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Technical Analysis Fallacy

  • #2,561
  • Apr 27, 2008 6:53am Apr 27, 2008 6:53am
Anybody has any prediction as to where eurusd is going early next week after a 400-pip drop last week?
Expected the unexpected
  • #2,562
  • Apr 27, 2008 7:17am Apr 27, 2008 7:17am
Quoting scyang
Anybody has any prediction as to where eurusd is going early next week after a 400-pip drop last week?
scyang,

we have not tarot cards here...but I guess it will move to the right.:

haaa...Ok, seriously...we do not know...we dance according to our chosen TM...the chart shows that last week it went down and according to Newton's law it should keep falling...but we do not really know...it might turn up.. Still I believe it will keep going down...

But do not put money on my belief...I've been wrong so many times...
Empty as water and soft as a facing wind mountain
  • #2,563
  • Apr 27, 2008 11:08am Apr 27, 2008 11:08am
Quoting lilpip
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 ?
Hi lilpip,
In adding to Zorans comments, this is also how I interpret the "walled cities". When we can see that we are approaching a key level of support/resistance, these are areas that we can anticipate no easy victory but more than likely will meet hostile forces. The idea again is to do battle quickly without redeployment of additional troops:

"Hence to fight and conquer in all your battles is not supreme excellence; supreme excellence consists in breaking the enemy's resistance without fighting." AOW

We want to pick the areas of entry that will pose the quickest and easiest path to victory. Long campaigns are not desired.

Applicable quotes from the AOW:

When you engage in actual fighting, if victory is long
in coming, then men's weapons will grow dull and
their ardor will be damped. If you lay siege to a
town, you will exhaust your strength.
Now, when your weapons are dulled, your ardor
damped, your strength exhausted and your treasure
spent, other chieftains will spring up to take
advantage of your extremity. Then no man, however
wise, will be able to avert the consequences that
must ensue.

There is no instance of a country having benefited
from prolonged warfare.
In war, then, let your great object be victory, not
lengthy campaigns.

What the ancients called a clever fighter is one who
not only wins, but excels in winning with ease.

Making no mistakes is what establishes the
certainty of victory, for it means conquering an
enemy that is already defeated.

Hence the skillful fighter puts himself into a
position which makes defeat impossible, and does
not miss the moment for defeating the enemy.

Thus it is that in war the victorious strategist only
seeks battle after the victory has been won,
whereas he who is destined to defeat first fights and
afterwards looks for victory.

You can be sure of succeeding in your attacks if you
only attack places which are undefended.

Hence that general is skillful in attack whose
opponent does not know what to defend; and he is
skillful in defense whose opponent does not know
what to attack.

The spot where we intend to fight must not be made
known; for then the enemy will have to prepare

So in war, the way is to avoid what is strong and to
strike at what is weak.
Like water, taking the line of least resistance.

Hope this helps...it has helped me.

Regards,
NP
  • #2,564
  • Apr 28, 2008 9:23am Apr 28, 2008 9:23am
Hello All,

It is been almost 3 weeks and I am still at page 102. I am at point where fti is going away for 1 month.

Zoran -> Did you compiled all the fti's teachings finally and got all answers ? It will be great help.

Can someone please provide me nutshell of 3 kingdoms strategy to implement ?

Regarding, fti's original quest for the best broker..then I would suggest to use Bloomberg and Reuters FX platform. (Obv for big pocket investors only)

This thread is the best I have ever seen, members like Leigh, Zoran, Northpro and Lusan are outstanding leaded by fti.

Guys, I would like to learn much more from all of you so pls keep posting or pm me. (I cannot pm as a new member at FF).

Thanks again for sharing your wealth of knowledge.
  • #2,565
  • Apr 28, 2008 5:11pm Apr 28, 2008 5:11pm
I'd just like to support hemal's post. I have got to the end of the thread and some of the recommended reading, just have to go over some of it again.

My take on the 3 kingdoms is they are meant to be in harmony, so that we know what sort of battle field we are entering. By the way I don't think we are allowed to comment on brokers and the like being "baby members".

