Technical Analysis Fallacy | Page 38 | 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

  • #741
  • Jan 7, 2008 4:46am Jan 7, 2008 4:46am
Quoting fti

@ MickD
You seem to be getting close to the working theoriticals of the training.
You need more hands on practise , the more practise you get the clearer it will become.
Thank you for your input Fti, I really appreciate it and it's good to know that I'm heading somewhat in the right direction.

I have since been experimenting with phi and it's skew with reasonable success, it's uncanny how the PA can follow these numbers!
I'm currently battling my way out of a very bad trade on demo, it's quite an experience (4 days now!) but I'm pulling square and may even make quite a good profit if the PA keeps up (I'm long A/J).
At the very least I want to get back to where I started the position, I'm almost there
  • #742
  • Jan 7, 2008 5:08am Jan 7, 2008 5:08am
Hello sir,

Hats off to you for sharing such valuable information and thanks to those who have been actively promoting growth and discussion in this thread. I've always wondered why a friend and mentor trades w/o stops. But he did not got into much details into loss management.

I would like to hear more about the methods required into snowballing a position to reduce a loss. (at the same time understanding that i am entirely trading on the wrong side of the market)

You indicated, that we will need a squad to save a losing position. Hope that you could find the time to further divulge this piece of information.

Could you aslo reccommend some books which explicitly discusses on position/risk management?

Have you solved your broker issue?
You might wanna try demoing with mfglobal.sg?
Anyway are you putting up in Cameron?

best regards
jest
  • #743
  • Jan 7, 2008 5:23am Jan 7, 2008 5:23am
Quoting Zoran
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.
This seems feasible, for good MM.
only that you are required to dance ! remember?

Zoran & ALL,
Ponder this.
What does the words martingale, fibonacci progressions and log arithematic spirals suggests.
What are they categorically ?
What is their relationship with price?
And whats their relationship with size?

regards
  • #744
  • Jan 7, 2008 5:31am Jan 7, 2008 5:31am
Quoting Syres
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.
Thanks Syres, you are a stand up person.
Much obliged to your chilvarious action.

It's sad, but in this world, there are many like vinn, who believe themselves learned, not realising that thay have contributed little of their knowledge.
But its so easy that they can see the spaek in the eye of others and not seeing the log in their own eye.

I tend to leave these people to their own ways, cos, the wisdoms of time have taught me that, these will continue to learn and relearn the lessons that they have to learn, again and again until they get it right. Such is the will of God. Until they come to terms with their egors, they shall make little progress.

tks Syres for your assistance to vinn & the likes of.

regards.
  • #745
  • Jan 7, 2008 5:55am Jan 7, 2008 5:55am
@ Beartrade
Thank you beartrade, you articulated your mindset well.
You seem a good trader.
Good fortune.

@ gene22
I wish you speedy recovery from your illness.
Then come on and tell us about your fibo views.
I may like to bring your thoughts to a different level.
But do let the people get the Sun Zi AOW right first.

@ Jairo
What you have described is similar to dollar cost averaging.
Your discription of staying within the thin red line (fighting zone) is good.
This can be a fesible MM.
What you may not have considered is the "dance".
Thats key.

regards
  • #746
  • Jan 7, 2008 6:03am Jan 7, 2008 6:03am
Quoting asyi
Hi there, Since no one has responded to your questions I will attempt to shed a little light on some of your questions.

#1 "Brains behind the Forex" Implying that there are brains behind this market would mean that there are reasons for price movements and logic in determining the direction of the movements. Someone once said, "If you have traded the forex long enough you know that logic and reason don't always matter." This (I believe) is one of the points of this thread - technical analysis doesn't always matter and if you put your faith in it and depend upon it you will become very disappointed and your account will be a little less. Even your SS of 533 on a 15 min. will at some point in your trading become a curse and you will have to default to your hope indicator for recovery. I would imagine that your success with SS 533 is totally dependent upon your entering the market at the best period of time, i.e., when the activity, the value of transactions, is the highest.
But, eventually you will be "Fooled By Randomness". But, we all are, and to that I say, "Welcome to the Forex."

