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Technical Analysis Fallacy

  • #2,301
  • Apr 11, 2008 5:40pm Apr 11, 2008 5:40pm
Quoting luSan
Look. If you get 1 % a day, then using the formula below you will be getting so much money that you would own the whole planet very soon...these have been in my mind for the last 2 weeks and I am very disturbed...It cannot be so easy...be warned.
Hi LuSan,

There are some stones in this path... there is the psychological side of going bigger... there is the scalability of the trading technique itself... and there is one important property of snowballing techniques: they tend to lurk the trader from behind an unexpected curve, taking back more than they have given... Just some points to be always kept in mind when setting proper MM, to preserve capital for the long run, imho. Good trading.
  • #2,302
  • Edited 6:57pm Apr 11, 2008 6:46pm | Edited 6:57pm
Quoting David
1. It's OK to babysit two for me now. I remembered once I traded more than 5 pairs at the same time, that is definately wrong.

2. E/u and g/u normally move in the same way.
Okie dokie, David, but I leave you these questions to ponder ...

Since E/U and G/U normally move in the same way, and you are entering Scouts for both pairs, if rescue needs to be conducted, do you have enough troops to allocate to BOTH pairs at the same time?

And let's say that you enter 1st rescue and you timed it wrong, thus a 2nd rescue is needed, do you have enough toops to allocate to BOTH rescues then, too?

And let's say that even your 2nd rescue was timed wrong, are you able to conduct a 3rd rescue for BOTH pairs?

If your answer is "NO," then my opinion would be for you to rethink your mindset about being able to babysit two babies.

What is your need to trade two pairs at the same time?

I have done that in the past when I first started trading, and sure, when they are all going the right way, you can increase your profits on all and very nicely, but if they're in trouble at the same time, then you can lose big should you not be able to rescue both adequately.

And if you are willing to sacrifice one because you have only enough resources to rescue the other, then you are being sorta reckless with how you treat your babies.

In a past post, fti mentioned that you need to be able to dance well with one lady first, before taking on more than one.

Your gambling Scorpion is showing up again, David, lol :. Might need to read the Scorpion story again. And this post of yours ...

Quoting David
I started to read again the thread. Actually he has told us everything. I am wondering why I repeat all the same mistakes again and again?
... is a very good question you have asked yourself, my dear

Quoting David
Very good information, "wait max. 7 candles to start rescue".
Well, that's what fti does, however I wouldn't be able to do it that way, cuz I don't have enough resources to be able to rescue more than 3 times should it take more than that if after the 7th candle the PA keeps continuing the wrong direction (without a large enough pullback for rescue) more than thrice (which in the past weeks we've seen the market do this a few times).

We cannot all trade like fti. When he worked for the bank, he traded with 500mio to rescue 1mio. Who knows, he may find that he can't even trade that way with his own personal account (although, he may have more capital than most of us to start out with).

David ... what you basically do is your business, but you and I have been chums from the start, so I care that you don't keep losing a lot of money after having built it up. You know what I'm referring to. So, please keep in mind all that I am saying to you here. Okay?

Quoting Kikas
Have read this thread since the begining and have already "danced" a few times. 11 trades, all in profit.
Good job!!

Welcome to all the new posters to this thread!

Quoting jest
Example yesterday, i made 380pips shorting euro and cable but the pft margin is barely 0.3% of my trading equity.
If you are using a starting capital of $2500, then 380 pips would be approx. $380.00 on a mini account (1 lot = $10,000, 100:1 leverage, approx. $1.00 per pip), so I come out with an ROI of 15% (excluding the subtracting of the commissions, as I don't have that info, but your ROI should still be in a close enough proximity). How are you calculating your ROI?

Quoting BabeFX
Just think back to how you traded before you started to follow fti's methods, now ask yourself are you more or less profitable now than you were before you started the fti trip.

If your answer is less profitable than before fti then go back to your old way of trading.

If however, your answer is more profitable than before fti then carry on with this voyage of discovery, but remember that fti stated in one of his earlier posts that his intention wasn't to produce a set of fti clones.

My advice(for what it is worth) is to dig a little deeper into fti's posts there are plenty of hidden gems that haven't really been discussed in group as yet.

Another point, I am not convinced there is a single contributing live trading A/C member of this forum that trades exactly as fti trades.

Final point. Trading for a bank is not the same as trading your own money, who the ***k is going to dig you out of the ***t when you cockup.

