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Technical Analysis Fallacy

  • #1,061
  • Jan 28, 2008 11:04am Jan 28, 2008 11:04am
Quoting Leonlorenzo
Hi DutchAngel,

According to Dirk du Totis book.........

Indicators (macd, RSI, STOCHS ect) were not made for forex and yeild no edge in this market.
Any Timeframe lower than 30mins gives so much random movement it is impossible to trade, and anyone who claims they can is a liar.

Remember people, IN THE BOOK. Not my opinion!
I am sitting on the fence on this one. I class consistent as roughly 2 years profitable, and I have no proof either way.

Just would be nice to hear FTI's opinion on the book as a whole and maby the industries thoughts on Dirks statements.

Leon
I think the author should say: "I can't trade any timeframe lower than 30mins and anyone who can is a better trader than me."
  • #1,062
  • Jan 28, 2008 11:14am Jan 28, 2008 11:14am
Quoting Jairo
I think the author should say: "I can't trade any timeframe lower than 30mins and anyone who can is a better trader than me."
Well, possibly, but........

Do you know anyone who trades any lower Timeframe than 30mins, for over a couple of years, cosistantly profitable over their start balance with proof?

That question is not ment as a challenge towards you, just a streight up question. If the answer is yes then great, if not then then.......

It is important to know what is possible.

Good trading!

Leon
Living the adventure in my head.
  • #1,063
  • Jan 28, 2008 12:26pm Jan 28, 2008 12:26pm
Quoting Leonlorenzo
Well, possibly, but........

Do you know anyone who trades any lower Timeframe than 30mins, for over a couple of years, cosistantly profitable over their start balance with proof?

That question is not ment as a challenge towards you, just a streight up question. If the answer is yes then great, if not then then.......

It is important to know what is possible.

Good trading!

Leon
Hi Leonlorenzo,

I think lower than 30 minutes timeframe does not demand such a long testing period. The most important in statistics is correct sampling, especially the number of experiments. Daily or weekly trading should certainly demand something like a couple of years.

I don't use to think much in terms of "proof" also. Market is always changing and I favour the betting attitude. We must take the risk if we want to win. If we think we have found something worthy, why not submit it to live testing?

I use 2 screens (the first: 1 or 5 minutes for price action and the second: a 15 minutes to daily for trend evaluation). Sometimes a use only 1 and 5 minutes chart. I don't have a long history, but the results so far are telling me to continue experimenting. I am increasing size slowly and carefully (some little moments of madness, but don't intend to repeat). No proof. Just a feeling, supported by some systematic statistical recording, that trading in very small time frame may be profitable. Time will tell. If I fail, I will not conclude that it is impossible. Maybe it is just my fault.

Good trading.
  • #1,064
  • Jan 28, 2008 12:27pm Jan 28, 2008 12:27pm
Quoting alexfot
This is how I understand some statements of lesson2:

"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."
This one I think is a warning, that if you don't see how the trade is going to go and don't see that it will go fast on plus side , so you can close it with profit at any time: don't take it

From experience, I know that I get impatient when a trade does not go as planned, and I tend to get out of profitable trades early and close my rescue attempts as close to break even as possible, when many times I could have seen profit. I also think that the longer a trade runs, the likelihood of the trend changing is greater, and then my capital is not available for a trade in a different pair.
"Victory can be forecast with a high degree of certainty,
but it cannot be compulsorily acquired.
To me that means, that when you go into trade, always remember, it is no guarantee it will go according to your plan ,so always be ready for for rescue operation.

I use patterns/trends/learning to dance to increase my odds of success, but last week was hard and I had more rescue attempts than riding winners.

 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."
Always try to find your way to successful trade, use all your knowledge and experience, like do not try to overcome strong levels(fortified cities) or do not trade before major news, or high volatility e.t.c.

Most of last week seemed to be a fortified city, I dislike the feel of burning oil on my soldiers so I need to get better at choosing not to battle when the charts are unfriendly.
"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.
The chart is a ground and the price is a water, act according to the price action, and remember conditions on the market are changing so should you.

