Soultrader's Clinic :)

Not been here for a while i'm afraid - been very busy with business and crappy trading conditions

The clinic will re-open in the new year - Ive already had some questions so if you would like to submit any please do so by PM or post in here if you are 1kt.

for now though, have a great Christmas folks and here's to a very prosperous 2008 for us all.

Cheers!!!

Is this the same soultrader that was selling the Hilda System?

Yep

Tis indeed, sorry not been around much but having a hard time of it lately - it's hard to trend trade without a bleedin trend!

Only things worth trading at the mo are Gold and AUDUSD

Hi ST,

Nice to see you're back.

All the best for '08

regards
daytrading

Happy new year and I look forward to more healing processes moving through the clinic.

MLK day in the USA so here's a new one for the clinic

Question:

im7i4z
http://www.forexfactory.com/images/misc/1kt.gif There is no why
Member Since Mar 2006
Posts: 106


http://www.forexfactory.com/images/icons/icon1.gif Hi
Hi,
I've been reading your Clinic thread for a while and really appreciate your time. I've been trading Fx since end of 2005. I really didn't do any demo trading went to live straight away. Blew up few mini accounts and since starting of 2007 I've been day trading with some success.

But as a student it is very hard to keep up with day trading... the time it takes it really is not suitable for me anymore. So I've been trying to put my system on longer time frames.

The question I'm trying to figure out is that... since I subscribe with your view that fibo is rather worthless and I actually know how to look for S/R on a naked chart, now how to use it properly.

Beside day trading on my live account I'm running a demo account for few months to check if I can put stop-limit orders at support levels on uptrend and vis-a-vis. But it is more like gamble "if-but" condition with tight stop loss than trading to me.

So I'd like to know your view on using stop orders at these levels.

2nd question I've is, it is rather your comment on my view, that if I use "pass through" stop orders which means the if I know support is at xx.120 then my stop long order will be at xx.x180 or higher.

What is you view on it? And how many pips you actually prefer to get in after price have bounced off from S/R levels? Or do you actually wait in terms of time before going in?

That will be all for now. I'd have posted it on the thread but unfortunately I don't know any experienced trader here so don't have my 1KT status.

Hope to have your response soon.

- Imtiaz
__________________
http://beuleah.wordpress.com
Currency Analysis from a backyard Economist.

Answer:

Must say, I left the link in the sig cos i love the stuff on your site - you rock

Stop levels at breakout area's I think you are saying - or is it stop levels at pullback levels?

well, if its the second, pullback levels then i'd say no, because i like to see price going back in my direction before buying /. selling - if i get in a long on a buy stop based on a retrace then i'm buying weakness and I like to buy strength.

If you are talking a buy stop just above a clear higher high (which would signify a new higher high) then i'm with you. personally i dont like buying this high because my stop would be big, however a friend of mine in NYC does this and has only 50 pip stops in general - he buys the momentum and says if it comes back 50 pips then it has no 'steam' and he doesn't want it.

Both are valid, it's all down to comfort levels and individual preferences really. Just make sure you arent trying to pick the bottom / top of a retrace. (of course you dont know it's a bottom or top till it's formed)

you talk of pass through stop orders. the odd pip here and there makes no difference if you ask me, certainly not on the timeframes you are talking about.

However, i have to say i'm a believer in waiting for the bar close for entry and exit - sure it costs you a little more, but how many times have you bought a strong engulfing candle to see it close as a doji?

I also have EA's that can do this for me if i'm going out - if i'm going long on a break then i'll put the level in the EA and then if a closed candle closes beyond the level it will enter.

you also asked about levels - how many pips each side kind of thing - my answer is 'further than the muppet stops' - if it's close to a figure then depending on the currency i'll be 10 pips away from the figure - i.e if the break point is say 1.9796 my long entry would be 1.9810 or maybe 12 - all the muppets would have stops between 97 and 07.

if the level has been building for a while and looks to break then I would actually enter BEFORE the break to make sure i'm in for the stop hits - i would buy at 1.9794 and take a chance - if it's got that far then it will always test the figure and as such take the stops.

Hope this covers your questions.

Thanks to the moderators for allowing me to post in the Trading Room.

Hi Soul,
thanks for your reply and I actually got some clues from it already. The main problem I faced when moving to higher time frame was the candlesticks forming at broker's time. As you mentioned already 4 hourly candle can form with different brokers at different times.

As per the S/R question, I can see much clearly now from your reply. I still have some MM questions for the clinic, hope to have your comments on those later as well.

- I~

Hi Soultrader,

Really enjoying this thread so far.

I do feel I must challenge the above statement, and would place it into the category of "things that are frequently bandied about in forex which haven't been proven and are harmful for beginners."

