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Technical Analysis Fallacy

  • #57,701
  • Aug 19, 2017 8:08pm Aug 19, 2017 8:08pm
What is "Price Tearing"?
  • #57,702
  • Aug 20, 2017 2:50am Aug 20, 2017 2:50am
What is "Price Equilibrium"?
Not to Advance is to Fall Back
  • #57,703
  • Aug 20, 2017 6:36am Aug 20, 2017 6:36am
Hi Atomic Sheep

'price tearing' from our friend fti's post...

Hi All,
@ Leighsww,

The chart presented was a GBP/YEN chart.
The cross comprise of GBP/USD against USD/JPY.
so the movements in the respective majors have an impact on the cross.
yes?
(Majors currency pairs = USD/JPY, USDCHF, GBPUSD, EURUSD, if renminbi gets to free float probalily be a major due to its size.
Monors pairs: USD/currencies eg USD/dinar, USDpeso, USDlira...
Exotics: USD/ third world currencies also USD/crosses)

The two pairs of GBP?USD and NSD?YEN normally moves in tendem of its natural relationship, which is an inverse relationship.

It is when one leg is not moving in the natural tendency. Or when both is tearing from the norm tendenct that created the swift and directional moves.

I check, You still on?

regards

https://www.forexfactory.com/showthr...04#post1742804


Hi Exnav

'price equilibruim'....

http://www.investopedia.com/terms/e/equilibrium.asp


in the previous post note how fti talks about using 3 or 4 digit charts, we retail have 5 digit charts (piptits)

the banks ect use 4 digit charts and they look very different to out 5 digit charts...

5 digit candles/bars start/show in 1/10 move of a pip

4 digit candles/bars start/show in 1 pip moves

3 digit candles/bars start/show in 10 pip moves

will produce very different candles/bars to what we see...... this is one way they try to fool us into bad trades and why i use mainly the bigger momentum bars for my entries now while virtually ignoring the rest.

regards

Phil.
-be careful about what you allow to be put in your mind-
  • #57,704
  • Aug 20, 2017 9:47am Aug 20, 2017 9:47am
Inserted Video


Inserted Video


the 5th pip appear due to hft market making in fx, that is why we got such fine spread, in fact the emergence of hft has benefited us retail traders by much, but the same thing can't be said to big players though...


A good website for those who want to know more about hft, especially how hft "frontrun" us based on mainstream conception
https://www.chrisstucchio.com/tag/hi...y-trading.html
  • #57,705
  • Aug 21, 2017 12:25am Aug 21, 2017 12:25am
Quoting phil13
Hi Atomic Sheep 'price tearing' from our friend fti's post...
Hello Phil,

Thank you for your reply. Honestly, I was wondering why A_S posed that question. He is coming to the TAF every two - three years... to write something. So, was thinking that his post was just a rhetoric.

My rhetoric was about equilibrium in two senses: 1. price at any given moment is always in its market determined equilibrium; 2. price may look/ seem at its equilibrium differently for those who see it under- or over-.

As regards, the reliability of 5 digits charts versus 3 digits, for me, it does not matter due to the following:
1. Trapping nature of the Markets (Brokers are within it);
2. Playing (observe, adapt and expolit) with that what is provided by the Brokerage.
3. I do not consider price volatility moves (price change) less than 50 pips (in 4 digits after dot, e.g., 1.3120 - 1.3170) within a current day worthwhile to engage. It would be 5 pips in FTI desired sense then (1.312 - 1.317).
4. We may have 50 pips at just 1 minute on 1M chart, why not consider it as a sort of reliable momentum? We should not then wait for 10 or 15 min charts to manifest.

Again, your patient and kind feedback are highly appreciated.

Best regards,
Exnav
Not to Advance is to Fall Back
  • #57,706
  • Edited 1:34am Aug 21, 2017 1:17am | Edited 1:34am
Hello FTI Followers Friends,

Until the Market commences to unfold I would like to ask you what would be your most reliable signs of price current flow turn. There are two versions: turn of a major trend, and turn on pullback, reversal in the direction of the major trend.

