What is a currency pair you currently trade that we can use to compare?
I will follow this thread with interest and would like to see more pictures (even more than trade explorer) because they are telling more than 1000 words (althought your words sound like you know what you are doing).Anyway, I read your blog in 2012 and all make sense....
Don't stop posting when trolls come,just bann them and continue to teach people who are willing to listen and learn.
And i agree about LOVE part with you !!
Pick any currency and showing more examples of how you might trade it would be great.
What is your preferred timeframe for scalping?
Thanks for your time.
Proverb #7. Use this suggested currency meter to track fundamentals.
If you have not already guessed, or assumed, I don't really use fundamentals for trading signals. Fundamentals is a fancy way of saying news releases. There is only so much a person can absorb, and you already know I prefer as much automation as possible.
I don't trade news releases, so I don't trade their spikes. However, I always know when they are coming. I know a person who LOVES trading fundamentals, so rather than me studying it, I use my master mind alliance (Think and Grow Rich) and let him provide his analysis and tool.
Ah, the tool. He has his own currency meter. Perhaps you have not heard about this tool? It measures the bulls versus the bears and inputs a value onto a chart or spreadsheet. I have two actually. One is a histogram, and the other is my friend's version. His is available at http://www.newsprofiteer.com/newsprofiteer-meter.html
There are other meters on the Internet, most are for sale. This one is free. But that is not why I use it I use it mainly because before I start to trade I can open it up and there is notice of the next news event and what time it will be released. There is even an alarm to alert you 5 minutes before the release. After the release it updates the expected versus actual data. Too cool
I do not use it for signaling, only for the news release notices. He provides training on his site for how he uses it and what the data means if you want to use it differently. Additionally he will send you weekly and daily newsletters with his fundamental analysis if you want to read it. It saves you all the time of tracking it yourself.
very interesting background. I am sure most people didnt know you are from SFT (hell i didnt even know SFT has a forum).
One thing i would say about explorers here is that they wont allow you to hide much. But for sure that is one thing that most clearly tells who really knows trading and who is just talking about trading. Most people here who claim to be doing very well trading dont seem to be able to attach a profitable explorer for long.
My proverb is that due to arrival of HFT, the manual chart traders have little chance of a long term success. Think about it, people are using machine learning techniques to sort through 1000s of parameters to find consistent patterns. How can a person who can maximum look at 3-5 things at a time, have behavioral biases that are very hard to control and cant do a real honest backtests compete with people who are using 10000 times more computing power to find edge in the market.
If you are interesting, try Andrew Ngs machine learning course on coursera and see what computers can do these days.
What is making you successful is not the technical rules of your trading but the experience you are bringing from your subconscious mind that allow you to interpret those rules in flexible manner. Give your rules to anyone who doesnt have that experience and i am sure they wont be as successful as you.
about the machine learning course - you dont have to hunt them on youtube. you can register for free at coursera https://class.coursera.org/ml-005/lecture
There are many other good courses there too.. I love how easy it is for someone to learn new things now from best professors in the field -- old university model is so inefficient.
Anyhow I am interesting in learning from you and your experience in trading. my motto is listen to everyone and then decide for yourself.
Proverb #8. Be at home on the range.
I assume you have heard many times that the trend is your friend. There is another expression tied to it declaring you have hit a home run. If you think about it just a little, it also means buy and hold and trade one direction. Of course it also depends on what chart you are looking at.
Okay, there are definitions, and there are guru courses dedicated to patterns of markets. This is my simple view of it all. A trend trade is an extended range trade. If there occurs a moment in trading where price is continuing in one direction and its reversals do not constitute a signal to trade in the opposite direction, then I consider it a trend. However, if the signal for the reverse does come, and profit is made, I consider it a range. I trade ranges. I also trade extended ranges, or trends.
