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Much of What You Know About 4X is Wrong!

  • #101
  • Nov 3, 2007 12:30am Nov 3, 2007 12:30am
I cant say anything except, there are two types of traders:

1.a trader who can learn from others experience through books, etc
2.a trader who cant learn without hard hits in the markets


  • #102
  • Nov 3, 2007 12:47am Nov 3, 2007 12:47am
Quoting benssol
I cant say anything except, there are two types of traders:

1.a trader who can learn from others experience through books, etc
2.a trader who cant learn without hard hits in the markets



bro plz me teach how to become the good trader
  • #103
  • Nov 3, 2007 8:50am Nov 3, 2007 8:50am
Quoting benssol
I cant say anything except, there are two types of traders:

1.a trader who can learn from others experience through books, etc
2.a trader who cant learn without hard hits in the markets

Surely there must be more than two types of traders. Please don't judge a book by its cover.

Here's an example of two things I first learned from books. Triangle patterns and Fibo Extentions. I first posted this in a systems thread back in late September. No body took it seriously because I used a crazy thread title, something like Interplanetary Predictions for GBP/USD. I used a crazy title just to see how many people could look past the obvious and see the true value of what I was predicting and how I was predicting it. Not supprisingly, there were no responses, yet when I started this thread with a title that provoked controvesy, everyone and their brothers were anxious to weigh in and fuel a debate about trends. Within a few days this thread had over 3000 hits! Now that's crazy! Frankly, I'm dissappointed that trends got so much attention becuase it was my hope to discuss other aspects of trading that I feel are more important.

Well, here's a summary of the chart I've attached.
The height of the triangle ~=1000 pips.
The Fibo extension of 161.8 ~= 2.1238 which is ~= 1000 pips above the last retest of the triangle formation.

Will price shoot straight up to that level before consolidation? That's the big question now.

The thing I dislike so much about this market now is not knowing where to get in without risking a large pull back. Right now price is near FE 100.0 so price could go either way by 200 pips or so. You could say that I should have stayed in the trade when I had a position at 2.0500 but I still had the same delema at that time- price can always go either dirrection by hundreds of pips and since my daily schedule is very unpredictable, I can only take positions when I know I will be able to examine my trade/s every few hours or be near my computer to hear an alert.

Look back at the posts in the GBP/USD thread for the past month or so. Confussion was the theme then and will always be simply because experienced traders know that price goes where it wants and can't be predicted with reliable certainty.

After saying all this I realize that I shouldn't be posting here at FF any more for several reasons.

  1. I not in the same league as most traders here i.e. I can't afford to drop more than a few hundred dollars a year on Forex.
  2. I don't have enough money to buy all the books ect. that will enable me to converse intelligently with the majority of traders on FF.
  3. I don't have the time to devote to interacting with others in an effective, responsible manner.
  4. I chose a user name that describes where I'm at now with my trading, but unfortunately, that user name doesn't get much respect, so why should I fight the trend?

Good luck getting in to the market on a pull back if your not in already, but for me, a few pips here and there will have to be enough for now.

Attached Image (click to enlarge)
Click to Enlarge Name: triangle_fibext.gif Size: 21 KB
  • #104
  • Nov 3, 2007 11:38am Nov 3, 2007 11:38am
Quoting Micro-MiniMe
OK SunShine
As illustrated by my account statement, since Oct 2 GBP/USD has moved down almost 200 pips and up just over 400 pips, yet somehow I was able to gain aprox 400 pips most of which I gained before the major up trend resumed. I would have made more recently during the easy trading (or trend as some call it), but personal responsibilities prevented me from trading safely.

Note how many times I made money from selling this pair against the major trend in early October.

Do I care about the trend? No. Do I need trends? No. Do I need other traders acceptance? No.

I know this appears arrogant of me. After all, I only trade part time and I trade in micro lots. What the hell could I possibly know, right?

Like I said before, the market is the only friend I need.
To start with you, having a nick like Micro I wouldn't twist someone else's around, but be that as it may:

1) You don't have to trade the trend. Trade what is profitable and compatible to your liking. But don't knock it if most find it a better approach.

2) Trend is determined by the timeframe you are trading. If I am trading a one minute chart (I don't BTW) then I am looking at the one hour trend, not daily/weekly/yearly.

3) Somebody far brighter than me and long ago came up with the analogy that the trend is like the current of a river. Trading/swimming with the flow is a whole lot easier than going against it. Less work/more profit potential. Good luck.
  • #105
  • Nov 3, 2007 12:17pm Nov 3, 2007 12:17pm
Quoting SunTrader
Or in other words - look for the trend.