Do you have any reference or study on that?

This thread died out pretty quickly http://www.forexfactory.com/showthread.php?t=48562

Someone mentioned the Van Tharp experiment awhile back, I believe this is where that "coin flip" idea came from, and said that that experiment was later proven to be flawed.

If I'm not mistaken, Hilda was going for 5K a pop. (Or was it 10k?)

I guess your customers are quite wealthy now after spending that kind of dough. I'd love to hear all the satisfied testimonials. Is the Hilda website still around and updated with these?

Where is the Hilda system now? I'm sure you are retired (after charging 5K a pop) and am guessing the "clinic" is recreation away from your yacht and palace.

I find the dynamics of this forum interesting. It seems some threads ran real hard for a month or so and then they fade away. Then another thread gets strong and gains momentum for a month or so and fades away. Interesting dynamics here on the FF site...

isn't that true for everything in the real world? Businesses come and go..only a few remains intact, traders come in and only few become profitable, etc

I remember that one. Broomhilda needed to "fly" and another 50 things cross over and go green or red n stuff

There was a free alternative to it with similiar/identical indicators(yes it was an ugly indicator based system) doing essentially the same thing.

The whole stuff lagged terribly iirc, but basically tried to get you into "strong trending moves".

--
Paying for systems isn't going to make you a trader, paying for an education might

Hi Blueruby, good, you should question everything. That's what makes a good trader.

It cant be disproven because all anyone defending the idea would say is that you 'havent tried the right money management yet' for every time you failed.

Unfortunately some things are not possible to prove but here is my hypothesis and reasoning.

define something in the market which does work like a coin flip and does make money.

My coin flip would be a breakout system. you define a range (heads and tails) and then see which side the coin lands (the break) then through money management the expectation is positive.

seeing as there are many breakout traders and systems that make money it seems logical to me that a coin toss managed in the same way must also make money.

My reasoning might be flawed I don't know - I can honestly say ive never spent hours on end testing a coin toss but I do believe that the markets are random and neither you nor I have any way of predicting the market. if this was a given then a coin toss seems as good a method as anything else.

It's been pretty well proven that MM cannot turn a negative or zero expectancy positive. It is clear from the way expectancy is calculated.

If you look at expectancy as a function of position size, you will notice that it is linear: its slope, or rate of change, or first derivative with respect to position size is not itself a function of position size (keeping all other parameters constant). Furthermore, the expectancy is always zero when position size is zero. Therefore, mathematically, the only way for expectancy to change sign (neg -> pos or vice versa) through adjustment of position size, is if position size becomes negative - which is clearly absurd in reality.

The coin toss example is a special case of the above, because expectancy is always equal to zero, regardless of position size. It is a linear function with slope equal to zero. If you have a zero expectancy system such as a coin toss, you will not make money in the long run.

It reminds me of the many variations and mutations of martingale systems that people try to sell to naive casino gamblers. The point is that none of them work because all casino games have an inherent house advantage, that is a negative expectancy for the gambler. No amount of fiddling with money management by increasing and decreasing bets will ever change that and that is why long time casino gamblers are always losers and why casino owners are rich.

BTW I like your thread so far.

a coin toss is a bit unfair to use - tossing a coin either goes heads or tails with an evens chance of heads or tails, however choosing long or short does not unless you are betting on the next tick. stop sizes mean that the choice 'long' can go short to begin with and still win if it turns around.

a coin cannot change it's side once fallen as a trade can hence the anaolgy is not the same. Your zero expectancy does not fit in when using a coin to choose direction only.

Also, your zero expectancy supposes that you have a perfect coin in windless conditions. Coins are not balanced 100% and external forces can affect the coin.

Money management in trading is the same as having an imperfect coin - it is weighted one way or another.

ps, roulette wheels are rarely perfect too - trust me I know this

pps, waiting for someone to talk about Shannon and his random walk money management.

But in the coin toss example you also don't have to pay spread. If you were to calculate spread (or other transaction costs) into the equation, even the coin toss example would yield a negative expectancy. The assumption that the coin is even sided and will result in an even 50/50 distribution is valid theoretically, as long as we don't try to test the theory in real life .

In any case, I agree trading is quite a bit more complex. The coin toss is the simplest example out there so it is widely used, but it isn't completely analogous to trading.

However, I still maintain that money management/position sizing can't change the sign of the expectancy value from negative to positive or vice versa (or change the value of a constant zero expectancy).

winlots http://www.forexfactory.com/images/s...ser_online.gif
Member
Member Since Dec 2005
Posts: 19


http://www.forexfactory.com/images/icons/icon1.gif failed trader
HI Soultrader

I have really enjoyed reading your post, it has been very knowledgable and informative.

