Misdirections in retail trading / mt4

Hi,

Curious as to what any of you feel are misdirections in trading and metatrader. Like the magician directing your attention with one hand while he steals your wallet with the other I feel there are at least a few things right in front of our eyes that are designed to disorientate us and make everything harder than it already is and already needs to be.

I don't expect any of this to be a revelation to anyone, but to start things rolling I have sitting gnawing at my brain the following :

1. MT4 Charts are generated dynamically to fill the chart window. This means that in a low volatility situation where the bars are only moving up and down a few pips over a long enough period the chart is effectively zoomed in on the price axis to show you a range of only a few pips. Then, in high volatility times where bars are moving up and down over many pips the charts then have to accommodate this larger range of movement so your chart is effectively zoomed out on the price axis.

If trying to get a 'feel' of how price moves then this becomes a futile task as you just let the charts draw themselves how they want. With everything being distorted depending on volatility you have little hope. Yes, you can play with the chart properties 'scale fix' etc, but this is far from simple and efficient.

My personal solution is to drag along the price axis so that it scales to my preferred number of pips. This is simple enough when using an indicator that draws lines at round numbers as you can simply scale the price axis until you fit in however many sections between round numbers that you prefer to see. This gives a more solid and consistent perspective on how the price has been behaving. If you are always looking at a consistent range of pips then you can begin to see price movement more clearly.

2. Has anyone noticed their tick chart spread not matching the bar chart? I just checked now and they are actually matching, however, I am certain that in the past when writing some indicators I have seen them not matching at all and are out by about 1 pip both directions. Is this something that occurs at high volume times only perhaps? I suspect that the difference may have been the broker markup in spread being shown in one place but not the other. Maybe this is something that has been patched out of MT4 along the way and I hadn't noticed until now.

3. Bar / Candlesticks / timeframe dependent data. As I understand it candlesticks originates from Japanese rice trading 'back in the day'. I do not believe they are at all helpful to a trader. At all. If you offset any candlestick data by x seconds you will see a completely different 'picture' of candlesticks, however, the movement of the data is exactly the same. The only difference is the timing has been offset. Candlesticks are good for looking pretty and allowing newbies to think that all they need to do is read some Nison about candlesticks and they will make money. They are the flashing lights to draw in the crowd. Quite simply they are a form of indicator... which leads to...

4. Indicators. With a bunch of them ready to go right out of the MT4 box I feel they are there for people to drown themselves in. Add this indi here, oh now add that one there, oh let's also add this one here for this... and so on. Like taking your car to a mechanic for a sale on wheel alignments, and somehow driving-out hours later with a new set of tyres + oil change + new radiator + etc + etc... oh, and a wheel alignment. LOOK AT THE PRETTY LIGHTS! They say "the best things in life are free", but in forex I'm not so sure. Why would they give you all of these things, for free, if most traders are going to lose anyway. Keep the traders distracted with the bells and whistles and they won't notice the brokers buying a new house with the money the trader just handed to them. Keep them toying away at the puzzles and they will keep plugging their money into the account.

5. Pipettes. Quoting to an extra decimal place? Really? To me this seems to be a bad thing dressed-up to be a good thing. "No really, your car looks better with that big dent I accidentally made". Let them become so focused on the small details they don't see the bigger picture.

6. Small gripe, but worth noting. Financial Advisors on TV. Does anyone else think it's a lot of "blah blah blah, with a small chance of rain"? For anyone that cares enough about finances and stocks etc, they will already have been online reading the actual financial news and so on. What good is someone from bank / broker x doing anyone getting on TV and speaking hours-old information? My personal view is it is simply to advertise their bank / brokerage. Newbies who are just beginning to consider trading need to get a broker, right? Why not get an account with the place they have seen each and every night on TV? It must be a safe place to go to right? It is on TV each night, after all. Surely they won't rob me blind if I'm too lazy to research more cost-efficient places to trade through?

That is all for now. This may simply be another one of my rambles. If anyone has anything to add or subtract (or multiply and divide) then have at it.

Peace out.

