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Psychology and MM free zone...

  • #21
  • Mar 4, 2009 12:33am Mar 4, 2009 12:33am
Quoting NuckingFuts
We all learn differently, so what may work for me, may not work for you.
But we are in agreement that a system with defined stops, entries and TPs that are followed without a second thought will work the same for all?
Living the adventure in my head.
  • #22
  • Mar 4, 2009 12:37am Mar 4, 2009 12:37am
Quoting cobraforex
Internal control and so taking only the A1 trades based on a good analysis.

Most new traders think that they don’t trade if they don’t have an open position.

I hope that doesn’t fall in the psychology rubric
Yes, Internal controll would be classed as psychology in my eyes.

Would you be able to mechanically describe an A-trade? I dont meen actually post it here, just if you had to then could you?
Living the adventure in my head.
  • #23
  • Mar 4, 2009 12:41am Mar 4, 2009 12:41am
Quoting Leonlorenzo
Yes, Internal controll would be classed as psychology in my eyes.

Would you be able to mechanically describe an A-trade? I dont mean actually post it here, just if you had to then could you?
Yes, I would be able to describe it, depending on the system I trade in that moment.

Well, if it falls under psychology, may I have two Toblerone instead of one and the flowers?
  • #24
  • Mar 4, 2009 12:56am Mar 4, 2009 12:56am
Quoting forexjedi
What can I say about money management. Well money management is part of the key to success in FX. In my opinion there should never be risk of more than 1% on any trade no matter the time frame. The problem I find is when MM meets the psyc fastor in FX. The internet is filled with bogus ads claiming FX is the instant road to riches.....WRONG. FX is hard work like any other carreer. This bother me to no end when I see these ads. Playing of people emotions. I dont thinks theres any place for there not to be MM skills in FX. My favousite equation for...
I hate to sound rude, but did you not read the first post? Im going to put the vouch hurdle up to 10 while I sleep, Id rather let my cat lick cream cheese off private parts of my body than read any more comments like this in this thread. Sorry.
Living the adventure in my head.
  • #25
  • Mar 4, 2009 12:56am Mar 4, 2009 12:56am
Quoting Leonlorenzo
But we are in agreement that a system with defined stops, entries and TPs that are followed without a second thought will work the same for all?
Technically it should, yes. But it never does with humans (clearly evident on this forum for example).

The only way to achieve this equilibrium would be to have a robot do everything for you. And then yes, the results would be the same.

This is assuming that every single aspect is the same (broker, pairs traded, robot settings, guaranteed internet connection, anything else that can go wrong ).
  • #26
  • Mar 4, 2009 1:03am Mar 4, 2009 1:03am
Quoting cobraforex
Yes, I would be able to describe it, depending on the system I trade in that moment.

Well, if it falls under psychology, may I have two Toblerone instead of one and the flowers?
So, Just to extract the main point of what your saying. What does an A-trade need to be an A-trade? That would in effect be the answer to the threads question, what characteristic of the market is most important to you(would be a good way to put it)?

Sorry, I only offered Craig the Toblerone because I knew he would have to send it back, I really love Toblerone you see....
Living the adventure in my head.
  • #27
  • Mar 4, 2009 1:20am Mar 4, 2009 1:20am
Quoting Leonlorenzo
So, Just to extract the main point of what your saying. What does an A-trade need to be an A-trade? That would in effect be the answer to the threads question, what characteristic of the market is most important to you(would be a good way to put it)?

Sorry, I only offered Craig the Toblerone because I knew he would have to send it back, I really love Toblerone you see....
A well known pattern like a Pinbar or a shampoo (H&S) in a strong moving market with high volume coming along with the rules of the system that I trade in that moment like a COG for ex. would be a A trade for me.

All trades have a certain percentage to be a winning or a losing trade based on historical data.

When several circumstances coming together the percentage gets higher, let’s say a Pinbar touching in overbought RSI condition a daily pivot which is also 61.8 Fib of the last stronger move.

That would be a AAA trade.

Take care of the Toblerone, I wouldn't give her back.

BTW: I'm out now, preparing the London session on my screens, thanks for the invitation, will lurk in tomorrow.
  • #28
  • Mar 4, 2009 2:01pm Mar 4, 2009 2:01pm
Quoting cobraforex
[font=Arial]
When several circumstances coming together the percentage gets higher, let’s say a Pinbar touching in overbought RSI condition a daily pivot which is also 61.8 Fib of the last stronger move.
How about a pinbar followed by an outside bar forming a double top at triple fibo confluence that's also flipover S/R (see point "X" in the attached chart)?

