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Technical Analysis Fallacy

  • #21,501
  • Jan 7, 2011 4:20am Jan 7, 2011 4:20am
Quoting fullperson
oh, maybe that's the way m tops are defined. Sorry sorry sorry If I mislead anyone (still learning). In any case, the price felt suspicious and the "topping pattern" I guess was a heads up for a new scout. Then the down move was a crawl so something felt fishy about the down wave too (but you would have been nimble because the momentum of the downwave was weak and did not justify adding to the position in our current terrain...) which would have allowed us to correct the down scout.

Speaking of which GU pattern now mutating to possible wedge...

Maybe that isn't the way 'm' tops are defined. I'm no expert, which is why I made the comment...more to get some feedback...not as a criticism.
  • #21,502
  • Jan 7, 2011 4:27am Jan 7, 2011 4:27am
lol, don't worry I ask question all the time hoping someone will correct me too

Website says (dbl top):

Formation is a distinct chart pattern characterized by a rally to a new high followed by a moderate pullback and a second rally to test the new high. As the stock rallies to make the second peak (top) sellers overwhelm buyers and the stock price collapses. Several weeks later the stock moves to test prior support levels.

There can be variations, but the classic double top marks at least an intermediate change, if not long-term change, in trend from bullish to bearish. Many potential double tops can form along the way up, but until key support is broken, a reversal cannot be confirmed.

I think you're right
  • #21,503
  • Jan 7, 2011 4:28am Jan 7, 2011 4:28am
Would anyone say cable is coiling, getting ready to go somewhere right now or am I completely out of it?

EDIT: @ FP -: Also, I think I read in Technical Analysis of Stock Trends, that the righthand side of an 'm' top was rarely higher than the left, but I honestly can't remember 100%.....I guess going with the flow is easier but I should know the basics by now.
  • #21,504
  • Jan 7, 2011 4:28am Jan 7, 2011 4:28am
Quoting Kaptain Ahab
when young i served god, country and corps blindly. now i know better.
God's alright, he didn't demanded much. Other things becomes relative, it all depends. But when old machinery keeps getting thrown into the dump, before we become redundant, becomes sad.

regards
  • #21,505
  • Edited 4:40am Jan 7, 2011 4:30am | Edited 4:40am
union is nothing but piss water.

however, lasko...hmmm it reminds me of the very first usage of my family jewel.

Quoting Fana
Union or Lasko? (twoo ireconcillable camps of beers in Slovenia...)
  • #21,506
  • Jan 7, 2011 4:31am Jan 7, 2011 4:31am
Quoting Kaptain Ahab
union is nothing but piss water.

however, lasko
http://www.forexfactory.com/C:UsersbarbaraDesktopbora2
The real Slovene! Dober dan!
  • #21,507
  • Jan 7, 2011 4:31am Jan 7, 2011 4:31am
I agree uk..something's up although pattern can mutate..like it is doing right now. I would stick in down scout but be ready to turn on wind
that wasn't a suggestion my bad. I'm saying "would" because I'm not participating in market.

speaking of which UJ is looking kinda like a triangle...BUt I haven;t been pulsing that girl so I can't say for sure
  • #21,508
  • Jan 7, 2011 4:32am Jan 7, 2011 4:32am
Quoting fullperson
lol, don't worry I ask question all the time hoping someone will correct me too

Website says (dbl top):

Formation is a distinct chart pattern characterized by a rally to a new high followed by a moderate pullback and a second rally to test the new high. As the stock rallies to make the second peak (top) sellers overwhelm buyers and the stock price collapses. Several weeks later the stock moves to test prior support levels.

There can be variations, but the classic double top marks at least an intermediate change, if not long-term change,...
every one loves a top or bottom.
Whats the point of saying "mom is a woman?"

regards
  • #21,509
  • Jan 7, 2011 4:33am Jan 7, 2011 4:33am
Cause there is nothing to trade atm, I'll want to throw in my experiences with rescue-concept....

The first and most important message is:

A rescue should be done only for misstimed soldiers but not against major trend/impulse/flow.

Second:
A rescue should be swift and strong.

There was a very good example fti has given in the early days of this thread about exposures when juniors hand over their book to senior and senior to chief. So let's play a littlewith the numbers...

