Can't Find the Answers of 2 Really Fundamental Questions | Forex Factory

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Can't Find the Answers of 2 Really Fundamental Questions

  • #1
  • First Post: Apr 29, 2014 12:51pm Apr 29, 2014 12:51pm
Hi fellows, I'm an aspiring trader who's looking for answers... I've lurked the forum quite a bit, and also I send some PMs around in order to understand better who FX works, although everyone gave me their time answering my questions, I'd like to open up a thread in order to get more insights.
Plz help me to understand better because right now I'm feeling lost

I've see over an over again the same gist... " You have to find what works for you" or something like that.
I can't really understand how such statement could be true.
The market has its own rules, trader just can't find what work for them, they have to understand how market works... and once they do that, they have to exploit.
Of course, different traders, could have different strategies, but I can't see how many strategies can work at the same time...


Another question that bug my head is how a begginner could find its way into trading? Plz don't tell me that he have to follow some premade system because IMO, this isn't the way to trade. Follow a recipe isn't going to make you a good trader, understanding the market does.
In the stategies section, I can find 1000 systems, none of them have a solid fundamental reason imo, they are just a set of rules probably, made watching past events...
Since many of those systems (if not 100% of them) doesn't work, why people continue to follow them?
If you are going to ask me why I think so, well, if one trader have a winning strategy I believe he wouldn't make it pubblic and second reason is, if a strategy is a winning one, you could build an EA and simply take that trade over and over again, making you rich in a fer years... obv this is not that simple I guess

Ty for you time guys and sorry for the dumb questions
  • #2
  • Apr 30, 2014 7:08am Apr 30, 2014 7:08am
I don't want to hijack the other thread, so I will answer here ....

You are correct on every front. There are patterns that exist on every chart and on every market. They have never changed and they never will. Every Billion Dollar Manager uses computers to recognize their particular patterns. The computer then provides the signals. At that point, the final filter MUST be a person. He is the most powerful part of the program that makes the decision and hits the button. He collects information on a daily basis and is able to react to the slightest changes. Here is where the normal EA will always fail. The computer cannot decide when NOT to take a trade. It doesn't know that Eastern Europe is in turmoil, which might cause your pattern to fail (That is added Risk). Many of my best decisions were NOT to trade. Again, you can beat yourself up trying to figure out WHY, or you can accept that it just IS.

I really hope this helps a little...
FS
  • #3
  • Apr 30, 2014 7:38am Apr 30, 2014 7:38am
again ty for your reply, I think I understood the gist of your message...
So your tip is to focus on PA and TA?
  • #4
  • Apr 30, 2014 8:22am Apr 30, 2014 8:22am
Ask yourself the question "How does any market work ?"

Why would prices go up , Why would they go down ?

Don't look for strategies until you understand this.
It never gets easier, you just get better
  • #5
  • Apr 30, 2014 8:51am Apr 30, 2014 8:51am
^ I guess it really depends on timeframes...
I you are trading daily or higher timeframes, news are going to influence the price way more than the small timerframes...
Obv this is not the key to be proficient... would be so easy to do that, I mean, look at news at trade higher timeframes.

What you asked me is basically my question... I don't know where to start... since all I could find is trading systems that doesn't work or some vague infos about the markets... I don't have a clue on what I should focus
  • #6
  • Apr 30, 2014 9:40am Apr 30, 2014 9:40am
Quoting Shabs19
Ask yourself the question "How does any market work ?" Why would prices go up , Why would they go down ? Don't look for strategies until you understand this.

I wish to ask a serious question...does this work for you? Do you know why the market is moving up or down? I am not saying that I am not aware of fundamentals or supply and demand, but do they really tell me what will happen, or only confirm what I presently see?

FS
  • #7
  • Apr 30, 2014 9:43am Apr 30, 2014 9:43am
Quoting 4StarGen
^ I guess it really depends on timeframes... I you are trading daily or higher timeframes, news are going to influence the price way more than the small timerframes... Obv this is not the key to be proficient... would be so easy to do that, I mean, look at news at trade higher timeframes. What you asked me is basically my question... I don't know where to start... since all I could find is trading systems that doesn't work or some vague infos about the markets... I don't have a clue on what I should focus
OK, Step 1 ... do you have a demo account?

