Technical Analysis Fallacy

Quoting Zoran

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Hapa, with 2000 in your account, I'm thinking you should start with micro lots instead of mini. I think it's important to get the phsycological factor in when trading with real money but if uncomfortable you may be underfunded. Find a suitable bro-ker if need be.

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Quoting sitoca

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Perks and downsides
The biggest lure of forex trading, it seems, are the monetary rewards.
'The starting pay of a trader is around $2,500, and that is just the basic pay. On top of that, you get a dealing allowance of around $500 and are entitled to profit sharing, which is normally about 5 per cent of the profit that you make above the budget given,' explains the forex trader.

He adds that a senior trader with about eight years of experience, on the other hand, can earn up to $200,000 a year, while star traders can easily reap more than $500,000. (Fti, why did you retire so early???)

However, the career life span of forex traders tends to be shorter than other banking positions, says Ms Kuek. 'The trading floor is a highly stressful environment, mostly for long periods at a stretch, causing higher burnout rates.'

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"Whether to concentrate or to divide your troops, must be decided by circumstances."

This is the method of attacking by stratagem.
It is the rule in war, if our forces are ten to the enemy's one, to surround him; if five to one, to attack him;
if twice as numerous, to divide our army into two.

[Tu Mu takes exception to the saying;
and at first sight, indeed, it appears to violate a fundamental principle of war.
Ts'ao Kung, however, gives a clue to Sun Zi's meaning:

"Being two to the enemy's one,
we may use one part of our army in the regular way,
and the other for some special diversion."

Chang Yu thus further elucidates the point:
"If our force is twice as numerous as that of the enemy,
it should be split up into two divisions,
one to meet the enemy in front, and one to fall upon his rear;
if he replies to the frontal attack, he may be crushed from behind;
if to the rearward attack, he may be crushed in front."

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"Whether to concentrate or to divide your troops, must be decided by circumstances."

Quoting lilpip

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fti,
I was wondering about the dance steps you took on the 17th with the eurusd.
Where did you start ?
Did the steps include 4613 area to 4690 area and a repeat of those steps?
Did we take steps from 4690 area to 4655 and back a couple times ?

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Quoting Zoran

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Hi fti

Would your three kingdoms relate to the following point in "The Battlefield"?

He must not venture into the focal ground, a hub of several converging roads,
without tacit support from allied feudal warlords.
He must not linger at desolate ground, which is uninhabitable."

I suspect we need to keep an eye on some key currencies? Care to expand on this?

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Quoting Northpro

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I think we should have a discussion on what was discussed in lesson 2 with reference to splitting the army in certain market conditions and attacking "both ways" as in a diversion, like fti had played. At first glance it looks like a the trader is lost on the dance floor. However, what you are doing I think is allowing the mixed volatility pair to run either direction when it looks confused. One group is gaining ground while the other is under attack, when the attacking enemy tires, MM your latter group out from under the attack. In a sense you are strategically squeezing the enemies resources, until clear direction is established.

Yesterday I was in the eur/usd trade and was getting whipped about. Had I attacked "both ways", not only would the rescue be hedged, but the gains would have been advanced. This wouldn't be a normal method of attack, but when market conditions dictate, it could be a valid way to divert and split the army.

Please discuss this further and lend your thoughts. I see a lot of members and unsigned guests viewing, but little posting. This is a great thread with many thought provoking ideas and concepts that are not necessarily conventional for the forum, which is very refreshing. If we cannot keep a stimulated interest in this thread I have a feeling we will let the big fish get away. I think fti would want more ideas to be discussed but has already stated, he wants to weed out the weak and the ones unwilling to learn. Ask Ask Ask...there are no stupid question...I have lots. Please contribute ideas, good and not as good.

NP

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Quoting Zoran

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I was thinking it means to have the market covered. When the direction is far from certain, be ready and attack once the action provides a directional signal. But in those cases being on both sides is fine (but tricky as he mentions).

I'm not sure about hedging. fti has not mentioned it at all apart from his OTC options at the bank. Here is a post he made and quoted below.

http://www.forexfactory.com/showthre...34#post1751534

"I dance in one direction, when there is determined trend.

Dance in both directions, where ranges when no predominant trends exist. To stretch the range.
This is a little tricky and the strategy requires adequate capitalisation.
The foundations for the MM is in the table provided, of course, for the bank, the pockets were very deep. For traders, I suggest milder or adjustments to accomodate risk appetites.
The MO is provided in the Art of War."

