pm: speculators are at the end of the food chain
[Trading Room]: guavaman has entered at 12:00 pm
[guavaman] 12:01 pm: looks like were range bound for the rest of the day\
[feb2865] 12:01 pm: I am not goint to get into outrigth contracts, swaps etc we could talk
about it later. Just get notice that you're in the most vulnerable part of the whole forex system
[feb2865] 12:02 pm: but don't worry
[Soultrader] 12:02 pm: i see
[feb2865] 12:02 pm: this is the way the "big boys" paly this market
[feb2865] 12:02 pm: play*
[Trading Room]: guavaman has left at 12:03 pm
[feb2865] 12:03 pm: by the way I am not showing you the holy grail or anything like that. But
this strategy is very effective and has been used for years and years in secrecy
[feb2865] 12:05 pm: you're going to draw two lines ....support and resistance
[feb2865] 12:05 pm: coming from past session -
[Trading Room]: guavaman has entered at 12:05 pm
[feb2865] 12:05 pm: look for high and low and draw your lines
[feb2865] 12:06 pm: whenever market breaks these lines........that's your entry
[MrPaul] 12:06 pm: feb when you say past session..you mean the market open/close of the
market where the currency is traded?
[nasdaq5048] 12:06 pm: What do u use for intraday H/L? 24hr or just the market hour of that
country?
[Soultrader] 12:06 pm: what time frame is this?
[feb2865] 12:06 pm: the lines has to be plotted on the daily chart
[feb2865] 12:07 pm: ok market close
[Soultrader] 12:07 pm: ok
[feb2865] 12:07 pm: form 6:00PM
[feb2865] 12:07 pm: until 5:00PM next day
[feb2865] 12:07 pm: that's your trading session...I am not finished yet
[torero] 12:07 pm: high /low of yesterday correct?
[feb2865] 12:08 pm: exactly torero
[Soultrader] 12:10 pm: test
[feb2865] 12:10 pm: sorry I had to turn my phone off
[feb2865] 12:12 pm: ok during the whole trading is divided in two segments - London Market -
2:00 AM 12 PM EST and New York Market 8:AM - 12:PM
[Soultrader] 12:13 pm: why 10 hours for london and only 4 for ny?
[feb2865] 12:13 pm: London market is the big daddy of forex followed by New York Market -
there's some other sesions like the Asian Market but we will talk about it later
Welcome! You have entered [Trading Room] at 12:20 pm
[Trading Room]: Soultrader has entered at 12:20 pm
[feb2865] 12:20 pm: sorry I got kicked out
[torero] 12:20 pm: got logged out
[Soultrader] 12:20 pm: sorry.. got kicked out
[namstrader] 12:20 pm: me too
[torero] 12:20 pm: everyone was i reckon
[Soultrader] 12:20 pm: i think my server went down
[feb2865] 12:20 pm: yeah me too
[Trading Room]: nasdaq5048 has entered at 12:20 pm
[torero] 12:21 pm: lo.l
[Soultrader] 12:21 pm: feb was this your last comment? London market is the big daddy of
forex followed by New York Market -
there's some other sesions like the Asian Market but we will talk about it later
[Trading Room]: guavaman has entered at 12:21 pm
[Soultrader] 12:21 pm: sorry guys.. my server went down for a few
[guavaman] 12:21 pm: does anyone know why my connection keeps expiring?
[feb2865] 12:21 pm: ok
[feb2865] 12:22 pm: are you guys reading me now?
[Soultrader] 12:22 pm: ill look into guavaman... it may be the settings
[Trading Room]: nasdaq5048 has left at 12:22 pm
[Soultrader] 12:22 pm: yep
[guavaman] 12:22 pm: tx
[torero] 12:22 pm: y
[Soultrader] 12:22 pm: luckily i was able to copy and paste the previous comments
[feb2865] 12:23 pm: here's the rules for trading these levels
[Trading Room]: MrPaul has entered at 12:23 pm
[MrPaul] 12:24 pm: did i miss alot?
