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Islander and Medici trade the European open

  • #2,801
  • Sep 5, 2010 2:18pm Sep 5, 2010 2:18pm
Quoting vasi
I like your trading style, very clean.

I want to ask you, what could be "the situation" on the chart, that alert you to analyze a possibile divergence ? I mean your looking for a divergence after an overbought / oversold situation, after news, patterns (head & shoulders), hammer, breakouts ?

Thank you
Thank you for kind words. Not sure I understand your question...I try to be alert and analyse divergences all the time...?
  • #2,802
  • Sep 5, 2010 2:31pm Sep 5, 2010 2:31pm
Quoting CoffeeDrinke
Hey there everyone.
I have had a bad past 3days, so I thought of changing my rules alittle.
Ok I trade 15min charts, so if anyone can find any meaning to it, then goodluck hope my little input helps alittle.
I will also add thanks for the thread it really has been a helpful tool.

[font=Times New Roman][size=3]Ok I trade Franky,...
Very interesting! Thank you. Could you give a bit of explanation, in particular the word only figuring in the FO/LO rules? Why?
  • #2,803
  • Sep 5, 2010 2:33pm Sep 5, 2010 2:33pm
Quoting medici
How is it that human traders can be hugely profitable but algos (i.e. EAs and the like) have a harder time?
Desire: I am better at trading than any machine because I want to succeed. I desperately want to avoid making mistakes and losing money. Focused will, well directed emotion, even if coupled with only moderate understanding, trump the lifeless "intelligence" of a machine any day.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #2,804
  • Sep 5, 2010 2:40pm Sep 5, 2010 2:40pm
Ok NY:

EU the first one, it was pushd to round number after big move before NY open then i was waiting for hidden divergence to happen which it didnt, so i neva took a trade there, and as you can see, it actially went south again.

EU1 you can see after NY opend it was pushd to round number so according to my rules it perfectly fine to take the normal divergence tht formd, it chopd around during asian but made a good drop the next day.

EU2 It made a nice move down then NY opend and formd hidden divergence and thts a good signal to short again.

Eu3 Was a wide ranging day so it was a good trade to take the divergence tht formd.
Attached Image(s) (click to enlarge)
Click to Enlarge Name: eu.gif Size: 29 KB
Click to Enlarge Name: eu1.gif Size: 26 KB
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  • #2,805
  • Sep 5, 2010 2:48pm Sep 5, 2010 2:48pm
Hi Coffee

I look for divergence myself but on higher timeframes generally.
Found this indicator a few weeks ago that Ive been looking using
not fully understanding it
Attached File(s)
File Type: ex4 cc_Divergence.ex4   13 KB | 316 downloads
rat
  • #2,806
  • Sep 5, 2010 2:49pm Sep 5, 2010 2:49pm
Ok tht basically covers almost all situations tht can happen according to my rules tht i have pointed out.
Sorry my resolution on the pics are rather low so you would prob have to enlarge the pics.

If anyone has any improvements on it input will be very nice.

OK my entries as i have explaind if the situation i have pointed out happens then i will trail my entries at the low of each candle, its prob a very slow way of entering but i just havnt developd the skill to enter trades on limit orders i know the possible areas of s&r but i just always convince myself not to trade tht way under the pretext of wht happens if it breaks out of tht area how will i know how big the stop must be and wht will be a relative ok area to take some profit and move to break even, for my by trailing i have a good perspective of where i would take 1:1 and move to break even and so on.

Ok thanks hope you can either learn or teach me somthing new
  • #2,807
  • Sep 5, 2010 2:50pm Sep 5, 2010 2:50pm
Quoting The Fool
Desire: I am better at trading than any machine because I want to succeed. I desperately want to avoid making mistakes and losing money. Focused will, well directed emotion, even if coupled with only moderate understanding, trump the lifeless "intelligence" of a machine any day.
Welcome to the thread, respected FF member, and thanks for your answer!

While what you say is very valid, it was the kind of thing that I ruled out by the "it's not about refined intuition or subjective judgement" bit. So there's something objective that's asked for.

Other ideas?
  • #2,808
  • Sep 5, 2010 2:55pm Sep 5, 2010 2:55pm
Quoting medici
Here's a question that you may want to reflect upon:

What is wrong with the statement 'I can see everything I need from my charts'?

Don't get me wrong, the answer has nothing to do with dissing funnymentals and news. We don't care about those. Rather, the answer is related to the answer to the question

How is it that human traders can be hugely profitable but algos (i.e. EAs and the like) have a harder time?

