(binned per thread starter’s request) CookieMonsta's Journey Into

Fti:

Quoting fti (https://www.forexfactory.com/showthread.php?p=5487130#post5487130)
hihi jack,
Retail asking institutional stuff. Is very sensitive.
Only hope they may get a glimpse and improve their mindset.
i hope i not step over the line. Bread and butter at stake.

Markets getting very directional.
How the feel on the desk?
I still waiting for wellington get a feel if this is real run.
if good one and make budget by mid year would be a party.


regards
Interesting
http://www.bloomberg.com/news/2012-0...erivative.html (http://www.bloomberg.com/news/2012-03-16/italy-said-to-pay-morgan-stanley-3-4-billion-to-exit-derivative.html)

Like you said, I just think folks should understand sometimes it's the modelé assumptions and sometimes it just the strategy that is flawed.

Just saying hello to friends.
Rgds sir

Interesting article, related to trading

http://leepublish.typepad.com/strategicthinking/2016/10/risk-and-regret.html

I guess 1 word which fits trading, objectivity.

Finally have an options account set up, let's see when I can start funding it, will definitely be interested to see if I can do the delta hedge technique, and in my own way.

There is 1 subtle thing though, you know the 3 legged animal? Perhaps with the delta hedge technique, together with the 3 legged animal correlation, it can be danced together, I seriously am very excited to test it out.

Will try to test out a myriad of strategies, mainly the delta hedge method with 1 pair, the delta hedge method with 3 pairs and then the collared rescue mo, because it seems at 0.382 of the account is where the breaking point is at, theoretically, once you step into pass this boundary, its do or die, and I believe perhaps it's possible to dance out of it, using other myriads of strategies, and the collared rescue is 1 mo.

Also to set up next, is the silent collar, what it does is, at the start we set up a say 100pip or 200 pip wide costless collar as our boundary condition, we pay only the spread, it's a relatively risk limited strategy and we can essentially decorrelate the portfolios risk to be marked at the 200 pip wide limit, meaning if price breaks pass that, we have some catch all strategy to handle it by default.

Man this is getting exciting.

Because who says I only have to dance the market in 1 way? The one who can play both sides of the coin rarely loses.

I believe the reason why I lost is mainly because of the death battle scenario, seems like I'm not effectively handling such scenarios yet, this is definitely an area I have to refine at, and an insight is, the death battle scenario is the last option, if you get there, its do or die.

The key to mitigating it is that, before you get there say about 0.23 approx troopers used, other strategies can be taken in to mitigate the death battle scenario. That is my key insight, there are basically 2 ways, try to out muscle market by mm and dancing skill or before it reach there, employ a myriad of strategies to try protect book with respect to price, and volatility, size itself can be controlled by us so it's not much of a problem.

This should be the last stage and I also realized that usually how it happens is as per goldenfinger pointed out, the volatility is fairly low, and not out of ordinary impulsive, but the direction is fairly consistent and the time duration can extend on hours on end before an opening for rescue can be deployed.

So in such circumstances, you have 4 choices, 1 spread it out then decide later if terrain is manageable, 2 cut and when the momentum comes in spiral out to next level rescue for short hit and run to rescue exposure, 3 stay all the way and try to rescue it back, 4 just cut and relax and reset your mind for the next battle.

So that's basically the mechanics of the toughest terrain for death battle.

I believe once this can be solved, it will overcome many hurdles I face previously. The 3 legged animal as mentioned above used with rescue and attack can help mitigate most scenarios and sort of help prevent entering the death battle. But the risk comes in when after spreading, you put in troopers from all the spreaded out positions and hit pass the 0.382 on 1 pair for rescue then that is where majority of the risk comes in.

Solving this segment is now my priority focus. The options endeavour above may help support helping to gain new insight and derive new solutions to help the account out as it enters the death battle scenario.

I believe once this is solved I will have the capacity to trade in all kinds of terrain.

You see, if momentum and impulse is fairly strong like when yellen makes some unexpected announcement, if one is caught out, it's fairly easy to rescue, simply cut and flip, the one which is hard, is the slow yet consistent move against the position, its volatility doesn't support cut and flip at high skew, and increases the risk of being churned out, and yet if I let it ride it may get dangerous, it's this boilling the frog in the pot scenario which is most dangerous.

Hence this is the primary focus for now.

Trading smaller would help alot, but the question still remains if and when wee reach such a state, are there alternative strategies to handle such a move?