Or a regular three piece quarter pack with fries, a small coleslaw, an extra potato and gravy, two cheesecake desserts and a diet pepsi?

Seriously though Cobra, I agree, confluences go a long way toward creating A grade setups.
As you point out, the more factors (e.g. S/R, fibos, round numbers, trendlines, pivot levels, etc) that coincide at a certain point, the greater the probability that more traders will place their orders around these points.

Leon, my answer to your question here. Wrote this some time ago, can't promise that it doesn't contain some of the forbidden words, though.

David
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  • #29
  • Mar 4, 2009 5:56pm Mar 4, 2009 5:56pm
Ok, so far we have two answers to what some people beleive is a key to success in the Forex market...

1. The Ability to read PA
2. Confluence of multiple technical criteria.

Im going to open the thread back up, see If we can make any more progress. I think its very productive to have this kind of disscusion where the same old psychology and MM stuff doesnt/cant eat up the thread.

I think 'the abbility to read PA' Is a little too broad, afterall, that is the aim of trading. The ability to profit from price moves. So we will take that one out.

1.Confluence of multiple techincal criteria.
2. --????--
Living the adventure in my head.
  • #30
  • Mar 4, 2009 6:45pm Mar 4, 2009 6:45pm
Quoting hanover
How about a pinbar followed by an outside bar forming a double top at triple fibo confluence that's also flipover S/R (see point "X" in the attached chart)?

Or a regular three piece quarter pack with fries, a small coleslaw, an extra potato and gravy, two cheesecake desserts and a diet pepsi?

Seriously though Cobra, I agree, confluences go a long way toward creating A grade setups.
As you point out, the more factors (e.g. S/R, fibos, round numbers, trendlines, pivot levels, etc) that coincide at a certain point, the...
Yes David, that is a gread example of what I was talking about.

Those setups don't happen every hour (that's the TF I mainly use your indi, but also on 4H) but when they are there you have a good chance to cash some really good pips.

Oh man, how I love your indicator, now I don't need to be glued all the time on the screens to get in right on time on those great oportunities.

I had already some trades that I would have missed without it.
  • #31
  • Mar 4, 2009 6:59pm Mar 4, 2009 6:59pm
experience i guess. the longer you are around, the more you learn. that's just fact, unless you're brain dead or whatever. but that doesn't help for each individual trade, which it seems like that's what you're asking for, but it will help your trading overall. but you don't just get it overnight obviously. i don't know dude. other than that (and the two never to be mentioned items) there really isn't much out there that actually makes a trade/trader successful. maybe increase the probability of winning more than 50% of the time, but not to make you successful for sure.
  • #32
  • Mar 4, 2009 7:11pm Mar 4, 2009 7:11pm
Quoting blacksun1
experience i guess. the longer you are around, the more you learn. that's just fact, unless you're brain dead or whatever. but that doesn't help for each individual trade, which it seems like that's what you're asking for, but it will help your trading overall. but you don't just get it overnight obviously. i don't know dude. other than that (and the two never to be mentioned items) there really isn't much out there that actually makes a trade/trader successful. maybe increase the probability of winning more than 50% of the time, but not...
Yes, but the point is to get down to the bottom of it. What has experience taught you? What is the one beleif or fact about the market that you put above all else?
Living the adventure in my head.
  • #33
  • Mar 5, 2009 7:03am Mar 5, 2009 7:03am
Wow, I thought what I have been saying in this thread Is the most important topic when It comes to trading. Why so few answers?

We have sooooo many system threads on the forum, what are they exploiting? What beleif about the market makes them profitable?
Living the adventure in my head.
  • #34
  • Mar 5, 2009 7:23am Mar 5, 2009 7:23am
Alright I'll chime in.

First, someone mentioned earlier that systems are profitable based on historical probabilities.

I think this whole probability rampage should be trimmed down a bit to understand what is really going on when you calculate the statistical factors of a system. There is a lot of talk that indicate there is confusion about the cause and effect of probabilities and outcomes. I see many basing their system entirely on the fact that probabilities are in their favor. This is to say that the historical probabilities cause the future outcomes. If this were the case, then if your system had a historical probability of success, with every consecutive loss you encountered you could theoretically increase risk simply because the market would eventually "owe" you a win.

