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  • #821
  • Jan 11, 2008 6:50pm Jan 11, 2008 6:50pm
Hi all
First I want to thank all the members of the FF who has been an invaluable source of information.
Thanks FTI for your decision to create this thread, that is full of invaluable information
Leighsww Thank you for your encouragement to FTI and your contribution to this thread.
Thank you to all the other members who have contributed and made this thread one of the best in this forum.

About the art of war, of Sun Tzu applied to Trading

Trading is a serious undertaking that should be regarded as such, whose only result is the success or failure, meaning sometimes life or death, the destruction or achieving our goals, thus deep reflection should be done, because the only objective that matters is the success.

Trading has five key factors that should be considered and respected

Moral Law is Market behavior, the pace and music, the trader should be always in tune with it and act always respecting it, never against him

Heaven means up and down, the different types of moves that the market as

Earth is the distances that can be measured, how much, how far, and the probabilities of success or failure

The fourth factor is the trader and the qualities that should have as honesty, wisdom, knowledge, determination and courage

Finally is the ability of the trader use their qualities with discipline and method when trading

In its activity the trader must plan their actions by analyzing and considering the seven factors:
What is the music the market is playing?
What trade has the greatest chance of success?
What is his direction and distance (chart analysis)?
Which trade that suites better our plan?
What positions size should be used?
What is the money management should be used?
What is the plan for contingency?

The answers to these questions allow forecasting the success or failure of the trade

The trader must plan ahead their trades, and perform many conjectures about them, have the ability to adapt and change their plans when market conditions change, and disclose as little as possible its plans, such as not putting SL or TP.

Regards
Sjbelchior
  • #822
  • Jan 11, 2008 9:58pm Jan 11, 2008 9:58pm
Quoting fti
More question to help you.
1. notice where the location of the epicenter in relation to the spiral
2. notice the distance between the sprial gaps on top and below the center?
3. notice the general characteristics of the shape.
4. Why do you only look from the pricing aspect of the study?
what about the MM aspect?

"What does the words martingale, fibonacci progressions and log arithematic spirals suggests."

Money managing?, exposure size?

Ringing any bells? my friend.

regards
The averaging out that you were talking about in an earlier post maby?
Also all the things mentioned involve increasing size.

LG
  • #823
  • Jan 12, 2008 12:06am Jan 12, 2008 12:06am
Quoting LoLoAC
The averaging out that you were talking about in an earlier post maby?
Also all the things mentioned involve increasing size.

LG
LG,
what is described is a MM technique.

About increasing size.
That's not true.
for most it is to reducing size.
as it would be unable to trade this way unless size was reduced to accommodate the different level trade entries. with the skew.


regards
  • #824
  • Jan 12, 2008 6:49am Jan 12, 2008 6:49am
DutchAngel wrote:
"...Advantage traders have over brokers. We get to decide when to launch on attack. We get to choose the terrain, the season, the timing, the number of troops. The broker is almost like a sitting duck waiting for the hunter to shoot him."

The way i see it the biggest advantage is we get to fight on the winning side. The buyers and the sellers are enemies and we are above the battlefield with the luxury of choosing sides. When prices are range bound we have the luxury of waiting on the sidelines until a breakout occurs and prices trend again. simple but not easy.

I want to be successful enough at this that nobroker could afford to take the other side of my trades. one day soon
steve
Don't kill your dreams - execute them.
  • #825
  • Edited 3:21pm Jan 12, 2008 10:32am | Edited 3:21pm
Quoting fti
More question to help you.
1. notice where the location of the epicenter in relation to the spiral
2. notice the distance between the sprial gaps on top and below the center?
3. notice the general characteristics of the shape.
4. Why do you only look from the pricing aspect of the study?
what about the MM aspect?

"What does the words martingale, fibonacci progressions and log arithematic spirals suggests."

Money managing?, exposure size?

Ringing any bells? my friend.

regards
Hi fti, can you please let me know if I am on the right track. In terms of snowballing a bad position, I have come up with the following table. I used the fibonacci sequence (0, 1, 1, 2, 3, 5, 8) as the snowball skew (although I only went up to 3).