One of fti's jobs was to save the skins of less able traders who had failed to exercise good judgement.
I have to agree with BabeFX's post above.

Quoting crazy_bdog
Leigh: I have been using the spreadsheet(thanks, thanks, thanks) to determine my proper mm, and it has caused me to change brokers in order to lessen my leverage and exposure......trading is fun again as I have calculated the maximum troops and have scaled my attack so I have less worry and a clearer mind when trading. Thanks!


Quoting jest
Well alot of you have been pretty quiet, esp the 'oldies' of this thread.
As I have mentioned before, I cannot post here as much as I have in the past, so I visit when I can.
  • #2,303
  • Apr 11, 2008 10:23pm Apr 11, 2008 10:23pm
Quoting jest1081
may i suggest a scenario. Has everyone forgot the asian financial crisis?

okay lets say u did well to make 200 pips on intraday. short on the EURO. So u bail out and leave one small mini lot (scout), go to sleep. Then suddenly u got a case of the Black Swan. USD faced a 400pip move down while you are still soundly asleep thinking that there is NO WAY market can move against you in that manner.

Remember that you are not actively managing ur position here. Its like leaving a your treasure box opened for pillaging. My suggestion is to still put one...put it far far away if need be, just in case. Preservation of capital, lose profits, still okay, lose profits which eats into capital while sleeping?

just a food for thought.
yea,the winning % will not much but remember this is ant job.0.5%-1% per day compounding everyday we still have a good income per month.depend on our risk appetite, are we going to risk all troops in order to gain 0.5-1%?is it worth?to increase my daily ROI,i will either increase troops size(not recommended) or battle several wars per day.

4 wars X 0.5% = 2%

Sometimes we finished our war more earlier,so we can easily start another 1 again.yes,it will be tired to have several wars per day,but this is business,the more time and effort you put on it,more reward you get.
  • #2,304
  • Apr 11, 2008 11:35pm Apr 11, 2008 11:35pm
Quoting leighsww
Okie dokie, David, but I leave you these questions to ponder ...

Since E/U and G/U normally move in the same way, and you are entering Scouts for both pairs, if rescue needs to be conducted, do you have enough troops to allocate to BOTH pairs at the same time?

And let's say that you enter 1st rescue and you timed it wrong, thus a 2nd rescue is needed, do you have enough toops to allocate to BOTH rescues then, too?

And let's say that even your 2nd rescue was timed wrong, are you able to conduct a 3rd rescue for BOTH pairs?

If your answer is "NO," then my opinion would be for you to rethink your mindset about being able to babysit two babies.

What is your need to trade two pairs at the same time?

Your gambling Scorpion is showing up again, David, lol :. Might need to read the Scorpion story again. And this post of yours ...

David ... what you basically do is your business, but you and I have been chums from the start, so I care that you don't keep losing a lot of money after having built it up. You know what I'm referring to. So, please keep in mind all that I am saying to you here. Okay?
The reason why I trade two pairs, as I said, similiar to timing.

If maximum lots can be traded for one pair is 1.2 mini lots in one 1200$ A/C, just split and allocate with the same skew as your table, if 0.05 lots allowed.

So, the key is still MM.

OK, dear leighw. I will follow your advice, and trade one pair only.

By now, the biggest issue for me is still the Money Management.
  • #2,305
  • Apr 12, 2008 12:17am Apr 12, 2008 12:17am
@leighswww
i used to trade with a bigger trading eqty so the 0.3% id against my trading eqy. But against the funded account, its abt 2%.

@Lusan
380 pips is not easy for me to make in a day, i need the trend to be strong... and if i wanna get where i am with 0.3% daily i need to keep targetting that amount. Its almost impossible to repeat it on a daily basis. And the possible drawdown in scary. So i have to fight tooth and nails to save a bad trade. Dun forget, for every 10% i lose i will need to make 12% back to BE, and thats not inclusive of trading costs. If you have traded long enough you will understand that, i've been in this game for 3 years (not long but long enough to advise i guess) and i can tell you that 30% yoy, means ur up there with the rest. Risk management is not easy, if its so easy, we would not have banks and fund going bankrupt.

My nuance is, that i avg 0.5% per pair. On good days i can bring home 2%-2.5%, but if i sampled that against my previous trading equity, its not even a fraction of 1%, and i just wanna know how much my friends out there are averaging.

@Green David
You are a super trader. When i trade china stocks, those that move 200% only still gave me a 50% ROI.

