The Trader's Academy - by Traders for Traders | Page 68 | Forex Factory

Options

Go to
Permalinks
Print Thread

Similar Threads

Are you a trend trader or a counter-trend trader? 29 replies

Baby pips style academy for other financial markets? 6 replies

from retail trader to full-time trader 17 replies

Discipline Trader and Voice Trader EA/IND 16 replies

IkonFX Viking Trader or Pfgbest Viking Trader? 2 replies

Attachments: The Trader's Academy - by Traders for Traders
Exit Attachments

The Trader's Academy - by Traders for Traders

  • #1,341
  • Jul 25, 2017 5:03am Jul 25, 2017 5:03am
Quoting cat
A quick post before I turn in for the day, but this is mega important. I Know of quite a few traders who have destroyed not only their accounts but also themselves by refusing to admit they are wrong, and this is usually against the trend. How many people have been blown to pieces repeatedly shorting the euro for example instead of waiting for pullbacks and trading with the trend? Loads I suspect, and I know of a few. I'm no psychologist, so why traders trade against momentum by trying to pick tops and bottoms is beyond my understanding, but traders...
Well said

I think such behaviour mostly comes from some form of loss aversion - thinking that if I pick the top or bottom I'll be safe from whipsaws.

While one may get such a strategy to work with some effort, it clearly isn't optimal for day-trading.

One way to mitigate the risk-aversion while trading with the trend, is to use a slower moving average, and a faster Bollinger band, and to enter on pullbacks to the slower MA that touch a Bollinger band pointing in the direction of the trend or, as in the picture below, reversal.
Attached Image
  • #1,342
  • Jul 25, 2017 5:20am Jul 25, 2017 5:20am
Quoting medici
{quote} Well said I think such behaviour mostly comes from some form of loss aversion - thinking that if I pick the top or bottom I'll be safe from whipsaws. While one may get such a strategy to work with some effort, it clearly isn't optimal for day-trading. One way to mitigate the risk-aversion while trading with the trend, is to use a slower moving average, and a faster Bollinger band, and to enter on pullbacks to the slower MA that touch a Bollinger band pointing in the direction of the trend or, as in the picture below, reversal. {image}...
Excellent example ! That's the proper way to trade a reversal when they show up.
  • #1,343
  • Jul 25, 2017 5:50am Jul 25, 2017 5:50am
Quoting medici
{quote} Well said I think such behaviour mostly comes from some form of loss aversion - thinking that if I pick the top or bottom I'll be safe from whipsaws. While one may get such a strategy to work with some effort, it clearly isn't optimal for day-trading. One way to mitigate the risk-aversion while trading with the trend, is to use a slower moving average, and a faster Bollinger band, and to enter on pullbacks to the slower MA that touch a Bollinger band pointing in the direction of the trend or, as in the picture below, reversal. {image}...
I would say it is more like potential profit maximalization. After all, the most money is made if you catch a trend reversal. Of course, it rarely - if ever - happens.
Invincibility lies in the defence; the possibility of victory in the attack
  • #1,344
  • Jul 25, 2017 7:16am Jul 25, 2017 7:16am
Quoting BBalazs
{quote} I would say it is more like potential profit maximalization. After all, the most money is made if you catch a trend reversal. Of course, it rarely - if ever - happens.
Well, people who do counter-trend trading successfully report high win-rate and low reward-to-risk ratio. Then calculate your Kelly ratio and realise that you can take quite big bets when trading counter-trend, based on the very high win-rate - so it's not about catching a reversal if you have any sense.
  • #1,345
  • Jul 25, 2017 7:52am Jul 25, 2017 7:52am
Quoting medici
{quote} Well, people who do counter-trend trading successfully report high win-rate and low reward-to-risk ratio. Then calculate your Kelly ratio and realise that you can take quite big bets when trading counter-trend, based on the very high win-rate - so it's not about catching a reversal if you have any sense.
Thanks for the clarification. I don't know any successful CT trader, so I assumed that fishing for a reversal is the point of it. Anyway, I prefer to have a high R:R, so I'll stick with the good ol' trend
Invincibility lies in the defence; the possibility of victory in the attack
  • #1,346
  • Jul 25, 2017 8:47am Jul 25, 2017 8:47am
Quoting BBalazs
{quote} Thanks for the clarification. I don't know any successful CT trader, so I assumed that fishing for a reversal is the point of it. Anyway, I prefer to have a high R:R, so I'll stick with the good ol' trend
Just to clarify my original post on this theme, counter trend trading can indeed be very profitable, and I myself do it all the time, but I wait for the set up, I never just hope that a top or bottom has been reached, which is what many traders do. After all, trading off small time frames as I do, although I try always to determine the momentum and trade with it, there are many very clear opportunities trading back into the big moving averages when a reversal or a pullback opportunity has been confirmed. That said, the best trades are usually the ones with momentum on their side, provided one can see which way that is running, which is sometimes difficult.