[Soultrader] 12:24 pm: paul we all got signed off
[MrPaul] 12:24 pm: oh ok
[Soultrader] 12:24 pm: server was down.. i apologize
[MrPaul] 12:24 pm: not your fault
[Trading Room]: nasdaq5048 has entered at 12:24 pm
[feb2865] 12:24 pm: once the market break these levels...you get in with all you got...you
don't fade the move, you don't "play" the level by no means.
[feb2865] 12:25 pm: once the market break these levels...you get in with all you
got...you don't fade the move, you don't "play" the level by no means.
[torero] 12:25 pm: how do you determine breaking? by 5 ticks? 10 ticks?
[feb2865] 12:25 pm: you don't look at your favorite flavored and well seasoned indicator...you
just make the trade
[feb2865] 12:26 pm: wel good question....I ALWAYS shoot for 5 ticks/pips or whatever you
want to call it
[feb2865] 12:27 pm: the crosses you're going to trade for now....EUR/USD....GPB/USD and
AUSD/USD....pick one or the three doesn't matter
[Soultrader] 12:27 pm: so a break is considered when price violates a S&R level by 5 pips?
[nasdaq5048] 12:27 pm: So put in buy stop 5 ticks above/below previous high/low first thing
in the morning??
[feb2865] 12:27 pm: no the trade is AT the S/R level
[feb2865] 12:28 pm: this is a radical trade. the moment you wait for a confirmation, citigroup
is going to take your money away
[namstrader] 12:28 pm: profit is then 5 tics
[Soultrader] 12:29 pm: so you would play a break of the high and not fade the high?
[Trading Room]: wrines has left at 12:29 pm
[feb2865] 12:29 pm: yes 5 ticks...you want more well you can use trail stops...I don't use
them
[nasdaq5048] 12:30 pm: Assume the high is 1.2800. What do u do when it first trade at
1.2800 ?
[feb2865] 12:30 pm: James, this is how I do it...I place an OCO order on the levels
[Trading Room]: wrines has entered at 12:30 pm
[feb2865] 12:30 pm: one cancel the other
[Soultrader] 12:31 pm: so you would reverse once the fade is wrong?
[feb2865] 12:32 pm: James you can do a backtest and if you play the crosses I mentioned
you migth have a reverse hitting your stop loss once a month. Once this market breaks a
level normally keeps going
[feb2865] 12:32 pm: I am not done yet
[feb2865] 12:33 pm: In september my stop-loss never got hit on the three pairs
[nasdaq5048] 12:33 pm: I think i was kicked out when u talked about stop loss. Where was
the stop?
[feb2865] 12:33 pm: beacuse I onlys shoot for 5 ticks...I don't want more
[feb2865] 12:34 pm: ok stop lossess.....20 ticks for EUR/USD...25 FOR GPN/USD and 20
for AUD/USD
[nasdaq5048] 12:34 pm: ok
[wrines] 12:35 pm: ive been kicked a bunch of times - i hope someone will save a transcript
[Soultrader] 12:35 pm: i got it wrines
[wrines] 12:35 pm: great thanks - and big thanks to you Feb!
[feb2865] 12:36 pm: 15 Ticks a day
[feb2865] 12:36 pm: in three pairs...that's all you need
[feb2865] 12:36 pm: but here's a little problem
[nasdaq5048] 12:37 pm: Does the bid has to be above the resistance, or the offer has to be?
Or do u use futures?
[feb2865] 12:37 pm: sometimes the London market gets into a move and New York Market
follows...when you get up...you just missed the bus.........how do we deal with that????
[feb2865] 12:38 pm: any takers?
[MrPaul] 12:38 pm: how?
[feb2865] 12:38 pm: guys could you wait 5 to ten minutes if you don't mind please ?
