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Technical Analysis Fallacy

  • #2,581
  • Edited 6:37pm May 4, 2008 6:20pm | Edited 6:37pm
Quoting mijamoto
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).
Hi mijamoto ...

LOL, being young has nothing to do with understanding the mathematical equations, cuz I'm old-er and it made my brain hurt, too! :

Quoting BabeFX
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.
Hi BabeFX ...

Looks like you're doing great! Good job! fti would be very proud of you!
  • #2,582
  • May 4, 2008 7:08pm May 4, 2008 7:08pm
Nice to see you back Leigh and thank you for taking the time to answer my questions.
  • #2,583
  • May 4, 2008 7:51pm May 4, 2008 7:51pm
hey leigh,

great to see you back. Heheh, okay lets change it to "anything is possible" but im gonna need to see that 80th trade hit the mark. Heheh.

regards
  • #2,584
  • May 4, 2008 9:44pm May 4, 2008 9:44pm
Quoting leighsww
~~
I will probably go back to fti's method, as well, since the commission is much more feasible.
Please do. I found your last two posts most helpful, and fti was clear with his views on hedging.
Good Trading
  • #2,585
  • May 4, 2008 10:40pm May 4, 2008 10:40pm
hi, first time replying here. thanks a lot to everyone who spent so much effort and time for this thread especially to fti and leighsww.

i been reading this great thread since last 3-4 weeks.I ould like to know more about the romance of 3 kingdoms. As of this year, GDP/USD and EU/US doesnt seem to have any correlation at all.
  • #2,586
  • May 4, 2008 11:01pm May 4, 2008 11:01pm
leigh,
welcome back...so I see that you are getting some good roi with your hedging! I like your idea of not surrendering more than the previous win... that is something to think about...

I have my 3K on the 5M, I wonder if the 1D would be also good...I will check later on...I find the 3K giving good guidance...if gb is jumping up and Us is not then maybe Us will follow...keep me awake..

This week I am away from home so I will not be fast dancing but I will be around...

Good pipping to all
Empty as water and soft as a facing wind mountain
  • #2,587
  • May 4, 2008 11:50pm May 4, 2008 11:50pm
Quoting leighsww
Hi mijamoto ...

LOL, being young has nothing to do with understanding the mathematical equations, cuz I'm old-er and it made my brain hurt, too! :



Hi BabeFX ...

Looks like you're doing great! Good job! fti would be very proud of you!
Hi leighsww,

Good to see you back.

I find the methods of fti more profitable than long term positon trading ( at this moment in time).

In my last post I failed to mention that in helping me decide when to enter I use your 48 & fti's 12 ma.

Regards,

BabeFX.
  • #2,588
  • Edited 6:53am May 5, 2008 4:47am | Edited 6:53am
Quoting jest1081
but im gonna need to see that 80th trade hit the mark. Heheh.
It's actually the 85th trade (since I'm using Hypothetical #2) :

Anyway, fair enough. I will let you know when I reach the goal (either the 85th trade or $10,000 Account Value, whichever comes first ).

Quoting aud
fti was clear with his views on hedging.
Actually, fti is not totally against hedging, as he does/has done a certain amount of hedging himself. See his following posts:

Post #950
Post #184
Post #993

In some instances, he might not be hedging within the forex market, but he uses a hedging method, nonetheless.

In the posts that Zoran linked (Posts #2561 & #2562) regarding merlin's "hedging" thread, fsiltd interpreted fti's post correctly in his Post #153, in my opinion. fti was mainly upset because he views it as Brokers using the hedging feature to make money off customers.

Here's a snippet from one of my logs as to why he was so upset about the Broker thingy (this time I've left in my part of the convo, so it at least sounds more cohesive, lol):

Quoting fti
[22:45] fti: now they sq me
[22:45] lww: sq?
[22:45] fti: oh screwed
[22:45] lww: lol
[22:45] lww: well, that's why I asked why you exit before clear sign, lol
[22:46] fti: no
[22:46] fti: thats ok
[22:46] fti: but my blotter shows
[22:47] fti: i have short 1 open 1.4835 and 1 long open 1.4799
[22:47] lww: oh, you can hedge?
[22:47] lww: my platform, I can't hedge
[22:47] fti: what?
[22:48] fti: I don't want hedge , I should be Squared
[22:48] lww: you said you have 1 short and 1 long position
[22:48] fti: yes
[22:48] lww: I don't understand, I thought that was hedging, lol
[22:48] fti: now both yoyo's need margins
[22:48] fti: so I have to get them out
[22:49] fti: in order to do that I have to hit both sides bid and offer and give away 4 pips
[22:49] lww: lol, you lost me, sorry
[22:50] fti: i got log right
[22:50] lww: yes
[22:50] fti: try again
[22:50] fti: I got 1 long 1 short right?
[22:51] lww: I thought you exited scout?
[22:51] lww: I thought scout was the last position left
[22:51] fti: yeah he's out
[22:51] fti: I have no exposure
[22:51] lww: what do you mean?
[22:52] fti: but these chaps sq me with 1 long and 1 short position due to ticket not marked liquidate,
[22:52] lww: ah
[22:52] fti: so became open now
[22:53] lww: you are referring to NF and your blotter
[22:53] lww: no wonder I was confused, lol
[22:53] fti: so now I gotta close out the open positions
[22:54] fti: gonna cost me 4 pips if I hit the bid and offer
As you can see from the above chat log, when he tried to close out Scout, instead he ended up with a hedged position. This is what upset him about the whole "hedge" thingy on the same currency pair (which was what merlin's thread was originally about).

