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Technical Analysis Fallacy

  • #1,821
  • Mar 16, 2008 1:08pm Mar 16, 2008 1:08pm
Quoting Jairo
I keep record of my results not in pips but in % on equity. I had a lot of 0.0x or 0.xx% gains until a very hard battle through the night ended up at -4,94% loss. Back to behind the starting point. God let it never happen to you.
That really hurts. What happens? 5 % is huge. For an account of 10K this is $500 and extremely high as you know as per fti's recovery table. I am very sorry and you might want to promise yourself of not having happening again.

For me, hope is out of the question during trading. I think that a "line on the sand" of 1 % should do the job when all hell break lose and we do not know what to do. Why 1 % because of rule No. 1. "Protection of capital." So far the worst I have seem is 0.2 % and I will play at the current level for at least one year...you know...I am in training...

Happy pipping...
Empty as water and soft as a facing wind mountain
  • #1,822
  • Mar 16, 2008 2:29pm Mar 16, 2008 2:29pm
Hi Lusan,
Attached Image
  • #1,823
  • Mar 16, 2008 2:34pm Mar 16, 2008 2:34pm
Hi Lusan,
the pic is just jesting.
Seriously, You probably wasn't aware of the USD devaluation from 2000 till now.

You must always remember that your neutral currency as an american is the USD.

Well to protect your Purchasing Power parity. (PPP)
To kill two birds with one stone, you could offer your USD to marry an arab.
To do that,you have to convert your USD. cos then your neutral currency won't be USD anymore,
your neutral currency would be Dinars and the dowry in gold.
AND try to find one that has at least two wells.One water and one oil.

I guess if you achieve that, you are fully hedged.LOL

regards
  • #1,824
  • Mar 16, 2008 2:37pm Mar 16, 2008 2:37pm
Hi Lusan,
Those were just jokes,because you sounded in a panic when you asked. LOL
Heres the serious one.

As a matter of timing, you are at the extreme end.
So it is not prudent to hedge.
Nevertheless we don't know where or when the USD can bottom out.
With this resurfacing of the US subprime thingy, its hard to tell.
That Bush plan didn't do its trick, so who knows, where its headed.
If the Fed's insistance to support the USD,
may be we may have a little reprieve before it heads south again.
That would have to be traded.

OK, what are your options?
Here's what I did, so it may help you with some ideas.

you mentioned gold. Since when gold was trading 300USDper troy ounce, I had been buying it and storing it in safe place for my children's education fund. So over the years, cost averaged of the holding is around 500+ for that portfolio. Now that gold is above the 1000 USD, its expansive. What I do was that I bought quaterly with 5% of my paycheck until I retired.
Please be clear that the gold holdings is in Bullion (999.99) gold purity and not gold from the goldsmith shops. Those are handicraft gold, and you pay alot for workmanship and design. So that's no hedge.
Your option for bullion supply is limited to , if you know any bullion smelters(wholesalers).
Alternatively, since you are in the US is the maple leaf coins produced by the Royal Canadian Mint, you can buy at banks.
the European alternative is the swiss gold bars, not the chocolate flavoured ones,ok LOL
The Credit Suisse Gold Bullion Bar, come in various sizes.

The others is the kuggarand Gold Silver Bullion Coins Bars or
if you are in asia, the Sun Hung Kai Bullion coins, Moncatta gold and silver bullion bars,
Australia's Kangaroo Nugget bullion coins. ( some people like Asian Bullion more, because it is darker orange in colour compared to gold mined from other parts of the world)

Never buy bullion bars from unknown or unmarked sources. If you do get it assayed and certified first. Remember, never do paper gold or accounts gold, theses gold carries "cost of carry fees" embedded into the price. Best stay on physical bullion but of course you will have security risk for that, unless no one knows you got any. Beware of bandits and highway robbers. ( oh sorry, wrong century) LOL.