#2 Never buy anyones system. Develope your own through hard work and much study. A system that works for one person doesn't necessarily work for another. There are many good systems at Forex Factory, demo them all and then develop your own.

#3 I never trade more that 20% of my margin at any one time. I start out with one trade and make sure it's in the money before adding to it. I'll continue adding to it until it becomes invalid or reaches my target. By starting out with one trade with one currency pair, if the trade goes against me, and I'm absolutely positive that my entry, according to my system, was correct, I'll just sit on it and wait until it turns positive. After all our goal is to make money. Last Thursday 12/27 I went long on a GBP/USD at 08:15 EST at 1.9940. I absulutely knew with 100% certainty it was going to go up. I was looking for 20 pips. It went up to 1.9958 and started back down. I just sat there watching going over by approach and reasons I entered the trade long. I began looking for some support and found it around 1.9870. My system said go long, what's happening? At 11:00 the candle started up. I could either add to my position or turn off the computer and do something else. I just hate to sit and stare at the computer so I decided to turn it off and come back later. My target was only 20 pips and my entry was based upon a system I have used for over three years. I came back around 1500, my trade had hit its limit with a positive 20 sometime around 1400. You must know why you place a trade and in which direction it will go and what your target is before you enter the trade. And then you must have confidence in your own system. Continue to read, and study all the forums at Forex Factory and you will become a good trader.

Best Regard, ASYI
@ olorunloniem
I concur with asyi in his advisement to you.

except this statement.
"You must know why you place a trade and in which direction it will go and what your target is before you enter the trade."

This is because there is actually no way to know what your targets are in any trade attempt. Active position management is recommended for profitability. Try to understand the meaning of "the dance." ie market form reading.

Further. I add these for your education.
1. Understand that it is impossible to predict the future.
The only way is to yield into it with appropriate strategies.
Leave predicting future to the fortune tellers.

As the markets are made up of the buyers and sellers,
no one is guaranteed a profit,
with the exception of brokers and back office accounting staff,
who work for a fee.
Any attempt to predict the market, will add nothing to a correct reading of market form, but will surely kill your portfolio in a wrong read by screwing up your mindset from all angles. Beware of "YOU".read sun zi text about knowing yourself.

2. All of creation is a mistery to the uninitiated. But nothing is hidden.
You know that an aircraft can fly.
But if I gave you all the parts of an aircraft, unless you are trained in its use, your bird may not take off.

And I repeat myself.
-no mentor, or course, or literiture can give anyone the holy grail to the secrets of success in trading in the markets.
-"and no one, sells the goose that lays golden eggs, probably the eggs, but never the goose"

3. Unfortunately there is no way of trading with minimal risk.
Your rewards will conmmensurate with the risk you attempt.
However if you stay to prudent MO, MM, proper capitalisation and mindset, your chances for survival is much better.
Be rackless and you will destroy yourself instantaniously.

regards
  • #747
  • Jan 7, 2008 6:12am Jan 7, 2008 6:12am
@ faqcya
You seem profitable in the long term positioning.
Was just wondering if you "stretch" your trend bands?
Good traders and dealers can out perform the markets, by stretching.
Thats part of MM.

@ lilpip

I am sorry to hear of your construction business turndown.
I believe many were affected.
I hope you learned your lesson from your "B prater" encounter.
remember my story about Diana.
You may like to examine your pinkness and reset that.

Further understand the W Wilder loss recovery table.
My advice to you is to change your mindset levels, write off the loss.
As you have hit non recoverable %
Re-strategise your MM base on whats left.
Don't even try to get the loss back.
It may just get you in quicksand environment.
The more you scratch , the more it'll itch.

