Soultrader's Clinic :)

The usefulness completely depends on the timeframe and what other analysis you use in concert with any particular price pattern.

Probably a lot of people will disagree with what I have posted.They have their view and will prove with facts their rightness... This is a never ending story too. But Money Management/Position Management is the key to the long term success because one can never never never predict the market.

Have a good evening
BR

Here is another such case of your so called "facts"

You state all these FACTS that are simply not facts. B/C the breakout trader you were only yielded a 30% success rate, doesn't mean other breakout traders will fall in the same boat.

Why not just state your opinion as just that. Your opinion. Not facts.

I agree with that. As I said the same thing in another thread.

Anyone to its own. There are many times , in this thread, discussions that lead to nowhere because to one personality is better something than to the other though both of them can be successfull in the long term because both of them are using methodology that is suitable to their personality.

Sure thing!

Let's take for example the charts I posted above. Now, by looking at the first one with the Fibonacci retracements on it you can see that a support level (1.4155) was shown at the bottom of the puke that occured 24 hours before the Friday morning action. That support level is then made even stronger when the Fibonacci's are drawn in starting from the low of ~1.4014 to the high of ~1.4240

Now, on Friday when the price retreated off of 1.4210 it created a short term downtrend. Once that trend was started I begin looking for the first major support below it. So those few times that you see a false positive on the price patterns (bullish piercing/engulfings) you can't really put much stock in them because the price is going to try and test the support level below.

Of course there are times when the price will reverse before getting down to that level, but when that happens, I am content to be on the sidelines.

This is a game of setups. And so that is why I say it is important to know when a price pattern is actually worth something. In the case of a price pattern forming and being confirmed at the bottom of a support AND at a major Fib number, then yes, that is the type of thing you are looking for.

To be honest with all of you guys, I haven't yet grasped the whole meaning of this thread. I find it very confusing and its posts are very fragmented.

I don't think it's useful to get into discussions about what works and what doesn't, at least not in technical terms.

Each of us has its own strategy/system/method, whatever. If we all believe we have an edge, what's the real problem? I don't care whether my edge is generally accepted by other traders. Who cares anyways? As long as it makes me money, I am happy.

Can we please take this thread on a different level? I thought the 1K-trades requirement would make it a challenging thread, but I am yet to read anything enlightening or worth taking notes of.

No offense to anybody.

Soultrader, since this is your thread...can you please get it on track? I don't care about whether Fib works or not...nor do I care about longer timeframes or shorter timeframes...nor do I care about how the "vets" like to trade...

I believe the path of a trader presents many challenges that we all have to face, regardless of our system/timeframe/screentime/etc.

For instance, I must have read a 100 times the old cliche "cut your losers short and let your profits run"

Why don't we all try to elaborate on that? Why don't we all try to explain how we apply that principle?

I don't think just saying it makes it work. And to be utterly honest, I don't think it's very easy to make it work on all trades.

There are many other things we could touch on.

Soultrader, you are the owner and moderator of this thread. Please keep it out of the common bull...it such as "my system works better than yours" or "all veterans trade higher timeframes" or "younger traders like this and older traders like that"

If you don't get this thread on track soon, I think it will soon die out.

I dont care if it dies out italian, in fact. let's just close the bloody thing, i can do without this.

anyone who trades breakout will tell you its between 30-40% win / loss regardless of the breakout method. if you want to prove it just buy a book on breakouts.

here's why fibs are rubbish, as for me showing you - go find out for yourself - this next bit proves how useful they are though.

firstly define exactly which high and low you should use - define it so well that you could program it.

then, even if you get the top and bottom right price retraces to the 23 line and bounces - fib traders say 'oohh look, it was a 23% retrace' if it keeps going they say 'maybe its a 38.2% retrace' then 'it must be a 50% retrace' this continues until price bounces at one level or another, even if its 214%.

long and short is that fibs do not help in your trading decision because you dont know which level it will bounce on until it's happened already - as much use as a chocolate fireguard

whats more mbq11 I didnt fail with fibs, i proved they were useless. it's also myth about the golden mean and the figures - just search for the truth about fibs on the net. also i didnt 'blow up' on breakouts, I made over 600% in a year on a breakout and stopped trading it at that time - at it's peak I had made over 1500% in that year so before you make statements like that i suggest you get your facts right.

