There are no secret patterns and there will never be one

A little bit about me. I had no professional training in markets until I got my current job (with the aid of knowledge from FF, so I was a pure outsider before that). The only thing I had to get me started was a suggested reading list from Goldman Sachs University (its online somewhere) and ForexFactory. This is why I am writing this thread, to give back everything I took from this place and hopefully aid a couple of coming traders to become profitable. THERE WILL BE NO COMMERCIAL MATERIAL INVOLVED. MY SELFISH REASON FOR STARTING THIS THREAD WILL BE PAY BACK WHAT I OWN TO THIS PLACE, PERIOD.

This message goes to all struggling traders who are still in the stage of confusion.

What is the stage of confusion?? It is when you are still unclear of WHAT YOU ARE DOING, WHY YOU ARE DOING IT and maybe HOW YOU SHOULD DO IT. This stage of confusion gives a very bad habbit of switching methods from methods, trying to find that prefect entry with low risk and high reward, known as HOLY GRAIL. Yes, it does exist, but you will be disappointed at what it is. (Mainly because its not mystical, but very logical. Come back to that in a min)

In trading, there are only two elements. PROFIT, LOSSES. So what the deal? You just gotta make sure your profit is bigger then your losse, PERIOD. That really is all. So, how can you do that? There are a few ways in gerenal. (Not talking in strategy wise, but Numbers wise.)

1.) A lot of small profits and less small losses.
2.) Huge profits and higher frequency but smaller losses.
3.) Anything between the two.

Now, here's the part where most beginners are looking for. "HUGE PROFITS and very little or no small losses". I can say with 100% certainty that, yes, such a method does exist, but it has nothing, NOTHING to do with the magic MA CROSSES, SECRET PATTERNS, THE GRAIL INDICATOR etc... The method is called "foreign capital" and "Understanding of the market". I will say it again, "foreign capital" and "Understanding of the market". Do you get it yet? Will let you some time to think about that.

There is a tendency for traders to look for something which I called a "punch bag". The punch bag is used to shift their self guilt and pain from losses due to the lack of ability and understanding. The most popular punch bags? MA settings, Chart Patterns, Supports etc... Think about this. How many times have one said after a loss, "Oh, this Pattern is SH*T! Made me loss xx$!". THAT IS CALLED BLAMING. Whenever you made a loss, YOU ARE RESPONSIBLE FOR IT NO MATTER WHAT METHOD YOU USE OR WHICH PERSON YOU GOT UR SYSTEM FROM. This responsibility shifting behavior will continue as the person will find another possible target to blame on, i.e. a new system.

The truth is, the only thing you can blame on, is the lack of understanding of the market, which is within yourself and has nothing to do with the outside environment. What I mean by understanding? Understanding gets you away from GAMBLING. Knowing WHY you are doing it and not just do it blindly, or follow the signal till death of your account. If you cannot explain why your method works, YOU ARE GAMLBING. Even with a expectancy of 90%+ with 20yrs data backtested, you are still gambler, NOT A TRADER.

Let me give you an example:

You found a pattern that gives 80% win ratio from 20yrs back testing. You go ahead to trade it, makes you profits, no? But one day, everything changed. The signal begins to fail rapidly. You are taking 10 conservative losses. "HEY! I KNOW ITS EXPECTANCY IS 80%, I WILL JUST KEEP GOING AT IT, EVERYTHING WILL BE FINE!" You will be surprised how many so called traders blow their account by doing just that.

The main problem with that kind of trading? (I know I will get a lot of ppl going against me after I said this especially on FF.) EXPECTANCY GAMBLING without understanding the market. I can tell you, the market changes MUCH FASTER then most people think, especially with the introduction of electronic trading. You got to know what's behind the moves. Here, take some candy.

1.) Dealer money - Intra day kings
2.) Funds money - The elephants, why? Once they move, its hard to stop. TRENDS anyone??
2.) Hedgers or users - The boring business guys

Understanding their roles in the market. How they conduct their business. What changes will gives them incentives to act?

Do you still worship your lines? Does your line have meaning to it? More then a dealer's incentive and action? The line cross signal beating the dealers, in their own grounds? I dont think so...

Back to the foreign capital thing. I was talking about low risk, high return. How can you keep ur losses small??