Do you reverse directions on a trade? It seems like part of a running battle might be to trade in the other direction (with the current) if you have trades going against you. For example, if you finish a rescue attempt, should you place a new order in the opposite direction or retreat and let your soldiers rest?

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."
Always try to trade with trend, avoid countertrend positions, and wait for reversal patterns to occur.

Or maybe a continuation pattern? I am not good at riding a trend (positive running battle), this week I hope to work on entering trades other than on reversal patterns if the market is willing!


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

Is it ever possible to have a numerical advantage in the market for a retail trader? I can maybe see a statistical advantage with pattern recognition, etc., but someone always has more soldiers than us.

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.
This is how you should plan your scaling in and scaling out operations, rescuing operations and MM.

I like the strategy of jumping on the giant's back (maybe add a friend or two along the way), ride for a while until it notices you, and then jump off with a few more soldiers in your pocket.

"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."


Opening a trade in a different currency pair? Some of the correlation of the majors vs. the dollar seem to be back in order this week, I have a hard time watching more than one trade so I will leave this to the experts....

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."]
Not sure about dividing army into two.

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.

Hopefully not at the expense of all of your soldiers....
 .
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.

When made a mistake, fight for your position like there is no tomorrow

I think mistake is a harsh word, sometimes unpredictable things happen and you have to learn how to save your position, and also to not be fearful of entering a similar trade if it appears again. If you did make a bad choice, some stressful rescuing will hopefully increase your odds of learning not to do the same thing again.

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.
Watch your leverage closely, never overleverage your position, otherwise one day you will be wiped out.

This is my understanding of lesson 2, there is probably something else out there, when I read it each time new idea can come out from shadow.
Alex
Overall it was a rough week last week, but so far yesterday and today seem more predictable. Good luck trading to all, I am going to try and ride more, rescue less and stay in the battle!

Eric
  • #1,065
  • Edited 2:00pm Jan 28, 2008 1:34pm | Edited 2:00pm
Quoting alexfot
This is how I understand some statements of lesson2:

"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."
This one I think is a warning, that if you don't see how the trade is going to go and don't see that it will go fast on plus side , so you can close it with profit at any time: don't take it


[/font][/b]
Hi alexfot,

In trading, it is quite impossible to KNOW if a trader is trading a market that runs.
As professionals we have to be trading it all the time when we come on board.
For traders too, many must be able to trade the markets whenever they come on board, otherwise the productivity is lost to opportunity cost.
So in essence , whenever a trader comes to battlestation, he should trade.

But sometimes his form is bad and his timing is bad. It is these times that the trader should be wary that is he should over stay a bad entry.

During the initial stages of his entry, he would be able to begin to graps the flow of the market. That is why a quick snap shot of the daily chart is necessay for him to determine the undertone of the market. It is from this analysis that he must determine the relationship of the 3 kingdoms and the general volatility , ie the gradient of the footprints of the market would hghlight , what the MM should be required.

If vo;ati;ity was high then the MM should not be aggressive and the tolerance of reverse swing to his position should be re-active.

Under low vol conditions his MM must be strong and non riding. His stay would be protracted. AND it would require him to spend much time to carve out his profits. If time was a factor against him for whatsoever reasons, then the trader should not attempt to begin anything that he may not be able to finish.

Generally the text from Sun Zi highlights that protracted battles uses lots of energy, therefore should not be attempted unless the charisma was strong And afforded.

Side note: This is what killed the kerviel and leeson, etc. Overstaying bad positions. This is why I trade the short charts. because a protracted battle in 5 min charts can cause a trader to be involved in active battle for up to 24 hours. Just imagine if such was attempted on hourly or 4 hourly charts . The tenure of protracted battle could last for up to a week+. Any thing that last more than 3 days would have totally drained the alertness and nimbleness of the trader. And this can disturb the careful natured behaviour of the best traders. When a trader is not proactive in his managing his positions, chances are that HOPE and numbness have stepped in to his mindset.