Other possibilities is silver, palladium and diamonds. And the latest instrument, titanium. For that I bought a few more golf clubs (drivers) than I needed. But was told that it was supposed to be in ingots. So now I am awaiting the introduction of titanium coinage.LOL

As you mentioned, you could open accounts in UK or Europe in your non neutral currencies accounts.eg in Stirling or EQ. Don't try to hold renminbi(China currency), its not freely exchangeable, at least not yet.

You best hedge is to hold a diversified holding of all the above mentioned. Aportioning the ratios of that holding to your fancy and dollar costing your purchases over a long period like what I did for my children's fund.

OR you may like the marry option, thats fun, they allow for harams.LOL

Oh , almost forgot, well, if you get caught in a depression holding your USD, you may like to snap up cheap agriculture land and convert them to commercial and residential land over time. This one could make you a LANDLORD aka king.

regards
  • #1,825
  • Mar 16, 2008 2:44pm Mar 16, 2008 2:44pm
Quoting fti
Hi Lusan,
fti, thanks for the reminder. I might be a total fool but if I have to trade that chart, I would short it because my gut tell me of an upcoming pullback. If so, I should keep my saving in USD and wait for the pullback and then go EUR long crazy. Not too far away from my thoughts this afternoon, the rumor is that the FED will drop again the rate. This is close to zero...they will have to revert and then the PA will revert to fight a crazy inflation...at least for while

Note not prediction here: just chart reading! If it looks like a trend is confirmed, then a million traders saw the same and will play against it...so a reversal is coming...my foolish thoughts.
Empty as water and soft as a facing wind mountain
  • #1,826
  • Edited 3:14pm Mar 16, 2008 2:50pm | Edited 3:14pm
Quoting luSan
fti, thanks for the reminder. I might be a total fool but if I have to trade that chart, I would short it because my gut tell me of an upcoming pullback. If so, I should keep my saving in USD and wait for the pullback and then go EUR long crazy. Not too far away from my thoughts this afternoon, the rumor is that the FED will drop again the rate. This is close to zero...they will have to revert and then the PA will revert to fight a crazy inflation...at least for while

Note not prediction here: just chart reading! If it looks like a trend is confirmed, then a million traders saw the same and will play against it...so a reversal is coming...my foolish thoughts.
Dear Lusan,
Don't get weird, read that chart carefully, its a monthly bar chart,.
If you traded that chart, you would be holding your position for years and probably have to pass the positions down to the next generation to manage. LOL

regards
PS: another thing is , if you chosed to use the precious metals hedge, you incur, cost of holdings, as you will not be getting interest for your holdings. Normally the appreciation in value takes care of that, but it can be negative costing, sometimes.
Some people buy in to bullion and lend it out to source and get "consideration returns" but for me that incurs counterparty risk. So I rather hold to the physical as I am aware that I may not be around to see the liquidation of that portfolio.

AND reading into expectations and pre emtive action is unhealthy trading mindset. trade whats happening, not whats expected. Careful there!.
  • #1,827
  • Mar 16, 2008 3:27pm Mar 16, 2008 3:27pm
FTI whats your oppinion about gold. I was once on a seminar of Mark Faber ( i didn't know who this really as long as somebody few hours before seminar explained me) . He showed some ratios between Dow and Gold than he said that U.S money printing will kill the dollar and beacuse of consumption from EM it will rise to 4000. He also said swiss bank sold it for low money and they will buy it back at 2000 and 3000. In short everybody on this planet is yelling metals will go up and i don't like it. I think in metals is now one bubble rising which is a consequence of U.S economy turmoil and bernanke's pumping. regards
  • #1,828
  • Mar 16, 2008 3:33pm Mar 16, 2008 3:33pm
Quoting mijamoto
FTI whats your oppinion about gold. I was once on a seminar of Mark Faber ( i didn't know who this really as long as somebody few hours before seminar explained me) . He showed some ratios between Dow and Gold than he said that U.S money printing will kill the dollar and beacuse of consumption from EM it will rise to 4000. He also said swiss bank sold it for low money and they will buy it back at 2000 and 3000. In short everybody on this planet is yelling metals will go up and i don't like it. I think in metals is now one bubble rising which is a consequence of U.S economy turmoil and bernanke's pumping. regards
Hi mijamoto,
I am sorry, I am just a retired trader.
I don't have crystal ball like all those clowns.
So I just trade everyday the best i can.
Ride smaller overnight positions when I have opportunity.
Save part of my earnings and profits from markets for the family.