1.) Small stop loss - Ask yourself are you god? Can you seriously PREDICT to the pip or 10pip range that price will bounce off and shoots right off the charts on ur entry? Maybe for a short time when you are exploring some market edges. But this requires a LOT of KNOWLEDGE about the market. Those who are doing it will know what I am talking about.

2.) Starting out small - A lot of room to breath, much higher sucess rate. But hey, smaller size means smaller profits!

Most focus on number 1. Surely it is much more comfortable to trade like that. It is the traders dream to become millionaire by a few trades like that. Come on, WAKE UP! You will not be able to predict flow to that precision unless you are doing something naughty called front running. You cannot predict flow, unless you are a dealer who SEES the ORDER coming in onto your book!!! (Maybe if you are a super hacker). You cannot know when a fund manager will make the call to purchase or sell a certain product. You will get better success at trying to predict when they will go to the toilet during the day.

So what now? Ever heard of something called scaling in??? Prymid??? Go do some research. You wanna know strategies of a top trader in Goldman Sachs? I just told you btw. Yes, i say that again "Ever heard of something called scaling in??? Prymid??".

The point I am trying to make? This guy who is really good with EA's from FF said it best, (I believe his name is RR, you will find him everywhere with EA's) flip a coin, heads for long/short, tails for short/long, trade till you are profitable. Entry! Does it matter? Yes it does, but it is not the main part of a trade, its only the beginning!

Take this as an example. Take any price from the market. ANY that price is currently at now. What will price do in the future? Do you know WHERE IT IS GOING TO GO?? Again, are you GOD? NO, you are not. But you KNOW, with 100% certainty that in the future, price is either ABOVE or BELOW the current price. DUHHH! But this is all you need to know! Why make it difficult, with all those lines flying around ur charts and 100+ readings below? You know, its either ABOVE or BELOW current price?

Brb, I need a rest, feel like a nice cold drink in these hot days. *Many mis-spelled words, but cannot be bothered to go back and correct.

For everything in life, there must be a balance. How about trading? Are profits and risk balanced? Ask yourself! Are you profit focused? Risk focused? Or both?

I can tell you that most are PROFIT FOCUSED. Yes, you are only looking at the reward! This, in my point of view is the real killer of accounts and years of hard earn money. How many times have you heard, I DOUBLED MY ACCOUNT, I GAINED 125% in 2 months etc... Do we hear about the risk? The truth is, a high % of gains in a relatively short time would require you to take very big risk levels.

Use this as an example. When you are trading a 90% accurate system, with a risk to reward ratio of 2:1, how much will you bet? Its a trick question. Think about it:

(I am not a fan of % that, % this, but use the maths for this example.)

1.) You will hear people saying, 2:1 with 90%, you can own the world in less then 1000 trades if u bet 50% of the account.

2.) Betting 50% of the account is impossible. Take this. Get rid of the 90% win. Use 10% failure instead. What do you see? Sounds much more scary, right? So how easy it is to get 2 conservitive losses? Are you going to risk 100% of the account just like that? How about 10 conservitive losses? IT HAPPENS! Even with 90% win systems which have been back tested and forward tested for a considerable time. I seems them fall to their knees! WHY?? Market changes, FAST. No, VERY FAST.

So, what do we do? LEARN TO DEAL WITH UNCERTAINLY INSTEAD OF SEARCHING FOR CERTAINLY. RISK! RISK! RISK!

How do we do that? TRADE MANAGEMENT.

Need shower. Trading is smelly business.

Thanks for sharing so what's the 95percent accurate system?

From what I see during my work:

Professional traders ALWAYS gives themseleves margin of error. Otherwise, why would they scale in? Why would they prymid? If you know you got the best cards on the table in a poker game, wouldnt you even bet your family? But what do professional poker players do? They add when cards get showned. Same as professional traders.

This is enough to show that THEY DONT KNOW. I am talking about full time profiessional at the tallest towers in the city, with the best resources and support given. What makes you think smelly, naked and most likely fat bellyed sugar high home traders like us could find certainty?

In a way, we have been brainwashed by the commercial world regarding the magical power of forecast. But I can tell you, forecasting is a TOOL. It has NO POWER ON ITS OWN. The power its in YOU:

What YOU do at the entry
What YOU do when winning
What YOU do when loosing
What YOU do when exit

Think about it... Can you control the market? Can you control Price? Can you control Volitility? Can you control whoever controls the market? (If you are a super hot chick, you might) So, what can you control????

POSITIONING SIZING AND TIME OF ACTION

So why not focus on something YOU can control? It is the ONLY thing you can do as a small trader!

