Technical Analysis Fallacy

Quoting Green_David

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I did check the 1 hour reference. I know it was very dangerous. In fact, I reduced some rescue positions with small profits befor I went to sleep. And the averaged price increased from 9780 to 9810.

The next day, due to weaker than expected data, G/U did go down as low as 9803. But it was a stop loss spike, it did not go down any more. I reduced some positions, but again not enough. And then G/U went up almost 80 pips higher right after I closed some rescue positions.

By that time the book loss was still in control, ie. less than 10%.

The disaster is mistake No. 4, because I was trapped another 100 pips already, and I openned more positions to average down, but this time I lost alert and clear mind after long hours of my work. The 9960 was not resistence any more.

Regards.

David

P.S. The same case with E/U and G/U now. To long on E/U? It is right, I don't know, I am squared and still enjoying my R&R, thats market bias only, I only know how to follow market, I have no crystal ball.Markets are still in coils.since it is definately following the trend. But it could also be possible that maybe chasing the market and longed at the top, if we see the long tail of G/U and U/J.

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Quoting rapaduski1

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Hi all,

David, I just read your last post and would say that the actual candle after your circled candle is an engulfing candle that would scare me to death( correct,trusting analysis on one candle and pridictive mindset dangerous, must see continuity and compounded patterns. you may trade position but adjustment to upcoming patterns critical due to candle traps. This is weakness of many rigid analysts) especially given that the trade is against the 4H trend. Perhaps in the future, when the imaginary candles do not develop, you are just better off killing the counter-trend trade and riding the trend up, which seems clear as the day developed. In know, paper trading is always 20/20.

In addition, you seem to use the shooting star candle as the main reason for assuming a move down. I am pretty conservative in my trading, so call me carzy for saying this, but you may want to establish a trading rule that says you must have at least 5 reasons to enter a trade (that would be five facts/observations rather that assumptions) before entering a trade.(this may become rigidity perspective, careful there,)

Rap

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Quoting Green_David

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Mistake No. 2: Since I missed the best oppotunity to long, on day 26, I started to short, assuming G/U will have at least a pullback and bearing mind of avoiding chasing the market. Look at hourly chart, it is a shooting star(GMT +6), isn't it? I made a mistake from the beginning, chosing the wrong trading direction.

I believe that this is where you were really wrong. (1) "Assuming"....we do not assume because this is making a prediction. You assume a future direction while the market was going on the oppositive one. (2) "Shooting star"... Giving too much credibililty to candlepatterns. Check Bulkowski website for his statistical analysis showing that they fail so often that make them almost worthless. Again they are predictive and blind us from the PA dance.

Confused and troubled: David

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Quoting luSan

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David, I have been there and I know your agony.

You fought the trend and that is not good.

The basic problem is that we get use of fighting the trend with the believe that it will always revert and that is not true at all; there will be case in which we find so far away that MC could happens or we cannot take the bleeding anymore. In my case I lost 1.5% only and that was enough to put into an extensive review of my approach. What is the value of a high success rate when all our ant work could be destroyed by an careless fight against the trend? None.

Do you remember when I was saying that we need to decide when to pull the plug, when to say 'Ok, I am wrong." That limit is different for each of us. I think that we need to set that limit BEFORE we begin the dance, because the dance itself will blind us. The dance will not blind you, it is you that is blinded from the dance. By our own ego. As clearly is the case for David.He was so focused on that he knew her moves watch her ams and didin't see her legs kicking to his groins.And even when they did He didn't felt that it had hit critically and still focus at the arms because he felt that he couldn't be wrong. That's egor.Yes, we will not win as often as before, but we will preserve our capital to fight some other day.

Because of my previous problems similar to you I put together my '10 commandments". Your trade violated 3 of them: never trade against 5M trend, never stay on a broken trend, never trade without a relaxed and clear mind."

I looked to your chart and marked the trend and my 'drop dead line.'

What to do? That is easy: (1) Review your basics: you were rescuing against the trend, rescue is done only for timing, He knows this one, he even wrote a posting about it some time ago, I am too lazy to try to find the posting though.(2) Review your size and dance, (3) Rebuilt your confidence.

Let us not forget that we are learning his strategy. fti told us that it would take about 2 years to get some competence, and he also said that large size and aggresive trading are premature, that we need to go slow and easy. I believe him very much and I do microsizes...I see myself I am NOT a trader but a student of his strategy.

I hope this help.

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Quoting rapaduski1

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In addition, you seem to use the shooting star candle as the main reason for assuming a move down. I am pretty conservative in my trading, so call me carzy for saying this, but you may want to establish a trading rule that says you must have at least 5 reasons to enter a trade (that would be five facts/observations rather that assumptions) before entering a trade.

Rap

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Quoting luSan

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But then you might be late.

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Quoting rapaduski1

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I am not sure what you mean. Late for what? I am just saying you need some guideposts before you make a trade. For example (and the examples are endless):
1. Am I entering with the 4H/Day trend?
2. Am I entering with the 60M or 30M trend?
3. Am I entering after a new support or resistance has developed in direction of trends?
4. Do I "sense" momentum entering the market?
5 If this goes against me, can I live with a pain threshold as indicated on an upper compression chart?

