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Technical Analysis Fallacy

  • #2,221
  • Apr 6, 2008 1:00pm Apr 6, 2008 1:00pm
David,

if I was dancing this chart, in my fast 5m dance, I would defnintely go long....but knowing that there is potential resistance waiting to stop the long movement I should be ready to revert...confusing...yes...very much...but I would go long in my style...
Empty as water and soft as a facing wind mountain
  • #2,222
  • Apr 6, 2008 2:59pm Apr 6, 2008 2:59pm
Quoting Green_David

@Jairo:

Glad you have your own coconut trees. And your bigest gain is your good wife.

Green David
Hi Green David,

Thank you for your kind words. I have not a coconut tree ... yet. Think I'm on my way. And fti has contibuted a lot for it... though he thinks my hard earned money is a joke... No problem on my side, I know forex numbers are HUGE... And I'll always respect OPMs... Good trading.
  • #2,223
  • Edited 3:39pm Apr 6, 2008 3:02pm | Edited 3:39pm
Welcome back, David!! Good to see you again!

Quoting luSan
My simple answer: split the trading account and let margin call works for us...madness? Imagin, margin call as our salvation from hell!!!
Well, hopefully, you should never experience a margin call. That's why I put in my spreadsheet to always enter a starting Account Value LESS than your actual account value/capital.

With an actual account value/capital of $2,000 and putting a starting Account Value of $1,200, even if you are at the level #6 of the Attack Sequence (ex: for the .1, .1, .2, .3, .5, .8 sequence, that would be 2 total troops in the battle), and if you are in rescue mode and let's say you selected to use the 3x rescue calculation, that would be adding 6 rescue troops to bring total to 8 troops now in the battle.

If you are dancing a currency pair with 100 margin debit per troop/lot (USD based pairs), it would take the PA to go approx. 230 pips for a margin call to happen.

Now, that is not an impossibility (for the PA to go 230 pips) so that's where one needs to practice to dance well to not get into that situation (especially, if there was a chance to rescue earlier on).

If you're using something other than 100 : 1 leverage, then you will need to adjust the spreadsheet to reflect your leverage, because the above is what it would take for a margin call at my broker (for those using MBT, Click here and scroll down to "Margin Policy" for Margin Call calculations. I have actually put a Margin Call column (I) in the spreadsheet, but I hid it, as it wasn't that important to display).

In my spreadsheet, I have put some other safeguards, so as not to put at risk your entire account ...

I had the Hypothetical scenarios only calculate on 5 levels, so that you can still see your potential without having to enter all 6 level attacks. So, if you are just training, you might want to only enter 5 level attacks until you get good enough and feel confident to then enter all 6 levels.

In the calculation for "Max. Lots Available to Trade," I have this formula --> =+IF(D5=0,"",TRUNC((F4-I4)/D5-4))

The portion in the formula that I show in RED leaves 4 lots worth in your account that you wouldn't touch, because in the RESCUE TROOPS table, I have it calculating the number of troops/lots needed for various rescue scenarios (1x, 1.5x, 2x, etc.), depending on how many pips away from B/E you want to be.

If the table calculates a number that exceeds the "Max. Lots Available to Trade" then it leaves those options in the RESCUE TROOPS table column(s) BLANK, thus you have to choose from only the columns that have a number in them. This way, you can never over-expose your troop/lot allocation.

So, hopefully, for those using the spreadsheet, the above will give you a better understanding of the MM I'm using and what some of the formulas are doing.

--------

Oh, regarding the RESCUE TROOPS table ...