First learn to make the small money for a simple living,
then over time you may horn your skills and resources to rebuild.
Its an ants job, but thats the reality of things.
You seem to be a numbers man, so works within the numbers.

About the dancing,
Its really "feeling" the market pulse ( market form) using charting.
Firststly, Do you know why women dance better than men.
Thats because they had to learn how to follow the men's lead in a dance.
This does not apply to those women who want to lead the men in the dance. That's where the problem arises for them.

The problem with many traders is that most were successful in some form of career or business before embarking in trading for a living.
This success , tends to have seeded the ego problem, while the development of confidence may be complete on the personality profile, over-confidence may be a side effect of that training.
For All the dealers I have trained in my life, somehow the more successful ones were always those that were untrained and had little knowledge , when they first started the training. While the "trained" ones had difficulty, because of mindset memory,not so unlike the muscle memory problem in golfers.
So go over what I have given very carefully.
I have taken pains to be very blunt in the presentation.
Unless you were trained in other desciplines of the art, a newbie should have no problems understanding and practising.

Anyway if anything is confusing , ASK.
Hope this helps you.

@ Daemien
Thank you Daemien, you understood correctly.
Good reading skills.

regards
  • #748
  • Jan 7, 2008 6:12am Jan 7, 2008 6:12am
Quoting fti
In re[ly to #633
Thats the correct and most realistic stance to take, as a trader.
So if this was your mindset, what should your MM look like?
The answer to this question should carry you to the MM strategies for prudent trading. Doesn't it?
Not sure if mine is the same as yours (scaling in?) otherwise I will wait for your lessons on MM & AOW to learn more.

Quote

Slippage is the least of my worries using the structured nature of futures FX markets . My major concerns are.

1. The liquidity of the markets.
Be aware that the bank, traded as liquidity provider to our futures desk who are corp members of the exchanges. So in reality I was privy to the true liqudity of these markets and I am not talking about general volume alone.
If my interpretation of the above statement is correct than isn't it better to clear through the Futures FX which is direct with the bank than through retail forex which is way down in the food chain?

Also, can you please explain further on this statement "I was privy to the true liqudity of these markets and I am not talking about general volume alone."

What do you mean by "true liquidity and not referring to the general volume"?

Also, I believe I saw somewhere that the volume of trading on the futures FX is much higher than those at a retail forex broker.

Quote
2.The non 24 hrs nature of the fx futures markets also will mean that part of market action will not be avail to you as a trader. This would restrict your markets access depending on your domicile of operation.
Isn't there now a 24 hours electronic trading on the CME Globex?

Quote
3. The cost of clearing trades and brokerage, as a non exchange members will prove to be the achilles heel for active trading.
Understand where you are coming from, as in your case, you are trading on the 5 min charts. But what are your thoughts if one is trading on a longer timeframe?
  • #749
  • Jan 7, 2008 6:19am Jan 7, 2008 6:19am
Quoting DutchAngel
Hi Argonaut

A currency-cross is any currency pair in which the US Dollar is neither the base nor the counter currency. You can create your own synthetic pairs by buying or selling dollar pairs. ie if you bought GBP/USD and bought USD/jpy
you would be trading GBP/JPY.
@Argonaut
There, DutchAngel explained it, She's right.

I say again.
All currencies are traded against the USD because of its relationship to Gold , due to the old relationship bretton woods system and the USD.
Further if you read "Paper Money" you would have discovered the links of the driving force behind all the world's economies, ie crude oil,( Black Gold ) which is traded only in USDs.

All currency crosses can be engineered from the USD pairs.
The Majors of the USD pairs are the EUR/USD, GBP/USD, USD/YEN, USD/CHF which are most liquid.

Basic chart reading and Technical Analysis is non market specific and can be used on the charts of any market.
There is however localised differences of read due to the different character of the markets.
Attention must be paid to the accuracy of the data inputs
and the interigity of the datafeed.
This is cos, Rubbish in (Rubbish charted) Rubbish Out. (Rubbish Trades).