Price patterns are useful to the extent that they are subjective not just to the timeframe but also the amount of zoom you have on your chart. I couldnt believe it the other day when i saw some guy on about the 20 degree angle of a moving average - again subjective to the amount of zoom, didnt anyone learn anything from the fact that Gann died skint?

for price patterns prove me wrong and use that IBFX pattern recognition thing and take every head and shoulders you see, or every ascending triangle etc - you will soon see how reliable they are as you have to load your account once more.

JX your original post with the charts with all the moving averages and junk on said "While people may know how to recognize price patterns it seems to me that they don't take the time to understand when they are and are not important"

well what use is that to the trader? - define when it's important and when it's not in a formula?, presumably it was important when it worked and was unimportant when it lost? - again no use to the trader sat in front of the screen.

Let me add another one into the mix - indicators are bollocks too as a predictive tool - again a proven fact - for this evidence just read back a few month in currency trader and find the article that proved statistically you have as much chance with an indicator as flipping a coin.

also, self fullfillng doesnt mean that they work more the more they are known, in fact the opposite is true if you can be bothered to research this then you will find out for yourself why.

ask yoursef the question why it is that the long term traders on here dont use fibs, or predictive indicators? then ask yourself why you do? - every indicator is derived from price itsself so why not use the thing they are derived from?

The meaning of this thread was to try and help those who were stuck in some way to move past a blockage Italiansharp, but let me ask you this - when you went to school as a teenager and had a maths lesson - did you tell the teacher he was wrong all the time? did you doubt his teachings on fractions because you thought you knew better? i'm guessing not so why do those in this career choose to barrack someone who's gone through all this shit several times over because it just doesn't fit with their view on the world?

Thanks for your time folks, this thread is now closed. I hoped the 1kt thing would stem those with closed minds but alas not, not when 1kt members equate to some who trade just 1c a pip and others just a few months in the game but have 1000 scalps under their belts.

Well, don’t some strange things happen.


I can’t believe the number of private messages I’ve received since closing the thread. Didn’t realise there were so many who actually read this stuff and were taking it seriously.


They ranged from the simple pleeeze don’t close it to “why would I want to ask a student when the doctor is in the clinic” – nice one that J amazingly I didn’t have a “yeah, piss off and keep your opinions to yourself” which I would have expected (no doubt to follow this posting – bring it on!)





The last PM I got was the best and convinced me to re-open the clinic, so for the time being we are back in business. It also asked some great questions which I’ll cover in more detail soon.





Some changes though, this is my thread and constitutes my opinion as a trader of many years. If you don’t like that opinion then go start your own clinic (oops, forgot, that hasn’t worked has it), well, your own thread then, there’s nothing more entertaining than watching the blind leading the blind.





From now on this thread will be closed as soon as I post something – This way it will be limited to answers to Private Messages sent to me and opinions on posts ive made. I’ll take them from anyone, Newbie or Veteran I don’t care – if you PM me and I don’t post your question or answer it then it’s a silly question that you could find the answer to in a simple search.





I’m sorry that the thread cannot be open as it was before, but as always when you have an arrogant attitude like me (yes, I know it and don’t give a toss) you get spoilers who don’t want to hear that the last three years of their life have been wasted looking at useless wiggly lines. It’s understandable, I felt that way too when I realised what a waste it was. On saying that I don’t believe that I would be in the position I am in today if I hadn’t have gone through the very same pile of dung that many reading this are trudging through so please just keep on walking.





I have space for hundreds of PM’s so if you want to join in or ask anything then please just click my name and send a message. I’ll put up all opinions within reason for you to make your own conclusions so even if you disagree with my opinion then still PM me – providing it’s not abusive or plain hi-jacking I’ll pop it up.


That’s it – Clinic is open

OK, Going to slowly start working my way through the PM questions: - Here's the first one


From generalz

Is this too good to be true??

I am going to take you up on asking a question....this is so newbie stuff.


question, set up:

Daily, Dochians's 5-20 ma cross..+1900 for last 12 months. no indicators, have to let it play out.

What am I missing..it can't be this easy. I can't see why this won't work, I am afraid I am not seeing the rainforest or the tree but just seeing the acorn? On the other hand this could be genius? Do this on multiple pairs .