Here's fti's other posts where his gripe is with the Brokers regarding hedging:

Post #1705 (see last paragraph)
Post #1037

BUT anyway, I will drop mention of my hedging method mumbo-jumbo from here on (*ahem* I may still continue to test it on my own if I can conduct my trades with a better commission feasibility (probably by conducting attacks on the pair in the GREEN before rescuing the pair in the RED and possibly timing it better so that the rescues can grab more profit than just B/E), but I won't discuss it any further here , and give you guys the courtesy of focusing discussion on what you want to focus on, which is fti's original method.

Quoting luSan
I like your idea of not surrendering more than the previous win... that is something to think about...
But, that doesn't mean we surrender too fast, either, now.

If you find yourself having too many losing trades, keep in mind that if you are in the direction of the longer-term trend (whichever that may be for you, since you're trading different/faster than some of us), don't be too fast to surrender so easily. If you have put in level attacks, sometimes you might consider lightening the load first instead of surrendering all troops completely. That way even if you have to sacrifice some troops at the moment, you have a chance to come back to save them (make back the loss) when the PA continues in your direction.

However, it may or may not work for you, since you have strict time constraints, thus you might not have the time to wait out a longer rescue mission.

But anyway, here's a snippet from my chat logs where fti suggests this during one of my tutoring sessions ...

Quoting fti
[00:19] fti: no sign of bull yet
[00:19] fti: but testing 45
[00:21] fti: actually mkts still at the same level
[00:22] fti: just nearer offer level, thats all
[00:22] fti: testing 45
[00:22] fti: if mkt was bull,
[00:22] fti: no chance to even mention
[00:23] fti: remember the 1st trade?
[00:23] fti: in split second saw 30
[00:24] fti: wait
[00:24] fti: wait
[00:26] fti: lets see if this up take is real first
[00:28] fti: because its not bullish
[00:28] fti: but our position is dis advantaged
[00:31] fti: once the sign is bad then we may have to bite the bullet
[00:31] fti: but the sigs of the bull is not there we fight
[00:35] fti: It doesn't look like its gonna run away
[00:35] fti: we must now consider lightening the load
[00:36] fti: I'll try to determine where is a good point to take level 3 out first
[00:39] fti: you got 3 right
[00:39] fti: take 1 out
[00:46] fti: we should be able to see 35 retested
[00:46] fti: the problem is the mkts letargic
[00:46] fti: with sporadic impluse push
[00:46] fti: so may have to wait for a bit
[00:47] fti: when it comes back to 45
[00:48] fti: we would be able to tell it it has momentum for 35
[00:51] fti: the last 3 bars suggest that they are waiting for something
[00:53] fti: but momentum is not building up
[00:57] fti: momentum too slow
[01:04] fti: there the momentum loss again
[01:04] fti: so the down swing is gonna take some time to build up
[01:05] fti: which is not so advantages for us
[01:13] fti: so we must relax and watch them fight
[01:14] fti: then lets make some pips to make the suffering worthwhile
[01:14] fti: going to 45 soon
[01:15] fti: but the down swing is coming well
[01:16] fti: that 45
[01:17] fti: again
[01:32] fti: ok this should be the last up test
[01:34] fti: what was the low you saw on the 45 test a mom ago?
[01:36] fti: the swing down to 45
[01:36] fti: here reads 41
[01:38] fti: this must pick up momentum downwards for us to get out of the woods
[01:44] fti: this mkts letargic
Sometimes, total surrender is necessary, but I'm just saying don't be too quick to do so all the time (as I'm sensing this may be the case for you after your tidal wave incident, because you were doing so well with your high percentage of winning trades previous to that)
  • #2,589
  • May 7, 2008 8:04am May 7, 2008 8:04am
Quoting BabeFX
Hi leighsww,

Good to see you back.

I find the methods of fti more profitable than long term positon trading ( at this moment in time).

In my last post I failed to mention that in helping me decide when to enter I use your 48 & fti's 12 ma.

