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How are you playing Q1 2010? Icon_minitimeWed Jul 23, 2014 7:44 pm by Sauros




 

 How are you playing Q1 2010?

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Snapman

Snapman


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PostSubject: How are you playing Q1 2010?   How are you playing Q1 2010? Icon_minitimeThu Dec 03, 2009 5:29 pm

QE may come to a screeching halt in the EU and possibly in the US as well. No more QE will lead to a spike in the dollar? A spike in interest rates? Tanking of Equities? Gold making higher highs?

How do you guys see this scenario? How are you guys gonna orient your trades?

-Alex
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Sauros

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PostSubject: Re: How are you playing Q1 2010?   How are you playing Q1 2010? Icon_minitimeFri Dec 04, 2009 10:14 am

Snapman wrote:
QE may come to a screeching halt in the EU and possibly in the US as well. No more QE will lead to a spike in the dollar? A spike in interest rates? Tanking of Equities? Gold making higher highs?

How do you guys see this scenario? How are you guys gonna orient your trades?

-Alex

First I'd say I'm not a good at forecasting and generally prefer to trade after the things happen : our job as traders is not to be right or to be good forecasters, our job is to make money.

A few thoughts to start with :

- As we've found out together in our past discussions here, this year, QE and central banks support led the global markets rally, particularly the stocks (roughly freshly printed money is pouring to banks that then are purchasing stocks) . I believe the FED and other central banks will make sure a tightening of their policy won't lead to a consequent market correction before they do anything. Thus they probably won't move their policy during the first quarter 2010 but any clue on WHEN they will tighten could have an impact on the market, albeit I guess not significantly

- What is currently happening to EUR, after ECB announced an exit not that far in time, is pretty interesting to follow up. As I write, it looks like it has been sold as the market may worry about a premature tightening rather than strenghten as the rates go up.

- This year, we saw as well a perverse relationship between economic data and markets: the worst the eco data were the more the central banks supported, the more the participants anticipated central banks and gov action and the more the markets went up... This may come to an end some time in 2010 as one needs to give
- In particular, if finally the economic situation prevails (nothing has fundamentally changed since last year) and the markets finally give in the anticipated "double dip" scenario. In such a scenario, my guess is the USD will initially increase, but ultimately will retreat as the focus will then be back on weak US economy. In such a case, gold as well will initially drop but I guess its safe haven role will take over the one of the dollar and it will probably head to higher highs. To summarize this point: if there's a strong correction , I'll probably wait for the USD initial jump and gold initial slump and then respectively short the former and buy the latter as soon as I'll find good opportunities in their price.

- This said, I believe that the current situation with a market rally and USD weakness could last a while, at least the whole Q1 2010 if there's no major change in the situation. So no change in the situation no change in the positions i currently have (long stock, short USD, long gold), just let the profits run! The only thing is to get ready for the "crash" I think will inevitably happen and be ready to get the hell out of the longs and put the shorts on as fast as possible.

- I need to have a closer look to other markets i'd like to trade next year: especially commodities and Oil as I found out that I'm under exposed there. Any 101 on Oil or help from you guys would be highly appreciated. Thanks

That's it for now.
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Snapman

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PostSubject: Re: How are you playing Q1 2010?   How are you playing Q1 2010? Icon_minitimeFri Dec 04, 2009 1:45 pm

Thanks for the insight reply sauros, as always.

Isn't forecasting and being right (even if for the wrong reasons) partial prequisites to making money ;-) . You engage in such activities but don't necessarily play them (as i too am a trend trader). Though it is true, it is only part of the game.

I just wanted to get your opinion on a price target for the SPX end of 09 and end of Q1 2010; since you are long equities for this time frame. I feel that the long term charts are converging in the short term (bearish picture forming). Though like you said if markets believe in the Fed, the Fed's will just keep the QE in place Q1. I still agree on shorting the dollar long term as in 2 quarters + into 2010. Though I feel there is a high risk of a significant correction ( significant > 5% over a period of a few days).

In terms of oils, you can play the short swings using a technical approach. Though you might have to tweak your system as oil does run on different fundamentals and gets stuck in different patterns due to the fundamentals (ie supply factors such as opec or as in this recession has shown the power of demand in a bubble state).

To get started just think or do research on all the various uses of oil. Then look at all the major countries that have oil. Then if you get that far you can start breaking down how the industry runs. Producers, refiners, storage, power and upstream, alternative market shares etc...

best person to talk about this probably would be @batman ( <-- too bad there is no @ function here like twitter or dailybooth lol). As Im sure he is far more versed in this as he follows the stats very closely and trades energy exposed products.

