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Technical Analysis Fallacy

  • #2,781
  • May 21, 2008 11:22pm May 21, 2008 11:22pm
fti,

just wondering, im quite sure the circle of floor traders in Simex is not so big in the 90s.

have you ever been in contact with Leeson? Spoke to him or even knew him personally? You gotta admit, he's quite something, one man who sunk Barings.
  • #2,782
  • May 22, 2008 1:30am May 22, 2008 1:30am
Anyone recommend a good book that analyzes the mindset of some of the most successful traders of all time? I know that a lot of them had completely different value systems, and yet were all still very successful. Sometimes I feel that we have no control in this gigantic market, and that everything is random.....
  • #2,783
  • May 22, 2008 1:54am May 22, 2008 1:54am
Quoting kluster1999
Anyone recommend a good book that analyzes the mindset of some of the most successful traders of all time? I know that a lot of them had completely different value systems, and yet were all still very successful. Sometimes I feel that we have no control in this gigantic market, and that everything is random.....
yes, try "Market Wizards: Interviews with Top Traders" by Jack D. Schwager
  • #2,784
  • May 22, 2008 1:58am May 22, 2008 1:58am
Quoting kluster1999
Anyone recommend a good book that analyzes the mindset of some of the most successful traders of all time? I know that a lot of them had completely different value systems, and yet were all still very successful. Sometimes I feel that we have no control in this gigantic market, and that everything is random.....
market wizard is a good one..
trend following -michael covel
  • #2,785
  • May 22, 2008 2:44am May 22, 2008 2:44am
Quoting fti
...
In our Open market ops for CBs ,the active interventions normally is in the scope of about 15 to 25 minutes. By 30 minutes we already have to call up Reuters News and API to inform them of the CBs presence in mkts.

From these observations I came to conclude that 5 minutes was a good gauge of big players attention span and if the tenure was more than 30 minutes then , the sparring party was probably the BIG BIGs.

No real rocket science thingy, just observations.
...
Hello fti,

does this in any way explain the "volatility run of max 7 bars average 3" thingy from one of your earlier post, http://www.forexfactory.com/showpost...postcount=1423 ; that we were all trying to work out. It was kind of derive from one of your many acute observations.
yes, but it was completely way off? no, but it was completely way off? ;-)

love your teaching style, I'm getting these new valuable distinctions in trading as you correct us, from many of your story-nuggets. gold.

with teaching to new trainee at Bank's Treasury, how did u handle new trainee that had bad days? and in low volatility days(limited market action)? and fti, u mentioned that attrition rate for traders in general is high.. what do u need to see in someone or what do they have to develop(show) that they got, to be accounted for further training and straighting up to become better traders? apologies for all these general questions.. just in a curious/questionary/(nosy?) mood today... feel free to bypass...

anyway, cheers...
  • #2,786
  • May 22, 2008 5:20am May 22, 2008 5:20am
Quoting DutchAngel
A week ago I would have answered "no" to this question, but my 10 year old daughter did something this week that shocked me. She too displayed outstanding forward planning, extreme secrecy, powerful mindset and brilliant execution. I know the feeling. My teenage daughter holds the opinion that I grew up in the pre historic period.
Hi Dutchangel,

Does this explain the phenomena.
http://www.thirdage.com/news/article...080520-01.html

regards
  • #2,787
  • May 22, 2008 5:54am May 22, 2008 5:54am
Quoting fti
Hi Dutchangel,

Does this explain the phenomena.
http://www.thirdage.com/news/article...080520-01.html

regards
Yes, its pretty close to that. Only other difference is that i was born and educated in africa, so dutch is my second language, with a lovely South African accent, but this tends to re inforce the fact the I am from the "oertijd" (dark ages). Kids, you gotta love them.

My trade is improving. Only 350 pips down now, and have been growing equity every single day so far without fail. Sticking to my plan.
Hope isn't a viable investment vehicle.
  • #2,788
  • May 22, 2008 8:35am May 22, 2008 8:35am
So, could anyone explain this charts?
Notice the out of sync
Attached Image (click to enlarge)
Click to Enlarge Name: 3 kings out of sync.jpg Size: 73 KB
Empty as water and soft as a facing wind mountain
  • #2,789
  • May 22, 2008 8:39am May 22, 2008 8:39am
Quoting luSan
So, could anyone explain this charts?
Notice the out of sync
yes, thats why crosses move too
  • #2,790
  • May 22, 2008 9:11am May 22, 2008 9:11am
Quoting fti
Hi ALL,
.......
@ textor,
well beside expeience in reading market form, attention to less of multiple indicators and the same that confuses you will certainly help in your timing.

Ponder this, I hope its appropriate analogy.