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Quoting Northpro

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Thanks Zoran...maybe hedge is the wrong terminology, but yes playing one way when the trend is obvious, play both ways when the pair is ranging. This kinda what I was getting at. In certain market conditions when we can determine that the pulse is non directional in clarity but at points of inflection, we can attack from the rear so to speak.

On another note:
I had an incredible week trading. Although I only used small resources, I applied the MM principles and the AOW mindset with every execution. There were only 10 trades. I had 9 winners of 10. The 1 loser was a rescue in process that I had to close out prematurely from priority commitments that had to be taken care of, it would have been rescued in hindsight had I stayed in the fight. I had 1 other rescue that was profitable, and one fight that was played "both ways" that worked well. I think the mindset of a completely planned battle is responsible for 95% of the victory, the MM is just a mechanism that assures greater success...at least thats how I feel. I didn't get psychologically beaten down when a trade momentarily went against me, I had a plan and resources standing by to rescue when and if needed. This confident and well planned process in my mind is invaluable to my trading. I hope others are seeing the immense potential as I am..please share and lets continue to learn together. Thanks fti.

Have a great weekend all.
NP

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Quoting fti

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Hi Lilpip,

You asked for dance. It is actually meaningless.
Since you asked , for One time only.
the blotter is enclosed.
Please don't ask for sequence , I cannot even remember.

regards

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Quoting MickD

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Just some thoughts on snow balling in a rescue using skew, I think that as you buy in at percieved turning points for maybe even small retracements, once you have a retracement and the PA is telling you it's stalling again to continue against you, take some profits from the swing to add to your book.
If you add to your trade, even with a large skew you might not reach the target required for a complete rescue and if you stay in with the larger position you are subject to an even bigger skew for the next swing.

To me at least, this is where you need to make strategic attacks or 'dance' with the market, as you get in the swing you can keep taking profits to keep building your book to a point where the initial lots when closed will leave you book even or at a very small loss.
If the market begins to go your way you can make a good profit as well.

In short, using the skew table is good for planning your attacks, if your attack doesn't quite work, take ground as you can and be ready for the next attack using you new gains for troops to protect the book.

Of course, if your initial lot sizes are small and you are obviously trading in the wrong direction you should cut your losses and exit.

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Quoting HapaSasa

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I´ll be reading through the thread again - there is a lot to absorb and I am well aware that I am out of my depth here.

The difficulty I am having is that I am looking at this as a retail trader with very little experience (and a small trading account).
I am sure that those who are able to apply all the skewing, spirals, martingale and logarthmic stuff are consistently profitable traders, who have sufficient capital available to allow for big price movement, say 200 pips?

I´ll try to illustrate what I mean:
- an account of 2000 trading capital, just trading long with one mini lot, then after a 25 pip drop in price I go in with 2 mini lots, a further fall of say 35 pips and I go in with 3 mini lots, then 15 pips down later it looks like there is going to be a rally so I go in with 4 mini lots but the rally don´t come and the price drops some more, so having an account where I can exit all trades at once I exit after a further 20 pip drop, which leaves me with an amount of (minus 95 from the first entry, minus 140 from the second entry, minus 105 from the third entry and minus 80 from the fourth entry: total -420, giving a 24% drawdown.
If I had an account where you can only exit each order individually I would lose maybe 100 more.
Another disadvantage is that the account I have stipulates a minimum 10 pips from the price for entry stop/limit orders.

There are times when the movement is at the speed of light, so even if his mental arithmetic is equally rapid, there is no chance for the average mortal to place the stops or even exit.

Let´s say the next trade is similar - you´re in deep trouble, needing to make 100% just to get back to b/e.

- an account of 10000 would leave less than 5% drawdown.
- an account of 50000 would leave less than a 1% drawdown, which according to conventional wisdom is the amount to risk and leave sufficient reserves to fight many more battles.

The sensible thing to do, which I am not doing, is to have sufficient capital in your account.
I have demo traded and for learning the mechanics of the platform it is fine.
A disadvantage is that on some platforms the demo trades go through automatically, no delays or requotes, it just ain´t like the real thing.
It´s like the guy who was saying at 25 yards he could should the stem of a wineglass, the listener not doubting this then asked him if he could do it with a loaded gun pointed at his head.

I am trading live because I believe that it is the only way to gain experience, and learn, in the heat of battle. The other thing is if I can't become consistently profitable with a 2000 account, can I do it with a 20000 account? the answer I think is that I stand a better chance but in the long run I believe I have to master the basics to be confident of staying in the game.
The idea of going away and don´t come back until I have say 20000 in my account doesn´t appeal to me.

