Technical Analysis Fallacy | Page 34 | Forex Factory

Options

Go to
Permalinks
Print Thread

Similar Threads

The Ultimate Fallacy in Technical Analysis 99 replies

"Technical Analysis Fallacy" thread people, I need your help 54 replies

Technical Analysis Fallacy Redux 23 replies

Statistical analysis fallacy 33 replies

Attachments: Technical Analysis Fallacy
Exit Attachments

Technical Analysis Fallacy

  • #661
  • Dec 18, 2007 12:49pm Dec 18, 2007 12:49pm
The Moral Law causes the people to be in complete accord with their ruler, so that they will follow him regardless of their lives, undismayed by any danger.
This to me means always respect price action, buy “riding trends” as FTI put it or cutting losses short very quickly when you are on the wrong side of the movement. Consistently fighting against price movements will surely get you (your account) beheaded just like the soldiers who do not follow their general. Rambo would not survive the Forex market!
Heaven signifies night and day, cold and heat, times and seasons.
Trade at times when the market is moving, pick one that fits your schedule and do not trade during quiet times. I would love to trade the London session, but I have a full time job and 2 small children, so I have been catching the opening of the Asian session and finding small successes instead of trading with resting orders or when there is no movement in the market.
Earth comprises distances, great and small; danger and security; open ground and narrow passes; the chances of life and death.
I think this refers to market “terrain” as catshot stated, which includes the look of single candlesticks and candlestick patterns, along with other patterns like wedges/triangles/head & shoulders/windows, etc. Traders look to increase their chance of life by trading recognizable patterns that experience has shown them to be profitable.
The Commander stands for the virtues of wisdom, sincerely, benevolence, courage and strictness.
The word mentor comes to mind here… I have tried to trade alone for a year and a half, and I think having a successful trader “show you the ropes” can make a big difference. Having a group of experienced traders willing to help the not-successful-yet crowd is how Commanders help new recruits in the context of trading, thanks to everyone who contributes in this thread!
By method and discipline are to be understood the marshaling of the army in its proper subdivisions, the graduations of rank among the officers, the maintenance of roads by which supplies may reach the army, and the control of military expenditure.
This is the all important individual investor component of having a trading plan, proper mindset and money management.
These five heads should be familiar to every general: he who knows them will be victorious; he who knows them not will fail.
Combining all 5 of these elements should increase the odds of a trader being successful. The End
  • #662
  • Edited 3:43pm Dec 19, 2007 1:02am | Edited 3:43pm
Quoting crazy_bdog
The Moral Law causes the people to be in complete accord with their ruler, so that they will follow him regardless of their lives, undismayed by any danger.
This to me means always respect price action, buy “riding trends” as FTI put it or cutting losses short very quickly when you are on the wrong side of the movement. Consistently fighting against price movements will surely get you (your account) beheaded just like the soldiers who do not follow their general. Rambo would not survive the Forex market!
<edit>sorry for the mix up catshot and crazy_bdog.
Hi crazy_bdog and All,
If I may make one small observation about losses, have a re-read of these threads, particularly the parts about 'rescue' and taking losses, risky stuff so take your time to think things through -
http://www.forexfactory.com/showthre...=57639&page=34
http://www.forexfactory.com/showpost...&postcount=180
http://www.forexfactory.com/showpost...&postcount=454

The secret or rather the 'key' to this is in there, I'm pretty sure I understand this now, some may run away in terror once they find out!
(*caveat: I may be wrong here but if so what I'm about to say is still worth thinking about I think.)

Fti detests taking a loss, especially if you can't 'rescue' it. I don't know the 'sequences' yet for rescue and attack but I think I have a fair idea (we'll see). Once you work this out you will trade more confidently than ever before

Another key to the 'strategies' is your MM in all situations, your goal is to keep your book even or better still in profit. You can keep your book full by not taking losses and by taking profits when you can, even in rescue mode. In rescue mode, if it's particularly bad you can bank enough pips to cover your exit and get out square even with negative pip counts still on your blotter, your book balance is what's important.
How you come to build your strategy to do this is probably the hardest part but not impossible.