Mostly , traders gets killed not because of MO but on MM. Which is clearly the case. When positions get large , its basically cos/ the trader is timed out. If trader was against trend , he can definately feel that his exposure was already dead in the water. Then the decision of whether to rescue comes into play. If such was attempted , it would be an exercise to book damage control, overstaying the trade would only work to his disadvantage. And if the damage increased, it would be fool hardy to increase stake. If stake was increased and the situation for recovery does not surface then it is clear that he's on the wrong side of the fence. Then if reacue was attempted again, surely over staying that rescue woud only show his ego at work. And if a trader continue to attempt rescue after rescue without improving book bottom line. It is clear that the trader is disillisioned.

Rule of thumb: Rescues must be strong and swiftly executed. Only profitable trades should be protracted in tenure of attempt, and even that must be limited in strength, for defensive options to be available.

regards
  • #1,066
  • Jan 28, 2008 1:49pm Jan 28, 2008 1:49pm
Hi all,



Hope you all had a great weekend. I had to go to Hong Kong over the weekend for work. During my weekend travel however, I was reflecting back over my trades and of lesson 2. Here is another brief of my original posts of lesson 2 as well as a summation of the application of a trade, as I see it. Please comment and debate.


The battlefield should be looked at from a distance to get the whole picture of how large an army is, an estimation of where and how far we can anticipate the battle to last. In the trading sensethis can be done using multiple time frames. Look at daily first to get the overall trend (flow of the water), and where about in the current wave is within the trend. If it approaching a critical fib level such as the 61% or the 161%, this is the time to execute discipline and patience, waiting for the corrective wave to take hold then exhausting itself. This is knowing when to fight and when not to fight, going with the flow of the water and respecting fortified cities such as the 161% fib level. Once the corrective wave nears another critical fib level such as the 23% or the 38% and begins to appear in disorder and to lose its keen-ness, now would be a time to attack for another impulse wave. The lower TF’s such as 1 hr and 5min would be employed to optimize entry. Personally, I use the 1 hr TF’s to plot my MM levels for a target and scaling into a winning trade as well as where I can anticipate rescue levels if the timing is off. From here, I can calculate what size the initial attack wave will be (lots). In the end we assess the proper trend, where-a-bouts within the trend the pair is trading, then timing the entry based on the exhaustion of the price action near certain corrective fib levels. The MM is based on Risk assessment, so no matter what happens with a wrong timed entry, we will be properly positioned to rescue a trade with the appropriate resources.
The MM is calculated backwards from the worst case rescue level. (example) If the timing is off or even the short term trend was misread and then I chose the -61% level as the approximate point of rescue. From here I can determine how far away in negative from the entry I will be. This will give me an approximate level and what skew will be applied for entry and rescue. If my ultimate risk exposure is to be 10% and the initial entry lots plus the rescue levels and skew fall within my maximum 10% risk, then it is a fight worth fighting. If it is over my maximum risk, I either size down or pick a different battle. ”Attack is the secret of defense; defense is the planning of an attack”. Also if it is determined that there was a miss-timed entry we can execute a deployment of an equal sized army to neutralize the effects of the first lots sufferings and fight with the flow of the water. The initial entry is what is called Cheng, while the reversal neutralized entry is Ch’I, which soon after reverts to Cheng as well. This in my interpretation is attacking from front and rear like the Shuai-Jan snake. Once the trend is exhausted and shows signs of correcting, rescue the initial entry. In this tactic you have neutralized the defeated position of the first regiment that attacked from the front, deploying a rear attack and quickly destroying the enemy going with the flow of water, and finally rescuing the initial regiment at the point of enemy exhaustion.

