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  • #361
  • Dec 4, 2017 2:10am Dec 4, 2017 2:10am
I see, I had an epiphany today, why my rescues are so inefficient, because my understanding of terrain and trends is still lacking, and after revising through my trades and reading the taf thread, I had more epiphany of where my mistakes are made, it is my limited understanding of terrain and trends, which is my inexperience which is causing my mistakes.
  • #362
  • Dec 4, 2017 2:59am Dec 4, 2017 2:59am
Hi CookieMonsta

I found this a while ago and saved it, I have not tried trading this way yet but maybe it would be more suited to what you are doing?

BUY BUY SELL
or SELL SELL BUY

EUR/CHF CHF/JPY EUR/JPY
GBP/CHF CHF/JPY GBP/JPY
USD/CHF CHF/JPY USD/JPY
EUR/GBP GBP/CHF EUR/CHF
EUR/USD USD/CHF EUR/CHF
EUR/GBP GBP/JPY EUR/JPY
EUR/GBP GBP/USD EUR/USD
EUR/USD USD/JPY EUR/JPY
GBP/USD USD/CHF GBP/CHF
GBP/USD USD/JPY GBP/JPY

For me as I have said and tried to show in my posts it is about the management of the trade (money) according to the terrain we see ahead in the now, keeping the trade to risks known in check has worked well for me, chasing the ‘big one’ all time is not where the money is in becoming long term consistent at this in my view, big recoveries either through booking a loss or scaling in to recover the drawdown just takes too much time away from us, it will also cause mental stress and we are then at greater risk of making another mistake.

There are many different ways to use what is presented by our friend fti, one example is the fib sequence, I have found it has many variations in the way it can be used to give the money management an edge in our favour, but we do as you have been stating need to be able to get a good read of the charts and market condition to be able to exploit it, one of the things fti recommended was ‘dow theory’, here is a basic link to it https://www.investopedia.com/university/dowtheory/dowtheory2.asp ,
this is a good way to read the charts but this must be coupled up with some fundamental read as well, I am thinking of doing another money management demonstration in my journal soon, I just need to finish something else off first that I am currently involved with.

Another thing is this year the market action has changed dramatically (maybe the Trump effect??), therefore we must adapt to this change, currently I am using H8 and H2 for my analysis and this seems to work better in this new market environment as the read can (or appears) to be seen easier.
It has become like a ‘free for all’ for anyone to tweet out rubbish that moves the market only to be retracted soon after, look at Friday near the close news came out about Flynn to testify then sunday it is retracted again, as our friend said there is no honour in this game anymore, we cannot rely on even what the CB’s say anymore as they are playing the same game all too often these days.

Good luck with your ongoing journey my friend.

Regards

Phil.
-be careful about what you allow to be put in your mind-
  • #363
  • Edited 4:13am Dec 4, 2017 3:34am | Edited 4:13am
Quoting phil13
Hi CookieMonsta I found this a while ago and saved it, I have not tried trading this way yet but maybe it would be more suited to what you are doing? BUY BUY SELL or SELL SELL BUY EUR/CHF CHF/JPY EUR/JPY GBP/CHF CHF/JPY GBP/JPY USD/CHF CHF/JPY USD/JPY EUR/GBP GBP/CHF EUR/CHF EUR/USD USD/CHF EUR/CHF EUR/GBP GBP/JPY EUR/JPY EUR/GBP GBP/USD EUR/USD EUR/USD USD/JPY EUR/JPY GBP/USD USD/CHF GBP/CHF GBP/USD USD/JPY GBP/JPY For me as I have said and tried to show in my posts it is about the management of the trade (money) according to the terrain we see...
Hi, phil, thanks for sharing.

What you indicated above is the basic mechanics of the 3 legged animal. But there are ways to employ it compared to the order which you presented, say eg, if you are long eurusd, and short gbpusd, you are long eurgbp, so if eurgbp is in retrace mode, you can long into eurgbp to rescue using eurgbp or if hourly trend is down, you can short eurgbp and then attack with it.