It is unhealthy to place stop loss orders in the majors as I have previously explained. ( althought the liquidity is high).
Placing Stop loss ordes on exotic currency pairs is sucidal.

regards
  • #750
  • Jan 7, 2008 6:25am Jan 7, 2008 6:25am
Hi ALL,
I hope most of the questions raised are answered.
For those I may have missed, please ask again. tks

For those of you who have embarked into the MM on the progression snowballs.
We shall go into that after completing the AOW texts.

There will be 3 Lesson task in the understamding of Sun Zi AOW.

I presume that you have read the AOW manual.
The first Lesson task is to indentify Sun Zi's teachings about

"THE GENERAL". for our purpose "YOU the trader".

Find all important points Sun Zi mentioned about the General( commander).
and post them here with your understanding of the read.

This will be Lesson 1

regards
  • #751
  • Jan 7, 2008 6:26am Jan 7, 2008 6:26am
Many thanks for the long and detailed reply. This has help me to clear some of my doubts but I'm still unclear on the below statement.

Quote
Liquidity is not the thrust factor of the directional sweeps of a marketmaker.
The thrust factor in market movement is predominantly the cluster size of stops and the trail of ("self-feeding") stops triggering.
My understanding is that liquidity and the spikes in the market movement are linked. If liquidity is thin than it only takes a smaller cluster size of stops to spike while a large amount of stops is required to spike the market if liquidity is heavy. Am I wrong?

Eagerly waiting for your AOW and MM lessons to commence. Thanks again.
  • #752
  • Edited 2:02pm Jan 7, 2008 1:46pm | Edited 2:02pm
Hi fti

Glad to see you back and it's really great that you are continuing!

I read "Paper Money" and what an enlightening book. I already had a hint of how the banks created "money" although the Oil/OPEC link came as a surprise. It does make sense though and understanding world politics is easier now. Although the book was written over 25 years ago, you could easily mistaken it for a new release. It seems things haven't really changed much, especially the importance of black gold.
  • #753
  • Jan 7, 2008 2:00pm Jan 7, 2008 2:00pm
Quoting fti
This seems feasible, for good MM.
only that you are required to dance ! remember?

Zoran & ALL,
Ponder this.
What does the words martingale, fibonacci progressions and log arithematic spirals suggests.
What are they categorically ?
What is their relationship with price?
And whats their relationship with size?

regards
I haven't thought about it for too long, but they are a mathematical sequence of numbers that continue to grow (or shrink in the opposite direction). The relationship with size seems to be the ratio at which they grow, being either 1.618 or 2 and with price seems to be highs and lows.

Anyone else have any ideas?
  • #754
  • Jan 7, 2008 3:00pm Jan 7, 2008 3:00pm
Hi ALL,
I have registered the AOW read of the below mentioned.

MickD#643
alexfot#646
Maseyw#648
Syres#649+650
catshot#654
crazy_bdog#661

please repost your revised thoughts on the subject for
Lesson 1. The General.
I shall compile the manifest of participants on this subject on friday 11 th Jan.

I shall PM the list a thought text of my own on the subject.
Please do not reveal the PM in public.

I would like all interested to post your thoughts.
This is not for my benefit but for you to check it against mine.
Unless you are actively in the thought process of these studies,
there will be little you can benefit from it.
Therefore for the education process of Sun Zi AOW,
I shall only be sending the PM, to those of the members who are in active study and research on AOW and have post prove here that They are reading Sun Zi AOW.
It is also to spare myself the frustration of explaining the contents to those who are not reading it.

