Plutonite's Trading Manual | Page 7 | Forex Factory

Options

Go to
Permalinks
Print Thread

Similar Threads

Automated trading vs Manual Trading 28 replies

Manual Trading vs Automatic Trading - Suggestions? 58 replies

Plutonite's Dynamic Trailing Stops 24 replies

Plutonite's Live Journal 103 replies

Mechanical Trading vs Manual Trading 27 replies

Attachments: Plutonite's Trading Manual
Exit Attachments

Plutonite's Trading Manual

  • #121
  • Jul 11, 2007 9:25am Jul 11, 2007 9:25am
Quoting Pip Meister
You said earlier...and I quote, "So why is this interesting? Well, think of this..if you threw those pebbles all at once and you slowy took a survey of about 47 out of 50 distances..imagine you found 5 pebbles that were already at 2 standard deviations away from the mean so far. Now before you look at the rest, you can practically rest assured that they will be closer to the mean than the 5 outliers, because of the nature of "randomness". Since you've already reached the normal limit of numbers that have strayed from the mean, the rest should (provably) be closer. Do you see the dollar signs now?"

Could possibly elaborate a little more for me on this? You said we could ask! lol.

PM
Hi again!

Thanks for asking. What I was saying there was that when we want to make predictions on the market, we obviously do not have the future data with us, but we are trying to make a statement about the next few bars' closing prices (which we liken to the distance of pebbles from you, as random numbers produced in one variance-limited set). In theory, even if we consider these closing prices to be completely random, they should be variance-limited to their mean, i.e they can only go so far from the mean before heading back. And as this distance/price difference approaches 2 standard deviations or exceeds it, the probability of reversing becomes 95%.

The problem is that we have no way of knowing when the market is going to change it's sentiment/the distribution of random prices which we are referring to, so we cannot make the same mathematically-proven statements about closing prices as we can about the pebbles. If you throw more pebbles with another throw of your hand, the 2 set are not necessarily related, in other words.

Still, the information is not useless. It gives a reasonable measure of the market position, and in absence of huge news it can be used very easily. Combined with our understanding of the market, our following of day-to-day market sentiments and some good experience with price action, we can make lots of pips. Hope this helps and..

Good luck.
Virtue finds and chooses the mean. Aristotle, Ethica Nichomachea
  • #122
  • Jul 11, 2007 11:17am Jul 11, 2007 11:17am
That helps a LOT! Thank you very much....I look forward to more charts and examples!

PM
  • #123
  • Jul 11, 2007 2:54pm Jul 11, 2007 2:54pm
So are you looking for Bullish or Bearish Candlestick Formations for reversals along with a combo of the other things on the chart?

PM
  • #124
  • Jul 11, 2007 3:07pm Jul 11, 2007 3:07pm
Quoting Plutonite
I am not trading off scrat (linear regression mean) or standard dev means/bollinger or vegas. I am using all three to judge the situation in the market. And when they coincide with the vegas fibs they usually give very neat price action. Will show examples of this later.

Good luck
-P
Pluto, this all sounds very good, but also very discretionary, which is to be expected with most successful traders in the market. Perhaps on your next trade (or some previous one you've taken), you could walk us through your thought process in evaluating these levels and how they relate to price. That would be very helpful!
  • #125
  • Jul 11, 2007 5:38pm Jul 11, 2007 5:38pm
Quoting JoshDance
Pluto, this all sounds very good, but also very discretionary, which is to be expected with most successful traders in the market. Perhaps on your next trade (or some previous one you've taken), you could walk us through your thought process in evaluating these levels and how they relate to price. That would be very helpful!
That's very true Josh, it all comes down to how you evaluate the price movements in light of what is going on in the world.

I don't like to keep a journal here as this is more of a "manual" than a journal, but I've been posting my trades lately on the respective pair threads (USD/JPY, GBPJPY..etc). It's more fun that way, with everybody joining in and all the camaraderie and all that. I'll do one or two here as you like though, because..because..because I love you!