Remember, a loss is not a loss just as a profit is not a profit until you take it and there is only one real choice to take here if you want to win.
While trading your book balance doesn't change unless you 'take' what's on your blotter, take plenty of the good when you can and leave the bad if you must, just don't let your book balance go backwards, it's too hard to get it back.

I liked this quote so much I've made it my sig' and stuck it to the monitor -
"damage is part of the battle, recovery is essential , victory is the objective." - fti

Cheers,
Mick.
  • #663
  • Dec 19, 2007 2:20am Dec 19, 2007 2:20am
MickD,

I agree the quote is awesome. When I first started trading I used loss rescue with a ton of success. Before anyone told me that was "wrong".

I love the "a loss is only a loss if you book it"!!

As my trading has developed I moved away from this style of trading to analytical " planned" trades with.. gasp! sls and tps. it is less stressful but yeah you book losses ;(

Trading loss rescue is pretty stressfull and you habve to be on your game but I personally have never had it go against me in the few handfuls I have done it

IF loss rescue as I understand it from this thread is what I did then it is basically you pick a flow and blam you were wrong. For shame. price corrects so you basically dollar cost average your loser so on the next retrace it is a winner and you get out.

ex. ficitious currency you buy 1 lot at 200.200 goes to 200.100 before retrace starts you see that and buy 10 lots now your effect rate is 200.109


lets say spread is 2 pips per lot when I buy in again I am down 1020 bucks or 102 pips I add 20 pips from 10 lots or 200 bucks so at 200.100 I am down 1220 on my deasl board and my pips are worth 110 bucks I need what.. 11 pips to break even now from a 100 pip loss. I better see a 11 point retrace on a 100 pip move the flip side is oops I still suck... now I am down another 100 good thing that is now 10k!! this would be an anti trend loss recue attempt gone wrong I suspect.

Do some charting on it the key is you basically never enter a position full strength and you have a lot of reserve soldiers to back you up

price always retraces to some degree eventually the lower the time frame the sooner. In theory with a large enough account, position averaging on your blotter, and a nimble mind you could never book a loss ever. I buy it it goes against me 100 pips before it retraces.. well I have to spot the retraces and load the cart to attack there.

also it is a big plus to have a broker that allows you to average all your lots into one and clear it out as one transaction for ease because you might have to move fast. basically not mt4

I had to buy something 10 more times then I wanted to once to get out of a jamI took 8 pips and was ecstatic about it. hehehe

I THINK this is how Fti does it based on context clues , but I will let him tell us as what i outlined is super risky hence chain smoking and drinking paper trade it on your account to feel the stress!!!

I am sure he has a more surgical way of doing it that fits into some form of MM sounds like you snow ball losers and winners especially from the AOW study.


I love this thread and the style of trading espoused here, I am just torn between planned trades and checking the flow and "jumping" into to an active trading session. Eventually I will probably have my longer term and use this style for short term gains intraday. glued to the screen trading my face off!

I would kill to watch Fti trade London it has to be awesome.

Sizz
  • #664
  • Dec 19, 2007 2:47am Dec 19, 2007 2:47am
LORD ALMIGHTY, Slow down guys.
I started reading a couple of hours ago, so far im up to page 26 and the thread is up to 45 i think. lol, 19 to go. Marathon reading continues.......

L'Lorenzo
Living the adventure in my head.
  • #665
  • Dec 19, 2007 2:50am Dec 19, 2007 2:50am
Quoting sizzler
Do some charting on it the key is you basically never enter a position full strength and you have a lot of reserve soldiers to back you up
price always retraces to some degree eventually the lower the time frame the sooner. In theory with a large enough account, position averaging on your blotter, and a nimble mind you could never book a loss ever. I buy it it goes against me 100 pips before it retraces.. well I have to spot the retraces and load the cart to attack there.

I had to buy something 10 more times then I wanted to once to get out of a jamI took 8 pips and was ecstatic about it. hehehe
Yes, once I'm in attack mode I keep an eye on progress, if the action is telling me I'm tiring, I take a profit, grow the book a bit and sit it out againand await the next attack sequence. If you can get enough on your book doing this you can get to the point of getting out fully intact, even with a red blotter.
Through my limited experience I have walked out with as much as I would have if it went in my favour. If you are in real danger, get out when you can, if you are gaining an advantage, take the sword to it and make a killing

Quote
I THINK this is how Fti does it based on context clues , but I will let him tell us as what i outlined is super risky hence chain smoking and drinking paper trade it on your account to feel the stress!!!

