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Technical Analysis Fallacy

  • #1,761
  • Mar 13, 2008 7:18pm Mar 13, 2008 7:18pm
Quoting fti
Hi Lusan,
I am not very sure what Mr Tharp's style is, but if you read what Lucky57 wrote, and he is well read, it reinforces what I do. But we will get to that soon. Of course, no two traders are alike. The principles that carry us should be similar. There are some issues but I am quite sure indepth analysis is likely to show where it syncs.This is a good direction to go, as you will see where the similarities for success are. And it is likely that we are singing the same song.

regards

PS: There is lots of development in the mkt front today, oil's gone thru the roof again,similarly gold and the wohole world is now readjusting, Be watchful.
Actually I agree a lot with Lucky57 and what Tharp said. I read Tharp's "trade your way to financial freedom" several months ago. He is deeply into trading psychology, position sizing and money managment. Mostly good, but stop loses is bad very bad! -As you already know I exit a trade when I want not when the market go against me. That is what the rescue approch that you taught us is all about. Righ? -I have his book in front of me while I write this note.- But after we see the conection between AOW and trading, as you show us, all other books fall by the side.

I think that Lucky57 got it right. We need to create our own system. I mean: we need to allow trading to be an expression of our own being. Ops! it sounds like new age philosophy....Any way, every morning, when I log on my account my heart is full of anticipation and fear. To know that before I see the wife's eyes, I will see PA eyes scares the heck out of me! On that Tharp is totally correct!!!

As far as I understand this game, It is US and PA. The rest is just a distraction....Oh well.. I am just a beginner and in training...
Empty as water and soft as a facing wind mountain
  • #1,762
  • Edited 7:50pm Mar 13, 2008 7:37pm | Edited 7:50pm
Hi All,

Good point brought up about stop loss.
Before we go into dissection of the points, facts and practices.
Let me say something very important.

One very important trait of a good trader is that they do not take most things lying down, unless they have no opinion of the issues.
This is because good traders are very proactive in their actions, seldom sitting on sidelines. This characteristics translate into their trading, mindset and proactive levels.

If one sits on the side like spectators, chances are that they are non-reactive and dormant in actions during their trading as well, or slow to reactions.
Let me try to explain in an analogy.
If a person watches a marathon race,chances are that unless that same has been participants before, the likely hood is that they have the opinion (feel) that they can do better. That is until they come on as participation, before they can empathies with the scene.Mostly we believe that we can do stuff well, until, we are truly tested. So trading like most things in life is cannot be learn from "learning by watching". There is mark difference in knowing and having the ability to do.

One thingy I watch out for in training dealers is to watch for this. I KNOW that those who ask questions and participate in the "fight " comes out educated, benefiting from the "fight", whereas those that behave like spectators gain nothing, because they only learn from one faculty, whereas those that fought went in with all faculties. The most important is "feel" which one can only get from being party to event. there is also the body chemical aspect of endophines levels , which is part of the mind memory process. This is quite similar to muscle memory as in golf.

regards
  • #1,763
  • Mar 13, 2008 7:44pm Mar 13, 2008 7:44pm
Quoting BabeFX
lusan,


Perhaps the number one rule of trading is to cut your losses short and let your profits run. Those who can follow this simple rule tend to make large fortunes in the market.


....I guess we will never make it. I NEVER NEVER cut my losses short. I fight my battles to have not loses. Our ways of trading is so different to his approch that it might sound very ilogical. Imagine we do not use stop loses. I have none and I trade everyday. At the beginning I was full of fear.Now I would finding unthinkable.


You might disagree with the logic of placing an emergency stop (disaster) loss, I do hope you have the pockets big enough to protect you in the event of a major disaster or massive C.B. intervention.

Take care,

It is too late to close the stable door once the horse has bolted.

BabeFX.


I am wrong until the market proves me right (POP. Phantom of the Pits).
In truth, Lusan is absolutely on the money in his mindset and approach.
Just that, from a casual view, it is difficult for many to understand that Lusan is one up. And I can assure all that if you have traveled the road taken , one will realise the strength embedded.

Whhy I say that will become apparent as we dissect this stop loss issue.

regards
  • #1,764
  • Mar 13, 2008 7:45pm Mar 13, 2008 7:45pm
Quoting BabeFX
lusan,


Perhaps the number one rule of trading is to cut your losses short and let your profits run. Those who can follow this simple rule tend to make large fortunes in the market.