I was gonna post on possible solutions - then realized your not wanting a solution .. kind of like the wife when she wants me to just listen and not offer any advice or observations. Very hard for me as resolving issues is what i am paid for. All i can say is:

Now it's all designed to blow our minds
But our minds won't really be blown
Like the blow that'll get you when you get your picture
On the cover of the Rolling Stone ~Dr. Hook

Okay, so you're just shootin' the breeze.


1. Scale fixing was 'crossing the boundaries' for me -- I feel like I have control of the chart now. Leaving that darn warp how the chart looks when it progresses, annoys me.

2. Ever since I figured the most valuable thing would be to measure and record the time between ticks, I gave up on them, since nobody does this.

3. As with a lot of methods in trading, I had to redefine how I looked at candlesticks. For a long time, they also seemed to me to have too much information and were, as you say, 'pretty...flashing lights'. Then I began putting drawing devices on one or more places on each candle, figuring what very big or small candles do to a different TF, etc., and I slowly learned to appreciate candlesticks' value. The original candlestick patterns, I still ignore. Mostly.

4. Add a bunch of lagging indicators so each one explains a reason that fits with the rest to make a jigsaw puzzle, and it can work. Not for me, though, either.

5. Same as switching to decimals in the stock market in the 90's -- an ordinary trader's scalping opportunity gone.
Excellent point on the marketing scam.

6. Yes, ignore 'em all.
Some people here do follow them with an appropriately large grain of salt.

mrgreen : comparing me to the wife... OW! feel free to post solutions and whatnot.

ha-pattern : nice. excellent feedback. also, i think pretty much everything trading and forex related requires salt. so much salt we will all be saltier than an old sea pirate. maybe with enough salt we will be the pirates of the online forex, yarrrr.

clarification to anyone reading. feel free to add more things you notice that doesn't sit right with you. the things i have mentioned above i would file and label under "i call bullshit". if you have a similar file stored in your brain then i'm curious as to what you have also noticed.

if anything i have said you disagree with then you are welcome to say so, and preferably why.

at the end of the day there is a metric butt-load of bs everywhere, not just in forex. cutting-away the garbage and leaving what's left is where we all want to be, is it not?

I've also stopped using candles in the software that I'm writing.

http://dl.dropbox.com/u/190212/ff/ve..._candles_2.png

There are a lot more misdirections in MT, especially related to the Strategy Trader which is full of problems.

lol - no insult intended - my wife is probably the greatest teacher i have ever had on listening and just shutting up

IMHO
Dopey made a post here:
http://www.forexfactory.com/showthre...52#post4134152
While not directly related to this subject - it is very good re "debilitative and facilitative" anxiety - not saying u should start using Xanax- but perhaps an eval of what is important may be in order.

Points 1 and 2 are non issues at a higher timeframe - 4HR and greater. I gather your a shorter timeframe trader -

3 - A candlestick is simply a bar w/ the body filled in - i find the greatest value is in the psychological studies offered by them - along w/ the western techs applicable to the bars - in combination they are valuable - but only if folded into a methodology - ie S/R or what is termed 'order flow'.

"I should say that a chart helps those who can read it or rather who can assimilate what they read. The average chart reader, however, is apt to become obsessed with the notion that the dips and peaks and primary and secondary movements are all there is to stock speculation." ~Edwin Lefevre - ROASO -

4 the only indicator needed is that little line drawing tool.

5 pipettes are silly - oanda has had them for years - i use the option to not display them - MT4 - i use a demo - i don't think it has them - just chkd - nope not displayed - so it may be broker specific - but i'd never use an mt4 bucket shop anyway - so again non issue for me.