Pips......Lot.....Total..Average..Loss
Against.Additions.Lots
--------------------------------------
0..........1........1
50.........1........2.....25........50
100........2........4.....25.......100
175........3........7.....25.......300
200................................175
...................................---
.............................Total 625

So I could let a position go against me for 200 pips while at each additional entry I would only need to collect 25 pips to break even. If my three attempts failed then I would lose 625 pips. I'm wondering in terms of the W.Wilder table, whether these 625 pips would equate to 5%? The increases are just an example as under normal circumstances I would add at an opportune moment (i.e. when market action shows a potential retrace or throwback).
  • #826
  • Jan 12, 2008 2:25pm Jan 12, 2008 2:25pm
Quoting fti
Hi Jairo,

( ... )

Personally I would discourage operating in this MO unless you babysit the exposures and operated only in short tenures for rescue.

regards

PS: Unfortunately, what I am trying to teach you is universal for pro-trading. I did warn that this is not for everyone or for those lacking experience or training. It may take you heads-off if mindset is wrong or undisciplined. Safety first, please. Approach with caution.

Also be informed, that for thousands of dealers operating in this professional MO, these mention were the exceptions, their cause for failure can be found in their mindset and recklessness. Mostly ego.
Hi FTI,

Thank you very much for your prudent advice.

I was already becoming uncomfortable with the lengthy exposure and decided to plan another way of coping with the lack of time to follow the market.

I made a "slightly" different arrangement: 5 times a week on average I can concentrate exclusively on the market for 2 to 3 hours. So during this time I will try, first on demo, to apply what you have been teaching us, finding the way I am most comfortable with. I think about limiting total gain/loss during one of these sessions to a maximum 5% of initial balance. Begin with micro lots, increase gradually.

I made one session thursday (demo). Ended up 0,25% on equity with 13 trades in 124 minutes. Lots from 0,01 to 1,28. Maximum drawdown in session was around 1,5%. Maybe not so bad for a first try, considering that I entered my first trade in the wrong direction, the market went against me yet in the second level and I bought a top during the session.

I am keeping an Excel spreadsheet of the main numbers of the session, to help me improve my performance.

I would appreciate hearing from you about this. Again, thank you very much.
  • #827
  • Jan 13, 2008 3:34am Jan 13, 2008 3:34am
Quoting Zoran
I would like some clarity on the enemy.

Are you saying the enemy is the broker? Perhaps to an extent but on the retail side, the broker is just emulating the interbank market. I can see the broker being more of an enemy when it manipulates prices or its platform to take you out. To that extent, yes.

I initially considered the market as the enemy, but reconsidered and deliberated when reading AOW. There is a constant battle going on there. If we read, enter and exit the market correctly then it pays us and is our friend, not our enemy. The market is the battlefield with a fierce and continuous battle occuring all of the time. We cannot make it our enemy as individuals because it is too big and strong. It would be like trying to move a mountain.

Therefore, who is the enemy? Well, I can only conclude that the enemy is within ourselves. It is our ignorance of the market, ignorance of MM, ignorance of MO and ignorance of ourselves. And the battle is to defeat this ignorance. We must understand the market, understand MM, MO and ourselves. In other words, we must learn to dance with it and that will take some practice. The general and commander within ourselves must be in agreement and understanding.

"If you know the enemy and know yourself,
you need not fear the result of a hundred battles.
If you know yourself but not the enemy,
for every victory gained you will also suffer a defeat.
If you know neither the enemy nor yourself,
you will succumb in every battle."

In my opinion, The enemy is my ignorance of the market, MO and MM.
I also must know myself. When I have conquered the enemy and removed the ignorance, then I am victorious.