....I guess we will never make it. I NEVER NEVER cut my losses short. I fight my battles to have not loses. Our ways of trading is so different to his approch that it might sound very ilogical. Imagine we do not use stop loses. I have none and I trade everyday. At the beginning I was full of fear.Now I would finding unthinkable.


You might disagree with the logic of placing an emergency stop (disaster) loss, I do hope you have the pockets big enough to protect you in the event of a major disaster or massive C.B. intervention.

Take care,

It is too late to close the stable door once the horse has bolted.

BabeFX.


I am wrong until the market proves me right (POP. Phantom of the Pits).
We are dealing with psychology. I keep enough troops in my domain that I believe that I can bring more and more to save the day if I have to. Of course, my constrains are very well define: I trade the 5M for only 1 hour, I do not commit to trading more than 25 % of my potential trading capital.

My number 1 rule: Preservation of capital. I mean: I am a total coward. I want to win a war with the fewer number of battles, so I fight every 5M bar. Illogical? will that limit my profit potential? probably. I just want to win day in and day out, any number larger than zero is delicious. Everyone has to define their own pain level. For some is 1% for other is 2 %.

I play very small because I still do not know what is my threahold for pain...but I tell you that an stop loss set is hell for me..Today I was losing 200 pips and I just followed the teaching and rescue the troops for another win day. Why? I screw up. I did not understand PA...no indicator to blame, no system to blame but my own blindness.

If I am in trouble I might play for another hour then I will take my loses and go to bed and cry. I will stop. So far, in more than 30 wars, the only time I have a loss was when the computer acted on me and I lost my mindset.

Protection against a major disaster? I already have it. I only need to close the trades. I mean, I babysit my trades as if they were my own children. Could that happen? Yes, if you play when US news are coming out. Do I do it? No news trading for me. I already got burned once. It will never happen AGAIM in my whole life... Of course...I am just learning and in training.
Empty as water and soft as a facing wind mountain
  • #1,765
  • Mar 13, 2008 8:02pm Mar 13, 2008 8:02pm
Quoting luSan
We are dealing with psychology. I keep enough troops in my domain that I believe that I can bring more and more to save the day if I have to. Of course, my constrains are very well define: I trade the 5M for only 1 hour, I do not commit to trading more than 25 % of my potential trading capital.

My number 1 rule: Preservation of capital. I mean: I am a total coward. I want to win a war with the fewer number of battles, so I fight every 5M bar. Illogical? will that limit my profit potential? probably. I just want to win day in and day out, any number larger than zero is delicious. Everyone has to define their own pain level. For some is 1% for other is 2 %.

I play very small because I still do not know what is my threahold for pain...but I tell you that an stop loss set is hell for me..Today I was losing 200 pips and I just followed the teaching and rescue the troops for another win day. Why? I screw up. I did not understand PA...no indicator to blame, no system to blame but my own blindness.

If I am in trouble I might play for another hour then I will take my loses and go to bed and cry. I will stop. So far, in more than 30 wars, the only time I have a loss was when the computer acted on me and I lost my mindset.

Protection against a major disaster? I already have it. I only need to close the trades. I mean, I babysit my trades as if they were my own children. Could that happen? Yes, if you play when US news are coming out. Do I do it? No news trading for me. I already got burned once. It will never happen AGAIM in my whole life... Of course...I am just learning and in training.
There you have it, on the money Lusan.
And I believe he didin't had the liberty to read my posting at feb???? 's thread.
Where I stressed .
rule #1 preservation of cap
rule #2 preservation of cap.
rule #3 don't forget rule #1

You can reference Leighsww about that, as I am not sure where'smy copy.
Although Lusan's excuse is that he's coward, which may be for the wrong reasons. the mindset is howerver correctly on the money, absolutely.

Issue of stop loss order later.
as mkt moving

regards
  • #1,766
  • Mar 13, 2008 8:17pm Mar 13, 2008 8:17pm
Quoting piphitman
jest,

Thanks for the spreadsheet.....question what is dde?
Once I launch the spreadsheet it has some sort of macro within it asking to "allow" for update............no offense but, please understand that I am a little skeptical of allowing such access to my computer via internet. Could you clarify the programs internet access a little more for me, and also, does it only work for E/U?

Thanks

ph
dde is a data link to mt4.
this if you allow the update, it will take data stream from mt4 and link it to the spread sheet so that the live feed will be updated with every tick movement. it will allow you to see the price movement easily.

for this to happen you need to have you mt4 terminal switched on and dde enabled. if you are skeptical, just delete the field markede in red and manually enter your own current price.

best regards
  • #1,767
  • Edited 9:49pm Mar 13, 2008 8:52pm | Edited 9:49pm
The ISSUE stop loss order.
--------------------------

What is a stop loss order?

