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Technical Analysis Fallacy

  • #1,681
  • Edited 4:32pm Mar 11, 2008 4:11pm | Edited 4:32pm
Quoting lilpip
fti , I've been consumed with personal issues and I'm back reading what I missed.
thankyou for being the light in the way we can go, I don't believe we could pay for an education like this, thanks for your direction, understanding and hope that you give.
Hi lilpip,
Thanks for your kind words.
If you missed "tunnel" try and get it from your friends here.privately

For those short of usd, be aware of a key reversal in the charts,
All 3 kingdoms, Manipulation of market is in progress, possibly to tame oil prices.so be nimble.

regards
  • #1,682
  • Mar 11, 2008 4:32pm Mar 11, 2008 4:32pm
I thought it was rather clever that the FED manipulated the market by not having to decrease rates but instead used another "tool" in their tool box.
trading naked.......
  • #1,683
  • Edited 5:00pm Mar 11, 2008 4:37pm | Edited 5:00pm
Quoting piphitman
I thought it was rather clever that the FED manipulated the market by not having to decrease rates but instead used another "tool" in their tool box.
Hi piphitman,

Agreed, do remember that they are pros, so they do have much arsenals up their sleeves. It behoves us to be nimble to avoid their snares. It is impossible to pace them, but we can time ourselves from traps. Paying for exit early says alot from the consequences for paying thru the ego. It is only prudent to take lesser profits whenthe ground changes, then to be stubborn and pay the ultimate fare.

For those that may be confused, lets say that although the trend is intact, there will be realignments necessary, because of undue force. It is fool hardy to fight the obsticle. The trick is to use the momentum generated to ones advantage while it meanders.

regards
  • #1,684
  • Mar 11, 2008 4:55pm Mar 11, 2008 4:55pm
Quoting niceguy777
This thread is getting crazy complicated! There are simpler ways, and trading can be much more relaxed than this!
When I feel that way, which is often then the order of the day is take the time to digest what your taking in, reread and read slower.
cheers
  • #1,685
  • Mar 11, 2008 5:08pm Mar 11, 2008 5:08pm
Quoting lilpip
When I feel that way, which is often then the order of the day is take the time to digest what your taking in, reread and read slower.
cheers
Thanks lilpip for commenting on that.
but really it is not necessary,

Some "masters" create for themselves unnecessary pressure due to .....
Like what my dad said when he was around.
"If we are constipated, don't blame that the ground is hard"
Like most things in live, it will baffle them until the awakening.
Nevertheless it was nice of you to try to help him.


regards
  • #1,686
  • Mar 11, 2008 5:26pm Mar 11, 2008 5:26pm
I'm in the process of getting prepared for the dance and I could use some constructive criticism.
To keep it simple I'm focusing on one pair so I can come to know its pulse, the gbpusd.
It seems to have a pretty good ave. daily range, my goal is to take a portion out of that range each day, and its doesn't seem to be all over the place the more I get to know it. So if I'm dancing with the trend we should have a good session.
To figure out the trend I believe I should look at the weekly for the overall trend, the daily to try to figure out if its a trending,ranging or rotating back as it did yesterday and today. From there I suppose we focus on what? 15 min. then 5 then 1 minute? Whats working best with what were trying to do?
Also, the spirals seem to be around 32, 60, 110 - 120 as it cycles throughout the day, any thoughts? Anybody trading this pair? What seems to work?
Any characteristics that we should be aware of?
thanks
  • #1,687
  • Mar 11, 2008 5:54pm Mar 11, 2008 5:54pm
Fti, thanks for your advise and guidance. I suspect that traditional traders might not understand, but who care when our balance book keep increasing.

I am glad you came to my journal and took a look.

I am taking this very slowly. My current plan is to increase my bet size slowly as I become more confortable with the risk. As you are aware, my top priority is to preserve my book

I began the practice of your message by making pennies per session, then I moved to dimes, and now and making dollars per session. -I told someone at work today that in forex I reached the state of buying hamburgers!

Your approach work wonderfully. I know I will get nasty surprises, and I need to come to a-pull-the-plug number. I do not have that number yet but I will medidate about it.