We start the trading day. If we are fairly loyal, then we want and mostly stick to go along with a major daily/ weekly trend (MT). That's presumably the safiest direction. Let's assume there are no fundamental news on calendar ahead and we do not take it into consideration.

Then, we should wait and see if there are retracements occurred so to engage with the MT flow. In this situational example I would refrain from openning positions at a break-out through corresponding MT extremes - highest for Long or lowest point for Short.

The pullback may be just of some 25 - 40 pips back from the extremes, or retracements numbering about 200, etc. pips before restoring the MT directional flow and possible break-out. What are your favourable and most reliable signs to open strategic positions? E.g., compound formation HS on 1H chart and at least 20 pips momentum on 5M chart... Peaks and Troughs on 15M chart...

And when it comes to MT turn, then it should be manifested by a big momentum on H4 and Daily, well looking candle, or a very slow directional change (dying trend) as for a large vessel ti turn. Probably the MT turn is forced by a major fundamental impact.

I'm unfortunately not good in well explaining what I'm personally doing, calling it as response, feeling, etc. Hopefully, this discussion would mutually help us evolve.

Thank you for sharing your concise views.

Best regards,
Exnav
Not to Advance is to Fall Back
  • #57,707
  • Edited 4:50am Aug 21, 2017 4:39am | Edited 4:50am
Quoting Exnav
{quote} Hello Phil, Thank you for your reply. Honestly, I was wondering why A_S posed that question. He is coming to the TAF every two - three years... to write something. So, was thinking that his post was just a rhetoric. My rhetoric was about equilibrium in two senses: 1. price at any given moment is always in its market determined equilibrium; 2. price may look/ seem at its equilibrium differently for those who see it under- or over-. As regards, the reliability of 5 digits charts versus 3 digits, for me, it does not matter due to the following:...
Just my opinion, I don't think it's possible to predict volatility before hand, maybe have a good guess, but no crystal ball, as volatility can expand or contract and it's one of the variables which is being priced in options, and after you enter a trade, it's still possible for pa's volatility to contract to below 50pips.

Part of the form read is the volatility leg range, it can expand or contract, but it can only be observed not predicted. And it is partly why the mm works so well, notice by spiralling in and out, volatility with respect to the leg becomes a invariant to the mm used if you are using fibo, which adapts as volatility unfolds, the mm is then trimmed according to your current position.
  • #57,708
  • Aug 21, 2017 5:01am Aug 21, 2017 5:01am
Quoting Exnav
{quote} Hello Phil, Thank you for your reply. Honestly, I was wondering why A_S posed that question. He is coming to the TAF every two - three years... to write something. So, was thinking that his post was just a rhetoric.
Not rhetoric, still trying to figure stuff out. I'm probably the equivalent to the student in that jade master story. Another thing I'm still figuring out.

Quoting phil13
The two pairs of GBP?USD and NSD?YEN normally moves in tendem of its natural relationship, which is an inverse relationship. It is when one leg is not moving in the natural tendency. Or when both is tearing from the norm tendenct that created the swift and directional moves. I check, You still on?
So tearing is when two currencies are moving opposite to what they usually do? But if that's so, how can they be both be tearing? If their natural tendency is to move in opposite directions, then they are tearing if for example JPY and GBP start moving in the same direction. But if they are both tearing, then they are moving opposite each other again which means they are no longer tearing. So something doesn't add up here. What am I missing?
  • #57,709
  • Aug 21, 2017 5:05am Aug 21, 2017 5:05am
Quoting Exnav
Hello FTI Followers Friends, Until the Market commences to unfold I would like to ask you what would be your most reliable signs of price current flow turn. There are two versions: turn of a major trend, and turn on pullback, reversal in the direction of the major trend.
Trend is trend or is not trend. So we all need definition of that as Jupiter says.

If price just runs why wait for pullback?

Volatility is what market gives us.

I like to look at the momentum in the legs including patterns i.e. is there a strong thrust long or short - we can feel these. So I want to feel in uptrend bulls strong and bears weak.

In pullback we can get rounding over as we saw of recent FTI chart posted here in thread and the opposite rounding bottom- flags are generally clear patterns to feel and understand.

