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Technical Analysis Fallacy

  • #58,081
  • Edited 11:41am Jan 10, 2019 10:55am | Edited 11:41am
Btw, if market counter impulses, may not be prudent to stay or hold size, usdchf is too strong today up, ro3k out of sync, somethings up.

Too persistent eurusd and usdchf, making me feel not comfortable

Sweep? Check usdchf.
Still not sure yet, very fuzzy what the markets attempting.

Ok, you know what wrong read on my part, only thing right is the pa not in sync, damage control time.

Locked in loss and done for the day, rescue when hourly inline, no point letting loss snowball like that. If no impulse rescue will be hard.
  • #58,082
  • Jan 14, 2019 2:04am Jan 14, 2019 2:04am
Hi CookieMonsta,

Can you explain me details of RO3K.

I have basic understanding like it is relation between EUR/USD, CABLE and CROSS (UDS/JPY). i also know First two are highly correlated in positively direction, and last one is negatively correlated.

What happens when it is out of sync. I read on this thread that this out of sync because of Major pairs which has impact on crosses.

What to do when they are out of sync. how to know it, how to profit from it.

Regards,
-Ant
  • #58,083
  • Edited 5:33am Jan 14, 2019 3:54am | Edited 5:33am
Quoting antmindset
Hi CookieMonsta, Can you explain me details of RO3K. I have basic understanding like it is relation between EUR/USD, CABLE and CROSS (UDS/JPY). i also know First two are highly correlated in positively direction, and last one is negatively correlated. What happens when it is out of sync. I read on this thread that this out of sync because of Major pairs which has impact on crosses. What to do when they are out of sync. how to know it, how to profit from it. Regards, -Ant
Hi, antmindset,

That view you got there is a more restricted view of ro3k, mainly that the assumption of correlation, is rather rigid.

If you go back to the first 200page you will see fti give the basic overview, the core is USD, then the allied currencies, EUR, GBP, jpy, then CHF and then commodities currencies, which are aud, nzd and cad, them the rest are emerging markets. Recently chinese yuan seems to be rather influential in a other currencies as well being their major trade partners.

So when we look at the above, the correlations are a result of trade partnerships, or other factors, such as GBP being in eurozone hence a pegged relationship is seen, hence eurusd moves together with gbpusd, but with the recent Brexit issue, eurgbp has been trending, implying possible tearing of eurusd and gbpusd relationship.

When all of ro3k lineup implies maybe a good wave is coming, so if inline with your position, it's good for attacks. So watch for momentum coming in.

When out of sync, like last Thursday/ Friday, it may imply cross currents, either choppy markets or something huge happening, so be nimble, stay on low skew unless say eg.
Markets churning on eurusd, so stay low skew, if oon usdchf, markets strong up and relentless, impulse is clearly up, attack if in favour.

Regarding cross, it's natural since, all crosses are quoted from a formulae from their USD pairs, say, eurusd and gbpusd will be used to produce the cross rate for eurgbp. So there is a fixed relation ship between 2 majors and their cross, go check out the triangular arbitrage relationship, it just implies, 2majors and their cross should be quoted inline.

Btw, ro3k helps with read of terrain, as for profits, it still depends on your current pair's volatility and terrain if it is willing to go in your favour. So to trade for profits, it's still the mo provided here to dance the markets. Ro3k is meant mainly to give a better sensing of terrain.

Btw, yen keeps tearing these days, so the analysis of yen may not stick so closely to other pairs in ro3k. Mainly keeping in mind that eurjpy, gbpjpy and audjpy are heavily traded pairs so flows from these can influence usdjpy.

E.g. long eurusd, short gbpusd = long eurgbp, so eurgbp should not be quoted out of line otherwise you make risk free profits, but these are dealers tools, so factoring in spreads, retails can't profit this way, so best way is to dance, crossing out is meant to cross out certain currency effects.
  • #58,084
  • Jan 14, 2019 5:33am Jan 14, 2019 5:33am
Quoting CookieMonsta
{quote} Hi, antmindset, That view you got there is a more restricted view of ro3k, mainly that the assumption of correlation, is rather rigid. If you go back to the first 200page you will see fti give the basic overview, the core is USD, then the allied currencies, EUR, GBP, jpy, then CHF and then commodities currencies, which are aud, nzd and cad, them the rest are emerging markets. Recently chinese yuan seems to be rather influential in a other currencies as well being their major trade partners. So when we look at the above, the correlations...
Thank you so much
Really appreciate the detailed explanation you have provided.