A bit long but I couldn´t make it any shorter,
have a nice weekend,
regards

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Quoting chiang

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Hi all,

Here is how I see the snowballing and works for me, could be many many times better, but I am still developing.

I dont follow an exact rule, I mean is not written on stone, for me is relative to the terrain, so how the price action is unfolding, before I trade I guess where big blocks of order could be and what will happen if they are triggered o not, If not why not.

So If I am wrong, where the price will go against me, If will pass this block where he will go , and so on, I do this also for the positive aspect of my trade also.

So If is going against me and I see PA that is telling me that the price could turn in my favor I add a position, some times I take some profit from this second position sometimes I take the profit with targets from 1st previous trade.( exit the battle with all the positions)
Depends.

I like the Fibonacci sequence for the rescue

So before the trade I want to have enough money (my soldiers),
well reparted, so to be able to rescue me if I am in trouble and to give a decisive winner.

How I repart the soldiers, his decided from my and the soldiers past perfomances and the others forces like liquidity? in play,terrain?

For me the previous price action is the terrain, kind of something more static, mountains are statics, but rivers can change so its not 100%,
and the PA unfolding, is the battle happening in this moment, That I am thinking to join and exploit, if I see others in a position where I can crunch them or join them to crunch somebody else for a short time.

Here is my interpretation from the snowballing.

Hope fti, doesn't stop with his invaluable lessons,

Thank you

Edited

I think Fti has give some good numbers to has to work with, and how to use regarding the skills that we have.

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Quoting sitoca

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Taken from the Business Times..........

Forex trading: a pressure cooker

Even with a driven personality, a trader's career life span tends to be short because of the high-stress work, reports QUAH CHIN CHIN

HAVING a career in foreign exchange (forex) trading often comes at a price, both literally and figuratively. It is exciting and lucrative - according to a survey last September by the Bank for International Settlements (BIS), trade on global currency markets is worth more than US$3.2 trillion daily. This is approximately equal to the annual economic output of Germany, the world's third-largest economy.

Closer to home, Singapore is the world's fifth largest forex centre, with an annual daily turnover of US$231 billion.
Despite the whopping figures, forex trading is often fraught with risks and pressure. In this article, we give you a run-through on the important aspects for a career in forex trading.

An eye on the market
'Forex traders can either work in a bank or in a company,' says Gary Lai, front office manager of recruitment firm Robert Walters. 'For most of these corporations, the traders are there for hedging purposes, but in banks, there is a group of proprietary traders who trade for profits for the bank.'

The traders make money for their institutions by buying currency and selling it later at a higher price or, if they anticipate that the market is heading down, by selling at a high price first and buying back at a lower price later.

A forex trader working at a bank in Singapore describes the job as 'straightforward'. 'The person speculates which way the currency will move, much like equity traders. However, the forex market is much bigger,' he says. 'For example, if you expect the US dollar to appreciate against the Japanese yen, then you as a forex trader will buy USD so that you can sell it off later.'

As currency prices are constantly on the move, forex traders are inevitably subjected to a fast-paced environment which Mr Lai describes as 'a pressure cooker'. 'Even during lunch breaks, (traders) cover for each other; you bring lunch back and eat at your desk,' he says, adding that 'even when you go for toilet breaks, the markets can just move'.

Due to the high pressure that the job entails, traders should have certain characteristics.

'A good forex trader is highly adaptable, decisive and has the ability to think out of the box, especially in volatile situations,' says Angela Kuek, manager, banking and financial services of recruitment company Hudson. 'He has a steady mind, stays cool and is not easily distracted, veering off course from positioning strategies. He should have an eye for opportunities and precision.'

Mr Lai shares similar sentiments: 'To be successful in forex trading, or any trading for that matter, a person has to be very numbers-driven, able to take calculated risks; and be a very calm, collected person who doesn't get scared of losing money overnight.'

In addition, a trader should be up-to- date with current world issues which influence forex markets. 'He or she is constantly at the forefront of happenings and movements in the global financial markets,' says Ms Kuek.
Interestingly, these traits take precedence over academic qualifications. 'In the past, when you look for a trader, it's all track record. But these days, many traders have degrees, except for the European and American traders,' notes Mr Lai. 'Many brokerage houses (in Europe and the United States) don't require traders to have degrees; they need personality.'
However, he acknowledges that degrees are 'a given these days', especially in Asia.

The forex trader from the bank agrees that 'most banks would like to see at least a university degree', adding that when job interviews are conducted, the questions are 'secondary; the primary assessment will be based on the personality'.