When you first start a trade/dance, you will probably be starting out with .1 troops/lots in the "Actual Lots Traded" cell. The RESCUE TROOPS table will show your rescue choices as follows:

1x = .1
1.5x = .2
2x = .2
2.5x = .3
3x = .3

The reason it has some with the exact same troop/lot allocation, is because I only made those cells ONE decimal place. If it were TWO decimal places, then it would show:

1x = .1
1.5x = .15
2x = .2
2.5x = .25
3x = .3

You will only have this happening with having .1 troop/lot in the battle, after that, when you enter another level attack (or rescue) and changing that same "Actual Lots Traded" cell to .2 troops/lots or more, you will no longer get that ambiguity happening with the rescue option choices from that point on.

Since .15 and .2 OR .2 and .25 was not a big difference in troop/lot count to make it an issue, I didn't feel it was worth making those cells two decimal places.

Oh, and when entering a JPY currency pair, the "Currency Price" table, as well as the RESCUE TROOPS table, are 4 decimal places, so you have to just disregard (in your mind, lol) the last two decimal places. I didn't want to have to create separate tables just for that, so you'll have to try not to get confused by the decimal places for JPY pairs.
  • #2,224
  • Apr 6, 2008 4:06pm Apr 6, 2008 4:06pm
Quoting luSan
David,

if I was dancing this chart, in my fast 5m dance, I would defnintely go long....but knowing that there is potential resistance waiting to stop the long movement I should be ready to revert...confusing...yes...very much...but I would go long in my style...
Hi Lusan,
Why would you bias short on G/U ? Do you mean if the chart that David posted was a 5 min chart not a daily chart?
When I look at a real 5min chart of G/U I can see a possible reason for not going short - the double bottom at 1.9908/9. But looking at the daily chart, the pin bar (shooting star) looks Ok to me, and the last 2 pin bars worked as expected.
I have read your log and can never understand why you choose long or short for the scout. Or even what influences your entries on the 5min chart, especially since you sometimes have up to 3 entries/exits on a single candle. Perhaps they are easier to understand on a 1 min or 30 sec chart.

Just curious,
Ian
  • #2,225
  • Apr 6, 2008 6:55pm Apr 6, 2008 6:55pm
Quoting leighsww
Okay, I've FINALLY finished my example attack sequence, so here it is ...

I've used whole lots just for ease of use, but those with shallow pockets, Scout should be .5 lot (or less) and the rest ratio'd out in increments accordingly.

Of course, you allocate whatever you can afford depending on your account capital, so the BUY quantities that I show in my example can be whatever you want. This is NOT like a recipe where you have to follow it exactly. It's just how I tend to trade. fti will have a different way than me to which he dances and allocates troops.

When to enter scout?

To be honest, basically, due to the nature of re-averaging and successful rescue missions, I have come to realize that one doesn't have to be totally anal about where to enter scout, lol. As said many times before, Scout is there to feel out the market pulse and if it turns out he was put going in the wrong direction, then rescue can be conducted with no problem.

A recommendation I will make, however, is that one enters him when the PA is shallow for the 5m trend direction to which you will be dancing to. Don't enter scout if the PA is moving fast and is already too deep, otherwise most likely you will lose most of the market move.

In the example ... Scout is LONG.

Just some other bits of info ...

Because I'm limited with shallower pockets, I've been a little more conservative on how many attack troops I enter at any given time. The maximum I will have on the battlefield is 5 total troops.

However, as my account is increasing pretty steadily and nicely, that may change tomorrow, lol, as I'm finding that I'm able to allocate troops more aggressively with each trade. Again, for good MM, one needs to scale troops accordingly (to what we can afford).

If you're not comfy with as much as 5 troops on the field, then don't risk them, however, that's why I take profits when I can, because that makes it easier to be more aggressive and add more troops once some profits have been locked-in.

Okay, that's it for now.