My only point is, if I am going to enter a trade, it act of entering the trade is based on facts and observations of the market and the dance, not wishful thinking. Hoping before a trade is worse than hoping after entering, I think.

This is an interesting discussion, so I hope we can keep it going for a bit.

Rap

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Quoting rapaduski1

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I am not sure what you mean. Late for what? I am just saying you need some guideposts before you make a trade. For example (and the examples are endless):
1. Am I entering with the 4H/Day trend?
2. Am I entering with the 60M or 30M trend?
3. Am I entering after a new support or resistance has developed in direction of trends?
4. Do I "sense" momentum entering the market?
5 If this goes against me, can I live with a pain threshold as indicated on an upper compression chart?

My only point is, if I am going to enter a trade, it act of entering the trade is based on facts and observations of the market and the dance, not wishful thinking. Hoping before a trade is worse than hoping after entering, I think.

This is an interesting discussion, so I hope we can keep it going for a bit.

Rap

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Quoting luSan

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I misunderstood you. I agree, but watch out on (3), S/R fail a lot on the 5M.
and...we do not trade the 1H or 30M...we trade the 5M, right?...the others are for general bias.

Regards,

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Quoting fti

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Hi Rap,

I understand your comments ,they are clear.
But 4 hrs trend, half hr trend, I never had consideration, in that aspects.

What Lusan mentioned, is correct, with rigid patterns analysis, you shall utilmate be impaired by them , likely that you will be late or disadvantaged in your positioning.

regards

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Quoting rapaduski1

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Hi fti,
Agree about being late sometimes and it is a disadvantage (a frustration, too). I tend to look for the center cut of the melon and sometimes the whole darn thing passes me by, but I find that there are many opportunities each week. You are absolutely right, as per my own experience (I need to switch to decaf coffee, too).

One thought about this discussion that is going on now. We are jumping between MM and trade execution in our conversations. It seems, however, that a discussion about MM in the context of, what all agree on, was a bad trade may not be in our best interest. I think that a trade against the trend is a mistake, and probably should be killed right away. An attempt to save a bad trade against the trend is a MC waiting to happen, as in this case. Fti, is it appropriate to say that when you discover a trading mistake (e.g., not a timing issue but against a major trend) that you need to head for the door and protect your margin? Again, perhaps too ridgid?

Rap

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Quoting lilpip

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g/u
1xb 9835 scout in

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Quoting Green_David

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@zenseven, Lusan, Jest

You advices are taken. Thanks.

However, please read carefully. I didn't open positions after that shooting star. The shooting star was formed after I fininished scout and first attack. In this sense, I was right at least temperarily.

I realized the following 5min and 15min candles indicated me some doubts, that's why I closed some positions.

The problem is either I did not close all, or the reducing the size is not enough.

Making mistakes occationally are unavoidable. What is more important is how to deal with mistakes and what learned from the mistakes. In the battele field, in the real-time fight, it is not that easy.

@ fti:

Thank you for reminding me my mistakes again.

"Know your enemy and yourself, you won't lose 100 battles". As I said I only discuss my mistakes, not successful trades. You did it right, of course you make money.

The trading is an unnatual business. Full of conflicting ideas:

Steadfast vs. nimble
Prompt actions vs. patience and more confirmation
Confidence vs. ego
No guts no glory vs. conservative in MM

Need balance.

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Quoting fti

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David,
you are wrong,
trading is the most natural business, esp markets as it is freely traded.
There is no conflicts at all, its all your MO, thats confusing you.
You are confusing yourself.
Crisis is opportunity in adversity, you are chinese, you must know this, should you?
Steadfast in riding and manouvers.
nimble to change.
Prompt actions when the time window opportunities opens.
Patience when the terrain is unclear.
Confidence in your analitical ability and contingency capacity.
Ability to subdue ego, and follow the markets lead and hints.
Guts - Ability to risk without panic and disorientation.
Conservative when in doubt or when position is adverse.

Where is the conflict?,
You have conflict because your skills may be unpolished.

Enough of hammering, reason with the man in the mirror.


regards

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Quoting Green_David

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Got it, and taking these words into my heart. So, there is context!

Shifu has some temper. Please accept my applogies if anything I said annoyed you. I am still learning and refining, especially fighting some bad ego element.

Have a nice day. Many thanks to you. I will report my trading 3 weeks later. Wish it would not shock any body.

Regards.

David

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Quoting lilpip

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g/u
bot x 1 x 1.9835
mo if trade goes the way I plan which so far it is, when the 9825-35 area tested again eyes are open to the action.
If heads up past 9865, starting to eye for attack.
dont know what mode r skew means yet- skew of attack? 1x3x6
Most trades closed by fridays highs.

1st resque attempt would be in 9815 area,9787,9759
attack I guess depends on the movement of 7 5min.bars and how they unfold.

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