[Soultrader] 12:38 pm: not sure
[Soultrader] 12:38 pm: sure
[MrPaul] 12:39 pm: np
[feb2865] 12:39 pm: meanwhile I' would like to see how you guys could deal with that
[Trading Room]: JayRemy has entered at 12:39 pm
[torero] 12:41 pm: i live in spain so getting up for london opening is no problem for me
[torero] 12:41 pm: it's 9am here when it opens so got this part covered
[torero] 12:42 pm: being there is 80%
[Trading Room]: feb2865 has left at 12:42 pm
[torero] 12:42 pm: as woody allen said
[torero] 12:42 pm: the 20% is hella tough
[namstrader] 12:43 pm: my heroe with an asian like my fiancee from philippines
[Soultrader] 12:43 pm: same here.. im usually up
[feb2865] 12:48 pm: I am back sorry for the delay
[Soultrader] 12:48 pm: its okay
[namstrader] 12:48 pm: no problem
[torero] 12:50 pm: .
[feb2865] 12:50 pm: I want you do backtest these crosess on the daily charts and count
within a month range how many times you could get five ticks or more...just a little homework
[Trading Room]: nasdaq5048 has left at 12:50 pm
[Trading Room]: nasdaq5048 has entered at 12:50 pm
[feb2865] 12:50 pm: I want you do backtest these crosess on the daily charts
and count within a month range how many times you could get five ticks or
more...just a little homework
[nasdaq5048] 12:50 pm: check
[torero] 12:51 pm: ok
[Soultrader] 12:51 pm: k
[MrPaul] 12:51 pm: sounds good
[torero] 12:51 pm: i can do that
[namstrader] 12:51 pm: sure
[feb2865] 12:52 pm: ok here's how to don't be left out of the bus if the market is already on
the move.
[feb2865] 12:53 pm: 7:00 PM EST....the begining of Asian Session...this is where you should
be drawing your S/R lines....not the next day
[Soultrader] 12:54 pm: this goes for all 3 pairs?
[feb2865] 12:55 pm: inside days...does anybody know what it is?
[feb2865] 12:55 pm: yes all three pairs
[torero] 12:55 pm: y
[Soultrader] 12:55 pm: yes
[MrPaul] 12:55 pm: so @ 7pm est you would draw your S/R from the previous days session (
6pm-5pm)?
[feb2865] 12:55 pm: AUD/USD always moves first
[feb2865] 12:55 pm: exactlyPaul
[MrPaul] 12:56 pm: thanks
[feb2865] 12:57 pm: you take in account the past session move but you wait until seven just
in case form 6:00-7:00 the market has done some sort of move
[MrPaul] 12:57 pm: then trade the say eur/usd @ 8pm New York open with that data set?
[MrPaul] 12:58 pm: err sorry 8am est
[feb2865] 12:59 pm: no you trade all pairs that way...The Asian Market and london market
normally takes position in these hours hedging EUR/USD so you could see a move...most fo
the time the move...EUR/USD will be the slowest followed by GPB/USD and AUD/USD
[MrPaul] 1:00 pm: okay
[feb2865] 1:01 pm: if is an inside day expect an early breakout for sure on the following
session
[feb2865] 1:01 pm: so you don't want to miss the move rigth?
[torero] 1:01 pm: so all these openings we're trying still for 5 pips profit correct?
[Soultrader] 1:01 pm: nope
[feb2865] 1:02 pm: yes 5 pips
[feb2865] 1:02 pm: and I don't recomend more
[feb2865] 1:02 pm: I always have a bracket order setup
[feb2865] 1:03 pm: OCO order with 5 pips limit and 20-25 ticks stop loss in place
[feb2865] 1:04 pm: don't be alarmed on what I am going to say next please...it's just my
style.....
[torero] 1:04 pm: ok i have to keep the opening times in mind
[MrPaul] 1:04 pm: hmm i just gazed across IB's forex faq's and saw this
[Soultrader] 1:04 pm: can you clarify one thing for me.... you set a order to fade the highs and
lows? and use a 20-25 tick stop?