A stop loss order is basically a limit order.
This limit order automatically becomes a market order to fill, once limit specification is triggered.

Stop Limit orders: specify limits of slippage, exceeding which the order resinds.

The use of this sort of orders are normally placed at critical "BREAK" zones , either to prevent over losses in fast market situations or to limit exposures.
"Smart" traders use it as entries for break of ranges. To captalise on getting on runs after breaks. So it is the "stupid" traders that will sit at these levels to give away positions on breaks. Thats what many is lead to believe. The truth is that these zones are vacuum zones in reality. As even the most "stupid" traders in the world know how not to trade against breaks.

Stop orders normally fill with slippage to the disadvantage of the order always. There is no OB possibilities, if any trader gets an OB fill , please come and tell me.

If you had ever seen 3 phenning (300 pips)gaps , you would understand what I am talking about. I believe many may not have seen this as most retail traders are new to the business. This brings us to the subject of liquidity and illiquid markets, another topic ,,,,later.

In the futures market context, ask any pit trader , if they had seen possibilities of fill upon market at day limit. Ask any pork bellies trader, coffee,sugar,....etc, what happens when the market goes on 5 continuous limits. Ask them about stop loss fills.

Fortunately Forex markets have no day limits, nevertheless 300 pips gaps, although not prevalent is nevertheless possible. Pray that you do not live to see market meltdown situations. It will open your eyes. If you have the time , go study what happen to the markets on the nikkei systemic failure that took nick leeson out. Study the event and then come and educate me on what actually happened. Ask option writer about ability to delta neutralise positions in such scenarios.

As a matter of fact, traders gets killed, not because of the price volatility, but because of size caught. In reality it is the stop loss order that will kills the traders, due their belief that the large positions are protected by the stops. In effects they get the fills at the extremes when markets unlock and swing back after the market has found equlibrium.

For pros , they are always on the look out for the possibilities , therefore as rule of thumb , always have contingencies in excess of up to 90% of cap as contingencies for the eventualities. These can survive the abrasion in these mkts. This are dangers of mkt's possibility at extreme.

What's really disturbing , is the abuse of stop loss order by overleveraged & undercapitalised traders , normally putting then at vacuum zones , within the volatility band of possibilities. This is prevalent for day chart traders, who, are in actuality putting stops in markets based on day volatilities bands, while trading on the weeks or months volatility bands because they are not watching their babies.
Ask any true market gurus, if they have to put stops , these are placed leaps off extreme tops and bottoms for ride capabilities. They pray that the stops never fills, as being stopped out could mean heavy %es off the book. Then there are pseudo gurus who advocates close stop strategies, by marketing long trend runs scenarios to sell wares. And the masses swallow hook ,line and sinker.

There are many long term position traders in mkts, subscribing to their ability to hold mindset for weeks and months, going against the grains of the human nature composition. One of the strongest human emotional mindset capabilities is the sexual urge. How long do you think you can maintain that mindset? And we can be sold that the human can be disciplined enough to hold infinite expectancy mindset if we follow a "system". Mostly only failing and not taking profits due to mindset failure.
Mostly allowing profits to turn to losses or capturing head and tails of movements at best. And they ask, why they fail. Sure once in a blue moon , they may ride a satisfactory run, But mostly in detriment. Can we call them professionals?
I put it to you , that the pro, works like ants . collecting daily. Once in a blue moon , he gets caught in an unexpected attrition, but only due to inattentiveness, probably still coming out in the plus, net off.

The truth of the matter is if you have to trade with stops, "if you cannot take the heat, don;t get into the kitchen." Let alone gearing it.

I say beware the trap in your mindset, not the curve ball.

Trailing stop loss orders next....

regards
  • #1,768
  • Mar 13, 2008 8:55pm Mar 13, 2008 8:55pm
Quoting jest1081
dde is a data link to mt4.
this if you allow the update, it will take data stream from mt4 and link it to the spread sheet so that the live feed will be updated with every tick movement. it will allow you to see the price movement easily.

for this to happen you need to have you mt4 terminal switched on and dde enabled. if you are skeptical, just delete the field markede in red and manually enter your own current price.

best regards
got it........thanks

I'm assuming I will have to figure out manually what my average entry price is for all troops already committed in the battle and then place that figure as the "entry price" in phase 1 of the rescue template and then place how many troops total I have in the battle and the spreadsheet will figure out the rest based on my estimated rescue skew?

p.s. can that spreadsheet be configured for other pairs too such as E/J
trading naked.......
  • #1,769
  • Mar 13, 2008 9:36pm Mar 13, 2008 9:36pm
Quoting fti
The ISSUE stop loss order.
--------------------------

What is a stop loss order?