"If it is too good to be true it probably is"..
Is this to good to be true or am I on the right track or am I missing it?

thanks

John
generalz

Hi John, yep ..... you're most likely missing it.

I really need to know more information on the statistics of the trading youve been doing - but the chances are that as you are taking trades on the daily timeframe you don't have enough trades to base any decision on from a mere 12 months. On saying that, you could find that what you are doing works for the next ten years, in which case mine's a pina colada on that beach in Cyprus when you get there.

It could be gold and it could be junk that's had just the right conditions. the trick is in making sure you have an opt out plan if it turns out it is junk.

To make a full assessment of advice i need to know if the 1900 pips are just tested pips (in which case it's junk) OR if they are real pips that you have traded real money (in which case it could still be junk but has a greater chance of not being) - can you send me another message please and elaborate on this a LOT more than you have done. How you decided on the system and how much work you put in to the development - is it a reversal strategy or a trend follower or a rangebound strat etc?

Im not looking for specifics on your method / system, just some basic knowledge and statistics

Come back with some answers and i'll try my best to advise.

Hi All,

Just a word of explaination for absense and an apology bundled in too.

The back half of this month has been awful for me. The ear infection got worse and worse to the point where i was in hospital on an antibiotic drip.

Whilst I was there I broached the question as to why i was often short and sharp with people and why I got quite angry easily.

Well, turns out I have high blood pressure and my diabetes isnt being controlled the way i thought it was and this is a prime cause of my attitude at times.

Having read through this thread I can't apologise enough for the way i spoke to JX81 and others - i've prob made yet more enemies for life there!, not as if i didnt have enough already from my earlier years in forex!

Thankfully the tablets have kicked in now and i'm much calmer - sure i will still be opinionated but i hope not so rude. amazing ive got this far in forex with that attitude.

Another balls up is that I left my monitor account on full automatic and it's gone to crap for the month without my discretionary choices - ce'st la vie, at least the client accounts were switched off !!

Im opening the thread again fully, - guess high blood pressure makes you a control freak too eh? The ears are much better, i have stereo hearing again (was totally deaf at one point) but there is still some soreness.

again apologies to those i've upset. let the clinic be open again.

Hope you are feeling better Soultrader, take care of your health it is the most important thing

Best
Mike

safeace
Member
Member Since Oct 2006
Posts: 3


http://www.forexfactory.com/images/icons/icon1.gif Hey glyn
Hey Soul,

I totally agree with you about indicators and price patterns, they are nothing but eye candy to your eyes. It just seems like they are helping you but what they are actually doing is showing you what you could have done in the past, not the present. I wish everyone got that, but no one does.

Once I realized this, I only trade off S and R levels. The S and R levels I draw I always draw it by myself, by zooming out and seeing where there were many R and S. I just had a question in my mind, if you don't mind asking me...what do you think about candle patterns or bar patterns.

Like lets say theres a doji or a double bar high lower close on a Support level. Would you base your trades on these candle patterns or you use some other method.

Oh and btw I always trade with the trend but still do find a hard time having a position open for longer time.

Any answer is greatly appreciated
Sean


Hi Sean, thanks for the PM

Indicators maybe eye candy and are useless at prediction - however I have hinted in earlier threads that they are useful for something else - no-one has yet come back to me on that useage so i'll leave it open a while longer

As for chart patterns, well I know earlier I said that they were useless but this was in my self destructing phase - chart patterns are useful for helping you have confidence in the continuation of a trade, for determining breakout area's and of course for showing support and resistance. for example a flat top ascending triangle has a >70% chance of going with the trend so they can help to keep your confidence in a trade.

I also use support and resistance, they are the whole key to forex trading and the whole key to trend trading also.

I don't however look back very far for support and resistance areas - i'm sure someone will tell me different, but to me it seems pointless knowing that you are at a June high when you are trading a four hour chart in September.

All I use is current support and resistance on my chosen timeframe - the four hour chart - I fill one screen with a four hour chart that shows about 2 months and if it's off the chart then it's out of my consideration.

I dont really consider resistance in an uptrend or support in a downtrend. Reason: the only reason to consider these would be to take profit early and I don't do that.

What i do take notice of is this, In an uptrend im looking all the time for previous resistance which has turned into support. As price moves up it breaks little areas of resistance - those areas then mostly turn into support for the prevailing trend.

