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

Hi CookieMonsta

I sometimes use 12 sma (actually I prefer ema) on m5 because that is an hourly average, on m15 I would use 16 ema (H4) on hourly (24ema – daily) ect.

Regards

Phil.

i see, interesting to know that.

On m5 I have same SMA + 48. Doing same thing as the others SMAs

Alex

Hi Alex

i have also done that in the past.

Hi CookieMonsta

the index's with 24ema (median - hl2). for trends at quick glance.



regards

Phil.

oh wow, the way i think about options is still very rigid, i think there is alot more, perhaps, essentially.

an example, is i sold a 50pip OTM puts and bought 100pips OTM puts, and price went down 200pips, instead of waiting for it to expire, i can close the short puts for a loss, buy long stock, and then see if i can sell a call ATM to get back the money or not.

essentially, anything which can be implemented using spot, can employ short sword skill from taf mo and integrate it into options mo.

essentially this means that, i can get 1x premium for the short OTM puts, when it goes down i can close it, let it go down further, then when it stops and reverse i can long stock and sell ATM, essentially, its a play on delta, gamma and theta, but not volatility.

premium decays with respect to price change in the shape of gamma curve.

Hmm, ok, i think i have been basing my options spreads on very bad data, 20pips for atm, as high as 40 for far otm. Jeeze they may as well rob people. Luckily i only put a extremely small sum in, definitely will close my account, spreads wise for spot, they quote 2x of average brokers and the impose a stoploss on you, so all trades must have stoploss and max is idk how many pips. When doing options trade, you dont want stoploss for a defined risk trade. Extremely fishy, dont think this one is legit. Well its easymarket if anyone is wondering.

Today i signed up a demo with avatrade instead, seems for a collar i only spent 7pips to establish the collar, 50pips wide so basically i got ripped of by the other broker.

Damn it, so i think this option thing really can work, if combined with the taf mo.

I think avatrade is legit for retail forex options, definitely will look to establish an account with them.

this is the bellcurve which the black and scholes use, unless its been switched to a levy distribution, levies are used mainly to account for stochastic volatility jumps, aka gaps or spikes.

the red box is where i want to optimize my strategy because price occillates around it about alot of the time, about 90% of the time, price mean reverts, the 10% of the time where tsunami happens, its more than 2 std dev, and collars can handle it, so technically with this collar strategy, we are always ready for tsunami.

so we may never even be able to get into death battle situations where book is over exposed.

the p&l return on capital can be modelled by, the function p = (1+r)^i

so basically if you want to ants work your returns, so as not to overexpose book, which is to keep r small, you can instead work with i, which is the compound factor, and if you spec it to the bellcurve's probability, you can create high probability, limited risk, high occurence strategies, except you give up the windfall profits. but in exchange for windfall profits, you get consistency.

additionally, splitting 1 army into 10 separate hit squads, and widen the profit area will allow for you to be able to stay close to the markets and widen your profit probability because your profitability range will be very wide.

how the 3legged animal can be worked into this is to follow the momentum and play with the money flow, and essentially, your ability to dance will determine your profits, luck is irrelevant.

Hello CookieMonsta,

I believe that your MO is getting more robust since it's grounded on fti's basics. If no Tsunami exposure, neither there's a high risk nor a lucky lottery.
I mean, within my MO, once launching an attack or counterattack, an extraordinary windfall still might occur/ be accepted (as in lottery, I would not dare to count the probability, something like 1: 100 000). But, it has never happened to me
(It's good to trigger 10x scouts size attack and get some 200 pips profit in a minute or so). I assume your former MO could also be open for such fortune, not the acting one.
Imagining, what could a big fortune make with an anthill (like a pig size pray fallen), perhaps just to destroy it both physically and mindset wise. That's a point for reflection.

Best regards,
Exnav

Hi exnav, thx for the post.

I think you mistook, I do not go 10x scout on the attack, what I meant was perhaps, if we layer in 1 squad at 1.1850, we can layer another squad at 1.1800 the another at 1.1750, essentially the martingale except with collars, except the collar is a customized usage where we have embedded deltas pass the strikes so, it's not quite martingale but a specialized form to make up for martingale's risk of ruin scenario.

I am currently testing this out if it turns out to be true, I will report the results back.

This mo is meant to complement and strengthen what taf mo with single pair cannot do.

There is money management within money management, and within that, there is mo with mo, there are no bounds, the only limit is the mind's creativity.

Hello CookieMonsta,

Thank you for your kind specification. No, I did not, that's my size. I would attack/ counterattack by troops at the number of 5 to 10 X Scout.

Presumably, you might be interested to look at the thread: "The REAL Traders Video Journal, 3-5% per month as a US trader". This trader is making a kind of martingale on swinging pairs.

Best regards,
Exnav

Hi exnav, noted,

will check the thread out, regards.

interesting exnav, the idea is very similar to the collar strategy, except i am using a custom collar to implement it.

