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Igrok Method. Q's & A's. Comments, thoughts and ideas

  • #41
  • Edited 12:29pm Mar 20, 2007 12:08pm | Edited 12:29pm
BTW on daily charts it looks even better than on 4-hour.
Like I have already said before, the charts are quite readable. Almost as any regular text. But in order to read and understand any text correctly, someone has to know the alphabet as well as grammatical and syntactic rules of the language.
  • #42
  • Mar 20, 2007 12:11pm Mar 20, 2007 12:11pm
Quoting ilanr
Great, thanks!
Let's say I can identify two triangles here (I can't, but maybe after seeing a lot more of these I will). Does calling this a diamond provide me with more insight than saying that the price went up within a neat channel from 2006.12.08, bumped into a resistance at 1.2564/70, became frustrated and jumped out of the channel on Jan 31, had some second and third thoughts, so spent some time in a range, until finally crossed down the 1.2374 support on Feb 15, and now happily slides down in a new neat channel. The reversal could be predicted with much certainty the moment the rising channel was broken out (at least, in retrospective...). So, would identifying the diamond on time help us more than identifying the breakout, and if so, how?
Any diamond formation offers great trading opportunities. Being able to identify it in timely manner will give you an opportunity to make multiple trades with clearly defined targets and extremely tight stops. There will be no need to wait till a break-out occurs. You can trade inside the pattern first and only then take a position on a break-out.
  • #43
  • Mar 20, 2007 12:26pm Mar 20, 2007 12:26pm
Quoting Igrok
BTW on daily charts it looks even better than on 4-hour.
Like I have already said before, the charts are quite readable. Almost as any regular text. But in order to read and understand any text correctly, someone has to know the alphabet as well as grammatical and syntax rules of the language.
Meanwhile, I have to take your word for that. I know that you have the syntactic rules, but I still have to understand them, let alone use them...
sans peur et sans reproche
  • #44
  • Mar 20, 2007 12:28pm Mar 20, 2007 12:28pm
There are two templates ##19.11 and 19.12 related to diamond trading that are described in my book. Those are simple trading setups for those not very much familiar with the subject. In my real trading I use at least 4-5 different ways of dealing with diamonds.
  • #45
  • Mar 20, 2007 12:34pm Mar 20, 2007 12:34pm
Quoting Igrok
There are two templates ##19.11 and 19.12 related to diamond trading that are described in my book. Those are simple trading setups for those not very much familiar with the subject. In my real trading I use at least 4-5 different ways of dealing with diamonds.
Thanks Igrok for all the explanations. I have a question here, how could you know whether a diamond is a reversal or continuation pattern?
In EUR/USD case, it turned out to be a continuation. In this USD/CHF, it was a reversal one. Is there a criteria/rule for this?
Tra-X
  • #46
  • Mar 20, 2007 12:39pm Mar 20, 2007 12:39pm
Quoting ilanr
Meanwhile, I have to take your word for that. I know that you have the syntactic rules, but I still have to understand them, let alone use them...
Unconventional results cannot be achieved by conventional means. If the trading crowd in general is illiterate, then you have to learn more in order to beat the majority under any conditions and circumstances.
  • #47
  • Mar 20, 2007 12:46pm Mar 20, 2007 12:46pm
Quoting Traex
Thanks Igrok for all the explanations. I have a question here, how could you know whether a diamond is a reversal or continuation pattern?
In EUR/USD case, it turned out to be a continuation. In this USD/CHF, it was a reversal one. Is there a criteria/rule for this?
In "single-diagonal" diamonds the break usually occurs in the direction opposite to the direction of the main move of the main diagonal. "Doble-diagonaled" are not so obvious. You have either to take chances, or to take some other additional clues into consideration. Because the borders are usually obvious, then it's not even going to be a big problem in case you make a mistake initially. The stops are very tight and if something goes wrong, the reverse will do the job just fine.
  • #48
  • Mar 20, 2007 12:47pm Mar 20, 2007 12:47pm
Quoting Igrok
Unconventional results cannot be achieved by conventional means. If the trading crowd in general is illiterate, then you have to learn more in order to beat the majority under any conditions and circumstances.
Someone calls the diamond (at least its first half) a "real disaster for a trader" (p. 180). I now tend to agree with the author. I think that for a "non-visual" person like myself (I'm better in numbers, definitions, etc.), it would take numerous examples to learn to identify such patterns.
sans peur et sans reproche
  • #49
  • Mar 20, 2007 12:54pm Mar 20, 2007 12:54pm
Quoting ilanr
Someone calls the diamond (at least its first half) a "real disaster for a trader" (p. 180). I now tend to agree with the author. I think that for a "non-visual" person like myself (I'm better in numbers, definitions, etc.), it would take numerous examples to learn to identify such patterns.
Math is not about numbers only. There is also a science called "geometry".
  • #50
  • Mar 20, 2007 1:02pm Mar 20, 2007 1:02pm
Quoting Igrok
Math is not about numbers only. There is also a science called "geometry".
Yeah, that's why I put my signature like that below. And I'm currently into EW principle, which is really far more difficult than it looks. This diamond pattern might help me abit in counting waves too, who knows.
Thanks again for the help, Igrok.
Tra-X
  • #51
  • Mar 20, 2007 1:10pm Mar 20, 2007 1:10pm
Quoting Igrok