Your are totally correct. As I increase my bet size, I feel my fear creeping in...I estimate that it might take a thousand trades before I feel relaxed enough to laugh at my own losses...so far I am laughing on my way to the bank even though I dance with very fast step: Image today I traded everyone of the 5M bars for a 35 min war! A little fast, right? I think it is just my personality!

Hey, those who are standing in the fences trying to figure out how to dance, I say -how naive am I- the only way to learn fti's strategy is by dancing and making it your own. Nobody learns how to dance by watching other play. Just do it. In my short experience - 40 wars - I have learned that the market is always changing. It is full of surprises and challenges...I must be totally flexible and spin on a dime -I mean: keep my eyes sharp on the 10S action!

Regarding the EMA(48) center of gravity: I use it but I do not trust anything. I already rejected all trend lines, candles, and the like. PA is ALL. Although, sometimes it feels as playing with market noise.

Good luck and happy piping!
Empty as water and soft as a facing wind mountain
  • #1,688
  • Mar 11, 2008 7:11pm Mar 11, 2008 7:11pm
Quoting lilpip
I'm in the process of getting prepared for the dance and I could use some constructive criticism.
To keep it simple I'm focusing on one pair so I can come to know its pulse, the gbpusd.
It seems to have a pretty good ave. daily range, my goal is to take a portion out of that range each day, and its doesn't seem to be all over the place the more I get to know it. So if I'm dancing with the trend we should have a good session.
To figure out the trend I believe I should look at the weekly for the overall trend, the daily to try to figure out if its a trending,ranging or rotating back as it did yesterday and today. From there I suppose we focus on what? 15 min. then 5 then 1 minute? Whats working best with what were trying to do?
Also, the spirals seem to be around 32, 60, 110 - 120 as it cycles throughout the day, any thoughts? Anybody trading this pair? What seems to work?
Any characteristics that we should be aware of?
thanks
Hi lilpip,
I don't normally comment about traders.
But since you are asking.
I get a funny feeling that you didn't read the thread carefully.
I really don't know , where you got the weekly trend thingy from, definately not from here.
Whats most worrysome is your fixation with spiral parameters on cyclicals probably on price, and that certainly is far far away from the truth.
Do try to read again, if you are truely learning.
And try to untrain your old-frame of mindset.
Like i have said numerous times, read slowly and pause to think then demo the market if you must to get the reality of what was presented.
I most certainly hope that you do not believe what you described is what is being presented by me.

regards
  • #1,689
  • Mar 11, 2008 7:35pm Mar 11, 2008 7:35pm
Quoting luSan

(...) and I need to come to a-pull-the-plug number. I do not have that number yet but I will medidate about it (...)
I am very curious about FTI's comment on this. It seems to me that the best way out is not exactly a number. I think I would rather "mark to kill" my positions if some adverse condition began to draw in but would try to find the most favorable moment to get out.
  • #1,690
  • Mar 11, 2008 7:50pm Mar 11, 2008 7:50pm
Quoting Jairo
I am very curious about FTI's comment on this. It seems to me that the best way out is not exactly a number. I think I would rather "mark to kill" my positions if some adverse condition began to draw in but would try to find the most favorable moment to get out.
I was thinking about that "just kill it" number too??? it seems that one would have to have proper MM and rescue possibility in ones plan of attack to account for, and to possibly withstand, (for example) todays USD/JPY blast of 85 pips in 5 short minutes (a 155 pip blast on the pair I trade GBP/JPY), followed by a 22 pip retrace then another blast upwards again for another 50 pips. Being involved in a trade during such a volatile spike makes one wonder when/where???? to pull the plug.....

It's imagining and planning in advance for these types of scenarios that brings up the ability to be "nimble" in one's attack for any and all contingencies. One does not want to be blindsided on one's flank for a mortal blow.
trading naked.......
  • #1,691
  • Edited 7:55pm Mar 11, 2008 7:54pm | Edited 7:55pm
Quoting niceguy777
I completely agree, but I'm not into masochism!