As this is also my first post I would like to thank everyone who has contributed to this thread, helped with our understanding of fti's teachings and helped keep it one of the most disciplined I've had the pleasure to study.
Good Trading
  • #2,566
  • Apr 28, 2008 5:20pm Apr 28, 2008 5:20pm
Hi hemal, I haven't had a chance to re-read this thread yet but as it progresses I continue to learn more and I'm sure when the time comes, re-reading it will be even more valuable. I still have a few books/papers fti mentioned that I still need to read so it will take a while to get through everything. However, practicing to dance and winding the spirals is what's most important for now so I am focusing on that.

NP, nice and detailed response and all applicable to city walls. If a wall is to be broken then we move through it effortlessly although the city walls are strong and take some time to break, so we must time it well.
  • #2,567
  • Apr 28, 2008 5:32pm Apr 28, 2008 5:32pm
Quoting Northpro
Hi lilpip,
In adding to Zorans comments, this is also how I interpret the "walled cities". When we can see that we are approaching a key level of support/resistance, these are areas that we can anticipate no easy victory but more than likely will meet hostile forces. The idea again is to do battle quickly without redeployment of additional troops:

"Hence to fight and conquer in all your battles is not supreme excellence; supreme excellence consists in breaking the enemy's resistance without fighting." AOW

We want to pick the areas of entry that will pose the quickest and easiest path to victory. Long campaigns are not desired.

Applicable quotes from the AOW:

When you engage in actual fighting, if victory is long
in coming, then men's weapons will grow dull and
their ardor will be damped. If you lay siege to a
town, you will exhaust your strength.
Now, when your weapons are dulled, your ardor
damped, your strength exhausted and your treasure
spent, other chieftains will spring up to take
advantage of your extremity. Then no man, however
wise, will be able to avert the consequences that
must ensue.

There is no instance of a country having benefited
from prolonged warfare.
In war, then, let your great object be victory, not
lengthy campaigns.

What the ancients called a clever fighter is one who
not only wins, but excels in winning with ease.

Making no mistakes is what establishes the
certainty of victory, for it means conquering an
enemy that is already defeated.

Hence the skillful fighter puts himself into a
position which makes defeat impossible, and does
not miss the moment for defeating the enemy.

Thus it is that in war the victorious strategist only
seeks battle after the victory has been won,
whereas he who is destined to defeat first fights and
afterwards looks for victory.

You can be sure of succeeding in your attacks if you
only attack places which are undefended.

Hence that general is skillful in attack whose
opponent does not know what to defend; and he is
skillful in defense whose opponent does not know
what to attack.

The spot where we intend to fight must not be made
known; for then the enemy will have to prepare

So in war, the way is to avoid what is strong and to
strike at what is weak.
Like water, taking the line of least resistance.

Hope this helps...it has helped me.

Regards,
NP

NP, I hear you. Thanks for the aow reminder...EUR/USD now is an impass..up or down...hold youself tight and be patient if you are dance a slow dance...I guess PA is waiting for US news.
Empty as water and soft as a facing wind mountain
  • #2,568
  • Apr 29, 2008 4:44am Apr 29, 2008 4:44am
Try to understand the reason of not placing stop-loss order.

Try to understand why rescue.

Try to understand attack.

Try to understand proper Money Management.

Try to understand the concept of positions management(babysit).

Try to understand dance with the market(read the chart as forming and follow the flow).

And then, the golden mine to open to you. Gurantteed.

David
  • #2,569
  • Apr 30, 2008 5:25pm Apr 30, 2008 5:25pm
Zoran if your asking me if I have a link to fti's commentary on aow 3 no I do not have a link.
I'd like to say northpro put up a good reminder of the goal is a swift victory with least resistance so we would want to avoid battle at s/r areas (walled cities) as you mentioned.
  • #2,570
  • Apr 30, 2008 5:53pm Apr 30, 2008 5:53pm
[quote=Northpro;1972027]Hi lilpip,
In adding to Zorans comments, this is also how I interpret the "walled cities". When we can see that we are approaching a key level of support/resistance, these are areas that we can anticipate no easy victory but more than likely will meet hostile forces. The idea again is to do battle quickly without redeployment of additional troops:

"Hence to fight and conquer in all your battles is not supreme excellence; supreme excellence consists in breaking the enemy's resistance without fighting." AOW

We want to pick the areas of entry that will pose the quickest and easiest path to victory. Long campaigns are not desired.