Let me digest this, it may takes couple of days to understand this properly, knowing will take its own time.

Regards,
-Ant
  • #58,085
  • Jan 14, 2019 5:36am Jan 14, 2019 5:36am
Quoting antmindset
{quote} Thank you so much Really appreciate the detailed explanation you have provided. Let me digest this, it may takes couple of days to understand this properly, knowing will take its own time. Regards, -Ant
No probs, if you want a more in-depth understanding, look through the 200pages, also pass the 200 pages where it's live trade chatter, especially Fti's conversation with others whom learnt it before us, it has more in-depth analysis than what I wrote. Specifically those to do with from conversing with others, and not the lesson, as the conversations hold many nuggets which at first sight you may not be able see from the lessons. The lessons are the main structure, the conversations hold the experience

So the main lessons give you the main knowledge structure, the nuggets help you connect the dots, enhance your core understanding as well as help show you variations of how ro3k can manifest.

Btw, if not in any position, best to stay out, tomorrow has Brexit vote, it's going to get crazy.
  • #58,086
  • Jan 17, 2019 12:11am Jan 17, 2019 12:11am
Guys,

What should be maximum rescue skew for account size to trade.

I am using 1000 unit lot. which is 1 pip = 10 cent.

How many time rescues, we should rescue before biting the bullet.

Regards,
-Ant
  • #58,087
  • Edited 3:17am Jan 17, 2019 2:50am | Edited 3:17am
Quoting antmindset
Guys, What should be maximum rescue skew for account size to trade. I am using 1000 unit lot. which is 1 pip = 10 cent. How many time rescues, we should rescue before biting the bullet. Regards, -Ant
Hey antmindset,

What's your account size as well as skew progression?

Usually by 30% exposure, you will be entering death battle situation.

Let's say for the sake of example, if you are using the fibo skew, at 30% exposure, you will be needing 30%*1.6 which is 48% for next trooper level, net total = 78%, implies you have no more troopers to effectively conduct rescue.

Note that skew size increment is not size increment, if you are using fibo skew size, each skew size is increasing at 1.6x and that means with each rescue your total size is increasing at a rate of 2.6x (current which is 1x+rescue which is 1.6x) per rescue.

E.g. if first scout is 2x, rescue is 3x (approx 1.6*2), total = 5x (approx 2*2.6)

This is covered in mm and is the function of log arithmetic and some geometric forms mm.

Note, this assumes you are not leveraged, but if you are, you will reach it even faster. As now you have 2 pieces consuming your margin, actual loss and margin for troopers.

As suggested before, one of the suggestions earlier in the thread is 3x daily profits, once you reach this, it may be better to take loss. This mainly ties to how well can you recover from such losses, and remain consistent and profitable long term.

For example if you are only interested in putting 2% capital at risk, then you do the mm calculation and see if you can net at least 0.67% per day consistently, but if you can achieve more than 0.67% that's great, then move on and adjust from there.
  • #58,088
  • Edited 8:17am Jan 22, 2019 5:20am | Edited 8:17am
hi,

i have been following master's method for many years, but i am in and out of the market due to personal reasons. i burnt several accounts demo and small real accounts. at last, i am able to get some slight grip and see positive signs. i am only trading US Oil because its shadow is available to trade in my country. (sending my currency to open foreign capital account is illegal in my country)

demo account
capital : $1000
instrument : US Oil
leverage : 1:400
scout : 0.1 lot (each small move costs $0.1) this is my 1X
rescue : (1x scout), 3X, 8X
attack : (1x scout), 1X, 2X, 3X

What is the problem with this attack and rescue in terms of size (x). this is my live trading result which i started trading from December beginning. Please enlighten.
  • #58,089
  • Jan 23, 2019 1:12am Jan 23, 2019 1:12am
Hi pannet1

Good to see you around again.

