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Use Length of Previous Move for Profit Target– #AnirudhSethi

  
Analysis, Education
  • The length or extend of any given “leg” within a given price trend (i.e. price move, in the same direction as the trend) will often approximate the length (extent) of the preceding leg, as measured from the extreme of the reaction following the leg.
    • Under the theory of action and reaction there is another rule that should be noted. It is that in an advancing market each stage of advance will tend to be equal to the previous advance, and in a declining market each stage of decline will also tend to be equal to the previous decline.
    • Again in this instance, the rule is not a precise one. In fact, in a normal bull market I would say that the stages of advance should tend to become broader, with the broadest move of all coming during the final phase of the bull market. In a normal bear market the tendency should be just the reverse.
    • On the basis of this rule, the technical market student can frequently accept profits against the trend to a good advantage on trades that are made in harmony with the trend movement.

Trade for Profits, Not for Excitement -#AnirudhSethi

  
Analysis, Education
  • I began to devote my resources to developing an unemotional, risk averse quantitative approach to the markets. Price data was subjected to rigorous computer testing to determine if they were recurrent statistical events. If so, then the events were subjected to further testing using strict risk parameters to determine if such a disciplined methodology could be consistently profitable.
  • Essentially, what I did was to take a highly charged, exhilarating profession and turn it into an actuarial process. I de-emotionalized markets and trading and reduced them to a probability study.
  • I discovered that, yes, I could risk a very small part of the farm, and make above-average returns with reasonable consistency. Yes, I could totally avoid any interpretations of chart patterns or underlying supply and demand that impact a particular market and my returns would not suffer. And yes, I could diversify into many markets, remain extremely disciplined, and still show an appealing return on investment.

The People’s Bank of China injected a massive net 975bn yuan in OMOs this week

  
  Analysis

The PBOC set the USD/ CNY reference rate today at 6.9646.

Open market operations are more interesting. For the week the People’s Bank of China injected a net 975bn yuan. This is the largest weekly injection since January of 2019.

Ensuring banking system liquidity over the new year will be part of the reasoning for this. I suspect three is more to the huge dump of liquidity into markets than just this though.

While in China, coming up over the weekend are the official PMIs for December:

china pmi December 2022

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While in Asia, the Bank of Japan conducted an unscheduled Japanese Government Bond buying operation again today. For the third day in a row.

The Bank of Japan buys Japanese Government Bonds (JGBs) as part of its yield curve control (YCC) program to maintain loose monetary policy.

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