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  • Are you thinking what I'm thinking? Well, don't.

Are you thinking what I'm thinking? Well, don't.

I will always recall the best and most important piece of advice given to me about 10 years ago by the Head of Dealing at a very large broker (not retail, but actual spot).

Always have a view, and try to see what others aren't.

This is something I'd hope carries through in what I write to you and how I come across within the community.

But I want to expand more directly in what I mean here and perhaps provide an example of how you might go about trying to see what others aren't...

It started with a Tweet...

This thought was in fact inspired by a Tweet someone sent me yesterday, as I underestimated the power of AI.

 Maybe 2 weeks ago.

Now with things like AgentGPT and AutoGPT, you write the intended outcome and AI does the research to determine the steps required to achieve it, understand the market/industry and writes the prompts.

It's insane how quick things are advancing.— Your Accountant (@TJiMTS) April 20, 2023 

WTF is AgentGPT?

Sounds like shit and a complete gimmick.

Well, it's not.

And it reminded me of the strength that having an understanding (but not necessarily the prior capability) that obtaining and interpreting data quickly has.

Here is what I told AgentGPT to do...

I had to refine it a little more to instruct it to tell me where to pull the specific term from...

But we ended up with this...

The sentiment from IG's AUDUSD page is 71% long, which meets the parameters of my strategy.

AHA! What strategy, David?

This is really where the thinking behind what I was told 10 years ago comes in.

Always see what others aren't.

What do we know about trading?

Most people lose.

Most people that lose are retail.

Most of retail looks at funny patterns and takes success rates of patterns as gospel.

Most retail also has crappy stop placement.

This is now where you can start building reasoning - in FX - as to how to actually think about flow.

For instance...

I want to go one step further with the above and let the AI tell me when the market is heavily short with a head and shoulders pattern cropping up.

This would let me scale bids at the neckline and below looking for the market to revert to the upside as retail are heavily short and would be easily taken out.

Makes sense?

In the AUDUSD example above, 71% of IG's clients are long.

How many day traders do you reckon are looking at AUDUSD here as a double/triple bottom with their stops lower?

If you're able to get that signal pinged right to you, you have a much bigger window for the signal to decay over - your execution doesn't then need to be spot on since you can rely on the expectancy of the strategy to work in your favour.

Of course, you can refine this far more.

Use of volatility stops, time frames and currency pairs will enter into the equation, but the basics are that you want to really be executing against uninformed flow - exactly the flow that brokers are willing to internalise (trade against)!

And if you are able to use a form of AI to ping over the signal to you as and when it changes, in real time, and combine it with other methods, you are beating 95% of those who DON'T do that.

Think outside the box - do and think about what others aren't.