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Myth Busters the Forex Edition

  • #201
  • Oct 14, 2009 7:08pm Oct 14, 2009 7:08pm
Quoting >Apocalypto<
mentioned his name as it's said he made million of normal chart patterns in stocks. that is ture I have the same issue once i go over 15min i can't trade! I also agree on the stops, 1min gives me a stop of 10-12 pips allows me to trade 100+ lots. with comfortable risk management. I never try to double my account, just try to bring in % per day.



what being said here is not an attack at you, I making a point that people are different like you and feel comfortable on different time frames. I am happy to hear you have found the time frame that suites...

But your missing our point, NO BODY can trade >M15 ( I say >M5 really ) not using the conventional methods for more than making 10-15% per year, there win to lose rate is near identical and that's the best of them.

The bigger the SL and TP the more Forex becomes a 50/50 game and therefore just gambling, why people like H4 they think there getting somewhere, where as a bad trader on M1 can lose 80% of the time, just like a good trader can win 80% of the time, a good H4 trader will win 52% of the time and bad 48% of the time!!
Nothing to it, but to do it!!! Stick to the plan FOOL!!!!
  • #202
  • Oct 14, 2009 7:09pm Oct 14, 2009 7:09pm
Quoting >Apocalypto<
another great reply..... still not getting the point???

good trading to u.....

Ever consider your the 1 that's not getting the point ??
Nothing to it, but to do it!!! Stick to the plan FOOL!!!!
  • #203
  • Oct 14, 2009 7:15pm Oct 14, 2009 7:15pm
Quoting Turveyd
But your missing our point, NO BODY can trade >M15 ( I say >M5 really ) not using the conventional methods for more than making 10-15% per year, there win to lose rate is near identical and that's the best of them.
LOL, is that right?? you have asked every trader bank trader out there have u? In 08 I met a guy that shorted the aud at .90 to to 68 with 300K on it. A guy I worked with bought the aud at .75 and is still holding they have made a hell of a lot more then 10-15% LOL.

Quote
The bigger the SL and TP the more Forex becomes a 50/50 game and therefore just gambling, why people like H4 they think there getting somewhere, where as a bad trader on M1 can lose 80% of the time, just like a good trader can win 80% of the time, a good H4 trader will win 52% of the time and bad 48% of the time!!

keep arguing mate, what works for some wont work for you and vice versa....

if this is what works for you then great stick with it and make money, if others trade 4 hour with 100pips stops and make consistent money then great. you dont have the right answer for fx trading. there's no single write answer there's only what works for you.
  • #204
  • Oct 14, 2009 7:18pm Oct 14, 2009 7:18pm
Quoting Turveyd
Ever consider your the 1 that's not getting the point ??
ok, so in your world the only way you can make money trading is on short time frames and that's it.... Yeh i am not getting it am I????
Trading is about being flexible and adaptive to change.
  • #205
  • Oct 14, 2009 7:21pm Oct 14, 2009 7:21pm
Quoting >Apocalypto<
LOL, is that right?? you have asked every trader bank trader out there have u? In 08 I met a guy that shorted the aud at .90 to to 68 with 300K on it. A guy I worked with bought the aud at .75 and is still holding they have made a hell of a lot more then 10-15% LOL.



keep arguing mate, what works for some wont work for you and vice versa....

if this is what works for you then great stick with it and make money, if others trade 4 hour with 100pips stops and make consistent money then great. you dont have the right answer for fx trading. there's...

1 Guy getting lucky proves it, errrr no it's just 1 guy!!

if others trade 4 hour with 100pips stops and make consistent money then great. you dont have the right answer for fx trading. there's no single write answer there's only what works for you.

Sorry can't see any, I really don't believe there are many making more than very small over all profit, ofcourse there are loads claiming it!!

Thats why they fight the you can't make more than 10% account growth per year crap everywhere, THEY CAN'T!!
Nothing to it, but to do it!!! Stick to the plan FOOL!!!!
  • #206
  • Oct 14, 2009 7:25pm Oct 14, 2009 7:25pm
Quoting Turveyd
1 Guy getting lucky proves it, errrr no it's just 1 guy!!

if others trade 4 hour with 100pips stops and make consistent money then great. you dont have the right answer for fx trading. there's no single write answer there's only what works for you.

Sorry can't see any, I really don't believe there are many making more than very small over all profit, ofcourse there are loads claiming it!!

