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Technical Analysis Fallacy

  • #9,261
  • Jul 31, 2009 10:31pm Jul 31, 2009 10:31pm
Quoting loqtus
fti,
i've been reading this thread for a few days with great interest, and trying to catch up. a few quick questions, if you please.

what is the purpose of the "dance"? is it to get a bias for the direction and take a position? or is it to judge price action after taking a position?

also, once you're in a trade, do you manage your position in a mechanical manner? if yes, then why dance?

i'm trying to figure out what elements of your trading are strict rules and how much is discretionary?

what would a general do?
The question of what is the purpose of the dance shows your not paying attention to what your reading as it is simply put and basic.

loqtus answer me this, whats the purpose of the scout?
  • #9,262
  • Edited 11:20pm Jul 31, 2009 10:59pm | Edited 11:20pm
As I reviewed the e/u terrain last weekend I couldnt help to recognize that we had a complete week above 1.4094 and that my bias was up from 1.4108 area, and what a battle that took place this week in this area with a move up and away.

I have to say my bias is up from 1.4131 area.
  • #9,263
  • Jul 31, 2009 11:38pm Jul 31, 2009 11:38pm
hey guys ,
thanks , shall get back on my feet soon ...
pete.alfa , love the song and the band

something to ponder ...
do u guys remember fti sir said that he produced 40% returns annually without leverage when he was in the bank,
is it correct if I assume this ,
1:1 lvg , 40% is standard for top trader
1:2 lvg , 80% wld be the standard
1:3 lvg , 120 % and so on ...
this is for top trader , a good trader I assume make half of it ...

I also remember fti tripling his money at retail spot within a very short timeframe last year , so u see , my calculation might hold true afterall , 200% in 2-3 months in a leveraged environment is his standard since at no leverage he makes 40% p.a...

in the light of this I think if I produce 30% a month at 1:50 leverage , it is still way below the pros standard performance ... off course I am no pro , but I aspire to at least be a good trader ...
so a good performance will be 20-30% a month at low leverage situation say 1:10 ...

am I right in my assumption of this calculation ?

good weekend to all
To Live is the rarest thing in the world , Most people exist , that is all
  • #9,264
  • Edited 12:14am Aug 1, 2009 12:04am | Edited 12:14am
Those figures seem reasonable to me. The only fly in the ointment that I can see is that as the leverage increases, so does your risk. With no leverage, theoretically you can't get forced out of a position by a violent price move, whereas with high leverage it could ruin you. So I think you would have to modify your trading style with a higher leverage as there would come a point where you were overexposing yourself continually.

Does that make sense, or have I forgottten something fundamental?
  • #9,265
  • Aug 1, 2009 12:43am Aug 1, 2009 12:43am
Quoting ukmanthailan
Those figures seem reasonable to me. The only fly in the ointment that I can see is that as the leverage increases, so does your risk. With no leverage, theoretically you can't get forced out of a position by a violent price move, whereas with high leverage it could ruin you. So I think you would have to modify your trading style with a higher leverage as there would come a point where you were overexposing yourself continually.

Does that make sense, or have I forgottten something fundamental?
yes thats exactly the point ...
having a good return at low risk is what good performance is ...

high leverage is good if u can utilize it fully , but by utilizing it fully u r taking an equally high risk of ruin , the only way to actually sub the high risk is by having extraordinary experience and skill ...
Im guessing 10+ yrs experience might do the trick ...
To Live is the rarest thing in the world , Most people exist , that is all
  • #9,266
  • Edited 4:19am Aug 1, 2009 4:02am | Edited 4:19am
in the light of this I think if I produce 30% a month at 1:50 leverage , it is still way below the pros standard performance ... off course I am no pro , but I aspire to at least be a good trader ...
so a good performance will be 20-30% a month at low leverage situation say 1:10 ...

Hey maheswara,

I did some research for you

Warrent buffet annual average return from 1965 - 2005 were 21.5%
George Soro annual average return 32%.

you should be dancing even 10% a month (120% a year) you still far more better than them but they are investors with very BIG money.

you should be happy so TAKE IT EASY don't worry you'll get there if you're making 20-30%. Slowly you will get 40-50. Later 60-70-80%

Me from -20% to BE I'm very happy hope to get 10% (if your min.is 10%) soon

pete
  • #9,267
  • Aug 1, 2009 5:09am Aug 1, 2009 5:09am
Quoting pete.alfa
in the light of this I think if I produce 30% a month at 1:50 leverage , it is still way below the pros standard performance ... off course I am no pro , but I aspire to at least be a good trader ...
so a good performance will be 20-30% a month at low leverage situation say 1:10 ...