When you trade on smaller time frames you can take advantage of reversals on higher time frames. Sometimes the reversal of a higher time frame can look like a trend on a lower time frame. In essence then, it is all perception. Even a range trade on a higher time frame can appear as a trend trade on a lower time frame. Confused? Me too. So, I just consider everything a range trade. No matter what time frame you are trading, price still moves away from some value before it returns to that value. Everything then, is a range. Ha, but what you must understand, and believe, is that "value" is moving. It is not a set data point on your graph. It is a dynamic value that adjusts as the sample size increases. Side note: That is why people who scoff at repainting indicators are funny to me. Everything repaints as new data is created, LOL, even a trend line. DUH. Maybe the expression should be repainting is your friend?? After all, isn't a trend repainting? Okay, back to the topic. Ever study Calculus? Isn't it awesome to define the formula for a line that curves? Rather than construct all those calculations to define the moving line, I just eyeball it. After all, the formula cannot be produced because the samples that make up the line are random. You can bring control to the chaos, but it is only probability, not reality. Consider your chart as being a moving range and you will begin to understand the concept of my trading style. If you are from the classically trained Forex school, then when you use Fibonacci you are defining the predicted range based on the previous range. Did you realize that was what you were doing? LOL. Yes, Fibonacci trading is also range trading, but it uses "fixed" values rather than "moving" values. Personally, I have tried to trade Fibonacci but I never knew what line price will actually stop on until after price had stopped and moved the other way. For me, it is not predictable in live trading. I can only guess, and so I am constantly in a state of human decision-making and not mathematically defined decision-making. Okay, sure, math defines the Fibonacci lines, but can you tell me, right now, which line price is going to bounce off of on Monday morning? No? Neither can I. So it is useless to me. Nice to look at after-the-fact, but useless in the moment. That is just my opinion. And then you also have the bounce between 50 and 23 and back to 50 or whatever it is. How can I possibly know whether price will bounce or break a Fibonacci line? Exactly. Nothing against those of you who have figured out how to trade it, or those of you who think you know how to trade it and are actually just analyzing historical data and not using it forward. Well, enough about that.
Hmm, perhaps I have just stumbled on another key to success? If you are a person who is more prone to be resistant to change, then you will probably not be a good trader. You have to embrace change as your friend and go with the flow
A range on a price chart and a range on your indicator should be as equal as possible. If price is going up, your indicator should be showing price going up. And vice versa. That is a little bit of an open statement. To be more specific, if price is going up on your chart, and that movement warrants opening a trade, then your indicator should show the movement as being substantial enough to open the trade. Sure, it is Trading Your Indicator 101, but perhaps it makes sense reading the words instead of reading the lines of the indicator. If you have indicators that show divergence, wow, get them off your chart...now. The market makers spend enough time head faking you. You don't need your indicators head faking you too. It is self destructive.
On the other hand though, lol, if you have an indicator that divergences during consolidation periods...keep it. I have one such indicator. Everything can show buy, except it, and it should because it is set to destroy small moves in the market, but if it disagrees...guess what? The market goes flat until it lines back up with my other primary indicators. In this case though, I am not looking at divergence as method of trading, but rather as a method of NOT trading. Too cool
The majority of people learn visually. This trait can be easily shown by asking you a few questions. What was the last movie you saw? What happened in the movie? What were the lines the actors said? You can probably tell me a lot more about what you saw than what you heard.
Don't get wrapped up in strict definitions and even the suggestions that you need a chart for every market condition. Think of it like religion. Most people believe in God. Along the way, in the history of man, someone wanted to put their own little twist on God, most likely for monetary reasons, though some might have had personal reasons. Now, thousands of years later, we have hundreds of different styles of religion, yet most of them pertain to the same God. Everyone has their own agenda to make their own twist. I suppose you could say me too. My twist is that despite the market being random, there is control, though it is not precise. It is sloppy. But, it is precise enough to predict with decent success. Perhaps the HFT guys figured out how to make it precise, but my logic dictates it is still some kind of edge and not a prediction. In only my opinion, I would think you first need to be your own broker so you can avoid spreads, and then you merely pump large sums in at once to trigger enough movement to then cash out with profit. Hey, it is just my opinion, and if it would work that way, I would do it too
Personal twists are the same here in Forex. We all trade the same data, but we each have our own little twist on how we do it. So definitions of things become slang and lost through marketing techniques or laziness or ignorance. We are all guilty. I don't want this to be like Fox News where conservatives offer an opinion and then the liberal dissects their sentence word by word and makes accusations. It is the spirit of the communication that is more important. So, if anyone has to provide the Webster version of any errors I make, fine, but please don't provide me John Forex Trader's version, okay? I have purposely avoided guru traders because the vast majority all promote the same thing, it is contrary to my design, and therefore I am biased against it. Money talks
All that said, if I can identify when price stops moving away from the point of equilibrium, when price returns to equilibrium, and when price moves away from it again, then do I really care whether a trend is my friend? On my chart, that would mean price reversed to equilibrium, and then bounced off of it rather than breaking through it. If it bounces, it trended. If it breaks through, it ranged. Terminology...big deal. It seems to me that if you learn how to trade the range, you will also be trading the trend. Hmm. You might have to just loosen up a little
I prefer to be at home on the range If my friend, the trend, stops by...cool
Proverb ##9. Trend lines are the only common denominator.
