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Technical Analysis Fallacy

  • #2,381
  • Edited 8:09am Apr 18, 2008 7:45am | Edited 8:09am
Quoting Green_David
No, brother. I wonder if your calculation is correct or my understanding is wrong.

Suppose you have a trap of 200 pips, and your total troops are 33. It could not be 33*200=$6600. Because you start rescue by levels.

And in your 33 troops, I think it is 1, 1, 2, 3, 5, 8, 13. So totally it is 6 levels.

In this case, suppose you start rescue by every 30 pips, so the total book loss is 1*200+1*170+2*140...+10*13=$2040. Not 6600.

Please do calculations by yourself to check.

David
No david ur not wrong

i place the worst case scenario. Coz we cant confirm if we can sequentially increase lots at every 30pips. i dont want to make it complex.

yes, the current trend in eurusd is an example that trends don't matter when you are in an active trade, the market moves wherever it wants to trend is a derived perception of price movements.... its all abt management and capitalisation. so who can fight this ??? These are the kind of days that can make or break a trader.

lusan alli can say, is stick to ur style bro. dun let a loss get u away. small frames are the ones that will decide how the long frames will look like.

zoran, thanks. Noted.

interesting stuff abt understanding fundamentals??? Jacko did a nostradamus lol

Quoting jacko
The ECB will act much faster than that. (within the next two weeks...and sooner rather than later)

They jawboned the market on the weekend....the market dropped but then started to recover .....the ECB would have been very annoyed by that (they had sent a subtle message to the market at the G7 meeting and the market attempted to trade against it...) so they will start cranking up the pressure to get the Euro lower.

If the market doesn't get the hint, or worse, tries to trade against it, the ECB will slap the market hard.

But the main issue is that the ECB wants the EUR/USD lower.


Just my opinion...and I could be wwwwrong !!!
.
  • #2,382
  • Apr 18, 2008 8:49am Apr 18, 2008 8:49am
Lusan

Yes, bailing out is certainly an option if you find yourself on the other side of a strong impulsive movement. Although if you have time and troops, going to another timeframe and searching for a rescue point is also another option.

If I decided to rescue instead of bailing out against such a strong move, I would look at it as a one chance, many troop, well timed rescue only if I can see such an opportunity. If not, then time to bite the bullet.

At times like these, fti's "be nimble" comes to mind.
  • #2,383
  • Apr 18, 2008 8:52am Apr 18, 2008 8:52am
Quoting jest1081
No david ur not wrong

i place the worst case scenario. Coz we cant confirm if we can sequentially increase lots at every 30pips. i dont want to make it complex.

yes, the current trend in eurusd is an example that trends don't matter when you are in an active trade, the market moves wherever it wants to trend is a derived perception of price movements.... its all abt management and capitalisation. so who can fight this ??? These are the kind of days that can make or break a trader.

lusan alli can say, is stick to ur style bro. dun let a loss get u away. small frames are the ones that will decide how the long frames will look like.

zoran, thanks. Noted.

interesting stuff abt understanding fundamentals??? Jacko did a nostradamus lol

Man,

I just got to work...while driving I came to the same conclusion...the market is heavily manipulated as result of G7... They want the dollar strong, very strong... speculators that were long on Euro are resisting which results on the so many S/R regions...pure destruction is going on...We have a new sherif in town who want to drop the Euro...Who wins?

We have chosen an insane time to become pro's...If we survive we will be strong

Jest, I am not changing style...but I will do some modeling about my skew...a way to minimize risk is to take more profit sooner and to have fewer troops out...similar to the 1-1-2 that our zen friend just mentioned.

Why? PT on 1 and 2 waves are very easy...the problem is always with the 3 wave....that is where the risk is...we could easily rescue wave 1 and 2 but then if we have a reversal on the third then we are heavily into the market...that wave become a very strong scout and trouble...