@Babefx
I really am not sure. To say that i am not profitable is not true, but the profit margins that i get currently is surely smaller, i'll have to compare the month to month result to get a better picture, so i'll wait till the end of april. I trade small lots due the fear that i have against the possible compounded risks. Maybe its all psychological, maybe i just need time to get comfy with my risks. I don't know yet, i'm just sharing my experience here.
  • #2,306
  • Apr 12, 2008 12:48am Apr 12, 2008 12:48am
Quoting luSan
Jest,
I just got back from Berlin...I read you message and I am in shock!...Maybe it is my jetlag..:

Look. If you get 1 % a day, then using the formula below you will be getting so much money that you would own the whole planet very soon...these have been in my mind for the last 2 weeks and I am very disturbed...It cannot be so easy...be warned.

Formula

FV=100*(1+r)^n

r=rates (your daily 1 %)
n=number of period (take 250 business days in a year)

If you use the formula you will end up transforming $100 into $1200!

Oh well...you might want to become a Soros within the next 6 months! Isn't it 1 % or even 0.5 % a day enough? Remembe that there are black swans out there!

I would be very happy with 0.3% in a compounding mode. It would give me 100% ROI for the year. How many money manager can do such a thing?

Regards,
Hi, Lusa,

1% per day, trade 250 days for a year, by compounding every day, your ROI is 11 times. Of course, this is great reward. 0.3% every day, ROI is 100% for 250 days compounding.

But some questions,

1. Are you sure you can make money every day?
2. On Thursday, E/U has a drop about 180 pips from the highest price (in price term, it is more than 1%), Jest shorted and made 380 pips, yet the return is only 0.3%. Would E/U have a movement like 180 pips every day? And can you catch each 180 pips movement?

Warren Buffet's portfolio annual return is around 28.4% (I am not so specific, but definately not more than 30%) over last fourty years. If you got 100% per year, some guy would say, you did a better job than W. Buffet.

But what I want to say is, that guy didn't do a good research on Warren Buffet at all. I read several books on Warren Buffet including "Buffet, the Making of an American Capitalist". As described in that book, Buffet started his first fund in 1956 spring. He put only 100 dollars in that $105,000 fund. But by no means 100 can increase to 40 billion in 50 years by annual return of 28.4%. In fact he earned bonus or profit sharing about 25%. And this means, he also uses leverage.

As for George Soros, if you read the book "The Alchemy of Finace", he admitted himself that he also used leverage. Without levarage, there is no way to have his high return.

For a price drop 1%, if you make 5%, you used 5 times leverage (since that drop happened only once on Thursday). If made 0.3%, you didn't use leverage or margin at all. Or, for a 1000$ account, with 380 pips to obtain that 0.3% you used 0.008 mini lot altogether.

Wish I helped you. Following FTI, I didn't want to comment on other person's trading style. Just some facts for you.

David
  • #2,307
  • Apr 12, 2008 1:09am Apr 12, 2008 1:09am
Quoting jest1081

@Green David
You are a super trader. When i trade china stocks, those that move 200% only still gave me a 50% ROI.
Well, for stocks I did't trade, maybe twice a year if you call that is also trading.

I do sort of investment which means basically I buy and hold on fundamentals not on TA. In fact, the stock which gave me 200% return is not due to trading, due to holding for 15 months. I am still holding it now. Of course, you need a very good patience. I remembered last year in May, the price dropped from 18 to 12, and my cost is 7.5, half my profit is gone. But I didn't sell at all.

Now the price dropped from 25 to 18, I am still holdling most of it. BTW, the shanghai index dropped from 6100 to 3500 during the same time.

My personal experience for stocks, I never get more by frequent trading than buy-and-hold stretegy. Of course, the key is company fundements not TA.
  • #2,308
  • Apr 12, 2008 3:02am Apr 12, 2008 3:02am
Imagine you have 10,000$ account. You sent a scout and shorted E/U @4806 on Feb 26.

The possible rescue could be illustrated on the attached chart. And a rescue up to level 6 as the following:

Attached Image


Is't it a "dead in the water" senerio even though the timing of each new entry is quite good? Since during this period of time, after every new troops sent, there isn't any price which could make you close all and break-even. Perheps rescue #6 never happens, before that price a margin call comes to you already.

Of course, this is an extreme case.

But anyway, some points maybe?