Indeed, price action these days feels like market has gone crazy, just afew mins ago, gbpusd spike 60 pips up, in 1 stick, no news too. Feels like you mentioned, my suspicion is that hft with ai trying to parse and trade news, and if the entire market all work based on 1 same algorithm, all produce same results, that's why, the strong volatility. Or maybe sudden unexpected news.

As for terrain, I feel like hourly still holds well, but as for 5mins, it may need a more stronger read to execute trades. I found the key to the 3 legged animal, in the way to rotate is to see which pair is currently trending now on the hourly and use that to help with direction to rotate it out, essentially Fti's advice to not trade against hourly trend, but since don't trade against hourly trend is because momentum can be very strong and is suicidal to rescue against it, we can instead use it to our advantage and spread it out using the hourly direction, essentially seeing which currently is trending on the hourly according to the 3 pairs. This in itself should cut down on our timeframe for rescue as since the inception of the volatility, we can already conduct rescue rather than have to wait for the move to slow off and reverse/retrace.

I guess the problem with a choppy confusing terrain is it sucks people into escalating to higher level skews too fast. And that usually kills alot faster because of the size.

To be honest, I'm actually quite interested in this kinds of terrain, it gives a gleams into the kind of markets fti has to deal in during his tenure as market maker, it sort of clues us what kind of difficulty he has to deal with.
  • #364
  • Dec 4, 2017 4:26am Dec 4, 2017 4:26am
Hi CookieMonsta

If the hourly charts are still working for you then stick with it my friend, for me they have got too noisy, as you say it is all down to the choppy way the markets are now trending.

In my journal I posted the fib tool with the skews on it and suggested a way it could be used for making your entries not be too close together and suffering from the effects of the growing snowball too quickly, as traders we need to be able to trade in all time lines short, medium and long terms, this allows us some breathing space if we make a mistake that we do not correct quickly enough, this will happen to everyone now and again and from my own experience so far will always continue to happen, so having the ability to sort out our mess we created for ourselves is a must.

I agree with you about it is faster to trade against yourself when we have badly timed something, as you know this something I have tried to demonstrate in my posts, for me it is the most efficient use of capital and time that I have found so far, but it is hard on us to trade against ourselves and takes lots of practice, our instinct feels this the wrong thing to do and the brain will cause us problems while doing it until it has been reprogramed to accept this new way of doing things.

It is all about management and adjustment on our part, we are the one’s taking on this challenge and as I read somewhere ‘do not be fooled by the ease of putting a trade on, when you enter the market you are putting yourself up against the brightest and most well practice/trained minds in the world who have made it their job to take money from you’, (not the exact words but you get what I mean).

Regards

Phil.
-be careful about what you allow to be put in your mind-
  • #365
  • Dec 4, 2017 4:38am Dec 4, 2017 4:38am
Quoting phil13
Hi CookieMonsta If the hourly charts are still working for you then stick with it my friend, for me they have got too noisy, as you say it is all down to the choppy way the markets are now trending. In my journal I posted the fib tool with the skews on it and suggested a way it could be used for making your entries not be too close together and suffering from the effects of the growing snowball too quickly, as traders we need to be able to trade in all time lines short, medium and long terms, this allows us some breathing space if we make a mistake...
Hi Phil,

I have 1 suggestion which is the way I view trading against my position, it's that I view it in a probabilistic way, day 40% chance market retrace, 60% chance market continues, if that's so, appropriate strategy is to spread out then slowly rescue later of it turns out it's the 40% chance of market retrace or reverses. So by adopting a probabilistic thinking it allows one to trade against our own positions since it allows for both direction to be in the same thought at the same time.