Thats why they fight the you can't make more than 10% account growth per year crap everywhere, THEY CAN'T!!
actually it's 2..... and they're two aussies think about the rest of the world you think they were the only two that saw that.......

think what you want, your entitled to. hmmm they can't cuz you say so hmmmmm....OK......

LoL Turveyd,

I just spoke to a workmate who was a dealer at ANZ (aussie bank) for 7 years. I asked him did you use a 1min 5min chart to trade he told me "no to short". "I used hourly, daily and weekly!"

LoL you muppet!
  • #207
  • Edited 8:01pm Oct 14, 2009 7:27pm | Edited 8:01pm
Quoting hanover
Exactly. What one trader sees as a myth could well be another trader's winning methodology!

Example: this thread: Why indicators will fail you. "They're lagging"; "they only show the past"; "they have no predictive quality"; "they only confirm what price is already telling you"; "divergence is their only possible use"; "trading naked is the way to go". How many times have I read comments...
I began to acquire peace of mind when I stopped believing everyones claims. These days I let my common sense clear the way. My logic tells me that TA is bull, so I gave it up.

Prices need to go up, to find sellers, to go down. But is the price going down to find buyers to go up? How can I judge this by looking at a currencies price history?

The trend is your friend. But isn't the point in trading to be Long before the others so that they will continue to move prices in your favor? If you are the one joining the trend then you are offering exit opportunities or increasing the profits of others, or both. What competitive advantage does TA offer? If you don't know what your edge is, you likely don't have one.

These are my beliefs, and from what I read of you Hanover I would kill to have your programming and mathematical skills. It would be interesting to see what you could do if the shackles of TA were broken.

Leon

PS. I've read back though some of your more recent post history, and see that you are doing well. What is your current aproach to the markets, roughly?
Living the adventure in my head.
  • #208
  • Oct 14, 2009 7:30pm Oct 14, 2009 7:30pm
Quoting >Apocalypto<
actually it's 2..... and they're two aussies think about the rest of the world you think they were the only two that saw that.......

think what you want, your entitled to. hmmm they can't cuz you say so hmmmmm....OK......

Just read back, you'll see them claiming it's a myth that anyone can make what was it 5% in a month or something stupid ??

They don't believe that anyone can make more than scraps because they can't.
Nothing to it, but to do it!!! Stick to the plan FOOL!!!!
  • #209
  • Oct 14, 2009 7:32pm Oct 14, 2009 7:32pm
Quoting Leonlorenzo
I began to acquire peace of mind when I stopped believing everyones claims. These days I let my common sense clear the way. My logic tells me that TA is bull, so I gave it up.

Prices need to go up, to find sellers, to go down. But is the price going down to find buyers to go up? How can I judge this by looking at a currencies price history?

The trend is your friend. But isn't the point in trading to be Long before the others so that they will continue to move prices in your favor? If you are the one joining the trend then you are offering exit...

Hanover Listen to above TA really is bull!!!
Nothing to it, but to do it!!! Stick to the plan FOOL!!!!
  • #210
  • Oct 14, 2009 7:59pm Oct 14, 2009 7:59pm
Quoting Leonlorenzo
I began to acquire peace of mind when I stopped believing everyones claims. These days I let my common sense clear the way. My logic tells me that TA is bull, so I gave it up.
Hey Leon,
I think that dismissing anything out of hand is a bad move, you're right that most TA is BS, but conversely there is a world of analysis that can be done which nobody here ever seems to touch on. In short, it's good to be guided by common sense, but also, periodically one should reevaluate past conclusions as perspectives change over time.
The breaking of a wave cannot explain the whole sea.
  • #211
  • Edited 8:29pm Oct 14, 2009 8:25pm | Edited 8:29pm
Quoting hanover
What one trader sees as a myth could well be another trader's winning methodology!
Excellent post Hanover.

Quoting Turveyd
Love no.6 by the way, couldn't of said it better myself!!

Glad you liked that Turveyd.

Trading is a very, very personal thing. When I first started, I stumbled on a method that traded only the D1 and did extremely well for a few months, then quit working all together, or so I thought. What actually happened was the market changed and the time between signals became extremely elongated. I just didn't have the ability yet to adapt to that and overcome the change.

As for trading longer time frames, they work. They just take a lot more patience and money to trade is all.

For example, if I am trading on M1 (monthly chart not minute) I probably need at least a 500 to 1000 pip stop loss. To trade that means I probably need an account of around 50 to 100 grand. Hence the myth that you have to have lots of money to trade effectively.