A man is trading in Moscow, a woman in Paris, a man in Rio, a man in San Diego, a woman in Tokyo, and a man in Singapore. They are all trading the same currency. Each has their own version of an edge. It is 20 minutes after the London Open. They are all looking at the 1 Hour chart and suddenly price moves up, and they all enter at the same time. Despite their differences, they all saw the same trend line break to the upside.
No matter what else you manipulate on a chart to try to edge out your competition, the lines drawn between highs and lows are the same lines for everyone. Sure, broker candles form differently from broker to broker, but overall, they still have highs and lows.
If you have read through my thread, you know that I am not a position trader. I do not make a trade and then sit on it for days, weeks, or months, like you would consider a stock investor to do. Why would I? I love to trade Forex because it takes way too long to profit in the Stock Market by comparison. So, if you want to try to trade like me, I would recommend using an automatic trend line that views shorter high/low action and even provides profit targets.
There are many automatic trend lines. I have tried many of them too. Some are quite fancy and show you multiple trend lines, others are more designed to show the profit targets. Still others are plain Jane. You can also draw them yourself. For me, since I trade tight to current market activity I use the trend line indicator I have attached. This one will show the trend line break by painting a circle on the trend line. If price breaks the line, but a circle does not appear, most of the time the break is a head fake Once you get the good break though, it projects the possible range of the break. Most of the time it is nearly accurate, but sometimes the break is more powerful than the tool calculates. Once it senses the trend line is break is finished, it will reset to the new values automatically. Normally the new trend line holds. In a powerful move, the price will normally go to the other trend line, retrace, and push through for a new break. It is similar to a double top or double bottom.
In other words, it is a bit more than a simple trend line, though what happens after a trend line break is only alerts to possibilities. No offense to anyone who has known me for years, but like I always say...it is just an alert. Think of it as entertaining Occasionally it is right, occasionally it is wrong. It simply means look at your design to see if you need to take action. Remember my previous post. I make pictures that draw themselves. I have set alerts in places to tell me to pay attention for a second. They are not necessarily valid signals. Still, without them, it requires too much attention, therefore too much emotion, therefore too many mistakes.
This trend line works VERY well. Try it out on a 1M chart so you can see its productivity quickly and become used to it.
The best part about having this trend line tool is that I can shuffle through charts when things don't look right, or when price slows down, and find the time frame holding up the wagon train in seconds. You can assume that nothing is going to move again until the trend line on that time frame is broken. That is mostly true. Over time the candles compress between the lines to form what is called a flag, or pennant, or triangle. The value of that information is not only do you know your next entry, but you can also patiently sit out of the market while the game is played out No need to frustrate yourself by being caught in the middle of it. That is priceless.
At one time one of my friends had developed a multi time frame trend line for us, but it had some bugs and there were some special instructions about how to load it in mt4. I don't remember exactly how to do it. But, if anyone has an mtf trend line indicator that works, I am certainly interested in checking it out. I mean, can you imagine seeing the trend line of the 5M, 30M, and 4Hr chart all from the same chart? Of course I can use my modified PSAR, but I like the lines better Hmm, I know there is a line alert tool. It is a line you can manually draw that will alert you if price touches it. I suppose this is a work around, but...it is not automatic
My design goal is always to be able to see pertinent information concerning higher time frames without using the pertinent chart. Since the trend line is the only tool that is constant among all traders, I think it is the best tool to have on your chart.
