There are no secret patterns and there will never be one

Maybe the author of the pdf should answer that question. He seems to be knowing all........ I bet the author is not a trader.If he was he would confuse himself. With all the knowledge he have he must be a skilled successful trader. Is he? The conspiracy between the various types of traders and their strategies against each other sounds like a hollywood movie to me.

It is just another forex article. Interesting here and there but the contents will not empower you to master the fx market.

With all the roleplayers and type of traders he describes, the only conclusion i can come up with is that the market is random. And certainly not predictable even if you are skilled and well informed.

If you know how to protect your account against losses and being diciplined about it you will survive. Period.

Only large roleplayers like the bank of Japan knows what will happen to the market when they manipulate it. No skill needed here. No fancy pdf needed for them to put on a trade. LOL!

The good, the bad and the ugly:


Good one.
While this helps me to the food chain:
large roleplayers -- manipulate the market
direct order-flow readers -- tap into the market
general public -- anything goes
: it misses the point that the last one is the toughest to do well at.
Not again....

I can not believe that anyone could read the FTI thread and come away with so little respect and so little understanding.

It is not FTi's method i am negative about, it is his way of putting his message across. His method is outstanding!

Originally Posted by RandomGamble http://cdn.forexfactory.com/images/buttons/viewpost.gif
the market is random.

The market is random in the sense that you cannot predict it.
The market is random because hundreds of thousands of roleplayers are long and short simultaneously creating unpredictable up and down and sideways movement irregularly. The strongest win. Nobody knows who are the strongest untill the market takes off in one ditrection. Also unpredictable.

If the market wasn't random , then most technical traders would have a 100% winning ratio.
If the market werent random then more traders would be successful, because trading would have been simple
If the market werent random then why does the market take off in the opposite direction of a fundemental announcement when clearly the $ has been effected by it in such a way that the direction is easy to predict after such an announcement?

the thread: Technical Analysis Fallacy is a good reference for the shortcommings of technical analysis and how this market should be traded. ( Just not an easy read)

Can randomness be traded? Yes it can be traded successfully.

There is no need in studying the pdf presented here in order to know whom you are up against. If educational material about this market was that effiecient then many more traders would have been successful with forex trading.. Most people can read and learn. Why are they still unsuccessful?

Answer: Simple. Most educational material is harmful to say the least. I believe forex education in the traditional way is deliberitly presented in such a way that traders believe that it is the ONLY way of dealing with this market . The real traders use technical analysis against other traders to profit. Example: Most bigger roleplaers who can move this market knows ( without seeing) where traders stoplosses are. How ? Because all educational material tells traders where to put their stops and ALL new traders do just that. Only to be slaughtered time and again. Educational material then suggests that you keep on trading with "tight stoplosses" to protect your capital. You are then stopped out repeatedly because the educational material advised you so. No wonder traders give up so early in their trading careers.The hunting of stoplosses is a contributing factor to randomness.

If traders pay less attention to what is dished up for them in educational material and start looking at this market with their own eyes then some would perhaps find a turning point in their trading careers.

I'm gonna have to read this thread.

If you are talking about pure randomness then no, it can't be traded succesfully. Especially with spread.

It's the same as you would say that you could play heads and tails succesfully, even if every tenth flip would always be a loss.

There are no 100% absolutes in the market. There are points where the movement is not totally random but it's not totally certain either. It's somewhere between and usually closer the random than certainty. That's why risk management is essential - you never know when the risk realizes and when it doesn't.

Holy horse. I can't get why people react so sensitively when someone says prices move in a random fashion or trading is gambelling. It's like I said your mother was a prostitute. Was she? Then you shouldn't be upset by the truth. Oh, she wasn't of course. Then why are you upset if someone is talking bollocks? It's nothing unusual these days. Just turn the TV on or read the news.

I know I shouldn't answer to this post but how was I "sensitive"? I really don't understand what you are talking about.

No, mikkom, I do think there's a lot of sense in what you said. Pure randomness, that is. Nobody said pure randomness.

If I have a white shirt with 2 stains of mustard on it, it's still a white shirt. It's not a mustard shirt, is it.

Soo, if there are some repeating patterns, and there may be a direction on the longer term (bull market, bear market) but the vast majority of up and down price changes are unpredictable, is it random or not?

Unpredictable is mere perception.

