Technical Analysis Fallacy

Quoting fti

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I find it funny that Londonfx seems an IT consulting specialist but manages their web page so badly that many of their links are dead. Anyone experienced that? or is it just me?
regards

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Quoting WaveRider3

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Hi Fti,
Can you or anyone who figured out this help me. Currently I use an ATR(20) for figuring out my SL. By stating "a leg of the trend" do you mean we have to use ATR(X) - X being the number of periods in the most recent trend. Hope my question is clear.
Thanks much,
WaveRider3

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Quoting Northpro

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WaveRider,

First off I think losing the concept of having a Stop Loss other than a mental limit of exposure must be addressed, do not show the enemy your cards. fti says he uses the true range of a leg of a trend...hint: use a fib retracement tool (for example) on the most recent leg to give you an idea. This does a few things...it shows volatility as well as possible levels of inflection...no two trades are the same due to the fact that no two trends are the same in length or speed. We cannot be so regimented and stuck on fixed numbers or pips down but nimble to both volatility and exposure. Once you have probable (remember, things can change and often do) levels of inflection based on the volatility present, you can work backwards from your initial capital to determine an exposure level to start with and at how many degrees you will attack.

NP

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Quoting Argonaut

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Quoting fti

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yes the MM evolves around the WW tables, but the true Range that I use is not the 14 ATR, but rather the TR of a leg of the trend move on the general speed (gradient) of the thrust.

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Quoting fti

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WaveRider,
I get a funny feeling that you did not read this thread carefully.
Let me say this very clearly so as no one else may misunderstand.
I am not one who advocates "magic bullet" parameters or indicators.
As a matter of fact I consider them the Technical Analysis fallacy. In All the years, I have never ever seen any magic bullets methodology succeed. And I was on the top of the food chain, if you like.

They always fail due to the rigidity of methodology. Believe me waverider (X) is not a constant.

regards

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Quoting WaveRider3

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Hi Fti & NorthPro,
Thanks for your inputs and observation. After reading thro' the valuable lessons from you, I stopped using SL. But I had mental exit levels, that I used to minimize my drawdown, in case the trade didnot go in my favor.
From what NorthPro has stated, I understand that for rescue operation, one has to use the fib levels (for snowballing) of the most recent trend. My confusion now is whether the "true range of the last leg" is same as the "fib levels of the last leg".
Bear with me if my question doesnot make sense. I am learning a lot from you and other experienced traders.
Thanks,
Waverider

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Quoting fti

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The maths is just the stastical read of the picture. Constant mathematical calculation only tires a mind that is coping with swiftly changing conditions. A visual eyeballing of the ranges thats unfolding would already give you a guessstimate of the required resources for the challenge, give or take a variance of up to 10 %+-.
Your understanding is complete. Initially you may have to content with the maths. but after a few initial skirmishes the scope of the required skew required will fine tune by intuition. And it probably will be view by bystanders that you were flying by the seat of your pants.

From that point onwards exposure size can be quickly determined. And the focus would be reverted to the timing of the hit which is determined by the gradient of the move (dance), which is a visual of it volitility.

Many analyst uses the this spiral ( some use fibonacci retacements) on price and although this is an accepted branch of TA. It builds blind reliance on "hope" factor. I use it as true to initial research basis and use it on size of position as in Money management.

@ Zoran
I think Zoran did ask me about my using the pi against that was suggested in the golden ratios (phi) by some posters here. I will answer him here as it is related issue.
Using a phi spiral creates a constant growth spiral from a point.
Whereas using pi skews breaks the circular leg price range and creates a spiral initiating from a "range window" .In doing so, price and volitility ( determined by visual observation of the leg of run from the bar chart.) becomes a component to the skew. This is akin to the using ATR of a run leg of a trend ( note: run leg and not bar range). And the spiral growth becomes a function of the windowed range. To do this requires much capitalisation.

This can also be constructed from a phi start point which begins not from the fibonacci progression but a user determined base. Only that the spiral growth then coils into a 1.618 constant of itself. The exact technique of determining that range window leg is classified for my own use as it may not be suitable for individuals.

For the purpose here, an understanding of the phi (golden) spiral may be sufficient as they both utimately produces the same , a progressive growth of position exposure growth. The differences is in the aggression of rescue and attack sequences.

You may like to build models to find your individual tolerance levels. Some may be able to build better models than that which I use because mine is aggressive due the size of my capitalisation, while at the bank. The reson I am doing so much demo is to retrain myself for trading as an individual.

Whats most important is the understanding of the impact of per pip "value at risk" as the position size spirals. It can get scary, so stay to most conservative parameters.

The most important thing to understand here is that there is no other alternative way to rescue badly timed positions other than using this methodology. The basis of the success is in the trading of the volitility, the direction of the trade is non negiotable it has to be right, so stay with the entranched trend, and watch your capitalisaion.

regards

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Quoting fti

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Hi ALL,
For those waiting for lesson 3.
please note that it nearly ready.(have been a bit busy)

But before I go into that.
There seems a big misunderstanding here.
I said before and I say again.
When I talk of fibo progressions, I am talking about size of trade and not price levels.
Why does many keep refering to price. It has nothing to do with price except that thru the price volatility,(always I spell volitility) I use it to determine the right progression to rescue trades.

AGAIN,
fibo progressions and martingale progressions and linear progressions is all about trade SIZE. I hope this is clear. The price level to attempt is determined by the pattern and movement, aka the dance which Leighsww refers to. For me I use a methodlogy of analysis I call "romance of 3 kingdoms" to time it and that I will teach you after all this Sun Zi thingy is completed. (I hope)

I understand that many analyst use fibo on price. I keep telling that is a fallacy, makes rigid methodology. Please try to correct bad mindset and thought process. I know its hard to retrain old ... but nevertheless that is wrong direction, in my opinion. You can use fibo on size as well as price level if you so desire, but that I personally discourage as I see no advantage only rigidity.

regards

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Quoting Northpro

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2. Trade goes against you to say the 161.8% fib level which technically is the 6th factual logarithmic level, (excluding 50% as it is not an actual fib). This would have had to happen fairly quick (high thrust) to get all the way to the 161% before stalling in price action (where the dance changes pace).

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Quoting alexfot

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1. How to define the point of retrace( I guess the TR of the leg should come into play somehow)

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