In pullback I like what I call abcdef attack or abc123 attack - these are spring/upthrust.

We also have topping and bottoming action and ranges and v tops/bottoms sharp reversals- gosh there are lots. Think we have to look at what is going on inside these patterns ie how they are formed.

I am sometimes unsure if price is being swept and then reversed or after sweep get pullback and then continuation. I have seen really strong sweeping action then after pullback price just keeps going so trend is super strong.

Alex
check out the terrain - follow never lead
  • #57,710
  • Aug 21, 2017 5:07am Aug 21, 2017 5:07am
Quoting CookieMonsta
{quote} Just my opinion, I don't think it's possible to predict volatility before hand, maybe have a good guess, but no crystal ball, as volatility can expand or contract and it's one of the variables which is being priced in options, and after you enter a trade, it's still possible for pa's volatility to contract to below 50pips. Part of the form read is the volatility leg range, it can expand or contract, but it can only be observed not predicted. And it is partly why the mm works so well, notice by spiralling in and out, volatility with respect...
Can you explain any more re volatility and mm - I am not so good on that - I can feel strength of push/pull - but the maths I am not so hot on.

Alex
check out the terrain - follow never lead
  • #57,711
  • Edited 6:44am Aug 21, 2017 5:36am | Edited 6:44am
Quoting alexandria
{quote} Can you explain any more re volatility and mm - I am not so good on that - I can feel strength of push/pull - but the maths I am not so hot on. Alex
https://www.forexfactory.com/showthr...55#post9111955

Check this post, I made an error then. The error was, notice that I did 1 iteration, if I had continued it would have collapsed into a constant of 1.618 which is the golden mean, the iteration synonymous with the expanding volatility. In actual fact, the math is right, but the answer is wrong because I answered the wrong question, fti asked for if it is a martingale series, which means I needed to do it afew iterations out to see the effect, but I did only 1 iteration hence 1.67 is wrong.

The fulcrum is the net average price.

Notice if it folds in on a constant, that pretty much means it does not variate, the mm number of 1.618 scales well to changing volatility as it is stable and can tolerate some form of volatility variance yet not bring book to death battle as fast, yet have capability to conduct rescue.

1/1.618 is a net average of 0.618, so in percentage terms it's, 38.2% with respect to your previous position to the current price, so buying more to pi skew of 3.14, you only get 25% pretty strong rescue but percentage gain is 13% approx with respect to volatility of X, so for fibo it's 1.618, with 38.2% with respect to volatility of X, and because of that, we use about 2x less capital compared to pi skew. Now compare it to 1x which is 50% it is 12% approx reduction, but we increase size by 0.618 which is considerably a better deal, as risk of accumulating accelerating loss does not go as fast a pi skew compared to phi skew.

So naturally, the golden ratio would fit better between number of troopers committed rescue optimization Vs volatility and position needed to push back to properly rescue.

X can be any value, including expansion in volatility and contraction in volatility.

Solving this above problem, the minimum progression for rescue is 1.618 the fibo progression, and that is why fti said, minimum rescue is fibo progression.

Though the specific usage can be variated abit, say in a short leg, less than 10 to 15 pips, just deploying a 1 1 skew for rescue can be pretty effective, but in larger leg ranges, more will be needed which you can revert to 1.618. if still larger, you can employ spiral within spiral, deploy 1.618 as first trench , then spiral in for mini attack, of 1x and bring it lower. So the mm simply shows you how your risk and position and net position to be acts like with respect to volatility. So it's customizable on the fly for what situation you encounter.

If you find it difficult to see it in the numbers, plot them out as price expands on a piece of paper.

https://en.m.wikipedia.org/wiki/Fibonacci_number

Check.the formula, phi ^2 = phi + 1

The formulae to get the net average price in percentage terms with respect to current net position and current entry price.

Net average = 1/(1+X) if X = 1.618 it would be 0.382 from the current entry price.

A more powerful mm usage is to gauge the dance from experience and use the fibo skew as a main structure skew but adjust on the fly for abit to fine tune to the specific situation.