-snapman
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Sauros

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PostSubject: Re: How are you playing Q1 2010?   How are you playing Q1 2010? Icon_minitimeFri Dec 04, 2009 5:18 pm

Snapman wrote:
Thanks for the insight reply sauros, as always.

Isn't forecasting and being right (even if for the wrong reasons) partial prequisites to making money ;-) . You engage in such activities but don't necessarily play them (as i too am a trend trader). Though it is true, it is only part of the game.

I just wanted to get your opinion on a price target for the SPX end of 09 and end of Q1 2010; since you are long equities for this time frame. I feel that the long term charts are converging in the short term (bearish picture forming). Though like you said if markets believe in the Fed, the Fed's will just keep the QE in place Q1. I still agree on shorting the dollar long term as in 2 quarters + into 2010. Though I feel there is a high risk of a significant correction ( significant > 5% over a period of a few days).


Actually I have to confess I have no idea of a target on SPX and I define no target generally
I'm long while the reasons I have to be long are valid...
Maybe it could be a flaw in my trading and maybe I should improve this in the future but for now, it doesn't bother me that much in my trading and I'm not sure it impacts it a lot. With a bit of experience I have become not so bad with my entries but I never know when to take the profits. I often use a trailing stop and get out of a position when I'm stopped (with a loss or a profit): it's the best way I found to let the profits run and it worked pretty well for some postions as gold for instance.
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Sauros

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PostSubject: Re: How are you playing Q1 2010?   How are you playing Q1 2010? Icon_minitimeTue Dec 08, 2009 11:50 pm

Snapman wrote:

Isn't forecasting and being right (even if for the wrong reasons) partial prequisites to making money ;-) . You engage in such activities but don't necessarily play them (as i too am a trend trader). Though it is true, it is only part of the game.

Well young man, the day I stopped focusing on being right but on making money, my trading improved dramatically
We can discuss this later, getting late here, but for now,I suggest you have a look to the quote from Livermore that ends my latest post: http://blog.thelordoftrading.com/2009/12/3-goldums-rule.html
This one changed a lot of things for me
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Snapman

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PostSubject: Re: How are you playing Q1 2010?   How are you playing Q1 2010? Icon_minitimeWed Dec 09, 2009 10:03 pm

Sauros wrote:
Snapman wrote:

Isn't forecasting and being right (even if for the wrong reasons) partial prequisites to making money ;-) . You engage in such activities but don't necessarily play them (as i too am a trend trader). Though it is true, it is only part of the game.

Well young man, the day I stopped focusing on being right but on making money, my trading improved dramatically
We can discuss this later, getting late here, but for now,I suggest you have a look to the quote from Livermore that ends my latest post: http://blog.thelordoftrading.com/2009/12/3-goldums-rule.html
This one changed a lot of things for me


lol wow you win! I love that chart you got there. haha, we should def open more discussion threads. gold has pulled back a bit with a stronger dollar but overall fundamentally id say dollar is still weak and gold still up.
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almbayrak66

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PostSubject: Re: How are you playing Q1 2010?   How are you playing Q1 2010? Icon_minitimeThu Dec 10, 2009 8:42 am

Hi Sauros, this is very good trade and post, "in my point of view" you are about to reach zen trading, again from Livermore book, I don't remember which page but once Mr. Livermore had chance to meet a talk with a very rich (by generations) trader, his winning % is very high(I dont remember his name but a well known rich) and asked him his technique, his answer was " I don't buy at bottom and I don't sell at top" maybe he does not even try and work hard for that, it is that simple. Not to make max profit but profit, that's the point as a speculator to care. I dont like to talk about pips, but profit and loss. Actually this quote is my guide and the peak point I want to reach. When all the news and talkings come around, "now it is too expensive, too high....this and this.....", after some time we chickened out and sell, after we sell what is left to sell, none, big guys and good traders who are confident with their positions stay there, and stocks are then jumping, this is also correlated Dow theory, third phase I believe.
After I started trading FX, in internet I red many articles about 10-20-50 golden rules of trading, one of those I remember " never be upset about your losing trades, never be proud of your winning trades" I was very emotional when I first trade in real account, now I'm trying to close loss asap saying myself "it is not your day man" then checking what I made wrong.
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Snapman

