(binned per thread starter's request) Market bottom rotation trad

sigh, so my mistake is the SL being too wide....... the real chance is where red check marked, but i wasn't there watching

DIS on track.

Was a solid attempt. Just didnt work out.

FNKO a solid pullback leg setup missed there.

Also OC.

GBPUSD tracking micro structure.

DIS long sold for gains. SL was set at X,26

EURGBP looking for long fill on retrace.

EURGBP covered at loss.

Russian rubble again placed at short term bear macro drive (USDRUB bull). DOJ conducting 12 Russian officials into election intervening which will very likely cause a further escalation point in the next days / weeks by futher sanctions. Timing wise its a bit hard to time this , but most likely the macro drive is in place as the moment of this post, however with softer impact. Will seek for bull plays in next days and expecting a delivery of further sanctions which will cause a spike in the RUB.

JBHT potential solid play but a bit more problematic since it looks like some strong short sellers are present, both disadvantage and advantage at same time.
Needs a strong momentum HH bake for consideration, chance to miss the entry is potentially high.

Coming for last 30 minutes of the day for potential end of the day short squeeze, low caps as priority focus or symmetric plays.

Nothing particular for last play, ZAYO on watch for pullback entry play but a B quality setup, small size.

EDIT: not worth it, pass.

second to that, it is purely waste to put fibo into a system. objectively speaking, it is just a 'random' thing. i've tested it too before.

i used to think price movement is all about key levels and how price react to these key levels. but that's apparently not enough.......

the most important thing that i learned from you on this thread is

symmetry

from symmetry to 'not symmetry' is where/when we start to consider entering........

btw, you are truly a master trader!

Yeh or with other words its about change of symmetrical consistent behaviour. Thats what drags attention to many people and what also has more likely the impact on the order flow. Especially when its fit into proper context. One can go from direction of strong symmetry or direction of strong context, strong symmetry is rare, but finding a great context is hard, usually the best way is to go about the middle on each of them. But generally if one can find strong context in the market most of the job is already done, since that will allow for trader to be more sloppy on the symmetry side or trade management and still get away with it.

by "context" do you mean 'fundamental' facts? It seems first time you used this 'context' word in such strong tone. Care to elaborate the 'context'?

Market overfitting strategy example, US equity index SP500 / US30 / US150

This is just case study to show why and how strategy work, what makes or fails one to deliver results and what can or cant be tweaked about strategy. If context in strategy is very strong it is easier to shape good strategy.

To relate to previous post about fibonacci and indicators in general one can construct two strategies with very different indicators using the same underlaying context and by analyzing and gathering data of strategy performance out of its norm its possible to see what makes a strategy tick, which variables are those that matter and which dont.
If two strategies have similar normalization path it is very likely that majority of added variables to strategy (indicators for example) do not contribute anything, the majority is contributed trough the context, especially if each strategy uses very different price areas for entry. The whole results are usually very similar to running a evoluation simulator with algo, most living beings are shaped under the context of given situation and exposure to envrionment and since those are static, the evolution in itself looking from macro view comes with very similar results even if run 1 million times over again. On macro scale looking from bird perspective, obviously from close up even a tiny change in middle will results in big changes later on if looked close enough.
The strategy developmnent is the same kind of thing. And what it matters mostly is the macro as that is what by itself is gona yield the result.

Normalization path differences between 5 different strategies. Each strategy is market overfitting strategy for US equity index, each of them long only but using different indicators or price action rules for entry. Normalization paths are too close to each other over 100 repetitions meaning that all those changed indicators contribute nothing to the efficiency, the majority of work is done by fitting it the right context.
And what that context is simply the fact that 70% of time (very rough estimate) US equity markets will slowly but surely move higher baking HHs on low volatility moves. So if one overfits long only strategy to such process with decent risk management chances are it might work. The point is not how much money it makes, because it wont make millions unless its traded on million USD account, the point is to show how important is the scale of context to strategy itself.


It also shows how logic might fail if one only uses logic and doenst test things. For example, the strategy 1 used Stocastic and ADX indicator as part of entry confirmation (under 20 for long) , strategy 5 used only mark of new all time high as entry and price being above 30 MA. Now a trader only using logical view might find either of those superior and expects it to work much better from the other strategy its compared too, but in reality data points are very close to each other.

Bellow is explained how HH bake of new all time high was used as initiation. Basically the whole point is to trade the slow upwards grinding move in index where the grass is green and all is fine in markets. Using 30 MA as entry filter (price has to be above it) and for entry it was used for price breaking trough the new all time high, using tight SL and aiming for 7-10 R on profit side, using strictly H1 chart. Very easy strategy to master and it works, but the reason why it works is what is important.


For market overfitting strategy if it wants to work, context has to be strong. What builds a strong context for long only such strategy are few factors that contribute to how US equity index behaves.
-consistent inflation. Inflation that is in US about 3-8% depending on data considered, is a first reason why equitiy index should behave with upward pressure, higher inflation prints higher equity index numbers.
-safest capital market in the world, since EM crysis is around the corner every 8-10 years on average the cycles of capital outflows are guaranteed and can last a while pushing capital into US (currently at present for example).
-Human population is a positive productive force no matter the downsides and short term bear macros, the economy of each state is positive productive force, which is bullish on equity side.
-history. Recorded historical data says that all above is true.