Opinions anyone?
I agree with you. Great!
  • #828
  • Jan 13, 2008 4:51pm Jan 13, 2008 4:51pm
Quoting fti
Lesson 2
The Battlefield
Running Battle mindset.
----------------------

Now begin the discussion and Q & A session on Lesson 1
Most have mastered this lesson well by now , I HOPE.
Otherwise there are many here who I beleive have got A+.
So debate away.

regards
Hi fti

I'm slightly confused about Lesson 2. Did you want us to repeat Lesson 1, except instead of "The General" we now must look at "The Battlefield"?
  • #829
  • Jan 13, 2008 6:59pm Jan 13, 2008 6:59pm
Quoting Zoran
Hi fti, can you please let me know if I am on the right track. In terms of snowballing a bad position, I have come up with the following table. I used the fibonacci sequence (0, 1, 1, 2, 3, 5, 8) as the snowball skew (although I only went up to 3).

Pips......Lot.....Total..Average..Loss
Against.Additions.Lots
--------------------------------------
0..........1........1
50.........1........2.....25........50
100........2........4.....25.......100
175........3........7.....25.......300
200................................175
...................................---
.............................Total 625

So I could let a position go against me for 200 pips while at each additional entry I would only need to collect 25 pips to break even. If my three attempts failed then I would lose 625 pips. I'm wondering in terms of the W.Wilder table, whether these 625 pips would equate to 5%? The increases are just an example as under normal circumstances I would add at an opportune moment (i.e. when market action shows a potential retrace or throwback).
Hi Zoran, this is an excellent post!
I did see it a couple of days ago but had to mull it over a bit before adding my thoughts. I hadn't done the sums yet but I was thinking along similar lines and I too will be interested on fti's thoughts about this.
In regards to your 25 pip recovery price move, did you base this on ATR or just an average for the pair you trade (similar thing really I know)
  • #830
  • Jan 13, 2008 9:10pm Jan 13, 2008 9:10pm
Think you guys might be interested in this especially Fti. This link was taken from the other thread in the "Brokers" forum.

http://www.londonfx.co.uk/ecn.html

Wonder what are Fti thoughts on this especially FXall?
  • #831
  • Jan 13, 2008 9:16pm Jan 13, 2008 9:16pm
I believe these calculations are wrong and you are not getting to BE after 25 pips in your favor at all entry points, you have to add more lots.
  • #832
  • Edited 2:39am Jan 14, 2008 2:29am | Edited 2:39am
Quoting Zoran
I would like some clarity on the enemy.

Are you saying the enemy is the broker? Perhaps to an extent but on the retail side, the broker is just emulating the interbank market. I can see the broker being more of an enemy when it manipulates prices or its platform to take you out. To that extent, yes.

I initially considered the market as the enemy, but reconsidered and deliberated when reading AOW. There is a constant battle going on there. If we read, enter and exit the market correctly then it pays us and is our friend, not our enemy. The market is the battlefield with a fierce and continuous battle occuring all of the time. We cannot make it our enemy as individuals because it is too big and strong. It would be like trying to move a mountain.

Therefore, who is the enemy? Well, I can only conclude that the enemy is within ourselves. It is our ignorance of the market, ignorance of MM, ignorance of MO and ignorance of ourselves. And the battle is to defeat this ignorance. We must understand the market, understand MM, MO and ourselves. In other words, we must learn to dance with it and that will take some practice. The general and commander within ourselves must be in agreement and understanding.

"If you know the enemy and know yourself,
you need not fear the result of a hundred battles.
If you know yourself but not the enemy,
for every victory gained you will also suffer a defeat.
If you know neither the enemy nor yourself,
you will succumb in every battle."

In my opinion, The enemy is my ignorance of the market, MO and MM.
I also must know myself. When I have conquered the enemy and removed the ignorance, then I am victorious.

Opinions anyone?
Hi Zoran

I never meant to allude that the broker is the enemy, I merely stated that we have an advantage over them.

I agree with you that we are our own worst enemies. I do however have a deep distrust of the entire central banking system and the way it affects moneyflow especially when coupled with the PPT, but that discussion would be off topic.

My broker is generally reliable, but tends to irritate me with re-quotes and sometimes not so stable server (on friday during live trade lost connection with Alpari 3 times). This comes with the territory suppose.

@ alexfot
Quote
I believe these calculations are wrong and you are not getting to BE after 25 pips in your favor at all entry points, you have to add more lots.