The higher the time frame, the more money it takes to be able to trade it and actually make a profit from it.

As for "lagging" indicators, ALL indicators are "lagging" even price action bars are "lagging" indicators. You can't see one until it has formed, then it is "lagging" and based on what has already happened, albeit was a very short time in the past when it happened.

All indicators work, IF they are used properly, but very few can do that. I can't claim to do it perfectly either, but I'm not going to slam someone for using their favorite one.

The only constant in all trading is "YOU!" YOU make the decisions, YOU pull the trigger to trade and to exit one. YOU interpret the indicators and YOU are the Holy Grail of ALL YOUR trading.

To try to tell another person that it can only be done a particular way is a lie. Let's take fundamentals as an example. And I will post some charts from the stock market to make the point.

Here is the "Max" chart for the S&P, the Dow and NASDAQ for a long time into the past. Looking at the charts, tell me, where was the beginning and end of the Saving's and Loan crisis? Where was the Gulf War, the Vietnam War. How long were we in WW II?

Folks these were definitely "fundamental" events but in the "long term" none of them had any lasting effect on the markets. It is the same with daily, weekly, monthly and annual fundamentals. The have a very, very short lived effect on the markets. BUT THEY DO HAVE AN EFFECT and there are those that trade them and do reasonably well.

If your trading strategy depends on fundamentals, great, just to lie to everyone saying "it's the only way it can be done." There are as many ways to trade successfully as there are traders trading the markets. There are just as many ways to trade unsuccessfully. It ALL depends on the trader and his or her "view" and "discretion" of the entries and exits.

I have also included two charts from a trade I took live today for +20 pips. The first one at the bottom of the other three is the entry, the second the exit. Both have an explanation on them of my reasoning at the time, and they also illustrate WHAT THEY LOOKED LIKE AT THE TIME I took the trade and the exit. It was "discretion" that made this trade profitable and discretion that made me exit. And YES, by the way, price did reverse after my exit.

It's time to get past ALL the myths of trading. ALL time frames work, ALL strategies work. Some are better than others is all and some traders do better with some than others.

As for lagging indicators, one last thing. History teaches us lots of lessons, two of which are that if we do not learn from history, we must repeat it. Next, IF we learn from it we can take great advantage of it.

The charts and markets are no different. What is a "lagging" indicator to one is merely a way of analyzing history and taking advantage of it.

Pay attention to what makes SENSE TO YOU and learn to modify, perfect and trade THAT way. Forget the rest as it will only confuse you. The SIMPLER you keep it, the more successful you will be.

Personally I believe that if a person were skilled enough and worked at it, they probably could trade Price Action alone and do really well no matter what chart they were on. I can't do it yet, but I WILL GET THERE, if I decide to.

One last thought is this. Analyze why you really trade. Is it to "make money," to "get rich," to gain "financial freedom," to be the "best trader alive?" Why do YOU trade? That one question will help you more than any other in learning to trade.

Personally I trade to become wealthy, which ALSO means to become "rich" financially. That means I DO NOT have to master every single nuance of trading to "get there." All I have to do is to be able to "see" the signals that give ME, not anyone else, ME a better than average probability of success. THEN I can simply learn to "print money" as a trader once said.

If you could master only one "signal" that gave you higher than average possibilities of gaining 20 pips, your account will eventually grow to where 20 pips could be worth 100,000.00 per trade. Would YOU "be there" then? ONLY YOU can answer that or any other question about why YOU trade and what YOU want out of it.

Successful trading should become so mind numbingly boring that you literally can sit down, take a few seconds and know IMMEDIATELY whether or not there is a viable trade available or not. THEN it takes patience to wait for that ONE signal to trade.

If you do that, you WILL master your trading strategy, then you will improve it, then you will increase the gains from it and before you realize it, you will be "there" where ever your "there" is.

After all, people to have "jobs" get to the point that the "job" is so boring they almost hate going any more. Why is trading any different, other than it's "upside" is a lot more and it's potential is literally unlimited as long as there is something to trade.

Now for the charts. Even the Great Depression, the "dotcom bubble" and the recent "Great Recession" (which I DO NOT believe is over yet) are mere corrections and "blips" on the market's radar screen.
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  • #212
  • Oct 14, 2009 8:25pm Oct 14, 2009 8:25pm
Quoting Craig
Hey Leon,
I think that dismissing anything out of hand is a bad move, you're right that most TA is BS, but conversely there is a world of analysis that can be done which nobody here ever seems to touch on. In short, it's good to be guided by common sense, but also, periodically one should reevaluate past conclusions as perspectives change over time.
what type of analysis is that Craig?? I would love to check it out if you have some topics I could go on.