6. agree w/ HA - ignore them all - in fact don't even watch TV - that is the biggest distraction ever invented. I don't watch - cept in football season - and the bears had a by-week - so didn't watch any today.

at this time i should point out that i'm not hating on metatrader, although it may come across this way. "don't hate the player, hate the game"?

adal : that is very interesting that you have gone so far as to roll your own software. it doesn't get any more middle-finger than that to metatrader software. hats off to you for your strive for better.

mrgreen : i like your reply. i'm not picking at anything you said, just adding to it.

read dopey's post earlier and it is a good read and spot on. also, i'm not suggesting anything here is the golden nugget to becoming a successful trader, or that i'm raging and angry if that is what you think and this is a rantalicious thread. i'm just curious to what others have realised or come across which they find to be misdirection / misinformation / all-round-bs that is otherwise touted as a feature / good / normal etc. i'm not hoping to break the magician's code here, just trying to reveal some of the sleight of hand.

you are correct that 1 and 2 don't matter much on higher timeframes, and yes I am very much in love with short timeframes.

3. yes, a candlestick is a bar. but, it is represented with more eye-candy. a bar is a bar and a candlestick is a candlestick, and there really isn't much to it all really. the problem is that most do not understand what they are looking at, but with things like this it all comes back to information overload. i appreciate the computer tech side of why bars / candlesticks are used and are somewhat efficient data storage and transmission-wise, but they can also become a doorway down the garden path for people that don't know any better.

i keep thinking about fighter pilots. studies have shown that a blaring warning sound can go completely unnoticed by trained pilots simply due to information overload. too many lights, sounds, dials, etc all stealing the pilots mental resources. that one extra warning sound saying "hey you are about to die" doesn't even get noticed as a result. information overload. i liken forex to this. add your candlesticks and their ambiguity, plus the eye-candy indicators, plus your pipettes, plus whatever else etc etc... information overload. at least we aren't flying planes.

4. the only stock indicator needed is the line drawing tool. totally agreed. custom-rolled indi's that aren't functioning on price data can be helpful too, though. custom indi's that calc your breakeven point for multiple positions is an example. world time clock indi's are also valuable (invaluable perhaps?). again, these do nothing with price data, and serve more relevant and tangible information to the trader. the stock indi's that come with mt i personally believe to be nothing more than fluff.

5. yep pipettes are broker-specific. IT'S A FEATURE... or so they say.

6. i spent some months watching virtually zero tv. maybe a handful of hours over the course of a few months. it was, interesting. i liked it, but on the flipside i like having tv to kill time and having the option.

Brokers claim that pipettes reduces the spread therefore increase our profitability, but is that true? IMHO this is really a bad thing dressed-up to be a good thing and especially bad for the box traders who use opposite box range as SL.

Let me show you 2 backtest results for my box breakout strategy. In this case I use a fixed TP and opposite box as SL for backtest and assume the same spread for Forexite and Oanda.

If you compare the the result, you will notice that the average SL for oanda is actually slightly higher. Furthermore the Win% for oanda also slightly lower compare to forexite. Although the differences are very small but when you add them up for a few hundred trades the differences are actually huge!!!

Please bear in mind that this is not an isolated case because I have same results for other pairs and other box settings. So, if your backtest (even real trade results) is based on 4 decimal points then you better prepare for a performance drop if you broker migrated to 5 decimal points.

Nubcake:
I don't read anger or your post being a rant. Not at all. It's that I view it a bit different I guess. I don't pay attention to what your describing as I can't afford to do so. It's the end game I'm interested in. Day to day stuff doesn't bother me and I really don't think about it. tools are just that - tools - some handle differently - and a chart package and broker are just that to me - tools.
The reference to candles being 'eye candy' - i only see OHLC when i look at one, thats it - nothing more.
This might sound crazy - but I once went a month w/o looking at a chart - I had a little indicator that called out the prices as they changed - lol - now that was an experience- but it got me to focus on the changing prices and how they changed - i was pretending to be 'jesse livermore' in a bucket shop w/ some customer standing by the ticker calling out prices, even had a pad of paper i was recording the prices on
Nothing is too crazy for me to improve my game. I consider myself the player that needs the most improvement. Toughest battle i've ever had is w/ that rascal known as mrgreen
I guess what i'm saying is if I can do something about it - i do it - if I cant I forget about it...

so how did that experiment pan out? did you learn much from it? that's quite interesting and probably something we should all do.

if you have seen 'floored' there's a scene where Linda Rasche has her trading comp visible and you see a dozen or so charts on the screen, but she says quite frankly "it's all for show. i only pay attention to this little square here" and points to a part of the screen where it simply shows the current price quoted.

i've heard almost the very exact same thing from someone elsewhere on the internet who appears to be trading for massive profit in stock indices. a whole bunch of monitors showing various information, but 99% of the time is spent on just one small square watching price quotes.