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PostSubject: Re: How are you playing Q1 2010?   How are you playing Q1 2010? Icon_minitimeThu Dec 10, 2009 1:12 pm

almbayrak66 wrote:
Hi Sauros, this is very good trade and post, "in my point of view" you are about to reach zen trading, again from Livermore book, I don't remember which page but once Mr. Livermore had chance to meet a talk with a very rich (by generations) trader, his winning % is very high(I dont remember his name but a well known rich) and asked him his technique, his answer was " I don't buy at bottom and I don't sell at top" maybe he does not even try and work hard for that, it is that simple. Not to make max profit but profit, that's the point as a speculator to care. I dont like to talk about pips, but profit and loss. Actually this quote is my guide and the peak point I want to reach. When all the news and talkings come around, "now it is too expensive, too high....this and this.....", after some time we chickened out and sell, after we sell what is left to sell, none, big guys and good traders who are confident with their positions stay there, and stocks are then jumping, this is also correlated Dow theory, third phase I believe.
After I started trading FX, in internet I red many articles about 10-20-50 golden rules of trading, one of those I remember " never be upset about your losing trades, never be proud of your winning trades" I was very emotional when I first trade in real account, now I'm trying to close loss asap saying myself "it is not your day man" then checking what I made wrong.


Its really great to hear that you are learning how to manage emtional risk as that is at many times a traders downfall. keep up the good work! do you have any thoughts on where markets are heading into 2010?
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almbayrak66

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PostSubject: Re: How are you playing Q1 2010?   How are you playing Q1 2010? Icon_minitimeThu Dec 10, 2009 5:26 pm

Hi Snapman, you should have seen me month ago, how I was emotional, " I bought you and you are goin down how you do that to me" , I think after losing and winning hundreds of time, first impression and excitement gone and then it is possible to trade emotionless, just a job.
Regarding 2010, I agree with Sauros, forecasting is very dangereus in our profession, markets may go up or down, my job is simply to be flexible and follow. Of course this does not mean that I have ideas, alternative scenerios, alternative plans.
with the assumptions:
- no countries will go bankrupt
Dubai, Greece, Japan, UK, Turkey.......
- BOJ will not intervene yen valuation (very low probability)

* stock markets need a correction as early as possible, can I. quarter 2010, "you can't simply not jump without bending" stocks need new money, and investors, icluding me, we are waiting correction to enter.
In Turkish market I expect min 35-40%
* Dollar will keep on losing dround as fed requested, Bernanke said fed have strong tools to control inflation then , usa chosed low currency strong production, lower unemployment, in this case BOJ intervention is low probabilty meaning buying usd vs. yen. After the bankrupcy of American cornerstones like GM, Crysler, I think no one will tolerate and ignore low yen anymore. No more sympaty for slant eyes.

So more or less FX tendency will be the same, stocks need an urgent correction which may last till the beginning of 3. quarter 2010.

These are simply my ideas, sort of crystal ball.

Any objections, corrections, pls welcome, I always like to reconsider, think twice.
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Sauros

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PostSubject: Re: How are you playing Q1 2010?   How are you playing Q1 2010? Icon_minitimeFri Dec 11, 2009 12:42 am

almbayrak66 wrote:
I don't remember which page but once Mr. Livermore had chance to meet a talk with a very rich (by generations) trader, his winning % is very high(I dont remember his name but a well known rich) and asked him his technique, his answer was " I don't buy at bottom and I don't sell at top" maybe he does not even try and work hard for that, it is that simple..

Yep I remember this one, it's Rotschild I think who said something like "The secret of my wealth? Well I purchase way too late and sell way too early"
Trying to pick the bottom and sell at the top is definietely the most difficult (and dangerous) game in the trading...

This said, I really need to take back my "reminescences" book from the guy I lent it to...
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Sauros

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PostSubject: Re: How are you playing Q1 2010?   How are you playing Q1 2010? Icon_minitimeSun Dec 13, 2009 11:48 am

Hey almbayrak66, thanks for your insights, we'll definitely need to adapt our trading as the events unfold but I tend to agree with your global picture: no double DIP recession and central banks everything to support the recovery. Economically the rally is pretty questionable as none of the main issues that drove us to the brink of a collapse are fixed yet. I'm afraid that ultimately we'll head again for a deep recession, but "the markets can stay irrational longer than you can stay solvent" and this rally can last years (at least I think a consequent part of 2010) before we see this.

