Trader Sentiment and Positioning - Page 35 - DailyFX Forex Forum

Sean Hyman · #**511** (**permalink**) 10-13-2009, 09:24 AM

Traders are still long USD/CAD but not quite as long as they were yesterday.

Trying to pick a bottom in a downtrend is a great way to clean out your account.

CB. · #**512** (**permalink**) 10-13-2009, 01:11 PM

Quote:

Originally Posted by Sean Hyman

Traders are still trying to pick the bottom on this downtrend. I wonder how many more will fall victim to it.

A positive SSI means that they are buying it. Since it has a reading of 2.72...that means that 2.72 traders are buying it up for every 1 trader that's shorting USD/JPY.

It's amazing that the trend is down...and what appeals to them? Not trend trading....but counter trend trading.

A trader has to ask themselves why they always want to go against most ALL of the momentum and most ALL of the professional order flow.

Would you rather have these big institutions pushing your order or working against your order?

Many times they are placing "yards" which are literally billions of units of currency at a time.

Thank you Sean, it is amazing how often this is true, the only time I profit on a trade against the trend is when I manipulate the trade as it is playing out, I end up moving my limits and stops, which is bad form, to say the least. Just about every book written on the markets starts off with "trend is your freind', there is a reason behind this, to be sure. Just keep pointing it out, it is a lesson we all need to keep in mind. Thanks,CB.

Sean Hyman · #**513** (**permalink**) 10-13-2009, 01:35 PM

Quote:

Originally Posted by CB.

Thank you Sean, it is amazing how often this is true, the only time I profit on a trade against the trend is when I manipulate the trade as it is playing out, I end up moving my limits and stops, which is bad form, to say the least. Just about every book written on the markets starts off with "trend is your freind', there is a reason behind this, to be sure. Just keep pointing it out, it is a lesson we all need to keep in mind. Thanks,CB.

CB, thanks. Yeah, for some reason, traders have a "bent" towards trying to judge a turning point rather than simply going with what's already there.

They should grab an 8 year old and ask them which way the chart was going. Then trade in that direction. haha. Reason being...children see things literally and they don't read a ton of stuff into it or over think it.

I used to have my 12 year old do this quite often.

Kids are much better at spotting trends because they'll go for the obvious. As adults, sometimes we can't see the forest for the trees.

I appreciate your kind words. thanks.

Lemur · #**514** (**permalink**) 10-14-2009, 03:52 AM

Quote:

Originally Posted by Sean Hyman

CB, thanks. Yeah, for some reason, traders have a "bent" towards trying to judge a turning point rather than simply going with what's already there.

They should grab an 8 year old and ask them which way the chart was going. Then trade in that direction. haha. Reason being...children see things literally and they don't read a ton of stuff into it or over think it.

I used to have my 12 year old do this quite often.

Kids are much better at spotting trends because they'll go for the obvious. As adults, sometimes we can't see the forest for the trees.

I appreciate your kind words. thanks.

William Eckhardt in the book 'The new market wizards' refers to this as the 'call of the countertrend'. Humans seem to have a cognitive weakness for this.

Recently I deviated from my trading plan by following some other good traders on a board who were bottom calling in the USD and top calling the S+P. Got my A** kicked. Lesson learnt.

Stick to pull backs in the trend with tight stops and forget all the top/bottom callers out there. And keep it simple.

CB. · #**515** (**permalink**) 10-14-2009, 04:29 AM

Quote:

Originally Posted by Lemur

William Eckhardt in the book 'The new market wizards' refers to this as the 'call of the countertrend'. Humans seem to have a cognitive weakness for this.

Recently I deviated from my trading plan by following some other good traders on a board who were bottom calling in the USD and top calling the S+P. Got my A** kicked. Lesson learnt.

Stick to pull backs in the trend with tight stops and forget all the top/bottom callers out there. And keep it simple.

Hi Lemur, Hi Sean, well, market books are very expensive and take some real analytical thinking, but from your statements and my own observation, I can see that it is time and money well spent. I have a question for both of you; what is the optimum time frame for trading or applying SSI? Is there such a thing or is it totaly subjective? It seems to work for me on a one to two day time frame quite well. Thanks for being there guys, CB.