For example, you are long 2x scout, another 2x scout, total 4x. You can deploy 3x as fibo rescue, and if price acts inline with your expectation, you can do another 3x for full fibo to bring net px into 0.38x region, then if price does not act in accordance well, you can just let it be 2x 2x 3x with net total of 7x and respiral out with a rescue of 12x reimplemented with say 6x 6x or 4x 4x 4x or 5x 5x 2x. It really depends on your feel of the dance.

The fibo mm is just a guide, when you get more experienced, you would usually adjust on the fly for it and usually the dance and your gut feel will tell you how to implement the rescue strategically as well as the required mm skew trimmed on the fly, which is base fibo, added abit here and there to account for volatility in local price action on curr my swings.
  • #57,712
  • Aug 21, 2017 5:36am Aug 21, 2017 5:36am
Hi Atomic Sheep

if you look at the first two lines fti mentions the cross also (g/j, g/u and u/j)

So you need 3 pairs to see a tear that are related to each other, let us use what is here the basic 3K’s (g/u, e/u and u/j), e/u and g/u should naturally move together in roughly the same direction and u/j should naturally move opposite, what we are tracking here is the USD, in a tear two will move naturally and one will not, this tells us the currency (eur , gbp or jpy) that is out of sync (tearing) and could possibly provide a trade in that pair or maybe its crosses, it means if there is no known news that something may be going on behind the scene that we retail traders are not privy to just yet and the big boys are trading into.

Regards

Phil.
-be careful about what you allow to be put in your mind-
  • #57,713
  • Aug 21, 2017 6:50am Aug 21, 2017 6:50am
Quoting CookieMonsta
{quote} Just my opinion, I don't think it's possible to predict volatility before hand, maybe have a good guess, but no crystal ball, as volatility can expand or contract and it's one of the variables which is being priced in options, and after you enter a trade, it's still possible for pa's volatility to contract to below 50pips. Part of the form read is the volatility leg range, it can expand or contract, but it can only be observed not predicted. And it is partly why the mm works so well, notice by spiralling in and out, volatility with respect...
Hello CookieMonsta,

Thank you for your kind feedback. It's me who might look weird. I don't engage if price has not made that pips range. I.e., it's a dormant shallow, tight market for me and sometimes before a bigger move. OK, price may vibrate within 10 pips range for hours and then fly for whatever distances; it may also vibrate within 60 pips and fly... or not. and those my 50 could be 35 or 65, it's not that rigid, I must feel something.
But, I don't predict, I react to the market moves after being dormant. That's a response; if wrong - either cut dead in waters or rescue. Nothing new from my end.

Best regards, Exnav
Not to Advance is to Fall Back
  • #57,714
  • Aug 21, 2017 6:54am Aug 21, 2017 6:54am
Quoting Atomic_Sheep
{quote} Not rhetoric, still trying to figure stuff out. I'm probably the equivalent to the student in that jade master story. Another thing I'm still figuring out. {quote}
Hello Atomic_Sheep,

It's fine then. Well understood. Whatever issues/ questions, it's good to discuss and remind us on the basics. Phil is much helpful.
Good luck in your figuring out!

Best regards,
Exnav
Not to Advance is to Fall Back
  • #57,715
  • Aug 21, 2017 6:58am Aug 21, 2017 6:58am
Quoting alexandria
{quote} Trend is trend or is not trend. So we all need definition of that as Jupiter says. If price just runs why wait for pullback? Volatility is what market gives us. I like to look at the momentum in the legs including patterns i.e. is there a strong thrust long or short - we can feel these. So I want to feel in uptrend bulls strong and bears weak. In pullback we can get rounding over as we saw of recent FTI chart posted here in thread and the opposite rounding bottom- flags are generally clear patterns to feel and understand. In pullback I like...
Hello Alex,

Thank you for your kind reply and contributing to the discussion. My intent was to re-activate it a little.
BTW, I always read your posts with attention and do remember your previous posts on the point I raised this morning.