Here is my summation;

1. Assess the battlefield: Look at the overall trend (daily)
2. Plot estimated points of entry, additional entries, and rescue entries. (Daily and hourly)
3. Determine the strength (vol.) of the prevailing trend and where-a-bouts the price level is at within the impulse wave to determine your entry point for attack. Let the enemy tell you when it is tired. (hourly and 5 min)
4. Apply MM calculations and work backwards from worst case rescue level to determine initial lot size for the attack. Think a defensive plan, to assure victory before battle even begins.
5. Plan possible neutralization level if required (hourly)
6. Use the lower TF’s to time your frontal attack with the flow. (5min)
7. Add to attack when going your way to assure quick and maximum effect.
8. Neutralize if trend goes against you and attack from rear if required.
9. Once trend shows signs of weakening, rescue initial entry as per the rescue skew.
10. Exit rear attack positions, assuring victory, never leaving the battle unattended.


NP
  • #1,067
  • Jan 28, 2008 6:06pm Jan 28, 2008 6:06pm
Here is a trade setup that I am looking at as an example: EUR/JPY

Daily Chart is the battlefield. This gives me the big picture. Which direction is the trend going. Even though today was an upward correction, I am saying the overall trend is down.

The hourly shows me where in the trend we are at and will dictate my entry level, my target estimation, adding levels, diversion/neutralizing level, and rescue levels. From here I can determine my MM and determine if the fight is worth fighting.

The 5min chart will give me my price action to enter and exit.

This may not be the best setup, but just an example of what I am looking at, then applying the MM and Skew that is predetermined prior to entry.

Please post comments. Fti can you comment as well. Thanks

NP
Attached Image(s) (click to enlarge)
Click to Enlarge Name: ey daily jan 28.gif Size: 40 KB
Click to Enlarge Name: ey 1hr jan 28.gif Size: 44 KB
Click to Enlarge Name: ey 1hr rescue level jan 28.gif Size: 43 KB
Click to Enlarge Name: ey 5min entry jan 28.gif Size: 39 KB
  • #1,068
  • Jan 28, 2008 7:58pm Jan 28, 2008 7:58pm
Quoting fti
Hi alexfot,

In trading, it is quite impossible to KNOW if a trader is trading a market that runs.
As professionals we have to be trading it all the time when we come on board.
For traders too, many must be able to trade the markets whenever they come on board, otherwise the productivity is lost to opportunity cost.
So in essence , whenever a trader comes to battlestation, he should trade.

But sometimes his form is bad and his timing is bad. It is these times that the trader should be wary that is he should over stay a bad entry.

During the initial stages of his entry, he would be able to begin to graps the flow of the market. That is why a quick snap shot of the daily chart is necessay for him to determine the undertone of the market. It is from this analysis that he must determine the relationship of the 3 kingdoms and the general volatility , ie the gradient of the footprints of the market would hghlight , what the MM should be required.

If vo;ati;ity was high then the MM should not be aggressive and the tolerance of reverse swing to his position should be re-active.

Under low vol conditions his MM must be strong and non riding. His stay would be protracted. AND it would require him to spend much time to carve out his profits. If time was a factor against him for whatsoever reasons, then the trader should not attempt to begin anything that he may not be able to finish.

Generally the text from Sun Zi highlights that protracted battles uses lots of energy, therefore should not be attempted unless the charisma was strong And afforded.

Side note: This is what killed the kerviel and leeson, etc. Overstaying bad positions. This is why I trade the short charts. because a protracted battle in 5 min charts can cause a trader to be involved in active battle for up to 24 hours. Just imagine if such was attempted on hourly or 4 hourly charts . The tenure of protracted battle could last for up to a week+. Any thing that last more than 3 days would have totally drained the alertness and nimbleness of the trader. And this can disturb the careful natured behaviour of the best traders. When a trader is not proactive in his managing his positions, chances are that HOPE and numbness have stepped in to his mindset.