I remember that at the beginning I was bringing the troops as 3-2-1...this is safer and what fti recommended...I must reset my skews and the way I bring my troops home...that would means faster and smaller profits...and also even shorter campaing...Now I might have seasonal campaigns...each lasting 5-6 bars...Very similat to asymetric warfare...hit them hard, fast, and run out...these are the thoughts that I will investigate today..

Regards,
Empty as water and soft as a facing wind mountain
  • #2,384
  • Apr 18, 2008 12:40pm Apr 18, 2008 12:40pm
Hello again,

I apologize for not posting before but I’ve been riding these markets the entire week. Slept, in total (since Monday through today) 10 hours.
I was already using the same MO as fti posted here, but my MM sucked, and found myself in trouble with big positions a lot of times. The fibonacci progression works fine for me and has improved my winning trades.

There is a point I would like to stress. It’s about personal (health) management. In order to perform well we need to fell well. In that matter we need to take care of our body and mind the same way we take care or our positions. Remember, our most valuable tool is our mind.
I realized, the hard way, that fatigue and poor food habits can cause your equity much damage as a very bad trade.
So, in order to maintain a clear and sharp mind you need to establish a sound sleeping and eating habits, take time to exercise yourself and finish the day with a nice talk to your wife/husband/companion/friend.

As Sun Tzu said: “Know yourself…”

Thank you all, once again.
  • #2,385
  • Edited 4:42pm Apr 18, 2008 2:06pm | Edited 4:42pm
Quoting gfsr
maybe 7 or so bars is enough bars to tell you if the current market action should has/or is going to happen(time period) ...
Hi gfsr ... That sounds very reasonable. There's obviously a reason fti counts 7 bars, so that could be it. It also would nip-in-the-bud right away a failed rescue, should the rescue keep continuing the wrong direction before reaching the B/E point.

I wonder if he uses that only during higher volatililty times though, cuz it might not work as well with slower/low volatile sessions. Gosh, I wish I had asked him these questions earlier, lol.

Quoting gfsr
how they are using fti insights on the elliot impulse waves concepts to their MO? or what is your interpretations, readings?
This is another thing that he mentioned a couple times and it certainly has some key aspects toward dancing.

You know, there's a lot of things I missed (or didn't realize were key components) during my private tutorings, so I am going to go back through some of that info and I'll post what he's told me during those sessions in case it helps clarify what he's already discussed in this thread.

--------------

Quoting mijamoto
I am really glad and i got some fti's concepts what is seen on my trading DEMO account. I attached trades from last month.
Good job!

*Edited - P.S. You might not want to post your actual blotter for security reasons, cuz it has your account info and such on it. You might ask a Moderator to remove the attachment if it's past the time deadline for editing the post yourself.

Next time, you can just give totals and such. That's sufficient enough if you want to share with us how well you are doing.
--------------

Oh my gosh, sorry to hear about all the tidal waves that went on for some of you

Quoting luSan
Losing more than 1000 pips is not worthy. 1000 pips? Yes, 1000 pips.
luSan ... for you to lose 1000 pips, you must have been overexposed, cuz the PA only went approx. 200 pips total against your direction.

jest ... you need to reread this entire thread again. I think you've gotten off-track somewhere.

I'm not going to reiterate what Zoran and others have already said to you guys about why going SHORT on EUR/USD was a mistake, but I will say ...

Slow and steady wins the race, guys (like the moral to the "Tortoise and Hare" story), so please take your time. Don't try to become millionaires overnight. When trading small positions, it might seem peanuts in the beginning, but with safe compounding in conjunction with increasing your account value slowly with each trade, it will build and grow substantially in the long run. You have to look at the big picture, so release some of that testosterone (read the last 5 paragraphs of that post), lol, which may be causing some of the recklessness :.

I know you guys can build it up again, just don't get impatient!!

Quoting jest
i don't see why one would love to be in a rescue situation
Nobody said they loved being in a rescue, most (including me) said they found it easier to know how to conduct a rescue rather than how to implement good aggressive attacks (finding the right timing to enter each level attack the way fti does it).

