Traders' delusion with random patterns

[cynic]

No, I'm just telling you it's not relevant here.

Thanks for that. Looking back through earlier posts it seems I may be drifting away from the original theme of this thread. I think I may have mistaken wysiwyg's footnote for part of his post.

Edit: Upon rereading recent posts, it appears that my comments probably do have relevance, given some of the comments that were previously made.

 

[cynic]

I just had a very interesting conversation with a CFD provider about the variance between their pricing and the actual underlying market. I've asked that the explanation be provided in writing as I do not want to make the mistake of misquoting them. At this point I can say that if I understood correctly, their product cannot be expected to reflect the underlying market.

 

[Joules MM1]

I just had a very interesting conversation with a CFD provider about the variance between their pricing and the actual underlying market. I've asked that the explanation be provided in writing as I do not want to make the mistake of misquoting them. At this point I can say that if I understood correctly, their product cannot be expected to reflect the underlying market.

should you expect them to say it (input your instrument code here) follows a futures contract ?

 

[cynic]

should you expect them to say it (input your instrument code here) follows a futures contract ?

Apparently not. It seems that contracts for difference on an underlying asset aren't !!

 

[Joules MM1]

Apparently not. It seems that contracts for difference on an underlying asset aren't !!

ok to publish what youre told, cynic ?

TIA, if yes

 

[rnr]

I just had a very interesting conversation with a CFD provider about the variance between their pricing and the actual underlying market. I've asked that the explanation be provided in writing as I do not want to make the mistake of misquoting them. At this point I can say that if I understood correctly, their product cannot be expected to reflect the underlying market..

Unless, of course, the CFD provider offers DMA trades e.g. SPI ASX200.

 

[sinner]

I just had a very interesting conversation with a CFD provider about the variance between their pricing and the actual underlying market. I've asked that the explanation be provided in writing as I do not want to make the mistake of misquoting them. At this point I can say that if I understood correctly, their product cannot be expected to reflect the underlying market.

Did you never read the PDS? All CFD providers have clauses which basically allow them to price any asset at their discretion.

sinner performs due diligence for cynic free of charge, from the City Index PDS:

12.14
Dealing with your Orders
In most cases when the condition or event specified in your order occurs it will be executed at or very close to the price specified in the order. However, please note that for all orders other than Guaranteed Stop-loss orders, the price you receive at execution is not guaranteed.

I think it is pretty foolish (given it is mentioned in the PDS) and naive (given the broad amount of anecdotes and feedback about bucketshops) to get indignant over a CFD provider misquoting you on fills. I have a CFD account with IG, and I even use it sometimes, but I don't view that account like I view my real brokerage accounts.

 

[cynic]

Did you never read the PDS? All CFD providers have clauses which basically allow them to price any asset at their discretion.

sinner performs due diligence for cynic free of charge, from the City Index PDS:


I think it is pretty foolish (given it is mentioned in the PDS) and naive (given the broad amount of anecdotes and feedback about bucketshops) to get indignant over a CFD provider misquoting you on fills. I have a CFD account with IG, and I even use it sometimes, but I don't view that account like I view my real brokerage accounts.

Yes I did read that and numerous others that gave me ample cause to believe that their product was designed to behave as a contract for difference on an underlying asset!

 

[sinner]

Yes I did read that and numerous others that gave me ample cause to believe that therebproduct was designed to behave as a contract for difference on an underlying asset!

It nominally, normally is and does. Otherwise people would blow them up arbing against the futs in no time. The point is that there is no guarantee. You walk into a bucket shop, and slam your money down on the table, anything can happen, especially if anything means a loss for you and resulting gain for the owner of the bucket.

 

[cynic]

ok to publish what youre told, cynic ?

TIA, if yes

My preference is to await their written response so that I can quote them accurately, however, I was left with the impression that their product often differs significantly from the underlying futures market and I was advised that I should base my trading analysis solely on their charts (irrespective of the outside market) for those reasons.

 

[cynic]

Re: Traders' delusion with random patterns.

It nominally, normally is and does. Otherwise people would blow them up arbing against the futs in no time. The point is that there is no guarantee. You walk into a bucket shop, and slam your money down on the table, anything can happen, especially if anything means a loss for you and resulting gain for the owner of the bucket.

View attachment 64050

I understand what you're saying Sinner and fully agree that every PDS I've ever read has always included clauses that allow such things to happen.

Do you know just how many people have argued with me that what you're describing simply never, ever happens?

 

[cynic]

Unless, of course, the CFD provider offers DMA trades e.g. SPI ASX200.

I quite agree, provided of course that they are genuinely offering the direct market access CFD and not just calling it that as has been rumoured to happen with some OTC CFD providers.

 

[cynic]

On the subject of arbitrage between an actual market and a synthetic derivative of same. Are variances greater than 300 points (>1%) insufficient to draw the attention of an arbitrager?

 

[sinner]

Re: Traders' delusion with random patterns.

Do you know just how many people have argued with me that what you're describing simply never, ever happens?

cmon man. If I argued with you that the DAX simply never ever gaps on high volume, or any other stupid thing, what relevance would that have to you?

None.

Your due diligence is your due diligence. You read the PDS, ignored the explicit, black and white statements made therein and instead chose to back your logic with the anecdotes of a bunch of people?