FORECAST? Case study: Top economist gets famous by predicting 1 big crash. But anyone told you how many times they got it wrong before that one time sucess??? So, is it luck or intellect? Maybe a bit of both?

Did I hear calling for a system? This is excaltly what I mean. I already said, NO SYSTEMS, NO METHODS, NO EBOOKS, NO MENTORSHIPS (I am not that good yet), NO SIGNAL SERVICE, just faith of some new traders getting to realize what they really could do to combat the market.

Dont blame me for writing a lot, I am on sick leave + public hoilday coming up this week and I missed the actions at my workplace and writing keeps me going during these boring times.

Now, forget the above. I wanna take the chance to say a thank you to a great man, who residents on FF. He shared his knowledge freely and teaches anyone who comes past. Not only he taught how he traded when he was in a bank, but he also teaches how to live your life as a person since he is experienced in that also (retired old guy - old in the good way, not the saggy type). Whom are interested should pay his thread a visit, you will find him in the trading discussion board.

Take this as a treat before I take a few sleeping pills to make me sleepy. I hope a few could understand what I mean.

MOST METHOD FOCUSES ON FINDING PLACES WHERE PRICE WILL GO TO.

But what about: PLACES WHERE PRICE WOULD HATE TO STAY.

Think about it, the later is much much more rewarding, but first, you need understanding of the market. I strongly suggest dropping ur system searching for now and get a few books on market structure.

Sleeping pill time.

Nice thread.


"LEARN TO DEAL WITH UNCERTAINLY INSTEAD OF SEARCHING FOR CERTAINLY. RISK!"
I'd rather search for certainty, to get it over with. Then, there's less uncertainty within myself about how much I can possibly know about the market. I can live with the market's surprises and thus be more consistent.

"systems..methods..mentorships..signal service" :
I worked to make lots of them with 2-3 simple devices, until I finally realized I'd never get an any-situation approach. Now, I adapt the devices to what the market presents, and expectations are per trade.

"What is the stage of confusion?? It is when you are still unclear of WHAT YOU ARE DOING, WHY YOU ARE DOING IT and maybe HOW YOU SHOULD DO IT."
The first was a tough one, the second will always be tough, and the third I'll probably never get to (since it resembles the HG.)

Thx Ha. The only certainty in the market is CHANGE. All the hours of work going into finding the certain methods will eventually lead you back to the same conculsion, YOU CANNOT PREDICT, THAT IS GOD's WORK, NOT YOU.

Not intended to get religious on you, but if God is all knowing; knows everything there is to know all at once -- no learning curve, then technically, He doesn't predict.

Excellent post.

great post mate!!

Nice affort on making the point to stay flexible while trading, i will humbly say
that is also important for everyday life. As rigidity its really a barrier to discover
wisdoms and knowledge.
Think you've missed the part about self-discipline. Will be nice to see what is you understanding on that part.

"MOST METHOD FOCUSES ON FINDING PLACES WHERE PRICE WILL GO TO.

But what about: PLACES WHERE PRICE WOULD HATE TO STAY."

Very interesting, here is what i think. 2parties bull and bear; price stay where both parties disagree on price and participate. Price "hate" to stay where both parties still disagree on price and one side is not participating. pls correct me if you think differently.

To slack: Okay, I will never raise the issue of GOD in this thread again. I wanna focus on trades for the moment.

To Eurotrash and Smallpotato: Thx for the support, it takes a lot of effort to write something out for free. I am a greedy bastard afterall, its hard to get use to it.

Regarding the bull and bear discussion. You are right, but what would be the reason to generate such hate for the place from the bears or bulls? There is always a CAUSE LEADS TO EFFECT. ALWAYS. Don't search for the PATTERN FIRST (backtesting, curvefittings focuses on FINDING THE PATTERN). SEARCH THE REASON, THEN UNDERSTAND ITS EFFECTS. There, you have what they call EDGE.

Here we go again. Some technical candy for all the technical lovers.

Prices have 3 elements:

1.) Velocity
2.) Acceleration
3.) Direction

You hear experienced traders talking about "starts selling when its coming down, start buying when its going up". BUT HOW DO YOU KNOW IT STARTS GOING DOWN?? HOW DO YOU KNOW IT STARTS GOING UP??