You're missing out :


Edit: Sorry for the intrusion, and diversion Fti!
Carpe Divitiae
  • #1,692
  • Mar 11, 2008 8:07pm Mar 11, 2008 8:07pm
a dance/trade I did this afternoon while working from home and having the ability to trade in late NY/Early Asian session. I normally am not even on the computer during this time to trade but I was at home all day today so I entered all positions at 1 mini? micro? whatever lot (1$ per pip) because I am not familiar with this trading session and just wanted to do a 1-1-1 scale in dance. entered at 207.60, 207.47, 207.28.....closed all positions @ 206.77 once price surged below my (imaginary trend line) and went past the 50 fib on GJ which tends to be a good bounce area.
Attached Image (click to enlarge)
Click to Enlarge Name: dance.gif Size: 20 KB
trading naked.......
  • #1,693
  • Mar 11, 2008 8:18pm Mar 11, 2008 8:18pm
Quoting piphitman
I was thinking about that "just kill it" number too??? it seems that one would have to have proper MM and rescue possibility in ones plan of attack to account for, and to possibly withstand, (for example) todays USD/JPY blast of 85 pips in 5 short minutes (a 155 pip blast on the pair I trade GBP/JPY), followed by a 22 pip retrace then another blast upwards again for another 50 pips. Being involved in a trade during such a volatile spike makes one wonder when/where???? to pull the plug.....

It's imagining and planning in advance for these types of scenarios that brings up the ability to be "nimble" in one's attack for any and all contingencies. One does not want to be blindsided on one's flank for a mortal blow.
I didn't quite understand if you have a "fatal number" or not. Excuse me.

I think these market violent ups and downs are a serious issue if you trade a very short time frame with high leverage. These moves are virtually imprevisible, I think. I chose to expand in time while reducing leverage. I experienced what you described with the euro, on NFP release and yet stronger today. Not too scary drawdowns, easy recovery and a steady pip flow. Nothing spectacular but satisfactory. Low risk. Low stress.
  • #1,694
  • Mar 11, 2008 8:25pm Mar 11, 2008 8:25pm
Quoting Jairo
I didn't quite understand if you have a "fatal number" or not. Excuse me.

I think these market violent ups and downs are a serious issue if you trade a very short time frame with high leverage. These moves are virtually imprevisible, I think. I chose to expand in time while reducing leverage. I experienced what you described with the euro, on NFP releasing and yet stronger today. Not too scary drawdowns, easy recovery and a steady pip flow. Nothing spectacular but satisfactory. Low risk. Low stress.
I agree, if I am in a position at a cost of $1 per pip as opposed to $5 or $10 per pip.......a volatile 100, 200, or even 300 pip surge doesn't wipe me out or give me a heart attack. it leaves something to be managed but not something to jump out the window over.
trading naked.......
  • #1,695
  • Mar 11, 2008 8:47pm Mar 11, 2008 8:47pm
Quoting piphitman
I agree, if I am in a position at a cost of $1 per pip as opposed to $5 or $10 per pip.......a volatile 100, 200, or even 300 pip surge doesn't wipe me out or give me a heart attack. it leaves something to be managed but not something to jump out the window over.
At present, I begin with 0,09 lots ($ 0,90 / pip) in a 9K standard account 100:1 leverage. I think this is very low risk and I can sleep well at night with 3 levels of positions (initial, 2x, 4x). Even 8x does not seem scary (?). What is your initial lot/account size relationship? (if you don't mind to disclose). I ask this because I am trying to find the most adequate risk level to begin with in a 1, 2, 4 sequence, taking into account usual (and extreme) volatility.
Thank you for your replies.

P.S.: though for now I never go against the trend, I am not baby sitting my positions. I am not limiting time of exposure. I am playing with leverage and lot sizes to allow for this.
  • #1,696
  • Mar 11, 2008 9:00pm Mar 11, 2008 9:00pm
Quoting Jairo
I am very curious about FTI's comment on this. It seems to me that the best way out is not exactly a number. I think I would rather "mark to kill" my positions if some adverse condition began to draw in but would try to find the most favorable moment to get out.
A number means for me, maybe, 1 or 2 % Equity loss. I probably will never tolerate more than that. So far I have about 40 bouts with the enemy and won all but once when the computer and my anger got the best of me. I have not decide on the best way to deal with it. So far, I have not faced that type of situation.