Do you remember the video you showed me? The idea on quantum mechanics? Same idea applied here. Schrödinger's cat
  • #366
  • Dec 4, 2017 4:58am Dec 4, 2017 4:58am
Hi CookieMonsta

that is a good way to think about it, well done my friend, it took me a while to work out why i found it so hard to trade against myself and never thought about it like that.

it was that video that made me understand so much about how and why we work and what make us do the things we do, the last part about time being relative also helped me see why market action/re-action to what is going on can sometimes be delayed by variable amounts.

regards

Phil.
-be careful about what you allow to be put in your mind-
  • #367
  • Dec 4, 2017 5:28am Dec 4, 2017 5:28am
Quoting phil13
Hi CookieMonsta that is a good way to think about it, well done my friend, it took me a while to work out why i found it so hard to trade against myself and never thought about it like that. it was that video that made me understand so much about how and why we work and what make us do the things we do, the last part about time being relative also helped me see why market action/re-action to what is going on can sometimes be delayed by variable amounts. regards Phil.
Hi phil, yep.

i believe it can be refined more, i believe there were some clues in fti's posts.

fti once mentioned afew posts which caught my eye,

1) that we will be using the most size when the probabilities are the strongest.
2) when fti was at the bank, they used to plot statistical tables, and the chart form is simply what they used to plot by hand, now a computer do it form them in graphical format.
3) possibility of mutation of form from 1 to another, this itself would indicate probabilities of form transforming from 1 to another.

i think fti was talking about something similar to this, except that, the probabilities keep changing, only the trader's mind can keep up with it.
  • #368
  • Edited 6:39am Dec 4, 2017 6:24am | Edited 6:39am
actually where i first encountered this form of thinking was when i was playing this game called starcraft 2.

it is a strategy game, player vs player, so its alot like the forex market, in which i had to guess what the opponent might do, when i do not had enough information, but there is always the option to scout the opponent out. however, what i figured was that, if i guessed right, i would win and if i guessed wrong, i would lose. so i needed a more surer way to play the game, which leads to the above thinking process, the opponent has say 33% chance to do strategy A, and 50% to do strategy B and 17% to do strategy C so what i can do is develop my economy such that my probabilities are skewed towards B and A counter transitions, which is thinking 2-3 steps ahead, to counter the opponent, as for C, a small sum of the economy is allocated in case i get headfaked.

at the start its difficult to say, so you have to deploy 1 to 2 troopers to scout the enemy's base and see his timing, economy and layout of base vs his moves, how is he moving and deploying units, is it fast and furious attack or is it slow methodical and defensive which may mean slow game.

so, in essence, i begin to think in probabilities in which the opponent could develop strategies against me, and i had to develop strategies which are very adaptable, and in the middle of the road so as to allow for smooth transition to handle multiple situations in the least amount of time, hence, the pre-strategy, before leading the the counter is extremely important, essentially thinking many steps ahead.

so a similar thinking is used here, and the quantum mechanics one is a way to view the probabilities, then next is developing the counter strategy to handle the situation and adapt to it.

well just saying, thats how i first figured how to use this, though its video game, it still teaches this form of thinking, similar to chess and go. and sometimes, when you have scouted some information, you can eliminate possibilities and skew your strategy to handle other possibilities. sometimes you can bait mistakes out of your opponent.

so a similar one is game theory (economics). https://en.wikipedia.org/wiki/Game_theory
which is used alot by economist and behavioral finance guys, essentially, strategic thinking.


https://www.youtube.com/watch?v=xt0NGu7V6kE
  • #369
  • Dec 6, 2017 3:01am Dec 6, 2017 3:01am
Quoting CookieMonsta
{quote} It's easy for fti after all, it's his nature. I knew I had a missing link somewhere, I think it's my understanding of trends that was missing. .
Market is not always trending so need to manage such terrain important.

For trend I am looking at d1 wave - are we in trending wave (nice) or not? Then I look at h1 and then m15 and m5. But a wave can not only be made up of a straight run of candles but a minor trend in itself. Maybe we should agree on/check our trend definition.

In addition if we are in a pullback correction then it may be possible to go to a lower time frame to trade it as a trend there and see when it reverses back to trend.