* edited - Oh, I should mention ... the 2nd chart is a continuation of the 1st chart (didnt' want the candlesticks and text to be small and all squeezed up on one chart, so thought it was best to do it in sections).
.
Hi Leigh,

Thank you for the very illustrative attack sequence......Do you mind posting an example of your rescue mission? I'm still weak with my rescue mission....hope your example will give me more oomph.....
  • #2,226
  • Edited 9:08pm Apr 6, 2008 8:48pm | Edited 9:08pm
Hi guys,

for those looking for examples on how to size your troops. You may wanna consider this. My calculation may differ from those that leighswww uses, coz i take into account the avg true range and this may fluctuate from day to day or hour to hour, what i have given below is just a mere example of how i go abt calculating my risk sizing.

For EURUSD, how often would it move above 200pips on a daily average? Rarely, its like a case of the black swan, (you can also use timezone range if ur trading on a specific timezone). So hypothetically lets place a mental stop of 200pips, for those who feel that you can swallow more risk, by all means go for 150 or even 100.

Okay, now you can start calculating the skew. Lets say we use a skew size 33. and our risk per skirmish is abt $2000. How much will ONE troop cost?

We have our mental stop, we have total risk and we have the skew.

so our fomula will be;

(troop_size x skew x pip_risk)/10,000=Risk ~ (troop_size x 33 x 200)/10,000=2,000

From the calculation above, i have derived that the size of each troop should be approx. 3000 or 0.3mini lot. From there on its all abt playing ard with the skews.

Btw, its almost impossible to see a 2k loss coz the risk calculates the MAX skew against mental stop. No one would throw in 33troops in one go, what will more likely be the cause of wipe out is not adhering to your mental stops, even if such a scenario happened, its still unlikely you will see a 2k loss, coz the skew will still have to size up to the pip movement.
  • #2,227
  • Apr 6, 2008 11:05pm Apr 6, 2008 11:05pm
@ManBukitKuda
A friend from Mountain Kuda? Welcome to aboard, sincerely wish you read through this thread from the beginning and understand, learn FTI's mindset, MO, MM. And practice, practise. No hurry to trade during your study. A Chinese saying, "When sharpening your knife, it is not delay of your cutting trees job."

I tell you, I have more than two years forex trading, I tried everything, and busted soooo many acounts. I think fti's MO is the way to profitable trading. Trust me, he is the best of the best.

@jest

Thank your for your info. Unfortunately, I never traded E/G before. Actuallly, if E/U geting stronger, and G/U weeker, long e/g definately gives us a double reward.

@Lusan, ianforster

My chart is a daily chart. You see? Watching the same chart, different people come to different viewpoints. Is that also proof of fallacy? As I said in that post, short or long it is no longer important. What more important is MM and rescue/attack.
  • #2,228
  • Apr 6, 2008 11:28pm Apr 6, 2008 11:28pm
Quoting leighsww
Welcome back, David!! Good to see you again!



Well, hopefully, you should never experience a margin call. That's why I put in my spreadsheet to always enter a starting Account Value LESS than your actual account value/capital.
Hi, Leighw.

Thank you for your kissing, wish that is a real one.

Rescue or attack, I didn't make difference, of course in a true rescue operation which means the scout never have a chance of profit, we must close rescue troops very fast, the shorter the exposure the better. In such case, if we closed scout position, in fact we cut loss on scout, right?

One question, what is the reason using fib skew/ratio for add-ons? Say, 2, 3, 5, 8?

For up to #5 layers, is that because the unfavorate price movement may develop in 5 waves? And using fib skew, because assuming bounce-back could be 30~50% of each wave?

Is possible that when we are trying rescue all the time, it turns out that we are trading against the trend all the time. One of the amazing thing about fti's method is that by proper MM and rescue, even we trade against main trend we still can make some profits/break even or very small loss.

