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Technical Analysis Fallacy

  • #2,641
  • May 14, 2008 2:52am May 14, 2008 2:52am
Hi All,

BabeFX,alexfot,Northpro,seeit,Zoran,skypeters, et al
I hope all are well.
Thanks for the kind words.
It's nice to be kicking again. Got good pips today.1st day trading after a long spell.
There are some info about the market structure development that I think is important for traders, only that it may attaract unwelcome attention that I have not given it out. Let me see how I can do that without rocking the boat(market).

There's also some wiping for some of you , to get you back to basics. It be forthcoming as we troddle along.

regards.
  • #2,642
  • May 14, 2008 3:03am May 14, 2008 3:03am

Great to see you back fti!!!!!!!!. Hope all is well.

trading naked.......
  • #2,643
  • May 14, 2008 3:31am May 14, 2008 3:31am
Fti,
Glad to see you back. Hope all is well.

Time to put things back in order as this thread is starting to turn your MO into something else....almost becoming a fallacy itself.
  • #2,644
  • Edited 3:51am May 14, 2008 3:32am | Edited 3:51am
Hi All,
@ Lusan

Hey friend, the train didn't came to hit you.
You actually chosed to test if you were invincible.LOL.
In fact, from what you are saying, you ran into the train, not the other way around.
Better be watchful of that scorpion inside, huh.

This can happen, sometimes, normally when we become bored and complacent as we become too profitable.The recklessness for change, was probably to break monotomy.
Nevermind , remember the lesson, otherwise it will come to thrill you again.

Another issue , is that, many dealers tend to get more rigid and hard in the arteries in their MO over time. This is because of boredom and overconfidence. So do watch out for that as well.
The reality is, this will happen subtlely, and creeps into your MO unnoticed.
It is nice to have someone do a reality check, once awhile.

Try not to be so rigid in your "surrender" conditions.
What you can do (if this is important issue to you) is to listen to your own conviction, when situations become too uncomfortable, Listen to your instincts.
and mark it relative to your normal daily P&L over time as I mentioned before.
A good benchmark would be 2X your average norm P&L.
There are some gurus that benchmark it to 2 SD (standard deviations) of charted performance
(if you are mathematically apped.) Remember that you are not a BANK.
When the coping with steadyness becomes a problem, you have no choice but to cut it loose and bite the bullet and take the pain.

I personally prefer to peg to market dance to determine my response instead.
Tip is to watch out for impulse volitility.
When the volitility maintains or increases when direction of the thrust is changed,
then rescue is red flaged and must be attempted with caution.
The probability of a trend change comes into radar. When thishappens readjust your MM skew. Formulate spirals within spirals. In this case skew-in.

Whereas , if the volatility maintains or decreases, and the impulse is still intact, then,
aggressive rescue has stronger chances to succeed.
Rigidity in ability to risk should only be conditionally to financial inability or
when such is beyond the capacity of mindset to cope.

However one is always free to decide
which frame of mind is reasonable and workable by your own tolerance factor.
There is no rules in stone , as each technique has is ownstrengths and weakness,
what I suggested is basically "best practice" based on personal experience.

I did noticed that there was some spliting of hairs on this issue ,
maybe some may like to bring their outlook to the table for some deliberation.
The ball i in your court!

regards

@piphitman. chiang, sitoca,
all is as well as can be. Thanks for your concern, friends.
I hope you are trading well.

PS for thos in the market , today is going to be a difficult day,
the USD is testing uninhabitable grounds, be nimble, and wind down risk.
if you can. Just my view.
  • #2,645
  • May 14, 2008 3:46am May 14, 2008 3:46am
Hi fti

So glad to see that you are back again. We missed you enormously. Please take good care of yourself.
Hope isn't a viable investment vehicle.
  • #2,646
  • May 14, 2008 3:59am May 14, 2008 3:59am
Hi Dutchangel,
Glad to be kicking again, Hope you're dancing well.

regards
  • #2,647
  • May 14, 2008 4:35am May 14, 2008 4:35am
Quoting fti
PS for thos in the market , today is going to be a difficult day,
the USD is testing uninhabitable grounds, be nimble, and wind down risk.
if you can. Just my view.