Applicable quotes from the AOW:

When you engage in actual fighting, if victory is long
in coming, then men's weapons will grow dull and
their ardor will be damped. If you lay siege to a
town, you will exhaust your strength.
Now, when your weapons are dulled, your ardor
damped, your strength exhausted and your treasure
spent, other chieftains will spring up to take
advantage of your extremity. Then no man, however
wise, will be able to avert the consequences that
must ensue.

There is no instance of a country having benefited
from prolonged warfare.
In war, then, let your great object be victory, not
lengthy campaigns.

What the ancients called a clever fighter is one who
not only wins, but excels in winning with ease.

Making no mistakes is what establishes the
certainty of victory, for it means conquering an
enemy that is already defeated.

Hence the skillful fighter puts himself into a
position which makes defeat impossible, and does
not miss the moment for defeating the enemy.

Thus it is that in war the victorious strategist only
seeks battle after the victory has been won,
whereas he who is destined to defeat first fights and
afterwards looks for victory.

You can be sure of succeeding in your attacks if you
only attack places which are undefended.

Hence that general is skillful in attack whose
opponent does not know what to defend; and he is
skillful in defense whose opponent does not know
what to attack.

The spot where we intend to fight must not be made
known; for then the enemy will have to prepare

So in war, the way is to avoid what is strong and to
strike at what is weak.
Like water, taking the line of least resistance.

Hope this helps...it has helped me.

Regards,

Yes, it will help.
I don't no why it didn't dawn on me sooner because I quite often try to get in around major support and resistance and try to get on the right side as price finally moves away. Your reminder is appreciated. Why would I want to put myself in the middle as price battles it out on which way to go? I always did have a hard time keeping my head on my shoulders until price moved away.
thanks
  • #2,571
  • May 2, 2008 4:21am May 2, 2008 4:21am
Quoting Green_David
Try to understand the reason of not placing stop-loss order.

Try to understand why rescue.

Try to understand attack.

Try to understand proper Money Management.

Try to understand the concept of positions management(babysit).

Try to understand dance with the market(read the chart as forming and follow the flow).

And then, the golden mine to open to you. Gurantteed.

David
Just wanted to add: Try to understand why capital preservation is on top of this list. Could be included in MM but just wanted to emphasize this.
  • #2,572
  • May 3, 2008 1:07pm May 3, 2008 1:07pm
http://www.norges-bank.no/upload/imp...rb-2003-10.pdf
If anyone is interested in microstructure of FX and how dealers make trades and work, than you should read this. As i am young i have some difficulties with understanding and i hope one expert will explain this (some mathematical equations are for scientists).
  • #2,573
  • May 3, 2008 1:46pm May 3, 2008 1:46pm
Has anyone heard any different than personal business being fti's absence ?
I hope it hasn't turned into health reasons.
  • #2,574
  • May 3, 2008 2:29pm May 3, 2008 2:29pm
Quoting lilpip
Has anyone heard any different than personal business being fti's absence ?
I hope it hasn't turned into health reasons.
Nope...We hope he is ok..
Empty as water and soft as a facing wind mountain
  • #2,575
  • May 4, 2008 3:34am May 4, 2008 3:34am
...Is that knowing how this Live beast of the ForeX thinks and moves is all that one needs for success. Learn to let go and leave your charts blank over time and one will gain a 6th sense on how the market will move in one's favor. Take risk take wins take losses, let it go for it was the risk one took and the loss one would have chosen to accept for if one can't do that why would one have taken the trade in the first place. The way a professional veteran in trading forex can't really be explained not through charts and such only in impulse and action within the moment, even seeing that doesn't explain much but the results will speak for them selves. And a professionals results can be hardly replicated. They all have their unique weapons in this market. Technicals are just a tool used by everyone else the only difference is the trader behind those tools. The trader makes the difference. In the end it is not the chart or the technical tools used by the trader that makes the trader money. It is based solely on the actions of the trader period.
"Diversification is an excuse for a lack of talent" ~FXC
  • #2,576
  • May 4, 2008 3:40am May 4, 2008 3:40am
There is no hope in the markets especially in the forex, it's the most lethal and deadliest capital market out there, the only thing you can hope for is death to your account when you throw that worthless word in your vocabulary and apply it in your mindset. hope is 'hopeless' in trading. hope = loss of all things that can go wrong is what hoping in the markets will bring you. that's another fallacy in tecnicals. hoping for it to work. hearing that word *hope* and seeing it alot in these forums makes me cringe and shudder when i read of it.
"Diversification is an excuse for a lack of talent" ~FXC
  • #2,577
  • May 4, 2008 7:40am May 4, 2008 7:40am
Quoting FXCapitalist
There is no hope in the markets especially in the forex, it's the most lethal and deadliest capital market out there, the only thing you can hope for is death to your account when you throw that worthless word in your vocabulary and apply it in your mindset. hope is 'hopeless' in trading. hope = loss of all things that can go wrong is what hoping in the markets will bring you. that's another fallacy in tecnicals. hoping for it to work. hearing that word *hope* and seeing it alot in these forums makes me cringe and shudder when i read of it.
Still...I HOPE that fti is doing ok...we have not heard from him...and we fear for his health...do you HOPE too?
Empty as water and soft as a facing wind mountain
  • #2,578
  • May 4, 2008 5:02pm May 4, 2008 5:02pm
Quoting scyang
Anybody has any prediction as to where eurusd is going early next week after a 400-pip drop last week?