FS
  • #8
  • Apr 30, 2014 10:14am Apr 30, 2014 10:14am
^ on oanda... but I think I'm gonna open up a ECN demo account
  • #9
  • Apr 30, 2014 10:19am Apr 30, 2014 10:19am
Quoting 4StarGen
^ on oanda... but I think I'm gonna open up a ECN demo account
Do you have MT4 set up of just FXtrade?

FS
  • #10
  • Apr 30, 2014 10:25am Apr 30, 2014 10:25am
I've downloaded a bunch of days ago MT4
  • #11
  • Apr 30, 2014 10:32am Apr 30, 2014 10:32am
Quoting 4StarGen
I've downloaded a bunch of days ago MT4
Oanda with MT4 is perfectly fine... It's what I use

Please understand that I trade what works for me, and if this doesn't work for you, at least hopefully I have given you some direction.

Step 2 - I use a 15 Minute chart for entry, but look at the 1 Hour for my patterns.

Quote #1 - Trend is your Friend

Find a Trend in any TF, Post the chart for me, and tell me what pattern has the highest probability?

FS
  • #12
  • Apr 30, 2014 10:53am Apr 30, 2014 10:53am
^maybe I didn't understand well...
How can I tell you what patter has the highest probability? And I don't think it is possible to tell how much is likely that a pattern is going to be good...
In order to be sure, you should have a ton of data to check...
I think if you know that a pattern has only 55% of chance to be a good trade, you will be rich in no time, or I'm missing something?
  • #13
  • Apr 30, 2014 11:08am Apr 30, 2014 11:08am
You have a demo account open, that is good.
Now add to it as many open windows on as many different pairs as you can stand.
The more windows you have open, the more patterns will present themselves to you and the more experience you will acquire in a short amount of time.
Notice that sometimes several pairs seem to move at the same time, some in the same directions and some in opposite directions.
Notice that they will frequently share a name between them, and that the ones with a name leading the pair will tend strongly to move in the opposite direction
than the ones where the name trails in the pair.

now insert an 8 bar simple moving average into each window you have open. (no matter your platform. they all have one of those somewhere. Some use 9 bar moving averages: I prefer 8).

Notice that when the candles are above the moving average the moving average deflects in an upward direction, and that when the average is moving in an upward direction great than 30 degrees the odds are that the candles will move upward more often than not.

Notice that when the average is moving downward at an angle greater than 30 degrees the next bar will also move downwards more often than not.

You should be asking yourself why these things happen while you observe them.

If you have a volumes indicator available enter that in your windows. Notice that there appears to be a more or less regular 24 hr cycle to the volumes. and that the big moves often (not always, but often) occur when the volumes are biggest.

Note that the market seems to get excited around certain periods of the day: 2-3am, est., 8-11am e.s.t., and sometime around 6pm e.s.t.
That is when the big centers open up their day and start trading. If you look around in ff you will find a timeline showing the opening times of the major centers.
notice that news announcements seem to cluster around these opening times (more or less).

Keeping verifying these things, and notice that they seem to hold true whether the market is advancing in a pair, retreating in the pair, range-bound, or choppy.

Some strategies that do well in an advancing market will lose you money in a choppy one, and vice versa, so recognizing the kind of market a pair is in will help you apply the right strategies.

If you have a dozen or more windows open you will find most of the time one pair or another is behaving in a fashion as to allow you to make money using that strategy.

Play around with these things in your demo. Use a lot size small enough so that you do not run the demo into the ground before you learn anything.

Discover how interrelated the pairs are; this is something that does not exist in other markets to nearly the same extent.

you should find in the course of a couple of months just about every market condition that will appear in one or another of these pairs. Do this for two or three cycles and you should develop a real feel for the market. You will learn to enter certain trades in confidence and comfort: You will learn not to enter trades in which you do not.

What happens then?
  • #14
  • Apr 30, 2014 11:12am Apr 30, 2014 11:12am
Quoting 4StarGen
^maybe I didn't understand well... How can I tell you what patter has the highest probability? And I don't think it is possible to tell how much is likely that a pattern is going to be good... In order to be sure, you should have a ton of data to check... I think if you know that a pattern has only 55% of chance to be a good trade, you will be rich in no time, or I'm missing something?

OK, lets simplify. In my mind, there are only 2 possibilities in the Market . Reversals and Continuations. Change Direction or not. If these are equal that's 50/50 flip of the coin.

Take a look at EURUSD Monthly for all the history that Oanda gives you. Of the only 2 possibilities, which happens more? Higher Probability.

http://stockcharts.com/help/doku.php...chart_patterns

FS
  • #15
  • Edited 11:33am Apr 30, 2014 11:15am | Edited 11:33am
YES!!! That was concise... Thanks RAP!