Mostly , traders gets killed not because of MO but on MM. Which is clearly the case. When positions get large , its basically cos/ the trader is timed out. If trader was against trend , he can definately feel that his exposure was already dead in the water. Then the decision of whether to rescue comes into play. If such was attempted , it would be an exercise to book damage control, overstaying the trade would only work to his disadvantage. And if the damage increased, it would be fool hardy to increase stake. If stake was increased and the situation for recovery does not surface then it is clear that he's on the wrong side of the fence. Then if reacue was attempted again, surely over staying that rescue woud only show his ego at work. And if a trader continue to attempt rescue after rescue without improving book bottom line. It is clear that the trader is disillisioned.

Rule of thumb: Rescues must be strong and swiftly executed. Only profitable trades should be protracted in tenure of attempt, and even that must be limited in strength, for defensive options to be available.

regards
Thank you fti, for your valuable comments, I can see that overstaying is very harmful for a trader, but how to define the point when you are overstayed and have to get out? Maybe it's a stupid question, probably will we shoud dance and fill it, but maybe there is a more formal explanation to that.
Btw because we are in the war, whould we learn MMA dances, not the tango?

Regards
Alex
  • #1,069
  • Jan 28, 2008 7:59pm Jan 28, 2008 7:59pm
Hi Northpro,
That's pretty much how I've been assessing the market too lately, I also use MO/MM in a similar style although I'm still a bit soft on the skew at times although I am getting better.

The best thing about that type of set up is that there is a better chance of rescue if the trend continues on its path, ie. if you timed it bad (if you entered short at the bottom of that green(up) daily candle say) and if the market does indeed tire and turn down, that's when it's time to attack hard for a quick rescue.

I've also found that it's better to avoid entering too early on 'coils' or 'pennants' at a turning points as per your 5m chart, personally I need to be more patient here and wait for the PA to get going in my direction again before committing and getting even deeper in trouble (it's also time consuming waiting!). If it goes further against me I wait for another fib level or PA to tell me it's ok to enter again.
  • #1,070
  • Jan 28, 2008 8:10pm Jan 28, 2008 8:10pm
Hi, Northpro!
This is very interesting, how you you put everything in order, you must have put a lot of thoughts into this. Very nice analysis, so you use Fib retracements for defining targets and rescue points, that's might be a good thing and very accurate, and I use them too. I think you did it pretty good, I would have done it pretty much the same. But I remember fti said, that Fib retracements are not recommnded to use, thou they are not indicators but tools. Maybe he will clear things out.
Regards
Alex
  • #1,071
  • Jan 28, 2008 8:17pm Jan 28, 2008 8:17pm
Quoting MickD
Hi Northpro,
That's pretty much how I've been assessing the market too lately, I also use MO/MM in a similar style although I'm still a bit soft on the skew at times although I am getting better.

The best thing about that type of set up is that there is a better chance of rescue if the trend continues on its path, ie. if you timed it bad (if you entered short at the bottom of that green(up) daily candle say) and if the market does indeed tire and turn down, that's when it's time to attack hard for a quick rescue.

I've also found that it's better to avoid entering too early on 'coils' or 'pennants' at a turning points as per your 5m chart, personally I need to be more patient here and wait for the PA to get going in my direction again before committing and getting even deeper in trouble (it's also time consuming waiting!). If it goes further against me I wait for another fib level or PA to tell me it's ok to enter again.
Hey MickD,

Thanks for the input. I have been playing with the skew as well and like you, just want the rescue to be as quick and painless as possible, although the skew level is high, the chance of rescue battle recovery is High. The dancing is something that is needing work as well as these smaller TF's are a new element for me...it is getting better however las week was a rescue festival for me. The area I am having a harder time with is the adding to winners (with the smaller lot size)...still a work in progress. What do you use for that? If you do.