I think gann's mo can handle both range and trend markets, the way he pulse the markets allows for it, therefore 89% win rate.

i see, the way to use indicators was not rigidly, was interpreting it with respect to price action and terrain.

price is likely to mean revert if it enters the moving average, keyword, likely, which is probability.

green box is nice clear trend, red box is entrance into possible mean reversion environment, as in a rangy market, it is likely to spaghetti cross.

alot of gut feel and interpreting of price action, it has alot of discretion, not really a rigid mo.

the way to use stochastic is, price must actually top out at the local area.

the key difficulty really is, when price is transiting it becomes difficult to trade, majority of problems occur when price is transiting from range to trend and trend to range, thats where the mo comes in.

what i have noticed in alot of indicator mo, is that they do not address this transition problem and they always become losing strategies because of the transition.

further, the reason why the taf mo is so strong, is because it allows for the transition of such states.

if you want to see how noisy a market is, count the frequency at which price intersects the moving average, and you will get a feel perhaps which state the market is in.

price is at daily highs, stochastics are oversold, but since price looks like its testing the highs, there is a good chance of stop hunting or break out, so definitely not a sell, also definitely not a buy, as we are in the middle of a move, but good to stalk for a setup.

all the experiments above with indicators are meant to recreate what possibly gann is seeing, to try to understand the discretion and skill in interpreting price action to identify market environment/terrain, it could serve me well as a swing trading method on higher timeframes, if i am unable to manage positions intraday and can only manage them from daily.

so the mo is as follows, identify condition, range or trend, then identify good entries, then if range 1 position only, if trend, pyramids allowed.

still experimenting, but preliminary results are good.

looks like the taf training to read pa really kicked in good this mo.

so for mo like these, majority of the edge comes from being able to read terrain well. this is good, it could force me to train my terrain read to be more accurate.

these are the do not trade segments, price in a tight coil, unless you do some form of re-averaging.

if you take it on the first candle, and if price for 2 to 3 days keep whipping up and down, you may want to just scalp out of it if possible.

Notice that in these sticks there is 1 commonality, which is that, the ATR is about the same as 1 stick. Which is bad when trading so far out in timeframe.

Knowing when to ignore certain indication is the key to interpreting the markets. As indicators have embedded assumptions in their study and is made to measure that dimension of the market.

Indicators help with timing, price action give you terrain.

To understand the nature of the river, you cannot study it from a bucket.

The significance of price entering the moving average, or the moving average catching up with price action, is there is a slowing of price momentum or mean reversion.

Additionally, there is 1 segment all indicators fail at, which is when price is transitioning from range to trend and trend to range. Therefore discretion to interpret and stay out or use counter strategies during these zones are key.

the hardest to handle may be the rounding top and bottom and the v top and bottom, 1 has very little time to react and little opportunity to view it, the other takes place very slowly.

Using indicators is like asking a question, for example, for stochastics, if market is in a range(assumption), where are we at now with respect to the range of the previous X bars? Essentially, you made 2 assumptions, 1 market is in a mean reversion range, 2 pass 80% down = down move beginning.

2 points, assumptions in the way you use indicators led to failure, verifying the assumption gives you conditional probability, which removes the assumption which is required for the system to work. Which is that, it's really the embedded assumptions which kills, indicators are really just tools to measure segments and dimensions of markets terrain.

Hence, the discretionary element in using stochastics is in terrain identification and verification, this is what is missing in most black boxes, because I tried programming 1, and I found this lacking and extremely difficult to program, but human instinct does a better job of terrain identification than machine.

You will see all black box systems either do not work at all, or simply work only the segment which they are optimized for, because they have embedded assumptions in it.

If you read the turtle traders book, actually, it's not a pure mechanical system, in the book, Richard Dennis did say at the end of the day, the turtles will have a discretionary call to see if they want the trade.

Hence, all mechanical system, input with human discretion can get an edge in the markets, the key wasn't the holy grail or probability, it's human discretion, that's what's tilting the edge, in your favour.

If you studied legends like wd gann, Richard wyckoff, Jesse Livermore, Paul Tudor Jones, fti and many more, they are all discretionary traders or at least have discretionary elements to their trading style, that should say something about pure mechanical systems, the evidence is irrefutable.

Hmm, I think I mismanaged my demo collar position, if I had held the reaverage buy and held the long from last week's spike down, would have been deep in the money by now. Sigh.

Spot leg is about in the money 1x, stop at 1.1920 for hedging, as short call strike is 1.1920 and puts bought is at 1.1820, and the strategy to handle it once it comes fairly in the money but you running out of clock space, is buy put spread to close it, deep ITM spreads have wider spreads, OTM spreads and ATM have tighter spreads. So boxing is best choice.

Another thought, to improve the collar mo, I can on top of splitting it into 10 hit squads and hit them at different price levels, I can go out in time to hit them too, so that my position can be diversified by timing too so as not to concentrate risk with respect to time axis. This may diversify against markets speed risk which is usually not a problem for spot only positions, but is a huge problem for options positions. Fti once mentioned about the 5 dimensions of options management, and this is one of them, speed of move, and path dependence, so I guess this is 1 way to mitigate such risk.