I guess intelligence is not my forte, just an old trader.

I check what the markets do , logic out the impact if any, and trust my charts and skills. Basket of precious metals and basket of currencies holding s is just hedge for PPP and savings for my family.

regards.
  • #1,829
  • Mar 16, 2008 3:36pm Mar 16, 2008 3:36pm
hehe! I should ask than fortune teller LOL As you said 100 times. Do what market do not what you expect he will do

regards
  • #1,830
  • Mar 16, 2008 3:42pm Mar 16, 2008 3:42pm
Quoting fti
Dear Lusan,
Don't get weird, read that chart carefully, its a monthly bar chart,.
If you traded that chart, you would be holding your position for years and probably have to pass the positions down to the next generation to manage. LOL

regards
PS: another thing is , if you chosed to use the precious metals hedge, you incur, cost of holdings, as you will not be getting interest for your holdings. Normally the appreciation in value takes care of that, but it can be negative costing, sometimes.
Some people buy in to bullion and lend it out to source and get "consideration returns" but for me that incurs counterparty risk. So I rather hold to the physical as I am aware that I may not be around to see the liquidation of that portfolio.

AND reading into expectations and pre emtive action is unhealthy trading mindset. trade whats happening, not whats expected. Careful there!.

fti, you have been keeping gold to you heart!

Your chart, monthly, and that is even worse, does not bear good for US.

Me? My plans are simple:

1. Protect my savings. Gld etf and oil etf for my 401K. I made 20 % in 2 months. That is not a good indication for US economy. Maybe get into some euro etf, and keep the rest in us currency. I distrust quick money.

2. Trade and trade every day as I do.

But this does not answer the key question. Where to park the non-trading money while keep high liquidty to take advantage of trading opportunities?

Is that I need to develop a much longer trading strategy for the "parked" cash while I develop my 5M skills? That is the question? Currently I have a bunch of $ in CDs and US cash. Playing the 1D chart with no leverage is interesting but it is NOT our way of doing things.

Am I trader? ...yes, well. I am a want a be trader... So I must be liquid to trade. righ?

Am I panicking? Sure. The FED is taking action almost everyweek. They behave as if the sky is falling. It seems to be falling...

In your non-serious message you mentioned arab money. That is a good thought. Today I learned that gas is already $5/gallons in CA. That is big news and not so good for US economy.

Maybe I should plan to move to Colombia or Poland! Hehe...hehe...
Empty as water and soft as a facing wind mountain
  • #1,831
  • Mar 16, 2008 3:53pm Mar 16, 2008 3:53pm
Quoting luSan
Maybe I should plan to move to Colombia or Poland! Hehe...hehe...
Hmmm... Colombia ... FARCs ... seems not to be a good idea...
  • #1,832
  • Mar 16, 2008 4:01pm Mar 16, 2008 4:01pm
Quoting Jairo
Hmmm... Colombia ... FARCs ... seems not to be a good idea...
oh well...FARCS is a real problem, even though I speak fluent Spanish...Poland yes... maybe a caribean island!

I guess the answer is gold and oil and trade, trade, trade.
Empty as water and soft as a facing wind mountain
  • #1,833
  • Mar 16, 2008 4:07pm Mar 16, 2008 4:07pm
Quoting luSan
fti, you have been keeping gold to you heart!

Your chart, monthly, and that is even worse, does not bear good for US.

Me? My plans are simple:

1. Protect my savings. Gld etf and oil etf for my 401K. I made 20 % in 2 months. That is not a good indication for US economy. Maybe get into some euro etf, and keep the rest in us currency. I distrust quick money.

2. Trade and trade every day as I do.

But this does not answer the key question. Where to park the non-trading money while keep high liquidty to take advantage of trading opportunities?