Hi fti,

Great to see u back! :-)

just wondering, what is it that u see that cues u in for such a day when market will be difficult? for me, the charts looks relatively normal, but then again, having said that, I have a feeling also(from the market actions/movements), that the markets not really sure where it wants to go atm... volatile and hovering around the same place still.

anyway, looking forward to party again... get out the whips...hehe. :-)

cheers,
  • #2,648
  • May 14, 2008 4:47am May 14, 2008 4:47am
Hi FTI,

as you have read, I am one of the few who had a train wreck too. lol. But all is well now. I still apply the method albeit with smaller risk. I also have decided to reduce my skews and thus far I hadn't had a loss from then.

I would also like to consult your personal opinion on using ticks. I have realised that tick (i use 200) has a tendency to show better technical price forms and movements, this is of course just my own opinion, lol the never ending search, yes but im serious...heeeheee. I can load some charts if you'd like but that will have to be a little later coz im at work right now.

My approach has been geared towards timing my entries, and if im caught in the wrong side, i'll allow the market to stretch and then conduct a quick rescue, once that is settled, i'll re-assess if my position should be maintained or abandoned. Yeap back to basics and that has been most helpful to me in my trading thus far. Thanks!

regards
jest
  • #2,649
  • Edited 10:39am May 14, 2008 5:49am | Edited 10:39am
Hi jest1081,

My general impression from reading the responses in this thread was that you and sitoca, Lusan and to a certain xtent Dutchangel, shreem and a many others, and of course Leighsww and coming on stream Zoran just to nam a few, are quite on the ball, in terms of the concept embeded in my presentation here.
That a few of you got caught in the wreak, prompts me that the sudden surge of volitility in the negative was probably a shadowless knife that swing into form from the blues to entrap the trend ride. It would be interesting if you could post the section of the chart to see if I can make any sense of the analytics then, although it is from hindsight.

I am glad that you held true and have made adjustments to regain stance.

regards.

PS: One example of these shadowless knifes in Forex is CB activity at odd times. These are tools in their strategy tool boxes. I had ever intervene markets for CBs during Far East Lunch times. If You were a trader leaving exposures during lunch time and met acivities of this nature, It can give you a whole new perspective, in considering when it's safe not to babysit.
  • #2,650
  • Edited 6:30am May 14, 2008 6:11am | Edited 6:30am
Hi fti, glad to see you are back. LuSan and jest were not the only ones in trouble during your temporary absence. I blew my first account, too. But don't worry. It was not your fault . I set up a $250 mini account to try the InterbankFX contest and experienced to full extent how much damage 200:1 leverage is able to do to an account. I decided to risk "high" (lose 250 or gain 3000 plus profits made). Blew the account in a few days. Should have demoed the madness first but I was on vacation and had to take the chance. Will demo with 10:1, maybe 30:1 at most for the future. With good dancing maybe I take another try someday. Think I failed thanks to poor listening to the market music and excessive leverage. Going from 30% profit in a few minutes to a margin call in the next 2 minutes is simply insane.
  • #2,651
  • May 14, 2008 8:00am May 14, 2008 8:00am
Quoting Jairo
Hi fti, glad to see you are back. LuSan and jest were not the only ones in trouble during your temporary absence. I blew my first account, too. But don't worry. It was not your fault . I set up a $250 mini account to try the InterbankFX contest and experienced to full extent how much damage 200:1 leverage is able to do to an account. I decided to risk "high" (lose 250 or gain 3000 plus profits made). Blew the account in a few days. Should have demoed the madness first but I was on vacation and had to take the chance. Will demo with 10:1, maybe 30:1 at most for the future. With good dancing maybe I take another try someday. Think I failed thanks to poor listening to the market music and excessive leverage. Going from 30% profit in a few minutes to a margin call in the next 2 minutes is simply insane.
ah, the greed..
  • #2,652
  • May 14, 2008 9:50am May 14, 2008 9:50am
Hi All,

@ gfsr

Basically, like you ,mentioned, "from market actions/movement"
coupled with some battlefield experience and pattern recognition.

party well.