Instead, it is the future outcomes that determine the historical probabilities. That explains quite well why a system can look solid while back testing and maybe make profit for a month or two, but soon those profits start to diminish, flat line, and eventually lead to losses. The system based solely off of historical probabilities will (most likely) fail to achieve long term success because it was never built to profit from anything except the environment it was created for. Because markets change on a minute by minute rate, the odds of long term success are just not in your favor.

So as far as the main point of this thread...in relation to the above statement I think it is important to understand cause and effect. But not just according to what I wrote above. My way of trading often exploits everyday cause and effect in the market. Price moves for a reason, and those reasons do not often include "because it did the same thing last week". Nobody really cares about the chart patterns, technical outlooks, etc. Those do not move the market, or if they do it is not for the reasons most of you think. To trade solely off of them is to rely on historical probabilities, which as mentioned above, decreases the chance of long term success.

I hope this all makes sense. Last night was my buddies bachelors party so you can image the mental state I am in at this time...
Headline: USD drops due to news of USD dropping!
  • #35
  • Mar 5, 2009 7:37am Mar 5, 2009 7:37am
i kinda disagree with you a little,historical data does play and important part in trading and contrary to what some may have you to believe there are chart patterns that have preformed for years and years without failure you just have to find them?
  • #36
  • Mar 5, 2009 7:47am Mar 5, 2009 7:47am
Quoting Gaston
Alright I'll chime in.

First, someone mentioned earlier that systems are profitable based on historical probabilities.

I think this whole probability rampage should be trimmed down a bit to understand what is really going on when you calculate the statistical factors of a system. There is a lot of talk that indicate there is confusion about the cause and effect of probabilities and outcomes. I see many basing their system entirely on the fact that probabilities are in their favor. This is to say that the historical probabilities cause the future...
Gaston, Im starting to think you are the reincarnation of a member who used to post here. Be sure, thats a compliment.

Every part of your post makes perfect sence.

Leon

PS. Im sorry that I never really have anything to add or discuss when It comes to your posts, be sure I take everything on board and appreciate the effort on your part.
Living the adventure in my head.
  • #37
  • Edited 8:01am Mar 5, 2009 7:48am | Edited 8:01am
Quoting monies
i kinda disagree with you a little,historical data does play and important part in trading and contrary to what some may have you to believe there are chart patterns that have preformed for years and years without failure you just have to find them?
OK. I understand that it is impossible for me to disprove every single pattern or system out there, but speaking from experience I have come to the above conclusions. I understand that you can pull up a chart with 10 year data and find things that happened in the past happening again. Technical support and resistance is one good example. But the sad truth is that everytime that level is encountered the situation is different. The players who move the market have different priorities now then they did before. So creating a mechanical system with predefined entry points, stop losses and take profits -which have been determine on historical data- might have worked last time price was at the level, but now things are different and you could still lose even if price respects that level.

Edit: Rereading that I feel I was quick with some of my statements. Again, I am not quite myself at the moment. What I would add is that you should continually seek to optimize your profits on a system. Meaning if you discover that as you trade you could be tightening your stop and still profiting equally, then by all means go ahead. Technically that system alteration took place based on historical experience. There is nothing wrong with that. I am just saying that the basis of the system should not rely entirely on the fact that it performed well on a chart days, months, or years ago. There must be some underlying and describable reason why price will behave the same again.
Headline: USD drops due to news of USD dropping!
  • #38
  • Mar 5, 2009 7:54am Mar 5, 2009 7:54am
Quoting monies
i kinda disagree with you a little,historical data does play and important part in trading and contrary to what some may have you to believe there are chart patterns that have preformed for years and years without failure you just have to find them?
Its possible you have accidentally found an edge, a reverse engineered one. But It would be wise to try and find out why these patterns work, It may lead to other methods/edges.
Living the adventure in my head.
  • #39
  • Mar 5, 2009 9:15am Mar 5, 2009 9:15am
Quoting Gaston
Alright I'll chime in.

First, someone mentioned earlier that systems are profitable based on historical probabilities. ........
Surely all analysis - whether technical, fundamental, statistical, etc - is based around the idea that outcomes of past patterns, behavior, inefficiencies etc are more likely to repeat themselves, in a certain way, on balance of probability, than not.

Otherwise, analysis is futile, and trading performance is purely the result of fortuitous guesswork.
  • #40
  • Mar 5, 2009 9:18am Mar 5, 2009 9:18am
Quoting Leonlorenzo
Its possible you have accidentally found an edge, a reverse engineered one. But It would be wise to try and find out why these patterns work, It may lead to other methods/edges.
Banned from the thread! LOL.
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