I am sure he has a more surgical way of doing it that fits into some form of MM sounds like you snow ball losers and winners especially from the AOW study.
I agree, in fact once you understand the basics, a re-read of the art of war gives you a whole new perspective! For me it was like reading with a candle when all of a sudden someone turned on all the lights

Quote
I love this thread and the style of trading espoused here, I am just torn between planned trades and checking the flow and "jumping" into to an active trading session. Eventually I will probably have my longer term and use this style for short term gains intraday. glued to the screen trading my face off!

I would kill to watch Fti trade London it has to be awesome.

Sizz
Yes, it's not for everyone that's for sure, but, no one said it would be easy
As you say, it would be quite a thing to see someone with real experience take apart a market like that .

good chattin' with you Sizz'
cheers,
Mick.
  • #666
  • Dec 19, 2007 6:33am Dec 19, 2007 6:33am
Quoting fti
I repeat.
The only way to manage a win AND a loss position is by size snowballing.
There is no other way. One increases the profitabilty bottom line and the other a recovery protocol.

Snowballing your positions in a win situation to to enhance and stretch the profits in the book.

Snowballing in a loss situation is very tricky,
The trick is to stay on the front line, and not allowing the market to run too far away from you for effective salvaging the bad . Therefore averaging of cost is the main component in this MO. Later in Art of War you will learn that to save 1 bad postion , you will need a squad. Therefore the timing is critical and the terrain whereby this is allowed to occcur must be manageable. This MO must be given sufficient thought , well parametered and executed swiftly on running battle sequences. If any possibilities of failure were to present itself , the whole exercise have to be abandon. So use it wisely. Under the strength of unlimited capital, this activity will dig you out of the holes , a trader might find themselves in. But traders do not have unlimited resource as with banks, if this protocol is adopted then much preparation is necessary, in terms of the limits of the parameters is concerned.

Remember that every loss you swallow, based on the WW tables, will put you off geometrically. So to a trader a 10 cts profit is a 10cts profit whereas a 10cts loss is not exactly that, its more. To keep books healthy, loss taking is a very detrimental exercise.
Try to be profitable , a small profit is better than a very small loss, by leaps.

regards

for viability, you must understand, the martingale, fibonacci and log arithmetic spirals. Their workings, the empirical formulation and their characteristics. The secret working lay in the pi & its skew.
Though I understand his reasoning and I have recovered from poor positions in the past by improving my average, it's the technical aspect fti uses that's still a mystery to me. Take note of the last bit in fti's post above.

"for viability, you must understand, the martingale, fibonacci and log arithmetic spirals. Their workings, the empirical formulation and their characteristics. The secret working lay in the pi & its skew."

This is not something I can say is familiar to me. Is anyone here clued up on that and able to provide some clues or references? I'd say most have overlooked the importance in it.

Also, going back to averaging, one of my platforms does it automatically as I add to a position, so I can know where my break-even point sits. However, my MT4 account keeps each trade separate so I would have to calculate my average manually, so not the ideal platform for it.
  • #667
  • Dec 19, 2007 6:49am Dec 19, 2007 6:49am
Was Fti looking for an option to 'close all orders' in MT4?
Some scripts seem to exist for this in the metatrader forum section
http://www.forexfactory.com/showthre...ht=closing+all

It seems that by using MT4 there is much flexability, but the scripts will mostly be created by users.

Quoting Zoran
Also, going back to averaging, one of my platforms does it automatically as I add to a position, so I can know where my break-even point sits. However, my MT4 account keeps each trade separate so I would have to calculate my average manually, so not the ideal platform for it.
You may be able to script an indicator to show your averages.
Or better still - to open an order ( with confirmation ) with the average already included so you dont have to do it manually.
  • #668
  • Dec 19, 2007 7:12am Dec 19, 2007 7:12am
MickD,

NIce chatting with you too.


I am glad to hear you are actually trading this!!! IMHO at the least every who is into this should open a mini or a mic and work with this.

it is like a big rush isn't it? and after a full trading session like that I was always spent. Completely beat. I'd check D1/W1charts and hop in with a Yen cross and get chopping.