On receiving the PM, check your thoughts against that which I have PM you and see if you can understand.
You may PM me questions and I shall answer them in this thread were appropriate.

regards
  • #755
  • Jan 7, 2008 4:16pm Jan 7, 2008 4:16pm
This passage stands out as the most meaningful for me in regards to the trader as general:

12. There are five dangerous faults which may affect
a general:
(1) Recklessness, which leads to destruction;

Chasing a move after it has already started is one reckless behavior I have learned to avoid after numerous mistakes. Other reckless trading behavior seems to be poor money management (too many lots to open a trade before it shows promise, etc).

(2) cowardice, which leads to capture;

reaction to recklessness in which a trader is scared to trade and either quits or paper trades, even if they have funds available to them. Allowing the popular liturature and media to convince them the big boys will take all their money and only a small percent of traders make it.........and getting out of trades early which will be covered in number 5

(3) a hasty temper, which can be provoked by insults;

losing a trade, and then launching a revenge trade to "get the losses back" instead of planning a better entry

(4) a delicacy of honor which is sensitive to shame;

no could of, should of, would of........I have started reporting my daily trading to my wife so she can ask the tough questions and I am held accountable (now public) to the boss! No shame in losing a battle when I have some smarter soldiers left to fight the good fight tomorrow.

(5) over-solicitude for his men, which exposes him
to worry and trouble.

I tend to get out of good trades early, not willing to take a tough retracement or consolidation due to worry and trouble, I am hoping to find some answers courtesy of Sun Tzu and FTI and experience........

I also read Paper Money (got it for $6 on eBay) and it is amazing how the ideas of the book (oil prices, housing, etc) seem to be coming out of today's headlines. Thanks for the suggested reading, looking forward to more thinking..............
  • #756
  • Jan 7, 2008 5:27pm Jan 7, 2008 5:27pm
Unfortunately I came across this thread a little to late to be abe to dust off my old copy of aow and reread it, but it looks like something I need to do. I read aow many years ago and a couple of the main things i remember from it were:
1) sun tzu was defensive
2)its a book that teaches safe ways to experiment and this is why it can be applied to virtually everything in life. Life itself is just one experiment after another