Kiss back

David
  • #2,229
  • Apr 6, 2008 11:32pm Apr 6, 2008 11:32pm
What would you think? Any body tried this before?

http://www.fxclub.com/expressfx/
  • #2,230
  • Apr 7, 2008 1:36am Apr 7, 2008 1:36am
Quoting ianf0ster
Hi Lusan,
Why would you bias short on G/U ? Do you mean if the chart that David posted was a 5 min chart not a daily chart?
When I look at a real 5min chart of G/U I can see a possible reason for not going short - the double bottom at 1.9908/9. But looking at the daily chart, the pin bar (shooting star) looks Ok to me, and the last 2 pin bars worked as expected.
I have read your log and can never understand why you choose long or short for the scout. Or even what influences your entries on the 5min chart, especially since you sometimes have up to 3 entries/exits on a single candle. Perhaps they are easier to understand on a 1 min or 30 sec chart.

Just curious,
Ian
Ian, I would go long because his chart is 1D and it seems to me that is climbing toward a resistance from the previous high. I would be inclined to believe that there were at least 2 more bars of long before a dramastic change...eithe breakthrough and keeping going long (most likely) or getting into a trench bouncing between the 2 highs and last 2 lows...we do not know...but I would definitely go long for a fast dance...

My bias approach? I think that it isdescribed in mz journal: 1D, 1H, 15M, 5M and whatever I feel is right...that part is really tough to describe...it is a feeling... with the 5M and knowing that its trend is much shorter than a 15M...PA getting closer and moving away from EMA(48) is sometimes usefull -that is Leigh´s idea...why it works? She never explained it...I am never sure..

but...I believe that getting in is not as important at what we do after we are in...

Regards
Empty as water and soft as a facing wind mountain
  • #2,231
  • Apr 7, 2008 1:41am Apr 7, 2008 1:41am
Quoting Green_David

@Lusan, ianforster

My chart is a daily chart. You see? Watching the same chart, different people come to different viewpoints. Is that also proof of fallacy? As I said in that post, short or long it is no longer important. What more important is MM and rescue/attack.
Absolutely agree! Noticed that I went from short to long as soon as I realized that it was 5M.

yes...getting in is the easier part...but mindse, that is the real hard part
Empty as water and soft as a facing wind mountain
  • #2,232
  • Apr 7, 2008 2:22am Apr 7, 2008 2:22am
Quoting luSan
Absolutely agree! Noticed that I went from short to long as soon as I realized that it was 5M.

yes...getting in is the easier part...but mindse, that is the real hard part
Good morning.

It is 3:20 pm here.

I shorted G/U @9876, not good price. WoW! it is 9834 now.

I will write later, time to baby sit.
  • #2,233
  • Apr 7, 2008 3:49am Apr 7, 2008 3:49am
Quoting Green_David
Good morning.

It is 3:20 pm here.

I shorted G/U @9876, not good price. WoW! it is 9834 now.

I will write later, time to baby sit.
Closed @9857, and the other add-on @9851(with 3 pips).

Because I didn't like the way it retraced, got too many positions already (MM), 6pm a news on E/U will come out. Some Eur/usd positions need rescue, wait if E/U could touch 1.5700 again and if any opportunities to rescue. What a big bounce E/U had, almost 80 pips!
  • #2,234
  • Apr 7, 2008 4:01am Apr 7, 2008 4:01am
Good job David!!

Post more of your trades for all of us to learn.
  • #2,235
  • Apr 7, 2008 6:39am Apr 7, 2008 6:39am
Hi All,

For the sake of full transparency, I must paste here the PM I sent fti a few weeks ago. For your judgement. The only reason for doing that is that I am not in the market for fun. I really NEED the money. No way back. No failure allowed. Here it goes.

Mar 22, 2008 6:37am
Jairo http://www.forexfactory.com/images/s...ser_online.gif
Member
Member Since Sep 2007
Posts: 59


http://www.forexfactory.com/images/icons/icon1.gif PLAMM - Managed accounts
Hi fti,

I am not sure this is adequate to be posted in the forum. If you like, I can copy/paste there.

Do you consider managing accounts? There is the PLAMM software in the MT4 platform, through which you can manage up to 100 accounts as if they were 1 account. The software takes all the work of dividing and spreading the orders around.