Is that I need to develop a much longer trading strategy for the "parked" cash while I develop my 5M skills? That is the question? Currently I have a bunch of $ in CDs and US cash. Playing the 1D chart with no leverage is interesting but it is NOT our way of doing things.

Am I trader? ...yes, well. I am a want a be trader... So I must be liquid to trade. righ?

Am I panicking? Sure. The FED is taking action almost everyweek. They behave as if the sky is falling. It seems to be falling...

In your non-serious message you mentioned arab money. That is a good thought. Today I learned that gas is already $5/gallons in CA. That is big news and not so good for US economy.

Maybe I should plan to move to Colombia or Poland! Hehe...hehe...
Hi Lusan,
there is no perfect hedge in this world. Basket of Precious metals are about the only possibilities. The others , they all gotta be traded. Whats most worrysome for you is the CDs , thats just paper.
The USDs can be mobilised at will.

If you take the options to migrate , then you may just be jumping from the pot into the fire. What makes you so sure that the others will not be hyper inflating as well.
I have seen the feds got themselves out of very bad situations before, and had even assisted them, in open market operations before. They are very professional, so this is just for now. Only that, the new team of administrators have to find their feet and not make more errs to compound their initial err.
If you think this is scary, you would be scared out of your skin , during the osmarks period. So steady, if you're not hedged , this is no time to panic.
I thought most 401K monry already sunk with enron already, so whats there to do. Just bite the bullet and flow with the tide. Thats the problem with all the funny plans govts do in micro managing citizens money, well thats govt issues.

regards
  • #1,834
  • Mar 16, 2008 4:21pm Mar 16, 2008 4:21pm
Quoting fti
Hi Lusan,
there is no perfect hedge in this world. Basket of Precious metals are about the only possibilities. The others , they all gotta be traded. Whats most worrysome for you is the CDs , thats just paper.
The USDs can be mobilised at will.

If you take the options to migrate , then you may just be jumping from the pot into the fire. What makes you so sure that the others will not be hyper inflating as well.
I have seen the feds got themselves out of very bad situations before, and had even assisted them, in open market operations before. They are very professional, so this is just for now. Only that, the new team of administrators have to find their feet and not make more errs to compound their initial err.
If you think this is scary, you would be scared out of your skin , during the osmarks period. So steady, if you're not hedged , this is no time to panic.
I thought most 401K monry already sunk with enron already, so whats there to do. Just bite the bullet and flow with the tide. Thats the problem with all the funny plans govts do in micro managing citizens money, well thats govt issues.

regards
I totally agree. I will (1) purchse more gold, silver and oil etf for me while leaving some cash at the side -I exited the US stock market at the top. (2) migrating away from US was not serious but I will use my availabe cash to increase my trading funds, and (3) trade, trade, trade.

There is nothing else to do. I wish we have more clarity but entropy is always there.
Empty as water and soft as a facing wind mountain
  • #1,835
  • Edited 4:45pm Mar 16, 2008 4:32pm | Edited 4:45pm
Quoting luSan
I totally agree. I will (1) purchse more gold, silver and oil etf for me while leaving some cash at the side -I exited the US stock market at the top. (2) migrating away from US was not serious but I will use my availabe cash to increase my trading funds, and (3) trade, trade, trade.

There is nothing else to do. I wish we have more clarity but entropy is always there.
Lusan,
Remember, $$ cost averaging starts froma base and slowly builds.
Don't go and run your free funds in to gold and find that you cannot $$ cost ave,so think carefully how you must do it. Its not so simple now at all extremes.

I started my gold portfolio nearly 30 years ago, this was one of the things my dad's education did for me, in learning to "keep wood stockpiles, for rainy days".
As a trader now, I hope you know how to do it correctly. Its not so different from your forex trading.

regards

I guess, Lusan, you are not following closely. If you had read Paper Money" as I had suggested you , would understand. Its not so different now from then. I suggest that you study this thread very carefully.
Scouts honour.
  • #1,836
  • Mar 16, 2008 4:49pm Mar 16, 2008 4:49pm
Quoting fti
I started my gold portfolio nearly 30 years ago, this was one of the things my dad's education did for me, in learning to "keep wood stockpiles, for rainy days".
As a trader now, I hope you know how to do it correctly. Its not so different from your forex trading.
Hi fti,

I will greatly appreciate if you comment the little "chat" between me and LuSan where position trading in trending markets came up. It seems to me similar to the portfolio building you have mentioned. The way I try to do it is getting into step by step, as long as there is a clear trend, always alert to the possibility of change. Short targeted rescues along the way if wrong timing occurs, the "scout" left to build up the position. Do you think this is fine or is there a better way to trade the trend?

