Technical Analysis Fallacy

Quoting piphitman

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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.

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Quoting lilpip

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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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Quoting fti

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Hi lilpip,
Not to worry, go slow, it will come to you.

The thingy about weekly reads , is actuality it tell you nothing , as the trade time scope will be going into years of market participnation, so really looking there, give the trader nothing.
Already if you traded a 5 min sequence, your exposure could be into days of babysitting, and that is if you got the stamina to do that.
The daily reference helps you if you happen to carry overnights while riding smooth trends, and these comes by only occassionally. Probably less than 5 or so in a year.
Ifyou are on rescues , try to limit to daylight.

Be absolutely careful when you think fibo in price scales. Price movements move in impulse wave thrust and equilibrium setting. So it is linear and 2 dimensional. position and P&L snowballing can be build on 3 dimensional models due to its geometrical undertones. I understand that there are a lot of disillusional material floating in markets on 3 dimensional price predictive models. Be clear that that is pure rubbish and is used as marketing BS. fibo leveling can be used to extend the position modelling to allow for illiquid markets,to stretch, but as a rule of thumb, I discourage traders from trading illiquid markets. manipulation is likely to be rampant in those.

regards

PS: also note that from trade clearing data 80% of all forex transactions are accredited to the 4 majors. Used to be the USD/DMK was most liquid, Now it is the EUR/USD. followed by USD/YEN, then Cable and CHF. The reson why london is lsrgest fx center is due to location of interlocking time zones. In interbank , all the other pairs are considered exotics.

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Quoting fti

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PS: also note that from trade clearing data 80% of all forex transactions are accredited to the 4 majors. Used to be the USD/DMK was most liquid, Now it is the EUR/USD. followed by USD/YEN, then Cable and CHF. The reson why london is lsrgest fx center is due to location of interlocking time zones. In interbank , all the other pairs are considered exotics.

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Quote

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Lets say you bad, are zooming out and if you are trading against changed pictures, you know you are "dead in the waters"
So what must you do?
> Exit Trade at BE if possible with foreign capital. If no foreign capital then take the loss.


If you turn, you lose ground, so you have to decide to trade against trend or sink. right?
When this happens, what is the mindset to adopt?

> Exit trade and wait for opportunity to turn into direction of the current trend.

If you decide to fight instead, you are trading against the trend,
so what should be the mindset, strategy & MO?

> Do a quick rescue to exit with minimal damage. Do not overstay in the rescue too long.

Remember when you try to turn "on wind again" you work against the law of motion.
What does newtons law of motion states about the law?
Think thrust & distance.

> Assuming our initial Trend analysis is correct but we mistimed or wrongly position our entry, then when we turn into the wind, we are likely entering into a period where market is going to reverse against our position.

If you decide to turn, WHERE do you look for that fresh timing?
and if you use $$$ to turn,how much ground must be lost before the turn is effective?

> ???? Help! Need clues and hints!

Understand the MM tables.
When risk snowballs , what is the best alternative.
> Reduce position size?

Even if turning is the way to go to flow back into the trend, Whats the purpose? Whats the MO supposed to be?

> MO is the rescue sequence. Purpose to recover back the previous loss.

You try to use attack MO and the MM WILL kill your portfolio.
> ???? Help! More hints pls.

Quoting ebooks

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Old story...

Take several good books (i.e. different point of views) and build your own super duper TA approach.

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Quoting fti

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Hi piphitman,
As combination of spiral 1,1,3 would be a better combination as your attck would be stronger. howerever 112 gives you the 1123 range of capabilities.
when attack is over, the winding down should leave normally only base.
ie scout. On second wave when you do a 113 again, the effective is actually on 2 base as one was left over, 2,1,3 then on wave 3 the base becomes as large as the attack, effectively 3,1,3 as 2 was left over. if the short term trend ride was succesful the base should be winded to the original of 1.
You can work in multiples of the base as per capitalisation.
I found this most effective.

In terms of using MT4, I found that their accounting of positions is unorthodox, and much prefer , FIFO, or netting off , as it its the interbank accounting standard.
You may like to refer this at merlins thread about "hedging" in the Trading Room.
http://www.forexfactory.com/showthread.php?t=68598
Its really non professional , and tedious at best.
Having said that it is your choice to determine which platform is available for your trading. Remember that time constrain in position managing is not confine to pip slippage only . In combination with the price spreads and re-quotes, your slippage is actually very large in relations to leg ranges.
In my opinion , too much to give to broker.

regards

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Quoting jest1081

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Hi fti,

i did a demo trade a while ago following your reccomended 113 attack sequence using the 10min charts.