You can read more about trend lines from Tom Strignano's books. Besides trend lines, he can also show you Fibonacci techniques like you have never seen Even knowing all he has shared with me though, it is not my preference. However, money talks...so his method is worthy
As with any indicator you should adjust line thickness and color to your taste. This one is set up for dark background charts. Remember I drove all the time, so I had black screens to cut out the glare. If you use white backgrounds, you may need to get into the code and change the color of the trend line break circle.
TD_Points&Line_Auto circle change.mq4
You are using this indicators in your trading or this is just example?
Proverb #10. Learn what signals most traders use.
Ah. This is the question you really need to be asking. It is not about what YOU do, or what YOU want to do, it is about what is the majority of everyone else doing. Be sure to include that one bank as part of everyone else because the size of its trade made the market move. Remember when I told you about DEMA and TEMA? I could use those tools to find tops and bottoms pretty easy, but they were not necessarily everyone else's tops and bottoms, if you know what I mean. Knowing what should happen compared to what does happen is probably the most common frustration among traders. It is what prompted me to figure out why I thought the market should reverse, but it didn't. It is the catalyst for how I developed my techniques for identifying equilibrium and control limits.
You looked at some candles and put together a design and sometimes it works and sometimes it doesn't. (Believe me, I have made hundreds of designs over the years and analyzed hundreds more) Or some Wall Street trained guru shows you how to draw some lines on a piece of paper and how to calculate risk/reward based on HIS mathematical formula. Pause for a second. Do you suppose a Wall Street trader that gives you a method for calculating stop losses and profit targets is your friend? Or is he a guy that has predetermined where the tolerance levels of your trade are located? Hmm. That kind of data will allow him to change his math to take advantage of you. It also allows them to stop hunt and either take you out of the market for a loss, or if you like placing pending trades, he can activate your BUY order and then charge the other direction to engage your stop loss. Think it doesn't happen? It happens ALL the time. Ever really think about how those buildings in Las Vegas got so big? Ever wonder how Wall Street got so big? It is from knowing what works, and what doesn't work, and turning the odds to their favor. So, why on earth would you volunteer to use their strategies????
Let's not forget that big candles are made not only from injecting new money, but also from hitting stop losses. I don't know what experience you have in the stock market, but if you have been in it awhile you will eventually receive touts to trade. A tout is a spam email or phone call telling you the next best great thing and if it is about to explode or implode in the near future. Perhaps the information is valid, or perhaps it is just like the Wolf of Wall Street? They want you to buy their stock so they can sell it for profit. Hey, it's your world to play in, but I don't play with touts. I also don't try to predict currencies. Anything can happen. You have economists on TV predicting movement but unable to rub two dimes together. Then you have traders who don't pay them any attention and could buy the TV station. Anyway, predicting where the market is going next week is stupid to me. I prefer to trail the market and pick up the crumbs. I could care less if price goes up or down. I wait until they put it in gear and just go with the flow. Consider me like a trailing stop, lol. I enter after you start moving, follow from a distance, and make money every time you turn on the next street. If the shark has his mouth open, but you are behind it, guess who is not getting eaten?
As a retail trader looking a price action, what do you see? Do you see the bigger candles that form on 5/8 moving average crosses? Do you see the bigger candles that form on 5/13 moving average crosses? Do you see the spikes when the 12/26/9 MACD crosses the 0 line? Or do you only concentrate on building your piece of pie? Do you see what happens at the 50 line of the Fibonacci? Do you see how market direction changes, even inside bigger moves, everytime the tiniest trend line is broken or hit? Do you see how price approaches certain moving averages and then bounces off them?
These are the things that are valuable. It is not just how can you manipulate some indicator to form fit the current data. What action drives the most market activity? Actually that answer is easiest. News. But afterward, how do you navigate the waves caused by the news? Think of the market as though you just threw a rock into a pond. Each ripple created from the cohesion of the water is potential profit, once when it rises, and again when it falls. I refer to this as wave trading.