The risk is all in this 1 scenario once you can dance well.

today's trade, really tested me to the max of my abilities, but it is definitely a good learning point, what happens if i get hit by a sudden spike and how to handle extreme circumstances?

the 3legged animal saved me today, and that was awesome, through strategic thinking and cool and calm disposition, i managed to turn today, which could easily be a loss day, into a day with good gains, from the inception of the volatility, i was actually hit out of position after rotating it once, when price just went to take the stops down, i thought i was hit out of position, but actually it was a stophunt, a 100pip stop hunt. when price action was very very confusing, i simply just locked my exposure, and then when price action showed its direction, i simply went with the leg which worked and then attacked into it, and came out profitable.

essentially i can let price do whatever it wants because i locked in my losses, so it is definitely not a problem for me, since my portfolio's volatility is now decorrelated to market's volatility, then when it shows direction, i went with the leg which showed direction, which is flowing with the volatility and momentum.

the big loss was essentially rescued by the rotation, but book's maximum drawdown was around $38 max.

this is definitely a great learning point, if i were ever hit by crisis type situations, i hope i can perform like this too.

this is an example of indirect rescues rather than direct rescues, by making unbalanced 3legged animals.

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

Flowing like water

Reactive trading.

I guess this is the true philosophy of the taf thread, it implies that rigid techniques if used correctly, is very powerful, meaning techniques are means to an end, in the end the user has to be flexible in order to bring the effectiveness of each method and technique out for each particular situation.

The implication is, there is a most powerful technique, which is the one which adapts all technique to proper assessment of situation and usage of the correct way of handling such a situation.

Hello My Friend,

Exactly, I must concur, "extemporaneous response". For me, it's more of a response reflex being humble and fluid. Practising to master the trading process.

Enjoy your Friday trading.

Best regards, Exnav

Hi exnav,

Agreed, different techniques and strategies, all are but dependent on the skill of the user. So it's always advantageous to learn all kinds of skills, just, if it's useful, use it to it's maximum efficiency, if not, just discard or keep it in the periphery until more use can be employed.

Good trading to u too.

I have not invented a "new style," composite, modified or otherwise that is set within distinct form as apart from "this" method or "that" method. On the contrary, I hope to free my followers from clinging to styles, patterns, or molds. Remember that Jeet Kune Do is merely a name used, a mirror in which to see "ourselves". . . Jeet Kune Do is not an organized institution that one can be a member of. Either you understand or you don't, and that is that. There is no mystery about my style. My movements are simple, direct and non-classical. The extraordinary part of it lies in its simplicity. Every movement in Jeet Kune Do is being so of itself. There is nothing artificial about it. I always believe that the easy way is the right way. Jeet Kune Do is simply the direct expression of one's feelings with the minimum of movements and energy. The closer to the true way of Kung Fu, the less wastage of expression there is. Finally, a Jeet Kune Do man who says Jeet Kune Do is exclusively Jeet Kune Do is simply not with it. He is still hung up on his self-closing resistance, in this case anchored down to reactionary pattern, and naturally is still bound by another modified pattern and can move within its limits. He has not digested the simple fact that truth exists outside all molds; pattern and awareness is never exclusive. Again let me remind you Jeet Kune Do is just a name used, a boat to get one across, and once across it is to be discarded and not to be carried on one's back.
— Bruce Lee

See how it's expression of his feel and what his mind thinks is the right move by reacting. Meaning all the years of training would lead to the understanding that, all forms have their use, but not 1 form can dominate all, except when the user can use them all in concert according to the situation( the reaction/reflex).

Notice how this philosophy has been battle tested, meaning it has true essence.

For every move, there is a counter move, and if there is a countermove for every move, we eventually go in a circle, hence the circular strategy.

And hence, it all depends on the users ability to react well to changing circumstances.

I think I finally understand the TAF thread's main philosophy.

So I guess I just need to follow this path, of acquiring tactics to outmanoeuvre and decorrelate book from volatility and then reinstating it later on.

All different combinations of instruments( I don't mean indicators or the like, what I mean is financial instruments like forwards, futures, options and others) are like different schools of martial arts, they serve a different specific usage, hence, to flow like water is to learn them all and use where appropriate.

Hi CookieMonsta

indeed my friend, all that matters is the that the 'state' (account) profits from your actions.

AOW...

LAYING PLANS
1. Sun Tzu said: The art of war is of vital importance to the State.
2. It is a matter of life and death, a road either to safety or to ruin. Hence it is a subject of inquiry which can on no account be neglected.

14. While heading the profit of my counsel, avail yourself also of any helpful circumstances over and beyond the ordinary rules.
15. According as circumstances are favorable, one should modify one’s plans.
16. All warfare is based on deception.

regards

Phil.