Cheers,
  • #213
  • Edited 9:04pm Oct 14, 2009 8:51pm | Edited 9:04pm
Quoting >Apocalypto<
what type of analysis is that Craig?? I would love to check it out if you have some topics I could go on.
Cheers,
For example, take a simple thing like an moving average, everybody knows that traditional moving averages are non-optimal, but there are a host of digital filters, splines, linear/non-linear regressions (which in itself is a huge topic) which can be applied to time series. Computing power allows for better models, why not use it? Good TA is about focusing in on trying to model the effect you are trying to trade and there are many ways to do it, bad TA is stuff like "my stochastic is over 80 and is that a pin bar?" LOL. In short, pick up any good quality statistics book and there will be all sorts of stuff you can try and apply, whether it makes money is a different matter, but you never know until you try.

Edit: For instance, check out the test for mean reversion here (http://en.wikipedia.org/wiki/Regression_toward_the_mean), this is the simplest test you can do, never seen it mentioned.
The breaking of a wave cannot explain the whole sea.
  • #214
  • Oct 14, 2009 9:27pm Oct 14, 2009 9:27pm
Quoting Craig
For example, take a simple thing like an moving average, everybody knows that traditional moving averages are non-optimal, but there are a host of digital filters, splines, linear/non-linear regressions (which in itself is a huge topic) which can be applied to time series. Computing power allows for better models, why not use it? Good TA is about focusing in on trying to model the effect you are trying to trade and there are many ways to do it, bad TA is stuff like "my stochastic is over 80 and is that a pin bar?" LOL. In short, pick up any good...
appreciate the reply.... I will look into the link.

Cheers,
  • #215
  • Oct 14, 2009 11:33pm Oct 14, 2009 11:33pm
Quoting >Apocalypto<
appreciate the reply.... I will look into the link.

Cheers,
The 2 things I have been looking at lately are Support Vector Regression & Smoothing Splines.
The breaking of a wave cannot explain the whole sea.
  • #216
  • Oct 14, 2009 11:52pm Oct 14, 2009 11:52pm
Quoting Turveyd
If you understand the math's behind most indicators...... for instance RSI.....
Below is my Clarion code for RSI. It was part of a specialized charting package that I wrote back in 2003. It incorporated more than 30 indicators, and a raft of other functions that it would serve no purpose to describe here.

Inserted Code
!-------------------------------------------------------------------------------
PREP_RSI     ROUTINE
!-------------------------------------------------------------------------------
  IF Q>1 THEN EXIT.
  RSI:SP = Parm[M:RSIDays]
! Plot first RSI point......
  RSI:T1R = 0 ; RSI:T2R = 0                                  
  LOOP IX=2 TO RSI:SP
    RSI:T3R = ARR:Close[IX] - ARR:Close[IX-1]           ! Change in close value since prev day
    IF RSI:T3R > 0 THEN RSI:T1R += RSI:T3R.             ! RSI:T1R stores total increases
    IF RSI:T3R < 0 THEN RSI:T2R -= RSI:T3R.             ! RSI:T2R stores total decreases
  .
  IF RSI:SP-1 = 0 THEN OA:Text = '?/0 @@ 2047' ; DO OUT_AUDIT.
  RSI:HighR = RSI:T1R / (RSI:SP-1)                      ! Ave increase
  RSI:LowR  = RSI:T2R / (RSI:SP-1)                      ! Ave decrease
  IF RSI:LowR = 0 THEN RSI:T3R = 0 ELSE RSI:T3R = RSI:HighR / RSI:LowR.   ! Relative strength
  IF ( 1 + RSI:T3R ) = 0 THEN OA:Text = '?/0 @@ 2051' ; DO OUT_AUDIT.
  A[RSI,RSI:SP] = 100 - 100 / ( 1 + RSI:T3R )
  EXIT
!-------------------------------------------------------------------------------
PLOT_RSI     ROUTINE    ! Plot Relative Strength Indicator
!-------------------------------------------------------------------------------
  IF Q>1 THEN EXIT.
! Plot remainder of RSI points.....
  IF ~INRANGE(TDY,RSI:SP+1,DP) THEN EXIT.
  RSI:T3R = ARR:Close[TDY] - ARR:Close[TDY-1]
  RSI:T1R = 0 ; RSI:T2R = 0
  IF RSI:T3R > 0 THEN RSI:T1R = RSI:T3R ; RSI:T2R = 0.
  IF RSI:T3R < 0 THEN RSI:T2R = RSI:T3R ; RSI:T1R = 0.
  IF RSI:SP = 0 THEN OA:Text = '?/0 @@ 2064' ; DO OUT_AUDIT.
  RSI:HighR = ( RSI:HighR * (RSI:SP-1) + RSI:T1R ) / RSI:SP        ! New averages computed by adjusting previous value
  RSI:LowR  = ( RSI:LowR  * (RSI:SP-1) - RSI:T2R ) / RSI:SP
  IF RSI:LowR = 0 THEN RSI:T3R = 0 ELSE RSI:T3R = RSI:HighR / RSI:LowR.
  IF ( 1 + RSI:T3R ) = 0 THEN OA:Text = '?/0 @@ 2068' ; DO OUT_AUDIT.
  A[RSI,TDY] = 100 - 100 / ( 1 + RSI:T3R )
  EXIT