scyang,

The market will go where the market participants take it.

My method is to follow either the hourly or 4hourly trend & enter using 5min & 15min counter trend exhaustion (retrace) as entry.

To help me in placing a relatively low risk trade I use my interpretation of the 3 kingdoms (3K) as mentioned by our much loved & missed mentor fti.

I very rarely have to carry out any form of rescue.

In the event of misalignment of the 3K I prefer to exit my trade with or without a profit.

I don't know if this is going to be of any help to you.

Kind regards,

BabeFX.
  • #2,579
  • Edited 6:39pm May 4, 2008 6:13pm | Edited 6:39pm
Quoting jest
if ur doing this hedge, there's no way you're gonna get to 10k within that 80 trades.
LOL, actually I'm not too far off my schedule of the target goals (only $33 shy, because my last dance set me back one trade due to it was a surrender, lol. My surrender criteria is that it not exceed the previous profit taken, so that I preserve my capital and the LOSS not push me too far back from my "Hypothetical" scenario's goals). See the screenshots of my spreadsheet below:

The first image is my Actual Trades. The numbers in RED in the Trade # column are trades I used the hedging on (Trades #5 - 10).

I've made a few changes on the "Commission" table of the spreadsheet to now include the rollover interest, as well as now the TOTAL percentage's formula takes the data from the Actual Trades' applicable columns instead of averaging the % column in the "Commission & Interest" table - due to I originally didn't take into account any losing trades, lol.

As you can see, due to the LOSS trade, my "Max. Lots Available to Trade" goes back down to 9 thus resetting the "Attack Sequence" to total 1 lot again, however, since I was not actually doing attacks with this hedging method, I just use the sum of the attack sequence to figure out the "Pips" banked (just so it corresponds and is easier to keep track with my Hypothetical scenario goals).

The second image is the Hypothetical scenario sheet which shows what the corresponding 10th trade would be. So, I'm still on target.

I feel it's still very doable to do the hedging and keep on track with my spreadsheet's "Hypothetical" scenario goals. Sheesh, you need to change that "it's impossible" mindset to "anything is possible," my dear :

BUT, I agree that one has to be really successful with the rescues in order for this hedging method to work. Also, there is still risk involved during the rescue session, so nothing is 100% safe. Even though I implemented some safeguards to lessen the risk (I won't go into details, as this post will get too long and it's not really important at this point), I found that the downside was, my commission percentages got excessive. However, I was happy with the ROI, so that helped buffer the commission infeasibility, at least.

It has its advantages and disadvantages like any method, so, with that being said ...