And, no, it's not about refined intuition or subjective judgement. There's an objective answer that has very much...
Its a bit deep for a Sunday evening but here's my take for what it's worth Humans need to learn to improve and will experiment and change their rules to try and improve, the charts are yesterday and a reflection of yesterdays news but tomorrows charts will be what we have learned today
  • #2,809
  • Edited 3:16pm Sep 5, 2010 3:02pm | Edited 3:16pm
Quoting CoffeeDrinke
Ok frankfurt open and london.
Eu1 i should not take tht divergence because it was not pushd to round number and it also did not form hidden divergence so it might very well form a fake out which it did, now tht london opend now i can look for divergence, it formd divergence after london opend and i took it.

Eu hidden divergence formd in franky so tht was a good trade.
Thanks. So if I understand you correctly, you are saying that at FO hidden divergence is the safer trend-following trade, whereas normal divergence (i.e. counter-trend/reversal) would in your view be too risky/low potential, right?
  • #2,810
  • Sep 5, 2010 3:11pm Sep 5, 2010 3:11pm
Quoting medici
Welcome to the thread, respected FF member, and thanks for your answer!

While what you say is very valid, it was the kind of thing that I ruled out by the "it's not about refined intuition or subjective judgement" bit. So there's something objective that's asked for.

Other ideas?
Ok. I like a good puzzle - let me get some coffee in me.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #2,811
  • Sep 5, 2010 3:14pm Sep 5, 2010 3:14pm
Quoting Eamonn
Its a bit deep for a Sunday evening but here's my take for what it's worth Humans need to learn to improve and will experiment and change their rules to try and improve, the charts are yesterday and a reflection of yesterdays news but tomorrows charts will be what we have learned today
Thanks Eamonn, but again an answer that fits under the refined intuition or subjective judgement heading.

So, it being Sunday evening, I should perhaps reveal the answer, but The Fool is in puzzle-solving mood, so we'll leave it a bit longer.
  • #2,812
  • Edited 3:17pm Sep 5, 2010 3:15pm | Edited 3:17pm
Quoting medici
Thanks. So if I understand you correctly, you are saying that at FO hidden divergence is the safer trend-following trade, whereas normal divergence (i.e. counter-trend/reversal) would in you rview be too risky/low potential, right?
Yes and no, if price is not close round number there is a bigger liklyhood of it faking out on normal divergence on london, so obv some times it will work but it will fail more times on franky than on london if not pushd to round number that is y i would rather take hidden divergence because its trend continuation and obv has a better chance of success

Sorry, not on london i ment to say more likly to fake out than on lodon.
  • #2,813
  • Sep 5, 2010 3:19pm Sep 5, 2010 3:19pm
Quoting CoffeeDrinke
Yes and no, if price is not close round number there is a bigger liklyhood of it faking out on normal divergence on london, so obv some times it will work but it will fail more times on franky than on london if not pushd to round number that is y i would rather take hidden divergence because its trend continuation and obv has a better chance of success

Sorry, not on london i ment to say more likly to fake out than on lodon.
Thanks, I think i understand. Those are very good observations that are in line with my experience, even though I rarely say no to a counter-trend opportunity...

Thank you very much for contributing your research.
  • #2,814
  • Sep 5, 2010 3:29pm Sep 5, 2010 3:29pm
Quoting medici
Thanks, I think i understand. Those are very good observations that are in line with my experience, even though I rarely say no to a counter-trend opportunity...

Thank you very much for contributing your research.
Thanks but i must say i have learnd alot from this thread, i just neva use to look at it tht way always just took divergence and it faild me big time past week so i had to look at it in a more structured way, i think it is prob more important for me than for you because i trade 15min so where 10pips might be almost enough to close on, i will not even take some profit seeing tht it usually wouldnt have coverd 1:1.
  • #2,815
  • Sep 5, 2010 3:31pm Sep 5, 2010 3:31pm
Quoting medici

So, it being Sunday evening, I should perhaps reveal the answer, but The Fool is in puzzle-solving mood, so we'll leave it a bit longer.
haha, right. Well in the interest of "moving along now" and since I have not read more than the last page of this thread, I'll have to admit: I'm stumped.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #2,816
  • Sep 5, 2010 3:55pm Sep 5, 2010 3:55pm
Med, is it something like an EA can't process enough data as the brain or something?? To me it simply comes down to, if an EA could be coded to reflect what one sees on a day-to-day basis, it would work, but would require a huge feat of effort
  • #2,817
  • Edited 4:29pm Sep 5, 2010 4:12pm | Edited 4:29pm
Quoting The Fool
haha, right. Well in the interest of "moving along now" and since I have not read more than the last page of this thread, I'll have to admit: I'm stumped.
OK, then, here we go. I will let my favourite trading psychologist, Brett Steenbarger, provide the answer:

My understanding is that an understanding of (and ability to read) order flow is one important factor that separates the older, successful generation of day traders from the newbies who only know simple chart patterns and indicator readings.