Thus the context built is strong especially if that can be actually proven by historical data of US equity index, if the price behaviour confirms it, the context is likely to be correct.
So in nutshell that is what will make such strategy tick. But each strategy has upside and downside, the downside of such strategy is that it might not be worth the time unless one has decent account to trade or a low expectations of the profits.
Developing and testing such strategy can be an excellent guide to see what works in market however and what doesnt, and what it doesnt----why it doesnt, or why it doesnt matter. There is no better way to confirm or reject the efficiency of indicator than by strapping it to such market overfitting strategy, its basically like having a sport team thinking that each individual in team is what makes team strong, but once that team is placed consistently against play action overfitting team one can easily see which of players are not contributing much at all. Emperor without the clothes basically.

Yeh thats a good question how do you explain a context. Lets see what wikipedia has on it

Context is "a frame that surrounds the event and provides resources for its appropriate interpretation"

Looks like they nailed it. With a simpler words one could say context is what you are trying to fit your current view of data into, to something that has already happened. And those "resources" as named on wiki need to be a 100% stated fact, something that isnt ones subjective view, its something that is pure fact. For example if you have a strong impulsive move with bull candle after bull candle up on M1 chart, and then 10 minutes later you say that your context is huge market order move which shows an expression of strong demand increase then that would be a fact. So no matter what kind of view you are projecting into that (going short or long based on that context), your context is 100% fact. So the context can be fundamental data or it can be purely technical or it can be something else, but what it needs to be is realistic and proven fact. If it isnt then chances are, strategy wont work.

In trading you need to have a context, something realistic that you are projecting your current view based on context of data that has already happened or is happening right now. And the worst one can do is to fit view into something where context is not suited with.
For example if you had a long only strategy of buying high cap equities in the Sunday expecting a short squeeze while having no short interest data at all, that would be a very bad approach because in majority cases there would be no large upward move in Sunday simply because short interest on such assets is rather small compared to whole float. So the context used would be bad, because...it simply is not true, by that one is making wrong assumption which doesnt hold reality.

So the strenght of context is the strenght of actually what is on going, and the stronger that context is surprising or fresh likely the stronger your view is, because it will be under priced.

The above post shows example of strong context.

To use some analogy what you could call a context is for example some behaviour that can be 100% proven and is very consistent. For example saying that adding an Oil to the pan will make pan much hotter than if Oil is not in it. Its a test if replicated 100 times, it holds almost every time to the truth. Thus that could be now your context, and now on top of that whatever else happens is what you are fitting your view into. So now lets say you droped some meat into pan, now your assumption would be.....the context makes pan hotter, thus my meat cooking time should be shorter to not burn the meat. You are fitting the right assumption into right context. And thats basically how you can view context in trading.
The most important thing in trading context is that context really should be as factual and accurate as possible, because fitting any data to wrong context (non performant) is going 100% yield bad result.
I used religion as example before, if your context of science comes from Bible for majority of sciences, then any view of reality you fit with such context will fail short every single time, or at lest in most cases.

GBPUSD bear macro target baked in Friday. Didnt catch any micro plays along the direction. An example of play where to context was right one, and thus the macro play worked out. Unexpected political situation develpment with soft shock fitting the projection into right context. Markets hate unstability of goverments and that was main factor to this context, as usually that causes selloff, and the extent of selloff and projected target depends on how strongly market reacted on the information on the spot, that could guide trader to how much more is around the corner based on how bad situation is. In this case it wasnt very bad, thus target was rather small.

When it comes to fundamental context, there is a "hotmap" that is a good guide to see how far could market go, its similar to maps that Bridgewater uses for their dot plots but more simplified. A trader should ask himself and establish few points about context.

-First it should be established 100% if context data is bullish or bearish that is a must. If unsure go and test it and figure it out or ignore it. It has to be established.
-Then check price, how strongly have markets reacted to it, if very soft and trader projects context is very strong, macro target should be large, but it totally depends on what that context is related to.
-Is context very hard to figure out, will most of institutions that can plow trough millions on research not be able to see what trader sees? Or will they be able to? Very important, being contrarian is fine, but in markets one has to be aligned with reality of what other people see too. That is why ignorant contrarians very often fall short. Its not about ego, its about understanding how world ticks.

The biggest problem traders will have is with first check. Is it bearish or is it bullish, that will basically cause majority of headace, simply because if markets are looked from over-simplified perspective one can always find a bullish reason for the bearish counterpart. Only when apples are compared to apples and not oranges and the whole fruit market is taken under analytics only then a right view is to be established. There are two ways to get that, one is to have extremely narrowed context that one is trading and research about that very very specific context anything is needed that is best way to go, but.... that is very difficult, or the other way to keep gaining more and more general data and then be efficiency minded, what data is efficient and what is not and discaring non efficient data. Data that cant be executed on or tested is not needed. Its just an art, not an execution tool.

DBK just took off, looking for micro longs