I remember fti saying that for beginners, best to only use 3 level attack sequence. He mentioned his "juniors" were only given access to first 3 level sequence/progression and his "seniors" had up to 6.

So, I've redone the spreadsheet to use a shorter 3 progression/sequence skew (instead of 6 levels), so I'll attach my new spreadsheet in another post later (I'm making finishing touches to it).

-------------

Quoting David
Wish you post some live cases, so we can make improvement together.
Okay, as soon as I finish the dance I am currently in, I'll post it along with my spreadsheet. I have been using the new 3 level skew, and trying to implement the Elliott Wave thingy wherever I can.

That's an important key to dancing, according to fti. LOL, but I don't know why he called my waiting for "higher highs, lower lows" rigid earlier, cuz isn't that part of the Elliott Wave thingy (that's another thing I'm gonna have to ask him about, haha)? Or maybe he was referring to my waiting for the breaking of previous candles as the rigid part. That's probably the more likely, since Elliott Wave is all about higher highs, lower lows, etc.

Oh, it did just dawn on me though, that the "waiting for confirmation" of higher highs, lower lows, etc. is what he might be also calling rigid, but that one I'm not going to easily give up, cuz I need that confirmation to know I'm going in the right direction and risk encountering a tidal wave like you guys have been posting about, lol.

Anyway, Elliott Wave might be an important part of dancing well, so that might need to be discussed further, no?

Okay, sorry, but I've been super busy lately, so I might be absent for long periods at a time, but before I leave again, I'll post those things I mentioned I would (the spreadsheet, my dancing a trade, some of what fti mentioned in private tutorings to me, etc.).

Quoting Kikas
There is a point I would like to stress. It’s about personal (health) management. In order to perform well we need to fell well. In that matter we need to take care of our body and mind the same way we take care or our positions. Remember, our most valuable tool is our mind.
Very wise advice!!
  • #2,386
  • Edited 2:27pm Apr 18, 2008 2:08pm | Edited 2:27pm
Hello,

Just to say that after starting this MO & MM and trading the fibonacci lot progression of 0.1, 0.1, 0.2, 0.3 ... 2.1 I had 25 trades (series of positions) totalising 81 lots with 11577 pips made (pips per 0.1 lot -> inicial position). Total ROI of 604,38%.

My ROI is = PL / (lots traded * margin per lot)

1 lot = 100.000 usd
0.1 lot = 10.000 usd

Regards.

By the way, i use a different approach in entering/exiting positions. I use Heiken Ashi candles in 5m and 15m to enter trades and in 1h, 4h, Daily to establish direction. I trade mostly EURJPY, GBPUSD, AUDJPY, EURUSD and sometimes USDCHF.
  • #2,387
  • Apr 18, 2008 3:15pm Apr 18, 2008 3:15pm
Quoting leighsww

luSan ... for you to lose 1000 pips, you must have been overexposed, cuz the PA only went approx. 200 pips total against your direction.

You are absolutely correct. The 1-2-5 skew for me does not work...I am going back to the 1-1-2... I notice that there is a pattern with my trading that make PT on the last wave very hard to accomplish without a rescue operation...I think that if I already have profit with the 1-1 then the last wave is pretty safe...

Yes, we do "ant work" and with limited skews...although I am happy of paying an expensive lesson...

Best wishes...Now I need to go to exercise now as recommended above and demanded by my wife...
Empty as water and soft as a facing wind mountain
  • #2,388
  • Apr 18, 2008 5:37pm Apr 18, 2008 5:37pm
Hi Leigh, nice to hear from you. Seeing that you are so close to fti, do you have any idea where he has gone? No word from him but just a quiet departure.

Kikas, I couldn't agree more about health but I would extend that to body, soul and mind. Unfortunately, sometimes I need to be reminded. luSan, listen to your wife.

Leigh, mentioning Elliott waves, I did ask fti about that and he was kind of conflicting about it. What I got from him with regard to Elliott was the trend is impulsive. Also not so certain, but Elliotts theory of 5 waves up (3 impulsive waves in the direction of the trend and 2 corrective) then we get an ABC correction. He does not count waves but he mentioned it comes to mind.