What's unpredictable to some is due to either their outlook or situational disadvantage.

Even the order of randomness in doing the most random thing ever, such as flinging dogshit, can be predicted, as one law always lends itself to the next. Because it's random to one person or all people, it still isn't random, it's just of a higher order.

Yeah Sim, you're quite right. I must agree I'm really ignorant about what I perceive as random. That must be reason, yeah. Good thoughts.

Accept my salute for speaking out truth

Here is a very simple reason why those good looking indicators will not work-

Each and every one of us is following a different method to trade. One guy is using SMA, another one is using EMA, another one is using MACD, another one is searching for clues based on volume, another one is using candlestick, another one is using pin bar....infinite methods..add to it..everyone is using a different TF to follow their own indicators.

MACD is going to work perfectly if each and every one who participates in the market follow it with the same set of rules and on same TF. Then trading will turn out to be 'first in first out game'.

It is a global mess- Everyone is following their own indicator which is putting temporary pressure on price but majority of traders loose in the end. This individualistic behavior is responsible for 95% failure rate.

How can you win in this global mess?

There is one only one way to win. Only one. Think about it- Every one is following their own indicator/trading method. Collectively, what every one is doing is reflected in the price and movement of price.

Collectively, what every one is doing is getting aggregated and reflects on price movement. Reading the markets is the only way to become a top class discretionary trader. For a top discretionary trader, The money flows into the trading account effortlessly.

Reading the markets without any indicator gives you in single glance the result of all individualistic behavior.

To become a top discretionary trader calls for hard work, patience and making journals/discipline. It is not an automatic robot trading method.

Think about a very simple question- The MACD which are you following or SMA 20 which you are following- How many other guys who are trading are following the same set of indicators on exactly the same TF?

The answer to the above question is negligible traders are following exactly the same set of indicators on same TF. Given the ocean of indicators combined with variety of TF, every one is on their own.

Traders have to leave this individualistic approach and try to understand the 'collective behavior which is reflected purely on price.

Being busy, I won't get to post here everyday, and I won't be able to respond to Private Messages, sorry about that. If you have sent a private message and have not received a reply, don't take it personally - I just can't start doing that, else I end up doing nothing but that.

The idea behind being consistently profitable in the Forex, is to have some understanding price behavior and why price behaves the way it does, at any point during trade execution decision time.

The facts about our business are quite simple:

 

1. Enter/Exit the market at the wrong time, lose capital.
2. Enter/Exit the market at the right time, net capital.

Those are not so-called "Rules." This is simply the reality of any traded market where you have taken a naked position. However, this does not necessarily apply to non-directional trades and/or certain/particular option strategies, though there are right times and wrong times to enter those types of trades as well. The singularly most important idea behind trading options, is ensuring that the entry into the strategy is done so during a period containing enough Magnitude (volatility), such that the options strategy can "net out" appropriately, as designed. There is plenty of good information on trading options out there, I won't belabor the point, here.

So, what's the problem? In one word: fear.

Fear is brought about by having lost capital in the past on trades where the trader formulated a positive expectancy prior to taking the position. That loss of capital came as a direct result of a failure to understand the true definition of Price Action, because had there been a true understanding of Price Action, the capital loss would have been negligible, at worst, in the aggregate.

The failure to understand the true definition of Price Action, comes directly from a lack of knowledge and a lack of knowledge comes from a lack of study and research. The rest comes down to mental/intellectual capacity, where any 12 year old would qualify to become a successful trader, on that score alone. So, the real crux of the matter is not how smart one might be, but how much one really wants to be successful in the business of trading and how much effort they put into learning the ropes.

Wall Street, has been awash for eons with highly intelligent human beings that have managed to fail at trading the markets. The financial markets have a way of tossing the most academically successful people to the street, upside down and on their heads - in a matter of weeks or months. Thus, it is not the gifted I.Q. that determines trading success. Determination, drive, motivation, focus, and a willingness to do the homework required, are what typically sets apart the successful trader, from the un-successful trader, in the aggregate. Others are successful merely because someone handed them their success on a silver platter (nothing wrong with that by the way), by showing them precisely what to do, how to do it and when to do it - a known successful formula. Those opportunities don't come around as frequently, as those who make their own way, through hard work and commitment to the Practice.


What is true Price Action?