Regards,

BabeFX.
Seeing that the 48 and 12 sma indicators are mentioned, can someone go over the use of them in more detail? I don't seem to recall much mention of this by fti or whether he explained how he used them (or how they should be used). I have seen it used as support and resistance but would like some detail if anyone has it.
  • #2,590
  • May 7, 2008 3:20pm May 7, 2008 3:20pm
Zoran ...

Here's the post where he answered what that was after you asked about it --> Post #1266

Here's the post where he explains how to use the 12sma (the "hourly benchmark") --> Post #1472

Read carefully that post, because he mentions that it is NOT used as a "trigger".

Here's what he says about using it as a trigger:

Quoting fti
[19:38] fti: never read the sma like everyone else , there all wrong
They are NOT used on the higher timeframes. Those charts are totally naked.
  • #2,591
  • May 7, 2008 4:26pm May 7, 2008 4:26pm
Quoting leighsww
Zoran ...

Here's the post where he answered what that was after you asked about it --> Post #1266

Here's the post where he explains how to use the 12sma (the "hourly benchmark") --> Post #1472

Read carefully that post, because he mentions that it is NOT used as a "trigger".

Here's what he says about using it as a trigger:



They are NOT used on the higher timeframes. Those charts are totally naked.
Amazing... I have missed this 12 sma on the 5M!!!
Thanks for the reminder...I will check it out tonight..
Empty as water and soft as a facing wind mountain
  • #2,592
  • May 7, 2008 5:20pm May 7, 2008 5:20pm
Thanks Leigh, I missed that post on the 12sma "hourly benchmark" but can I assume that the 48sma is treated in the same way? That it can also be treated as a potential resting place (and not a trigger). Action speaks louder than MAs.

I will have to re-read this thread at some point and pick up on the lost jewels but getting through it will take some time. I'm just reading "The Kybalion" now - almost finished.

I think we should also discuss fti's live trade at some point. I know he deleted it but I don't see why we shouldn't go over it here, right?
  • #2,593
  • Edited 8:36pm May 7, 2008 8:23pm | Edited 8:36pm
I've been using the 48 sma And the 12 sma since they where mentioned and I find them to be quite similair. I'm not quite sure who it was that said " it's like the center of gravity" ,but thats how I find them to work. You can watch the price tear away from these sma but they always return within a short period. I've been looking at any possible coralation between the 7 bars and the price action on the tear aways.

48 sma = 15 min chart 12sma = 5min chart

I just re read those post from fti that leigh put up and that is good stuff (fti's explanations usually short, but never simple)
  • #2,594
  • May 7, 2008 9:35pm May 7, 2008 9:35pm
Quoting luSan
Amazing... I have missed this 12 sma on the 5M!!!
Thanks for the reminder...I will check it out tonight..
Yes i believe its used to measure vol.
  • #2,595
  • May 7, 2008 9:40pm May 7, 2008 9:40pm
I have found that the pattern will never go past 7 bars on the 5 min chart. A example is you if get 7 bull bars in a row theres always at least one bear bar reverse. also the average is about 3 bars then resverse what ever way it is trending.

I trade G/y so i havent really checked the other pairs. Its probly not what fti means but its just some thing i saw.
  • #2,596
  • May 8, 2008 4:28am May 8, 2008 4:28am
Regarding 7 bars, I have been counting them on different timeframes and I've noticed that normally from peak to trough and trough to peak there are normally about 7 bars before some kind of retracement. It is not always 7 bars but close enough so it's a good number to use.

It would be useful to know whether fti awaited the completion of a bar before making his next move. I get the impression that he did.
  • #2,597
  • May 8, 2008 10:39am May 8, 2008 10:39am
Quoting M-H Trader
I have found that the pattern will never go past 7 bars on the 5 min chart. A example is you if get 7 bull bars in a row theres always at least one bear bar reverse. also the average is about 3 bars then resverse what ever way it is trending.

I trade G/y so i havent really checked the other pairs. Its probly not what fti means but its just some thing i saw.
Good insight...Yes...I noticed those quick retracements too...7 bars = 35 min...7-5M = 2-15M...this is something to think about....

How often we have it?
Empty as water and soft as a facing wind mountain
  • #2,598
  • May 9, 2008 3:01pm May 9, 2008 3:01pm
hello all, so whats time is best for dance with the market ?
is rescue mean hedge ? locking ?

regards
I Deeply Love My Virtual Life In Virtual World , RLC
  • #2,599
  • May 9, 2008 3:03pm May 9, 2008 3:03pm
Quoting notme32
hello all, so whats time is best for dance with the market ?
is rescue mean hedge ? locking ?

regards
Read the whole thread and you will gain all the info.
  • #2,600
  • May 9, 2008 3:08pm May 9, 2008 3:08pm
Quoting luSan
Good insight...Yes...I noticed those quick retracements too...7 bars = 35 min...7-5M = 2-15M...this is something to think about....

How often we have it?
Fti said 7 bars before rescue, so i think its just to make sure your on the wroung bus before starting a rescue.
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