Lemur · #**516** (**permalink**) 10-14-2009, 05:48 AM

Quote:

Originally Posted by CB.

Hi Lemur, Hi Sean, well, market books are very expensive and take some real analytical thinking, but from your statements and my own observation, I can see that it is time and money well spent. I have a question for both of you; what is the optimum time frame for trading or applying SSI? Is there such a thing or is it totaly subjective? It seems to work for me on a one to two day time frame quite well. Thanks for being there guys, CB.

Hi CB,

Don't really use SSI. Suspect it would be quite a noisy indicator which would require a trading method with wide stops in order to be useful etc.

Sean Hyman · #**517** (**permalink**) 10-14-2009, 09:57 AM

Quote:

Originally Posted by CB.

Hi Lemur, Hi Sean, well, market books are very expensive and take some real analytical thinking, but from your statements and my own observation, I can see that it is time and money well spent. I have a question for both of you; what is the optimum time frame for trading or applying SSI? Is there such a thing or is it totaly subjective? It seems to work for me on a one to two day time frame quite well. Thanks for being there guys, CB.

CB, let me know if you're interested in a free fx online course...if so, email me your first and last name and email to shyman@dailyfx.com and I'll get you enrolled for free.

Concerning SSI, it's a general sentiment tool to give you a bias on your direction, especially when the market is trending.

For instance, since "everyone and their mama" is long USD/CHF, I should consider short selling the pair. However, it doesn't mean to short it at any instance of any day.

So I need to use my technical indicators to note higher probability shorting points than others.

Hope this helps.

So SSI is not a timing indicator...it's a sentiment indicator.

grand · #**518** (**permalink**) 10-14-2009, 08:22 PM

First let me say thanks for the good work Sean.
SSI is truly a very good indicator.
What I'm thinking is if EURUSD's SSI keeps getting lower, there's a good chance 1.5 won't hold. What we need is just another catalyst. Be it CPI, job numbers tomorrow or earnings from GS, C or Google or maybe Friday's TIC flows. Chances are 1.5 will be broken sooner or later.

CB. · #**519** (**permalink**) 10-15-2009, 03:03 AM

Quote:

Originally Posted by Sean Hyman

CB, let me know if you're interested in a free fx online course...if so, email me your first and last name and email to shyman@dailyfx.com and I'll get you enrolled for free.

Concerning SSI, it's a general sentiment tool to give you a bias on your direction, especially when the market is trending.

For instance, since "everyone and their mama" is long USD/CHF, I should consider short selling the pair. However, it doesn't mean to short it at any instance of any day.

So I need to use my technical indicators to note higher probability shorting points than others.

Hope this helps.

So SSI is not a timing indicator...it's a sentiment indicator.

Thank you Sean, I like the SSI concept, it is going to take some time and experimentation to learn to use it, it seems the key is in the rate of change. I just completed the power course and the majors course so my head is spinning a bit with all the info, this last week has been good trading with my first loss last night. It acts as a wake up call that I am slipping into old habits and that I need to focus on the technicals until they are second nature. CB.

Sean Hyman · #**520** (**permalink**) 10-15-2009, 10:32 AM

Quote:

Originally Posted by grand

First let me say thanks for the good work Sean.
SSI is truly a very good indicator.
What I'm thinking is if EURUSD's SSI keeps getting lower, there's a good chance 1.5 won't hold. What we need is just another catalyst. Be it CPI, job numbers tomorrow or earnings from GS, C or Google or maybe Friday's TIC flows. Chances are 1.5 will be broken sooner or later.

grand, yeah SSI is a phenomenal indicator mainly in a trending market like what we have right now. It will hit the nail on the head because there's a huge "bent" out there for traders to go "counter trend" vs. "with the trend".

So when the trend continues on (and most of the time it will), these guys get stopped out...or scared out...or have to reverse their positions, etc...which in and of itself helps the trend to continue onward. It's like fuel to the fire.

So glad my posts have helped out so much.

Thanks for posting to this forum...and Welcome to the trading community, grand!

