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Fibnacci trading..Are U thinking what i'm thinking? 76 replies

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Think Outside the Box 26 replies

Attachments: Thinking Outside the Box!?!
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Thinking Outside the Box!?!

Quoting ForexQuant
IMHO the fractal concept in BW books is not a real fractal and completely misleading. To me he just packaged his book with Chaos Theory and Fractal Geometry. In fact I dont think any parts of his trading system are based on the new science.
I can confirm this.
Very difficult.

Thinking outside the box you have to understand the market and the role of the other participants.

Track them, interpret and profit from their intentions or mistakes.

Experience and knowledge is key.
  • Post #63
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  • Edited 10:22pm Nov 30, 2010 9:51pm | Edited 10:22pm
Quoting newyear498
.
Most of my technical ideas are outside of the box, even if they stay well within the center of your picture. It's how you approach it that counts -- Keep off the path of the norm.

Another 'outside of the box' list (ignorable, just making a point):

  1. Divide any chart into patterns, recombine the patterns for each symbol in a way that it describes how the symbol reacts to and describes its news, and watch for tiny changes in the symbol's habitual patterns.
  2. Use very few four price doji candles to call (5') months-long down moves or (1') news to the second.
  3. Read the chart and then literally record your own gut's pattern and apply it to the chart.
  4. Leverage how long it takes between ticks, and the tick's size and position on the chart, to read the chart.
  5. Take a fibonacci (Binet formula, or other) spiral that is in 3D and can spin around, put it on transparent mode, copy an instance of the spiral on the chart, and draw devices off the spiral until they work.


They're all worthless!
Why, because you can't really represent an entire chart with such things.
It takes an overall approach to conquer trading,
something I still struggle with.


P.S.
Fractals are not, to me, outside of the box, because, like most uses of Fibonacci (excluding the one above, a few uses of retrace, etc.) --
Elephant tracks or other patterns in nature included --are merely a new twist on an old theme, that of trying to represent the chart without closely understanding what it's saying.
HFT, as another poster noted, is outside of the box. From what I've read, it's new, often profitable, and go within the market to work. Or maybe this is wrong, since big banks do something like it.
Reading the chart for human behavior, if it is ever adequately coded, also has a chance for being outside of the box; astrology/astronomy could be thought of this way, if not closely so.

Quoting ha-pattern

P.S.
Fractals are not, to me, outside of the box, because, like most uses of Fibonacci (excluding the one above, a few uses of retrace, etc.) --
A direct application of fractal geometry into trading is futile. Fractal geometry is just a math tool that help us to study understand the chaotic process. Although this new science has opened my mind, my trading system has not much difference than ideas in some sinking threads in FF. The core idea itself is working, it is just the thread participants who screw the core idea by doing something look 'smart' but unnecessary.

Fractals, allow me to look at price movement from a completely new perspective, and it turned me from a chartist into a quant. To me, it is outside the box.
Quoting ForexQuant
A direct application of fractal geometry into trading is futile. Fractal geometry is just a math tool that help us to study understand the chaotic process. Although this new science has opened my mind, my trading system has not much difference than ideas in some sinking threads in FF. The core idea itself is working, it is just the thread participants who screw the core idea by doing something look 'smart' but unnecessary.

Fractals, allow me to look at price movement from a completely new perspective, and it turned me from a chartist into a quant....
What is your method to trading fractals.. I have looked at so many different perspectives of trading the fractal I am just curious of yours
Because I too love fractals lol

maybe a little chart for your explanation is best if you kindly have the time... thanks!
Quoting newyear498
What is your method to trading fractals.. I have looked at so many different perspectives I am just curious of yours
I do not trade fractals.

Like i said in my previous post, a direct application of fractal geometry into trading is futile. Fractal geometry is just a tool that help me understand the chaotic process of the price movement.
  • Post #67
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  • Edited 6:20pm Dec 1, 2010 3:00am | Edited 6:20pm
Quoting ForexQuant
I do not trade fractals.