Alex.
check out the terrain - follow never lead
  • #370
  • Dec 6, 2017 3:18am Dec 6, 2017 3:18am
Quoting CookieMonsta
{quote} say eg, if you are long eurusd, and short gbpusd, you are long eurgbp, so if eurgbp is in retrace mode, you can long into eurgbp to rescue using eurgbp or if hourly trend is down, you can short eurgbp and then attack with it. ........... essentially Fti's advice to not trade against hourly trend.......is suicidal to rescue against it ....... I guess the problem with a choppy confusing terrain is it sucks people into escalating to higher level skews too fast. And that usually kills alot faster because of the size. ......
Great post.

I also think if we are in pullback then it is possible to go to lower time frame where it will be trending and trade there (but need big skills) or see when trend is running out of steam.

Alex
check out the terrain - follow never lead
  • #371
  • Dec 7, 2017 3:17am Dec 7, 2017 3:17am
Quoting alexandria
{quote} Market is not always trending so need to manage such terrain important. For trend I am looking at d1 wave - are we in trending wave (nice) or not? Then I look at h1 and then m15 and m5. But a wave can not only be made up of a straight run of candles but a minor trend in itself. Maybe we should agree on/check our trend definition. In addition if we are in a pullback correction then it may be possible to go to a lower time frame to trade it as a trend there and see when it reverses back to trend. Alex.
Hi Alex,

It might be alittle more nuanced, I usually assess terrain using 1hrly, as for daily, I only use it for checking if there is strong daily trend, but if not, I don't use it much, mainly because I realized that terrain is easier to be seen from 1hourly. I realized what was missing in how I was assessing terrain, was that I was assessing 1 swing to 1 swing only which is basically faulty, it may not be wrong but it's an extremely myopic and faulty way to view price action.

So I researched gann's truth of the stock tape again and Richard wyckoff's book again too, and finally I saw it, what fti meant by terrain.

Below attached is a picture of mark down, into accumulation into mark up, accumulation, in blue, is choppy, while marking up, in red is trendy. But what we can see is that, accumulation on the 1hourly chart, can be seen as a general area of congestion with no general direction, while marking up is a clear trendy direction shown by nice legs.

Hence assessment of terrain has to be done by a huge group of sticks. But in general, let's say if 5mins is the chart in accumulation, hourly may seem like a congestion group of sticks.

As you shift out in timeframes, you essentially will see the stocks get compressed from say triple top to become dark cloud cover, which is essentially the same thing on 2 different timeframes.
Being able to assess if we are in accumulation or marking up helps us decide if rescue if in original position or is to be flipped in direction.
Attached Image(s) (click to enlarge)
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  • #372
  • Edited 5:47am Dec 7, 2017 3:40am | Edited 5:47am
Quoting CookieMonsta
{quote} Below attached is a picture of mark down, into accumulation into mark up, accumulation, in blue, is choppy, while marking up, in red is trendy. But what we can see is that, accumulation on the 1hourly chart, can be seen as a general area of congestion with no general direction, while marking up is a clear trendy direction shown by nice legs. Hence assessment of terrain has to be done by a huge group of sticks. But in general, let's say if 5mins is the chart in accumulation, hourly may seem like a congestion group of sticks. As you shift...
Not sure I am understanding what you are saying re gbpusd chart provided.

I always have sight of d1/h1/m15 of what I am trading although if strong trend can put them to side - I like to know d1 wave. I get the link between m5 trend and h1 candles just different views.

This is all about a move, then test to see if buyers/sellers around then another move then another test....

Alex
check out the terrain - follow never lead
  • #373
  • Edited 4:58am Dec 7, 2017 3:44am | Edited 4:58am
Quoting alexandria
{quote} Not sure I am understanding what you are saying re gbpusd chart provided. I always have sight of d1/h1/m15 of what I am trading although if strong trend can put them to side - I like to know d1 wave. I get the link between m5 trend and h1 candles just different views. Alex
Well, just to check what's your understanding of terrain, so we can see if we are on the same page.

How would you describe terrain, or what do you think terrain is?