True price action is price behavior which is consistently measurable, consistently identifiable and consistently predictable within a range of acceptable margin of error, or deviation from the norm, such that a profitable trading model can be sustained over time.

Every ounce of time a trader spends on research, that has nothing to do with understanding price action and/or money management, is an ounce of time (quite frankly) wasted.

Once the trader has found the Price Action they intend to use (whether one or more Price Actions are used in combination), the issue then turns immediately to Money Management and whether or not that particular researched Price Action contains enough Magnitude to extract from the market, the profit necessary to maintain a positive slope equity curve. It does not matter whether the trades are executed manually or through an automated Bot. The goal of every "for profit" trader, is a positive slope equity curve. Anything less than a positive slope equity curve means that true Price Action is not being used as the basis for making trades, which in turn, is a direct result of the success or failure of the research done, to produce the evidence for true Price Action in the first instance. Every successful trade is so, because Price Action was favorable at some point prior to AND subsequent to trade execution.


How does one find true Price Action?

Well, just Yoda might say something like this:

"The secret to locating true Price Action, that there is no secret to locating true Price Action. What's hidden in full plain view, is the very thing that most traders hardly ever see, and that is what cloaks its ultimate secrecy."

The trader needs to come to the realization that true Price Action is "perceptively ubiquitous throughout the market." Again, Yoda might say: "It surrounds the market." "It envelopes the market." By definition, true Price Action reveals itself in the form of Patterns: patterns of Time, patterns of Price and patterns of Volume. So, now, we've come full circle, back to the very thing that is said to not exist - Patterns.


Why do Patterns exist in the first place?

This whole thing comes down to an understanding about the Universe in which we live out our lives: There are no random coincidences. Not one. Not even a single one. Not even a fraction of a single one.

There are no random happenstances in the Universe - you won't find one anywhere. Think about it. If the Universe were truly "random" and truly "chaotic," there would be no human beings, no earth, no solar systems, no galaxies and most importantly, no laws of physics existing independent of our ability to perceive them. Gravity and Electromagnetism cannot be explained in the absence of the Strong and Weak forces of the Universe. Yet, both gravity and electromagnetism as inextricably tied to the existence of every single component coded into the Periodic Table. Tweak either gravity or electromagnetism, and you dissolve the entire Periodic Table, at once - including every single human being that has ever walked on planet earth. Why? Because, at the very same time, you will have tweaked the entire known Universe, right out of existence, as well. Cause & Effect.

Cause & Effect, net Patterns, by definition. And, we live in a Cause preceding Effect Universe by way of fact. Thus, if Effect always follows Cause, then the existence of Patterns must therefore equal True. If the existence of Patterns equals False, then Effect would not be bound to follow Cause and thus, Cause would not be necessary to produce Effect. And, if that's the case, neither the Strong or Weak forces in the Universe would be primordially essential elements in the subsequent formulation of either Gravity or Electromagnetism. Thus, Patterns not being True, argues against its own existence. So, much for "Patterns" not existing.

The only question the trader needs to deal with is: Which Pattern can I Exploit for Profit. Thus, Pattern exploitation becomes the name of the game. Find the "Pattern" then exploit the Pattern - on a consistent basis. That's trading. The rest is inconsequential at best.

So, one might say:

'Ah, WaveTop! I don't believe that nonsense. You are using hyperbole just to deliver a personally held belief. I don't trade "Patterns" and look at me, I'm a successful trader. I trade random walks and use good money management, that's how I thrive in the markets.'

Well, try walking with me through a logical extrapolation of that would-be statement about random -vs non-random events. Let's see how that logic hold up to scrutiny.

Adolf Hitler, was no more random than Jack the Ripper. 911, was no more random than Pearl Harbor. The New Orleans Saints, winning the Superbowl, though a massive miracle (lol!) was absolutely no random event. It may have been a prayer delivered from Heaven itself, but it was no random walk through humanity. The Saints, won for a very good reason. Patterns! The Saints winning, is a great example of very large patterns in history, repeating themselves.