1. scout must be small enough
2. In rescue operation, new troops better get out no matter how much they could make, especially if the book loss is reaching 10%.
3. This senerio, actually turned out to be trading against the trend. In this case, better let the scout die and started over. Nimble.
4. During the same period, G/U however gave very good retracement enabling profitable rescue operation. That is why I also trade G/U.

Don't know. Confused. Maybe there is no perfect trading.

David
Attached Image (click to enlarge)
Click to Enlarge Name: eu 1h 0226-0307.gif Size: 14 KB
  • #2,309
  • Edited 4:54am Apr 12, 2008 4:39am | Edited 4:54am
Quoting Green_David
Is't it a "dead in the water" senerio ...
David ... you wouldn't use the 1, 1, 2, 3, 5, 8 sequence for rescues (that is only used as an attack sequence), and the areas you show to enter the rescues wouldn't be where I would enter them (the PA was still heading upward and not showing clear sign of a retracement/reversal), HOWEVER seeing that there were no good outcomes (even for where I would have entered), that chart definitely shows a "dead in the water" scenario and it sure doesn't look like there would have been any safe rescue mission able to be conducted.

That would have been a very scary situation in which one would need to surrender and cut losses to preserve capital.

I recall fti mentioning that for personal trading, rescue scenario would be 3 levels then surrender. We wouldn't keep snowballing into that many levels of rescue, cuz our pockets aren't deep enough. I'm not sure if he said it in this thread or he told that to me when he was tutoring me privately, but I know he said it somewhere.

In any case, this is a very good illustration you brought up and one that we need to take heed about.

Quoting David
3. This senerio, actually turned out to be trading against the trend.
Well, this is why best NOT to trade against the trend, lol. But, even though that fact would have kept most of us out of this scenario trade, there is always possibility that even if we start out going with the trend, the trend could reverse and that above scenario you depicted could become a reality, as well.

Thus, the "zero losses" concept/mindset would not be one to hang on to and surrender would be wisest.

Thanks for posting that chart and scenario, cuz that's definitely something we all need to think about.

Quoting David
4. During the same period, G/U however gave very good retracement enabling profitable rescue operation. That is why I also trade G/U.
Well, you were lucky that time, but what if G/U had same exact scenario at that same time? You'd have double the "dead in the water" losses.

Quoting David
Maybe there is no perfect trading.
Evidently.

I guess we just have to be smart in how we handle our MM, and dance as best we can, but also know when surrender is necessary to preserve capital.
  • #2,310
  • Apr 12, 2008 6:11am Apr 12, 2008 6:11am
Quoting David
If maximum lots can be traded for one pair is 1.2 mini lots in one 1200$ A/C, just split and allocate with the same skew as your table, if 0.05 lots allowed.
Ah, okay you are saying that you would be splitting the allocated lots between the two, so that trading both is like allocating troops for only one pair?

Hmmm, I guess then, that would work.

For myself, I still would prefer to concentrate on dancing one pair at a time, but if you can handle dancing the two at the same time and have mastered the skills of dancing with one lady (as fti mentioned you should do before dancing more than one), and you say you are going to do your MM by cutting down the lot size so that you can split the same allocated resources between the two (thus NOT doubling the amount of your allocated resources needed) ... let us know if that works out for you.

Also, I noticed something about that "dead in the water" scenario trade you gave, that I want to comment further on (because I see something in the 5m version of the chart that I didn't see in your 1hr chart example), but I am going to do that tomorrow, cuz I need to get some sleep right now.
  • #2,311
  • Edited 8:22am Apr 12, 2008 7:00am | Edited 8:22am
Quoting Green_David
Imagine you have 10,000$ account. You sent a scout and shorted E/U @4806 on Feb 26.

The possible rescue could be illustrated on the attached chart. And a rescue up to level 6 as the following:

Attachment

Is't it a "dead in the water" senerio even though the timing of each new entry is quite good? Since during this period of time, after every new troops sent, there isn't any price which could make you close all and break-even. Perheps rescue #6 never happens, before that price a margin call comes to you already.

Of course, this is an extreme case.

But anyway, some points maybe?

1. scout must be small enough
2. In rescue operation, new troops better get out no matter how much they could make, especially if the book loss is reaching 10%.
3. This senerio, actually turned out to be trading against the trend. In this case, better let the scout die and started over. Nimble.
4. During the same period, G/U however gave very good retracement enabling profitable rescue operation. That is why I also trade G/U.

Don't know. Confused. Maybe there is no perfect trading.