I take very seriously all your advices. My limitations on baby sitting positions are a very serious issue. This week I gave back 2,62% of the 6,4% I had won last week. I was afraid to lose the bus (continued uptrend) and held my position a bit beyond what I should. Well, a new week is a new fight.

The annoying fluctuation is the reason I ask you the question about the PLAMM software. There are commissions, etc. While I am not sure I can generate steady income by myself (in fact, I am not sure I ever will) I ask you this. Hope not to bother you with a business proposal, since you are retired. I apologise if this is the case. All the best and thank you very much, as always.

P.S. I never thought he could understand this as a selling pitch. In my mind I was trying to buy something I doubted I could get by myself. Now I understand. We live in different worlds. At least he took it as a joke. That's fine for me. I make jokes on my own misery too. The fight goes on. Good trading to all.
  • #2,236
  • Apr 7, 2008 8:59am Apr 7, 2008 8:59am
Jairo,

Take care,there are sharks who operate out in the muddy FX waters who will gladly take your money & leave you in a worst situaton than you find yourself in at present.

Reduce your lot size to a size that can't possibly bankrupt you in the event of a panic bailout of a losing position.

Read over again the entire postings of fti, leighsww, luSan, Jest & others.

BabeFX.


To fail is forgivable, but to fail to try is not !
  • #2,237
  • Apr 7, 2008 9:17am Apr 7, 2008 9:17am
Quoting BabeFX
Jairo,

Take care,there are sharks who operate out in the muddy FX waters who will gladly take your money & leave you in a worst situaton than you find yourself in at present.

Reduce your lot size to a size that can't possibly bankrupt you in the event of a panic bailout of a losing position.

Read over again the entire postings of fti, leighsww, luSan, Jest & others.

BabeFX.


To fail is forgivable, but to fail to try is not !
Hi BabeFX,

Thanks for the prudent advice. I am "safe-sized" in my account now. Had two bad experiences with money managers in the past. Small accounts, total loss less than $300. Enough to know the risks involved. Now only on my own, but open to diversification.

Now a real joke... even if fti accepted to manage my miserable $$$ (among many others, of course), I would submit his track record to an X-ray before risking . Thanks again and good trading.
  • #2,238
  • Apr 7, 2008 10:08am Apr 7, 2008 10:08am
Quoting Jairo
Hi All,

For the sake of full transparency, I must paste here the PM I sent fti a few weeks ago. For your judgement. The only reason for doing that is that I am not in the market for fun. I really NEED the money. No way back. No failure allowed. Here it goes.

Mar 22, 2008 6:37am
Jairo http://www.forexfactory.com/images/s...ser_online.gif
Member
Member Since Sep 2007
Posts: 59
Maybe it is not appropriate for me to say something. If anything I said annoying, please ignore and accept my appoligies.

I think you are not prudent to make this proposal to Fti. Maybe you don't know FTI. He started this thread not seeking any financial regards in any forms, just to help us, the newbies, who are tortured by the market and keeping losing money in the darkness. Your proposal is a little bit of insult.(My language is too heavy, I am sorry, wish it is not true.) Since he despised all the "gurus" selling trading books to make money.

So all we have to do, just treat him as a very good friend, accept his teaching, at the same time, make his teaching happy and funny. That is enough.

In fact, if not Leighw's strong pusuation and encouragemeng, he won't come here again forever after he was misunderstood and banned before this thread.

Do you know, Leighw and I are his first students in this forum? So Leighw and I knew him since the beginning, the first time he put posts in FF.

For you personal financial misery, I can tell you my experiences may be 100 times worse than yours.

About ten years ago, when I was a student, I went bankrupt for the first time trading stock index in Malaysia, and just several days all my 4 years' savings gone which I earned so hard by part-time job. Beside that, about 3000 USD which my father lent to me were also lost. My girl friend left me than, and we were supposed to get married that month. Now she is other man' wife. And, worse, about four months later, dear father passed way, he got a cancer. Which means I had never a chance to pay my father back.