Cheers,
NP
  • #1,072
  • Jan 28, 2008 8:23pm Jan 28, 2008 8:23pm
Quoting alexfot
Hi, Northpro!
This is very interesting, how you you put everything in order, you must have put a lot of thoughts into this. Very nice analysis, so you use Fib retracements for defining targets and rescue points, that's might be a good thing and very accurate, and I use them too. I think you did it pretty good, I would have done it pretty much the same. But I remember fti said, that Fib retracements are not recommnded to use, thou they are not indicators but tools. Maybe he will clear things out.
Regards
Alex
Alex,

I use them to give me an idea of estimates, but like you mentioned about fti saying not to use them as actual points, they give me an idea of where I can expect points of turnaround. For the actual entry for start, adding, neutralizing/diversion, and rescue, I use PA. I let the enemy get tired, then wham! I am in. I use the fibs to pre calculate my MM as per the worst case rescue versus my max % risk. I have to use something and fibs seem to give me an expectancy that I can work from before entering, but they are just an estimate.

Cheers,
NP
  • #1,073
  • Jan 28, 2008 8:30pm Jan 28, 2008 8:30pm
Hi alexfot,
I'm sure Northpro uses them only as tools as you and I would, it was good to point that out though for others who may have missed that point.

Hi Northpro,
I seem to be having the same trouble as yourself in regards to maximising the winners .
I too had a rescue festival at the end of last year and was doing quite well at it, I think the reason for this is the 'dance', when you are in rescue mode you are very alert and become quite in tune with the market. I think this has to pass over to winners but I somehow become conservative and sit on my hands when I should be 'really' attacking but I hate leaving money on the table at the corrections.

Experience is key here I think, a method that I have thought about is similar to my rescue entries/exits but going forward.
Enter the position with 2 units, when it's gaining, listen to PA and look for a reversal, pull out 1 unit to take profits and wait for the correction to complete and add 2 more units giving me 3 units in for the ride again (or use skew amounts ), watch PA and repeat and keep adding to the book while always keeping a stake in the market.
  • #1,074
  • Jan 28, 2008 9:08pm Jan 28, 2008 9:08pm
Quoting MickD

Experience is key here I think, a method that I have thought about is similar to my rescue entries/exits but going forward.
Enter the position with 2 units, when it's gaining, listen to PA and look for a reversal, pull out 1 unit to take profits and wait for the correction to complete and add 2 more units giving me 3 units in for the ride again (or use skew amounts ), watch PA and repeat and keep adding to the book while always keeping a stake in the market.
Hi Mick,

Interesting. I have been leaving original positions in and anti-martingaling into the winning position. example. Original position is say 4 lots, next entry is 2 units (total of 6) then the next position is 1 for a total of 7. I then hold these until PA says to get out and of course I reference my initial analysis from the estimated fib levels as a reference tool. Even if the last lot gets caught up in a reversal, the compounded sum of the original and second entry is well worth the risk. Anybody else use something similar/different, please jump in.

Cheers,
NP
  • #1,075
  • Jan 28, 2008 9:34pm Jan 28, 2008 9:34pm
I guess I just hate leaving the money on the table. I Like to start small and get a feel for the PA (it's hard to get it watching from the side lines), if I'm going in the right direction, the PA will tell me after the first swing against me, if it swings back in my direction before or at hitting my entry price, I'm more confident to attack a bit harder and take more ground. After every push though, if PA tells me I'm tiring, I take out some of the troops before they get trampled, retreat and wait for the next attack.
As I keep attacking though I do build my position by leaving in some units from the last entry (thus keeping my position), I just like to take profits and build the book, as this happens and I'm more in tune with PA I can use these profits for swift attacks without the feeling of having my book too exposed.
  • #1,076
  • Edited 9:53pm Jan 28, 2008 9:41pm | Edited 9:53pm
Quoting fti

In trading, it is quite impossible to KNOW if a trader is trading a market that runs.
As professionals we have to be trading it all the time when we come on board.
For traders too, many must be able to trade the markets whenever they come on board, otherwise the productivity is lost to opportunity cost.
So in essence , whenever a trader comes to battlestation, he should trade.
Hi Fti,

I'm not quite sure if I fully grasp your point here. My belief is that if whenever we are uncomfortable with the market then we should not trade. The opportunity lost is better than a monetary loss. Defensive first then comes attack.