fti what do you mean by "stretching" the trend?
  • #757
  • Jan 7, 2008 7:14pm Jan 7, 2008 7:14pm
Quoting alexfot
My comments for Chapter1, Laying Plans:
I. LAYING PLANS
1. Sun Tzu said: The art of war is of vital importance to the State.
You have to study first, in order to trade.
Otherwise you will be wiped out.
 2. It is a matter of life and death, a road either to safety or to ruin. Hence it is a subject of inquiry which can on no account be neglected.You have to to study all the time.
The importance of of learning is difficult to overvalue.
3. The art of war, then, is governed by five constant factors, to be taken into account in one's deliberations, when seeking to determine the conditions obtaining in the field.
One have to follow some major rules when go into trading(war)
4. These are: (1) The Moral Law; (2) Heaven; (3) Earth; (4) The Commander; (5) Method and discipline.
5 rules
5,6. 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.
Always trust your intuition, experience and knowledge first, then anything else
7. Heaven signifies night and day, cold and heat, times and seasons.
Watch for fundamentals, and motion of the market
8. Earth comprises distances, great and small; danger and security; open ground and narrow passes; the chances of life and death.
Watch you size positions, and define them according to the market conditions
9. The Commander stands for the virtues of wisdom, sincerely, benevolence, courage and strictness.
Watch your open position and never leave it unattended, because this is your army (soldier, baby)
10. 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.
Always follow you MM rules and trading plan.
11. These five heads should be familiar to every general: he who knows them will be victorious; he who knows them not will fail.
Not following the above rules will definitely kill you
12. Therefore, in your deliberations, when seeking to determine the military conditions, let them be made the basis of a comparison, in this wise:--
13. (1) Which of the two sovereigns is imbued with the Moral law?
(2) Which of the two generals has most ability?
(3) With whom lie the advantages derived from Heaven and Earth?
(4) On which side is discipline most rigorously enforced?
(5) Which army is stronger?
(6) On which side are officers and men more highly trained?
(7) In which army is there the greater constancy both in reward and punishment?
The quality of your trading plan depends on how you observe 5 rules
14. By means of these seven considerations I can forecast victory or defeat.
The closer you followed the rules the more chances you trade will be successful
15. The general that hearkens to my counsel and acts upon it, will conquer: let such a one be retained in command! The general that hearkens not to my counsel nor acts upon it, will suffer defeat:--let such a one be dismissed!
If you don’t see all the rules are observed, don’t take the trade
16. While heading the profit of my counsel, avail yourself also of any helpful circumstances over and beyond the ordinary rules.17. According as circumstances are favorable, one should modify one's plans.
For 16 and 17: All rules have exceptions, never forget it, and change your plan if something goes wrong, even if it against current rules
18. All warfare is based on deception.
All markets are deceptive never forget it and take it into consideration when you trade.
19. Hence, when able to attack, we must seem unable; when using our forces, we must seem inactive; when we are near, we must make the enemy believe we are far away; when far away, we must make him believe we are near.
See 23
20. Hold out baits to entice the enemy. Feign disorder, and crush him.
Try market with a small lot first
21. If he is secure at all points, be prepared for him. If he is in superior strength, evade him.Add more to your position if it goes OK
22. If your opponent is of choleric temper, seek to irritate him. Pretend to be weak, that he may grow arrogant.
Wait for the best price and time to enter the market
23. If he is taking his ease, give him no rest. If his forces are united, separate them.
For 19 and 23 be agile, smart and inventive, if sure act fast
24. Attack him where he is unprepared, appear where you are not expected.
Buy deeps, sell tops, or maybe buy when everybody sells and vice versa.
25. These military devices, leading to victory, must not be divulged beforehand.
Do not enter the full position at the very beginning, scale in gradually
26. Now the general who wins a battle makes many calculations in his temple ere the battle is fought. The general who loses a battle makes but few calculations beforehand. Thus do many calculations lead to victory, and few calculations to defeat: how much more no calculation at all! It is by attention to this point that I can foresee who is likely to win or lose.
Study your market as much as possible, before take your first trade.

Of course, my comments are not perfect, but at least we can start discussion from here.
Regards
Alex
In red are my additions to my first post on the subject. I think the main idea of chapter 1 is that trader is a General in the war, and lots are his/her soldiers, and he has to be wise and inventive to win the war(trade) and follow some permanent rules(5rules) and devise the new ones when battle environment is changed. But, still don't know how to effectively use it in trading.

Regards
Alex
  • #758
  • Edited 12:15am Jan 8, 2008 12:05am | Edited 12:15am
Quoting fti
@ Green_David

Thanks, my friend for your praises.
Fearing that I may be blowing my trumpet too loud,
but I used to be with the cream de la cream of the business.
Now but just a burnt-out candle.
When a trader travels thru this Quest, they' ll undestand.
Was nice that you saw the hints.
Be mindful that you just rode the 1st loop of his rollercoaster ride, more a coming.

Just a little help since you are on the markets live. The fundamental backdrop has not changed signifiv=cantly since dec 07, what is evident is that many Cbs are at, the defend the dollar front, due to vested interest in the oil prices. (Oil is traded in USD) So look for continued trend in USD weakness, but look out for the CB lurking in the markets. They are operating in stealth mode so be nimble. Move like the wind, don't be sitting ducks.

regards

Thank you fti. Buring out, but still shining, right? I will keep in mind of your saying--:They are operating in stealth mode so be nimble. Move like the wind, don't be sitting ducks."

Here is my intepretation on AOW 1st chapter:

I. LAYING PLANS


1. Sun Tzu said: The art of war is of vital importance to the State.

2. It is a matter of life and death, a road either to safety or to ruin. Hence it is a subject of inquiry
which can on no account be neglected.

Trading is like batttle field, you either die or to be destroyed to join 95% losers. So don't trade like playing games. You have to be serious, committed and focused.