Also, higher highs and lower lows is more about DOW theory. This again is something fti mentioned earlier on.

Well, I had my first loss today after a while so I think that scorpion showed its face again. Loss was small but I can see that I still need more practice and discipline.
  • #2,389
  • Apr 18, 2008 6:27pm Apr 18, 2008 6:27pm
Quoting Zoran
luSan, listen to your wife.
She will be happy. I did 36 min of aerobic...Thanks for stopping by...

You lost? I am sorry. welcome to my club. Leighs told me that I overextended. I did and I know exactly how and when... So I will take care of it... Did you overextended?

I began reading a book by Benoit mandelbrot, "the (mis) behavior of markets"...I sense that fti did not tell us much about risk management but a lot about position management. Am I wrong? I concur with jest about the risk problem: we must manage risk in this market...And this market is going really crazy!

Where is fti's wisdom? I feel as a graduate student trying to figure out the next step while my thesis advisor is watching with a grin on his face and saying nothing....ah......Either he is too involved in his own trading, personal issues, or gave up on us..ahhhh...Am I emotional?...Yes, I am...this is darn too important to me!!!...did I miss the risk management teaching? If so, I am open and I want to learn...maybe we need to figure out the rest on our own...I JUST DO NOT KNOW...

Anyway, I'd better stop...I have too much wine and vodka tonight.

Best wishes
Empty as water and soft as a facing wind mountain
  • #2,390
  • Apr 18, 2008 11:55pm Apr 18, 2008 11:55pm
Okay, here's play-by-play charts of my last 3 dances/trades. I also copied them into a spreadsheet, so you can see the date and times of the trades (so you can see how long each dance took). The last column in RED is the commissions.

I also show a screenshot of my attack/rescue spreadsheet using the new 3 level sequence (I'll attach the actual spreadsheet, so you guys can use it, in another post later).

As you can see by the screenshot, I am using this following 3 level sequence --> .2, .3, .5

Because I am using fractional lots on a mini account, my total exposure if all 3 level attacks implemented is 1 lot (approx. $1.00 per pip).

You will be able to see the "Hypothetical scenarios" for that sequence when you download the actual spreadsheet later. It will show those of you who are "impatient" : that you still can make a decent living if you go slow and steady.

Some explanations of the dances ...

For the first chart, the first AUD/USD trade ... I only ended up having 2 level attacks in, because I was already too deep, so I didn't want to end up having the reaveraged Basis too far from the earlier Basis thus making my TP smaller as well as take longer to dance (although it ended up a long dance anyway with only a 20 pip TP, lol).

For the 2nd chart, the NZD/USD trade ... I lessened the load after having been full in (level 3 already implemented) when I was sensing that there might be a turn of the PA against me. I then reentered the troops after it looked like it would resume again.

I do this sometimes, after all 3 level attacks have been implemented, so as not to encounter too many troops at risk, should a tidal wave hit. If I'm only in with level 1 (Scout) or level 2 attack, I don't lessen the load for those, because rescue would be able to be conducted 3 or more times with those smaller exposures.

For the 3rd chart, the 2nd AUD/USD trade ... I did not lessen load after being all in for that one, since I was a little more confident with the longer term trend continuing upward. Since it was Friday with only a little over an hour left to trade, I exited the trade and took my 33 pips profit (my goal is normally a minimum of 25 pips).