Sean Hyman · #**521** (**permalink**) 10-15-2009, 10:34 AM

Quote:

Originally Posted by CB.

Thank you Sean, I like the SSI concept, it is going to take some time and experimentation to learn to use it, it seems the key is in the rate of change. I just completed the power course and the majors course so my head is spinning a bit with all the info, this last week has been good trading with my first loss last night. It acts as a wake up call that I am slipping into old habits and that I need to focus on the technicals until they are second nature. CB.

Yeah, I keep SSI simple. If its at or over +3.0 then I need to look for short technical entry signals when a set up occurs.

If its -3.0 or lower, then I need to look for buying opportunities on my charts.

Also, I make sure that the market is trending first and not just in a range. That's the only weakness that I see in SSI..is when the market is ranging. Actually more of the traders get it right then. But most of the time the market trends and they get it wrong.

CB. · #**522** (**permalink**) 10-16-2009, 07:59 AM

Quote:

Originally Posted by Sean Hyman

Yeah, I keep SSI simple. If its at or over +3.0 then I need to look for short technical entry signals when a set up occurs.

If its -3.0 or lower, then I need to look for buying opportunities on my charts.

Also, I make sure that the market is trending first and not just in a range. That's the only weakness that I see in SSI..is when the market is ranging. Actually more of the traders get it right then. But most of the time the market trends and they get it wrong.

This sounds quite a reasonable approach, I think I will adapt this for awhile. The tip on range markets helps, now if I can just get my stop levels in order...

Thanks again, Sean, CB.

CB. · #**523** (**permalink**) 10-16-2009, 08:07 AM

Quote:

Originally Posted by Lemur

William Eckhardt in the book 'The new market wizards' refers to this as the 'call of the countertrend'. Humans seem to have a cognitive weakness for this.

Recently I deviated from my trading plan by following some other good traders on a board who were bottom calling in the USD and top calling the S+P. Got my A** kicked. Lesson learnt.

Stick to pull backs in the trend with tight stops and forget all the top/bottom callers out there. And keep it simple.

Thanks for being so candid, you mention tight stops here, what do you consider tight stops, I have been using what I want to risk in terms of leverage to my account, coupled with what I see as support or resistence, the results are a bit bizarre. Some times my stops seem like over kill and some times not enough. If I use a target of 1:2 risk reward then the required reward is unreasonable when 1% of my account is too much for the expected price move when playing a single contract (10 lots). Any suggestions and insights would be fantastic, Thanks, CB.

Sean Hyman · #**524** (**permalink**) 10-16-2009, 11:43 AM

Quote:

Originally Posted by CB.

Thanks for being so candid, you mention tight stops here, what do you consider tight stops, I have been using what I want to risk in terms of leverage to my account, coupled with what I see as support or resistence, the results are a bit bizarre. Some times my stops seem like over kill and some times not enough. If I use a target of 1:2 risk reward then the required reward is unreasonable when 1% of my account is too much for the expected price move when playing a single contract (10 lots). Any suggestions and insights would be fantastic, Thanks, CB.

CB, glad I could be of help to you.

To me...I set stops based off of how volatile a pair is...in other words, how many pips can it typically travel in a day (on average).

Right now the GBP/USD is trading around 180 pips a day according to the ATR (Average True Range) but that average is also likely to start creeping up too. So I assume it could move about 200 pips on an average day and that helps me with my stop distance.

CB. · #**525** (**permalink**) 10-17-2009, 08:25 AM

Quote:

Originally Posted by Sean Hyman

CB, glad I could be of help to you.

To me...I set stops based off of how volatile a pair is...in other words, how many pips can it typically travel in a day (on average).

Right now the GBP/USD is trading around 180 pips a day according to the ATR (Average True Range) but that average is also likely to start creeping up too. So I assume it could move about 200 pips on an average day and that helps me with my stop distance.

Thank you Sean, I think I understand what your thinking is here, you are using the daily ATR with an allownce for expected movement in the ATR as a safety margin, very prudent, I like that. I tend to shoot for the middle third of a move so I will work out how to incorporate that into my style. Thanks, CB.