The one weapon I never really got sharp was the positive snowballing. Negative loss recovery made all the sense in the world but averaging your price toward your target eluded me. What are your methods?

I would generally look for S/R points in the market or PA signals and add there keeping my target in mind.

Keeping the target in mind seems to go against the methodology of going with the flow , but I agree you can hop out and hop back in if that is the case.

It ISN'T for everyone, but I really think you need to be exposed to it. It broadens you and makes you better. Before I read this thread I was a different trader.

As for being torn here is an example of what is going on with my trading now which at the least is a hybridized ver of FTI.

I was just bopping through my charts and spur of the moment , no trade plan, CAD/JPY looked awesome. So I jumped in on a 5M danced with it up until the trade was clear set my tps some sell limits sls and tps and bam so far so good. I generaled it until it became clear to me. I stepped back and double checked and then I let my soldiers play out the battle for me.

On the same hand I have been in GBP/CHF trade for days. Completely planned. Such is the Dichotomy of my trading.

I am hypothesizing (from trading charts and working with multiple TFS and PA ) you can effectively ( in this threads terminology) take the rythym of market and from observing it's dance and focusing on certain areas

Those areas dictate an "if then" that gives you the edge and allows you to see the future moves of your opponent since in a larger sense he reacts in a predictable manner . I really am bad at articulating it I know what I mean , but I can;t say it

Super Simply put it is like from A he can go to B or C ,

If your opponent goes to B he can go to 1, 2, or 3

If C, the 4, 5, 6

If you are vigilant you can notice your opponent moving to B before he gets there then you know to not only strike B but to be vigilant be ready to cover 1,2,3 which he will key you into before hand as well.

That being said, en route from A to B you may go from x, y, z as there is an un avoidable degree of random attacks, but you opponent has tells which clue you in before hand to the structure and direction. I don;t know if this makes any sense..?

If AOW is applicable to the market and AOW dictates you can know your enemy,yourself, the battlefield and through the teachings of AOW become a supreme General and a master of war with no loss , then what I am theorizing should be possible.

My work with this is very promising and I am seeing some awesome stuff, but I have a ton of work to do still.Has anyone else worked with this in the context of this thread?

Sizz
  • #669
  • Dec 19, 2007 9:40am Dec 19, 2007 9:40am
Hi MickD and Sizzle!
You guys talk about the same things more or less, and I agree with you 100%. I believe that counterattack( adding to losers) can be successful almost all the time, it's only a matter of your skills for it to be successful. I did it many times, and often it was successful, but not always. The failures I relate to my luck of skills, b/c when I analyzed it afterwards it was always the way, I did not see or took at the time of action. For example, if EU goes against you 100 pips, and you scale in to this loser with 5 times bigger lot, than the retrace of 20 pips and closing all positions would leave you + 20 pips for 1 initial lot. And now you can watch the market again being free and positive. The question is how to master this technique , I guess you have to dance with the market and this what I'm not good at yet and have to work on. And I'm looking forvard to hear that from Fti. He is on vacation now, let's wait for him and try to discuss this without him for now.
  • #670
  • Dec 19, 2007 3:04pm Dec 19, 2007 3:04pm
Hey Sizz'
what you say makes perfect sense as I understand it.
How I handle it is when in rescue mode I watch the PA in all time frames looking for patterns that make up compound/larger patterns and for S/R et al.
When it looks like it may be time to attack, I send in a squadron to take on the skirmish.
In attack mode I wait for my troops to tire and regroup, leave them to secure the taken ground and lookthen add another squadron to take more ground.
You could basically say it's buying the dips, selling the highs I guess. MM is key, especially in a rescue situation.

Quoting alexfot
<snip>
For example, if EU goes against you 100 pips, and you scale in to this loser with 5 times bigger lot, than the retrace of 20 pips and closing all positions would leave you + 20 pips for 1 initial lot.
...
Hi alexfot, be careful here, while snowballing in don't send in too many troops at once. Yes, you may be able to take some ground and come out square a lot quicker but if you are pushed further backwards your losses escalate a lot faster.
If you had an army you wouldn't send the whole lot of them to war, you would be strategic and send in enough where and as required depending on the enemies tactics and the terrain.
While defending, take cover, send in just enough troops to keep balance and to take small winnings constantly, this way you never get too over exposed.

