Trading Ideas/Potential Trades
- Thread starter Pejman Hamidi
- Start date
I want to share something with the group. I actively trade the spot forex market, and when I'm not trading it, I'm monitoring it because it does have a direct impact on my equity strategies.
For example, the market on Wed. looked like a perfect breakout waiting to happen. First, we had the gap, which was troubling, but sufficient to set off a short squeeze of the weaker hands. But after an early attempt at closure, the Nas made a new high, and it looked like we were on our way to blast through 2100 as you could hear the bears screaming mercy.
However, at the same time, the US Dollar was getting slammed against the G7 basket. It was for this reason alone that I didn't take the bait on the breakout in the morning and instead chose to sit this one out. About 8 out of 10 traders I spoke to were "long and strong", but I didn't like the divergence between US equities and the Dollar. There was a mass exodus out of dollars last night and through this morning, so I couldn't understand the reasoning behind the obvious breakout taking place in the Nasdaq. It was EXTREMELY tempting to get long, but the Dollar reigns supreme over all other instruments. Then I came across the 2 out of the 10 that weren't long but instead were selling aggressively into the rally, getting as short as can be. Their reasoning?
"The dollar is cratering, institutional flow is negative USD, the strength you see in the equity markets this morning is false. The wirehouses are 'holding' their institutional sell tickets and instead buying the market to bring in the retail. There is not enough bid side to handle the sell orders in hand, so this is a trap to get the bid stronger. The 'order in hand' tickets will come in fast and furious after lunch. Watch out!"
Those were the words that firmly validated my thinking and at that time, with the Nas brushing up around 2080, I lifted my hedge and returned to net short. This was a painful reversal day for many, but the lesson learned is keep an eye on the dollar for the next few months. It will tell you a great deal.
Pejman Hamidi
For example, the market on Wed. looked like a perfect breakout waiting to happen. First, we had the gap, which was troubling, but sufficient to set off a short squeeze of the weaker hands. But after an early attempt at closure, the Nas made a new high, and it looked like we were on our way to blast through 2100 as you could hear the bears screaming mercy.
However, at the same time, the US Dollar was getting slammed against the G7 basket. It was for this reason alone that I didn't take the bait on the breakout in the morning and instead chose to sit this one out. About 8 out of 10 traders I spoke to were "long and strong", but I didn't like the divergence between US equities and the Dollar. There was a mass exodus out of dollars last night and through this morning, so I couldn't understand the reasoning behind the obvious breakout taking place in the Nasdaq. It was EXTREMELY tempting to get long, but the Dollar reigns supreme over all other instruments. Then I came across the 2 out of the 10 that weren't long but instead were selling aggressively into the rally, getting as short as can be. Their reasoning?
"The dollar is cratering, institutional flow is negative USD, the strength you see in the equity markets this morning is false. The wirehouses are 'holding' their institutional sell tickets and instead buying the market to bring in the retail. There is not enough bid side to handle the sell orders in hand, so this is a trap to get the bid stronger. The 'order in hand' tickets will come in fast and furious after lunch. Watch out!"
Those were the words that firmly validated my thinking and at that time, with the Nas brushing up around 2080, I lifted my hedge and returned to net short. This was a painful reversal day for many, but the lesson learned is keep an eye on the dollar for the next few months. It will tell you a great deal.
Pejman Hamidi
Pejman,
What are you talking about? The eurocurrency was basically unchanged on the open and JY was up by about 20 ticks on the futures, this after sustaining a big hit Tuesday. euro/dollar has lost ground for 5 straight sessions. Where was all this dollar bashing that so unnerved you?
What are you talking about? The eurocurrency was basically unchanged on the open and JY was up by about 20 ticks on the futures, this after sustaining a big hit Tuesday. euro/dollar has lost ground for 5 straight sessions. Where was all this dollar bashing that so unnerved you?
AAA -
In addition, the dollar index contract was rallying into about noon yesterday before dropping along with the market into the close (continued down this morning into about 11am and has bounced as of this writing). It closed up for the day yesterday.
The British Pound contract was basically falling all day yesterday (opened up higher today though).
The EuroFX contract sold off fairly steeply from about 9am going into about noon and then started back up (continued up today into about 11am and has been falling since as of this writing) - essentially the mirror image of the dollar index contract.
So far haven't been able to find where the "dollar was crashing" yesterday either.
In addition, the dollar index contract was rallying into about noon yesterday before dropping along with the market into the close (continued down this morning into about 11am and has bounced as of this writing). It closed up for the day yesterday.