I realized how we describe terrain, becomes how we view trend Vs range Vs whipsawy, and that dictates how we trade.

Well the question seems deceivingly simple, but intruth, you will see how very different it can get, if you ask 50 traders what terrain means, I believe you will get 50 variations to something which is similar to a certain degree but encompass very many minute differences in details.

It's the usually the fundamental questions which everything is anchoring on which is the most simple yet difficult to answer. Simple because it can be answered easily, but to produce a good answer is the key to profitability and mastery.

At the start I was only looking to trade swings, and that means my understanding of terrain is faulty, because everything I look at I would assume it's a trend. All because my definition of terrain is off. Upon looking at my definition of terrain, I had seen that actually I had many faulty thinking processes, which is causing me mistakes. And learning to understand terrain helped with my profitability.

The key is, as you get more experienced, your definition of terrain will change to be more refined.

And it's these details which help us trade better.
  • #374
  • Edited 9:39pm Dec 9, 2017 9:27pm | Edited 9:39pm
hmm, i believe i gained a little more insight into options today.

as below, the graph, shows what happens if i have a position, managing a 1 short x spot, 1.5x long call, 2.0x short puts.

as the p&l get into the green zone, i should be looking to flatten the position, while if i were in the red zone, i can look to flatten both side, and 1 way to do this, is to use butterflies on the red zone and put sell stops as price gets into the green zone.

notice that, the p&l has many times, it shows how the p&l transit with respect to time and price, so it should be a 2 dimensional lookup table to a 3rd p&l value, all these assuming volatility is constant, the thing is, volatility may not have that much of an impact, if we are trying to be volatility neutral and the goal is protecting book.

the 2nd picture is what happens if we have 1 short spot, 1.5x 30points spx from spot long call, and 2.0x 30points spx from spot short puts, x from and another long 1.0x 60 points spot, essentially our risk is concentrated at the sharp drop, which you can then attempt to try to mitigate it with options

essentially with these forms, we are tail risk hedged.

i have been thinking how to integrate this into the taf mo, as a book rescue scenario for pass level 3, where spot book has gone into death battle mode, in order to see if its possible to create a no loss book, the main use of this, is in case of the tsunami scenario, notice that you have essentially gone from short to long exposed, in the direction of the tsunami wave, so if the tsunami wave really keeps persisting, like in the nick leeson case, you will essentially be looking to profit from it.

this is a custom strategy, so i do not believe they teach this in textbooks, except maybe the more complex ones like sheldon natenberg's book, or nassim taleb's book, because the mainstream textbook's form is too rigid, but i believe most professionals have learnt this way through experience, and actually do manage positions this way.
Attached Image(s) (click to enlarge)
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  • #375
  • Dec 11, 2017 12:51am Dec 11, 2017 12:51am
Quoting CookieMonsta
{quote} Well, just to check what's your understanding of terrain, so we can see if we are on the same page. How would you describe terrain, or what do you think terrain is? I realized how we describe terrain, becomes how we view trend Vs range Vs whipsawy, and that dictates how we trade. Well the question seems deceivingly simple, but intruth, you will see how very different it can get, if you ask 50 traders what terrain means, I believe you will get 50 variations to something which is similar to a certain degree but encompass very many minute differences...
terrain I am trading in for me means lots of things: news/fundamentals/time of day/trend & range & whipsawy & accumulation & distribution & correction & consolidation/RoK/higher timeframes/momentum candles/springs/failed upthrusts

How are you defining trend and trend reversal - can you give chart example?

Alex
check out the terrain - follow never lead
  • #376
  • Edited 3:00am Dec 11, 2017 2:47am | Edited 3:00am
Quoting alexandria
{quote} terrain I am trading in for me means lots of things: news/fundamentals/time of day/trend & range & whipsawy & accumulation & distribution & correction & consolidation/RoK/higher timeframes/momentum candles/springs/failed upthrusts How are you defining trend and trend reversal - can you give chart example? Alex
Hi Alex,

That's my point right there, that defining trend and trend reversal for individual trader is different.