Like i said in my previous post, a direct application of fractal geometry into trading is futile. Fractal geometry is just a tool that help me understand the chaotic process of the price movement.
Oh yes and as your walk the distance of the border of the Sea and the sand and you realize that you are not seeing the border, you are estimating it. So you begin to crawl along the border and then you see more of the border of the sea and the sand. You then realize if you could just look closer still you would see that the border is much more defined, so you get right down on the beach.

Well then it occurs to you that you have always been measuring up the border between the sea and the sand, only your perspective has changed; showing you an ever increasing contiguous border.

LOL, ain't this reality grand? Trading truly is a box of chocolates.
This is a very thought provoking thread.


Edit: 23:18 GMT I suppose this post is too esoteric and out of the box... LOL
Quoting ForexQuant
Like i said in my previous post, a direct application of fractal geometry into trading is futile. Fractal geometry is just a tool that help me understand the chaotic process of the price movement.
I just watched a lecture by Mr. Mandelbrot. Very interesting realizations that I've never thought about.

Could you give a basic example or 'jump-start' on how you started applying fractals to trading for us? TIA!
here's an idea that's possibly outside of the box. signals, patterns, charts in general... will be right just as much as they are wrong.

instead of trading the charts which will only screw you over eventually, trade your account balance.

not saying i'm right... it's just a thought.
Quoting smjones
Oh yes and as your walk the distance of the border of the Sea and the sand and you realize that you are not seeing the border, you are estimating it. So you begin to crawl along the border and then you see more of the border of the sea and the sand. You then realize if you could just look closer still you would see that the border is much more defined, so you get right down on the beach.

Well then it occurs to you that you have always been measuring up the border between the sea and the sand, only your perspective has changed; showing you an...
Trying to see the universe in a grand of sand is always esoteric.
Quoting EmeraldEyes
I just watched a lecture by Mr. Mandelbrot. Very interesting realizations that I've never thought about.

Could you give a basic example or 'jump-start' on how you started applying fractals to trading for us? TIA!
This should be a good jump start IMHO. http://intelligenttradingtech.blogsp...l-markets.html

p/s: Btw guys, please do not relate the real fractals to BW fractals.
Quoting ForexQuant
Trying to see the universe in a grain of sand is always esoteric.
HA Ha - In your face BW...
In order to think outside the box, you firstly need to understand what is inside the box very clearly indeed. This, in my humble opinion, is where many would-be traders fall at the first hurdle.

For many, the "forex market" (and many other markets for that matter) is defined by a screen with a price chart on it and with lots of indicators to choose from, provided by the retail broker, where there is a secret to be decoded and a "profitable system" to be discovered.

Within these confines it is a 2 dimensional game, with less than a 50% probability of success (the spread assures you of that), where decision-making is guided by false assumptions within a system that is fundamentally flawed for/by the retail trader. "System" here referring not to a trading system, but the operating environment which the trader creates for himself/herself. The majority of contributions on this website are dedicated to fruitless pursuits within this closed and flawed system.

So how do you open up the closed system to allow yourself to think outside the box? It is probably not an easy question to answer, and no doubt there are different ways to tackle the problem, but my thinking immediately to turns firstly to the acquisition of detailed knowledge about the way the market(s) operate, who participates, why and when, what the participants seek to do and what the outcomes are in terms that can be exploited by the humble retail trader. For example, exploiting these opportunities is something I do 1 to 2 times per week (though with stock index futures, not forex); sitting back, watching and waiting for the big players to do something that they need to do in order to complete their purpose or mission in the markets.

Darkstar has described some of these attributes extremely well in a previous post in this thread, and far better than I would be able to do here, but I think my humble contribution here is quite a simple one: to break out of the flawed system or to "think outside of the box", (whichever terms you prefer), you need to firstly understand the detailed operations of your market very clearly, and in very real and practical ways. This involves effort, hard work, challenging your assumptions, and facing up to reality - something that many would-be traders are simply not prepared to do, and the outcomes of which are plain to see.

If the intentions of this thread are to really break out of the system and to be able to think in new and different ways, then I commend the efforts and wish you every success.
Quoting Hedginghog
In order to think outside the box, you firstly need to understand what is inside the box very clearly indeed. This, in my humble opinion, is where many would-be traders fall at the first hurdle.