So we all use the skews differently from what I have seen, there is no wrong or right way that works in all situations, personally if had your full attack size in and needed to rescue I would use the attack 8x as the new scout and work from there, but that is me and that may not be right for you and your account size to trade size over what you are trading, my main aim would be to work the average price into the current legs at what I thought would be the start of the retraces so it was above/below the current trend last high/low as this will give me a better chance of rescue in my view, but this is just my view of the basic rescue plan that I have.

Regards

Phil.
-be careful about what you allow to be put in your mind-
  • #58,090
  • Jan 23, 2019 4:55am Jan 23, 2019 4:55am
Oh Phil,

First, I remember you very well. You patiently almost hand held me in this journey on several occasions. Thank you once again.

Second, I understand now from you words my learning of the attack is completely wrong. Suppose if i am long and in with the scout and price is trading comfortably above my entry, i enter into my next attack sequence. if price moves against me, i cover my original scout and the new attack soldier (1x) becomes my scout. if price moves further against me I go into rescue mode.

I think, i should start filling my journal thread to elaborate.

Third, I am very comfortable with my MO but how can i find out if my basis 1X is really sharp enough for the account size. How can i calculate it from Account Size.

PS: Incoming update. Just completed my CRUDE rescue

Attached Image (click to enlarge)
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Quoting phil13
Hi pannet1 Good to see you around again. So we all use the skews differently from what I have seen, there is no wrong or right way that works in all situations, personally if had your full attack size in and needed to rescue I would use the attack 8x as the new scout and work from there, but that is me and that may not be right for you and your account size to trade size over what you are trading, my main aim would be to work the average price into the current legs at what I thought would be the start of the retraces so it was above/below the current...
  • #58,091
  • Jan 23, 2019 6:32am Jan 23, 2019 6:32am
Hi Pannet1,

Which Trading platform you are using. I think Zerodha is great for forex and commodities.
  • #58,092
  • Jan 23, 2019 8:24am Jan 23, 2019 8:24am
Quoting antmindset
Hi Pannet1, Which Trading platform you are using. I think Zerodha is great for forex and commodities.
hi antmindset,

zerodha sucks big time. i am dealing only with US OIL presently (demo). If i go live i will use another broker.
  • #58,093
  • Jan 23, 2019 10:01am Jan 23, 2019 10:01am
Quoting pannet1
Oh Phil, First, I remember you very well. You patiently almost hand held me in this journey on several occasions. Thank you once again. Second, I understand now from you words my learning of the attack is completely wrong. Suppose if i am long and in with the scout and price is trading comfortably above my entry, i enter into my next attack sequence. if price moves against me, i cover my original scout and the new attack soldier (1x) becomes my scout. if price moves further against me I go into rescue mode. I think, i should start filling my journal...

Hi pannet1

No problem my friend, I was helped here and all that was asked of us was to help others and give some of any excess money we may create to good causes, so just trying to give a little back.

I was not saying what you were doing is wrong, I was just giving an example of how I would do it now using only the original trade direction to trade/recover in, there is no wrong or right way, every situation we create in the market for ourselves is different, those comments were just a basis to work off.

To answer your question, if I understand correctly you have entered the scout and the first attack when price then goes against you, so you have 1x and 2x = 3x total in trouble, so yes the way I would do it now is 3x would be my next rescue entry so I would have 2 scouts at 3x, the sequence is 1,1,3,5,8,ect, you simply add the last two numbers together, so if i was to rescue on your 3x entry (scout and first attack level) my skews would be 3x,3x,6x,9x,15x,ect but as I say that is just how I would do it and there are many many ways of using these skews to create an advantage to recover or attack, my aim as I said would be to get my average within the last leg as I described.

The other question on finding out if your skews are sharp enough for your account I can not answer, you have to test (in demo) your skews to destruction and back to find your own personal tolerances, everyone has a different tolerance to account size to trade risk size over what ever you are trading, remember fti has said it is prudent not let losses exceed 3x your rough daily profits.