Perks and downsides
The biggest lure of forex trading, it seems, are the monetary rewards.
'The starting pay of a trader is around $2,500, and that is just the basic pay. On top of that, you get a dealing allowance of around $500 and are entitled to profit sharing, which is normally about 5 per cent of the profit that you make above the budget given,' explains the forex trader.

He adds that a senior trader with about eight years of experience, on the other hand, can earn up to $200,000 a year, while star traders can easily reap more than $500,000. (Fti, why did you retire so early???)

However, the career life span of forex traders tends to be shorter than other banking positions, says Ms Kuek. 'The trading floor is a highly stressful environment, mostly for long periods at a stretch, causing higher burnout rates.'

She adds that traders also have to be prepared to work long hours which span the Asian, European, and sometimes part of the US time zones.

Where to next?
Ms Kuek explains that there are two career paths for forex traders: they can choose to become specialist traders - for example, dealing with G-10 (the Group of 10 industrial countries) currencies; or take on management responsibilities such as being heads of desks, who trade but also manage other traders and the entire portfolio.

The forex trader, however, believes that the career prospects look bright only for the 'next 5-10 years'.

'The long-term prospects are not good, given that, in the near future, the world is heading towards a few currencies only,' he explains. 'First, the euro. And in the Americas, the US dollar is a de facto single currency, while Asia is thinking about having one currency too. So the volatility has dropped considerably, making trading harder.'

He adds: 'A word of advice - investment banking is where the big money is.'

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Quoting Zoran

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So with London being the financial capital, an average I.T. contractor here with 3-5 years of experience can expect a 6 figure salary making it about $200k a year. This is without stress and most jobs are fairly quiet (most of the time). So why not get into I.T., earn your $200k per year and just spend most of the day trading and surfing the net?

Sounds like a better idea than waiting 8 years to earn that much as a trader and then burning out!

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Quoting Green_David

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Hi, Fti.

Nice job, but I could see that you were actually trading against daily trend. Is that because you traded by one direction?

David

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Quoting fti

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Hi Green_David,
16 jan already made a bomb.
17 th mkt was distributing, so used the profits form 16th as foreign capital for scalping the distribution.
Like I said make no sense . so don't pay that too much attention.
sometimes , I get backside itchy as well.
The scorpion in me.
So far for jan 08, haven lost a single day yet.
If I get my egor up, may have big lesson to learn. lol

With these high vols, really doesn't matter which side to trade.
But of course, you are not me. I know how to rescue, remember?
Just bragging.LOL

regards

PS: If leighsww saw this , I 'll be whipped for sure.LOL

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Quoting Green_David

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Well, anyway, you only had one bad day. But for me, it is a different story.

I made more than 100% gain before Jan 15th. And acctually I closed many E/U long positions on 15th around 1.49, had very light positions because I wanted to have enough money and get prepared to short E/U (since, I thought E/U shall pass 1.5. But, so what will happen after that? Stretegically better prepared to short).


However when E/U went down to 1.4820, since it retraced 100 pips and with idea that FED will lower interest rate by 50 points at the end of this month, I thouht I could long first, and close them around 1.49. But the market didn't go as I expected.

Worsely, on 16th, E/U suddenly droped more than 150 pips just in one hour. I was frozen and didn't take any actions since such a vilent move just in one hour seldom happened before, and I didn't know if it was a real falling knife or just a spike.

Now all the profits gone.

Lessons learned:

1) Market is a monster, it trained me to form a solid mind to be long blindly.
2) Don't or be very cautious to add winners when the price has increased/decreased a lot.
3) Be careful about your self (I was greedy to add winners) and the market(E/U out of expectations).
4) Retrace could be a start of a down trend. So becareful.
5) Your position will fixate your mind(I closed half with loss around 1.4650, but not all, that is a problem, now it is 1.4444. And after I saw a big bold red candle, I know it better to short E/U. But my long positions stopped me shorting.)
6) Since I was stuck in E/U, I lost the chance to short A/U.

Regards

David

P.S. Where is Leigh? Any news from her?

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Quoting fti

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Hi MickD,
Like I was telling Northpro, I think many of you have got it s theory.
You gotta dance the best you know how, and tailor your own battles.
I am good in how I do it, but I can in no way teach experience, only the theory.
You have to find your comfort zone, and you have to learn the ropes by you own battle experiences, I can only show you technique and theory.

From what I am reading , for those of you that are posting, I think the main points are clear to you.
Its the putting it all together, that seems to elude you traders.
That comes from experience and market structure knowledge.

Some hands on battles and the market will teach you.
Just do small enough, to survive the boot camp.

regards

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