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Technical Analysis Fallacy

  • #2,541
  • Apr 24, 2008 5:16pm Apr 24, 2008 5:16pm
Quoting leighsww
ACK, Zoran, I just thought of one more advantage, so I have to at least say this before FINALLY leaving, lol ...

Okay, I guess whether it's one pair or two separate opposing pairs, I guess my whole originally thinking in regards to the hedging is that we want to make a profit, so I guess why not rescue your other hedged position so that you can capture the full 45 pips rather than be -6 in the RED? lol

Anyway, I may still be wrong about this whole theory, but it sounded good at the time when I was thinking about it :
Leighsww,
This thread wouldn't be the success it is without your continued input.

We all have to explore and experiment to help convert the teachings of fti into a method that suits our own personalities & appetites for risk.

You have helped us pick out some of the gems of wisdom posted on this forum.

Thank you.

BabeFX.
  • #2,542
  • Apr 24, 2008 7:33pm Apr 24, 2008 7:33pm
okay, am i the only one allowing leighsww to take a break from this all? ... lol.

Take Care leigh.
Anyway, if ur doing this hedge, there's no way you're gonna get to 10k within that 80 trades. Hahah okay okay jokes aside. Do drop by once in a while.

regards
  • #2,543
  • Apr 24, 2008 8:52pm Apr 24, 2008 8:52pm
Quoting leighsww
David ... just a note ... G/U normally goes in tandem with E/U most of the time, so be careful when you enter opposite. You were lucky this time that it went opposite, but that is gambling :

With my theory method, this hedging can only be done with E/U and U/C, in my opinion, because they are high "negative" 90s correlating pairs (meaning, they go opposite of each other most always and in close proximity).

Anyway, you probably weren't going short G/U for hedging reasons, so I guess it doesn't matter/apply, but please be careful when you enter opposite positions on normally "positive" correlating pairs.

ACK, okay I gotta stop and get outta here, lol.

These forums are too addicting :

Best wishes on your success, David!!
You are right about correlation between G/U,& E/U, and E/U & G/U.

I sent a scout because the reason every trader knows--- E/U is in a up-trend and it has met a support @4840 last time on 4H chart. Scout for G/U is based on daily chart also.

Please don't leave us. Do visit here every day. We are having a big family, FTI Traders Club. And you are the cheer leader.

My rescue operation on E/U long positions (scout deep "dead in water" with - 220 pips and the level 1 rescue dead in water for -190 pips) is quite good. About half loss from E/U reduced.

This morning I closed level 2 rescue troops with 40 pips loss. The price didn't touch my limit order last night. I made about 4% profit yesterday anyway, so I asked myself why bother take some loss and reduce my size, since E/U could go down as low as 1.55 or 1.5350. If E/U goes up to 1.5780 or 1.5820, so what, if that happens, my scout and rescue level 1 troops will make money for me.

By the way, I like making profits by riding on trend (for intra-day trading).

Best wishes to you also. .

I sent an email to FTI about 2 weeks ago, but no reponse by now. Hope he is fine. I know his true name and his true identity and a tel number, but it is not decent to contact him besides PM and email.

David
  • #2,544
  • Apr 25, 2008 4:22am Apr 25, 2008 4:22am
I sent Leigh an email yesterday and I would just like to reassure everyone that her emails are just as long as her posts! Now this is a sign of an active and healthy mind.

Seriously though, I am relaying this message that she is not leaving but she is busy attending to business and personal matters. She will be back, yes that's right - with even longer and more detailed posts, so please don't despair!

Cheers!
  • #2,545
  • Apr 25, 2008 6:09am Apr 25, 2008 6:09am
Quoting Green_David
I sent an email to FTI about 2 weeks ago, but no reponse by now. Hope he is fine. I know his true name and his true identity and a tel number, but it is not decent to contact him besides PM and email.
David, when someone gives out their details and phone number, it normally gives that person permission to call. Also, when someone intends to be absent they normally announce it (as fti has in the past). I think the concern of some here about fti is justified and maybe a phone call to just make sure he is OK would be appropriate?
  • #2,546
  • Apr 25, 2008 6:47am Apr 25, 2008 6:47am
Quoting Zoran
David, when someone gives out their details and phone number, it normally gives that person permission to call. Also, when someone intends to be absent they normally announce it (as fti has in the past). I think the concern of some here about fti is justified and maybe a phone call to just make sure he is OK would be appropriate?
I will send you an e-mail to tell you some thing.
  • #2,547
  • Apr 25, 2008 7:18am Apr 25, 2008 7:18am
Quoting luSan
Note the prior bar before the news...the trend was broken 20 min before the news...leakages in germany?