On the subject of arbitrage between an actual market and a synthetic derivative of same. Are variances greater than 300 points (>1%) insufficient to draw the attention of an arbitrager?

lol. Ok I am laughing now, because you are so indignant over this issue. What I said specifically is that nominally and normally the CFD follows the underlying because otherwise arbs would blow them up. But there are no guarantees.

What I did not say is that crap fills are happening all the time, which is the kind of thing that an arbitrageur might be interested in. Feel free to open a real futs account and take City to the cleaners when they give you crap fills.
This post sounds like a plea from you for the arbs to come and save you from the mean mean CFD provider that you signed up to, deposited money, placed limit orders with.

 

[Joules MM1]

...so that I can quote them accurately,.....

so you know

From: Joules MM1 [mailto:****@hotmail.com]
Sent: 27 August 2015 05:49
To: CMC Markets Helpdesk
Subject: trading the SP200 (XJO) cfd
please tell me, when the cash market is closed (ASX200) what decides on direction?
is it a futures contract or just active cfd traders, or combination of other factors
please tell me what factors would be involved ....
thanks
j c-t account ######/#######

Trading the ASX 200
Account number: 87#####
Dear Mr ####-#####

Our ASX 200 Cash price is derived exclusively from the front month futures contract for that index.



We backward induce the Cash price by removing “Fair Value” (both interest accrual and dividend payments) that has been built into the futures price.



If you would like to speak about this in a little more depth please do not hesitate to get in touch

 

[cynic]

so you know

Thanks for that. I am very tempted to ask if you believe them based upon your experience of their product. However, I do recognise the importance of prudence when discussing specific entities on a public forum.

 

[Trembling Hand]

Cynic you cannot be serious. How much of your life are you going to waste on this?

It's like telling a friend to leave a filthy cheating partner. How much more time, literally years, are you going to be a victim?

 

[Joules MM1]

Thanks for that. I am very tempted to ask if you believe them based upon your experience of their product. However, I do recognise the importance of prudence when discussing specific entities on a public forum.

youre running a business.....

milkbar owner:
question: has the milk been refrigerated? (might sound like a dumb or embarrassing question, but, youre selling milk...your customers want fresh milk)

trader:
question: what are the mechanisms that make this instrument move, can you tell me about anything that might affect its price structure such as maturity/releases/intermarket requirements/costs etc? (you want all the knowledge you can get)

keep banging out the questions....belief and prudence are not required

as you are accountable to your own business, you need to hold your partners (platform/provider/datafeed)
accountable to you as the customer

people gotta do decent business to get repeat business ...whether it's a good business idea for you as the end-user is a whole diff convo ....usually the question of appropriate business to business needs and knowledge is more the key than efficacy of conduct.....

not promoting anything here.... hinting at research

yep and

How much more time, literally years, are you going to be a victim?

 

[cynic]

Cynic you cannot be serious. How much of your life are you going to waste on this?

It's like telling a friend to leave a filthy cheating partner. How much more time, literally years, are you going to be a victim?

On this point I thoroughly agree. It has been too many years now since I first saw the writing on the wall whilst reading certain disclosures that could potentially leave me unreasonably exposed to additional risk without legal recourse.

I remember a heated conversation I had with a major provider from years back when I basically said words to the effect of "So now you're telling me this is my fault! Well you're right! This is my fault for being foolish enough to choose you as my broker!"

After that I promptly engaged other brokers and was delightfully surprised at how much easier my trading experiences became at that time. However, it seems, that I was probably in error in my estimation of the longevity of outliers within that particular industry.

 

[Wysiwyg]

Re: Traders’ delusion with random patterns

Notes:
* You're trading EURAUD intraday outside of AUD session time.
* You anticipated the low of a pretty tenuous pattern (IMHO anyway) and it does look like the price rallied off that low, 5 or 10 pips is the most I would expect at the "high probability" end of the spectrum on that kind of line. I would put the expected probability of it bouncing magically off that line and going straight up to the top of the "channel" at less than 25%.
* I would have instead placed a buy stop at 1.6+spread+1 pip if I was looking for channel highs.
* Not sure why you shorted. Pattern failure is not a reverse signal. i.e. there is no guarantee that because a bullish pattern failed that bearish price action will ensue.
* You will note the bar you shorted is basically >4 consecutive down closes. Terrible place to short.
* You say the result was the reverse back into the channel, as if this was a large bull move, but (at least from your screenshot) the high of the bar is lower than the low of the bar you initiated your initial long from.
* Channels and whatnot in general are ways to visually identify consolidations. The trade is consolidation breakout, usually pro continuation. Looking at the chart, to me the channel your software has drawn is not a consolidation. The real consolidation is on a higher timeframe, visible as multiple highs and lows on your chart between ~1.625 and ~1.585.

Meanwhile, nearly every single inside bar (i.e. consolidation which probably shows up as a channel or whatever on smaller timeframes) on that chart paid out at least 1:1.

Thanks for your constructive view. The move was on that same bar and greater than 160 pips. Obviously the turning point to bullish of a flag as I had initially wished to trade. As CanOz noted it is frustrating but the reality is the move will happen and NOT when one expect it to. Look at the other night U.S. down massive numbers only to reverse. How many squillions sold on the Friday and Monday. I have been studying charts for many years now and trading the actual is different from the observations. Like little twists in price action, duration and intensity that are difficult for me to process. I did better when I knew less. Thanks for everyones input.