There is also a science called "geometry".
This is exactly the source of my confusion... In geometry, a triangle is a triangle, a rhomb is a rhomb... :-(
sans peur et sans reproche
  • #52
  • Mar 20, 2007 1:14pm Mar 20, 2007 1:14pm
Quoting Traex
Yeah, that's why I put my signature like that below. And I'm currently into EW principle, which is really far more difficult than it looks. This diamond pattern might help me abit in counting waves too, who knows.
Thanks again for the help, Igrok.
The use of templates and trading discipline should be enough in case you just want to make your trading business profitable. This is why I composed that trading manual in the first place. But to become something bigger than that you will have to get the skills way above the average.
  • #53
  • Edited 2:25pm Mar 20, 2007 1:26pm | Edited 2:25pm
Quoting ilanr
This is exactly the source of my confusion... In geometry, a triangle is a triangle, a rhomb is a rhomb... :-(
Not a big deal. Put together some geometry and "vegas like" probability theory along with some discipline and money management rules and you will get a solution.
I'm aware that unfortunately Western high school education sucks. In my school years in former USSR we have been learning a basic probability theory and even its root science called "the theory of games" in 9-th or 10-th grade. Appeared to be very useful when I got involved in this business. Not formulas, of course, but general concept.
  • #54
  • Mar 20, 2007 2:58pm Mar 20, 2007 2:58pm
Quoting Igrok
Not a big deal. Put together some geometry and "vegas like" probability theory along with some discipline and money management rules and you will get a solution.
I'm aware that unfortunately Western high school education sucks. In my school years in former USSR we have been learning a basic probability theory and even its root science called "the theory of games" in 9-th or 10-th grade. Appeared to be very useful when I got involved in this business. Not formulas, of course, but general concept.
I earn my living by statistics, applied research methods, and data analysis. All these are extremely helpful in forex. I can't understand, how can one move even one step without at least some knowledge of statistics, signal detection theory and such. However, it seems that many people succeed without these. Could it be possible to succeed without geometry? Maybe a person should rely on her or his strong sides? I now use a system I developed using a purely probabilistic approach, no geometry (just the price, a couple of moving averages, a narrow Keltner ATR band - and lots and lots of analysis, optimization, sampling and re-sampling and re-sampling) - and meanwhile, it seems to work not bad (touch wood). If I'm blind to geometry - maybe I shouldn't try to pretend I can use it?
sans peur et sans reproche
  • #55
  • Mar 20, 2007 3:52pm Mar 20, 2007 3:52pm
Quoting ilanr
I earn my living by statistics, applied research methods, and data analysis. All these are extremely helpful in forex. I can't understand, how can one move even one step without at least some knowledge of statistics, signal detection theory and such. However, it seems that many people succeed without these. Could it be possible to succeed without geometry? Maybe a person should rely on her or his strong sides? I now use a system I developed using a purely probabilistic approach, no geometry (just the price, a couple of moving averages, a narrow Keltner ATR band - and lots and lots of analysis, optimization, sampling and re-sampling and re-sampling) - and meanwhile, it seems to work not bad (touch wood). If I'm blind to geometry - maybe I shouldn't try to pretend I can use it?
Your very presumption about “many being successful” is not statistically correct and in fact is very naive. 95-99% of traders will lose eventually no matter how successful they might have appeared in the beginning. And there is a reason for that. When I read this forum I often don’t even understand what is being discussed in those topics. I mean that I usually understand the subject of discussion but I don’t understand what it has to do with being profitable.
Here is another simple example. When I first time became a participant of a forex forum in 1995 there was a bunch of very nice people there that came at about the same time into this business as I did. Lots of them were mature, well educated and overall successful in their regular lives and businesses. We had a lot of fun discussing the market and other issues there. But unfortunately almost no one survived to this day. I know just one person who is still in business, but his 30+ years of trading experience along with paid FX services that he offers have helped him to survive for that long. If statistics is really your profession, then I bet after just realizing how small the odds are you should have quit this job.
Now look. There are certainly some other ways to become successful exist. But only for a while. All the trading systems based on some mathematical models and indicators are doomed because they are based on artificial formulas and unconfirmed assumptions. This is why I don’t use them. The first half of my templates is largely based on statistics and the second half is mostly based on geometry (a bit modified classic TA). However those simple setups work for so long only because they are based on the characteristics that the market will never be able to change. Those characteristics are natural to the market and no math formulas are involved in figuring them out.
So, if you really want to get into this business for long, then you just must learn how to trade the market itself without replacing it with some sort of a model. Comprendo?
  • #56
  • Mar 20, 2007 5:03pm Mar 20, 2007 5:03pm
Well... Definitely something to think about.