But, someone might say:

"Aha! I got you WaveTop. The Saints, never won a Super Bowl before, so it had to have been the very time in human history - ergo, the "pattern" could not have existed before! I've got you now, WaveTop - right where I want you. "

To that I would say: But, who said anything about large historical patterns involving only the Saints? What if my concern had nothing whatsoever to do with the Saints in particular, but in Football in general? What if I executed my position based on the fact that at some point in human history, some NFL team that has never won the Super Bowl, would simply - win one at some point in the future? Would my position have paid off? Absolute, yes! Why, because my position was not taken on the smaller scale wrapped around the Saints, it was taken on the larger scale wrapped around the entire NFL. At some point, every team inside the enclosed system called the NFL, will win the Super Bowl for their franchise.

How do we know? Simply because more than two teams have already won the Super Bowl, and that is a Pattern that cannot help but be extensible to the entire system. If you are with an NFL franchise, your chances of winning the Super Bowl are virtually guaranteed. The only question that remains is: When?

One of the huge problems with using random event language (prose) and random event models as human beings, is that we are finite beings, incapable of peering forward or beyond the event horizon. We are unable to see beyond the event horizon, and are bound by an inertial reference model within our own Universe. Thus, we are unable to perceive of a Universe that does not contain dimension of Time. Only that which is infinite is capable of perceiving our known Universe, absent its dimension of Time and for that entity, there is no such thing as a random walk and all events are equal. Thus, there is an abundance of order/pattern to the Universe everywhere we look, yet we have a very hard time coming to grips with that reality.

The Forex is a multi-dimensional Price, Volume and Time based model, yet the trader always sits just shy of its event horizon, which unfolds on each tic. We always sit at a relative position with respect to Price, Volume and Time, that is inferior, not superior to the Event Horizon. By definition then, we are always observing Patterns in the process of their unfolding on the "Time" side of the event horizon, and not on the side the contains No Time dimension. To understand this fully, one needs to understand that there is an existence beyond our perception of Time, and yet directly connected to our past and present.

How do we know that? Because, Effect (a direct consequence of Cause) cannot be made manifest in our Universe, unless or until catalyzed by an event in Time. Since we know that Effect must come after Cause, and that Cause must be contained in Time, we can with great certainty, be confident that Effect exists already outside of Time itself, if (and only if) Cause exists inside Time. Thus, if the Pattern exists in our frame of reference, then there must always be a portion of that Pattern which also exists outside our frame of reference, else the Pattern can never emerge Time as an Effect of Cause.

Thus, those "Patterns" that were researched according to the earlier statements above, have already been completed beyond the Event Horizon. You can never trade the future as an infinite being. You always trade the past, from the present, which has already happened in the future.

Difficult to swallow, I know. And, I fully understand. But, once you get it, you will begin to see "Price Action" unfolding like you've never seen it before. You primary task will then become, picking the best Price Action Causalities that lead to the Price Action Effects that you need to keep your capital growing and your equity curve, positive. The rest is literally, history. The part that people will get hung up on is "trading the past, from the present, an event that already happened in the future." You will need to work that one out on your own. Give it time, let it resonate for a while in your subconscious mind.

This has everything to do with simply accepting the fact that any previously researched and proofed Price Action (Pattern) from within the trader's frame of reference (Time), would never have been "researched and proofed," absent its existence beyond the event horizon, in in a dimension that is at the same time, outside the trader's frame of reference. Why? Because, if the Price Action (Pattern) has been proven to exist, at least a portion of that Pattern it must also be the Effect of Cause as it unfolds, and we know that true Effect cannot instantiate itself - it cannot bring itself into our frame of reference on its own.

Thus, for each Price Action (Pattern) found by the trader, there is a continuously unfolding and emerging portion of said Pattern, continually evolving on the event horizon, that has not yet been fully made manifest in his/her frame of reference (the present). Which means, the Pattern must exist somewhere else, before it comes into our existence. Our difficult is in understanding the "somewhere else" part. But, that's a function of not properly understanding the relationship that Effect has with Causation inside a finite frame of reference. Another way to think about it would be to say that Effect, extends beyond our physical reach.

Adolf Hitler's actions were not random, nor was his existence. There were clear cut Patterns that existed in the world, long before Adolf was born, which helped to give rise to the emergence of Adolf in the global consciousness. Did Hitler have a choice in his actions/patterns/behavior? Absolute, yes - we all do. Then, if Hitler had a choice, why did he become "Hitler?" Well, Hitler, became "Hitler," because he made choices that plugged him directly into "Patterns" that preceded his own existence as a human being. He used those Patters to produce human suffering. He repeated those Patterns, because he could predict their outcomes with relative certainty. Had he plugged into a different Pattern library for his life (equally available to him at the time of his birth), then the Hitler that we now know and loath today, would not have been the "Hitler" of our historical reference, covered in so much blood. He could have very well competed with Albert Einstein, for developing a Special Theory of Relativity, all to easily - had he decided to plug into different "Patterns" for his life.