There are plenty of profitable traders who use oscillators as part of their entry strategy. Check out the Spudfyre threads on stochastics, as an example. And there's a contributor to this forum who uses three different entry signals, one of which is generated solely by MACD. And yes, he's also a very successful trader.

Again, it's not the tool itself that's profitable, but how it's applied, within the framework of the trader's total methodology.
  • #217
  • Oct 14, 2009 11:58pm Oct 14, 2009 11:58pm
Boy, it's been awhile since I've heard the phrase '4GL' uttered
My first IT job was using the 'Progress' 4GL, it was awful.
The breaking of a wave cannot explain the whole sea.
  • #218
  • Oct 15, 2009 12:30am Oct 15, 2009 12:30am
Quoting Leonlorenzo
........It would be interesting to see what you could do if the shackles of TA were broken.
..........
PS. I've read back though some of your more recent post history, and see that you are doing well. What is your current aproach to the markets, roughly?
Leon, I'm not sure what you mean about the shackles of TA being broken?

Current approach is very discretionary involving 'robust' abstracts like trend; S/R; confluences; candle reading (there's a great PDF by Steve Nison called Profiting in Forex, if you can find it); overbought/oversold; relative currency strength; selective, low risk entries. Re exits, I let profits run relative to trend strength, and/or scale out at S/R points, depending on my judgment. All on H1 or longer timeframes, although sometimes I'll drill down as low as M15 to time an entry.

Don't know if I have a real edge, though, I haven't enough trades behind me yet to make a conclusion. If a setup ticks enough of the above boxes in the right way, I give it a try, and learn from the result. Hence my approach evolves as I learn more, and is too discretionary to back-test mechanically.

Interesting thread BTW, we have some folk saying TA is BS, and others claiming that returns upward of 20% per month are very possible using TA.
  • #219
  • Edited 5:29am Oct 15, 2009 2:21am | Edited 5:29am
Keeping in mind that the past prices can't predict the future ones I found that any analysis whose name can't be pronounced by my grandmother is, of course, useless.
A very complicated formula tries to use many old prices in funny ways. This is the search for the holy grail, can I devise a formula which will tell me the future with 90% accuracy? And the trader always thinks that something is missing from this TA for his system to work flawlessly. What the trader is missing it is called experience.

Let's take the simplest system imaginable. EURUSD, Hourly. Put a 15 SMA on it. Buy any time the H1 closes above and sell any time the H1 closes below. The candle must also touch the SMA. SL = 25 and TP = 35 always.
Take all signals for one year. We suppose that the spread is zero.

At the end of the year the trader must be at breakeven using this system because it provides no edge and enough trades for a unbiased distribution between wins and losses. Can somebody make it profitable?
I think it is possible by sheer experience. There are some setups or situations when the trader "knows" that the trade will be a loss and he stays out. If he does it 5 times every month then we can say that this approach works. By risking 1% per trade he will have a 5% profit monthly just avoiding some really bad trades.

My point is that the system doesn't matter, a trader must also have experience.
  • #220
  • Oct 15, 2009 2:52am Oct 15, 2009 2:52am
hey sauron.......

Quoting Sauron
Can somebody make it profitable?
yes.....h
to trade and code, keep both simple... no call to impress....h
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