The British Pound contract was basically falling all day yesterday (opened up higher today though).
The EuroFX contract sold off fairly steeply from about 9am going into about noon and then started back up (continued up today into about 11am and has been falling since as of this writing) - essentially the mirror image of the dollar index contract.
So far haven't been able to find where the "dollar was crashing" yesterday either.
''I am probably the only short seller who stays away from the NASDAQ...........Knowing NASDAQ is overpriced and being able to sell short on it are two different things , as a lot of people found out in 1999''Bill Ginsberg trade idea, quote ,care of writer Joshua Salan......................................
I'm not quite sure if I view the response as a challenge. It is not "unusual" for professional traders to use Forex analysis in their daily equity trading routine. However, it is rather unusual for the average scalper/daytrader to know much more than reading the tape and recognizing momentum or order flow vacuums. Doing macro analysis, which is a prerequisite for F/X trading, is beyond the scope of understanding for most scalpers.
Makes no diff'c to me whether you take the advice or not, nor do I have an interest in "defending" my advice as it is just that: advice. The central focus was not to present a bearish picture of the dollar, although there is a strong case for it in both short and long-term time frames, but rather to suggest for those interested in expanding their knowledge to consider studying the F/X markets and connect the interrelations between it and equity markets. If you think the Dollar is not bearish, or was not going down, it is of no interest to me. Again, the point was to bring this notion of intermarket analysis to the attention of those using this board as a venue to learn and broaden their horizons.
And when someone doesn't respond immediately to anothers "challenge", as you like to call it, it doesn't always mean they are "skirting" the issue. It could certainly also mean they have busy lives, in fact, F/X traders sometimes find it difficult to schedule a trip to the bathroom. Honestly, I don't see how some of you on this list find time to post so much if you are in fact trading actively.
My point is this: Consider using spot forex to give you a better understanding of what the institutions are doing. To provide you with the details of our interpretation of the spot currency markets during overnight runs preceding the reversal in the market earlier this week would take quite a bit of work towards something which I have no interest in sharing with this board, or any other public forum for that matter.
One of the major weaknesses of members on this board is their insistence to quickly "attack" other members rather than pursuing intellectual inquisitions. I for one know of a few heavy hitters that I personally introduced to this board that have since moved on because the dialogue here was of no use to them. Between the sales presentations constantly taking place by the namesakes of the prop firms, and the gang-bang style attacks on individual members from those with obviously huge amounts of built-up anger and frustrations most likely the result of their continuous losses, makes this board an unfortunate waste of bandwidth at times. Darren last month presented us with some excellent insight into the mind of a specialist, but we have since seen nothing from him. The regulars on this board are rarely so generous as to provide the type of dialogue we saw from Darren.
This is about as much of my Friday night as I'm willing to spend here.
As for the Dollar, the outflows continue and the pullback in stocks will accelerate next week, as volume is heavy on the sell side and any rally is met with a wall of liquidations. The cover of Business Week should remind you all of the mood in the ensuing months ahead. The general consensus is that the markets will explode into February. The general consensus is now 0 for 19873904.
Pej.
Pej,
I enjoyed the original posts on this thread and our back and forth on the potential trades. I was hoping to do more of that in the future as you said you will give full trade parameters in future posts.
Looks like some of your potential trades had very good potential returns, too bad (for me) that I do not trade penny stocks. It's just that i'm not familiar with that market. But I'd like to learn from those who know more about it.
I'm also interested in finding out more info on how you put on your hedges - what instruments do you use? How much does it cost to put on a hedge etc. ? When you were 20% net short and put the hedge on, did you make or lose money?
If you are not interested in doing it publicly, please feel free to email me.
Good Trading
Tony
I enjoyed the original posts on this thread and our back and forth on the potential trades. I was hoping to do more of that in the future as you said you will give full trade parameters in future posts.
Looks like some of your potential trades had very good potential returns, too bad (for me) that I do not trade penny stocks. It's just that i'm not familiar with that market. But I'd like to learn from those who know more about it.
I'm also interested in finding out more info on how you put on your hedges - what instruments do you use? How much does it cost to put on a hedge etc. ? When you were 20% net short and put the hedge on, did you make or lose money?
If you are not interested in doing it publicly, please feel free to email me.
Good Trading
Tony
Pejman,
It certainly was not my intention to confront you or criticize you. You said the dollar was getting "slammed" when a cursory glance at the chart indicated it was not. Whatever.
It certainly was not my intention to confront you or criticize you. You said the dollar was getting "slammed" when a cursory glance at the chart indicated it was not. Whatever.