Hi phil,

much agreed. I won't be surprised if bruce lee would have read the AoW, and came to the same conclusions too.

perhaps, it may be boiled down to this, perceive, think, strategise and react.
it is simple and elegant, yet extremely deep if each term were to be dissected fully.

and just my guess, perhaps fti also has similar believes regarding trading to bruce lee too, he may have seen parallels in jeet kune do, since he was a martial arts practitioner and figured that trading and sparring are alike, no rules bound them in real live combat, anything that works, most efficient is best employed, others which serve to bog him down should be discarded.

both are at the peak of their respective arena, there is a commonality, non-rigidity, so i seek to emulate that too.

i guess thats 1 justification for using methods not written in the TAF thread perhaps, as nothing is absolute, so long as it has a proper core foundation in true to the masters trading strategies which can last in time.

All methods which work are a consequence and result of understanding the markets, how it functions and how the players trade, since the players are really the one that layer the bids and the asks.

there is a difference between just taking a method and running with it, and taking a method, understanding the core of it, which alludes to a segment of market knowledge which then translate back into the method and its derivative methods. the first, you only get 1 method, in the latter, you get an infinite variances.

that is why i never say no to diverging from the TAF thread.

well you see, changing your trading mo is just part of evolution and improvement of your skills, so if you change because of improvements and because you become more efficient in handling certain bad situations which cause problems for you, why not right? the only different between diverging from the right path to go into bad methods and improve your skills and becoming better, is whether it has proper grounding in risk management or not, the only golden rule is, if it works keep it, if it doesn't discard it, but while you do not know, and need to find out, budget some small money to test it out, and don't go all in. its basically the same idea as attacking. scout in, if works well, level 1 goes and level 2 goes in. same for experimenting, scout goes in, if it works, level 1 and level 2 goes in as larger sums of money committed because the strategy proved itself.

there is an additional method of profiling if a method works, which is a binomial simulation against the form which the market transform and mutate into, then you profile the method's ability to handle the transitions as the market mutates from 1 form to another, and profile all transitions. this itself gives you a complete understanding of the method's ability to handle changing circumstances and its robustness, as well as where it fails. this one can be done inside 1's mind, AOW, the general does many calculations in his temple. then verifying and training the ability to use it live in the markets, in real combat conditions.

this itself mirrors how the market move and how 1 would manage a position. except, we profile for all circumstance, and if we like specifically where the most risk is at and how to handle them, all without money in, just pure simulation.

In the field of martial arts, "be like water" refers to the ability to adapt. If pairing a striker against a grappler, the striker may prevail over the grappler if the grappler is unable to counter someone with superb striking because, in this scenario, the grappler's technique is set in stone so to speak. And so is the striker who happens to be more effective, in this scenario. Now imagine a striker going against a grappler who happens to have excellent striking skills. According to Bruce Lee's reasoning, the grappler will be able to adapt to the striker by striking in response and also use his grappling to win the fight. The grappler ,now, being water; and the striker being more like stone, unable to adapt and operate outside of his style. A stone paired against water will soon find itself sinking as the water flows around it. Pour water into the cup and it becomes the cup. You pour water into a vase and it becomes the vase. Be water.

Someone else wrote this on quota, I didn't write this, just what I think the 3 legged animal is doing in its essense. Not overly strong in the attack stance and not overly strong in the rescue stance. Be like water because volatility is the rock.

Alright, finally got my options account up, super Thursday this Thursday, I will be looking to see how i can craft a strategy to handle this.

current the long straddles are going for about 0.0068 for 1 side of the call and 1 side of the put 0.0068, which means that, if i do not delta hedge to trade the volatility, i will need price to go 140pips either up or down to profit from it. the delta hedge method can be used to trade counter swings before this thursday, and then lets see what i can do on this thursday, i will see if trading 1 week out will work or not.

it still remains to be seen if i have the proper skill sets to manage options positions.

keeping my fingers crossed.

Hmm, maybe a bad move, not sure if this broker is a full fledged options broker, they seem to force a stoploss on every positions, very cumbersome, I may just kiv the experiment till I can get a proper options broker.

Hmm, alright, after this Friday I will stop trading the options, because it is really not suitable, the spreads are quoted 2x above normal broker spread, and they force a stoploss, hence, this experiment will be considered a failure.

Hmm, ok, seems my intuition is correct, using Fti's mo, it will converge on the volatility much faster, and is much faster in converging on volatility compared to predictive models for volatility.

Hmm although I have much misgivings about carrying out this strategy with this broker, but being quoted 2x spread and now the position value is at -9 dollars with spot 10 dollars profit taken, but we will never know, I will let it ride out till after super Thursday, then decide what to do with it, mean while I will try to delta neutralise near the hips and lops of 15 / hrly, since they timeframe suits this mo more.

I guess if we liquidate now we break even.

Thing about options is because it expands on the timeframe, you have more time to deliberate on moves.

This could prove to be incredibly powerful data.

So if the market flash crashes now, it will be in my favour, no matter the direction.