There are two foundational ways to wave trade. One, is to recognize when the rock will be thrown, and the other is what will other traders do during the rise and fall of each wave. Then capitalize on their behavior. If they do not react normally, prepare to exit. If they do react normally, prepare to ride the wave until it reaches its apex. This is another way of saying the control limit of the market's equilibrium. A control limit is some value, pivot point, trend line, or probability crossover inside an indicator that shows the point of exhaustion between the bulls and the bears, or in the most simplest terms, the high or low point of the wave.
The trick though is to measure those control limits properly. If your settings are wrong, you will enter too late and be subjected to drawdowns or outright reversals. If you enter too early, you will be subjected to head fakes and be heading the opposite direction as the rest of the herd. It is safe to assume that the standard setting of any indicator is wrong! That point was already discussed so no need to expand on it.
Despite how hard it all looks, feels, or seems, it is still 50-50. Price will go up, or it will go down. You will buy, or you will sell. There are some low volatility currency pairs that actually don't move, but don't be that guy who dissects things Keep a big picture focus and stay out of the weeds. Expect to be fooled once in awhile. Notice I did not say LOSE, I said FOOLED! When you get fooled, simply pick up your remaining money and leave. You can't do that in Las Vegas, LOL!! Did you know you don't have to let a stop loss activate? If you don't get fooled much, you will have no other choice but to be rich.
This will be my last proverb. I hope you have learned something new, got your creativity back, or gained new hope for a new future. Thank you for taking to time to read my thread. I will see you again...maybe
You don't need to see his identification. These aren't the droids you're looking for. He can go about his business. Move along.
excellent advice, thank you
Thank you very much for what you have shared. I hope you continue your posts in order to help a few of us figure it out for ourselves so we can become profitable.
Thank you des b and rcbarlow for your comments. I welcome any trading feedback you have.
I hope that as aspiring traders you have studied some kind of mathematics? In particular, I hope you have knowledge of Statistics. If not, it is in your best interest to take a course at a community college or university near you. It is the math behind probabilities, or odds.
In Statistics you learn about the infamous sum of squares, and average of averages, lol. Does that sound familiar? By the end of the course though, you should know what correlation and regression analysis is, and what a line of correlation is.
Given the concept of a line of correlation, it can really only be drawn once the sample size and sample values are known. This line represents the mean, or average, of most samples. If there are outliers, or values that are really far from the rest of the pack, you have to dismiss them. Hence, most values. There should be an equal number of samples above the line as there are below the line, minus the outliers.
You can actually draw a line of correlation on a Forex chart. That is, you can draw it after-the-fact. It requires known values, not projected ones, to draw itself. Once drawn, then it can predict. It is straight too, so it would look like a trend line, or even the midline of Andrews Pitchfork. Once drawn it would predict the future as long as the future does not bend.
To resolve the rigidity issue, I use a moving average that most closely follows the mean price action of the market. This gives the line of correlation continuous updating and allows it to bend. Then I just place trades between the mean and the farthest points in the sample size. It lets me trade with high probability that price is ready to move vertically up or down, and to have some idea when that movement will stop.
Not only do I use this tool, but I always use its half value, quarter value, and double value. It is like using zoom in and zoom out I don't normally get stuck in consolidation, drawdown, or double tops/bottoms. I try to time the meat of the move and get out until the next one. Most of the time it is easy, but like everything else, sometimes you cannot overcome the ferocity of the market.
The meat of the move is really all any trader profits from, right? I mean you can sit there and watch price go up and down, or what they call breathe, and each time it reverses, so does your profit, then it comes up again, down again, blah, blah, blah. Or, you can just trade to each up and down and only be in the market when it is in your advantage.
y = beta * x + alpha + noise
here beta = rho * sigma(y)/sigma(x) ; rho is correlation
if so, do you look at regression of prices vs time (thats like trend line except it cuts in the middle of the prices so half are above, and half are below).
If not, can you explain a bit what you mean by line of correlation.
I was hoping you would talk about your lfx indy. You posted a screen shot on the no stop loss thread.
Anyway good read.