So 1 thinking process is that, to help with the path dependence problem, we can average the position out in time and price.

update on the collar position, we are 1 day to expiration, if i close now, its break even, if i try to let it expire, in the money, i run risk to handle this position, if i take profits on spot and let options ride, i will have to manage breakout risk for sold call. i can't flatten, no point, i lose all the profits.

i guess this options strategy needs more refinement.

hmm, ok didn't thought of this before, what i can try is, i close 1x call for $3 loss, buy another 10pip 1x put @ 1.1870, my p&l profile will be, maximum of $4 loss and and $50 gain, and final p&l factoring in all trades, will be -10 to +40, so its about a 1 to 1 risk reward ratio.

if i don't do anything now, i will end up with either -50 or +50 final p&l.

i guess now is the time to play defensive. ok going for the adjustment, i guess the risk reward ratio improved.

opps edited i saw wrongly, my short calls are -6 for 2x, so now i closed 1x its -3 for 1x. so my loss will either be -10 or + 25.

opps have to adjust for the initial startup spread of 14pips @ 1xspot.

dam it, should have bought the 1.1890 calls, its only 2pips more, dam it, mistake.

so now max p&l is -40 vs +11, oh man, so many mistakes.

i guess i learnt alot today from these mistakes, this collar strategy works best when there are whipsaws, if it trends very strongly, but to flatten the position, its fairly difficult, maybe the volatility needs to be widen abit more.

if price expires now, i will lose $5.

i guess right at the start factoring in spreads, its -65pips to +35pips r&r.

so i think there is a relationship between strike width vs spreads, when strike width widens, spreads will not affect risk reward ratio as much, when strike width is smaller spreads become extremely significant when adjusting for risk reward ratio.

this is using 50pip wide spreads and going 1week out.

if i tried it using 1month out 100pips wide, long puts short calls, i actually receive a credit of 15pips, and if i did 2x its 30pips, because of the volatility skew and interest combination i guess(???) to be verified, and it becomes 100pips wide but advantage 30pips so it becomes, -70 to +130, and if i reaverage it 100pips below and it slingshots back 200pips, its 30+200+100 vs 70 = 330 pips vs -70pips, the risk reward ratio is huge. which also means that it works extremely well in mean reverting situations and trendy situations is probably good too. additionally, if price does not move at all, i am actually rewarded for 30pips.

think there is alot more for me to learn about this collar strategy, i still think it has potential.

It seems to me like, eventually, all non rigid methods will converge and arrive on taf mo.

I was trying to improve my own custom method for swing trading, to be able to handle whipsawy and rangy and trendy terrains, after that, it still looked more and more like the taf mo, the more I make it unrigid.

So I guess I was reinventing the wheel, in a certain sense, but it also brought me deeper insights as to why certain parts of the taf mo was done in a certain way.

Conclusion, just use the taf mo, with some restriction for my timing constraints.

So I guess 1 way to trade the custom method, is to use wyckoff's accumulation distribution to check for topping and bottoming formation, then use hourly to deploy troopers, to trade from swing to swing and I define 1 swing as 1 swing point to another swing point on the daily chart. Taf mo uses short charts 5mins, because of my time constraint, I use daily for terrain and direction, and hourly for management, if it hits pass accumulation /distribution formation, I cut losses. I have 6 units, all to deploy in 1 1 1 fashion, if trading higher timeframes, it may not be safe to use fibo skew, so I revert to 1 1 1.

The key implication is that, I use accumulation and distribution formation to measure volatility band for a limited form of martingale, so as not to run into the risk of ruin embedded into most martingale strategies.

The main problem with most martingale is, they do it even when the trend is against them, which is what killed their account, so theoretically if you bound the martingale by the volatility range you intend to operate in, you end up being trend following, and mean reverting at the same time, and if you follow the rules, cut losses short and let profits ride, a limited martingale bounded by technical analysis can have a strong edge in the market.

The function of reaveraging actually helps your risk reward ratio be held constant with a very dynamic market, and that's 1 way to get good percentage winners while holding on to the good risk reward ratio.

The key is being able to understand currently what terrain we are in, and manage positions in it.

Then you will see this is a very basic variation similar to the taf mo.

So theoretically, martingale's are a way to manage trades, it by itself does not have an edge, because martingale's helps only by helping you stay near market, if your direction is wrong, you still lose money, so main analysis timeframe direction still needs to be correct. Then when you do not limit winners when doing a bounded martingale, you end up being trend following and actually end up with a risk reward ratio opposite to traditional martingale.

Hence martingale's have operational/execution edge, but not directional edge or expectancy.

There are many kinds of edges, like execution, directional, fundamental, intermarket relationship and dealer vs retail (spread) edge, instrument edge and strategy edge, and more. Being able to use combinations of the above strengthens your ability to trade well.

Theoretically with a combination strategy, it should also avoid problems which plague trend following strategies of having extreme risk reward ratio but a probability below 50%.