There isn't a singular event in our known Universe that happens without First Cause/First Premise, leading to Effect. There can be no Effect, without there first being a Causality, for all things finite.

Now, someone might say the following: If patterns exist, then why can't we predict the next underwater earthquake that will lead to a Tsunami crashing into the coast of some country and prevent lives from being lost?

Answer: We can, if we really wanted to do that.

Are we aware of underwater earthquakes? Yes.
Do we have research on some of their attributes? Yes.
Have we compiled empirical data on their physical nature? Yes.
Can we study the geological tracks they leave behind? Yes.
Can we study the Marine ecosystem impact left in their wake? Yes.
Can we quantify aspects of the relationship between their existence and Tsunamis? Yes.

Would having access to such pre-event horizon research, tell us precisely where the "next" underwater earthquake will take place? No. Will such pre-event horizon research provide us with specific details about the resulting Tsunami wavefront? No. Will such pre-event horizon research tell us somethings about what to expect as a result of having Tsunami strike the coastline? Absolute, yes.

Why? Because:

 

1. The Patterns from previous underwater earthquake driven Tsunamis exist.
2. We know there will be another underwater earthquake.
3. We've mapped many underwater geological fault lines.
4. We know the relative position of coastal areas with respect to underwater fault lines.
5. We know the population statistics and the building construction technology used on those coast lines.
6. We have empirical evidence on post-Tsunami damage to coast lines, after a catalyst underwater earthquake.

Thus, we may not able to "predict" the future in express detail on the next underwater earthquake that causes a Tsunami. However, we stand on pretty solid ground that another underwater earthquake catalyzed Tsunami will occur and when it does, that we can also know a range of expectations and a reasonable margin of error to look for as potential outcomes when the event is detected.

Therefore, the opportunity that the trader has right now, to prepare and position him/herself for the "next Tsunami," (Pattern) is precisely the exact same opportunity that Adolf had before he plugged himself into known "Patterns" that would ultimately see him become, "Hitler."

There is an old saying that, "there is nothing new under the sun." And, "its all just a little bit of history repeating." If somebody plugs themselves into the wrong "Patterns" again, we could see yet another "Hitler" emerge, just like we could see yet another underwater earthquake caused Tsunami. These are not random events. These are clearly Pattern driven events that have their roots in Cause and Effect. The earth's crust is in a constant state of motion, that's the Cause. Human beings are in a constant struggle to control and manipulate, that's Cause. Thus, the Effects, once understood, should be no surprise.

Rest assured, as long as there is a Forex market to trade, some (known) "Pattern" will always be lurking, just beyond the horizon. Finding a way to consistently plug into it, is our mission.


[ Disclaimer: I realize that I used the name "Adolf Hitler" in this post. Let it be well understood by all, that all such references to "Adolf Hitler" were used only to highlight examples of truth and to provide historical perspective when and where needed. No attempt to glorify and/or pacify the behaviors, actions and/or deeds of "Adolf Hitler" were intended. The man was pure evil. We all understand that fact and never wish, desire, or hope to replicate such despicable human "Patterns" anywhere on this earth, ever again. ]

I don't know - some people like to help others. Depends on where you come from in life. Some take the 'just me' approach to life - to each his own. I prefer to help those who want to help themselves.

Outside of options/derivatives/ND trading, there really is only one way to trade and that's Directional. Naked positions are the riskiest of all, but if you are trading large notional values and you want to be in an out of the market with real intra-day trades, then you really don't have a choice, therefore, you need to know direction, better than most.

That's why Patterns are so important. They provide structure. The help extend the life of a trade. They help with positioning stops (for those people who use stops - I don't). They also help with setting limits for T/P.

The key is finding the right Patterns to trade, and they exist under just about every FX rock you can lift with your finger. The question is only whether or not they fit your equity curve growth expectations. Not all Patterns are for every trader and not every trader is for every Pattern. But, there are some Patterns for all traders, if he/she knows how to perceive them and how to exploit them.