History: I have traded forex for 3 years now but i am a loser. I tend to trade on discretion, using a few technical indicators and moving averages. However it has made me inconsistent. I have tried a few systems but i have filed my discipline to follow them.

The latest problem i am facing these days are is that i want to be in the a position all these days. I do not know why. I will be winning a series of trade, then my ego will take over and i start to bet bigger.

I am a UK spreadbettor but i am losing and losing. The losses has almost driven my out of forex but i am determined to succeed because i want to be a billionaire as well but i have failed. I have lossed so much money and it has psychologically affected me as well.

I have to take a break to refresh my mind, but i am far from being a sucessful trader.

I hope your trading is going well!


Hi winlots.

I completely empathise with you in your plight. You keep on thinking 'after three years i should be getting there' don't you. been there, got the t shirt etc etc - still go back there every so often too.

Truth is, ive had mail in the past from people who have been in the game for EIGHT YEARS and still lose money.

The reasons? a million and one of them, all folks are different - some people can trade well after just a couple of years in the game, for others a lifetime is not enough and they should never trade.

I can only advise from my own experience and i'll try my best to help you.

The core things at the heart of my trading is that every trader needs 'common ground' - you know the kind of thing i mean - 'golden rules' kind of. even discretionary traders have these golden rules embedded inside.

My first piece of advice would go like this. Decide if you are to be a trend follower or a range trader. those are just about the only real trading methods that make money. make it a real decision and once made you will not attempt the other for a while. (ps, if you choose 'range trader' then you should still look to buy at the bottom of a range if the recent move was long and vice-versa for shorts)

someone will no doubt say 'scalping' well if they can show me a single scalper who has made money for a 12 month period consistently then i'll agree with em, it should be included - but until that time it's off the screen and in the land of total bollocks.

So, trend trading or range trading. make your mind up

when youve done that you need to learn to define either a trend or a range. A trend tends to be identified by higher highs / higher lows or the other way around lower lows and lower highs.

a range is identified by horizontal lines that price bounces off (ish).

you'll notice i didnt mention any indicators.

well, indicators are based on price - they only move the way they do because price moved that way for them. not sure i'm getting this across ... erm, imagine this..

when you were a kid did you ever buy one of those things that would enlarge your pen movements? it was like a pen on one end and a pointer on the other with some clever levers inbetween - remember? - there, i drew one (see attachment)

one end had a pointer or a pen and the other had a pen. basically what you did was trace one end over what you wanted to copy and the other end would mimic your movements - depending on where the fulcrum was fixed determined what the magnification was.

the point i'm trying to make here is that no matter what the end result was that it was made based on what happened with the pointer. if you shove the pointer up then the other end went up. The pen did not lead to pointer.

Indicators are the same thing - all of them based in one way or another on price. Listen to this - many people use OSMA as an indicator. so lets look at what it is.

first of all osma is the histogram part of the macd. the macd at 12,26,9 is based on the gap between a 12 moving average and a 26 moving average. the line is then smoothed by another moving average (9) to give the line. Then what they do is make another moving average of the divergence between the smoothed line and the unsmoothed line to give you the osma.

so osma is a moving average of two moving averages that are a moving average of a gap between two moving averages.

Now tell me that isnt a pile of bollocks? (ive maybe missed out a moving average there but it's just the same)

However, when you look at it it looks like when the osma turns so does price - and it does!!! but it only turns BECAUSE some crappy moving averages are coming closer together, not any magic formula.

see what i mean? indicators are mostly bollocks.

so why not just use price it's self?

Now before i get totally ripped to pieces let me say that they can be used, but don't make the mistake in thinking that they predict. use them for discipline in your trading method but not for predictive qualities that they do not possess.

I must take issue with the 'i'm a loser' bit - you arent a loser at all. as you cannot possibly predict the market how can you be to blame if it does not go your way?

You do however need to get a 'golden rule' kind of method and make sure you stick to it. It does not have to be complicated. you can't predict the market any more than i can, so just go for probabilities and have a method that closes the losers fast.


if you cant predict the market and accept that properley in your mind then you can begin to detach yourself from the trading decisions and act like a trader. My guess is you sweat every trade and in fact probarbly every pip.

second piece of advice would be to trade at a level where it does not seem to matter much - say £1 a pip - and whatever timeframe you are using make it bigger - i'll guess you are still doing the majority of your trades below a one hour chart.

So, that's enough i think for one rant because my evening meal is ready. I'll let the replies come in and let's see where this one goes.

let the battering begin

Trivia : The device you illustrated is a pantograph.

thats it!

http://www.artlex.com/ArtLex/p/image...orenson.lg.jpg