Although, I know how to play with numbers, my dancing style does not allow that luxury...I do not like calculations but I want the total feel of the market and to develop the skill of playing 5M bar one-by-one. When I dance, my eyes keep close attention to my book. 1-2% would be very painful.

Is this possible? Yes; during news time, I have seeing PA big jumps that are followed by time dependend decays. PA will always retrace and help save the day. 1 % for a 10K account is 100 pips for 1 minilot. So what to do? I NEVER NEVER NEVER NEVER WANT TO BE IN THE MARKET WHEN US NEWS ARE OUT! Why? Once I lost $25 and it hurt like hell. So NEVER AGAIN. The market are very unpredictable already. Why should I introduce more risks? -Even though I have observed in the 30S news leakage that could be very profitable but my gut tell me to stay away.

I cannot image a bar of such of length. I would expect a big retrace and a quick exit in such event....Actually my first inclination is to go against any 100 pips 5M bar! My short learning suggest that whenever you see a 20 pips bar, you will very likely see at the minimum a 6 pip retrace; so go big and rescue right there....but you never never never NEVER know.

One of the most important lesson that I learn with fti is to watch the market or as he says to "baby sit." I baby sit every trade and I am ready to take inmediate action. I suspect that the market destroy those who are lazy.

I must be ready. If you want to see my mad 5M dance go to my journal. Enjoy.
Empty as water and soft as a facing wind mountain
  • #1,697
  • Edited 10:04pm Mar 11, 2008 9:43pm | Edited 10:04pm
Quoting piphitman
I was thinking about that "just kill it" number too??? it seems that one would have to have proper MM and rescue possibility in ones plan of attack to account for, and to possibly withstand, (for example) todays USD/JPY blast of 85 pips in 5 short minutes (a 155 pip blast on the pair I trade GBP/JPY), followed by a 22 pip retrace then another blast upwards again for another 50 pips. Being involved in a trade during such a volatile spike makes one wonder when/where???? to pull the plug.....

It's imagining and planning in advance for these types of scenarios that brings up the ability to be "nimble" in one's attack for any and all contingencies. One does not want to be blindsided on one's flank for a mortal blow.
Hi ALL,

In reality, if you have been following the methodology closely,
is that when you are in attack mode, you have foreign capital cushion before you "press"
for attack, so you are prepared for minimal damage if flanked. but most impotantly,your nimbleness is in the attack. As in yesterdays scenario, there was good windfall already.
If you can remember , my hand hold session before, you would realise that as this windfall comesin the money, the possitions are wounded down. this gives you muscle for rewinding for another attack on the next wave. this action also prepares one for the eventualities as we witness yesterday. where we met the owner of the market coming out in protest. The cost to the trader would only be opportunity cost in such instances.
Therefore to be able to carry out such, the mindset must be, to allow for lost opportunity cost on every attack.

Althought when the protest was in progress, most traders will not see CB face, but it will be announced within the (normally) 30 min time lag. Therefore, the only pain to recind is the small spiral, which can be easily reversed. That's why when the attack is in progress , we are known as "big guns". The rule of thumb is never to allow the "big guns" to stay on the field, after its purpose has been achieved.
Again as in yesterdays scenario, the smaller exposure may be trapped in battle ground, but that can be managed to reverse the positions "on wind". If I was in the dealing room , I would probably have seen CB in market much earlier, because they check the market many times before they act. Some tier 1 are actually acting on their behalf.
In unnormal situation of unseen hand at work, the same scenario is still applicable, but only that there maybe slight attrition to P&L due to reactive time scope. Nevertheless, they will never find the trader in attack mode and trapped in "dead ground" due to it never is in there long enough for targeting. At worst case , only part of the attck may be trapped.That's why the attack's nimbleness is critical for success and babysiting is necessary.

For normal traders, it would be highly likely that they would be caught log stock and barrel, while they where pushing for the market run. The deadly possibility is where they had actually added the bulk to press the run.This is especially so for term position trading. Or for break out traders. The difference is the greed factor.