LOL! It might, on the other hand (instead of being sensitive) simply be a matter of enlightenment, maybe - I don't know. I was just asked to give my reasoning on the matter.

At the same time, I can fully understand why so many people think this particular market is random. I certainly understand the sentiment and the difficulty in seeing the otherwise, which is of course, reality.

There is no such thing as a random event in this Universe. [my earlier posts explains why] That would also apply to man-made financial markets, especially.


Here, this might aid in a better understanding of the concept:

Its an all or nothing proposition. If there is just one (1) random event in the Universe [anywhere], then the logic must hold that all events are equally random.

Now, why is that true?

Simple. The mathematics behind even the most simple of material compounds in the Universe, merely coming together through the primordial soup and forming randomly, is virtually incalculable. The number is so incredibly small, that its hard to fathom something even being remotely likely.

Now, apply Occam's Razor and what do you get? All things have to have been created. Creation, expels a random walk-about Universe. It denotes intelligence. More appropriately, infinite intelligence that goes far beyond anything we can postulate and/or imagine.

Everything, comes housed inside Cause & Effect Model, everywhere you look inside our known Universe. Thus, the EURUSD, moves as a direct result of Cause preceding Effect. Buyers buy for a reason. Sellers sell for a reason. Yet, not all Buyers buy, nor do all Sellers sell, for the same reasons, and at the same time. Yet, their collective, aggregate buying and selling over time, forms patterns in the market, otherwise known as Price Action.

You don't predict it. You don't wish it into existence. You don't own it. You simply become aware of its existence and you seek to tap into it, along its path from its "inertial" (not really, but close enough) frame of reference.

LOL! If randomness = True. Then every electron in orbit about every single proton in your body, would have Universal "permission" to fly off into the outer reaches of both space and time. Yet, the molecular strata of your body remains intact. Not because of randomness, but because of the exact opposite - order.

They are not called Electron Probability Patterns, for nut'n! They are very orderly, very "solid," and very much a huge part of how our known Universe works.

Now, is trading "gambling?" Could be, sure. I'll buy that. But, allow me to put this question forth:

Is getting into your car and driving across town, gambling - or driving?

Here's another one:

You did not commit the crime, but the local Police charge you with murder anyway [like that's never happened anywhere around the world before]. You have $1 million in your bank account for emergencies. You declare this an emergency and hire the best defense attorney money can buy. Here's the question:

Was investing your money on your defense attorney's skill and mastery of the law and legal system, gambling - or defending your innocents?

Thus, "gambling" just might in the eye of the beholder.

If driving = gambling, then we all do it. And, if trying to defend ourselves against a narrow minded Prosecutor, not interested in the facts = gambling, then many do it.

Heck, in some places on earth, just drinking the local water is considered, gambling.

Come on Snake Eyes....... [while holding your nose] - Gulp!

I don't believe your disclaimer. You mentioned that name for a reason. And it quite sounds like racism to me. And we don't like racism here, now do we Twee?

Correct. And, the vast majority of those "indicators" are mostly all based on: A Moving Average of common OHLC price points. That's what the 50+ years of the vast majority of technical analysis calculates, a moving average of OHLC, in some respect or another - with a few exceptions.

Thus, the vast number of technical traders are in the aggregate, using very similar tools, and if the 90%+ failure rate is true, then they are obtaining very similar results.

All the more reason why proper Pattern recognition aids the trader.



And, such discretion, if done properly, can be built into a Model. What is discretion in trading, if not decision making? That's all discretion means for the active trader. Decisions, can be modeled and made to run in real-time and without perpetual human intervention.


What is an Indicator? How does the trader define, Indicator? An indicator, indicates. I mean, that my sound flip, but its the truth. That's all it does - it won't make your coffee for you in the morning and it won't physically feed the dog or physically take out the trash. At the end of the day, an Indicator..... well, it indicates. That's what it does.

So, if one sits and merely looks at the market on a chart or ticker all day and makes decisions based on that, while saying, "I did it all without an Indicator," then, I've got some new for that individual. Here it is: It ain't true! You did use an Indicator. Here's why.