EDIT: And I don't use the sma(8) or Volumes, but we are both profitable because we let the Market do what it does.

FS

Quoting Rap Skallion
You have a demo account open, that is good. Now add to it as many open windows on as many different pairs as you can stand. The more windows you have open, the more patterns will present themselves to you and the more experience you will acquire in a short amount of time. Notice that sometimes several pairs seem to move at the same time, some in the same directions and some in opposite directions. Notice that they will frequently share a name between them, and that the ones with a name leading the pair will tend strongly to move in the opposite...
  • #16
  • Apr 30, 2014 11:59am Apr 30, 2014 11:59am
This was EURUSD earlier this month. It really doesn't get any easier than this. My R:R was more like 1:6 and Risking around 2%. I didn't take the middle move and only took the ones approaching the Daily Pivot. Once MY criteria is met, I do start to build my position.

Attached Image (click to enlarge)
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  • #17
  • Apr 30, 2014 12:07pm Apr 30, 2014 12:07pm
Quoting 4StarGen
" You have to find what works for you" or something like that. I can't really understand how such statement could be true. The market has its own rules, trader just can't find what work for them, they have to understand how market works... and once they do that, they have to exploit. Of course, different traders, could have different strategies, but I can't see how many strategies can work at the same time...
You are right. It shouldn't be about what works for you. Rather, it should be about (1) what works for the market AND (2) also works for you. There's is no value in having an exploitable market inefficiency that you can't actually exploit for some personal reason (e.g., schedule, personality, etc).

Quoting 4StarGen
Another question that bug my head is how a begginner could find its way into trading? Plz don't tell me that he have to follow some premade system because IMO, this isn't the way to trade. Follow a recipe isn't going to make you a good trader, understanding the market does. In the stategies section, I can find 1000 systems, none of them have a solid fundamental reason imo, they are just a set of rules probably, made watching past events... Since many of those systems (if not 100% of them) doesn't work, why people continue to follow them? If you...
Again you are right. It is detrimental for a beginner to focus on systems/strategies. Instead, a beginner should focus on understanding the market (what it is, why does it move, how does it move, when does it move). This is the "Know your enemy" maxim from Sun Tzu. Once you start to truly understand the market, not only will strategies to trade it come naturally to you, you will also be confident in those strategies.

Quoting 4StarGen
Ty for you time guys and sorry for the dumb questions
There is no such thing as a dumb question. The only dumb thing is having a question and not trying to get an answer.
"To hold, you must first open your hand. Let go." - Lao Tzu
  • #18
  • Apr 30, 2014 12:19pm Apr 30, 2014 12:19pm
Quoting vox dei
{quote} You are right. It shouldn't be about what works for you. Rather, it should be about (1) what works for the market AND (2) also works for you. There's is no value in having an exploitable market inefficiency that you can't actually exploit for some personal reason (e.g., schedule, personality, etc). {quote} Again you are right. It is detrimental for a beginner to focus on systems/strategies. Instead, a beginner should focus on understanding the market (what it is, why does it move, how does it move, when does it move). This is the "Know your...
Hi Vox,
Since I really feel that 4Star is searching, can you please provide him further insight? It really isn't kind to leave him with "you need to understand the market". Can you direct him to specific links or who he should read?

Thanks,
FS
  • #19
  • Apr 30, 2014 12:54pm Apr 30, 2014 12:54pm
Quoting ForexSam
{quote} Hi Vox, Since I really feel that 4Star is searching, can you please provide him further insight? It really isn't kind to leave him with "you need to understand the market". Can you direct him to specific links or who he should read? Thanks, FS
Hi Sam,

Sure. Attached is a paper on order flow to get started (a paper which could already be found here at FF). There is plenty quality info available for free on the net. All one has to do is search for it.

Cheers,
vox
Attached File(s)
File Type: pdf Trading and Exchanges Draft.pdf   650 KB | 1,254 downloads
"To hold, you must first open your hand. Let go." - Lao Tzu
  • #20
  • Apr 30, 2014 1:01pm Apr 30, 2014 1:01pm
Quoting vox dei
{quote} Hi Sam, Sure. Attached is a paper on order flow to get started (a paper which could already be found here at FF). There is plenty quality info available for free on the net. All one has to do is search for it. Cheers, vox {image}

Perfect!

Thanks,
FS
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