Virtue finds and chooses the mean. Aristotle, Ethica Nichomachea
  • #126
  • Jul 11, 2007 6:42pm Jul 11, 2007 6:42pm
Awwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwww.............
  • #127
  • Jul 11, 2007 8:01pm Jul 11, 2007 8:01pm
Quoting Plutonite
That's very true Josh, it all comes down to how you evaluate the price movements in light of what is going on in the world.

I don't like to keep a journal here as this is more of a "manual" than a journal, but I've been posting my trades lately on the respective pair threads (USD/JPY, GBPJPY..etc). It's more fun that way, with everybody joining in and all the camaraderie and all that. I'll do one or two here as you like though, because..because..because I love you!

Yes, this method is very very intriguing to me, I have been backtesting through charts and trying to get an idea of how to react, but I look at your examples and I am scatch my head.

What pairs do you like best for this? besides usd/jpy and gbp/jpy?

great thread btw
  • #128
  • Jul 15, 2007 10:30am Jul 15, 2007 10:30am
Hi Pluto,
I´ve read your thread last week and did some visual backtesting this weekend.
I must say I´m starting to see the light. ( amen )
I made 450 pips in januari backtest and 380 in feb.
This is still a lot less than you I supose.
I am leaving a lot of pips on the table.
Please can you tell me more about the actual entery and exit proces. ( do you wait until candle close etc.)
Do you also reenter when a trade goes against you?
I realy want to know more about this way of trading.

Thanks

Johan
  • #129
  • Jul 21, 2007 7:36pm Jul 21, 2007 7:36pm
any update... plutonite..
The future depends on what we do in the present.
  • #130
  • Jul 22, 2007 3:13am Jul 22, 2007 3:13am
Hi folks!

Sorry for my short absence, I know I was sorely missed (sarcasm detectors on please) :-)

I was touring various coastlines along Egypt's northern coastline and the Red Sea to the east. The north (Alexandria..etc) has absolutely stunning weather, simply paradise, but the beaches - and the..umm..people on the beaches - are a lot prettier to the east. Russia has invaded Egypt with an ultra top secret weapon called "The Blonde". I was a good boy though, was with friends, oh well.

Now that I am back I'll try and post something soon. I hope those of you looking to rid themselves of various forms of nonsense concerning trading the forex and futures markets have made use of the little info I provided. Hope you guys had a great summer too
Virtue finds and chooses the mean. Aristotle, Ethica Nichomachea
  • #131
  • Jul 22, 2007 11:22am Jul 22, 2007 11:22am
Quoting lepiricus
Yes, this method is very very intriguing to me, I have been backtesting through charts and trying to get an idea of how to react, but I look at your examples and I am scatch my head.

What pairs do you like best for this? besides usd/jpy and gbp/jpy?

great thread btw
Hi

I use anything under the sun with these methods, but the more heavily traded a pair the more I like it, because the millions of factos involved help insert some decent "rendomness" which serves us well. Also, major pairs usually behave more logically than others in certain situations, as large investors move in to correct prices, plus the fact that it is more difficult for the large currencies to be manipulated by a single entity(like a bank with an agenda). All of the above make the majors (EURUSD, GBPUSD, USDJPY..etc) pretty attractive, but I also trade GBPJPY and any other pair that is trading in ranges big enough to provide decent return on investment. I don't like to put tons of margin into a EURGBP trade that yields 20 pips in 5 years

You will understand more as we do more (and live) examples. Hope it helps, and good luck!
Virtue finds and chooses the mean. Aristotle, Ethica Nichomachea
  • #132
  • Jul 22, 2007 8:44pm Jul 22, 2007 8:44pm
See you are taking in the sights. Hope you are enjoying yourself.
I am enjoying your post..keep them coming.

Dave

-We are stardust, we are golden.