.
Attached Image(s) (click to enlarge)
Click to Enlarge Name: Last3Trades.jpg Size: 100 KB
Click to Enlarge Name: spreadsheet.jpg Size: 111 KB
Attached Image
  • #2,391
  • Apr 19, 2008 12:16am Apr 19, 2008 12:16am
Quoting Zoran
Seeing that you are so close to fti, do you have any idea where he has gone?
Hi Zoran ... Nope, he still hasn't replied to my emails, so I have no clue

Quoting Zoran
mentioning Elliott waves, I did ask fti about that and he was kind of conflicting about it ...
... He does not count waves but he mentioned it comes to mind
Okay, thanks. That's interesting though, cuz here's a snippet I found from one of the ride-alongs where he mentions Elliott Waves (I've removed all my side of the chatter, as it would just be "noise" when reading, lol):

Quote
[20:38] fti: now for the bank I can do that
[20:38] fti: if I asked you to sell 144 lots to rescue 1 you would ...
[20:39] fti: so thats for the bank
[20:39] fti: for you
[20:39] fti: do you understand elliot wave?
[20:42] fti: markets move in 5 wave cycles
[20:44] fti: 3 impules waves and 2 retracement waves making a total of 5 waves
[20:45] fti: so wave 1 is impulse wave 2 is retracement wave 3 is impluse wave 4 is retracement wave 5 is inpluse.
[20:51] fti: anyway,I personally feel for real people we should never go pass level 3
[20:52] fti: that is unless you want to be a multi millionaire overnight or be bankrupted
[20:53] fti: that's why i showed you 1,3,3
[20:53] fti: attack
[20:54] fti: you didn't see 1,5,5, rescue
[20:55] fti: actualy rescue is 1,5 then surrender
[20:56] fti: If you analyse my blotters
[20:57] fti: you will see that I am alot more complex than that because I add volitility to the figures
[20:58] fti: I meant that I add market volitility to the positions
[20:59] fti: volitility means the speed of the waves.
[21:00] fti: you see when a wave forms it has direction right?
[21:00] fti: it also has speed.
[21:01] fti: so I add that to the positions
[21:01] fti: its vv beyond you now
[21:02] fti: for now just know that you have to take that into consideration.
From the snippet, I was interpreting his use for it to gauge his attack entries, but maybe he is using it mainly for the volatility. Is that how you would interpret the above?

Oh, and notice he talks about rescue being "1, 5 then surrender".

I know he's mentioned a different rescue sequence in this thread. Here's one I found --> Post #1716

And another --> Post #1723

I guess this is where we have to be nimble (as there doesn't seem to be a set fib sequence according to all his posts so far) and so I would figure we rescue according to how far away we want to be from B/E. That's how I calculate rescues, anyway.

In the above snippet, he also mentions that he did a 1, 3, 3 attack, but just know that, it is because his platform wouldn't let him put in 5 lots for some reason. Otherwise, he would have attacked 1, 3, 5. Here's that snippet below:

Quote
[19:08] fti: but for beginners I'll teach you 3 for simplicity, ok
[19:08] fti: level 1 = 1 lot
[19:09] fti: level 2 = 3
[19:09] fti: level 3 = 5 lots but I could'nt do 5 on the system so I did 3
[19:09] fti: does this make any sense
[19:10] fti: so every attack will be in 3 waves
Anyway, he recommended us to use a 3 level attack sequence, which I feel is a good idea. This, too, doesn't seem to have a set sequence, as we've seen various sequences he's used, so again, we use what is appropriate for our comfort zone and account size.

Quoting luSan
did I miss the risk management teaching?
Well, here's a post that he made when he first joined FF --> Post #3

Here's another post that is also important to read (especially after the tidal waves that some have recently experienced) --> Post #465

Okay, here's another good post on "surrendering" especially if you are on the wrong side of the trend --> Post #1776

--------

Okay, sorry, but I'll have to post my spreadsheet at another time, cuz I'm still checking it to make sure it's good to go, and because I have a party tomorrow, I still have to do some shopping tonight, as well as my hubby wants to watch a DVD. Aargh, not enough time in a day!
  • #2,392
  • Apr 19, 2008 12:47am Apr 19, 2008 12:47am
Quoting leighsww
...

This is another thing that he mentioned a couple times and it certainly has some key aspects toward dancing.

You know, there's a lot of things I missed (or didn't realize were key components) during my private tutorings, so I am going to go back through some of that info and I'll post what he's told me during those sessions in case it helps clarify what he's already discussed in this thread.
Hello Leighsww,

Thank you for your responses.