We all know basic Fib row:
1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 114, ...

So if you are trading the you attack skew like 1,1,3. Means when you fail you have an exposure of 5 troops in the market already. So the senior would try to rescue with 5,5,13 (the same progression like junior, but starting over with cummulated exposure of junior).
Next one will take over with aproximately 21,21,55.

Let's ignore for a moment, that at sometime in this game someone would have detected, that we are tradiong against the trend already.

Ok now let's come to the postulation of "Swift and strong".
Because a rescue is always a very risky MO, I do not want to be too long exposed to the market with high skews. Therefor I personally skipp one level in the fib row for my rescues.
So like in the above example I would not rescue with 5,5,13, but with 5,13,34. So I can reach BE much faster and take rescue troops out immediately.

Well - let's play with the numbers in relation to the account size.
Cause my smallest lotsize with my broker is 0.1lot (=10.000USD), I'll use it for this scenario too.

Accountsize = 5.000USD
leverage 200
-> Available margin = 5.000 * 200 = 1.000.000 USD
-> max. troops = 1.000.000 /10.000 = 100. Means you can buy max. 100 troops according to your margin requirements.



Scenario A:

  1. A: deploy 1 scout (=0.1lot = 10.000USD)
    - position is running against you for 15 pips (15USD loss).
  2. B: deploy rescue L1 (= 0.1lot, Sum 0.2lot)
    - ~8pips needed to get to BE again
    - position is running against you for 20 pips (55USD loss = 1.1% of acc).
  3. C: deploy rescue L2 (= 0.1lot, Sum 0.3lot)
    - ~18pips needed to get to BE again
    - position is running against you for 20 pips (115USD loss = 2.3% of acc).
  4. D: deploy rescue L3 (= 0.3lot, Sum 0.6lot)
    - ~19pips needed to get to BE again

Now you can do some calculation how long you can stay with this exposure of 0.6 lots against you.

  1. Your account will be blown up after another 814 pips against you
  2. 5% loss of capital will be reached after another 22 pips.
  3. 10% loss of capital will be reached after another 64 pips.

Scenario B (more agressive Rescue):

  1. A: deploy 1 scout (=0.1lot = 10.000USD)
    - position is running against you for 15 pips (15USD loss).
  2. B: deploy rescue L1 (= 0.1lot, Sum 0.2lot)
    - ~4pips needed to get to BE again
    - position is running against you for 20 pips (55USD loss = 1.5% of acc).
  3. C: deploy rescue L2 (= 0.3lot, Sum 0.5lot)
    - ~11pips needed to get to BE again
    - position is running against you for 20 pips (155USD loss = 3.1% of acc).
  4. D: deploy rescue L3 (= 0.8lot, Sum 1.3lot)
    - ~11pips needed to get to BE again

Some calculation again how long you can stay with this exposure of 1.3lots against you.

  1. Your account will be blown up after another 372 pips against you
  2. 5% loss of capital will be reached after another 7 pips.
  3. 10% loss of capital will be reached after another 26 pips.

As you can see, ther rescue distance in pips is smaller the more agressive is your skewing. But of course that has it's price. You will reach your risk limits much sooner.

My personal preference is going to really strong rescues for a few pips only.

In anyway your rescue timing should be really good, cause the snowballs are growing very fast. So take out your troops as soon as the momentum is fading, regardless if you have reached BE or not. You can do your rescue in several steps as well ...

Ok - have to leave for Family lunch now.
Hope my calculations are correct.

Feel free to comment/correct.
Will join in later again ...

Niels

  • #21,510
  • Jan 7, 2011 4:34am Jan 7, 2011 4:34am
Quoting fullperson
I agree uk..something's up although pattern can mutate..like it is doing right now. I would stick in down scout but be ready to turn on wind
that wasn't a suggestion my bad. I'm saying "would" because I'm not participating in market.
I would stick in a down scout too if I hadn't already done so way too early!!
  • #21,511
  • Jan 7, 2011 4:37am Jan 7, 2011 4:37am
Quoting MaMood
Cause there is nothing to trade atm, I'll want to throw in my experiences with rescue-concept....

The first and most important message is:

A rescue should be done only for misstimed soldiers but not against major trend/impulse/flow.

Second:
A rescue should be swift and strong.