Regards
The day before is the Belgium BNB Business Confidence report it is considered a leading indicator for the Euro and the IFO report. Since the BNB report came out terrible, -7.9 in comparison to the previous month of +1.2, I'm going to say that most people were looking for a bad IFO report. Don't bother looking for the BNB report on forexfactory calendar since they don't include belgium.
  • #2,548
  • Edited 8:41am Apr 25, 2008 7:21am | Edited 8:41am
This morning I was dissappointed. The news did not have any impact...but it gave me the opportunity of demoing leighsww' hedging.

1. I went long EUR/US and US/CHF
2. I went to bed and came back several hours laters
3. I sold EUR/US to take profit (in the blue)
4. I played rescue mode using my style on the US/CHF -that's why the some many entries
5. I ended up with +150 pips/session- you know greed comes out when I demo. Why to rescue? Let us profit!!

Lesson:
1. It works
2. It takes a lot of guts...you will be dealing with deep red even although the book will be close to find.
3. I would work very good if the pair for rescue is in a reversal mode

This is equivalent to 2 dances..you win the first and fight the second...again if you wait for a reversal or congestion then you might have you have 2 attack dances...this type of hedging needs further evaluation and testing...why chf? why not the same EUR/US in another account...then we have perfect (-1) correlation?

I think she got something good for news trade...she is a genius!

I am attaching my graphs

Enjoy

Edit: Actually it does not work because win-loss=0, so by taking profit with the winning trade, we just borrow pips from pa. Now we have to pay back..that is the rescue operation...and that most be done very aggressive, probably level 2 rescue and higher...

so why not just not trade and go wrong and now have a strong rescue...there is no difference...it is the sme but starting with a BE balance...right?

so sorry...I would not recommend it...I stay away from the news for 5M fti's strategy.
Attached Image (click to enlarge)
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Empty as water and soft as a facing wind mountain
  • #2,549
  • Apr 25, 2008 7:29am Apr 25, 2008 7:29am
Quoting Green_David
I will send you an e-mail to tell you some thing.
I would be satisfied on knowing that he is Ok.
Empty as water and soft as a facing wind mountain
  • #2,550
  • Apr 25, 2008 9:47am Apr 25, 2008 9:47am
I am not at all criticizing this idea what so ever but this is the gist of it. For simplicity you are hedged perfectly, you have paid the spread for both your trades and for holding it you are interest negative.

So if you are hedged into a news event, you have no exposure and therefore are not trading the news anymore, which is the same as having no trades in the first place. So what you are really trading is the retracement.

The difference is you paid for the spread on the hedge, the negative interest, and obligated yourself to the trade. You also give yourself a false sense of confidence by taking a profit that really isn't a profit yet. By human nature we feel inclined to take profits earlier and hold onto losses. So I imagine people would feel inclined to expose their hedge prematurely and then end up trying to rescue a position that is far from the front line and in a volatile time.

Just saying that using the idea just to trade news in the fashion that was described isn't very helpful. You might just be onto something, but it shouldn't be with perfectly hedged pairs.
  • #2,551
  • Apr 25, 2008 12:33pm Apr 25, 2008 12:33pm
Quoting Hidhadows
I am not at all criticizing this idea what so ever but this is the gist of it. For simplicity you are hedged perfectly, you have paid the spread for both your trades and for holding it you are interest negative.

So if you are hedged into a news event, you have no exposure and therefore are not trading the news anymore, which is the same as having no trades in the first place. So what you are really trading is the retracement.

The difference is you paid for the spread on the hedge, the negative interest, and obligated yourself to the trade. You also give yourself a false sense of confidence by taking a profit that really isn't a profit yet. By human nature we feel inclined to take profits earlier and hold onto losses. So I imagine people would feel inclined to expose their hedge prematurely and then end up trying to rescue a position that is far from the front line and in a volatile time.