Marked below are the entries i took at the close of each bar. Say once price reached its target (do you even use targets?), i'd liquidate and leave the 'scout' in. As of now, i'm preparing to make a second wave at it, which will eventually make my skew to a 213 right?

http://img511.imageshack.us/img511/9194/euqv3.jpg

a few qns, pardon my naivety

What combination would you reccomend when i am trying to do a rescue for 113(5troops), 213(6troops) and 313(7troops) combo?

Can the 113 sequence be used as a skew for doing a rescue too, i am asking coz i saw lusan's journal and his skew sorta puzzled me?

attack with 1, 2, 3
rescue with 3, 9 , 20

does this mean that if i have
- 1 troop to rescue I will send 3?
- 2 troop to rescue I will send 9?
- 3 troop to rescue I will send 20?

or

- 1 troop to rescue I will send 3?
- 3 troop to rescue I will send 9?
- 6 troop to rescue I will send 20?

regards
jest

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Quoting luSan

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Rescue. I send my scout out. I see that I missed the 5M trend. What to do? 3 outs to balance book. I fail? Maybe another 3 out? I still fail? I am desperate, go with 9 troops. Adjust profit taking very short to average out. In a terrible bad shape and total collapse? Go ballistic with 20 troops out. Simple: 3-9-20 rescue.

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Quoting jest1081

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Hi fti,

i did a demo trade a while ago following your reccomended 113 attack sequence using the 10min charts.

Marked below are the entries i took at the close of each bar. Say once price reached its target (do you even use targets?), i'd liquidate and leave the 'scout' in. As of now, i'm preparing to make a second wave at it, which will eventually make my skew to a 213 right?

http://img511.imageshack.us/img511/9194/euqv3.jpg

a few qns, pardon my naivety

What combination would you reccomend when i am trying to do a rescue for 113(5troops), 213(6troops) and 313(7troops) combo?

Can the 113 sequence be used as a skew for doing a rescue too, i am asking coz i saw lusan's journal and his skew sorta puzzled me?

attack with 1, 2, 3
rescue with 3, 9 , 20

does this mean that if i have
- 1 troop to rescue I will send 3?
- 2 troop to rescue I will send 9?
- 3 troop to rescue I will send 20?

or

- 1 troop to rescue I will send 3?
- 3 troop to rescue I will send 9?
- 6 troop to rescue I will send 20?

regards
jest

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Quoting jest1081

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Thanks guys.

Lusan, from you MM. i am now seeing you using a 1,3,3,9,20 modelling with regards to the post above.

thats 36 troops instead of the 32 you initially mentioned, won't this affect you MM? You are correct. 32 is a guide. I have not deeply fixed rules.

Also i do feel that we need to note the distance (price gaps) between the scouts and the rescue team. The wider their gap, the more troops we will be required to send to minimise the loss/break even/profit, right? This means using a pre-determined rescue skew is not neccesarily feasible as price moves in variations depending on volaitillity. (Thanks Sitoca) You are correct. that why I do not calculate. Things move too fast. I do everything buy eye. No fixed rules but fixed general concept.

Do you suggest i use a skew where say for every xxx lost i will use enough troops to allow me to get to BE within 5pips? Sometime I do that. When I need to rescue I move my profit target to about 5 pips. Sometimes I BE and close the loser, sometimes I am greedy put the money in the bank and keep the loser and watch the show. Yes, full of fear. No fixed rules here either.

I undestand the importantance of being flexible but if we are to leave it to a point where our MM becomes to complex and unmanageable, im afraid it could only spell for greater disasters. Maybe, but please note that I give myself only 13 5 bars to win the battle. I have only to make 13 battle decissions. After my 3 or 4 attack sequence if everything is ok, then I watch the show and smile. Otherwise I work those 13 bars hard. I am not Ok after the first 13 bars, I keep working until I am saved.

Warning: this is the way I do it. There are other ways to do this. I think that people need to find what make then feel comfortable. Do not use what I do as a guide, I am just learning; I am probably a terrible student that does no follow a fibo sequence, care about fundamentals, or play multiple legs of the market. I just want my 45-60 min of glory! fti is the king master here.

