USD index
- Thread starter Piptaker
- Start date
I trade the eur/usd and aud/usd, it pays to know where the usd index is price wise.
I day traded both these pairs all last week on the short side when my set ups presented. There's some swing high price structures just above 98 level in the index price so the crosses may get held up a bit so I'll be looking at scalps until wednesday then see what happens with the announcements.
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I don't trade without volume on my charts. Even on currencies I use tick volume as it shows not the transactions but the interest in price levels which is very helpful once you have an idea about order flow.
http://traderfeed.blogspot.co.uk/2016/07/three-questions-to-ask-about-your.html
1) Am I looking at new information in new ways? - You don't mine for gold where everyone has been searching or, if you do, you use new tools that help you dig deeper and sift better. A wise portfolio manager recently explained his success by citing the importance of exploiting "hard to get data". That's where the truly new information--and the possible future sources of edge--lie. For example, in a recently developed routine, I break the day's action in ES into bars that represent a given number of trades. It's quite common for a single day to break down into 500-1000 bars, depending upon the level of market activity. I then look at the volatility of each bar and the degree to which expansions of volatility result in directional price movement. It turns out that expansions of microvolatility that have a directional bias precede short-term market trends. The new information is capturing the behavior of large market players who have to enter their positions over time because of their size. If you can recognize this process early, you can ride their waves. New information leads to new, promising trading.
2) Am I synthesizing market information, not just analyzing it?- Analysis gives us the pieces of the puzzle, but it's a perceptual synthesis that helps us identify what the puzzle represents. Without that synthesis, we can't assemble the puzzle; it makes no sense to us. Synthesis is sense-making; it's taking information from multiple sources and assembling it into a coherent market picture. Perhaps we see a possible trend starting per the discussion of microvolatility above. At the same time, we notice that one sector of the market is breaking out to the upside and other risk assets are firming, despite a seemingly bearish data release earlier in the session. Putting those pieces together, we recognize that the path of least resistance is to the upside and we construct a solid risk/reward entry. Too often we get lost in the weeds and overreact to single pieces of data. Our noses are so stuck in the screens that we don't pull back to see the broader context of what's going on in markets. Successful traders operate with microscopes and telescopes, developing ideas that synthesize the here-and-now with larger market patterns.
3) Do I flexibly adapt my trading style? - Traders often insist that they succeed by finding a trading style that fits their personality and faithfully sticking to that style. I've come to recognize the limitations of this view. A while ago I gave the example of the radio station owner who played music he believed to be "good music". The problem was that musical tastes were changing and people did not want to listen to the music he believed to be good. Rather than adapt to consumer needs, he stuck with his style and drove the business into the ground. Creativity means that we flexibly adapt to changing conditions. We don't insist that markets follow our predilections. When I adopted cycles as my unit of market analysis, issues of "trend trading" vs. "mean reversion trading" became moot. At certain, early portions of a cycle, you trade the momentum. At other points, you fade directional moves. When cycles are higher frequency, you trade in and out more opportunistically. When lower frequency cycles dominate, you can behave more like an investor. The market plays the music. How you dance depends on the music being played.
Too many traders approach their craft as if they're managing a manufacturing process. They don't recognize that they are also managing a creative enterprise. How you manage an assembly line making widgets is different from how you manage a movie studio. It's great to become more consistent by introducing process control and staying process driven--but not if the rigidity of process becomes a straitjacket that limits the creative essence of managing our capital.
1) Am I looking at new information in new ways? - You don't mine for gold where everyone has been searching or, if you do, you use new tools that help you dig deeper and sift better. A wise portfolio manager recently explained his success by citing the importance of exploiting "hard to get data". That's where the truly new information--and the possible future sources of edge--lie. For example, in a recently developed routine, I break the day's action in ES into bars that represent a given number of trades. It's quite common for a single day to break down into 500-1000 bars, depending upon the level of market activity. I then look at the volatility of each bar and the degree to which expansions of volatility result in directional price movement. It turns out that expansions of microvolatility that have a directional bias precede short-term market trends. The new information is capturing the behavior of large market players who have to enter their positions over time because of their size. If you can recognize this process early, you can ride their waves. New information leads to new, promising trading.
2) Am I synthesizing market information, not just analyzing it?- Analysis gives us the pieces of the puzzle, but it's a perceptual synthesis that helps us identify what the puzzle represents. Without that synthesis, we can't assemble the puzzle; it makes no sense to us. Synthesis is sense-making; it's taking information from multiple sources and assembling it into a coherent market picture. Perhaps we see a possible trend starting per the discussion of microvolatility above. At the same time, we notice that one sector of the market is breaking out to the upside and other risk assets are firming, despite a seemingly bearish data release earlier in the session. Putting those pieces together, we recognize that the path of least resistance is to the upside and we construct a solid risk/reward entry. Too often we get lost in the weeds and overreact to single pieces of data. Our noses are so stuck in the screens that we don't pull back to see the broader context of what's going on in markets. Successful traders operate with microscopes and telescopes, developing ideas that synthesize the here-and-now with larger market patterns.
3) Do I flexibly adapt my trading style? - Traders often insist that they succeed by finding a trading style that fits their personality and faithfully sticking to that style. I've come to recognize the limitations of this view. A while ago I gave the example of the radio station owner who played music he believed to be "good music". The problem was that musical tastes were changing and people did not want to listen to the music he believed to be good. Rather than adapt to consumer needs, he stuck with his style and drove the business into the ground. Creativity means that we flexibly adapt to changing conditions. We don't insist that markets follow our predilections. When I adopted cycles as my unit of market analysis, issues of "trend trading" vs. "mean reversion trading" became moot. At certain, early portions of a cycle, you trade the momentum. At other points, you fade directional moves. When cycles are higher frequency, you trade in and out more opportunistically. When lower frequency cycles dominate, you can behave more like an investor. The market plays the music. How you dance depends on the music being played.
Too many traders approach their craft as if they're managing a manufacturing process. They don't recognize that they are also managing a creative enterprise. How you manage an assembly line making widgets is different from how you manage a movie studio. It's great to become more consistent by introducing process control and staying process driven--but not if the rigidity of process becomes a straitjacket that limits the creative essence of managing our capital.
To your last point--we are taught in school to think that way. Most schools are using an assembly line as their model.
The first part where you talk of looking at volume at a certain price, that's interesting. I follow futurestrader71 and am starting to integrate volume profile into my thinking. I think that's what you are saying.
The first part where you talk of looking at volume at a certain price, that's interesting. I follow futurestrader71 and am starting to integrate volume profile into my thinking. I think that's what you are saying.
Then again, sometimes less is more. It's up, down, or sideways for this trader. Mostly sideways is what I see. Sometimes I'll see a great setup, then I realize I'm looking only at a 15 min chart. Time to zoom out. Things take time to develop. Also, I think you can sort of eyeball where the volume is taking place just from the lower timeframe charts and from watching the tape. I know when I went from es to currencies I noticed immediately how much longer it took for things to move once support or resistance was violated, and how many more shakeouts there were before the real move resumed.