Could you please explain why you think the calculations are incorrect? They look pretty good to me except that I would be a lot more aggressive with the entries each time ie by tripling initial entry rather than doubling it.
Hope isn't a viable investment vehicle.
  • #833
  • Jan 14, 2008 3:29am Jan 14, 2008 3:29am
Quoting DutchAngel
Hi Zoran

I never meant to allude that the broker is the enemy, I merely stated that we have an advantage over them.

I agree with you that we are our own worst enemies. I do however have a deep distrust of the entire central banking system and the way it affects moneyflow especially when coupled with the PPT, but that discussion would be off topic.

My broker is generally reliable, but tends to irritate me with re-quotes and sometimes not so stable server (on friday during live trade lost connection with Alpari 3 times). This comes with the territory suppose.

@ alexfot


Could you please explain why you think the calculations are incorrect? They look pretty good to me except that I would be a lot more aggressive with the entries each time ie by tripling initial entry rather than doubling it.
Here is a link that explains the reserve system (that I'm sure you understand but probably not everyone here).
http://video.google.ca/videoplay?doc...ebt&pr=goog-sl

However, it's only a fraction of the story and the book "Paper Money" goes into a lot more detail. The cycle goes something like Oil -> Bank Deposits -> Bank Loans -> Inflation. Inflation increases the price of Oil so the cycle continues. People also tend to park their money into real-estate (i.e Bank Loans -> Real-Estate) and Oil is recycled petro-dollars (i.e The Oil producers like the Saudi's put their money into the Banks and the banks lend the money out to countries that use it to pay the Saudi's for oil). Just keep in mind that the "system must survive".

I have an account with Alpari UK and I tend to experiencce the same issues (requotes and occasional loss of connection). It hasn't been a big issue at this stage but it is annoying.

Alex, please note that my table was an example only just to ask fti whether I'm on the right track. I know there are still some missing pieces.
  • #834
  • Jan 14, 2008 4:46am Jan 14, 2008 4:46am
Quoting Zoran
Here is a link that explains the reserve system (that I'm sure you understand but probably not everyone here).
http://video.google.ca/videoplay?doc...ebt&pr=goog-sl

However, it's only a fraction of the story and the book "Paper Money" goes into a lot more detail. The cycle goes something like Oil -> Bank Deposits -> Bank Loans -> Inflation. Inflation increases the price of Oil so the cycle continues. People also tend to park their money into real-estate (i.e Bank Loans -> Real-Estate) and Oil is recycled petro-dollars (i.e The Oil producers like the Saudi's put their money into the Banks and the banks lend the money out to countries that use it to pay the Saudi's for oil). Just keep in mind that the "system must survive".
Hi Zoran
Thanks for video link. I see you understand my distrust in CB. Some wise words from wise man.

"I place economy among the first and most important virtues and public debt
among the greatest of dangers; we must make our choice between economy and liberty; or profusion and servitude. If we can prevent the government from wasting the labors of the people under the pretense of caring for them, they will be happy."
-Thomas Jefferson
Hope isn't a viable investment vehicle.
  • #835
  • Edited 5:58am Jan 14, 2008 5:11am | Edited 5:58am
Quoting MickD
Hi Zoran, this is an excellent post!
I did see it a couple of days ago but had to mull it over a bit before adding my thoughts. I hadn't done the sums yet but I was thinking along similar lines and I too will be interested on fti's thoughts about this.
In regards to your 25 pip recovery price move, did you base this on ATR or just an average for the pair you trade (similar thing really I know)
25 pips is just an example. I will need to research ATR a bit more to learn how to read it (volatility indicator) and determine how it fits in. At the moment I have replaced my "volume" indicator with ATR(14).
  • #836
  • Jan 14, 2008 6:25am Jan 14, 2008 6:25am
Quoting DutchAngel
Hi Zoran
Thanks for video link. I see you understand my distrust in CB. Some wise words from wise man.

"I place economy among the first and most important virtues and public debt
among the greatest of dangers; we must make our choice between economy and liberty; or profusion and servitude. If we can prevent the government from wasting the labors of the people under the pretense of caring for them, they will be happy."
-Thomas Jefferson
The message I got is that "the system must survive" so whatever is needed to keep it alive will be done. There is no alternative apart from a complete collapse.