Just saying that using the idea just to trade news in the fashion that was described isn't very helpful. You might just be onto something, but it shouldn't be with perfectly hedged pairs.
agreed.

@green david
now that you have announced something publicly, it isnt nice that you are only willing to share it with zoran right, i believe everyone here is as commited. Is there some higher level niche grp going on here? im after all in singapore.
  • #2,552
  • Apr 25, 2008 1:24pm Apr 25, 2008 1:24pm
Quoting jest1081
agreed.

@green david
now that you have announced something publicly, it isnt nice that you are only willing to share it with zoran right, i believe everyone here is as commited. Is there some higher level niche grp going on here? im after all in singapore.
No, I don't have anything hiding. I sent Zoran a PM which contains nothing with trading.

In fact, I didn't have any private tutoring from FTI. The time he invited me to join with Leighswww to learn trading, he asked me how was my trading?

I told him I got +350 pips with G/U short position opened @2.08, and +150 pips with short E/U position. And I am still holding the positions. (In fact if I held G/U short position longer, I could make 700 pips more.)

So he told me, I don't need his help. He is right, what I need is correct mindset and good MM.

In fact, I think his most valuable thoughts to me are no-stop-loss order and scout-rescue MO, "nimble". Also the 7 level troops idea is also very helpful for MM.

Of course, all his stories are great. Which helped me a lot for the correct mindset.

David
  • #2,553
  • Apr 25, 2008 1:31pm Apr 25, 2008 1:31pm
Quoting Green_David
No, I don't have anything hiding. I sent Zoran a PM which contains nothing with trading.

In fact, I didn't have any private tutoring from FTI. The time he invited me to join with Leighswww to learn trading, he asked me how was my trading?

I told him I got +350 pips with G/U short position opened @2.08, and +150 pips with short E/U position. And I am still holding the positions. (In fact if I held G/U short position longer, I could make 700 pips more.)

So he told me, I don't need his help. He is right, what I need is correct mindset and good MM.

In fact, I think his most valuable thoughts to me are no-stop-loss order and scout-rescue MO, "nimble". Also the 7 level troops idea is also very helpful for MM.

Of course, all his stories are great. Which helped me a lot for the correct mindset.

David
yes i understand, but if it does concerns fti, whether his wherabouts or condition, i believe anyone here would have the right to know. If not it wouldn't be nice to indicate to us that u are sending a privy eamil to zoran, esp when u know who fti is. but thats okay, i won't force u into telling me or anyone here stuff, i just felt that it would have been more respectful if u had not announced anything in the public forum if u had wanted to share some private info with zoran.
  • #2,554
  • Apr 25, 2008 2:04pm Apr 25, 2008 2:04pm
Folks,

I am still meditating about news events and nasty surprises...I have the following thoughts and I would like to hear your comments:

PA has only 2 options....either trend or stay put....on trend the MA works well and in the trenches the oscilators...-do not worry I am not going back to indicators!-...the big problem is that we do not really know when PA will go one way of the others nor when news will kick in and disrupt 5M..

So... a way to deal with this problem is having two separate accounts set as...

1. Dancing account for 5M dance and fti strategy....

2. 3H or 1D trend account for long trend following ing period - just follow the trend until the trend is broken...resize appropiately such size is equal or less to the maximum number of troops out during a full attack...no stop... you use trend lines or 1-2-3 or Elliots, candles...whatever works for you...

Ok...let us say you are long with 10k units on the 3H trend...you are collecting pips and happy...the trend is up and you check every 3 hours or so for a bar completion and confirm that the trend is still on going...etc.

in your other account you short dance the 5M as per your MO...everything is ok, you are pipping, etc...suddenly there is an announcement out...the 5m goes against you because--it goes long-... worst case....you lose?...not really because your other account will hedge you...No need to rescue at all...just surrender the 5M...you will only rescue if you are only dealing with trading timing..."dead in the water"?...just exit and smile...

Or

5M goes long and you are happy...collect pips in both accounts...etc.

so either way you are protected and can dance during the news... you could 5M dance fearly in any direction knowing that the big trend is as a big brother

I began exploring live this idea last night...I went EUR/short...I trend the 3H...