Quoting from Sun Tzu: "The skilful warriors in ancient times first made themselves invincible and then awaited the enemy's moment of vulnerability on himself. It follows that those skilled in war can make themselves invincible but cannot cause an enemy to be certainly vulnerable. Therefore, it can be said that, one may know how to win but cannot necessarily do so."

So your point about "trading all the time" confuses me. Maybe because you are trading for a bank thus must be trading all the time but for mere mortals like us, we can afford to pick when to trade?

Quote
That is why a quick snap shot of the daily chart is necessay for him to determine the undertone of the market. It is from this analysis that he must determine the relationship of the 3 kingdoms and the general volatility , ie the gradient of the footprints of the market would hghlight , what the MM should be required.
You have previously mention the gradient of the footprints of the market.... Are you refering to the trend slope - steep or gentle? How would you use this to determine the MM? Think you have mention something about the gradient and time taken previously. Can you please elaborate more?

Quote
If volatility was high then the MM should not be aggressive and the tolerance of reverse swing to his position should be re-active.
I got lost completely here......what do you mean by "the tolerance of the reverse swing to his position should be reactive?"

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Under low vol conditions his MM must be strong and non riding.
Here does "non-riding" means not adding into the existing position?

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Generally the text from Sun Zi highlights that protracted battles uses lots of energy, therefore should not be attempted unless the charisma was strong And afforded.
Think Sun Zi also mentioned that any protracted battle will incur huge capital expenditure and eventually ruins a country's economy which is also the case of what happened at SocGen.

+++++++

Your posts are always very enlightening although think most here will agree with me that your posts need lots of deciphering. Sort of like the many different ways people interpret the I-ching. :

Lastly, we really appreciate your efforts in educating us. Please keep it up. Many thanks!
  • #1,077
  • Jan 28, 2008 9:50pm Jan 28, 2008 9:50pm
Quoting alexfot
Thank you fti, for your valuable comments, I can see that overstaying is very harmful for a trader, but how to define the point when you are overstayed and have to get out? Maybe it's a stupid question, probably will we shoud dance and fill it, but maybe there is a more formal explanation to that.
Btw because we are in the war, whould we learn MMA dances, not the tango?

Regards
Alex
Fti mentioned something about the original Dow waves in his previous post. Believe in this case, overstaying means that the trend has already changed as indicated by the wave structure.

However, he also mentioned moving up the timeframe and senior dealers taking over the junior dealers loss trades. For us mortals, how do we define when we finally take the loss and move on?
  • #1,078
  • Jan 29, 2008 12:33am Jan 29, 2008 12:33am
Hi All,

An good read about understanding self and risk.

http://blog.thirdage.com/?p=1222

regards
  • #1,079
  • Jan 29, 2008 12:34am Jan 29, 2008 12:34am
Quoting sitoca
Fti mentioned something about the original Dow waves in his previous post. Believe in this case, overstaying means that the trend has already changed as indicated by the wave structure.

However, he also mentioned moving up the timeframe and senior dealers taking over the junior dealers loss trades. For us mortals, how do we define when we finally take the loss and move on?
@ sitoca

not dow waves but elliott waves.

regards
  • #1,080
  • Jan 29, 2008 12:38am Jan 29, 2008 12:38am
Quoting Leonlorenzo
Hi Fti and all,


Yesterday I finished reading 'Bird watching in lion country, which was also a great read. I was just wondering if you are familiar with the book, and if so, what are your thoughts on some of the opinions and methodology expressed in it.
Im refering to the points made in the book such as market randomness, short timeframes and what possitive edge over the market is possible.

It would be very interesting to hear (read) your take on this.

Great thread once again.

Good trading.

Leon
@ Leon
Sorry not familiar with "Bird watching in lion country"
therefore cannot comment.Sorry
Only thought, on that is, if this chap is making good in markets why trying to SELL methodology for a living? and using spamming methodology in the process??

regards
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