3. The art of war, then, is governed by five constant factors, to be taken into account in one's deliberations, when seeking to determine the conditions obtaining in the field.

4. These are: (1) The Moral Law; (2) Heaven; (3) Earth; (4) The Commander; (5) Method and discipline.

5,6. 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.Many friends here think that moral laws means trading rules. No.

In my opinions, moral laws ARE moral laws. In Chinese ancient philosophy, every thing to be done, the purpose has to satisfy a moral standard even a war. Otherwise the war will have a failure. Think about why US lost the Vietnam War(nor American people neither many countries supported US), Soviet Union also failed in Afganistan occupation. But why US won the war v.s. Iraq in 1992?

Regarding trading, for what purpose we trade? What are our final objectives in trading Forex? Making profits, of couse, but profits for what? If some people seek profits for immoral or wrong purporses such as womanizing, wasteful and unnecessary luxurous life, satisfying unnecessary ego, etc, I don't think they will succeed finally. Because with immoral objectives in heart, they will focus only on money and fast profits, then, a lot of phychological enemies like greed, hope, undue pressure etc. will attack you. And if they got some initial success, they will be in a hurry to satisfy their initial purpose maybe abusing themselvs, then how can they continue to make greater success?

For me, I trade forex just to prove to my self, that by studying hard and lots of efforts, I can make it also, I can also succeed in trading. By trading forex, I will learn decipline, emotion control, patience and more economics knowledge. Money is just a byproduct if you do things right.

7. Heaven signifies night and day, cold and heat, times and seasons.

8. Earth comprises distances, great and small; danger and security; open ground and narrow passes; the chances of life and death.

Regarding trading forex. They mean market conditions, like volatile, strong trend, sideways, the volitily and charactoristics of each pair(e.x. E/U vs. G/U), and focus of market now(for example, since July 2007, in forex market as well as US eqity and bond market, the focus is subprime crisis. Almost every movement is related to that), etc.

They also mean your platform, the quoting mechanism, and all other forex knowledge etc.

9. The Commander stands for the virtues of wisdom, sincerely, benevolence, courage and strictness.

The trader determines the trading. And it is trader who finally decides the success or failure. Market is market, it does't care your qualification or understanding.

16. While heading the profit of my counsel, avail yourself also of any helpful circumstances over and beyond the ordinary rules.

Try to use any factors to help you such as, besides TA, also take some fundemental, herds emotion, etc. into consideration.

17. According as circumstances are favorable, one should modify one's plans.

You should not be rigid on trading. To be nimble and flexible according changing market condition and forming prive movement pattern.

18. All warfare is based on deception.

Sitting ducks and false break outs?

21. If he is secure at all points, be prepared for him. If he is in superior strength, evade him.

After a sharp increas/drop, wait price patiently to be stable and go into a consolidation, and then be prepared to enter a trade. If you want to long, but the price is droping sharply, evade it.

24. Attack him where he is unprepared, appear where you are not expected.

When market shows some signals of trend reversal, you can try some position entry. If the trend is so clear for every one, maybe it is too late.

26. Now the general who wins a battle makes many calculations in his temple ere the battle is fought.
The general who loses a battle makes but few calculations beforehand. Thus do many calculations
lead to victory, and few calculations to defeat: how much more no calculation at all! It is by attention to this point that I can foresee who is likely to win or lose.

Study on market carefully and make a trading plan before you enter a position.

David
  • #759
  • Jan 8, 2008 12:55am Jan 8, 2008 12:55am
Much gratitude to fti for allowing his time to be consumed in this way. Thanks also to Leigh for inspiring even those of us lurking- godspeed to you. It's been a few days since I've read all the replies to the first lesson and therefore apologize if I've subconsciously used thoughts of others. These are truly intended to be my own. On with it then......