Thank you very much for any input.
  • #1,837
  • Mar 16, 2008 5:01pm Mar 16, 2008 5:01pm
"The central bank approved a cut to its lending rate to financial institutions to 3.25 percent from 3.50 percent, effective immediately, and created another lending facility for big investment banks to secure short-term loans."

I tell you. I never expected to see so many rate changes from the FED in such a short time. Another rate cut and done in a Sunday! So the expected a major mess tomorrow morning!
Empty as water and soft as a facing wind mountain
  • #1,838
  • Mar 16, 2008 5:19pm Mar 16, 2008 5:19pm
Quoting luSan
"The central bank approved a cut to its lending rate to financial institutions to 3.25 percent from 3.50 percent, effective immediately, and created another lending facility for big investment banks to secure short-term loans."

I tell you. I never expected to see so many rate changes from the FED in such a short time. Another rate cut and done in a Sunday! So the expected a major mess tomorrow morning!
Lusan,
Thats their prorogative, we the market will judge if its right or not by our positions. They can do anything they have to. This is the reasons why , I do not like to carry large exposures overnight, people does things thats impacts markets which may be hard to be reactive to.

regards
  • #1,839
  • Mar 16, 2008 5:31pm Mar 16, 2008 5:31pm
Quoting fti
Lusan,
Thats their prorogative, we the market will judge if its right or not by our positions. They can do anything they have to. This is the reasons why , I do not like to carry large exposures overnight, people does things thats impacts markets which may be hard to be reactive to.

regards
Thanks I am out: no short nor long. I just play 1-2 hr session trades. There will be many surprises tomorrow morning. I guess that the dollar will be even weaker.

Tomorrow morning, when I awake up for my trade, I would be fun to see what the london market will do. My guest that the day will be EUR/USD long. Of course, I will play whatever make sense to my poor trading sense. Short and cautions with the 5M and long and happy if the 5M say so: a 5M bar at the time, that is my motto.

Still, I never expected them to take action on Sunday Evening.
Empty as water and soft as a facing wind mountain
  • #1,840
  • Edited Mar 17, 2008 2:45am Mar 16, 2008 5:35pm | Edited Mar 17, 2008 2:45am
Quoting Jairo
Hi fti,

I will greatly appreciate if you comment the little "chat" between me and LuSan where position trading in trending markets came up. It seems to me similar to the portfolio building you have mentioned. The way I try to do it is getting into step by step, as long as there is a clear trend, always alert to the possibility of change. Short targeted rescues along the way if wrong timing occurs, the "scout" left to build up the position. Do you think this is fine or is there a better way to trade the trend?

Thank you very much for any input.
Hi Jairo,
There's little for me to say.
I have given my opinions mostly.
To trade professionally, one has to be professional.
No professional, can afford to be caught gambling the markets, but most do,esp those managing OPM (other people's money).
To me these are non professional, but thats the latest fashion, so let them learn. And they will continue to learn the lesson until they get it right.

There are true professionals in the markets, and most will benefit from the ego of the pseudo gurus.
There are too many "pseudo pros" who only got paper, but these are not market warriors, are they?

regards

PS: It would be erroneous ,if traders only know how to trade term positions ( mostly based on predictive methodology). The pros use term positions only to enhance, normal daily revenue.
Well, thats just my take.

If there is any term positions to carry , it MUST always be an extension of the positions from the short charts trading and reduced to a fraction of babysitted positions , with absolute range backing from foreign capital that has been taken into book for any eventualities that may occur.
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