[feb2865] 1:05 pm: if is an inside day.....I'll set the bracket up after 7:00 PM
[MrPaul] 1:05 pm: Is there a stop loss available on forex trades? No there is not stop loss
available
[Soultrader] 1:05 pm: or do you only play the breakouts?
[Trading Room]: wrines has left at 1:05 pm
[Trading Room]: wrines has entered at 1:05 pm
[feb2865] 1:05 pm: anything inside the range is noise...
[feb2865] 1:06 pm: check the charts and let me know
[guavaman] 1:06 pm: where did all the vol on ES go?
[Soultrader] 1:07 pm: its the doldrums guavaman
[feb2865] 1:07 pm: once you see the market breaking the level, you'll notice an increase in
momentum...big time
[feb2865] 1:07 pm: always happens
[Soultrader] 1:07 pm: this is when u get in?
[feb2865] 1:07 pm: exactly....the big volume is on breakouts
[feb2865] 1:08 pm: thei is the signal the banks are waiting to dump their gazillions
[feb2865] 1:08 pm: they don't trade noise
[Soultrader] 1:09 pm: okay
[feb2865] 1:09 pm: test
[namstrader] 1:10 pm: i will be back thanks again feb
[feb2865] 1:10 pm: noise has a reason in froex......position trading...swing trading
[feb2865] 1:10 pm: ok nams
[Trading Room]: TinGull has entered at 1:11 pm
[feb2865] 1:11 pm: remember we're at the end of the food chain...tmost traders are lured by
trading intraday...wel you could catch some moves but not consistenly
[feb2865] 1:11 pm: forex and indices are different mammals
[Soultrader] 1:11 pm: i see
[feb2865] 1:12 pm: I set a bracket trading....and I go to sleep
[MrPaul] 1:12 pm: i have to go thanks so much feb, talk with you all later
[feb2865] 1:12 pm: no problem Paul hope it helps
[Trading Room]: MrPaul has left at 1:12 pm
[feb2865] 1:12 pm: there's more
[feb2865] 1:12 pm: test
[feb2865] 1:13 pm: about forex brokers
[feb2865] 1:13 pm: don't use them
[feb2865] 1:13 pm: here's why
[feb2865] 1:13 pm: test
[Soultrader] 1:14 pm: test
[feb2865] 1:14 pm: Forex market is controlled and manipulated by the big boys. They call
themselves the"interbank" market and the spread is razor edge...very thin
[feb2865] 1:15 pm: Forex brokes are market makers....They "make" the market for you
[feb2865] 1:16 pm: meaning they take the other side of your trade and re-sell it to the
interbak market...well guess what???? not always happens
[Soultrader] 1:16 pm: i see
[feb2865] 1:16 pm: so the can make any price the want...and the worst part is that you can't
do anything about it
[feb2865] 1:17 pm: currency futures is the way to go
[Trading Room]: guavaman has left at 1:17 pm
[Soultrader] 1:17 pm: ahh. so you trade currency futures only?
[Trading Room]: guavaman has entered at 1:18 pm
[feb2865] 1:19 pm: I don't trade it I have an arrangement with a bank, you know this "I scatch
your back if you sctratch mine" thingy but is reall hard 'cause I have to do the whole thing by
myself. I have to create the croos and calculate the spread
[feb2865] 1:19 pm: but I have a couple of friends trading currency futures. They're very
satisfied customers
[feb2865] 1:20 pm: turnover is around 60b daily..not bad
[feb2865] 1:20 pm: and some brokers are offering DAT (direct access trading) I use that for
indices
[guavaman] 1:21 pm: do most traders in here trade forex?
[Soultrader] 1:22 pm: so if i consider trading forex.. i should start with currency futs?