@ Jairo,
Oh, you must watch the mindset and ambition.
My feeling is with piccolo, you must control that greed.
I believe that you must have your personal reasons, nevertheless,the greed factor was too strong.
From hindsight you may recognise it, but in trading we have to suppress it in foresight. we call that prudence and discipline.

It was small money, but I guess the lesson is priceless.
Do better next time, my friend.

ADD: You touched on a very important point about over-gearing. That's one big killer of many good traders. The secondary impact it has on traders using stop loss orders, is a killer concoction.


regards
  • #2,653
  • Edited 10:45am May 14, 2008 10:19am | Edited 10:45am
Quoting jest1081
Hi FTI,

as you have read, I am one of the few who had a train wreck too. lol. But all is well now. I still apply the method albeit with smaller risk. I also have decided to reduce my skews and thus far I hadn't had a loss from then.

I would also like to consult your personal opinion on using ticks. I have realised that tick (i use 200) has a tendency to show better technical price forms and movements, this is of course just my own opinion, lol the never ending search, yes but im serious...heeeheee. I can load some charts if you'd like but that will have to be a little later coz im at work right now.

My approach has been geared towards timing my entries, and if im caught in the wrong side, i'll allow the market to stretch and then conduct a quick rescue, once that is settled, i'll re-assess if my position should be maintained or abandoned. Yeap back to basics and that has been most helpful to me in my trading thus far. Thanks!

regards
jest
Hi jest,
almost missed this one.
When you mentioned tics, I presume, you are talking about futures trading.
Well, foundationally, my feeling is that the contract sizes there are a little too large for smaller cap traders, more inline for corporate risk management.
It needs a bigger cap to manage the skews, as the snowballing is from a larger base with rounding off characteristics. If you were well funded, ratio wise, I do not see much problem. Try not to stay too rigid with absolute tics. As you become more experienced you will realise the power of flexibility. Moreover futures FX contracts trade reciprocal quotes and therefore a tic is much larger than the pip, theredore increasing quote spread ranges, not withstanding arbitrage overruns.

regards

PS: Futures exchanges realising this structural weakness , are begining to introduce mini contracts. As these are not across the board yet. I guess it will take some time for it becoming widely implimented. Nevertheless, the spot FX's flexibility is hard to curcumvent.
  • #2,654
  • Edited 11:17am May 14, 2008 11:06am | Edited 11:17am
Hi FTI,

i think you are mistaken. You see, your teachings have suggested that we use the 5 min timeframe. Well i trade almost exclusively with it. But i have been looking at price tics too. 1tick is equivalent to 1trade. What i do is to collate 200ticks(200trades) to form 1 candle.

Personally, i have found ticks to be closer to Price action and also keeps you away from 'dead market' candles. At times the ticks will move really fast during volatile markets, they may create a candle very 60-120 seconds, and when there are not much participants they may take longer than 5 min to form a candle. but the waves they form are very discernable, i must add, theres less noise in it too.

Anyway, thats some valuable info you supplied with regards to miny fx futures. hmmmmmmm

anyway heres a pic of a 200tick vs a 5min chart
Attached Image (click to enlarge)
Click to Enlarge Name: usdjpy.jpg Size: 82 KB
  • #2,655
  • May 14, 2008 11:59am May 14, 2008 11:59am
I hope you people are doing good in markets and i am pleased to see FTI back and i learned today a new life lesson. I bought myself a cycling shoes and i falled today 2 times and it really hurts. But i kept in my mind if so many people can drive cycle with shoes i can also do that. Later i succed and drove around a hour without any problems. The main point of event is: we must be determined to succed otherwise we will fall and that will hurts us! regards
  • #2,656
  • Edited 7:23pm May 14, 2008 7:01pm | Edited 7:23pm
Quoting fti
Hi All,

Sorry , that I have been away. But it was out of my hands.
I see that much is developing, it is much within that should be expected, as the skills develop. I however I like to caution that you must ,"return to basics" if you find that the forward movement, does not contribute to productivity.
I believe many here have a good head on their shou;der and will be able to navigate your development par excellence, as you progress.