A stop loss order is basically a limit order.
This limit order automatically becomes a market order to fill, once limit specification is triggered.

Stop Limit orders: specify limits of sllipage, exceeding which the order resinds.

The use of this sort of orders are normally placed at critical "BREAK" zones , either to prevent over losses in fast market situations or to limit exposures.
"Smart" traders use it as entries for break of ranges. To captalise on getting on runs after breaks. So it is the "stupid" traders that will sit at these levels to give away positions on breaks. Thats what many is lead to believe. The truth is that these zones are vacuum zones in reality. As even the most "stupid" traders in the world know how not to trade against breaks.

Stop orders normally fill with slippage to the disadvantage of the order always. There is no OB possibilities, if any trader gets an OB fill , please come and tell me.

If you had ever seen 3 phenning (300 pips)gaps , you would understand what I am talking about. I believe many may not have seen this as most retail traders are new to the business.

In the futures market context, ask any pit trader , if they had seen possibilities of fill upon market at day limit. Ask any pork bellies trader, coffee,sugar,....etc, what happens when the market goes on 5 continuous limits. Ask them about stop loss fills.

Fortunately Forex markets have no day limits, nevertheless 300 point gaps, although not prevalent is nevertheless possible. Pray that you do not live to see market meltdown situations. It will open your eyes. If you have the time , go study what happen to the markets on the nikkei systemic failure that took nick leeson out. Study the event and then come and educate me on what actually happened. Ask option writer about ability to delta neutralise positions in such scenarios.

As a matter of fact, traders gets killed, not because of the price volatility, but because of size caught. In reality it is the stop loss order that will kill the traders, due their belief that the large positions are protected by the stops. In effects they get the fills at the extremes when markets unlock and swing back after the market has found equlibrium.

For pros , they are always on the look out for the possibilities , therefore as rule of thumb , always have contingencies in excess of up to 90% of cap as contingencies fro the eventualities. These can survive the abrasion in these mkts.
...... cont
you story reminds me of my dad's friend who was working as a dealer for CIMB 10 years ago. He quitted the job during the financial crisis. This is what exactly happened, he described that the sheer size the big boys were playing was the main factor contributing to their ultimate disaster, after that it was all chaos.

@piphitman

at phase 1 you are required to enter the "initial entry price" and "phase 1 entry price" by default the scout is only 1 troop, which size is determined by the risk skew you had pre-assigned initially. The average price is automatically calculated once you enter the amount of rescue troops you sent out so you need not manually figure your average price, the table will aslo keep track of the price of 1pip as your martingle grows. After looking at the phases, i've realised that with a proper risk skew, martingling really isnt so bad.

Personally, i use this table to track my running losses and from it pre determine the size of my next martingle, since it may vary from time to time due to price volatility

Thanks for pointing out coz i realised i have made a major mistake by using the DDE link for all fields now. I have updated the spreadsheet, tell me if you need further clarifications.

Next, i'll try to work on the "attack" sequence on excel, once i've done up a template, i'll rack it up here for sharing. thanks.

cheers and best regards
Attached File(s)
File Type: xls martingle.xls   25 KB | 1,001 downloads
  • #1,770
  • Mar 13, 2008 9:43pm Mar 13, 2008 9:43pm
Quoting Lucky57

· you are not defeated until you accept it as reality.
·Do not fear mistakes. Make more of them so you learn quickly.
·Don’t look at failures as negative. They are just a footstep to success. If you are afraid of taking those steps then you will never reach the summit.
·Never regret the things you tried and failed but regret those you never tried.

My first account of 10K was blown away in about 2 weeks. 2nd account of 10K took a month. Third account of 5K took two months. Fourth account of 1000 dollars took about 2 months. Fifth account of 700 lasted 2 months and I am again on demo trading.

I have been there myself and I commend you for your courage in revealing your past blunders...it's a steep learning curve, and anything worth doing has a cost.
Most people dont understand or comprehend how big part psychology plays in trading. For example most professinal traders who trade for their company and do exeptionally well and make millions for their company when come to trade for their own accounts fail badly at trading. Why? Psychology: when trading others money their emotions are not involved in making trading decisions. It is just like surgeons when they have to operate on their own family memebers they ask other surgeons to do the job.. Strange...