[feb2865] 1:22 pm: I want you guys to really do your homework and backtest so you can
confirm what I say
[feb2865] 1:23 pm: I this currency futures is the way to go....the comission is low and the
transparency is there
[Soultrader] 1:23 pm: will do
[feb2865] 1:23 pm: 4-6 dollars round trip versus 30-50 dollars spread on arket makers
[feb2865] 1:24 pm: another thing is leverage
[feb2865] 1:25 pm: market makers will push you into 100:1 or 400:1 This is an invitation to
blow your account
[feb2865] 1:25 pm: use your leverage wise
[feb2865] 1:26 pm: as any amrket money management is the key...most of my trades are
while I'm sleeping
[feb2865] 1:26 pm: and I sleep all nigth...real good
[Soultrader] 1:26 pm: whats the leverage for currency futurs?
[feb2865] 1:26 pm: 12:50 per tick /per contract on GPB/USD
[feb2865] 1:27 pm: 6:50 per tick/per contract on EUR/USD
[Trading Room]: TinGull has left at 1:27 pm
[Soultrader] 1:27 pm: 12:50 what does that mean?
[feb2865] 1:28 pm: ok with 1 contract, evert tick move on GPB/USD is 12:50
[Soultrader] 1:29 pm: ok
[feb2865] 1:30 pm: remember this is how banks play this game
[feb2865] 1:30 pm: don't trade against them
[Soultrader] 1:30 pm: ok
[Soultrader] 1:31 pm: thank you very much raul every line was priceless
[feb2865] 1:31 pm: like all markets, you could get stopped out...but most often than not you'll
make it. Like I said before I didn't get stopped out for the whole month of spetember and in
October just once
[feb2865] 1:33 pm: or if the market don't break the levels you just don't trade..as simple as
that...it could happen depending on the pair once or twice a month...actually I could trade
AUD/USD for the whole trading session last month
[Trading Room]: TinGull has entered at 1:33 pm
[Soultrader] 1:33 pm: feb.. how did you come up witth the 20-25 stop loss?
[feb2865] 1:34 pm: well I get that from the bank..based on volaliltily...these numbers change
every 30 days
[feb2865] 1:35 pm: if you want I can make a post everytime they change
[Soultrader] 1:35 pm: how much does it change?
[Soultrader] 1:35 pm: that would be great
[feb2865] 1:35 pm: not much
[feb2865] 1:36 pm: sometimes GPB is 22 sometimes is 25 GPB/USD is the most jumpy of
all
[Soultrader] 1:36 pm: i see
[feb2865] 1:37 pm: if you're going to trade currency futures my advice is to have charts with
one broker and clearing with DAT
[feb2865] 1:37 pm: that way you go straigth to GLOBEX
[Soultrader] 1:37 pm: okay ill look into it
[feb2865] 1:39 pm: I will look into currency futures and still will do some trades at the
bank...once you start trading forex this way you'll be amazed how easy it is...sometimes it's
unbelievable
[Soultrader] 1:39 pm: ill need to practice and get used to it
[feb2865] 1:43 pm: if you guys are really looking into forex trading, I could keep doing this
small informal seminars. We could talk about the yen, the swiss franc, exotic currencies and
how to make money ...and if you're looking to trade something seasonal this winter, I'll be
watching heating oild very closesly
[torero] 1:44 pm: .
[torero] 1:44 pm: great
[Soultrader] 1:44 pm: im definitely interested raul.. thank you very much
[torero] 1:44 pm: i currently trade with mbtrading
[wrines] 1:44 pm: yes thanks a million
[torero] 1:44 pm: no dealing desk
[torero] 1:45 pm: and i have spread of 1 pips on eursd and usdjpy
[feb2865] 1:45 pm: I don't know but I have the funny feeling that some people are doing their
homework already LOL
[torero] 1:45 pm: straight to spot market
[torero] 1:45 pm: lol
[torero] 1:45 pm: excited about getting some profits, free money
[feb2865] 1:45 pm: really???I'll have to look into that
[torero] 1:45 pm: raul that's generous of you to tip us
[torero] 1:46 pm: yes, the rules are changing
[torero] 1:46 pm: i used to trade with fxcm i got killed with the spread
[feb2865] 1:46 pm: well this is something I got from my mentor
[torero] 1:46 pm: check out this site nondealingdesk.com