You looked at the chart, saw price behaving in a way that you recognize, you made a decision about lot size, leverage used, percent allocation, and you checked the news for major economic releases - you then pulled the trigger and clicked on your mouse. Boom, just like that, you were in the market. But, it ain't over. You now have to pay special attention to the news, determine whether not to adjust lot sizing by adding or subtracting positions, pay even closer attention to the charts and the way in which price behaves around your entry level and you then have to make a decision as to whether or not you should remain in the trade and of so, under what conditions. Whew!

You just used not only a single Indicator, but you just used an entire System for pulling all that off, in real-time, inside your brain - while under the pressure of not losing too much capital in the process. You used so much more than merely an Indicator.

What did you just do, that a fully automated trading system can't do - even more efficiently?


Because one's system is in their head and another has their system on computer, both are encoded. If one does not understand that, then one needs to re-evaluate how the human brain works. The term, Neural Net, did not originate outside of the physical sciences. When you ask your brain to perform a higher level task, it must (100% must) have already been programmed or scripted before that task can be carried out. The neural networks in your brain, are massively complex, both in reality and in concept - I'm not going even attempt to offer a full discussion on that, as I am hardly qualified to do it justice. However, every decision you make and action you perform, has a certain amount of neural encoding attached to it.

The human brain is far more capable of processing and performing than any computer ever designed, but it is also far more susceptible and prone to error, than any computer that has been properly coded and bug free and in the world of trading, one of the biggest causes of performance degradation is simply, fear and greed. Once the adrenaline starts pumping in the middle of a trade, the brain switches into a Fight or Flight response mode and much of the higher level, creative functioning capacity of the brain is temporarily shut down, because the brain actually believes that you are in a mortal fight for your survival.

And, survival mode trading is the worst kind of trading to undertake, bare brained! This is what off-sets the limited capacity of encoded automated systems (done right, of course.)

Why do you think we don't fly Shuttle Missions solely upon human operational inputs? Every mission critical system on-board the Space Shuttle, has a back-up for the back-up's back-up, which is then backed-up, yet again. (did I miss any back-ups?)

Its the same thing with commercial aviation. Most modern technology commercial aircraft designed and built today, are the poster children of technical operational redundancy. Concepts like fail-over, redundancy, fault tolerance and mode security, are all encoded these days, with minimal human intervention required. Heck, even down at the business jet level, there are 15,000lb light business jets operating with flight management systems on-board, where in the event of a rapid loss of cabin pressurization and no corrective inputs from the pilot, the "system" will engage an emergency decent profile to bring the aircraft below 12,500 ft, and then level-off by placing the nose and the wings on the horizon - where the aircraft will cruise until the pilot/flight crew regains consciousness.

Is trading the markets not a mission critical endeavor, too?

I love the rough, rugged outdoorsy, individualistic spirit, just as much as the next man. I, really do. I've also been around this business long enough to realize that in addition, I need some externally encoded help, as well. Cause, after all, I'm only human and prone to both fear and greed - which means, augmented error rates.

Hyper imagination maybe on your part? And, what is a "Twee," exactly? Inquiring minds want to know.

Lastly, the disclaimer stands as written. Its not meant for "believers." Its meant to clarify a point. In my mind, whether one believes it or not, the point ha been duly clarified. If you see racism in a post about Cause and Effect, then you probably see Elephants and Gingerbread Sticks in cumulonimbus cloud formations, as well.

People typically see what they want to see, not what's obviously sitting in front of them, more often than I would like in this world - but that's how this world works. Therefore, I would not be too surprised, if after actually having read the post, you claimed to have seen Elvis running around on your keyboard. The thought of racism and Elvis, after reading what was written, are just implausible, IMO.

But, you are free to see what floats your swift boat.

Thanks for highlighting the questions for me. I was kinda lost in that endless flow of verbal diarrhea.

You're trying to confuse me, old man. I'm not talking about driving or legal issues. I'll stick to this definition of gambling.

A game played with money, a small bet on an uncertain outcome. That is what I'm doing. For the challenge, for the occasional profits, for fun. You're just too serious about it. Hope it's not all the fun you have on this sunny sunday.

Let me put it in perspective. I have a white car. My next door neighbor drives a blue one, a diesel with auto gearbox.

Do I walk up to him and tell him that diesel sucks, auto gearbox is for girls, and blue cars are dangerous because you can't see them well in the dark?

No. As long as he pays his taxes, buys his own gasoline, and doesn't crash his car, well, it's his call.

And ... I still think you're a racist.