For many, the "forex market" (and many other markets for that matter) is defined by a screen with a price chart on it and with lots of indicators to choose from, provided by the retail broker, where there is a secret to be decoded and a "profitable system" to be discovered.

Within these confines it is a 2 dimensional game, with less than a 50%...
This is perfect.. this thread is getting to the good stuff finally.. I am starting to see how the brokers are hiding the true market order flow by screening us with fancy indicators and charts.. and to them thats like the easiest way in the world to send us doing circles while they check their computers to see where everyone is placing there stop losses and such :-p
Here's a great thread by DS describing the forex market operations that I found extremely helpful.. http://www.forexfactory.com/showthread.php?t=7484
We must first begin by understanding that almost everything we've been taught is incorrect. The worst mistake a trader makes is believing that they can predict where a market is headed. It can't be done - accept that. We use all these worthless indicators without realizing they all give different information predicated on what particular time frame we're trading. I guess the worst use of an indicator is a term called "hidden divergence". I shake my head everytime I read it. Mathematically, there is no such thing - this idea is based on variables that are based on variables, it's ridiculous, but that's another subject for another time. NOW FOR OUT OF THE BOX: There was some mention here about risk/rewards of 1:2, 1:3, etc. You will find in time that the minimum you must shoot for is 1:100. How do you do this? By continuously paticipating in the market, stacking positions, and when you're wrong - get out and save your money for the next entry. I can tell you by trading this way, you will only get 1 or 2 out of 10 correct. The rest you will lose or hopefully break even. However, those 1 or 2 that you win, if left to complete exhaustion on a daily, weekly, monthly chart, will pay you 5 to 10 times the losses you incurred. Look back in chart history and you will see this occurring time after time. I had a chance to talk with one of the principals of FXCM several years ago. I asked about time frames. I'll never forget his answer - he said "trading with small time frames is a fool's game". So .... stop trying to predict - just participate.
Quoting FrenchCuff
We must first begin by understanding that almost everything we've been taught is incorrect. The worst mistake a trader makes is believing that they can predict where a market is headed. It can't be done - accept that. We use all these worthless indicators without realizing they all give different information predicated on what particular time frame we're trading. I guess the worst use of an indicator is a term called "hidden divergence". I shake my head everytime I read it. Mathematically, there is no such thing - this idea is based on variables...
I respectfully disagree with both of your first two statements. I found a teacher that could predict where the price was going. He could do it correctly on almost any instrument 75% of the time, he always called his trades live and he was constantly improving his win rates.

Trend analysis and support and resistance will do that if you learn it properly.
I agree. I do it as well in as many times with the same percentage, using the same methodology. I was trying to make the post short - what I was referring to was the greater majority of traders using what is taught in most trainings and the majority of these forums without tryng to dig deeper to discover what is actually going on behind the curtain. Personally, all I need is the ability to draw lines on a chart and I'm happy. I see you've discovered that as well.
Quoting jag1966
I respectfully disagree with both of your first two statements. I found a teacher that could predict where the price was going. He could do it correctly on almost any instrument 75% of the time, he always called his trades live and he was constantly improving his win rates.

Trend analysis and support and resistance will do that if you learn it properly.
Yeah but just remember trend analysis and support and resistance points.. they all go back to Dark Star talking about order flow.. those points just indicate where buyers and sellers are.. so it might be better to look at things less like technical analysis and more like order flow :-p

any insight into how your teacher predicted where price was going? and I'm not sure what you mean he could do it on any instrument? like indicators?

Thanks for your insight!
This has been said on many forums but the difficulty is this. There are too many variables going on at any one time. At any given moment traders are trading your particular currency of choice on the spot market, futures market, options market, both individually and institutionally, manually and robotically, with all the emotions of fear and greed, using a host of the 100 major indicators (and combinations therof), trading on every time frame imaginable, all giving seperate and different information regarding entry and exit. In order to trade successfully, one must be able to read the market as one would their favorite book and realize it is ever-changing and will not follow your prediction, your creation, and especially your host of indicators.
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