David
David,
fti told us many time that to play his strategy with a very long time frame would take a huge account....In the long time frame, the scout could be falling behing, way behind, and that it what you showed us here... I saw your time frame and I asked myself if I could have gotten into this trouble...it does not seems so if you have played the 5M.

In the attached graph I placed you entering spot and possible places were Lusan would have gotten out...I used what I believe the spot you got in, and I played my fast dance.

The trend lines and other things in the chart are used to show for the discussion...I have not lines in my trading...

edit: I want to avoid confusions: I time my rescue with the 30S and the 10S...how? quick fingers and a lot of care!

Note that at 16:00, PA was even below the 4806...Actually, if you have rid the session for 5 hours, you would be happy in profits with everyone..so am I missing something?

I hope I was helpful,

Regards
Attached Image (click to enlarge)
Click to Enlarge Name: david-_mod.jpg Size: 74 KB
Empty as water and soft as a facing wind mountain
  • #2,312
  • Apr 12, 2008 7:06am Apr 12, 2008 7:06am
Folks,

I have been making some modification to leighsww matrix to adjusted to my ways of doing things...It is not final because I suffer of the continous improvement syndrom.

Leighsww asked me to post it here. It is based on her original matrix, but I added several fields and other detailes that I use to for record keeping. If any find it usefull, have fun. If anyone find any mistake please let me know and I will fix it.

Please note that this is a setup for a fast dance and it is less generic than her matrix.

I hope that it is helful.
Attached File(s)
File Type: xls Lusan's Forex Spreadsheet - Fast dance.xls   58 KB | 1,047 downloads
Empty as water and soft as a facing wind mountain
  • #2,313
  • Edited 9:09am Apr 12, 2008 8:28am | Edited 9:09am
Quoting leighsww
Ah, okay you are saying that you would be splitting the allocated lots between the two, so that trading both is like allocating troops for only one pair?

Hmmm, I guess then, that would work.

For myself, I still would prefer to concentrate on dancing one pair at a time, but if you can handle dancing the two at the same time and have mastered the skills of dancing with one lady (as fti mentioned you should do before dancing more than one), and you say you are going to do your MM by cutting down the lot size so that you can split the same allocated resources between the two (thus NOT doubling the amount of your allocated resources needed) ... let us know if that works out for you.

Also, I noticed something about that "dead in the water" scenario trade you gave, that I want to comment further on (because I see something in the 5m version of the chart that I didn't see in your 1hr chart example), but I am going to do that tomorrow, cuz I need to get some sleep right now.
Have a good sleep, Leighw.

During 2006, I traded only GBP/USD, very few times other pairs, maybe less than 1 percent of all the trades. So I am quite familiar that lady's temper. She is very volatile. Remember, volatility is a key to rescue operation.

During 2007, I traded a lot of pairs, all major 4 pairs, and A/U, N/U, G/J, E/J, A/J. I find out each pair has its own character just like girls have different temper. You need to treat them differently.

So I am quite familiar with E/U and G/U, since I danced with them a lot. E/U is a more gentle girl, but G/U is a hot one(you need stronger balls for her). Yesterday, my G/U short positions give me profits, E/U, no! G/U started to go down earlier. Just like wrong timing, we don't know before, so we have rescue. I don't know which pair will perform as expected, so when that pair starts to perform, increase the size of it.

Maybe I am wrong.

In fact, E/J has very good short oppotunity, if you looked at the daily chart and 4H chart.

David
  • #2,314
  • Apr 12, 2008 9:07am Apr 12, 2008 9:07am
Quoting luSan
David,
fti told us many time that to play his strategy with a very long time frame would take a huge account....In the long time frame, the scout could be falling behing, way behind, and that it what you showed us here... I saw your time frame and I asked myself if I could have gotten into this trouble...it does not seems so if you have played the 5M.

In the attached graph I placed you entering spot and possible places were Lusan would have gotten out...I used what I believe the spot you got in, and I played my fast dance.

The trend lines and other things in the chart are used to show for the discussion...I have not lines in my trading...

edit: I want to avoid confusions: I time my rescue with the 30S and the 10S...how? quick fingers and a lot of care!

Note that at 16:00, PA was even below the 4806...Actually, if you have rid the session for 5 hours, you would be happy in profits with everyone..so am I missing something?

I hope I was helpful,

Regards

Hi, Lusan:

That post illustrated only an possible senerio.

In 5m chart of yours, you placed scout on 25 Feb. In my illustration the order is between 08:00hrs to 09:00hrs Feb 26 (the last red candle). The time zone is GMT+1.