If you sat at the table having dinner with your family. And a pretty young thing comes along and invites you to fun on the dance floor, what will happen if you went consulting your dad , mom, brothers, sisters before taking action?? Yes, you are likely gonna lose the window of opportunity. :nerd:

on the same token, (the reliability of the form reads)

If there were 7 pretty girls in a huddle, whats the chance that you may get enough hints from the bits and pieces that you may get from them individually, to be able to figure out where they are going??

Think about it.
.......
Thank you for the answer.

Yes, I understand the analogy.
I feel comfortable without indicators.
By the way, at the table I'm the dad of the pretty girl.... http://www.forexfactory.com/images/icons/icon10.gif

Regards,

Textor
  • #2,791
  • May 22, 2008 9:15am May 22, 2008 9:15am
Quoting spotless1212
hey textor.. u should probably read the 3rd thread.
the part where fti said
*look at the chart, ask yourself what did the market do when it was at this level historically?
*was this level significant chart wise?
and so on....
i think you should print out the instructions and try to dance!!!

hint- try doing this from 7:00 gmt.
That piece of text is very important to me. I find that I am going back to my original trading style but taking out the worthless bits and introducing fti's teachings - being the MM and dance. Since strategies are being discussed, I am currently mulling over my practice and having the strategies clear in my head for common scenarios.

At the moment, this is my strategy. I analyse the daily/4h charts to determine the trend and to mark the important points on the chart (historical levels). The 4h trend may be different to the daily so in that case I may be trading against the daily up until a historical level is reached. During that point, we tend to get some consolidation and I don't normally see an issue with dancing both ways although I tend to favour the daily trend when the extreme levels are being hit or suspected sweeps are taking place. Being nimble at this point is important but also having a rescue area in mind helps determine the risk.

In the past I would blindly enter at certain levels without feeling the pulse so the dance now improves the accuracy considerably. Previously I would enter too early or miss the entry.

I need to keep practicing and to have the main scenarios in my head and play them out as they occur. That will be the icing on the cake so practice, practice, practice.

fti, a couple of questions. I believe you use compound candle formations perhaps as some confirmation to your feeling the pulse/dance. Do you wait for a candle to complete before entering? Also, do you ever enter when you suspect a sweep is taking place?

Finally, how is reading that book coming along? Managed to finish it? I was also wondering whether you could leave some contact details with someone, maybe Leigh, in case of any future absences, so we can know your status and send our best wishes.
  • #2,792
  • May 22, 2008 9:27am May 22, 2008 9:27am
Quoting luSan
So, could anyone explain this charts?
Notice the out of sync
The eurusd and usdjpy pairs will move in the opposite direction 86% of the time and the gpdusd and eurusd move in the same direction about 91% of the time. These relationships change for a variety of reasons, the most common of which include diverging monetary policies, a certain currency pair’s sensitivity to commodity prices, as well as unique economic and political factors. I usually just tell myself that its fed interference when this happens.
Hope isn't a viable investment vehicle.
  • #2,793
  • May 22, 2008 9:45am May 22, 2008 9:45am
Quoting DutchAngel
The eurusd and usdjpy pairs will move in the opposite direction 86% of the time and the gpdusd and eurusd move in the same direction about 91% of the time. These relationships change for a variety of reasons, the most common of which include diverging monetary policies, a certain currency pair’s sensitivity to commodity prices, as well as unique economic and political factors. I usually just tell myself that its fed interference when this happens.
Thanks...I understand that way...

Maybe I did not ask the right questions...

1. Who to trade?
2. Which one to trade? Long or short
3. Where is the maximum potential risk?

I know that fti and jest has a views on this...I just watch it during my trading sessions...

by the way...I just finished the day with the allocated daily profit...I think that more cash is possible going short...but be carefull...the long trend for EUR/USD is long....even though the all the economical news say that the dollar will become strong...etc...you can make up any story...that's way I dance and I have the TV off!

Happy today pipping...I am done
Empty as water and soft as a facing wind mountain
  • #2,794
  • Edited 10:25am May 22, 2008 10:11am | Edited 10:25am
Quoting luSan
So, could anyone explain this charts?
Notice the out of sync
Hi Lusan,

The mkt is not out of sync in terms of the movement, the out of sync is in the volitility. There seems to have movement in "turn based" style. Normally the Eur move first , then the GBP follows when the Eur stalls. Did you noticed this?