Good to hear you have had another successful trade, long may it continue my friend.

Regards

Phil.
-be careful about what you allow to be put in your mind-
  • #58,094
  • Jan 23, 2019 11:26am Jan 23, 2019 11:26am
I'm unsure if this is even relevant, but given the title of the thread I thought it worth sharing.

I remember being young and developing technical analysis skills. (I was a terrible trader at the time but my analysis was spot on; bad mm) And an old family friend, who was a rather wealthy, fundamental-type old man, called me a parasite for utilising the hard-work of investors.

Took me awhile to even comprehend what he said, and I eventually just forgot about it. But later I realised that all of those intelligent investors, the quantum physicists and the mathematical algorithms lead to only 3 things. BUY - SELL - HOLD. There really is no other option.

So when these intelligent systems make their move, technical analysts simply ride their genius by knowing their actions through price action. Large buying before a significant event, for example, leads to a pretty stable conclusion. Thus parasite in some sense of the word.

The logic might be flawed but it's the way I look at it. Would love to hear thoughts from others.
Humans are naturally hardwired to avoid and detest uncertainty.
  • #58,095
  • Jan 23, 2019 12:02pm Jan 23, 2019 12:02pm
Quoting phil13
To answer your question, if I understand correctly you have entered the scout and the first attack when price then goes against you, so you have 1x and 2x = 3x total in trouble, so yes the way I would do it now is 3x would be my next rescue entry so I would have 2 scouts at 3x, the sequence is 1,1,3,5,8,ect, you simply add the last two numbers together, so if i was to rescue on your 3x entry (scout and first attack level) my skews would be 3x,3x,6x,9x,15x,ect but as I say that is just how I would do it and there are many many ways of using...
i get it. i get it. thanks phil. one cannot recommend a sequence for others.

But my problem is the mindset itself. My full attack sequence is scout, 1X, 2X, 3X. Assuming I am long and i add positions on breakout of the short chart. The attack becomes rescue immediately when the low is tested. Is this cowardly act acceptable. For example:-

1st level attack changed to rescue
scout, 1x, -1x, ...... rescue mode

2nd level attack changed to rescue
scout, 1x, 2x, -3x .... rescue mode

3rd level attack changed to rescue
scout, 1x, 2x, 3x, -6x ... rescue mode

Never i have succeeded in crossing beyond 2nd level, mostly attacks changes to rescue at level 1. You could have noted that when entering into rescue mode from attack, i always leave behind my 1x (scout). This way i have a comfortable rescue mode in cards that i am used to. But the question is if this form of cowardly attack accepted.

Quoting phil13
The other question on finding out if your skews are sharp enough for your account I can not answer, you have to test (in demo) your skews to destruction and back to find your own personal tolerances, everyone has a different tolerance to account size to trade risk size over what ever you are trading, remember fti has said it is prudent not let losses exceed 3x your rough daily profits. Good to hear you have had another successful trade, long may it continue my friend. Regards Phil.
one big looser was 9% of my account size and max drawdown so far, but profits are very very small, because mostly they were bail outs. i am also not able to stay long in the big winners because of the cowardly act explained above. so need to look at increasing the daily profits without increasing the scout size x. But how ?
  • #58,096
  • Jan 23, 2019 1:26pm Jan 23, 2019 1:26pm
Hi pannet1

So, if you look at it all as just trading, some trades are easy and some are harder maybe that would help with your mindset about what you are doing with the skews/trades, to me I do not look at things as attack/rescue for me it is just another trade to deal with the best I can manage too, who can ask for any more than you doing your best? We all make badly timed entries for a number of reasons, the worst one being at the moment the news being released unexpectedly via twitter ect, accept what we do is hard and all we can do is our best to manage the situations we create for ourselves, why should anything in trading be cowardly or brave…. Ants work, build your nest slow and steady piece by piece on good foundations. No one who tries to trade can be called cowardly YOU choose to try to do one of the hardest jobs in the world where about 95% of people completely fail.

The only way to increase your daily profit is by using bigger trades but then you need a bigger account, it is a dilemma we all face, all can say is do not risk anything you cannot afford to lose.