My first "gut" reaction. I've been lucky all my adult life not to do things according to the rules, to enjoy them and even to do them well and be payed well. I'll try to continue this line with fx. I don't depend on it for a living, I simply enjoy it. I must do it in a way that would suit me - otherwise, why bother? If it will eventually pay my bills - great, if not - so I had great time learning new things and conversing with great people. Now I have to find a way to adjust TA to my personality - or leave it...

I'd like to ask for your opinion regarding moving averages crossovers. As I perceive them, they are an inevitable arithmetical property of a trend: a trend means that an average computed over a later period is different from an average computed over an earlier period. Using MA X-overs for identifying trends and their changes is not different than just looking at the price movements, however, they are more easily quantifyble and optimizable. It seems to me that as far as there are trends of prices, properly optimized MA x-overs should have positive expectancy. This seems to me to be a no less basic market property than price geometry. In what way is my reasoning flawed?
sans peur et sans reproche
  • #57
  • Edited 6:20pm Mar 20, 2007 6:10pm | Edited 6:20pm
Quoting ilanr
Well... Definitely something to think about.

My first "gut" reaction. I've been lucky all my adult life not to do things according to the rules, to enjoy them and even to do them well and be payed well. I'll try to continue this line with fx. I don't depend on it for a living, I simply enjoy it. I must do it in a way that would suit me - otherwise, why bother? If it will eventually pay my bills - great, if not - so I had great time learning new things and conversing with great people. Now I have to find a way to adjust TA to my personality - or leave it...

I'd like to ask for your opinion regarding moving averages crossovers. As I perceive them, they are an inevitable arithmetical property of a trend: a trend means that an average computed over a later period is different from an average computed over an earlier period. Using MA X-overs for identifying trends and their changes is not different than just looking at the price movements, however, they are more easily quantifyble and optimizable. It seems to me that as far as there are trends of prices, properly optimized MA x-overs should have positive expectancy. This seems to me to be a no less basic market property than price geometry. In what way is my reasoning flawed?
You’re very lucky indeed. I’m even getting a bit jealous. I have never had this luxury since I got into trading in 1993 as my living has always depended only on my trading success. I’m a strictly profit oriented FX market participant and this is why I don’t have an opinion regarding “moving averages crossovers”. At least not the one that would be suitable for more or less lengthy discussion. J I don’t really think they have something to do with making money.
I you read my book then you should probably know that I don’t use indicators. Nothing fancy. Not even candlesticks. There are only plain bar charts on my PC’s screens and a few lines drawn. Sometimes, very rarely, I check on MACD and only for the purpose of defining potential divergences, but also never trade on those signals alone. On the templates I can trade with no charts at all. So far it have been working OK for me. I have traded successfully over the phone from different locations such as beaches, planes, boats, casinos, restaurants and concerts and have never had a single regret that I didn’t know what the moving averages were doing at those moments. If you have any practical questions about my method you are more than welcome to ask them. I have this thread open for this particular reason.
  • #58
  • Mar 20, 2007 11:10pm Mar 20, 2007 11:10pm
Hi Igrok,
yesterday the GBP/USD seems to change its main move of the day by breaking its low at 2am PST. If we had traded we would have gotten stopped out. It then changed direction and take out the high of the day before making new high.
Do you wait for a break and a close below the low of the day before putting on a position or do you enter using limits on either side.
  • #59
  • Mar 21, 2007 12:06am Mar 21, 2007 12:06am
I was wondering if you could clear up the average daily range technique:

First let me make sure I have the right idea: Is this the basic setup?...
The pair was ranging during the Asian session (beginning of the day)...so it is expected to trace out is average daily range at some point, hence you will look for it in the European or North American sessions. Next you need to identify either the high or low of the range, so take the Asian session high/low, especially if it recently make that high/low right before the European session.

So then would you enter at market in the opposite direction (go short if there was a recent Asian session high right before the European session, or go long if there was a recent low)? And would your target be the amount of distance remaining in the average daily range?

Do you place your stops just beyond the recent Asian session high/low? Do you reverse if the stop is hit? And how would you typically measure the stop point on the reversal trade?

Also, in terms of measuring the average daily range, do you keep a running average of a pair's ATR or do you just use general historical numbers? e.g. EUR/USD tends to move 80 pips/day or GBP/USD will move 100.

Thanks, for starting this thread!

-mathematician
  • #60
  • Mar 21, 2007 1:07am Mar 21, 2007 1:07am
Quoting jotty
Hi Igrok,
yesterday the GBP/USD seems to change its main move of the day by breaking its low at 2am PST. If we had traded we would have gotten stopped out. It then changed direction and take out the high of the day before making new high.
Do you wait for a break and a close below the low of the day before putting on a position or do you enter using limits on either side.
Cable didn't feet into any ATR template yesterday. Like OJ's attorney once said: "If it doesn't fit - you must acquit". There is no need in fitting every real market situation into a template forcefully. If it doesn't fit naturally - it doesn't fit at all.
However, in the very beginning of this thread I have already posted my opinion on Cable's technical picture. Based on it a medim-term long position could be taken on Monday with stops below the current low of the week. I haven't seen any other trades available for Cable so far this week.
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