So in reality there is no "just kill it" requirement. But if any comfort, a 3X of normal daily P&L range , would already signal, "dead in water" possibilities. From there the trader has to decided if the "cannon" (rescue of last resort) may be used, but that would depend on how much accumulated foreign capital is available for such an endevour.

Once you are experienced in this MO, you are mostly doing ants work regularly, and any attrition to P&L would be within the confines of your accumulated winnings. For banks that is limited to the annual quarter's P&L. This is also the reson why , when a disaster scenario is reported , as in the case of socgen, they can still report that principal is safe.

It would be great if individual traders can adopt this. But this is unlikely as , the modus operandi sowed in the minds of most trader is to profit in access of 3 to 4X cap ROI on outlay. So exposing them to castratopic runs on cap. Not withstanding those that want to make millions from pittance. Of course high gearing accelerates their demise.
Maybe this may help some come to their senses, that to be truely profitable , it must be over time ( like ants work), never depending on sudden winfalls. If of any value , to be on the watch out for and to reverse sudden misfortunes. [MINDSET]

regards

PS: Was checking brokers, heard recently how one trader made like 15mio from market, heard he was down close to 50+mio at one time, guess his exposure and bank borrowings? Lets see when he goes chapter11. This stories are circulating enticing traders to commit "harakiri" in markets, but who am I to question his style. and some brokers are selling that.Well greed hasno limits.
  • #1,698
  • Mar 11, 2008 9:57pm Mar 11, 2008 9:57pm
Quoting Jairo
At present, I begin with 0,09 lots ($ 0,90 / pip) in a 9K standard account 100:1 leverage. I think this is very low risk and I can sleep well at night with 3 levels of positions (initial, 2x, 4x). Even 8x does not seem scary (?). What is your initial lot/account size relationship? (if you don't mind to disclose). I ask this because I am trying to find the most adequate risk level to begin with in a 1, 2, 4 sequence, taking into account usual (and extreme) volatility.
Thank you for your replies.

P.S.: though for now I never go against the trend, I am not baby sitting my positions. I am not limiting time of exposure. I am playing with leverage and lot sizes to allow for this.
my acct is currently at around 16k, my smallest lot position I can open is .01 ($1 per pip). I will use a 2-3% risk MM so that is about $480 I would risk on any one trade. The hard part is when I have to allot for rescue capital within that $480.

I think it was GreenDavid that had a good idea about how many troops total he would use for attack and rescue..... I think it was something like 20 troops (20 mini/micro lots) total needed for an attack and possible rescue sequence.

a 1,2,4 sequence is .7 standard lots (almost 3/4 of a full standard lot). For me that is too high. In the fti dance style I usually only do a 1-1-1. Once I feel more comfortable I would like to increase my sequence but for now I am still learning this and doing it a little at a time till I learn to dance like Fred Astaire.
trading naked.......
  • #1,699
  • Mar 11, 2008 10:21pm Mar 11, 2008 10:21pm
Quoting fti
Hi ALL,

In reality, if you have been following the methodology closely,
is that when you are in attack mode, you have foreign capital cushion before you "press"
for attack, so you are prepared for minimal damage if flanked. but most impotantly,your nimbleness is in the attack. As in yesterdays scenario, there was good windfall already.
If you can remember , my hand hold session before, you would realise that as this windfall comesin the money, the possitions are wounded down. this gives you muscle for rewinding for another attack on the next wave. this action also prepares one for the eventualities as we witness yesterday. where we met the owner of the market coming out in protest. The cost to the trader would only be opportunity cost in such instances.
Therefore to be able to carry out such, the mindset must be, to allow for lost opportunity cost on every attack.

Althought when the protest was in progress, most traders will not see CB face, but it will be announced within the (normally) 30 min time lag. Therefore, the only pain to recind is the small spiral, which can be easily reversed. That's why when the attack is in progress , we are known as "big guns". The rule of thumb is never to allow the "big guns" to stay on the field, after its purpose has been achieved.
Again as in yesterdays scenario, the smaller exposure may be trapped in battle ground, but that can be managed to reverse the positions "on wind". If I was in the dealing room , I would probably have seen CB in market much earlier, because they check the market many times before they act. Some tier 1 are actually acting on their behalf.
In unnormal situation of unseen hand at work, the same scenario is still applicable, but only that there maybe slight attrition to P&L due to reactive time scope. Nevertheless, they will never find the trader in attack mode and trapped in "dead ground" due to it never is in there long enough for targeting. At worst case , only part of the attck may be trapped.That's why the attack's nimbleness is critical for success and babysiting is necessary.