And if you attacked since the one hour chart seems quite bearish during that hour, surely you have more problems. And don't forget, E/U dropped twice before, when touching 1.4900.

My point is as before, when you tried to rescue, don't think of b/e or make small pips, get out the rescue first if PA is wrong. If so, ego comes in, and maybe the senerio would happen.

And, by the way, I never think I shall use rescue as main profit sources. It is only a damage control process. Or rescue could be finding a better entry to attack, if you trade with the trend. In this case rescue and attack didn't make too much differece.

And, in your chart, I didn't see any PA reason for rescue#1.

In martigale gambling, guess head or tail, you could always bet for head, if lost, double the size. In this case, your bet size would be $1, 2, 4, 8, 16, 32,..., so at the one point you will definately win $1. And you start again.

Problems may be faced:
1. After 10 consecous rounds, your bet will be $512 and the lost bets are $511. What about 11 times you also lost? Ok, no problem, maybe you have 10,000 ready.

2. If lost 20 times in one roll, your best will be 2^19=$524,288, lost bets will be $524,287. Would any casino allow such a big bet? If so, how deep your pocket would be if 21 times also lost? And is it worthwile facing the risk of losing 1million dollars just to make 1 dollar back?

Of course, you may say, losing consecutive 20 times almost impossible. But I think you also know, each toss is an independent event. With 19 times of previous consecutive losses, chance is still half and half. Small probability event, but if it does happen, maybe all the money we make will be gone, just like LTCM case.

So, think about it. My illustration would be a little bit similar to this gambling case.

David
  • #2,315
  • Apr 12, 2008 9:19am Apr 12, 2008 9:19am
Quoting Green_David
Hi, Lusan:

That post illustrated only an possible senerio.

In 5m chart of yours, you placed scout on 25 Feb. In my illustration the order is between 08:00hrs to 09:00hrs Feb 26 (the last red candle). The time zone is GMT+1.
>>>I was not sure. I will look at that period with the 5M


And if you attacked since the one hour chart seems quite bearish during that hour, surely you have more problems. And don't forget, E/U dropped twice before, when touching 1.4900.

My point is as before, when you tried to rescue, don't think of b/e or make small pips, get out the rescue first if PA is wrong. If so, ego comes in, and maybe the senerio would happen.
>>agree

And, by the way, I never think I shall use rescue as main profit sources. It is only a damage control process. Or rescue could be finding a better entry to attack, if you trade with the trend. In this case rescue and attack didn't make too much differece.
>>>In my case, I have not fixed rule about rescue. Why? I rescue for the book. Sometimes I just keep the money, keep the scout alive and watch PA. Of course, this is not recommended. The best is just to get out.

And, in your chart, I didn't see any PA reason for rescue#1.
>>>because PA broke the last high and then I would tell myself "Lusan, you are in trouble. Change your mindset to rescue mode" I would be watching the 30S and mostly find a peak to trade short. I think that rescue 1 would fail according to the chart. So I would go for rescue 2.

In martigale gambling, guess head or tail, you could always bet for head, if lost, double the size. In this case, your bet size would be $1, 2, 4, 8, 16, 32,..., so at the one point you will definately win $1. And you start again.
>>>My rescue order: 3-9-20. I would not marti but follow my rescue skew.

Problems may be faced:
1. After 10 consecous rounds, your bet will be $512 and the lost bets are $511. What about 11 times you also lost? Ok, no problem, maybe you have 10,000 ready.

2. If lost 20 times in one roll, your best will be 2^19=$524,288, lost bets will be $524,287. Would any casino allow such a big bet? If so, how deep your pocket would be if 21 times also lost? And is it worthwile facing the risk of losing 1million dollars just to make 1 dollar back?

So, think about it. My illustration would be a little bit similar to this gambling case if you did't get.

David
David, thanks for the comments. I will review your actual trading period. I find it very interesting...
Regards
Empty as water and soft as a facing wind mountain
  • #2,316
  • Apr 12, 2008 10:08am Apr 12, 2008 10:08am
David, I hope this time I got the right time period.

Comments:

1. The trade is within the period that I call the "no-trading zone." I do not trade went there is potential of any news coming out. 7-9:30 am. I want to avoid this type of events. Was any news coming out? If so, that explains the high volatility.

2. Note there is a good congestiong going between 8:30 and 9:00 am. For me this means that the buyer are out and the trend is might be long. So I would be long here.