This type of trading is hard, and sometimes it takes quite a while to take back some ground if in a losing position. It is up to each individual how to manage and protect the book by MM, MO and TA, I can see why it would take 1-2 years to train a good dealer.
  • #671
  • Dec 19, 2007 3:49pm Dec 19, 2007 3:49pm
Quoting Zoran
Though I understand his reasoning and I have recovered from poor positions in the past by improving my average, it's the technical aspect fti uses that's still a mystery to me. Take note of the last bit in fti's post above.

"for viability, you must understand, the martingale, fibonacci and log arithmetic spirals. Their workings, the empirical formulation and their characteristics. The secret working lay in the pi & its skew."

This is not something I can say is familiar to me. Is anyone here clued up on that and able to provide some clues or references? I'd say most have overlooked the importance in it.
I have been meditating on this also, the martingale part is pretty straight forward, the fib, spirals and golden ratio (phi and skew) and how they are formed I also understand but as you say, how to apply them would be another good tool in the traders TA tool box for sure!
  • #672
  • Dec 19, 2007 5:30pm Dec 19, 2007 5:30pm
Quoting MickD
I have been meditating on this also, the martingale part is pretty straight forward, the fib, spirals and golden ratio (phi and skew) and how they are formed I also understand but as you say, how to apply them would be another good tool in the traders TA tool box for sure!
Here is another site I follow with someone using spirals in TA. Check this out

http://www.fxsurfer.com/forums/showt...=3382#post3382

I'll have to ask him how it is used.
  • #673
  • Dec 19, 2007 11:03pm Dec 19, 2007 11:03pm
Wow! that made me dizzy

It looks as though he set's it up with a line from the 2 major tops and a line square to it to start the spirals. An mt4 coder could knock this up if they were good with the graphics side, the calc's wouldn't be too bad as from memory it's just the radius of the box side length to draw an arc across the diagonal, the last point is the start of the next arc which is the next box size up and so on.
You can see where the price has touched the spirals in a few places and where he plans his set up.

I don't know though, still a bit too 'predictive' for me I think. Having said that, so is S/R etc. and like those it's only a guide, not a given so if taken in that context I guess it couldn't hurt.
  • #674
  • Dec 20, 2007 1:41am Dec 20, 2007 1:41am
Lieghsww,
Does the 1st AOW lesson relate to a particular part of the trading stratergy IE: only MM or only Chart analysis etc..

Or will will it relate the the stratergy as a whole ( Phsychology, MM, Technical analysis, Damage control, Rescue, and so on...) ?
  • #675
  • Dec 20, 2007 7:45am Dec 20, 2007 7:45am
Looks like that guy is using it as a time point so it is probably not what fti had in mind.

I wonder whether he is just referring to projection and retracement values when he made his comment?

"for viability, you must understand, the martingale, fibonacci and log arithmetic spirals. Their workings, the empirical formulation and their characteristics. The secret working lay in the pi & its skew."

This all seems to come back to the numbers 1.618 and 0.618. Then we have derivations (skews?) 0.382, 0.5, 0.786 (sq root), 0.886 (fourth root), 1.13 and 1.27 (inverses). I've used these ratios in harmonic patterns but that is also predictive.

A basic trading strategy is to follow the trend, enter on a retracement (eg. 0.618) and project target (eg. 1.618). So when in trouble, the martingale approach would be used to improve the average to get yourself out of the hole, but the timing would likely line up with one of the numbers above?

I'll leave it there for now.

Quoting MickD
Wow! that made me dizzy

It looks as though he set's it up with a line from the 2 major tops and a line square to it to start the spirals. An mt4 coder could knock this up if they were good with the graphics side, the calc's wouldn't be too bad as from memory it's just the radius of the box side length to draw an arc across the diagonal, the last point is the start of the next arc which is the next box size up and so on.
You can see where the price has touched the spirals in a few places and where he plans his set up.