Ask yourself are your comfortable with what you are doing? If so then you are doing the correct thing for you at this point in time, if not then ask why? And be true, is it greed, boredom of using small sizes, wanting to run before you can walk, wanting to change your situation and it is not happening fast enough? Or just lack of confidence in what you do, if it is a confidence issue then try to root it out and adjust your tolerances slowly to where you want to be, it is all part of the learning curve we all go through sorting out our issues, mindset is the hardest part as the mind will fight for its ingrained beliefs that it knows it can survive with, it is hard to accept new things and adjustments that do not fit with stuff we have experienced so far.

Regards

Phil.
-be careful about what you allow to be put in your mind-
  • #58,097
  • Jan 23, 2019 1:40pm Jan 23, 2019 1:40pm
Quoting CannonScout
I'm unsure if this is even relevant, but given the title of the thread I thought it worth sharing. I remember being young and developing technical analysis skills. (I was a terrible trader at the time but my analysis was spot on; bad mm) And an old family friend, who was a rather wealthy, fundamental-type old man, called me a parasite for utilising the hard-work of investors. Took me awhile to even comprehend what he said, and I eventually just forgot about it. But later I realised that all of those intelligent investors, the quantum physicists...

Hi CannonScout

A parasite just takes and gives nothing back.

We cannot move the market, but just because some are aware enough to have put lots of work into trading any particular way to be able to follow some moves and make something from that how does that make them any less worthy of some profit than anyone else? Not all trades are winners unless you are the exception, a lot of trading is/was done by ‘who you know’ rather than what you know, fundamental and technical traders do the same thing ‘make a best guess’ at direction, that is it, that is all anyone can do, the rest is down to money management and experience.

Regards

Phil.
-be careful about what you allow to be put in your mind-
  • #58,098
  • Jan 23, 2019 6:29pm Jan 23, 2019 6:29pm
I think technical analysis is valid. You must understand that the market is manipulated and technical levels are used because that's where the money is. You just have to be on the correct side of the trade (buy or sell).
  • #58,099
  • Jan 23, 2019 11:29pm Jan 23, 2019 11:29pm
Hi phil,

I cannot thank you enough and at loss of words. I got answers to my questions and i get the picture of the mindset i should strive for. At present the rescue terrain is bigger because the limited sequence need to be distributed across. There is no reason to stretch the attack terrain to such a bigger extent and could move swiftly at the first available instance.

I will work on those lines and post in my journal, so the flow of this thread is not disturbed. I will ping you once I am done.

Thank you once again.
Quoting phil13
Hi pannet1 So, if you look at it all as just trading, some trades are easy and some are harder maybe that would help with your mindset about what you are doing with the skews/trades, to me I do not look at things as attack/rescue for me it is just another trade to deal with the best I can manage too, who can ask for any more than you doing your best? We all make badly timed entries for a number of reasons, the worst one being at the moment the news being released unexpectedly via twitter ect, accept what we do is hard and all we can do is our best...
  • #58,100
  • Jan 24, 2019 3:40am Jan 24, 2019 3:40am
Quoting pannet1
Oh Phil, First, I remember you very well. You patiently almost hand held me in this journey on several occasions. Thank you once again. Second, I understand now from you words my learning of the attack is completely wrong. Suppose if i am long and in with the scout and price is trading comfortably above my entry, i enter into my next attack sequence. if price moves against me, i cover my original scout and the new attack soldier (1x) becomes my scout. if price moves further against me I go into rescue mode. I think, i should start filling my journal...
Remember not everything should be rescued - what if you are dead in waters against main trend versus just mistimed (where you are getting in at discount)/ what if you are in very deep pullback/ what if volatility against trend has increased could it be reversing/ what if trend has actually changed. Then Ro3k should be considered too.

As for the numbers - play with them yourself to review the nos and what you can handle. Also for rescue I would advise you to do a search on the thread and read FTI posts on rescue for strategies and thoughts - they are invaluable - he gives you info to work from on the numbers too.

Hope that helps.

Alex
check out the terrain - follow never lead
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