I also realise that some of yo are begining to uncover some "hiddens" as you reread the thread. Although, I will never be giving you my MO in totality, I shall however guide you in your educatonal reaearch and quest when able. Mostly all had been given, just that it may not be obvious.
So if you do have questions, do ask. Apart from myself , I believe all here probably have their own stance to the issues, apart from ego trip reponses, I believe all can benefit from honest and polite debate.

As I shall be catching up on the reading the thread, I shall be replying to important questions, when I am able to.

regards

For those who may feel that this is stressful or too difficult.
Well all I can say is that most thngs in life seems to be very difficult , but for those who had given good thoughs and reasearch , then it becomes very simple and second nature.
It is alway most difficult when on the learning process, as many will have to reset and educate themselves new mindsets. Moreover some of you are going thru thought processes that took me some years to arrive at.
So in effects you are very intelligent, to be able to compress all the years of knowledge.
And for those who think that this is dangerous, I can only direct you to the risk disclosure staements that you sign as you undertake thi s endevour.
Good to see fti up on the board.
Time and unforseen occurance befall us all, I hope that everything is manageable for you in your recovery and I wish you the best.
  • #2,657
  • May 14, 2008 10:04pm May 14, 2008 10:04pm
Sorry this is a bit off topic but, how did trading all start for you? Im just finishing off high school and i really really want to do this for a living. Any advice would be greatly appreciated.

Thanks
  • #2,658
  • May 15, 2008 3:06am May 15, 2008 3:06am
Quoting M-H Trader
Sorry this is a bit off topic but, how did trading all start for you? Im just finishing off high school and i really really want to do this for a living. Any advice would be greatly appreciated.

Thanks
Hey MH,
I'm a newbie in the forex market as well. I am still just demo trading.
There's good news and bad news for you.
The bad news is that very few people end up doing what they thought they would be doing when they finished high school.
The good news is that I and probably everyone else is envious of you in that you can start studying the forex markets at your age.
I think that if you are diligent and truely study and demo trade and learn all that you can here, you will be teaching us someday.
The other good news is that we are probably all cheering for you.
-Mike
  • #2,659
  • May 15, 2008 3:33am May 15, 2008 3:33am
Quoting jest1081
Hi FTI,

i think you are mistaken. You see, your teachings have suggested that we use the 5 min timeframe. Well i trade almost exclusively with it. But i have been looking at price tics too. 1tick is equivalent to 1trade. What i do is to collate 200ticks(200trades) to form 1 candle.

Personally, i have found ticks to be closer to Price action and also keeps you away from 'dead market' candles. At times the ticks will move really fast during volatile markets, they may create a candle very 60-120 seconds, and when there are not much participants they may take longer than 5 min to form a candle. but the waves they form are very discernable, i must add, theres less noise in it too.

Anyway, thats some valuable info you supplied with regards to miny fx futures. hmmmmmmm

anyway heres a pic of a 200tick vs a 5min chart
I lost you here. Tick in forex is 1 pip move and would not correspond to 1 or more trades.. so this is some sort of volatility approach to candle drawing.. never had time to study it even though i have seen it around and must say that ticks differ from broker to broker..
  • #2,660
  • Edited 9:00am May 15, 2008 4:25am | Edited 9:00am
Quoting piccolo
I lost you here. Tick in forex is 1 pip move and would not correspond to 1 or more trades.. so this is some sort of volatility approach to candle drawing.. never had time to study it even though i have seen it around and must say that ticks differ from broker to broker..
yes they differ but i have compared...its not that much. Since i trade with efx, and have their data fed thru my trading platform, im getting real ticks.

top dog trading has covered some things abt ticks but its futures related.
http://www.topdogtrading.com/?p=27
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