Hey maheswara,

I did some research for you

Warrent buffet annual average return from 1965 - 2005 were 21.5%
George Soro annual average return 32%.

you should be dancing even 10% a month...
hey pete ,
warren buffet is phenomenal , cant compare at all , haha
my thing is not about making 20-30% a month, but doing it with much reduced leverage ...
I keep thinking about the risk I carry , and frankly I dont have the capacity to carry very high risk , I get tensed at high risk , first I thought time will take care of that part , but few months passed and its still there

so I will try reducing my leverage substantially and work harder to maintain okay profit ...

its true though , few percents compounded a long long time gets really big
To Live is the rarest thing in the world , Most people exist , that is all
  • #9,268
  • Aug 1, 2009 6:24am Aug 1, 2009 6:24am
Quoting maheswara
so I will try reducing my leverage substantially and work harder to maintain okay profit ...
Good idea.
That is what I have done:
(1) very low leverage
(2) do not worry about money, but total focus on dance practice

I am counting that as my skill develop, I could raise the leverage. It is too soon for me to go for a REAL fortune.

Forex is a dragon killer.
Empty as water and soft as a facing wind mountain
  • #9,269
  • Edited 8:13am Aug 1, 2009 8:02am | Edited 8:13am
Just to chime in. I'm trying to think how to put this into words...............

Viewing your average rate of return in comparison to others is apples to oranges. A person's return percentage is based on their skill, account size and comfort level (i.e. trade size.)

Buffet with Billions of capital, does not need to risk large percentage or high leverage to ensure nice profits. A small trade nets him several to hundreds of thousands of dollars or more..... ants work on a much larger scale.... hence 20% of several Billion is what? Not to mention Buffets trading is different from the average day trader. He's more into buying large blocks of stocks.

The average trader works within his/hers comfort level what ever that level is. The scout size is determined not just by a division of the account but also needs to be adjusted for psychological factors if the normal skew would put the trader in abnormal mental discomfort.

There are very few folks in this world with the appetite for very large risk and profits, I dare say most would be consumed by the search. Everyone here has had the taste of getting stung by the market. tis not fun.

Your returns or percentage are justified by you and not in relation to anyone else. Work to be consistent and profitable.... then the ability to support yourself through trading... then see where it goes. It starts by truthfully and inwardly searching what you want, what will make you happy. If trading is done for the adrenalin rush of the trade, or an attempt to seek vast fortunes.... there's much pain waiting in the large percentage.

Wishing all a great weekend.

my $.02

a
  • #9,270
  • Edited 9:08am Aug 1, 2009 8:20am | Edited 9:08am
Happy Saturday to everyone. Just stopped by to catch up on some reading and saw this discussion on leverage, risk, etc. I look forward to reading fti's comments on this, but thought I'd throw my 2 pips in for his expert consideration, too. One part of everyones journey to becoming a forex trader is to figure out how much risk is the right amount of risk for you, and how much risk is too much risk. IMO, this must be done before you start trading in a serious way, because if you are worried about money or leverage or risk while you are in your trade, the mental demons start to impact your trading. When I am trading, I only focus on execution of my trades, because I know that trade execution already includes these things so I do not have to worry about them. I think this is one area where it is acceptable to be rigid in your trading and thinking because you must be a good steward of your money to be successful, and at the same time while trading, not worried about being a good steward of your money. Does that make sense? If I missed the point of your discussion please excuse my rambling.

By the way, Mr. Buffett is a long term investor who would be happy with 20% annual returns, but we are traders (fast money) and we should have higher goals. On average we have 22 days a month to find trading opportunities. Assume that there are, on average, only 2 times each day where your trading strategy can be reasonable executed, so on average there are 44 times each month where you can make a trade. Assuming you can put all the deamons aside and focus, a 20% monthly return seems reasonable, and then move up from there.

Edit: That number of 44 opportunities per month is on one currency pair. If you are tracking 2 pairs, the number becomes 88, and at 3 its 132, and so forth. I track 5 currency pairs, so I have 220 trading opportunities each month to make my numbers. I don't have to trade all 220, but I try to track as many as possible and trade the best among them. IMO, this is where your focus should be, because you have already considered what is the most important part of trading, MM, and it is part of your execution, or as fti so wisely puts it, the dance.
  • #9,271
  • Aug 1, 2009 2:08pm Aug 1, 2009 2:08pm
Personal Songbook.
Listen carefully.
Inserted Video


Inserted Video
  • #9,272
  • Edited 2:37pm Aug 1, 2009 2:17pm | Edited 2:37pm
Hi, very interesting discussion this weekend