For my forex, I also paid too much, many account busted. I don't even wanna talk about it, because it is such a shame that I WAS a gambler not a trader.

Learn, learn, learn, practise, practise, practise, work harder harder and harder.

I kept a thread of a scam case, a real case. If you know anything about Colonius or tiger system, then that is it. If your want to know, I can send you that link by PM, since that thread was thown to recycly bin, I don't want put it here in public.

Good luck.

David
  • #2,239
  • Apr 7, 2008 10:24am Apr 7, 2008 10:24am
Quoting Green_David
Maybe it is not appropriate for me to say something. If anything I said annoying, please ignore and accept my appoligies.

I think you are not prudent to make this proposal to Fti. Maybe you don't know FTI. He started this thread not seeking any financial regards in any forms, just to help us, the newbies, who are tortured by the market and keeping losing money in the darkness. Your proposal is a little bit of insult.(My language is too heavy, I am sorry, wish it is not true.) Since he despised all the "gurus" selling trading books to make money.

So all we have to do, just treat him as a very good friend, accept his teaching, at the same time, make his teaching happy and funny. That is enough.

In fact, if not Leighw's strong pusuation and encouragemeng, he won't come here again forever after he was misunderstood and banned before this thread.

Do you know, Leighw and I are his first students in this forum? So Leighw and I knew him since the beginning, the first time he put posts in FF.

For you personal financial misery, I can tell you my experiences may be 100 times worse than yours.

About ten years ago, when I was a student, I went bankrupt for the first time trading stock index in Malaysia, and just several days all my 4 years' savings gone which I earned so hard by part-time job. Beside that, about 3000 USD which my father lent to me were also lost. My girl friend left me than, and we were supposed to get married that month. Now she is other man' wife. And, worse, about four months later, dear father passed way, he got a cancer. Which means I had never a chance to pay my father back.

For my forex, I also paid too much, many account busted. I don't even wanna talk about it, because it is such a shame that I WAS a gambler not a trader.

Learn, learn, learn, practise, practise, practise, work harder harder and harder.

I kept a thread of a scam case, a real case. If you know anything about Colonius or tiger system, then that is it. If your want to know, I can send you that link by PM, since that thread was thown to recycly bin, I don't want put it here in public.

Good luck.

David
Hi Green David,

Your opinion and experience is very welcome for me. Thank you for sharing. I see I have been in fact very fortunate in the markets so far. I don't blame anybody for anything bad that has happened to me and I am very thankful for fti's teachings, as I said many times here and in my only PM to fti.

The only thing I can't really understand in your comment is how a pro trader may consider an honest business proposal an insult. But that is only my point of view. As I would never think that, I hardly understand how may someone do. My fault.

Please send me the link to the horror story you mentioned. It's useful to know scam stories, in order to be always aware of. Thank you for your input.
  • #2,240
  • Apr 7, 2008 10:41am Apr 7, 2008 10:41am
Quoting Jairo
Hi Green David,

Your opinion and experience is very welcome for me. Thank you for sharing. I see I have been in fact very fortunate in the markets so far. I don't blame anybody for anything bad that has happened to me and I am very thankful for fti's teachings, as I said many times here and in my only PM to fti.

The only thing I can't really understand in your comment is how a pro trader may consider an honest business proposal an insult. But that is only my point of view. As I would never think that, I hardly understand how may someone do. My fault.

Please send me the link to the horror story you mentioned. It's useful to know scam stories, in order to be always aware of. Thank you for your input.
Sent the link by PM to you already.

Maybe it is due to different culture. Insult may not be the right word. Just feel like incentives challenged and goal of giving fishing not fish is not understood.

If you sent that proposal to me, I also will not take it. Ha ha, since I am still not a good trader. Too greedy.

David
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