ps...one also needs to know where and when to get out of a trade, a far more difficult skill to acquire than entering a trade in my own opinion, and that's where knowing roughly where the main S&R are likely to be.
  • #1,347
  • Jul 25, 2017 11:56am Jul 25, 2017 11:56am
Very nice moves off the Daily Central Pivot today on many pairs, bang on with EU, and just below on GJ and EJ, plus others I'm sure, so if you don't use pivot points, you should, as price very often finds S&R on them, especially when they fall on trend lines, key fib levels, and moving averages.
  • #1,348
  • Edited 6:51am Jul 26, 2017 6:11am | Edited 6:51am
Quoting BBalazs
{quote} Thanks for the clarification. I don't know any successful CT trader, so I assumed that fishing for a reversal is the point of it. Anyway, I prefer to have a high R:R, so I'll stick with the good ol' trend
Trend can mean many things, and if you keep track of trends on more than one scale, then you may be able to pick some good CT trades.

For example, take a look at the 1 minute DAX chart below from this morning. Indicators are a 3 ATR Keltner channel around SMA60 (green) and a 240 period Bollinger band (white).

Counter-trend opportunities would now be in terms the 240 period scale while keeping track of the 60 period channel.

The first opportunity, around 9.45 Frankfurt time, was an example of a good CT scalp. 20 points with a 10 point stop would be a feasible trade.

Still, the SMA60 was still pointing up, so a scalp rather than a reversal trade.

Then, just after 11.30 and after a longer consolidation, there's a final burst outside of BB240 - a clear end-of-trend move and a juicy opportunity.

Also, end-of-trend doesn't, mostly, mean that a new trend is starting. Often the market goes into sideways consolidation, or the recent top/bottom gets retested. So when trading CT one does need to take profits. Hoping for a big trend is just wishful thinking.
Attached Image (click to enlarge)
Click to Enlarge Name: Screen Shot 2017-07-26 at 13.00.20.png Size: 114 KB
  • #1,349
  • Edited 7:51am Jul 26, 2017 7:36am | Edited 7:51am
Quoting medici
{quote} Then, just after 11.30 and after a longer consolidation, there's a final burst outside of BB240 - a clear end-of-trend move and a juicy opportunity. ....... {image}
Funny, because I was going to post something about these. I call them death throe candles, and have referred to these moves as such on this thread. These final, aggressive candles occur at the end of a trend, on whatever tf you are watching, and they often move into and often through support or resistance that you have marked. We saw one yesterday on EU. The trend has been up, but I had my high for yesterday at 11,700. and was expecting a move up to it based on my analysis. The price hit it, to the pip, dropped back a bit, tracked sideways, then suddenly and aggressively broke through resistance. Some people already long were holding out fopr higher I'm sure, and others may even have gone long when 700 was broken, but this was a death throe candle, and as fast as it broke 700, it fell hard and fast back again. Are these safe candles to trade on? Well, what is safe in this business, but, provided you have support or resistance in place, which you trust, and the price moves aggressively through it, then stops, perhaps leaving a shooting star, then they can be great entry opportunities, right at the point the price turns. I called one for the Dow on the first of March, I think on this thread, and although it didn't mark the top of the market, as it is now higher, it did signal the beginning of an 800 pip fall down to the Daily 100sma. Then, as Medici correctly pointed out, there was one on this morning's Dax, through the resistance I had on my 1 minute chart, then it closed near the high, put in a couple of shooting stars, and down it came, hard. Okay, not a huge move, but worth 60 pips to its maximum. Look out for these moves, they can be great entry opportunities...just don't get caught trading them the wrong way.