Dear SunTrader,

What was the purpose of posting this, to antagonoze me? Does the fact that the current trend matches the long term trend somehow justify sticking it in my face? I saw nothing constructive in your post or in the last few posts before yours, so I decided to put an end to this nonsense.

I was more than willing to let this thread die of natural causes, but for some reason people feel compelled to dig it up. For what reasons, I don't know.

If I sound bitter it's because I missed the boat recently when price broke the recent range. I was preoccupied then and now I have to wait for a low risk setup to get back in or just sit on my hands while price continues climbing to the next FE level.

For some crazy reason I thought there were other traders like me, traders with a small bank account and very limited time who could benefit from what I've found to be a fairly profitable way to trade trends and ranges, but it appears most people here are aspiring to trade large accounts and work as IBs and therefore, are seaking advice from experienced professionals like your self. My mistake. I will gladly go away now so as not to distract future IBs from the advice they can recieve from the 1KT group.

Best wishes,
  • #106
  • Nov 5, 2007 3:22pm Nov 5, 2007 3:22pm
MMM:

I just ran across this little tidbit in "High Probability Trading Setups" by Laurence A. Connors and Linda Bradford Raschke, and thought you might like it:

"Your biggest enemy in trading is going to be a directional bias, an opinion about market direction ... whether yours, a broker's or a friend's. Shut it out! Learn to concentrate on the "right-hand side" of the chart-in other words, on the pattern at hand."

If I read that right, they're clearly saying the trend is your enemy! Might be a good book.....
  • #107
  • Nov 5, 2007 3:28pm Nov 5, 2007 3:28pm
Quoting blueruby
MMM:
If I read that right, they're clearly saying the trend is your enemy! Might be a good book.....
I think what they are saying is, don't say the trend is going up or down, whichever the case you may believe. But look at the chart and it will tell you what the trend is. I don't think they are saying, don't look for a trend.

But hey, maybe its just me.
  • #108
  • Nov 5, 2007 3:41pm Nov 5, 2007 3:41pm
I think they're saying don't try to predict direction.

If you have a directional bias, you're liable to hold a loser too long or fail to take profits when the market is saying to.

But, if you're a trend trader, it will be harder not to have a bias. It's hard enough anyway. I always think price is going up or down, otherwise I wouldn't enter the market long or short, respectively.
  • #109
  • Nov 5, 2007 4:20pm Nov 5, 2007 4:20pm
Hi BR,
I found a copy of the book you mentioned by LBR and LC called Street Smarts and published in 1995. Most of the book deals with paterns they use in the futures market, but I did find the quote you mentioned also. The book has some pretty neat ways to scalp (not my favorite method) and most methods do trade with and against the major trend. Very cool!

One part I really liked was when they talked about using the momentum trend as opposed to the price trend. This opens the posibility for some quick gains in a volatile market regardless of the major trend. Very cool also!

Small guys like me can't take the emotional stress or the monetary loss of a large drawdown nor can I sit in front of my PC all day. That's why I'm forced to think outside the box and experiment with alternatives. So far I'm doing great. Last night I saw a high probibility setup to short the GBP/USD. I had so much confidence that Smart Money would take some profits off the table after last weeks meteoric rise that I used 4% risk and gained 212 pips by setting a target near the next closest Fibo level. I viewed this as high probiblity setup due to the psychological aspects of the market, not the 'Climaxing' trend from last week. I also have a neat trick for determining what the next days trend is likely to be based on simple open close comparisons.

Momentum, volatility, patterns, psychology, sup/res levels...they are all more important to me than price trends, not that I ignore price trends, I just keep them in the back of my mind.

Thanks for encouraging me to open this thread again blueruby. Recently I was asking myself why I opened this thread and what I would gain from it. Now I'm reminded of how writting this stuff down for others to examine helps me to evolve as a trader and gain confidence in my methods.

I guess what ever method i.e. trend, range, channel you choose, the important thing is to know it inside and out to the point where you own it and it works for you. That brings up another good point made in Street Smarts where they said to become your own guru. You just can't beat self confidence that come from experience.
  • #110
  • Nov 5, 2007 5:46pm Nov 5, 2007 5:46pm
here's a paradigm shift for you (maybe)

you imagine that in a trend the higher highs and then the retrace goes like this.

mr trader A buys, price goes up and then he sells as it looks to turn happy with his pips taking profits - price moves quickly to the downside because all the trend traders are taking profits.

is that how you see an uptrend?

