Mr. Bean and the Volatility

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The intraday volatility pattern in the major currency pairs would likely to stay the same, thanks to these reasons on why London will keep its role as the center of financial world:
(taken from this link).

• (US) Financial regulation: After scandals like Enron, the financial industry is more heavily regulated. The Sarbanes-Oxley Act required lots of tightening of financial controls. As a result, it’s less attractive to do business in a country where every transaction is scrutinized.
• Patriot Act and Dept. of Homeland Security: After 9/11, US security was tightened quite a bit. That means there’s less openness with foreign transactions, travel, and more. In contrast, London is easier to deal with.
• Time zones: Who wants to keep weird hours? London’s time zone is more favorable for many world areas. Investors, generally outside of the US, who want to keep more regular hours trade on London time.
• International flavor: With London’s immigrant financial workforce and relatively open work and travel visas, the city’s financial makeup is very internationally diverse. Last year, a Russian pipe manufacturer chose to list with London’s stock exchange rather than NYSE because it’s “very internationally flavored,” a sentiment that is likely echoed by many others with financial interests.

Mr Bean has probably been adding more weight to the image of London’s openness. Imagine having friends like him for a coffee during the market break. Perhaps I could ask him for some advices on the market. lol.

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Scalping wisdom

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Some traders have put an enormous amount of time developing scalping strategies. One of them is a German trader named himself as Winwin. Despite of his controversial strategy in the 2007 EA Championship, his wisdom seems to be worth examined:

“….for me there are two scalping techniques.
first technique: in trendmarket take out some trend pips of the trend. if i want it to do in short term there is the problem that in a trend the market is moving fast. i cant set pending orders all the time in championship, because so i would create a very big journal. so i had to use marketorders, but in fast moving markettrends i will nearly always get a reqoute.
second technique: find out a range and trade in the opposite direction on the borders or on some points. but dont trade the whole range, only some pips. so you have more time for a marketorder because it is not a fast moving market.
i will underline, that this is my definition of scalping possibilities. it can be completely wrong to books maybe………..”

His wisdom has sparked an idea of a new strategy in my head. Especially with this idea of modifying a scalping technique to be accepted by most Metatrader brokers. Will discuss it tomorrow with Yogi, the programmer. Can’t wait for tomorrow. lol.
When having hot ideas in the head like this, i feel like being a 10 years old boy who has just been given a pair of new shoe, that he even wears the new shoe to sleep. lol.

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COT and market sentiment

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A conversation early this morning with one member of the Indotraders.

Trader: kalau tidak sibuk, saya mau tanya sedikit Pak mengenai COT (Common Of Trader)
Trader: apa Pak Darma tau mengenai COT ?
Trader: COT itu mengenai apa Pak ?
Darma: Commitment of Traders ya
Trader: iya
Darma: posisi net open di bursa, mas ya?
Darma: di bursa futures
Trader: saya tidak tau Pak mengenai COT
Trader: mau tanya mengenai COT itu dan apakah bermanfaat bagi trading kita?
Darma: tergantung time frame kita mungkin pak. dulu saya pernah coba perhatikan, karena ada beberapa teman traders yg mencoba menginterpretasi COT menjadi sentimen market
Darma: tapi kok rasanya gambyar dan tidak ada korelasi dengan market ya. terutama dengan market di time frame intraday.
Trader: apa berarti hanya bermanfaat di time frame D1 ke atas ?
Darma: sedangkan untuk timeframe long term, arah market dalam ekspektasi 2-3 bulan ke depan, saya sendiri lebih suka menggunakan pendekatan sistem aja. misalnya dulu pernah coba dengan sistem turtle atau aberration. fundamental ternyata nggak dipedulikan samasekali oleh market.
Darma: COT mungkin bermanfaat untuk mengantisipasi sentimen market untuk market yang likuiditasnya rendah
Darma: misalnya untuk saham di bursa jakarta. posisi net open para partisipan akan sangat mempengaruhi harga.
Darma: tapi kalau di market yg besar seperti spot fx, kayaknya gak pengaruh samasekali. karena data COT yang ada di bursa di NY atau Chicago, itu hanya sampel kecil dari market yang jauh lebih besar.
Trader: ok, terima kasih Pak Darma
Darma: iya, mas. sama2. itu pun hanya pendapat saya mas. belum tentu benar juga kok.

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Tentang COT dari salah satu halaman di website CFTC:

Commitments of Traders

The Commitments of Traders (COT) reports provide a breakdown of each Tuesday’s open interest for market reports in which 20 or more traders hold positions equal to or above the reporting levels established by the CFTC.

Reports are available in both a short and long format. The short report shows open interest separately by reportable and nonreportable positions. For reportable positions, additional data is provided for commercial and non-commercial holdings, spreading, changes from the previous report, percents of open interest by category, and numbers of traders.

The long report, in addition to the information in the short report, groups the data by crop year, where appropriate, and shows the concentration of positions held by the largest four and eight traders.

Supplemental reports show aggregate futures and option positions of Noncommercial, Commercial, and Index Traders in 12 selected agricultural commodities.

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