Yes, just can't wait to the new findings. hehe... :-)

as I thought, the rescue skewes(important still) are the simple part of fti trading styles, as it just involves adding troops to help out. the kicker or missing link is when - how to technical analysis properly. as much as the title of the thread is technical analysis fallacy in terms to ma, macd, shapes patterns, current super waves theories etc; -(maybe all these have their own merits??? nonetheless, (having re-read the thread a few times again), I feel that fti, maybe also leading us to do technical analysis, but the traditional way. back to the roots of reading market patterns(bar, candle patterns, impulse waves, reversals - when valid or invalided).

-----
Quoting luSan

I began reading a book by Benoit mandelbrot, "the (mis) behavior of markets"...I sense that fti did not tell us much about risk management but a lot about position management. Am I wrong? I concur with jest about the risk problem: we must manage risk in this market...And this market is going really crazy!
Hello lusan,

i believe position(exposure) management is risk management/money management in a subtle way. this is how I see it, let say u have your rescue troops in place, but breakeven is some distance away. with all your rescue troops u are now seeing big $ red. however, then market action goes your way but doesn't quite reach your b/e point because market action is signaling to go against you again. At this point if u take(exit) some or all of your high level troops out; you are still seeing $ red, but not so big. And you continue to manage the position, send in more recue troops at a higher level, again.

as they say, if you manage the losses, the profits will take care themselves... and just tweaking this, I say, if you manage/focus upon your positions(exposure), the $ risk(book-wise) will take care of itself... - :-) hmm, maybe.

simple in theory. not easy in practice. b/c u have to be pro-active and read the market properly and also a mental thing. anyway, that is just my opinion.

maybe,should ask, how do you intepret risk management to be? reducing risk - what risk?

cheers,
bl
  • #2,393
  • Apr 19, 2008 1:00am Apr 19, 2008 1:00am
Quoting leighsww

Okay, thanks. That's interesting though, cuz here's a snippet I found from one of the ride-alongs where he mentions Elliott Waves (I've removed all my side of the chatter, as it would just be "noise" when reading, lol):
wow, leighsww... this is great stuff... thank you.
I need to review my own trading further... study...

any chance of seeing more of the running battle examples, the blotters. be interesting and valuable to analyse. but better, ask fti for permission first? don't want to cause any troubles.

anyway, cool... have a great w/e.
bl.
  • #2,394
  • Apr 19, 2008 7:15am Apr 19, 2008 7:15am
Quoting leighsww
Well, here's a post that he made when he first joined FF --> Post #3
Hi leighsww,

Have you saved fti's full comments in feb2865's thread? A few weeks ago, I read that thread and could find only some fragments. I know fti decided to delete them from there but maybe they are appropriate to be posted here. After all, this is HIS thread. I think they would be very enlightening, especially because they generated a lot of resistence from readers of that thread.

... hmmm ... another bad idea?
  • #2,395
  • Apr 19, 2008 7:15am Apr 19, 2008 7:15am
Quoting gfsr

Hello lusan,

i believe position(exposure) management is risk management/money management in a subtle way. this is how I see it, let say u have your rescue troops in place, but breakeven is some distance away. with all your rescue troops u are now seeing big $ red. however, then market action goes your way but doesn't quite reach your b/e point because market action is signaling to go against you again. At this point if u take(exit) some or all of your high level troops out; you are still seeing $ red, but not so big. And you continue to manage the position, send in more recue troops at a higher level, again.

as they say, if you manage the losses, the profits will take care themselves... and just tweaking this, I say, if you manage/focus upon your positions(exposure), the $ risk(book-wise) will take care of itself... - :-) hmm, maybe.

simple in theory. not easy in practice. b/c u have to be pro-active and read the market properly and also a mental thing. anyway, that is just my opinion.

maybe,should ask, how do you intepret risk management to be? reducing risk - what risk?

cheers,
bl
gfsr,
I see risk as a measure of losing the war. For example, I put 3 waves out. I want to bring them home without damage and with some treasures captured during the war. When PA is really really angry as lately, if I missed the her tune, then my waves are wiped out. Then I must surrender. There is no other wait out. So my question is how to minimize this event from happening?