Yeah, me too but I also see other things much easier as well such as whip saws. To me it's all about how I can make it easier to see what I want to see. In the case of candles it does it very well.

I suppose I could train my self to use the "chicken scratch" bar method... but why? The candle stick is "FREE"!

There's nothing magical about them... just a preferred way to read a chart. If you use them to try to predict direction there are just as many failures as with any other form of indicator.

A candle is simply a summary of the price action over a time interval, range, specified volume, or number of ticks. It is certainly meaningful, I just think people put far too much emphasis on candles as written in books, rather than flexible interpretation. Not being able to see the forest through the trees.

If their opinions were worth what they claim, they would be traders, not advisors. If I want to hear opinions on trading, I'll listen to traders. Even still, under a natural distrubition, most traders must be marginal to mediocre, so their opinions often won't be much better. We just have to take everyone's opinion with a grain of salt. If I wasn't so biased, I'd treat my own that way too!

I don't use MT4 Charts, so I can't comment on them. I do not think there are any intentional misdirections in play in the forex market. In fact, most of the time, movement in the forex is very predictable, depending on which "personality" the market is presenting (there are at least 4 of these). If you mis-read which personality the market is presenting, you will probably use the wrong set of tools/time frames/etc. to analyze the market. It gets kind of tricky when the market presents a personality within a personality...that is what separates the men from the boys. I probably have added nothing to this discussion, other than to try to dispell the notion that there is something underhanded going on here.

No you've done your fair share.

So is there really nothing underhanded going on here? REALLY?

Seriously... really?

Most people that get run over when they crossed the street didn't see the bus coming. A deer caught in the middle of the road at night is hipnotized by the lights. Are you a deer "caught in the headlights"?

Whether this is underhanded or not depends on if you are in the middle of the road when the bus comes plowing thru.

In chess a checkmate often happens 2-3 moves before it actually happens. Not necessarily underhanded... but someone wins, someone loses.

It's all underhanded if you lose. Only if you win does it become something else....

Yes.
Really.
Seriously.
Really.

It took me several years of very hard work, but in that time, I must say that I never felt like a deer in the headlights, nor that I was hit by a bus. If this is your experience, then I can understand how you might feel that the market is conspiring against you. I wish you the best in your future, but perhaps trading is not for you. Not for me to say.

One thing is true about successful trading, and that is to take responsibility for your trades and not blame the market or others. Until then, it is a very expensive and time consuming hobby.

Best wishes and good luck.

lol, forex conspiracy theories.

In case you haven't noticed, you as a 21th century retail trader have things available to you that were never available to any of the traders of the past.

You have market prices fed to you in real time, refreshed every few milliseconds, from global networks of banks over high-speed internet connections. You have a wide range of charting software (free or not) with advanced charting and analysis tools allowing you to see that price however the hell you want. You have access to multi-bank liquidity, fast execution, 1 pip spreads, lots of leverage, real-time news and alerts, etc. etc.

The only thing you should probably worry about is too much information, too much self-confidence, too much trading, too much freaking out and blaming everybody starting with your bröker, your charting software, your system, your strategy, your discipline, you risk management, and of course, the market "conspiring against you". All this over what? Over failing to consistently predict a stochastic process (market price) that has been mathematically proven to be mostly a RANDOM walk in the first place. Then again, it's probably because math is conspiring against us too.

Commence argument:

No argument from me. Very well stated though it's a hard pill to swallow for most. Something that really must be internalized in order to trade objectively.

P.S. You forgot to mention the conspiracy theory du jour: Those lousy regulators limiting my leverage to a stinking 50:1.

i do not know what y'all are talking about as no one mentioned 'conspiracy theories'.

Maybe the term itself hasn't come up but, that's the general tone that I'm getting from the outset of the thread.

Anyway, that's more than enough from me. Carry on and peace!

nope