Drew attention to the March 1st Dow move on another thread actually - see page 2, the last three posts on that page dated March 1st, 2nd, and 31st.https://www.forexfactory.com/showthr...=587620&page=2

Anymore input by anyone on how to recognize tops and bottoms will be very much appreciated by all I'm sure.
  • #1,350
  • Jul 26, 2017 10:00am Jul 26, 2017 10:00am
Quoting medici
{quote} Trend can mean many things, and if you keep track of trends on more than one scale, then you may be able to pick some good CT trades. For example, take a look at the 1 minute DAX chart below from this morning. Indicators are a 3 ATR Keltner channel around SMA60 (green) and a 240 period Bollinger band (white). Counter-trend opportunities would now be in terms the 240 period scale while keeping track of the 60 period channel. The first opportunity, around 9.45 Frankfurt time, was an example of a good CT scalp. 20 points with a 10 point stop...
Wouldn't it count as a pullback when price touches the bottom of the keltner channel where you took profit for a long trade entry towards the target of the end-of-trend move ? I didn't take that trade but just asking looking at your chart.
  • #1,351
  • Edited Jul 27, 2017 2:45am Jul 26, 2017 10:06am | Edited Jul 27, 2017 2:45am
Imagine a career with unlimited earning potential, requiring no formal qualifications, minimal start up capital, working from the comfort of your own home, independently, with no boss or anyone to tell you what to do or how to do it, getting up when you like in the morning, a career you can begin immediately, and theoretically be turning a healthy profit in months or even weeks, offering no more of a challenge than predicting the direction of a price which can only go in two directions - up or down ( okay, and sideways ). Basically, complete and utter freedom.

Sounds fantastic doesn't it. No wonder so many people flock to become traders, and no wonder most fail.

Be realistic and treat this business with the utmost respect, Don't fall into the trap so many traders fall into by thinking that there are short cuts to trading success, because there are none, just lots and lots of hard work as in any other profession. Be honest with yourself and equip yourself with the right attitude, and the sky is the limit.
  • #1,352
  • Jul 26, 2017 10:26am Jul 26, 2017 10:26am
Quoting skyway
{quote} Wouldn't it count as a pullback when price touches the bottom of the keltner channel where you took profit for a long trade entry towards the target of the end-of-trend move ? I didn't take that trade but just asking looking at your chart.
The way I read the market is that it can be in

 

  1. uptrend
  2. downtrend
  3. range


and I have exact definitions for those, eliminating discretion. In my model DAX had already entered a range before the push up to 12345.

In the absence of contradicting evidence the market would, after the strong push down, enter a range. This is the typical behaviour for tops. Bottoms are more likely to reverse into an uptrend. Regardless, the answer to your question is no. Better to look for continuations down. Actually, I didn't take profit as indicated, but waited for the first pullback up to 12315, and doubled up the position for the continued journey down.

The long entry was to be had after 13.30 CET, at the bottom of the crab pattern. DAX likes crabs.

Attached Image
  • #1,353
  • Edited 11:53am Jul 26, 2017 11:37am | Edited 11:53am
Inserted Video


I like Brett Steenbarger, and have his book ' The Daily Trading Coach '. He is very strong on Trading psychology, and this book helped me in the early days.This is an interview I hadn't heard before, so sharing it here. Check out the first reply, because its good.

One of the biggest lessons I took away from Professor Steenbarger's book, was the notion of habit. Habit is what makes us do what we do on a day to day basis, so we brush our teeth, eat breakfast and watch tv in the evening not just because we have to or want to, but out of habit. It's the same with trading practices...if we habitually get fearful when about to enter at trade, exit too early, or make any number of the most typical trading mistakes, then that is what we will continue to do, no matter how we beat ourselves up afterwards, because unless we take clinical steps to break those habits and learn new ones conducive to better trading results, the bad habits will just continue, no matter how much we try and motivate ourselves not to make them.