People who want to, can play around with the hedging method how they wish, but I'll focus back to discussing the "basics" of fti's technique, since that is less complicated and what most people will probably find better suited for them. I will probably go back to fti's method, as well, since the commission is much more feasible. The hedging method was just an idea and a search/test for a more conservative/safer method, but again, it has its disadvantages.
.
Attached Image(s) (click to enlarge)
Click to Enlarge Name: actualtrades.jpg Size: 121 KB
Click to Enlarge Name: hypothetical.jpg Size: 86 KB
  • #2,580
  • Edited 6:50pm May 4, 2008 6:16pm | Edited 6:50pm
Quoting Zoran
I am not entirely certain about the following:

"and volatility run of max 7 bars average 3"

but my guess would be fti plays his sequence based on each bar (or close to it). He will unwind fully in 7 bars if the volatility is strong but he normally only gets to the third level before winding back in.

So he could play each bar and depending on the following plus measuring speed and what the component bars represent will determine his play. When viewing his charts, it is quite obvious that he plays very close to the market.

Also, when referring to Gann, he highlighted the fact that on average, Gann's trades lasted 20 minutes so that may coincide with fti's practice?

Leigh, perhaps you could confirm?
Hi Zoran ...

Sorry, but I missed answering some of your previous posts, but I think when he says "average 3" he is referring to the candlestick pattern, meaning 3 (or more) strong candles in the direction of the trend then one or two small opposing candles, then 3 (or more) strong candles in direction of the trend.

This snippet from his training log gives the clue as to why I am thinking this is what he means (the part in BLUE) ...

Quoting fti
[23:24] fti: do you notice that the down bars are in 3s and 4s
[23:24] fti: the up bars are singular
[23:25] fti: and now the up bars are singular and down bars are singular
[23:25] fti: sign of stops sweep
Okay, I've been still trying to figure out that "max. 7 bars" thingy (because even though gfsr had a really good interpretation (Post # 2334), I can't help but think there's still more to it than that.

Re-reading the quote above in RED gave me some insights as to also why maybe the "max. 7 bars," as well as this following quote might be a clue and key ...

Quoting fti
This attack sequense is not invoked when the market volatility is tight, Only when the legs are strong,(strong = range play 50 pips average) and volatility run of max 7 bars average 3.
I previously missed the important info he's disclosed in that above quote.

By his statement, it's evident that he wants to be in-and-out fast, and in the case of putting Scout in the wrong direction, he can conduct the "rescue" with a good chance of success. Besides wanting high volatility and strong legs (50 average range play), if any "stop sweeps" are going to be implemented, it would probably happen within those 7 bars, so if we're needing to rescue, we don't want to miss the opportunity to get out ASAP before the PA moves too fast and furious in the direction against us (in the case of those tidal waves).

I've gotta pay attention to the "range" from now on. Never took that into consideration before, but I can now see that it is very important for more efficient attacks and rescues.

Quoting Zoran
Does anyone know whether fti waited for a candle to finish before entering?

Also, when he referred to shadows, is anyone clear about what that means or the type of action it represents?
I'm not sure if he waits for the candle to finish, but he does look at reversal bars. This is a snippet quote from one of my logs (he said this to me after I was analyzing the candlestick patterns too much, lol):

Quoting fti
[23:41] fti: don't read too deep into the bars
[23:41] fti: just remember the reversal bars
As far as his reference to "shadows," he was talking about the wicks on the candlesticks. Unfortunately, without the chart to look at during that trade, I can't refer back to exactly where we were watching, but what I somewhat know of the reading of candlesticks, normally when there are long bottom shadows, then it's a high probability that the PA is going to go up and visa versa.

----------

Oh, and I'm using RO3K as well (I've given it another try after reading back on some of fti's tutorings, lol), but I have also incorporated the Swissy with them, since it's more reliable with going in the opposite direction of the Euro than the Yen, so I guess mine is RO4K, lol. fti didn't trade the crosspairs, so he used RO3K mainly for trading Euro or Yen. I'm not trading the crosspairs, either (although, jest and a few others had some good findings for using it in conjunction with the crosspairs, as well).

The other thing I noticed when looking back at some of the tutorings, was that fti used the RO3K with the Daily charts (I missed that fact the first time, thus found RO3K unreliable when using it with the 5m). This is how his trading screen looks --> Daily timeframes open for GBP, Euro and Yen. 5m chart open for the Yen.

However, he must have similar charts for trading the 5m for GBP and Euro, cuz we've seen him trading those two pairs, as well.

From just looking back at my logs, I can't tell whether he looks at any lower timeframes for RO3K. Whether he does or not, I can't say for sure.
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