Think about throwing a ball. When do u know it will start falling? Come on, think harder! Price, is the same as the ball. Here, make it even more easy for the lazy minds:

A = +ve, V = +ve, D = +ve
A = 0, V = +ve, D = +ve
A = -ve, V = +ve, D = +ve
A = -ve. V = 0, D = +ve
THEN????

Is this prediction? NO, this is OBSERVATION, and this is a METHOD OF OBSERVATION. This power of observation is BUILT IN inside our brain. BUILT IN, BORN WITH, OUR NATURE SKILL. You ever wonder what are all those maths guys are doing in trading houses? They are trying to quantify this power of OBSERVATION. You have what the machine wants. NEVER LOOK DOWN ON WHAT YOU ALREADY HAVE.

Re: My last posts

Observation, but observation of WHAT?

There are only two governing forces in the market.

The moving force and the resistance force.

Moving force is MARKET ORDERS

Resistance force is LIMIT ORDERS

I have said enough for now. I will have some Moon cakes.

http://4.bp.blogspot.com/_EibMqi9ndj...0902079C-3.jpg

dude, what is the point of this thread.

get to the bottom of it already.

Trying to help some souls to get away from commercial tools for forecasting and dig into whats important - Trade Managment. (I think i said it before.)

I am glad you are reading, thank you for that. Be relax, I have 2 more days of holiday. I will get everything out, let me finish my moon cake.

Whilst I admire your intention, don't you think the whole ethos of this site is to get people away from commercial crap that doesn't work?

although I suppose there's no harm in repeating it.

You will be surprised regarding the % of commercial stuff are in this site. FORECASTING in itself is a commercial product. Great prop firms do not forecast, they operate, they manage, they control. Do you see the differences? No? Give me some time, its hard to get stuff out of my head into words.

Can I ask how I find this thread you are referring to?

I searched for "retired old guy" but didn't find any related thread.

Thanks,
Joe

Edit: Nice looking moon cake btw

My frd, I don't intend to start a marketing campaign for him. There are a lot of pages in his thread. "HINT?". You know, in the menu, you can click Posts



Now please, lend me your brain for a minute.

As I said before, (wait, let me find it and copy and paste)

"Take any price from the market. ANY that price is currently at now. What will price do in the future? Do you know WHERE IT IS GOING TO GO?? Well, are you a seer? (no more GOD is used) NO!

But you KNOW, with 100% certainty that in the future, price is either ABOVE or BELOW the current price. DUHHH! But this is all you need to know! Why make it difficult, with all those lines flying around ur charts and 100+ readings below? You know, its either ABOVE or BELOW current price?"

Give it some time to think about this. How can you grind the market based on this fact? (yes its a fact, look at ur chart! the future price is either ABOVE OR BELOW).

You see, ENTRY is merely a REFERENCE POINT. This is the main point I am trying to make.

In the system section of this forum, offers 1000's of ENTRY AND EXIT CONDITIONS. All that effort spent searching for the BEST ENTRY. But let me stress this one more time:

THE ENTRY IS JUST A REFERENCE POINT. Call me annoying, but I am going to stress it really big.

THE ENTRY IS JUST A REFERENCE POINT.

What does a reference point do? To see if the market is above or below it. THAT IS ALL.

This is the point where I need you all to start thinking. How can you make money based on a random entry? Imagine you are a prop trader of a fund, (Imagine only, no fund manager is crazy enough to risk real money to do this experiment) your boss would walks in every morning, looks up into the sky. When a plane fly across, he will shout "LONG" and you have got to enter a long position in the market. The next plane comes across, he would make another call, SHORT or LONG or ALL OUT depending on his mood. *IN BETWEEN HIS CALLS, YOU DO ANYTHING YOU WANT WITH THE POSITIONS, AS LONG AS YOU DON'T GO OPPOSITE DIRECTION OF HIS CALL! SORRY TO HAVE MISSED THIS OUT.

The really good traders would love these kind of games and I can tell you most of them will come out in profit. I have seen a few do it.

So whats the deal? HOW can you achieve profit even under such conditions? Really, it can be done. So please, feel free to write out your thoughts. This thread is not for me, its for you.

Here, use some tools to put the puzzle together:

Position sizing, Scaling in, Scaling out, Prymid, Stop loss, Breakeven, Small Profits, Large Profits, Trends, Loosing Position, Winning Position, Compound return

Will most likely come back tomorrow. No trade for me today, its family day here. Happy moon day to you all.

Very interested to see where this is going.