Risk increases when

1 - I try to brind more pips than what PA is willing to give mem
2 - I missmanage my troops by having too many out or not bringing them home
3 - I am too aggresive falling into self-destructiveness
4 - Lossing focus and concentration and forgetting AOW

and so on...

Lately I did all of the above and PA was very very nice with me. I was saved by my self imposed limit on allowable losses.

Leighsww's example above are good one about active risk management. Her trades are very similar to my own but at a much long time space.

Me? I want both active and passive risk management. Although, I feel that a passive risk management is very dangerous because it might be falling into the trapped mentioned on item 4 above: "Hey, lusan, you are already protected and do not need to pay so much attention to the dance, etc." That would be wrong, a violation of my own trading ethics.

Regards
Empty as water and soft as a facing wind mountain
  • #2,396
  • Apr 19, 2008 7:30am Apr 19, 2008 7:30am
Quoting fti
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.
Leighsww, thanks. He did talked about... I will print large and post it on top of my computer as a reminder.
Empty as water and soft as a facing wind mountain
  • #2,397
  • Apr 19, 2008 9:08am Apr 19, 2008 9:08am
Quoting luSan
gfsr,
I see risk as a measure of losing the war. For example, I put 3 waves out. I want to bring them home without damage and with some treasures captured during the war. When PA is really really angry as lately, if I missed the her tune, then my waves are wiped out. Then I must surrender. There is no other wait out. So my question is how to minimize this event from happening?
hi Lusan,

I think u have answered your own question in a quirky way ;-) ... as below:
Quoting luSan
Risk increases when

1 - I try to brind more pips than what PA is willing to give mem
2 - I missmanage my troops by having too many out or not bringing them home
3 - I am too aggresive falling into self-destructiveness
4 - Lossing focus and concentration and forgetting AOW

and so on...
I don't know if this helps, maybe another view, (following previous posts and in terms of risk and risk management), in your case what do u define as war in trading terms, your trading? a battle? - define battle etc. 4 cases to consider:
- in some wars u might have no casualties. all troops rescued. successful campaign/battle.
- in some wars u might have some casualties, most of troops rescued. successful campaign/battle.
- in some wars u might have most casualties, some of troops rescued. fail campagin/battle (or is it?).
- in some wars u might have all casualties, no troops rescued. failed campaign/battle (or is it?).
(i think that is right? any others?) hmm, where am I trying to lead to??? I don't know... in effect, if u managing your troops(position exposures), sending them in and out. then resending them again(if required); aren't you controlling the risk of the losing the war(book)?

anyway. I think I'm too engaged here and moving away from discussing of fti's other important teachings. and also, that I could be completely wrong and over my head, so leave it here. (i think). cool. :-)

cheers,
bl
  • #2,398
  • Apr 19, 2008 10:51am Apr 19, 2008 10:51am
Quoting luSan
She will be happy. I did 36 min of aerobic...Thanks for stopping by...

You lost? I am sorry. welcome to my club. Leighs told me that I overextended. I did and I know exactly how and when... So I will take care of it... Did you overextended?
Well, I became overconfident and left my babies unattended and missed the rescue attempt, which came very quickly. So the market gave me a deserved slap. You were complaining about a 100 pip EUR move but I was battling what ended up being a 500 pip GBP/JPY move.

So my rescue plan would have worked had I been better prepared and present. This is why I'm sticking to microlots for now until I have proven to myself that I am ready to move to the next level. I am playing the real game but I won't be wiped out.

Quoting luSan
I began reading a book by Benoit mandelbrot, "the (mis) behavior of markets"...I sense that fti did not tell us much about risk management but a lot about position management. Am I wrong? I concur with jest about the risk problem: we must manage risk in this market...And this market is going really crazy!