Some quick comments here:

almbayrak66 wrote:

- no countries will go bankrupt
Dubai, Greece, Japan, UK, Turkey.......
- BOJ will not intervene yen valuation (very low probability)

On the corporate side, while I'm pretty sure we won't see anymore so soon a Lehman-like bankruptcy (they can't do twice the same error and for some reasons, it looks like Lehman was shot down by the US gov), I think we could see other defaults particularly on the SMEs and other company not "to big to fail". This said, we've seen that year that the american gov-supported-Chapter 11-bankruptcy for big companies as GM is not that a bad thing: my understanding is it's a way to prioritize the payment back to the taxpayer against the state support and some bankruptcies of "big" may happen.
On the sovereign side,

Now regarding the sovereign risk, I'd say sovereign defaults are not impossible (at least the Credit Default Swaps defaults) provided the contagion risk is limited. I mean the world "sheriffs" (well, the governments and their central banks) could "let" a default happen if they consider the resulting risk of contagion to the global financial system is "controlled", which i think is the case for Dubai for instance.

I think that Japan is in the deep sh... and that might be the short of the year. Now it's more my pure gut feeling and I have no serious grounds to say that: it needs to be assessed more deeply. The JPY is too strong despite of a decade of QE and I guess that they have no choice but to intervene and I'm not sure that would be enough. Sauros very bear How are you playing Q1 2010? Kopfschuettel

almbayrak66 wrote:

* stock markets need a correction as early as possible, can I. quarter
2010, "you can't simply not jump without bending" stocks need new
money, and investors, icluding me, we are waiting correction to enter.
Agreed. I think too many investors missed the stock rally and will buy at the dip so a deep correction is unlikely. Working on this.

almbayrak66 wrote:
* Dollar will keep on losing dround as fed requested, Bernanke said fed
have strong tools to control inflation then , usa chosed low currency
strong production, lower unemployment, in this case BOJ intervention is
low probabilty meaning buying usd vs. yen.
While in the short term i'm positioned for a USD rally, you can be right on the longer term on the USD weakness. Let's say that the FED supported its weakness to help the stock rally and the "recovery" but if there are evidence that the rally can live on its own, the USD could rally consequently.
Now in the long term, I think the USD is doomed as the US may decide to "inflate their debt out" and support further its weakness. For that reason I guess that the USDJPY carry trade will come to an end.
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almbayrak66

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PostSubject: about jpy   How are you playing Q1 2010? Icon_minitimeMon Dec 14, 2009 6:52 am

http://www.bloomberg.com/apps/news?pid=20601103&sid=aIf0OWDzVKMM
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Batman

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PostSubject: Re: How are you playing Q1 2010?   How are you playing Q1 2010? Icon_minitimeTue Dec 15, 2009 6:34 pm

I'm looking at going long Natural Gas when I find the right price. There is too much volatility at the moment. But I'm looking for something around the 50 day SMA. Additionally, I will short financials. There has been too much good news. Additionally, I don't believe banks are healthy. So I will look to short some smaller names like, 5/3rd bank corp, KeyCorp, PNC Financial...These banks have much worse exposure to consumer loans and CRE than the big boys according to Standard and Poores.
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Sauros

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PostSubject: Re: How are you playing Q1 2010?   How are you playing Q1 2010? Icon_minitimeTue Dec 15, 2009 10:47 pm

Batman wrote:
I'm looking at going long Natural Gas when I find the right price. There is too much volatility at the moment. But I'm looking for something around the 50 day SMA. Additionally, I will short financials. There has been too much good news. Additionally, I don't believe banks are healthy. So I will look to short some smaller names like, 5/3rd bank corp, KeyCorp, PNC Financial...These banks have much worse exposure to consumer loans and CRE than the big boys according to Standard and Poores.

Hey dark trader, thanks for your views. 2 questions I would raise:
- what's your rationale for a long nat gas position (I'm just wondering because I don't know a thing about gas)?
- Will you play your short financials purely short or in a relative value way: long the big boys and short the smaller?
Thanks
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PostSubject: Re: How are you playing Q1 2010?   How are you playing Q1 2010? Icon_minitimeWed Dec 16, 2009 2:03 am

Batman wrote:
I'm looking at going long Natural Gas when I find the
right price. There is too much volatility at the moment. But I'm
looking for something around the 50 day SMA. Additionally, I will short
financials. There has been too much good news. Additionally, I don't
believe banks are healthy. So I will look to short some smaller names
like, 5/3rd bank corp, KeyCorp, PNC Financial...These banks have much
worse exposure to consumer loans and CRE than the big boys according to
Standard and Poores.

Id agree fundamentally on long nat gas. Especially look at that XOM M&A action with XTO.

Your short financials definitely worked out in November, lets see if it holds up, ill have to review longer term charts for this one. This time I won't make the same mistake twice ;-)
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