3. Just by looking at the 30 pips 5M charts: Note that it broke the previous hight at about 8:20 am. So long long and long...Yes...the fact that the congestion was there, I would not be short at all...

4. I believe you sent the scout at 4806. So the scout was already late and the congestion was coming...so slide the sequence 1 bar down..Nothing change because we still have 30 pips to capitalize...my normal target is about 50 pips per war...but it would very very tight...

Of course, all this is is hindsight...in the middle of the war, it would take a clear mind to see the change of trend.

One of the things that I would like to investigate are news events...of course, maybe much later in my trading life...

several times I have noted that prior to major changes like in the chart there 20M indications of the upcoming PA jump..

.Note that PA seems to be preparing for this change...the congestion and then the thrust...another interesting point is the one that I market as the beginning of the trend...it seems as a small breakout...almost like a hint that something big is coming...
Sorry, I sound like a tea leave reader.

Best wishes
Attached Image
Empty as water and soft as a facing wind mountain
  • #2,317
  • Apr 12, 2008 10:09am Apr 12, 2008 10:09am
Quoting leighsww
I recall fti mentioning that for personal trading, rescue scenario would be 3 levels then surrender. We wouldn't keep snowballing into that many levels of rescue, cuz our pockets aren't deep enough. I'm not sure if he said it in this thread or he told that to me when he was tutoring me privately, but I know he said it somewhere.
Thanks for that Leigh. I do remember mention of limited rescue attempts so he probably said it here (or perhaps in one of my dreams ). I think it's a very important point nonetheless.
  • #2,318
  • Apr 12, 2008 10:54am Apr 12, 2008 10:54am
Quoting luSan
David,
fti told us many time that to play his strategy with a very long time frame would take a huge account....In the long time frame, the scout could be falling behing, way behind, and that it what you showed us here... I saw your time frame and I asked myself if I could have gotten into this trouble...it does not seems so if you have played the 5M.

In the attached graph I placed you entering spot and possible places were Lusan would have gotten out...I used what I believe the spot you got in, and I played my fast dance.

The trend lines and other things in the chart are used to show for the discussion...I have not lines in my trading...

edit: I want to avoid confusions: I time my rescue with the 30S and the 10S...how? quick fingers and a lot of care!

Note that at 16:00, PA was even below the 4806...Actually, if you have rid the session for 5 hours, you would be happy in profits with everyone..so am I missing something?

I hope I was helpful,

Regards
I think Lusan is right...it is not gambling...it is kind of feeling how the market dance around.....during the up trend there will be some snap back on the PA....this is when u will need to save ur scout......

Whenever a price against us...we need to determine rapidly and acting fastly to place order and to exit that particular order within minutes or even second.....this is what i understand from fti's explanation at MArket Structure........i might be wrong.....We need to know how the big player going around.....and fti did mentioned about market structure in his earlier post at page number 4

His modus operandi, is to "duck and move quickly"
so as to have a better average on the up swing towards stops to maximise his shorting near the top of the swing.
This scenerio is most effective if there are stop near levels where he las a large order to sell,
where he can help the customer sell OB and "kill the sitting duck stops" in the same blow.
Another senerio is where by the heavy selling is CB levels or specific sell zones,
where many teir 1 are ready to pounch on the buyers.
You must understand that only tier 1 and some big tier 2 will have this advantage.

This is the reason, why you have rubber band snap backs in the direction of trend directions,
and slow puffy moves counter trend.
Am I making any sense to anyone here?

I tried to dance waiting for retracement to happen....but it jsut doesn't works that great....and whenver i use the shorter retracement (retrace within the 5 mins bar)......it just help a lot....

and of coz....we must really really avoid the News hour....coz that time PA will go crazy...and we are not pro enuf in that dance yet.....
  • #2,319
  • Apr 12, 2008 11:48am Apr 12, 2008 11:48am
Quoting loonyew
I think Lusan is right...it is not gambling...it is kind of feeling how the market dance around.....during the up trend there will be some snap back on the PA....this is when u will need to save ur scout......

Whenever a price against us...we need to determine rapidly and acting fastly to place order and to exit that particular order within minutes or even second.....this is what i understand from fti's explanation at MArket Structure........i might be wrong.....We need to know how the big player going around.....and fti did mentioned about market structure in his earlier post at page number 4

His modus operandi, is to "duck and move quickly"
so as to have a better average on the up swing towards stops to maximise his shorting near the top of the swing.
This scenerio is most effective if there are stop near levels where he las a large order to sell,
where he can help the customer sell OB and "kill the sitting duck stops" in the same blow.
Another senerio is where by the heavy selling is CB levels or specific sell zones,
where many teir 1 are ready to pounch on the buyers.
You must understand that only tier 1 and some big tier 2 will have this advantage.