For normal traders, it would be highly likely that they would be caught log stock and barrel, while they where pushing for the market run. The deadly possibility is where they had actually added the bulk to press the run.This is especially so for term position trading. Or for break out traders. The difference is the greed factor.

So in reality there is no "just kill it" requirement. But if any comfort, a 3X of normal daily P&L range , would already signal, "dead in water" possibilities. From there the trader has to decided if the "cannon" (rescue of last resort) may be used, but that would depend on how much accumulated foreign capital is available for such an endevour.

Once you are experienced in this MO, you are mostly doing ants work regularly, and any attrition to P&L would be within the confines of your accumulated winnings. For banks that is limited to the annual quarter's P&L. This is also the reson why , when a disaster scenario is reported , as in the case of socgen, they can still report that principal is safe.

It would be great if individual traders can adopt this. But this is unlikely as , the modus operandi sowed in the minds of most trader is to profit in access of 3 to 4X cap ROI on outlay. So exposing them to castratopic runs on cap. Not withstanding those that want to make millions from pittance. Of course high gearing accelerates their demise.
Maybe this may help some come to their senses, that to be truely profitable , it must be over time ( like ants work), never depending on sudden winfalls. If of any value , to be on the watch out for and to reverse sudden misfortunes. [MINDSET]

regards

PS: Was checking brokers, heard recently how one trader made like 15mio from market, heard he was down close to 50+mio at one time, guess his exposure and bank borrowings? Lets see when he goes chapter11. This stories are circulating enticing traders to commit "harakiri" in markets, but who am I to question his style. and some brokers are selling that.Well greed hasno limits.
Excellent commentary fti, Thank You.

a question for you, for example; If I am in dance mode and I have 1 troop in for skirmish, then I place another 2 troops in for further attack, then I place another 3 troops in a little later for a press of attack. What you are saying is that the last 3 troop unit is the one that must be taken out as soon as it's job is completed and not be left to linger on the battlefield for such damaging effects of CB intervention or other Major player actions.

If I have 3 positions open and a news spike or other major player intervention quickly turns the market the other way should I be placing a trailing stop on that last 3 troop unit as it goes along so it will not get caught up in a slippage nightmare?

In MT4 it could feasibly take a few deadly precious pip moments to close out three positions when the market is changing very rapidly. The time it would take to open up the trade and close it out and then move on to the next one and do the same thing, then each succesive one could be very costly. For now I guess I would just manually already have the 3 troop trade window open just waiting for a simple click to close the trade if needed and then deal with the other two positions as quickly as I could attend to them.
trading naked.......
  • #1,700
  • Mar 11, 2008 10:53pm Mar 11, 2008 10:53pm
Quoting fti
Hi lilpip,
I don't normally comment about traders.
But since you are asking.
I get a funny feeling that you didn't read the thread carefully.
I really don't know , where you got the weekly trend thingy from, definately not from here.
Whats most worrysome is your fixation with spiral parameters on cyclicals probably on price, and that certainly is far far away from the truth.
Do try to read again, if you are truely learning.
And try to untrain your old-frame of mindset.
Like i have said numerous times, read slowly and pause to think then demo the market if you must to get the reality of what was presented.
I most certainly hope that you do not believe what you described is what is being presented by me.

regards
fti,
I agree I need to read this thread over again, actually a couple times over.
As you might recall I'm new at this and didn't know anything and probably still don't but at least you got me thinking about matters.
So I'm trying to figure out the overall trend so I thought it would best to begin with the weekly trying to understand which way the day might be going so I'm on the right side of the road.
As far as the spiral I was trying to prepare myself for a rescue from watching this pair it seemed that those 3 seemed to be areas where price may rotate back. Maybe I'm trying to hard to see characteristics or patterns.
thanks for keeping me going in the right direction.
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