Before seeking out specific conditions of the war of trading, one must know well five concepts: Knowledge of Self (Moral Law), Inherent nature of the Market (Heaven), Knowledge of obstacles (Earth), possess virtue of Character as steward of your own resources (Commander), and Knowledge of your system, capitalization, and basic preparation (Method and Discipline.) Ignore these and failure is certain.

When these concepts are mastered, then approach the field gathering intelligence by comparing your battlegroup (yourself and trading method) to the traders who will be placing opposite positions. How does your knowledge of self compare? How does your ability compare? How well do you know the this particular market and its intricacies? Are you disciplined more than the others? What is your prior experience and how will you use it?

(13.) Ignore counsel of experience (others as well as your own) to your detriment.
(14.) Pay attention to the overall picture for unseen advantage.
(15.) Be nimble and flexible and aware of changes in conditions.
(16.) Beware of market and self-deception- “fakeouts” and wishful thinking.
(17.) Avoid showing full intentions at the outset.
(18.) Plan then Implement your system without hesitation.
(19.) If market does not give signal stay out!
(21.) If a position goes fully your way, ride it for all it is worth and hedge if you should.
(22.) Calculate entries wisely.
(23.) Again do not show your intentions-(This could be were fti means to wean those of us from stops that market makers can see.)
(24) Test and backtest your system, demo, and fully prepare prior to going live with real assets.

Truly looking forward to lessons of the "dance." Thanks again to all who undertake this journey.

Bohunck
  • #760
  • Jan 8, 2008 3:23am Jan 8, 2008 3:23am
Hi fti and others

My interpretation of the general leading an army viewed by trader managing her trades.

Chapter 1- Laying plans


10. These five heads should be familiar to every general: he who knows them
will be victorious; he who knows them not will fail.
4. These are: (1) The Moral Law; (2) Heaven; (3) Earth; (4) The Commander;
(5) Method and discipline.

A successful trader needs to take the following into account if he wishes to be successful.

  1. Moral law – complete discipline. Learn to take charge of your life and hold on. This is a long ride, and you are the driver every single day.
  2. Heaven – Multiple time frames and fundamentals
  3. Earth – Market Structure
  4. the Commander – trading plan. Make careful decisions and then pull the trigger.
  5. Method and discipline – Sufficient capitilization and sound money management

Chapter 2 - Waging war

14. Hence a wise general makes a point of foraging on the enemy. One cartload
of the enemy’s provisions is equivalent to twenty of one’s own, and
likewise a single picul of his provender is equivalent to twenty from one’s
own store.
Take your profits, protect your capital and avoid loss.


Chapter 8 - Variation in tactics

12. There are five dangerous faults which may affect a general:
(a) Recklessness, which leads to destruction;
(b) cowardice, which leads to capture;
(c) a hasty temper, which can be provoked by insults;
(d) a delicacy of honor which is sensitive to shame;
(e) over-solicitude for his men, which exposes him to worry and trouble.
13. These are the five besetting sins of a general, ruinous to the conduct of war.

Traders beware of the following –
 a)recklessness - self explanatory
 b)cowardice – being afraid of admitting mistaken entry and hanging on to it till it blows your account
 c)Hasty temper – revenge trading or trading on emotions instead of well thought out plan
d) Delicacy of honour – ego and attempt to blame lost trade on anyone or anything else except yourself. You can’t fix it if you can’t admit that its broken.Stop making excuses and start making results.
 e)Over solicitude - your mindset ie psychology involved in a trade

Chapter 10 - Terrain
24. The general who advances without coveting fame and retreats without
fearing disgrace, whose only thought is to protect his country and do good
service for his sovereign, is the jewel of the kingdom.

Trade in the present and for the future. Do not brag about big wins or beat yourself up about losses. You win some and you lose some what is important is the trade you are in right now and the next one you enter into. Protect your resources so that there is a next trade even if this one goes against you.

Hope isn't a viable investment vehicle.
13 traders viewing now