From experience, this signify , lack of liquidity. So the same monies is moving from one market then to another. Under this circumstances, traders must be careful as the volitility becomes very uneven and manipulation can surface.
Noticed how the market can do sudden and fast change in directional thrust then sudden lose the same momentum as suddenly as it came. This is deep sweeps..... lack of liquidity again. So volitility increases with wild and swift swings but prices are locked in a band.

regards

There is much propaganda circulating that the Feds will change stance, the end of the year. But I think the market still have not gotten over that the Feds had effectively devalued the USD. So any USD gains will be met with much disbelieve. There seem to be invisible hands try to turn the bear USD around, evident from the daily chart reads. But the turn around seems to not find stability, as the turns are v shaped and find no follow thru. Better stay on short charts now, Term traders may be at a lost for the direction, I think most already disorientated, the posiible reason for liquidity loss.now seem mostly marketmaker liquidity.
  • #2,795
  • May 22, 2008 10:30am May 22, 2008 10:30am
Quoting DutchAngel
The eurusd and usdjpy pairs will move in the opposite direction 86% of the time and the gpdusd and eurusd move in the same direction about 91% of the time. These relationships change for a variety of reasons, the most common of which include diverging monetary policies, a certain currency pair’s sensitivity to commodity prices, as well as unique economic and political factors. I usually just tell myself that its fed interference when this happens.
Hi Dutchangel,

Good, by dealing standards . you have already recovered loss, (we benchmark to 75% of drawdown) . You are riding a recover strategy and have done well. Just keep to faith and push along. No need to rush, slow and steady. Well Done. Stay true to mindset, and don't read too much materials and opinions, just hold to your own rhythm.

regards
  • #2,796
  • May 22, 2008 10:34am May 22, 2008 10:34am
Quoting fti
Hi Lusan,

The mkt is not out of sync in terms of the movement, the out of sync is in the volitility. There seems to have movement in "turn based" style. Normally the Eur move first , then the GBP follows when the Eur stalls. Did you noticed this?

From experience, this signify , lack of liquidity. So the same monies is moving from one market then to another. Under this circumstances, traders must be careful as the volitility becomes very uneven and manipulation can surface.
Noticed how the market can do sudden and fast change in directional thrust then sudden lose the same momentum as suddenly as it came. This is deep sweeps..... lack of liquidity again. So volitility increases with wild and swift swings but prices are locked in a band.

regards
There is a econ data release which caused G/U to move up.
4:30pm GBP http://www.forexfactory.com/images/m...mpact_high.gif Retail Sales m/m
http://www.forexfactory.com/images/m...etail_star.gif -0.2%
-0.5% -0.2%

By the way, fti. How would your treat news/econ data release?

Some unexpected data move the price so violently that it makes rescue or attack difficult. Or, as you mentioned once, not trade into news announcement?

And you always says "be nimble", and no prediction. But how? When we open a position, surely we have a prediction or expectation of which direction it goes and how much it will, right? If no expectation on price move, why shall we open a position?

For nimble, we can't be so 'nimble" that we will short when we see a red 5m candle, or buy when a green 5m candle. At least we have to put up with some retracement. A little bit confused, because, we only can tell if a wave is Wave 2 or Wave 3 only after it happened and comfirmed by another wave. But if it happened and confirmed, either it is too late or more risky.

Regards.

David
  • #2,797
  • May 22, 2008 10:41am May 22, 2008 10:41am
Quoting Green_David
.......
And you always says "be nimble", and no prediction. But how? When we open a position, surely we have a prediction or expectation of which direction it goes and how much it will, right? If no expectation on price move, why shall we open a position?

For nimble, we can't be so 'nimble" that we will short when we see a red 5m candle, or buy when a green 5m candle. At least we have to put up with some retracement. A little bit confused, because, we only can tell if a wave is Wave 2 or Wave 3 only after it happened and comfirmed by another wave. But if it happened and confirmed, either it is too late or more risky.
.......

David
Oh, thanks David, you wrote my thoughts.

FTI, your comments about this will be very appreciated.

Thanks in advance.

Rgs,

Textor
  • #2,798
  • May 22, 2008 10:59am May 22, 2008 10:59am
Quoting Zoran

fti, a couple of questions. I believe you use compound candle formations perhaps as some confirmation to your feeling the pulse/dance. Do you wait for a candle to complete before entering? Also, do you ever enter when you suspect a sweep is taking place?

Finally, how is reading that book coming along? Managed to finish it? I was also wondering whether you could leave some contact details with someone, maybe Leigh, in case of any future absences, so we can know your status and send our best wishes.
Hi Zoran,
You are right.
I use compound candle reads.
I don't see why it is important whether the bar is completed or not.
If you were waiting for candle completion, then you must be reading something already and is poised for trading.
During this phase , it would probably be level 2 or 3 or 4.
If It was scout, accuracy is of no significance.
at other levels. it is multiples of scout, so you can break that up to try at differnt parts of the bar. On average, it will stilll be on the bar's range , so it doesn't matter.
If this still isn't clear, then rephrase the question and I will try again.