Try this alternative view - as 95% lose then this is more likely the case

traders b,c,d,e,f,g and H are selling short the uptrend which unfortunately for them makes a higher high. when it looks like a top they sell again hoping to average the position.

trader I,J,K,L and M sold ages ago and has already added to their short - in desperation they shorts again where they thinks the top is makin three position averaged in at about 50% of the last upmove.

luckily there are enough of the second group to turn the trade around a bit, and as the price drops they close out, one by one for a sweaty break even or maybe a pip or two - some might make 10 pips and think they've done really well.

The majority of this group of traders have now closed and gone to relax and use a towel to wipe their brow - the trend trader bought some more just where the last of the majority were getting out.

The majority are happy - they got out and didnt lose anything much and maybe made a few and as price is only rising slowly they vow to stay out - it rises slowly as there are less trend traders than the 95% club. the other members of the 95% club see another top forming and look for that elusive 10 pips again and the cycle starts over. higher high and the retrace - same thing just different players this time, the first lot are still mopping their brows. but the trend traders are still there waiting and waiting.

Choice ...

 

  1. Wanna be a sweaty counter trend trader who causes all the dips and needs a good wash every few hours along with vallium?
  2. Be the trend trader having fun whilst the countertrend traders make you your money.

how's that for a paradigm shift?

this one is bigger and more baffling ......

If this is the real state of affairs then think about this ...

The countertrend traders actually cause the trend that the trend traders trade.

https://linktr.ee/Soultrader
  • #111
  • Nov 5, 2007 5:59pm Nov 5, 2007 5:59pm
Sorry, ST, I don't see it.

What you're describing would be way too much order and logic, and the market mostly doesn't have that, especially for the duration of a long trend.

There's no question that what you're describing happens, but along with those brow wipers and cool trend traders are so many, many other players all going different directions at different times, for different reasons, it's hard to really come up with a general story for trends.

How about the stop hunters?

How about all the amateur trend traders that get stopped out or scared out, not to mention those faked out, that's more likely to be the source of the massive selling that causes pullbacks.
  • #112
  • Nov 5, 2007 6:52pm Nov 5, 2007 6:52pm
Quoting soultrader
Choice ...

  1. Wanna be a sweaty counter trend trader who causes all the dips and needs a good wash every few hours along with vallium?
  2. Be the trend trader having fun whilst the countertrend traders make you your money.

Actually, I don't want to be either one exclusively; although, I must admit last nights counter-trend trade had tight stops and a short term profit target based on the probability that once price broke it would continue to the next Fib level. If I were trading with the trend, I would have been more likely to hold the position or at least part of it for a longer time and at least gain the swap.

I prefer to plan several scenarios in advance of taking a position and place my orders to react to price action accordingly. First, I decide how much money I'm willing to give the market and I accept that the money is gone once I enter the trade. I find that this gives me a clear head while the trade is developing. The rest is just position and money management after the trade goes in my favor. If monmentum stalls out, I'm likely to take profit immediately and plan my next trade scenarios.
  • #113
  • Nov 6, 2007 1:20am Nov 6, 2007 1:20am
hey, it was only a story very simplified of course ... don't take it too serious

it's my job to make you think a little differently



ps, only brokers are stop hunters.
https://linktr.ee/Soultrader
  • #114
  • Nov 6, 2007 6:24am Nov 6, 2007 6:24am
Quoting soultrader
hey, it was only a story very simplified of course ... don't take it too serious

it's my job to make you think a little differently



ps, only brokers are stop hunters.
That's cool

Sometimes I wish I could just sit on my hands and wait for the major trend to continue, but I'm an adict, hopelessly hooked and always looking for that quick fix from a big stop run.

Now I find myself waiting for the excitement of 'The Big Top' with all the clowns stumbling over each other as they try to decide which way to go.
Looks like the circus has yet to come to town, or has it?

ps, the crap I do to make trading interesting. It's enough to drive some crazy!
  • #115
  • Nov 6, 2007 7:05am Nov 6, 2007 7:05am
First I would say that I understand that the argument is not so black and white but I would like to advocate for trend trading because I think that the natural move for people is to short when it goes up and long when it goes down. Trend following is not natural (or only when it is too late) and then that's why it should be promoted.
I think that the promotion of a natural movement (trying to pick the tops and bottom) or sentences such as 'trees don't reach the sky' (we see this one quite often) is a bit dangerous and not a help for people.
Again, this thread is not so much a promotion for one side but more a try to challenge the usual ideas but anyway, I am afraid it would push some people on the side they are already ready to fall....