Also, although the US banking system caps the loan amount by requiring that for every $10 loaned, the bank must have $1 in reserve and as this amount gets deposited it snowballs into about $1 in reserve for $100 loaned, however, keep in mind that the European system does not have this limit (as far as I'm aware). That seems a bit more scary to me.
  • #837
  • Jan 14, 2008 6:52am Jan 14, 2008 6:52am
Quoting Zoran
The message I got is that "the system must survive" so whatever is needed to keep it alive will be done. There is no alternative apart from a complete collapse.

Also, although the US banking system caps the loan amount by requiring that for every $10 loaned, the bank must have $1 in reserve and as this amount gets deposited it snowballs into about $1 in reserve for $100 loaned, however, keep in mind that the European system does not have this limit (as far as I'm aware). That seems a bit more scary to me.
Hallo Zoran!

There is a Minimum Reserve to be held in all ECB governed European countries and also in the UK and in the Scandinavian coutries. The only Central European banking place without these requirements is Switzerland. The reserve ratio is likewise to the US criteria and used to be in a range, fixed due to the policies of the single central banks in Europe. I will do some catch up on how it is handled now.
A major difference is the fact that e.g. the ECB is an entity of the European Union, while the FED is a company to put it bluntly. And this is really scary!!
BTW, where is that Pub Chris and I gonna have drinks with you on your next birthday?

Greetz!
Gnat
  • #838
  • Jan 14, 2008 9:03am Jan 14, 2008 9:03am
Quoting Gnat
Hallo Zoran!

There is a Minimum Reserve to be held in all ECB governed European countries and also in the UK and in the Scandinavian coutries. The only Central European banking place without these requirements is Switzerland. The reserve ratio is likewise to the US criteria and used to be in a range, fixed due to the policies of the single central banks in Europe. I will do some catch up on how it is handled now.
A major difference is the fact that e.g. the ECB is an entity of the European Union, while the FED is a company to put it bluntly. And this is really scary!!
BTW, where is that Pub Chris and I gonna have drinks with you on your next birthday?

Greetz!
Gnat
Thanks for clearing that up Gnat. The book is 25 years old so I suppose some things have changed (but not a lot it seems). I'd be interested to hear what your "catch up" reveals.

I'll be moving to the continent in August for two years, then off to Australia for two and back to the UK. So my next birthday will not be here, however, my local is always open so call Chris and we can have some mid-birthday pints!

Now, my biggest worry is watching my GBPs becoming more and more worthless against the EUR and AUD. I think I need to long the EUR/GBP to protect against further loss. What do you think?
  • #839
  • Jan 14, 2008 10:08am Jan 14, 2008 10:08am
Hi ALL,

Friend, please be assured that I appreciate all the pms that I am receiving.
Thanks guys.
But I am becoming tooo bacl-logged in the rplies and the typing of the lesson.
Plus negiotiating some deals at shenton way, for market, so please be patience if I missed some of the pms.
I would appreciate if some of you who have a clear view of the concepts that I am trying to explain, to help out some here who may be baffled at the lessons.
Debates and ideas sharing is much encouraged.

Lesson 2 on its way soon.

regards
  • #840
  • Jan 14, 2008 10:47am Jan 14, 2008 10:47am
Lesson 2
The Battlefield
---------------
Running Battle mindset.
----------------------

"In waging a war one must always attempt to score a swift victory.
Protracted battles will frustrate and diminish morale.
Therefore swift victory is the best outcome and
protracted war is the most undesirable."

"Victory can be forecast with a high degree of certainty,
but it cannot be compulsorily acquired.
Win using undue force
Therefore, the best policy is to thwart your opponent’s plans by superior strategy.
There are five important keys to victory:

2.01.01
" Knowing when to fight and when not to fight;
There are paths that he must not travel.
There are armies, which he should not attack.
There are fortified cities, which he should not besiege.
There are territories the he should not contest."

"Water shapes its course according to the nature of the ground
over which it flows;
the soldier works out his victory in relation to the foe whom he is facing.

Therefore, just as water retains no constant shape,
so in warfare there are no constant conditions.