About the book, I would like to afore thank you for your concerns.
Like I mentioned before copd is not reversable.
However, I am reading the book.
But I have the problem that normally after a few paragraphs of his braging how suceesful he is , I tend to get sleepy and drop the book.
Then I try to give the reading another chance, and forgetting where I stopped , start from cover again, and experience the same problem.
I think I have read the first 3 chapters like 3 to 4 time already.
Some how , I will manage to finish it before the year is over.
And I will come on here to give my testimony, if I did or didn't succeed.
Thanks again, Zoran.

regards
  • #2,799
  • May 22, 2008 11:14am May 22, 2008 11:14am
Quoting fti
Hi Dutchangel,

Good, by dealing standards . you have already recovered loss, (we benchmark to 75% of drawdown) . You are riding a recover strategy and have done well. Just keep to faith and push along. No need to rush, slow and steady. Well Done. Stay true to mindset, and don't read too much materials and opinions, just hold to your own rhythm.

regards
Thank you fti

I will keep on with this plan. You right about not reading. Everyone has a different opinion, some give you hope (which i don't need) and some make me want to second guess my stance. Just do the ants work every day.
Hope isn't a viable investment vehicle.
  • #2,800
  • May 22, 2008 12:01pm May 22, 2008 12:01pm
Quoting Green_David
There is a econ data release which caused G/U to move up.
4:30pm GBP http://www.forexfactory.com/images/m...mpact_high.gif Retail Sales m/m
http://www.forexfactory.com/images/m...etail_star.gif -0.2%
-0.5% -0.2%

By the way, fti. How would your treat news/econ data release?

Hi David, textor,

We have covered this before , I do it again just for your benefits.
I do not give a dime for fig releases, If there are critical Fed releases, or the tankan, then I try to SQUARE all exposures, under worst scenarios I delta neutral banks books.
the reasons for this is because figs are for economist, not for dealers.
When these figs are released for the world's jobless fortune tellers and real economist that plans for countries's think-tanks strategist, some hedgers and speculators get trapped in markets due to their stance. And after the fig releases try to correct their stances desperately.
As the desperations are some times very strong, dealers shade the prices to try filling the customers at extremes by fast market shading.

trading into figs is gambling. For speculators, it is solely that.
The extreme fills for hedgers have no real impact to them because , the price is of no significance to them. Term hedged positions stance is.

At the end of the day , whatever the data presents should have no immediate impact to markets, as the impact take about at least 2 quarters to filter into the economies. Not withstanding that the data may already be a couple of months lagging. So real time window range is about a year at extremes.

Moreover , before the data releases,relavent administrators are already privy to the figs. So if the data was unfavourable, strategies would have been arranged to stabilise the markets for physical traders to hedge or unhedge.

For example, if the figures shows that the US eco was in depression, after the initial volitility impacting the markets , the CBs would be seen doing necessary open markets to stabalise the markets. When this happens , markets will just
U turn on the initial impulse. If you were a speculator , trying to make a quick buck for the ride, then, may the almighty have mercy on your position.

Normally after a knee jerk impulse after fig releases, the volitility frizzles out very quickly to sleepy blue mountain stance. Those trapped , stays trapped, and hedges realigns.

Some unexpected data move the price so violently that it makes rescue or attack difficult. Or, as you mentioned once, not trade into news announcement?

I don't understand, what is there to rescue or attack when you should be squared??


And you always says "be nimble", and no prediction. But how? When we open a position, surely we have a prediction or expectation of which direction it goes and how much it will, right? If no expectation on price move, why shall we open a position?

"be nimble" means to be cautious. To be cautious not to be too highly exposed when either too deep in the money or too out of money. To watch your position sizes that there is room to manouver and that contingencies may be implimentable if required. To reduce size either to accomodate for increase voli or uncertainess. Not to allow greed to take over. What do you think I meant.

I initiate buying and skew buyings on the basis of strong chart formations and sellings on weak chart formations. what does predictions have to do with the positions?

For nimble, we can't be so 'nimble" that we will short when we see a red 5m candle, or buy when a green 5m candle. At least we have to put up with some retracement. A little bit confused, because, we only can tell if a wave is Wave 2 or Wave 3 only after it happened and comfirmed by another wave. But if it happened and confirmed, either it is too late or more risky.

Again, what has whether it is wave 2 or 3 gotta do with the positions.
At best, if it was wave 2, you would have pocketed good profits, and probably have a base position as well that is riding good profits.For wave 3 , you would be already be in super profits.


Regards.

David

I think you have mistaken my MO with others.

regards
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