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Introduction:
At the beginning of the year, everyone (myself included) expected to see rates push higher and higher. The US 10 year yield started at around 3%, and currently sits at 2.5%... 90% of the market participants were expecting to see 3.5%, not 2.5! And here lies the problem, consensus trades have been failing miserably this year, and frankly don't look goof for the rest of the year.
The consensus trades that nearly everyone believed in going in to 2014 were as follows, as they thought at the time:
1.) Sell bonds - With the Fed tapering, and the US growing well, interest are surely going to rise in the not too distant future. As such, we will have higher yields on Government bonds across the curve.

2.) Buy Equities - The so called "great rotation", sell bonds and buy equity. The US is growing, the world is recovering, buy stocks. Corporate default rates are historically low, and their profit margins have never been higher!

3.) Sell the EUR, buy the USD - With the ECB acting very dovishly, the EUR will fall... ignore the growing current account, or financial stability, the ECB will force the EUR lower. For the USD, the US could grow >3% this year, and interest rates could
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mimuspolyglottos avatar

Vix, Gold, Cad, we could put here much more whereat six figures guys were not precise. I am impregnated by the feeling that the whole situation is just slipping out of the US hands, no matter geopolitics or economy we are talking about. Baltic Dry Index stays below the cellar, capex is subdued, too much of ''Too Big To Fail'' in politics and in economy. Where the hell is my sell in May and go away, aaa? ZH and its armageddonian rap fails again? Fat cats overshadow tigers! CBs are offering only the blue pills, not the red pills. Thank You for the relevant one, Adrian. Best Regards.

Daytrader21 avatar

Great article as always. I couldn't agree more with what you have already said. US 10Y yields was the biggest surprise as Fed is moving away from his easing cycle I was expecting US rate to soar and breaking below 2.6 the previous days was quite a big surprise.I guess the market has to force weak hands out before moving in the right direction. Right now EUR/USD is the one to watch but until we see some raise in volatility I'm not expecting any powerful down trend to start anytime soon.

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8/65
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Retail Positioning-The Scary Uncle in the Room
If you could tell how the majority of retail traders were
positioned, how would you use it? Would you even care? Could you even take
advantage of it? How retail traders are positioned is often referred to as
retail-positioning, and it’s usually treated like the scary uncle we all have
and all want to forget. Yet every day we all buy into the notion that 70-90% of
traders bust their account within a year, or 3 months, or 6 weeks, the
statistics vary depending on who you talk to.
So why not understand and take advantage of that fact. For
years profitable traders have been using the COT report to see how groups of
traders are positioned. The COT has one really big drawback, it reveals the
positions days after the data is collected.
Dukascopy updates their customers positioning every half
hour, and it is accessible right from their web site. From dukascopy.com simply
follow the “Sentiment” link under the Market Watch section.
 
How should you use it though? It only makes sense that since
the majority of traders are wrong most of the time, that you would want to be
positioned against the crowd. Let’s look at GBPUSD. During overnight trade …
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ikhall avatar
ikhall 26 Nov.

If anyone has questions about how I use retail positioning, let me know!

AdrianWS avatar
AdrianWS 29 Nov.

Hey, I was just wondering how you could use this in a leading indicator way, as surely for a day trader 30 mins is too late?

ikhall avatar
ikhall 30 Nov.

Actually 30 minutes isn't to late for a day trader. I am a day trader and use it everyday. On the EURUSD I wait for the sentiment indicator to reach around 55% on one side or the other and I simply look for pull backs to trade into the opposite direction. EX: if retail is net long EURUSD 55% then I will look for a FastStochastic to bump the top line and sell into that hit. I'll post another article on it with pictures and a trade in the next few days.

rob_deniro avatar
rob_deniro 15 Dec.

Hi ikhall. Looking at the index now I am confused... It currently says USD 51% long, GBP 39.35% long but GBPUSD is 50.97% long... please, what does that suggest?

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