Just an example,

The blue line shows impulse, my read, of course, it can be subjective, red line shows impulse too, so this market is swinging wildly, green box shows consolidation, overall, the entire segment of the market, is very choppy, no trend., Bull leg is strong, but so is bear leg.
Attached Image (click to enlarge)
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  • #377
  • Dec 11, 2017 3:44am Dec 11, 2017 3:44am
Quoting CookieMonsta
{quote} Hi Alex, That's my point right there, that defining trend and trend reversal for individual trader is different. Just an example, The blue line shows impulse, my read, of course, it can be subjective, red line shows impulse too, so this market is swinging wildly, green box shows consolidation, overall, the entire segment of the market, is very choppy, no trend., Bull leg is strong, but so is bear leg. {image}
Looking at chart you presented the whole bull blue run is 1 single bull wave (so not yet a bull trend in itself) - has fewer candles than bear wave and travelled further.

The bear red down move is also just 1 bear wave. Yes the bear has pulled down deeply much lower than 50%.

So just looking at all that is presented trend is not shown. Each wave has minor waves in it. I do think we need a definition of a trend and not sure we should see it differently - but what do I know.

Alex
check out the terrain - follow never lead
  • #378
  • Dec 11, 2017 4:06am Dec 11, 2017 4:06am
Quoting alexandria
{quote} Looking at chart you presented the whole bull blue run is 1 single bull wave (so not yet a bull trend in itself) - has fewer candles than bear wave and travelled further. The bear red down move is also just 1 bear wave. Yes the bear has pulled down deeply much lower than 50%. So just looking at all that is presented trend is not shown. Each wave has minor waves in it. I do think we need a definition of a trend and not sure we should see it differently - but what do I know. Alex
For a hourly swing trader, he may be considering it is a range trade, wait for price to hit the extremes of the range then look for failure swing, for a 5min trader, it's a trend.

But as you can see, there's already a discrepancy in how we view trends.

Going back to Jupiter's post on us trading a model, or our believe, that's what he is talking about I suppose.

All depends on your mo mm and market duration which you intend to stay in.

As in there are trends but this is a broad view, we try to trade in line with trend, but individual trend definitions are very nuanced.
  • #379
  • Dec 11, 2017 4:35am Dec 11, 2017 4:35am
Quoting CookieMonsta
{quote} For a hourly swing trader, he may be considering it is a range trade, wait for price to hit the extremes of the range then look for failure swing, for a 5min trader, it's a trend. But as you can see, there's already a discrepancy in how we view trends. Going back to Jupiter's post on us trading a model, or our believe, that's what he is talking about I suppose. All depends on your mo mm and market duration which you intend to stay in. As in there are trends but this is a broad view, we try to trade in line with trend, but individual trend...
Another example is this morning eurusd London opening - they sent it down in 5 wave down move (m5 3 down + 2 up) for duck hunt - that down move is not a trend just 1 wave. It could have become a trend but it did not.

I do think we each need a definition of a trend that we use as our model - and of course accumulation, distribution turn up in trends and corrections can always end up as new trend. Not sure if the trend is fully defined somewhere in TAF. For me I need to see my last wave taken out to have potential of new trend turning up.


Alex
check out the terrain - follow never lead
  • #380
  • Dec 11, 2017 4:40am Dec 11, 2017 4:40am
Quoting alexandria
{quote} Another example is this morning eurusd London opening - they sent it down in 5 wave down move (m5 3 down + 2 up) for duck hunt - that down move is not a trend just 1 wave. It could have become a trend but it did not. I do think we each need a definition of a trend that we use as our model - and of course accumulation, distribution turn up in trends and corrections can always end up as new trend. Not sure if the trend is fully defined somewhere in TAF. For me I need to see my last wave taken out to have potential of new trend turning up....
If you could screen shot it and identify the waves it would be good, I'm seeing a single pullback on the hourly. M5 is choppy.
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