A winner never quits and a quitter never wins.

If you have

PATIENCE--to wait for a trade or right opportunity

DISCIPLINE --to abide by the rules you have set for yourself

COURAGE... --to accept if you are wrong and accept the loss

you can be a WINNER

YOU DO NOT NEED ANY TRADING SYSTEM. TAKE ANY LOUSIEST SYSTEM and if you have all three above you can win. But why then we run after systems? Simple; because it is easy to run after systems and EXTREMELY DIFFICULT TO EXERCISE PATIENCE, DISCIPLINE and COURAGE. We run after systems so we can blame something in case of failure.

In every single one of my failures within this market, once I settled my nerves and evaluated, the clearest reason for the failure was my own lack of planning, failure to be disciplined and more often than not tried to get too much too soon...lack of patience!
TRADING IS EXACTLY LIKE HUNTING: A HUNTER WHO CAN WAIT PATIENTLY FOR HIS PREY TO COME TO HIM MAKES THE KILL. YOU CANNOT MAKE A KILL BY CHASING YOUR PREY.

In Nov last year, I doubled my live account in one week. 22 trades, all winners. What indicators I used, NONE. NO INDICATOR EXCEPT Trend lines. It took me a week to double my account and took just one night to bring it to less than half. WHO is responsible.. ME. Did my system fail? NO.. I failed for lack of DISCIPLE, and PATIENCE.
Hah, this sounds familiar..
In circus you see large and big elephants tied to tiny little pegs with very weak strings or chains. Why don’t they break loose? Here is why: when they are little and weak they are tied to those pegs with the same chains. They try hard to break loose. They fail because those chains are stronger than their strength. They believe that they can’t break them and learn to live with them. As the years pass their strength increases tremendously but their beliefs remain the same. Once they have believed that they can’t break them, they never try to break them again in life. They will never try it again unless they change their belief that they can do so. It keeps them tied to their pegs. Now it is not the strength of chains that is holding them it is the strength of their beliefs that is responsible for their freedom.
Great analogy!!

Same is true about markets. We don’t trade them we trade our beliefs about them. We bet our money not on what is the reality but what we believe to be the reality.

I am just writing to let you know my view about TA and indicators. I have spent thousands of hours in front of my computer. Have wrote a lot of my own indicators in easy language and MQL 4 for MT4. After all that hassle and struggle I am now where I can see everything clearly.
Been there done that too..

I am now where I started from. Naked bare charts without any indicator or even a trend line. My eyes can see the trendline even without drawing it on the chart. And if a trendline is not visible with naked eyes I don’t believe in that trendline. I have Absolutely nothing on my charts. I now BELIEVE that the price action is the most pure form of indictor and is most recent than any indicator. What we can see with our own eyes happening in front of us: why we have to wait for a moving average or MACD or ADX to tell us the same thing after some time has passed. And the time when indicator gives you a signal it is already too late.
Great! It's been hard for people like myself and I think at one point Fti mentioned when he took on new traders to train them, that he preferred someone without any trading back round or knowledge as it's hard to shed old habits and learn the basics all over again, or maybe the basics for the first time after all those years...this has been my challenge, but now seeing the light..and it's getting brighter.
I am FREE now. From all indicators. thank god.

I dont mind the price I paid for this FREEDOM. There is no price tag for FREEDOM.

Some think that if they know how to enter and where to enter that is all they want to know. They have no idea that entry is the LEAST IMORTANT ingredient of a trading system. Trading starts after you are in a trade. I BELIEVE that you can even win by entering on a flip of a coin if you have all else that is needed to be a winner. Most of us including me jump into a trade without knowing even our objectives of the trade.

I used to do the same, not anymore..I have a plan well before the execution, and for that a backup..if thing go array, my MM will take over. Since the beginning of the month I have executed 8 different cycles of trades all starting with scouts....well I have been very busy this month with other commitments and so forth so my scout executions have been not so dreamy, dancing with 2 left feet so to say...out of those 8 cycles, guess what, there has been 6 rescues..dope..all profitable however, and due to my MO those profits turned quite large as I have learned to be patient especially when executing the rescue and once in it, let the market tell me when to get out. I almost prefer the rescues to be honest. as it makes me focus harder. What did I learn this month....small losers can become big winners if executed with the same discipline, patience, and stratagem as a General would execute in the AOW, I cant put my finger on it, but there is a lot more to that philosophy than what is on the surface, this could be the greatest trading book I have ever read..regularly!!
What else did I learn......I am putting too much on the table..I made too much profit on the book too fast....I was too aggressive. It all worked out great for profits, but at one point I did feel uncomfortable..thats my point that even though I have backups for the backups, I should never feel stressed about a trade or a rescue. As Fti states...preservation of capital is key!