As the trend moves on these areas will be tested for their support and if it holds then the trend can continue - if it fails then it could be the end of the trend or time for some consolidation. (see attached pic)

Consolidation is a time when those traders in this trade decide to hold or close - the price will gyrate up and down for a good while whilst traders get out of the trade, get into the trade and generally make decisions - this can take a few days to happen, even a week or so whilst those with losses accept their losses, and those holding wins consider if this is the end.

at this time the support will get stronger every time it is hit, but then so will the resistance - then it's just a matter of time - price is like electricity - it will flow in the direction of least resistance and when this happens you get a surge.

so, as a trend trader i'm always looking for resistance to turn into support or the other way around when short - when it's been tested and the top goes it gives me a good place to put a top if i am trailing that way as a break of the new support will mean either the trend has ended or a fakeout.

The fakeout is why i dont use a hard stop to exit my positions. I always wait for the close of a bar before closing my trades and even then i use a bit of discretion. for example a support point broken 2 minutes before bar end does not mean i will close at bar end as the fakeout has not had chance to retrace - if it's within 5-10 minutes of a bar end then i'll wait another 30 minutes before closing.

Now, onto your question. What do i think about candle patterns / bar patterns?

Well, with candle patterns and bar patterns you are the closest you will ever be to trading pure price. I don't believe in the old 'three black crows' or 'morning star' or the 'crapping baby' formations - to me they are not of use and just the imaginings of an overactive mind.

However a candle or bar shows you what has happened in the current timeframe of reference. it shows you who has control of the market, it shows where traders have rejected price moves and shows where price is happy to be (in the body)

Again though they are subjective because generally they do not represent the market as a whole but the players in the market that are using your broker (or bank in the case of an ECN). So you never actually see the whole market as the whole market does not exist in a single place - forex is a bit like the internet

what this means is that your candles or bars at ABC brokerage will differ from those at XYZ brokerage and this is why candle and bar patterns are not as reliable as you would hope - particularly on the lower timeframes and those higher than 1 hour but below a daily.

Generally speaking daily bars can be relied on as the difference between brokers is too small to matter. four hour bars however can be vastly different because of the timezones between brokers - one broker's four hour could close 3 hours later than another brokers for example.

One hour candles are fairly consistent but lower than this again it changes for the worse.

All in all candles and bars are useful but not as accurate as they are said to be for the reasons above.

At the end of the day the most important question to answer is this - Is price going up generally, is it going down or is it rangebound? - the answer to that should decide your trade direction or lack of participation.

from my perspective if it's going up i want to be long, if it's going down i want to be short and if it's rangebound i want to be out.

Hope this helps

Thanks Mike, I owe you an apology also.

no worries bro

and your last post was very informative and I agree completely. i look for the same type of things thanks for sharing, that chart alone should help those peering in tremendously. the flip of S/R is a very important concept in trading in my opinion.

Take it easy
Mike

Forgetting the difference in trade size it's good to see that the way my trading style has now developed is basically the same as yours.

My recent conversion to this simple approach has resulted in a better understanding of how price flows around the chart, but I need more time to understand how to play the 4hr chart S/R levels. These have been less successful for me as opposed to Daily/Weekly levels I've drawn. Time will solve this for me I'm sure.

There are some interesting comments on your chart re S/R areas having to be re-tested as price hasn't retraced (to test Support again) after breaking a Resistance level. This has helped me clarify a thought that has been bugging me as I look at where to place my lines. I'll have a stab at this. There are ways of interpreting some Oscillators to help fade weak players who are making wrong plays regarding the direction of the market, or something like that!

PS Forgot to add my best wishes for a return to full health

I am using a few indicators for the following purposes:

1. To determine/confirm the trend.
2. To quantifi the strength of the market.
3. To quantifi the probabilities of the outcome of the next trade so I can measure the risk thus the size of the position, the target and the catastrphic stop loss.

Regards
BR.

BTW Thank you ST for you comments, views, etc etc. This was the last trigger in my final transition to the daily/weekly chart and the recognition of a couple of fundamentals things of trading and understanding the market. Last week I have made max 2 trades / per currency and resulted in other things like profitability and have more time to my family and other things.

Regards
BR

Soultrender, I hope you get feeling better..

I thought it was Soultreasure. Anyway, glad you're back. It's been kind of boring without you.