This is the reason, why you have rubber band snap backs in the direction of trend directions,
and slow puffy moves counter trend.
Am I making any sense to anyone here?

I tried to dance waiting for retracement to happen....but it jsut doesn't works that great....and whenver i use the shorter retracement (retrace within the 5 mins bar)......it just help a lot....

and of coz....we must really really avoid the News hour....coz that time PA will go crazy...and we are not pro enuf in that dance yet.....
Thanks for the reminder...Yes, fti told us about the "duck and move quickly."
and he also told us the story of the few times that God send help but the man in the roof of the house did not accept it...

The first retrace within the 5M bar timed with the 30S: I have use this technique so many times...but remember this is the fast dance...we are dancing within the 1H and use 15 and 5M as bias...is that retrace the first attempt of God to save us from death?

David is not doing this type of dance, I believe. He is playing a much higher time frame... One that I chose to stay away because I came to the conclusions that:

(1) Live trades are seating ducks. I mean: the longer we keep open trades the more exposed we are to unhappy events.

(2) Very short time frames seem to give more control to people like me (us?) with a small book. We can duck and move quickly,
and
(3) PA chaotic behavior seems easier (for me?) to understand and follow in the very short term than on higher time frame.

What I mean? I subcribe to leighsww's view of zen trading. I want to be in the NOW and that means that shorter is better.

I believe that trends move from the short time frame to the longer time frame and only with a lot of cash we can efficiently fight the long time frame. So...the shorter the better...

But who am I? I am just a forex trading student trying to understand...maybe I am missing something...still...I am very happy with my approach so far...I love analyzing charts...It makes me happy.

fti told us so much that I think could pass several years just practicing and learning from his already given teaching. (Yes, I beginning to change my mind about the 3kingdoom! thanks to jest...but I do not have time to look into..so much to learn...ah...)

Gash...I am writing to much...

Best wishes
Empty as water and soft as a facing wind mountain
  • #2,320
  • Edited 12:18pm Apr 12, 2008 12:06pm | Edited 12:18pm
Quoting luSan
Thanks for the reminder...Yes, fti told us about the "duck and move quickly."
and he also told us the story of the few times that God send help but the man in the roof of the house did not accept it...

The first retrace within the 5M bar timed with the 30S: I have use this technique so many times...but remember this is the fast dance...we are dancing within the 1H and use 15 and 5M as bias...is that retrace the first attempt of God to save us from death?

David is not doing this type of dance, I believe. He is playing a much higher time frame... One that I chose to stay away because I came to the conclusions that:

(1) Live trades are seating ducks. I mean: the longer we keep open trades the more exposed we are to unhappy events.

(2) Very short time frames seem to give more control to people like me (us?) with a small book. We can duck and move quickly,
and
(3) PA chaotic behavior seems easier (for me?) to understand and follow in the very short term than on higher time frame.

What I mean? I subcribe to leighsww's view of zen trading. I want to be in the NOW and that means that shorter is better.

I believe that trends move from the short time frame to the longer time frame and only with a lot of cash we can efficiently fight the long time frame. So...the shorter the better...

But who am I? I am just a forex trading student trying to understand...maybe I am missing something...still...I am very happy with my approach so far...I love analyzing charts...It makes me happy.

fti told us so much that I think could pass several years just practicing and learning from his already given teaching. (Yes, I beginning to change my mind about the 3kingdoom! thanks to jest...but I do not have time to look into..so much to learn...ah...)

Gash...I am writing to much...

Best wishes
haha....i have the same though as you too

(1) Live trades are seating ducks. I mean: the longer we keep open trades the more exposed we are to unhappy events.
Agree...

(2) Very short time frames seem to give more control to people like me (us?) with a small book. We can duck and move quickly,
Ya....agree too....just feel like in control of the whole dance....and i think this is where we should take note of our EGO....i think this is the area mentioned by fti...coz when u can dance very well...and that is when u lose ur attention on ur enermy.........

(3) PA chaotic behavior seems easier (for me?) to understand and follow in the very short term than on higher time frame.
yes....the longer u dance the easier u lose ur dance step.....
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