It took me almost two years to realize that problem is not anywhere else but inside me. My fight is not with the markets buy my own self. I AM THE PROBLEM and I started working on me.

It is not the system but the trader who wins or loses. The HOLY GRAIL IS INSIDE YOU:


I don’t mind blowing my account a number of times. To get to top 5% or 1% you have to go through the crowd of losers and be among them for a while to push yourself through. Who can't stand losses cant taste success either.

I totally agree with you on TA. It is a fallacy and to break loose of this fallacy requires tremendously strong beliefs.
And the ability to break poor habits.

Lucky,

This was a great post, thanks so much for sharing and welcome to Fti's thread. Your honesty and courage to admit past mistakes is a welcome breath of fresh air.

Cheers,
NP
  • #1,771
  • Mar 13, 2008 10:12pm Mar 13, 2008 10:12pm
Quoting fti
hit

"Would leighswww or fti or any of the oldtimers in this thread care to give an example say for a 100k account?"

If a trader needs me to help work out his exposure tolerance for him, without the liberty of tuely able to size him up. Then it becomes dangerous.
What would he do when I am not around to troubleshoot?
Moreover what can I do for him, when I am possibly a world away , that I cannot gauge trader's state of mind?
Best to find this out by demoing to find self first.
The market is the greatest teacher.

regards
oh i just saw this post while i was tracing back the thread.

I must say sorry, my bad.
I have traded for sometime, well not as long as you but this is my sixth year since i have started trading.

It took me 4 long years to finally find myself in a profitable position, losing and losing, profit and losing again until i understood what stability truely is. I guess im a slow learner. And 2 years down the road i am still working hard to get myself to become financially free.

My reason for seeking your assistance in giving examples is:

1. In many instances, you will not be ard to police our trading, live.
2. In many cases, when martingling is involved, no matter how much books or words in psychology, there is bound to be many traders who will find themselve in an extremely bad position. The mental strength required to be in such a position is extremely huge. Even you conceded that you tremble at times. Getting the balls of steel is no mean feat.

but nevertheless after re-reading this thread a few times (yes i did, i'm a lurker ), i am slowly getting the point. The risks are small, but its starting to worry me that some already preffered doing rescues than making a clean attack? is it because a clean attack usaually results in smaller profits?

I'll continue demoing and try to learn as much as possible, it may take sometime, probably a long time. Thanks fti and all. Again, my sincere apologies.

best regards
jest
  • #1,772
  • Edited 11:26pm Mar 13, 2008 10:56pm | Edited 11:26pm
Quoting jest1081
oh i just saw this post while i was tracing back the thread.

I must say sorry, my bad.
I have traded for sometime, well not as long as you but this is my sixth year since i have started trading.

It took me 4 long years to finally find myself in a profitable position, losing and losing, profit and losing again until i understood what stability truely is. I guess im a slow learner. And 2 years down the road i am still working hard to get myself to become financially free.

My reason for seeking your assistance in giving examples is:

1. In many instances, you will not be ard to police our trading, live.
2. In many cases, when martingling is involved, no matter how much books or words in psychology, there is bound to be many traders who will find themselve in an extremely bad position. The mental strength required to be in such a position is extremely huge. Even you conceded that you tremble at times. Getting the balls of steel is no mean feat.

but nevertheless after re-reading this thread a few times (yes i did, i'm a lurker ), i am slowly getting the point. The risks are small, but its starting to worry me that some already preffered doing rescues than making a clean attack? is it because a clean attack usaually results in smaller profits?

I'll continue demoing and try to learn as much as possible, it may take sometime, probably a long time. Thanks fti and all. Again, my sincere apologies.

best regards
jest
Hi jest,
Really no apologies is necessary.
I do like to stress a very important point since it creeped into my mind.