I wish I could make over 20% a month, unfortunately my equilibrium is far away from that level, so the ultimate goal is not to lose money and be able maintain steady mindset in every battlefield situation (harden my balls). When considering long term profitability I'm aiming to make anything between 5%-8% monthly which is about 80%-125% a year (compounded ,pre tax) while using 3:1-8:1 leverage.
That's how I see it for myself, but market reality and experience will surely verify it.
the worst horse can be the best one
  • #9,273
  • Aug 1, 2009 2:49pm Aug 1, 2009 2:49pm
Personal songbook,
End
Attached File(s)
File Type: zip unb.zip   1.7 MB | 642 downloads
  • #9,274
  • Aug 1, 2009 10:36pm Aug 1, 2009 10:36pm
This is a message not a song.
Listen careful.
The Secret.
Attached File(s)
File Type: zip LiJin message - The Secret.zip   1.5 MB | 1,005 downloads
  • #9,275
  • Aug 2, 2009 4:27am Aug 2, 2009 4:27am
Quoting fti
This is a message not a song.
Listen careful.
The Secret.
I listened carefully but the message was not clear.
  • #9,276
  • Edited 12:15pm Aug 2, 2009 11:13am | Edited 12:15pm
Quoting Zoran
I listened carefully but the message was not clear.
Thats because , you are Ang Mo, la
Unlike you, but some Ang Mo speeks perfect mandarin.
so , if you don't get it, you don't.

Then dig this.
Inserted Video
  • #9,277
  • Edited 11:54am Aug 2, 2009 11:25am | Edited 11:54am
Quoting auxesis
Just to chime in. I'm trying to think how to put this into words...............

Viewing your average rate of return in comparison to others is apples to oranges....
Thanks auxesis, Mahes, you owe him 2cts.
I ll wait till imjscn to tell you the $800 joke.
That was interestingly funny.

Just to add, my thoughts, I came to teach some in the thread that you may not lose your money, because of the lack of knowledge, and now I have to deal with people complaining that they don't make enough. As far as i am concerned , the highways to wealth is your own journey, You use your minds and make it happen. My task to to help the little people not to be scalped to death by the markets. Is hard a task to improve people who are already outperforming most FUNDS managers out there. I believe , there's a whole lump of them um out there still grappling with negative books.

1 thing , I would like to ask you Mahes, is , did I ever advised you to run two books concurrently?


regards
  • #9,278
  • Aug 2, 2009 12:14pm Aug 2, 2009 12:14pm
Quoting fti
Thanks auxesis, Mahes, you owe him 2cts.
I ll wait till imjscn to tell you the $800 joke.
That was interestingly funny.

Just to add, my thoughts, I came to teach some in the thread that you may not lose your money, because of the lack of knowledge, and now I have to deal with people complaining that they don't make enough. As far as i am concerned , the highways to wealth is your own journey, You use your minds and make it happen. My task to to help the little people not to be scalped to death by the markets. Is hard a task to improve people who...
ai sir ,
not complaining on not making enuf lol,
just that I felt uneasy at high level skew , frankly I felt I was lucky few times I got out of the situation , but that wont happen all the time...
so I thought if i cld lower my leverage and thus my risk , i just need to work harder to make similar profit ...

no sir , u never advised the two books thing ...

thank you sir
To Live is the rarest thing in the world , Most people exist , that is all
  • #9,279
  • Aug 2, 2009 12:24pm Aug 2, 2009 12:24pm
Quoting maheswara
ai sir ,
not complaining on not making enuf lol,
just that I felt uneasy at high level skew , frankly I felt I was lucky few times I got out of the situation , but that wont happen all the time...
so I thought if i cld lower my leverage and thus my risk , i just need to work harder to make similar profit ...

no sir , u never advised the two books thing ...

thank you sir
Hi mahes,
Like I said before, moving up levels of risk exposure is not an easy task, as the mindset comes into play , big time.
The transition must be slow and comfortably increased as the mind settles from the escalation. Once unease sets in cut back quickly. Once disorientation comes into play, then all scorpions are released simultaneously. Go slower, that will make the difference.

Just for example and some bragging. I will easily take the head off a chicken and drain it of all its blood for camp cooking. For one who had been getting thie chicken from the super, it may be a mind explosion to do it. Its all mindset, my friend. I hope you understand.

regards
  • #9,280
  • Aug 2, 2009 12:37pm Aug 2, 2009 12:37pm
Quoting fti
Hi mahes,
Like I said before, moving up levels of risk exposure is not an easy task, as the mindset comes into play , big time.
The transition must be slow and comfortably increased as the mind settles from the escalation. Once unease sets in cut back quickly. Once disorientation comes into play, then all scorpions are released simultaneously. Go slower, that will make the difference.

Just for example and some bragging. I will easily take the head off a chicken and drain it of all its blood for camp cooking. For one who had been getting thie chicken...
sir yes sir ,
not able to do exactly that , moving up risk exposure ...
disorientation and all scorpions released all at once is what happened , the resultant is this losing cycle ...
will cut back by releveraging at lower counts ...
thank you sir ...
To Live is the rarest thing in the world , Most people exist , that is all
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