Where is fti's wisdom? I feel as a graduate student trying to figure out the next step while my thesis advisor is watching with a grin on his face and saying nothing....ah......Either he is too involved in his own trading, personal issues, or gave up on us..ahhhh...Am I emotional?...Yes, I am...this is darn too important to me!!!...did I miss the risk management teaching? If so, I am open and I want to learn...maybe we need to figure out the rest on our own...I JUST DO NOT KNOW...

Anyway, I'd better stop...I have too much wine and vodka tonight.

Best wishes
luSan, you understand fti's teachings well and we may need to replace him and let the market be our teacher. So long as we continue to make mistakes, the market will let us know. We really are on our own and it's up to us to make it work. We can do it if we practice, practice, practice without overexposing.

Having fti around would certainly help though.
  • #2,399
  • Edited 1:11pm Apr 19, 2008 12:34pm | Edited 1:11pm
Some # I was thinking about and was looking for an opinion

Skew: 1,1,2 including scout

Capital: $1000
Max Daily Draw Down: 10 %

- $1000 – 10% of capital risk per day = $100

- $100 must be able to survive a draw down of approximately 200 PIPs

Lot Size: 200 pip at .50 per pip = $100 per day
Pip Value:

- Scout = .50 per pip

- Rescue #1 at .50 = $1.00 per pip traded

- Rescue #2 at $1.00 = $2.00 per pip traded

Dollar Amount Lost and Rescue Entry:

Scout down –30 pip = $15 and entering rescue attempt 1

Rescue 1 results: -30(.50) + -30 ($1) = $15 + $30= $45 and entering rescue attempt 2

Rescue 2 results: -30(.50) + -30 ($1) + -30(2.00) =$15 +$30 + $60 = $105 and ending phase 1 .
  • #2,400
  • Apr 19, 2008 1:26pm Apr 19, 2008 1:26pm
After reading back on some of his posts I linked, he says this ...

Quoting fti
Another point is that when a rescue gets into trouble, the next "spiral within a spiral" possibility would insist that the next rescue sequence, if attempted on would have to take the form of size of minimum next in order from the exposed base.
ie a martingale of base.
example.
if 1 scout was in trouble, u sent in 1 to rescue then 3 to rescue if unsuccessful, if more rescue was required then the next squad would be ?
Notice that he rescues Scout with 1 trooper first. So basically, if Scout is in trouble, he waits max. 7 bars/candles, then sends in 1 troop to rescue 1 Scout. If after another few bars/candles, both Scout and rescue trooper in trouble, he sends in 3 (or 5, depending on the distance and the volatility, I presume) rescue teams. After that ... surrender.

Now, heed his warnings about trading against the trend, cuz he specifically mentions to not even attempt rescuing those and just get the heck out!

Quoting gfsr
any chance of seeing more of the running battle examples, the blotters. be interesting and valuable to analyse. but better, ask fti for permission first? don't want to cause any troubles.
I cannot post his blotters, since that one in particular, he asked me not to due to his identity. I cannot do so even if I were to remove his identity from the blotter, for he is not here to give me permission to do so, and the fact that he asked me not to share that, I have to live up to my commitment of his request.

As far as the other info he taught me, he said I could share that freely. So, I will post that when I can strip out my convo part of it.

Quoting Jairo
Have you saved fti's full comments in feb2865's thread?
Yes, I had saved that for him just before he zapped them from feb's thread, so I will post those here, as well. Some of it he has repeated here already though (not in the exact words, but with the same info), but let me go through them and post what's new or that I don't remember him metioning.

Quoting Zoran
you understand fti's teachings well and we may need to replace him and let the market be our teacher. So long as we continue to make mistakes, the market will let us know. We really are on our own and it's up to us to make it work. We can do it if we practice, practice, practice without overexposing.
Zoran is right that we must all stand on our own two feet from here on. fti has given us enough info to use in our trading. It's now up us to use it wisely and responsibly.
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