Do not think that all positions are to be rescued.
The invokement of the MO, is dependent on the dance sequence as well as the cap position of the trader. This is especially so if the dance in in effect out of sync with trader. ie caught on wrong side of the trend. Under this circumstances rescue is fool hardy. You can see this example in the position on the Euro recently. To rescue a "dead in the waters" case is craziness. With dance experience, you will notice that every nerve in the body is in revolt to your such decision and in effect a gambling mindset takes hold. If in doubt when you become too nervous on position rescues, listen to your body. Bite the bullet and take the pain and Imean cut loose. For newbies it may be hard to differentiate this body language that their bicam mind sends out, as they are probably even nervous even with the scout. For seasoned traders, it becomes very recognisable.
As in the story that was posted , when Karl, made the statement that he cannot lose somuch. iTs SIGN but already way overdued. Normally others around the trader can recognise this signs eaily, due to not in state of mindframe. The worst is for traders in the same state to come in consolation of each other. That is why , I have the buddy system in the rooms. So that another of senior capacity comes in rescue of an "outed" trader. Never trade against trend, trend based on the highs and lows relationship. NEVER try to rescue those. Rescue there will lead to rogue trading. That's where "cutting your losses short", comes in play. Sad to say nick lost his head to egor there. So please, no more bad sheeps. This being my greatest fear for some of you.

Another thing is that tables of MM are helpful initially for training. Once experienced , these tend to get in the way of reflex capabilities. Drop that training wheel (borrowed from northpro, thanks), as soon as you feel that the mindset is developing so as to advance the mind development. Alway be mindful of the geometrical nature of rescues. No two rescue will be the same.This is hard to explain, I hope I come across clearly.

Remember , the MM has a form (shape), but it is never rigid, otherwise it becomes the archeles heel.

regards

By the way, it was honourable of you to try to show the others the spreadsheet concept of calculus. Much appreciated. Remember, ditch it once it out live its usefulness. Let the mind learn, you will be surprise as to its capabilities. Divert the focus to the dance instead. Your minds guesstimates will probably be only slightly out. It is better even to stick to preconceived parameters than to have divided attention. This is because your mind will never violate its own threshhold for pain, so even if you had the figures , your mindset may reject due to out of comfort zone. Keep it always in your comfort zone. Under adverse worst case scenarios , that may just save your b,,t.
  • #1,773
  • Edited 11:45pm Mar 13, 2008 11:30pm | Edited 11:45pm
Quoting fti
By the way, it was honourable of you to try to show the others the spreadsheet concept of calculus. Much appreciated. Remember, ditch it once it out live its usefulness. Let the mind learn, you will be surprise as to its capabilities. Divert the focus to the dance instead.
Fti,

Noted. Thanks.

Well i do think its neccesary for me, as of now. Coz there are many things abt skews which are not at my finger tips yet. I will not feel easy until i can get the concept and calculations of averaging at my fingertips.

I'll need to note that as my position size grow, so does the value of 1 pip, and if i do not know my average price, i will never know how much i am losing, how much i may risk and worse still not having any idea the cost of 1pip with 12 troops in the hot soup. I may sound paranoid but, thats they way it is for me, (i guess), as long as i do not understand the concepts of my skews and the risks that i am carrying, i won't feel easy.

I'm gonna have to read and read and read, smack myself a few times for screwing it up, or probably blow it up and start all over again before i got get it right. Well they say the best lessons are learnt from the biggest failures. eheh, but i do hope i don't find myself in that kinda predictament.

It may take sometime for me to get used to this, only with a full understanding of my MM (its maths, logics etc), will it complement my MO, right?

Of course for an experienced trader like you, these concepts and calculations are like plucking grapes, not for me, at least not yet. .

Which reminds me, its like im starting all over again. Its like how i first started out trading, its so hard to remember the currency quotes, you'll just have to get used to em till it just sticks at the back of your head.
  • #1,774
  • Mar 13, 2008 11:39pm Mar 13, 2008 11:39pm
Quoting jest1081
Fti,

Noted. Thanks.

Well i do think its neccesary for me, as of now. Coz there are many things abt skews which are not at my finger tips yet. I will not feel easy until i can get the concept and calculations of averaging at my fingertips.

I'll need to note that as my position size grow, so does the value of 1 pip, and if i do not know my average price, i will never know how much i am losing, how much i may risk and worse still not having any idea the cost of 1pip with 12 troops in the hot soup. I may sound crazy but, thats they way it is for me, (i guess), as long as i do not understand the concepts of my skews and the risks that i am carrying, i won't feel easy.

It may take sometime for me to get used to this, but to me this is the base which will ultimately be my MM and only with a full understanding of my MM (its maths, logics etc), will it complement my MO.