Since a regression lines is linear, and the market is nonlinear, it is not correct for me to say I am using a regression line. However, in my examples outside of Forex charting, that would be the correct term.
I use a mean within the scatterplot to dictate positive or negative correlation. The mean is nonlinear and therefore becomes a pseudo regression line.
As far as I know, it is out-of-the-box thinking. I did not get this idea from anyone else, so any terminology I use is strictly my own. It is not Statistical analysis in the conventional sense, but rather an adapted clone.
Like some mathematical equations, you need to solve part of it with a different equation, and then insert that value into the original equation. It is similar to how C++ points to another indicator to find the data for a different indicator.
If you imply that a price chart is an x-y axis, then quadratic equations could be calculated to find lines on the chart. However, the market does not adhere to quadratic equations, so you need something more. Nonlinear analysis of recurrence relation equations, like Fibonacci, are used by big institutions and must be considered as a logical means of finding trading "hotspots". If you superimpose a differential equation to intersect the recurrence relation equation, then you have a nonlinear line intersecting another nonlinear line at the "accepted" median between the high and low. By converting the median into a mean, it allows you to find apexes in price movement. It lets you trade vertically until you meet horizontal support/resistance. That horizontal support or resistance is a big deal. However, I wanted it even more simpler than that. I do not want to arbitrarily decide to end the trade because it hit a line. It may or may not be accurate. Therefore I want to wait until the correlation changes from positive to negative, or negative to positive after the intersection occurs. In other words, I want the math to be more sloppy than defining the intersection. This "sloppy" math remarkably removes you from most head fakes and identifies consolidation areas.
Why? Because the head fake is beyond the normal distribution in the correlation. When correlation tips between positive and negative, there is usually a pause in momentum. Similar to if you throw a ball into the air. At some point its upward velocity reaches 0. That is considered the apex. In the market, if there is a fluctuation in price beyond the apex, it is usually a head fake and can be ignored. In addition, if there is a fluctuation BEFORE the apex in the opposing direction, more often than not it is a head fake too, and can be ignored.
Why? Because consolidation occurs when momentum begins to equalize, or at the tipping point between positive and negative correlation. However, since markets are man-made and do not adhere to physical law, price can continue in the original direction rather than reverse. However, the measurement between momentum and price correlation will conflict, thus identifying the consolidation area. Another phenomenon of consolidation is that by changing your data sample size you can find the visual recurrence relation equation versus differential equation intersection and watch the tug-of-war. This visual representation is produced on a different time frame analysis (sample size) by a set of upper and lower trend lines (recurrence) that are containing price.
By using a moving average for the dependent variable, and then converting it into a nonlinear range, and then applying a differential equation to the range what I have created? I just call it a Line of Correlation because it correlates each price point and distributes it in a method that identifies positive or negative correlation, which the moving average translates into a range, which then shows the average direction until the velocity slows or stops.
When the quarterback throws a football, he does not throw it to the receiver. He throws it to a spot where the football and receiver will meet. That is the apex. If the receiver is tackled, then the play is finished. That is a reversal. If the receiver runs after he catches the ball, that is apex, consolidation, and continuance.
This is all in my head, by Divine intervention, so excuse me if I cannot explain it well. In the case of this technique, sufficient testing has found the sweet spot of sloppiness to provide consistent results to comfortably trade with high probability and high risk.
Thank`s for share your Proverbs you could write a book from that...
About Trade Explorer i only put Demos and my friends can see what i am doing and my real one is a real disaster and don't want to show until i take the control of it. I don't care about what people thinking of me. It`s all right if you want to keep secret a part of your strategy. That secret parts is where i create my own strategy.
I love the mind game of the FX Market and where i learn the most is doing contest, like you say eat the crumbs, scalp and re-scalp. After less than a dozen contest i have 150% positive and make little prize money because i finish in the top ten.
I copy some trading history from number one winners and try to fix an oscillator on it and go on with that. Very very simple.
I am a beginner (6 months) in the FX and i have a lot to learn.
About the trend line I dont follow you very much because i am not very good in English. But i flash on the open and close and if i take a MA of 10 i will have my trend line.
I keep searching and thank you for your good work.
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