I don't know though, still a bit too 'predictive' for me I think. Having said that, so is S/R etc. and like those it's only a guide, not a given so if taken in that context I guess it couldn't hurt.
  • #676
  • Dec 20, 2007 3:00pm Dec 20, 2007 3:00pm
Quoting Zoran
....
A basic trading strategy is to follow the trend, enter on a retracement (eg. 0.618) and project target (eg. 1.618). So when in trouble, the martingale approach would be used to improve the average to get yourself out of the hole, but the timing would likely line up with one of the numbers above?

I'll leave it there for now.
I agree, I've been trying to use that strategy (or variations of it) with price movements but haven't quite got it to fit, a bit more practice.

You're right, we don't want to get too far ahead in case we are going down the wrong road
  • #677
  • Dec 21, 2007 1:12am Dec 21, 2007 1:12am
ok , read this thread and its not working at all. Looks to me like another mind twister , I appreiciate everyones time ,but if you are going to put something out there to help people learn how to trade ,then do it. dont jerk people off creating threads as long as WAR and PEACE and then walk away . Look not the greates trader at all but , this remindes me off when dark Star started a tread and then decided to keep it from the Forum ,and got it erased completely . If you got something that works great keep it to your self and get lost , dont hang it in front of these guys and then take it away , not right and , prety stupid on your end . If these threads are going to achieve anything then its going to need guys with bigger commitments .

happy trading
  • #678
  • Dec 21, 2007 6:03am Dec 21, 2007 6:03am
Quoting MickD
I agree, I've been trying to use that strategy (or variations of it) with price movements but haven't quite got it to fit, a bit more practice.

You're right, we don't want to get too far ahead in case we are going down the wrong road
The strategy is fairly simple. Follow the trend and enter on retracements (of significant high and low points). If the retracement goes further than expected, then add at the next level (fti's snowballing - eg. add at 50%, 61.8% and 88.6%). If that fails (ie, goes further than 100%), move onto the next timeframe to determine other points and possible recovery routes. If the trend continues then keep adding on retracements.

Of course, practice helps.


vin234... I believe the intention is to continue teaching but probably not until the holiday season ends.
  • #679
  • Dec 21, 2007 6:48am Dec 21, 2007 6:48am
Quoting vinn234
ok , read this thread and its not working at all. Looks to me like another mind twister , I appreiciate everyones time ,but if you are going to put something out there to help people learn how to trade ,then do it. dont jerk people off creating threads as long as WAR and PEACE and then walk away . Look not the greates trader at all but , this remindes me off when dark Star started a tread and then decided to keep it from the Forum ,and got it erased completely . If you got something that works great keep it to your self and get lost , dont hang it in front of these guys and then take it away , not right and , prety stupid on your end . If these threads are going to achieve anything then its going to need guys with bigger commitments .

happy trading
Vinn, I'm sure you have a proper reason to think as you do. I'm sorry to hear that it's not working for you.

I respect what FTI and all other great people have contributed here. As I'm not very good at reading the reasoning behind a mind, I have to ask you to help me to understand you better.

What part exactly is a mind twister? Maybe we can help to explain because surely there are others with same questions as you.

You seem to be quite knowledgeable about how to teach people about trading. May I ask about your method of mentoring? I'm sure you have shared your vast knowledge somewhere on the web, do you mind pointing where we could see your method of teaching people to trade, please?

I'm sure you have read the whole thread, but it's so long that it's entirely possible you have missed that info, so let me humbly remind - FTI went on vacation with his family and promised to be back on new year beginning. Maybe I have confused the days and years somehow, but I'm pretty certain it's not 2008 yet. Even Christmas is yet ahead not to mention new year's eve.

About the Star guy - don't dwell on past as it's an obstacle on the way to moving on.

Advising somebody to "get lost" shows only lack of self control. You're not obligated to read this thread, so you don't have to stay around here. If it makes you mad, then I can only suggest you follow your own advice, please.

Wishing you all the best,

Syres.
  • #680
  • Edited 8:08am Dec 21, 2007 7:10am | Edited 8:08am
I'm absolutely sure Fti, will be back on this thread in 2008, like he said he would, hope fully leighsww will be back earlier. I think by pi, fti meant 3.14159 number and maybe he uses it somehow. Everybody just don't mind negative people.
28 traders viewing now