Of course for an experienced tarder like you, the concepts and calculations are like plucking grapes, not for me, at least not yet. .

Which reminds me, its like im starting all over again. Its like how i first started out trading, its so hard to remember the currency quotes, you'll just have to get used to em till it just sticks at the back of your head.
Understood, that's why I didn't ask you to ditch it now. It was clever of you to have d.evised your own "baby walker".
What you mentioned is called experience, it comes with practise, then it become internalised , then it becomes difficult to unlearn.
If you do not use it much, then it becomes rusty,a nuisance, like the male pecker. LOL

regards
  • #1,775
  • Mar 13, 2008 11:53pm Mar 13, 2008 11:53pm
Quoting fti
a nuisance, like the male pecker. LOL
omg ...!
not that way!

im sure a many of us would beg to differ, at least not...."gulp"...yet.
  • #1,776
  • Mar 13, 2008 11:55pm Mar 13, 2008 11:55pm
bearish for yen?
  • #1,777
  • Mar 14, 2008 12:22am Mar 14, 2008 12:22am
Quoting Lucky57
BACK TESTING

Back testing is the biggest BS that I hear time and again. We don’t trade in past but in future. The strategies that worked a year ago, don’t work anymore. 95%(The loosing percentage) of the Traders who traded a year ago have been replaced by new ones with different mindsets, psychology and goals. You can back test a system but when you do it in REAL TIME, the playing field is different. The emotions are different. Your mind works differently and the results are different. That is why when I devise a system I test in real time even on a demo is fine. I BELIEVE that we dont trade a system but a concept. If that concept is sound it should be tradable today, yesterday and tomorrow. Markets are mass psychology and human psychology has not changed in the most recent past. The simpler the system or the concept; more tradable it should be on any time frame and during any period and on any instrument. If your system can only be traded on any one instrument or was valid yesterday and is not valid today, then it was flawed from the start because I dont know if human psycholgy changes so frequently.
Some good points here but isn't demoing a form of backtest too? Once you are done with the demo and ready to go live, the results obtain from demo are historical.

I believe its how a trader backtest, using the appropriate methods that will determine the validity of the results. Its a tool that if used properly will be beneficial to the trader but if wrongly applied then.......

Its similar to the MM and MO that Fti teaches us here. Who would have thought of trading without a SL or averaging into a loss trade? Again, in the wrong hands it is dangerous.
  • #1,778
  • Mar 14, 2008 12:31am Mar 14, 2008 12:31am
Quote

Who learns from his own mistakes is SMART and who learns from others mistakes is WISE.
It costs money to be SMART and it is free to be WISE but free stuff in this world is considered worthless.
So this post you just wrote is free = worthless? :

Just jesting....no offense. I understand why you wrote this.

Just thought its ironic you wrote such a long post hoping to enlighten us but start off with this quote at the start.
Maybe you ought to charge for this post you wrote to make all of us smart.
  • #1,779
  • Mar 14, 2008 1:08am Mar 14, 2008 1:08am
I did not write free = worthless. I said it is CONSIDERED worthless.

Fress stuff is not worthless because it don't have any inherent value. IT is worthless because when we dont pay for something we dont recognise its value. That is why what we get for free is considered useless as we haven't paid for it and we care less about it.

When we pay for something, no matter how worthless or useless that stuff is that is not worthless for us. Sometimes and most of the times price is the only criteria we have to measure something's value. Hope I made some sense.
  • #1,780
  • Mar 14, 2008 1:37am Mar 14, 2008 1:37am
Quoting Lucky57
I did not write free = worthless. I said it is CONSIDERED worthless.

Fress stuff is not worthless because it don't have any inherent value. IT is worthless because when we dont pay for something we dont recognise its value. That is why what we get for free is considered useless as we haven't paid for it and we care less about it.

When we pay for something, no matter how worthless or useless that stuff is that is not worthless for us. Sometimes and most of the times price is the only criteria we have to measure something's value. Hope I made some sense.
I believed what you are trying to say is this:

“There are many truths of which the full meaning cannot be realized until personal experience has brought it home.”
– John Stuart Mill, economist, philosopher

Doesn't necessarily means you have to pay for it to learn from it. For those who have went through the same learning process as you, they will understand what you are on about.

For those who have yet to, they will still do it regardless of all the warning signs out there. Your post may minimise it but they will still make the same mistakes as the rest of us...... the magnitude maybe lesser but it will still happen.

Its part of the learning process.
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