My main assumption is that news are NOT very critical on the higher time frames and that we can identify the trend easily...

Now if there is no trend on the 3H then you have not protection and should not dance during news time...

Thoughts would be appreciated.
Empty as water and soft as a facing wind mountain
  • #2,555
  • Apr 25, 2008 2:06pm Apr 25, 2008 2:06pm
Continuation of previous..

I found confirmation of these ideas today:

Quote
In Staying Ahead of the Curve, George Soros describes how Victor Niederhoffer had a system for trading these ripples and how, eventually, it failed.

“He was well grounded in random walk theory. He looked at markets as a casino where people act as gamblers and where their behavior can be understood by studying gamblers. For instance, gamblers behave differently on Mondays than on Fridays, differently in the morning than in the afternoon, and so on. He regularly made small amounts of money trading on that theory. I gave him money to manage and he made a good return on it.

“There was a flaw in his theory however. It is valid only in a trendless market. If there is a historical trend, a tide, it can overwhelm these little waves that are caused by gambling behavior and he can be very seriously hurt because he doesn’t have a proper fail-safe mechanism.

“He made very good money while the markets were sloshing around aimlessly. Then he started losing money, and he had the integrity to close out the account. We came out ahead. Very few commodity traders would have done that.”

This is Soros speaking
Empty as water and soft as a facing wind mountain
  • #2,556
  • Apr 25, 2008 6:00pm Apr 25, 2008 6:00pm
Everyone thinking about hedging, read this post by fti and follow the link to a thread by Merlin. It seems to be discussed there. As mentioned, mathematically they cancel each other out and the spread and negative carry put you at a disadvantage.

http://www.forexfactory.com/showthre...73#post1873473
  • #2,557
  • Apr 25, 2008 6:39pm Apr 25, 2008 6:39pm
Here are two of fti's posts regarding hedging (from that thread).

http://www.forexfactory.com/showthre...26#post1854126
http://www.forexfactory.com/showthre...08#post1916208
  • #2,558
  • Apr 25, 2008 6:51pm Apr 25, 2008 6:51pm
Quoting jest1081
yes i understand, but if it does concerns fti, whether his wherabouts or condition, i believe anyone here would have the right to know. If not it wouldn't be nice to indicate to us that u are sending a privy eamil to zoran, esp when u know who fti is. but thats okay, i won't force u into telling me or anyone here stuff, i just felt that it would have been more respectful if u had not announced anything in the public forum if u had wanted to share some private info with zoran.
Hi jest

Just to clear this up, nothing important was discussed. I don't know who fti is and I'm not sure it really matters. If fti ever has the desire to tell me or anyone, then that's up to him and his decision.

As for his absence, it is a little concerning but he did mention he needed to attend to some business for a month. Perhaps that's where he is? If he was to leave permanently, I'm sure he would announce it so I have faith that he will return soon enough.
  • #2,559
  • Apr 26, 2008 8:14pm Apr 26, 2008 8:14pm
Quoting Zoran
Hi jest

Just to clear this up, nothing important was discussed. I don't know who fti is and I'm not sure it really matters. If fti ever has the desire to tell me or anyone, then that's up to him and his decision.

As for his absence, it is a little concerning but he did mention he needed to attend to some business for a month. Perhaps that's where he is? If he was to leave permanently, I'm sure he would announce it so I have faith that he will return soon enough.
My understanding also was that he would be gone for a month or so and that he was on the road.
Also, he mentioned being patient and develope a good understanding of the aow as we continue to practice.
I do have a question.
In lesson 3 aow #4 Does anyone have any thoughts when were told not to besiege walled cities if it can possibly be avoided ?
  • #2,560
  • Apr 27, 2008 6:41am Apr 27, 2008 6:41am
Quoting lilpip
My understanding also was that he would be gone for a month or so and that he was on the road.
Also, he mentioned being patient and develope a good understanding of the aow as we continue to practice.
I do have a question.
In lesson 3 aow #4 Does anyone have any thoughts when were told not to besiege walled cities if it can possibly be avoided ?
Do you have a link to that post?

My interpretation is to be cautious around key resistance levels (walled cities). Not to have too many troops in the market at that point and not to launch any attacks against it. These are good points to unwind.
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