If you think that the trees don't reach the sky (of course that is true but some trees are 1 meter high and others more than 50 meters I guess), just take for instance the stock of any successfull company. Would you have been happy to short the Microsoft stock from the 80's for instance, or Google more recently.
Would you be happy to have shorted the Euro these last months? (I saw in a chat that people actualy do it of course and either we don't see them anymore or they are praying very hard now. They have now switched to "hope trading"! )

Nothing is absolutely correct or wrong, but be very very careful if you trade against a main trend.
  • #116
  • Nov 6, 2007 9:46am Nov 6, 2007 9:46am
Quoting Micro-MiniMe
That's cool

Sometimes I wish I could just sit on my hands and wait for the major trend to continue, but I'm an adict, hopelessly hooked and always looking for that quick fix from a big stop run.

Now I find myself waiting for the excitement of 'The Big Top' with all the clowns stumbling over each other as they try to decide which way to go.
Looks like the circus has yet to come to town, or has it?

ps, the crap I do to make trading interesting. It's enough to drive some crazy!
Nice thread, friend Macro-minime. And nice replies from all the friends.

I am also confused in finding trend: Where is the trend? Where is it going, up or down? Is it possible the retracement will come right after I jumped in?

Well, only a trend goes out, I can say the trend may be established. You jumped in, if the retracement comes, maybe your S/L is kissed and leave you frustrated and at a loss both financially and mentally.

Here are some my humble opinions for fellow traders to make comments:

The best strategy is Buy-and-hold, which is stated in investment textbooks and mentioned by the greatest investor: Warren Buffet and the greatest speculator: Jesse Livermore. Of course, you need to jump in at right time (for investment after a stock is really undervalued and for speculation after the trend has finished retracement). The right time are not for minutes or hours, maybe days or weeks, i.e. not 5M TF etc. And give up thinking about making profit from retracement. Even if you are day-trading, the strategy still holds good. Just compare the movement of E/U and G/U from middle of August till now on day chart. If you compare these two pairs in one day movement, the conclusion is the same.

Any time you make some profits from FOREX speculation, save part of the profits. And when the savings accumulated to some amount, withdraw it and invest it to stocks or mutual funds. You can win money for some times in a casino, but you can never beat gambling industry.

Ride on the trend, but jump on it ONLY after the retracement. Take G/U for example, the mid-term trend for this pair could be 500~2000 pips and could last from 1 month to 4 months. There could be retracement from 50 to 300 pips (could be 500 pips in extreme). E/U, A/U, N/U and JPY carry trades seem more trend riding friendly.

Trading is just a profession just like other professions. For other professions like doctors, lawyers, only 5% could become very successful.

Forgive my poor English.
  • #117
  • Nov 6, 2007 10:44am Nov 6, 2007 10:44am
Quoting Green_David
I am also confused in finding trend: Where is the trend? Not me, most of the time.

The best strategy is Buy-and-hold, which is stated in investment textbooks and mentioned by the greatest investor: Warren Buffet (Greatest Owner of insurance companies which means he has the most money to be able to just buy and hold or take a $billion or so loss in currencies and wait a market out. Not too many others who can do that.)
........
  • #118
  • Nov 6, 2007 11:12am Nov 6, 2007 11:12am
You raise some good points. I wish I had started with stocks...I find them much more predictable in the long term. Oh well...

One of my favorite analogies from Street Smarts was the comparison of fishing to trading. I'd like to modify the authors view and say that trading is like fishing because sometimes the fish gets away, most times you catch small fish, but when you do catch a big fish it can be long (Northern Pike) or short (Large Mouth Bass). Unfortunately, most of the big fish stay well hiden under brush or in deep water making them hard to catch without substantial risk.

Trading is risky to say the least, regardless of how you approach it. Many famous traders have implied that their best trades were the hardest ones to enter. In my estimation, all trades are equally (or should be) hard to enter. When your sure you have an edge, that's when you're most vunerable to a big supprise.

Perhaps we should be discussing ways to determine trend change, consolidation, exhaustion ect. It seams to me that most losses happen when market conditions change. It's my goal to become more adaptable to these changes.

Take care
  • #119
  • Nov 6, 2007 12:50pm Nov 6, 2007 12:50pm
Soultrader,

am an avid reader of your clinic and have learnt more about trading psychology on there than anywhere else.

my only gripe is you have gone too nice on there


Quoting soultrader
hey, it was only a story very simplified of course ... don't take it too serious

it's my job to make you think a little differently



ps, only brokers are stop hunters.
  • #120
  • Nov 6, 2007 12:59pm Nov 6, 2007 12:59pm
Quoting soultrader

ps, only brokers are stop hunters.
I could have missed a post here

But this is so far from the case. The big players know where the stops are gathered. The only stop hunting brokers do are those random spikes that show up on only their feed.
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