Anyway, have a listen, because what he has to say is great stuff for us traders.
  • #1,354
  • Jul 26, 2017 4:03pm Jul 26, 2017 4:03pm
Quoting cat
https://www.youtube.com/watch?v=rD5nQzbm0iI..if we habitually get fearful when about to enter at trade, exit too early, or make any number of the most typical trading mistakes, then that is what we will continue to do, no matter how we beat ourselves up afterwards, because unless we take clinical steps to break those habits and learn new ones conducive to better trading results, the bad habits will just continue, no matter how much we try and motivate ourselves not to make them.
Very true, and I say that from personal experience. Habits don't change unless one makes the effort to create new habits, and one needs to consult the best of knowledge on psychology to do so. I'm less keen on Brett S however. What has worked better for me is the mindfulness approach of the book pictured below.

The book is a lot more thorough and thought through than Steenbarger;s work, methinks, and it comprises three parts:

  1. Understanding your mind
  2. Using cutting-edge psychology to transform you mind
  3. Using performance psychology to develop a top class trading process

Attached Image (click to enlarge)
Click to Enlarge Name: Screen Shot 2017-07-26 at 22.59.31.png Size: 522 KB
  • #1,355
  • Jul 27, 2017 2:10am Jul 27, 2017 2:10am
Two EU charts. We've got to look at the weekly and the monthly charts to see the resistance levels now, as anything smaller has EU in clear water right now. The weekly shows that the price has hit the 200sma right now, having broken the 200ema, and this could certainly be a big resistance level. If it breaks, then the monthly sure looks bullish up to the trend line, as shown.
Attached Image(s) (click to enlarge)
Click to Enlarge Name: USD (DFB).png Size: 64 KB
Click to Enlarge Name: eu weekly.png Size: 56 KB
  • #1,356
  • Jul 27, 2017 2:56am Jul 27, 2017 2:56am
Quoting medici
{quote} Very true, and I say that from personal experience. Habits don't change unless one makes the effort to create new habits, and one needs to consult the best of knowledge on psychology to do so. I'm less keen on Brett S however. What has worked better for me is the mindfulness approach of the book pictured below. The book is a lot more thorough and thought through than Steenbarger;s work, methinks, and it comprises three parts: Understanding your mind Using cutting-edge psychology to transform you mind Using performance psychology to develop...
I just started reading it. Looks very promising, thank you for the suggestion
Invincibility lies in the defence; the possibility of victory in the attack
  • #1,357
  • Jul 27, 2017 4:29am Jul 27, 2017 4:29am
Monthly $ Index chart. From this chart, it looks like the $ Index wants 9000, which obviously means the Euro has higher to climb vs the $. Its main obstacle on the way down is just beneath at 9,230, which is the weekly 200sma, the ema having been broken yesterday. I realize most traders on ff are intra-day, but it's always good to have the longer view.
Attached Image (click to enlarge)
Click to Enlarge Name: $ index.png Size: 58 KB
  • #1,358
  • Jul 27, 2017 4:52am Jul 27, 2017 4:52am
Quoting cat
Imagine a career with unlimited earning potential, requiring no formal qualifications, minimal start up capital, working from the comfort of your own home, independently, with no boss or anyone to tell you what to do or how to do it, getting up when you like in the morning, a career you can begin immediately, and theoretically be turning a healthy profit in months or even weeks, offering no more of a challenge than predicting the direction of a price which can only go in two directions - up or down ( okay, and sideways ). Basically, complete and...
i'm agree with you master cat
  • #1,359
  • Jul 27, 2017 3:30pm Jul 27, 2017 3:30pm
Attached Image (click to enlarge)
Click to Enlarge Name: trade.jpg Size: 466 KB
  • #1,360
  • Jul 28, 2017 3:31am Jul 28, 2017 3:31am
Anyone who may have been following my new Dax thread today or yesterday, it has been moved by the ff moderators to Stocks and Commodities, where I don't want it to be, so I'm going to start a new Dax thread, and either put it on the Interactive, or back on discussion, and I'll call it something else, though I don't think I'll do it today, but over the weekend.
0 traders viewing now