- and we've got to get ourselves back to the garden - CSN
  • #133
  • Jul 23, 2007 9:08am Jul 23, 2007 9:08am
Plutonite,

Can you talk more abt exit ?

How you go about planning exit level ??
The future depends on what we do in the present.
  • #134
  • Edited 7:48pm Jul 23, 2007 7:45pm | Edited 7:48pm
Quoting compro99
Plutonite,

Can you talk more abt exit ?

How you go about planning exit level ??
--------------------------------------------------------------

Well, we use some of the lines we've drawn all over the place....
A quote from page 6, or thereabouts...

From Plutonite...
"In the USD example, the price rebounded off the band (26th Jun 12:00) as per the maths, but the market sentiment drove the yen crosses down again. We can cash in some profits to see what happens, and looking at all charts at the same time we see that GBPJPY still has room down to go, so on violation of the USDJPY low we enter short for a nice 50 pips or so UJ (120 on GJ) and quit right before the expected rebound at the vegas fib.

When GBPJPY reaches the very strong variance threshold and rebounds nicely, we enter long again on both pairs (see the white circle on chart 1b) and keep the long until fibs reached on the other side of either pair. Again, SL at the predicted low, which is not violated this time. GJ faces the resistance first (after another 200 pips of profit) and we cash in and watch the market. Nasty price action here, and UJ price action leads to a risky short with SL at the high.

The UJ short gives another 100 pips or so with slight hesitation at the bollinger band, but we hold on until the conundrum of bands and fibs at the second white cirlce of the UJ chart (1a). We enter long on convincing price action at July 3rd, 20:00 CET, and we aim for the sensible target at 123.40, which is reached before friday close for another 100..."

So, basically we use the bands and fibs to enter, and also to exit. We are entering at the "bottom" of the direction of a bull trend, and exiting at the "top" of the trend using the fibs and bands. Reverse for Bear. I'm not so sure we need price action to tell us when to exit. But, Pluto did make one other comment concerning large moves, and I'm paraphrasing...."don't exit a large move on the first retrace, it will retrace slightly and then finally bottom out when the market's exhausted."

Anyway, look for post #85 (and charts) on Pg 6 and read through it, should help with exits.

How'd I do teacher?
Disregard all prognostications.
  • #135
  • Edited 9:06am Jul 24, 2007 8:46am | Edited 9:06am
Quoting Pidgeon
How'd I do teacher?
I would hug you, but you'd probably take it the wrong way Thanks for helping out, I really find it hard to get time to write (barely trade) these days.. here's my take regarding the people who were asking about exits:

We are price action traders first and foremost, what we do with mathematical reasoning simply puts things in perspective. There are only 5 states I am in at any given time -

1) I am positive the market will buy the currency.
2) I think the market will buy but am not sure enough to risk money.
3) I am clueless.
4) I think the market will sell but am not sure enough to risk money.
5) I am positive the market will sell the currency.

I enter on (1) and (5) using methods described so far on this thread, with examples such as the ones you quoted. I'll post a new "article" soon (insert cheers, applause here of course) detailing how I watch the price movements and how I reason about re-entries given a bad trade, but generally I exit when in states (2) and (4), and being undefeatable I don't stay in state (3) for very long because it's bad for my mental health

Please use the resources available here on FF to improve your "feel" of the market and how everything (stock indexes included) moves together in real time. There's a great thread dedicated to price action patterns I believe (james16 folks) but you will gain even better info learning through patience and live viewing of the charts by yourself IMHO.

Now get the tea brewing, something mild and infused, green with mint is a possibility. You need to concentrate, so much is at stake.

-Ahmed
Virtue finds and chooses the mean. Aristotle, Ethica Nichomachea
  • #136
  • Aug 1, 2007 11:01am Aug 1, 2007 11:01am
I have a question which I don't think has been addressed.
Here's a sample chart showing a pattern that seems common lately..