Now, what does that mean? Let me disclose that I am no longer in my 30s and started my electronic day trading career back in the day when there were no intraday charts - they hadn’t been invented yet and we were excited enough by being able to trade without phoning a broker. All that was available was the bid and the ask, last tick/trade, and depending on market perhaps also higher/lower asks and bids maybe with sizes as well.

Imagine trading intra-day without any charts and making money based only on current price and tick flow! Those were the days. The old timers called it reading the tape (see attached photo of ticker tape machine), and there's a good book from those days by Richard D Wyckoff called Studies In Tape Reading which can be found online as a pdf. Legends like Jesse Livermore used tape reading almost exclusively and said that "you can depend on it seven out of ten cases."

Yeah, right, but how important is that to us with our advanced charting packages and high-speed computer networks, you may ask. Let's hear what a trader who started out in the 80s, and who is #113 on Forbes' list of the richest people in the world - legendary Steve Cohen - said in a Business Week interview:

"...everything I do today has to do with those early tape-reading experiences."

See http://www.businessweek.com/magazine...2001_mz001.htm

Which brings one of the phrases I strongly dislike to mind - I am waiting for confirmation - such as when somebody says "It hit the support level and now I am only waiting for confirmation to enter." Well, if you know how to read the tape you don't need to do that. Enter right at the level.

And don't think that it's a matter of playing it safe or getting yourself a low risk entry - on the contrary. Those applying psychological methods to behaviour in financial markets have even identified it as a distorting bias, called confirmation bias. See http://www.investopedia.com/universi...ehavioral6.asp

So if you find yourself thinking "I am waiting for confirmation", you should know that you are suffering from a diagnosable disease and seek treatment.
Attached Image
  • #2,818
  • Sep 5, 2010 4:32pm Sep 5, 2010 4:32pm
Interesting post, will ponder on it
  • #2,819
  • Sep 5, 2010 4:36pm Sep 5, 2010 4:36pm
Quoting medici
OK, then, here we go. I will let my favourite trading psychologist, Brett Steenbarger, provide the answer:

My understanding is that an understanding of (and ability to read) order flow is one important factor that separates the older, successful generation of day traders from the newbies who only know simple chart patterns and indicator readings.

Now, what does that mean? Let me disclose that I am no longer in my 30s and started my electronic day trading career back in the day when there were no intraday charts - they hadn’t been invented...
So let me get you right here, are you saying because they traded the tape back in those days they had to act more on the price it self and if you wait for 'confirmation' you are not acting on the price but rather on a opinion which might lead to failure??

If so thts a very good observation, but if your 'confirmation' whteva it might be divergence,PA whteva you want to call it, is based on a succesfull pattern is it truely bad to have a biased opinion towards tht specific 'confirmation'.

Ex. pin bars, there is huge rave about them and big biases tht pins reverse the trend so if you had a biase about pins they reverse the trend and use it as 'confirmation' ignoring the current price movment you might be on the wrong with the current trend because of your wrongly assumed biase you hold towards pins.
But if you see weakening in trend whteva you use lets assume you use divergence and then wait for pins to form as 'confirmation' you would still be holding a biased opinion on the market but i mean its a rightly assumed biase so i would not see anything wrong with a profitable biase.

Is my thinking flawd in anyway, but take note i do understand wht you mean, so ppl look at price action then it forms and they would say they wait for indi to turn first or rubish like tht.
  • #2,820
  • Sep 5, 2010 4:57pm Sep 5, 2010 4:57pm
Quoting CoffeeDrinke
So let me get you right here, are you saying because they traded the tape back in those days they had to act more on the price it self and if you wait for 'confirmation' you are not acting on the price but rather on a opinion which might lead to failure??
You got it. Right on the money.

Quote


If so thts a very good observation, but if your 'confirmation' whteva it might be divergence,PA whteva you want to call it, is based on a succesfull pattern is it truely bad to have a biased opinion towards tht specific 'confirmation'.

Fine if you have the objective validation of those patterns, but do you, or do you believe in them?

Quote
Ex. pin bars, there is huge rave about them and big biases tht pins reverse the trend so if you had a biase about pins they reverse the trend and use it as 'confirmation' ignoring the current price movment you might be on the wrong with the current trend because of your wrongly assumed biase you hold towards pins.
But if you see weakening in trend whteva you use lets assume you use divergence and then wait for pins to form as 'confirmation' you would still be holding a biased opinion on the market but i mean its a rightly assumed biase so...

That's an interesting use of words.... Read that investopedia article again. It's called hindsight bias as long as it is not objectively verified.

Quote


Is my thinking flawd in anyway, but take note i do understand wht you mean, so ppl look at price action then it forms and they would say they wait for indi to turn first or rubish like tht.

Rubbish, indeed.

It's about trading without belief and bias, which is very hard for us to do. When I mess up it's either because of biases and beliefs or because of not being 100% focused (which typically leads to the former).
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