Best regards,
Exnav
Not to Advance is to Fall Back
  • #57,716
  • Aug 21, 2017 7:01am Aug 21, 2017 7:01am
Quoting Exnav
{quote} Hello CookieMonsta, Thank you for your kind feedback. It's me who might look weird. I don't engage if price has not made that pips range. I.e., it's a dormant shallow, tight market for me and sometimes before a bigger move. OK, price may vibrate within 10 pips range for hours and then fly for whatever distances; it may also vibrate within 60 pips and fly... or not. and those my 50 could be 35 or 65, it's not that rigid, I must feel something. But, I don't predict, I react to the market moves after being dormant. That's a response; if wrong...
As long as you understand to not get predictive and let pa drive your decision, and do what is required to properly manage the position.
  • #57,717
  • Aug 21, 2017 7:41am Aug 21, 2017 7:41am
Quoting CookieMonsta
{quote} As long as you understand to not get predictive and let pa drive your decision, and do what is required to properly manage the position.
Hello CookieMonsta,

Taking into account the FTI's point reminded by Phil regarding those 3 or 5 digits after dot on our charts, that I responded to, I shoud admire guys scalping the Market on ticks charts to get let's say some 2 - 5 pips some 50 times per day.

Best regards, Exnav
Not to Advance is to Fall Back
  • #57,718
  • Aug 21, 2017 7:52am Aug 21, 2017 7:52am
Quoting Exnav
{quote} Hello CookieMonsta, Taking into account the FTI's point reminded by Phil regarding those 3 or 5 digits after dot on our charts, that I responded to, I shoud admire guys scalping the Market on ticks charts to get let's say some 2 - 5 pips some 50 times per day. Best regards, Exnav
well, just my opinion, abit restrictive to just scalp 2-5 pips, many many more things can be done with with the foreign cap as per the attack and rescue mo here, its much more powerful, not to say that scalping for 2-5 pips is no good, but don't have to be so rigid to only scalp for 2 -5 pips. if market wants to give me 100pips in 5mins i definitely won't complain. if pa dictates scalping 2-5 pips is the max to be gotten, probably 2-5 pips is good enough, but if volatility is strong, more can be gotten, then better to trade for more pips, so that when you get into future drawdown, its less painful.
  • #57,719
  • Aug 21, 2017 8:02am Aug 21, 2017 8:02am
Quoting CookieMonsta
{quote} well, just my opinion, abit restrictive to just scalp 2-5 pips, many many more things can be done with with the foreign cap as per the attack and rescue mo here, its much more powerful, not to say that scalping for 2-5 pips is no good, but don't have to be so rigid to only scalp for 2 -5 pips. if market wants to give me 100pips in 5mins i definitely won't complain.
Hello CookieMonsta,

100 pips, why not 150 then?
So far, it happenned to me only once: price on USD/JPY made about 90 pips in 1,5 minute approximately. I was very happy with the move and dreaming (keeping my finger on the Close button) about 100 pips+ to close. Finally booked just 40 pips profit on the 3rd minute after the spike started...

Then price reversed on the 2nd minute and if I had kept it, would have been far in negative. That's a Scalping indeed (2 years ago? don't remember exactly, that time U/J was good to make surprises in such 5min 200 pips moves)

Best regards,
Exnav
Not to Advance is to Fall Back
  • #57,720
  • Edited 8:32am Aug 21, 2017 8:19am | Edited 8:32am
Quoting Exnav
{quote} Hello CookieMonsta, 100 pips, why not 150 then? So far, it happenned to me only once: price on USD/JPY made about 90 pips in 1,5 minute approximately. I was very happy with the move and dreaming (keeping my finger on the Close button) about 100 pips+ to close. Finally booked just 40 pips profit on the 3rd minute after the spike started... Then price reversed on the 2nd minute and if I had kept it, would have been far in negative. That's a Scalping indeed (2 years ago? don't remember exactly, that time U/J was good to make surprises...
exactly, why not 150?

if market gives you 150 then even better, the only goal is manage position properly, thats really all. be it 100 pips or 1 pips, its still profits, if market gonna show signs of reverse then just take some out, then slowly take more and square down. no need be rigid as to how many pips you can/ "should" take.
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