The bars follow the scrat line down, but don't really move through it. Then, they start to move away from the line, into some rangey behavior. Since they never really went through the line, are we still waiting for a bottom, or is the pull away from the Scrat telling us that its time to look for price action to enter? This GBP chart isnt a perfect example, but it's close.

Oh, and hope you had a nice vacation btw
Attached Image (click to enlarge)
Click to Enlarge Name: GBPUSD_Pidg2.jpg Size: 68 KB
Disregard all prognostications.
  • #137
  • Aug 4, 2007 10:12am Aug 4, 2007 10:12am
Hi!

Okaaaay, back in the land of the free, amazingly hot weather here in D.C, but it feels great to be here, now for your question:

I don't really pay that much attention to the scrat line (haha his name has been immortalized) during periods of setntiment change such as this one. As you can see the market was suddenly extremely bearish with all the unwinding, and the bottom can only be determined on significant price action/market exhaustion, it retraces a little so it might appear rangy but in fact with such a strong move like this one we now expect our short term working trend to be downwards, so we watch for the price to hit the top of the bands. This has already happened on Eurusd, so take a look there.

Cheers,
-A

Quoting Pidgeon
I have a question which I don't think has been addressed.
Here's a sample chart showing a pattern that seems common lately..

The bars follow the scrat line down, but don't really move through it. Then, they start to move away from the line, into some rangey behavior. Since they never really went through the line, are we still waiting for a bottom, or is the pull away from the Scrat telling us that its time to look for price action to enter? This GBP chart isnt a perfect example, but it's close.

Oh, and hope you had a nice vacation btw
Virtue finds and chooses the mean. Aristotle, Ethica Nichomachea
  • #138
  • Edited 12:22pm Aug 5, 2007 10:58am | Edited 12:22pm
thank you! thank you very much.
actually, the "scrat" line is a LINEAR REGRESSION.
do they know that, P.?

p.s. i have attached a screenshot with my last trade on g-u. short @ 2.0615, sl @ 2.0650, closed @ 2.0221.
bearish divergence, failure swing, 270 gann (this one was for tp).

Quoting Plutonite
Hi!

I don't really pay that much attention to the scrat line (haha his name has been immortalized) ...
Attached Image (click to enlarge)
Click to Enlarge Name: g-u_entry.jpg Size: 88 KB
Nihil Sine Deo.
  • #139
  • Aug 5, 2007 7:12pm Aug 5, 2007 7:12pm
Quoting Scrat
thank you! thank you very much.
actually, the "scrat" line is a LINEAR REGRESSION.
do they know that, P.?
Yeah they do, if they read the previous articles on the first few pages they understand why the great honor of your name is now attached to these simple-looking colored lines

PS: I'm reading up on that gann stuff you sent me, not loving it at all so far. In fact, if you do a google search, the best google-ranked page talks about how astrology is incorporated (not in a joking way like me, serious stuff).. Yikes! Will pm you about it later though. Thanks for the chart, I will be posting some soon, just really busy these couple of days.

Best,
-P
Virtue finds and chooses the mean. Aristotle, Ethica Nichomachea
  • #140
  • Aug 5, 2007 8:12pm Aug 5, 2007 8:12pm
i know it doesn't make any sense at first. fibonacci doesn't make any sense either but works like a charm. just look at my chart and how price behaves around those dotted lines... i find it amazing.
alright, i gotta go back to work. good luck see you (all) later.

Quoting Plutonite
Yeah they do, if they read the previous articles on the first few pages they understand why the great honor of your name is now attached to these simple-looking colored lines

PS: I'm reading up on that gann stuff you sent me, not loving it at all so far. In fact, if you do a google search, the best google-ranked page talks about how astrology is incorporated (not in a joking way like me, serious stuff).. Yikes! Will pm you about it later though. Thanks for the chart, I will be posting some soon, just really busy these couple of days.

Best,
-P
Nihil Sine Deo.
0 traders viewing now