Disciplined and calm, to await the appearance of disorder and hubbub amongst the enemy:
--this is the art of retaining self-possession.

A clever general, therefore, avoids an army when its spirit is keen,
but attacks it when it is sluggish and inclined to return.

This is the art of studying moods.
It is a military axiom not to advance uphill against the enemy, nor to oppose him when he comes downhill."


2.01.02
Maximising tactical advantage in deployment according to the numerical strength of the army;

Classified sections omitted.

The Components

"The equivalent to an army corps, according to Ssu-ma Fa,
consisted nominally of 12500 men;
according to Ts`ao Kung,
the equivalent of a regiment contained 500 men,
the equivalent to a detachment consists from any number between 100 and 500, and the equivalent of a company contains from 5 to 100 men.

For the last two, however, Chang Yu gives the exact figures of 100 and 5
respectively."

"Whether to concentrate or to divide your troops, must be decided by circumstances."

This is the method of attacking by stratagem.
It is the rule in war, if our forces are ten to the enemy's one, to surround him; if five to one, to attack him;
if twice as numerous, to divide our army into two.

[Tu Mu takes exception to the saying;
and at first sight, indeed, it appears to violate a fundamental principle of war.
Ts'ao Kung, however, gives a clue to Sun Zi's meaning:

"Being two to the enemy's one,
we may use one part of our army in the regular way,
and the other for some special diversion."

Chang Yu thus further elucidates the point:
"If our force is twice as numerous as that of the enemy,
it should be split up into two divisions,
one to meet the enemy in front, and one to fall upon his rear;
if he replies to the frontal attack, he may be crushed from behind;
if to the rearward attack, he may be crushed in front."

This is what is meant by saying that
'one part may be used in the regular way,
and the other for some special diversion.'
Tu Mu does not understand that dividing one's army is simply an irregular,
just as concentrating it is the regular, strategical method,
and he is too hasty in calling this a mistake."]

2.01.03
Possessing the capacity to seamlessly unite the commander and his troops with one heart and one mind;
Classified sections removed. refer explaination in lesson 1.

2.01.04
Maintaining a state of alertness and having strategies for all eventualities;
and
- Mental agility and physical robustness with dedicated facilities to recharge the charisma and moral.

"He will win who, prepared himself, waits to take the enemy unprepared."
After every battle forget about the glory , as well as its pain
- the next batlle will be totally different.
Have stress control.
-Meditate,
-Exercise
-Talk the family out,
-try a new hobby,
-get drunk or maybe have a fling.
- go to church, do social work,
- spend some money.
- listen to music.
The important thing is to get the mind off trading.
See no market, Hear no market, Talk no market.

Watch for Dealer Bio rhythms
Off form & burn-out signs
esp Energy levels

2.01.05
Having an able commander."
- It is important to have trustworth allies in the access of the battlefield. Beware of brokers conflicts of interest.
- It is important to have trustworthy logistics support, access and information. Beware of "experts".

------

Remember always that the market is a battlefield.
Do not be on the battlefield unless you have a purpose.
"He should not encamp in treacherous areas like thick forests,
narrow passes and marshy ground,
in which the army could be easily bogged down.

He must not venture into the focal ground, a hub of several converging roads,
without tacit support from allied feudal warlords.
He must not linger at desolate ground, which is uninhabitable."

02.02
Defensive Infinate response.
---------------------------------
-He must always by ready to implement a contingency plan when traversing encircled ground.
-When trapped in fatal ground, he is in an irredeemable position.
He must order his army to fight resolutely to the bitter end.

2.02.01. You are the General, therefore you must carry a General's mindset always.
General Code : Never leaving the army in the battlefield cut-off from support.

2.02.02 Preparation for Battle ( Money Management )
Your moneys are your only ammunition.
Therefore never deplete it under any circumstances.
therefore your gearing should never be inexcess of 30%,
for young dealers start with 10% and work upwards.

"Managing a large group is no different to managing a small one if the organisation(structure) is sound.


---------End Lesson 2-------------

Lesson 3
Blitzreig and the markets
------------------

regards
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