Would leighswww or fti or any of the oldtimers in this thread care to give an example say for a 100k account? Both showed good examples. Have you read the thread? If you have not then, all these will not make sense and you risk trouble.
- how would we plan the MM?
- What is the max risk?
- how do we plan our scaling (attack and rescue)
- what are the preffered sequences depending on PA.

many thanks

best regards
jest

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Quoting luSan

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My answers:

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Quoting fti

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Hi jest081,

Interesting,

1. I am sorry to say that I would not be as sharp as you. In the sense of the ability to pick tops.
No i did not, i just saw it as a price failure and took it as an oppurtunity to play a small swing. After the recent volatility (selldown up-spike) all i can guess is that huge area within the HILO of the spike only spells consolidation.

2. That you are on an extended compressed time frame that there will be little decision making reads.
since this was the time frame you chosed then I will try to explain it in sync.

3.Before we go on, I would like to enquire with you if you know the daily trend, and at what zone of possibly sequences that may occur?
Yes sir, i am aware thet we're essentially in a major eurusd bullride

My take on the daily trend is bullish EUR with a strong key reversal influence.
Base on your short chart (10min) if I was to attempt this trades, I would probably be short E/U at point marked 1.
Thats the same area i shorted. well i made a decision to do it at the close of the red bar...so i think we're in line here. cheers!

Since we are in a range sequence, I an afraid that, that would be my only possition for up to where your chart stopped. This is because we are in a range bound scenario.
There is no attack sequence possibility until more info comes on stream.

I would like to further enquire your reasons for your position 2 where you sold another position, to rescue your scout. Based on the position of the scout, there seemed no rescue necessary, as it was never out of money.
The 3rd position further is at question based on that again there presented no such necessity.

I think you must have confused that you must always impliment rescue, even if the position was not emcumbered. Please reanalyse your position.

For this part, i was not doing a rescue sequence but the attack sequence you reccomended, am i wrong or am i missing anything? I thought lusan and a few others did the same? Pls advise

Further do not be confused that the attack sequence and the rescue sequence both take on the geometric basis. The purpose of rescue MO is to recover the scout , when encumbbered, therefore the minimum reponse is at least a fibo progression sequence.

The attack sequence is for press therefore should at least be a reverst fibo, to protect from possible retracement against possition.

Another point is that when a rescue gets into trouble, the next "spiral within a spiral" possibility would insist that the next rescue sequence , if attempted on would have to take the form of size of minimum next in order from the exposed base.

ie a martingale of base.

example.
if 1 scout was in trouble, u sent in 1 to rescue then 3 to rescue if unsuccessful, if more rescue was required then the next squad would be ?

ten,, did you get it right?
yeap, yay!

based on this progression what would be the next required rescue?
thirty, did you get this right?
not twenty? ahh i see now

what's next, ninety.... see now.

lets say you use a 1,2,3
then requried rescue is 18, 50, 150,

i best not show you level 3....

if you evaluate your rescue risk snowball....
now do a rough guesstimate for every pip run against you,it will cost your book?

By the 2 nd level at least a quarter of book is at risk.
thats right, i figured that, and its almost impossible for me to survive the 3rd level at current MM i'm doing, well at least thats what i thought statiscally

So try not to get yourself into this often, for the sake of sanity, unless you are a bank.

The focus should however be on attack sequence, where you have foreign capital protection to a certain extend.

Pressing should however be initiated only once trend is entrenched, normally on wave 2 onwards.

and should be on reverse fibo summation up to limit, if foreign capital reserves allow.

Of course when you first set out, there is little foreign reserves to lean on, so then you must be very conservative, until you have the nesting.

As sitoca rightly pointed out, the MM is to hold to proper sizing, the profits comes from dancing correctly. Dance badly, and the most the MM can do for you is to minimise drawdown at very high risk of ruin. Maybe you would like to show if there was any other way?

And MM management on profitaking should be on LIFO as Lusan suggested.

I hope this helps you crystalise your thoughts.

regards

many thanks!

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Quoting fti

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The attack sequence is for press therefore should at least be a reverst fibo, to protect from possible retracement against possition.

The base of which could be the sum of all available ammo left over from the original rescue or scouts possitioned, whichever is applicable. If it slipped you, there is no possibility of further pressing when the base is not in the money. I mean well in the money.

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