There was a very good example fti has given in the early days of this thread about exposures when juniors hand over their book to senior and senior to chief. So let's play a littlewith the numbers...

We all know basic Fib row:
1, 1, 2, 3, 5, 8, 13, 21,...
rocket science?
  • #21,512
  • Jan 7, 2011 4:38am Jan 7, 2011 4:38am
sorry to disappoint you but i am from san francisco married to a beautiful slovene girl. never intended to stay but here i am still after 10 years. beautiful country. hvala enako

Quoting Fana
The real Slovene! Dober dan!
  • #21,513
  • Jan 7, 2011 4:42am Jan 7, 2011 4:42am
Quoting MaMood
Cause there is nothing to trade atm, I'll want to throw in my experiences with rescue-concept....

The first and most important message is:

A rescue should be done only for misstimed soldiers but not against major trend/impulse/flow.

Second:
A rescue should be swift and strong.

There was a very good example fti has given in the early days of this thread about exposures when juniors hand over their book to senior and senior to chief. So let's play a littlewith the numbers...

We all know basic Fib row:
1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89,...
Thank you Niels. Very appreciate.
  • #21,514
  • Jan 7, 2011 4:43am Jan 7, 2011 4:43am
Quoting Kaptain Ahab
sorry to disappoint you but i am from san francisco married to a beautiful slovene girl. never intended to stay but here i am still after 10 years. beautiful country. hvala enako
nice.
you found your good purpose in life at last?

regards
  • #21,515
  • Jan 7, 2011 4:44am Jan 7, 2011 4:44am
Quoting fti
rocket science?
I hope not, because otherwise it will be difficult to trade inside poper risk parameters ....

BTW: Please relaod the posting, cause the "Rocket Scientist" made some mistakes
  • #21,516
  • Jan 7, 2011 4:45am Jan 7, 2011 4:45am
yes, my purpose to serve my family and friends.

Quoting fti
nice.
you found your purpose in life at last?

regards
  • #21,517
  • Jan 7, 2011 4:52am Jan 7, 2011 4:52am
thanks mamood. It is 5:46am here so I will read your post tomorrow (when I am fully awake to absorb info).

I took a quick glance and I noticed that you use the 1,1,3 sequence. I use 1,1,2 was wondering if any significant difference (I think fti mentioned that 1,1,2 may be more flexible due to 1,1,2,3 use, while 1,1,3 = more aggressive).

In addition I would be really curious if there is some sort of optimized sequence that can be created when parameters given (or maybe you just figure out the rescue skew necessary for level of aggression as you practice)
  • #21,518
  • Jan 7, 2011 4:56am Jan 7, 2011 4:56am
Happy trading day everyone! Fresh coffee and good conversation while the market sits and waits for NFP in the US. Just a heads up on the $/CAD: Canada reports their employment numbers 90 minutes before the US so you may find some action there in about 70 minutes. My chart work is done and I am waiting on the sidelines (no trades in yet). Time to step outside for some fresh air, although at 14F I won't be out there long. Good trading!
  • #21,519
  • Jan 7, 2011 4:57am Jan 7, 2011 4:57am
Quoting fullperson
thanks mamood. It is 5:46am here so I will read your post tomorrow (when I am fully awake to absorb info).

I took a quick glance and I noticed that you use the 1,1,3 sequence. I use 1,1,2 was wondering if any significant difference (I think fti mentioned that 1,1,2 may be more flexible due to 1,1,2,3 use, while 1,1,3 = more aggressive).

In addition I would be really curious if there is some sort of optimized sequence that can be created when parameters given (or maybe you just figure out the rescue skew necessary for level of...
that fti, real pain in the...
He said use this use that.
I say he not said anything, he said, understand the concept and develop.
anyway i not afraid of him.

regards
  • #21,520
  • Jan 7, 2011 4:59am Jan 7, 2011 4:59am
Quoting GEfx
Happy trading day everyone! Fresh coffee and good conversation while the market sits and waits for NFP in the US. Just a heads up on the $/CAD: Canada reports their employment numbers 90 minutes before the US so you may find some action there in about 70 minutes. My chart work is done and I am waiting on the sidelines (no trades in yet). Time to step outside for some fresh air, although at 14F I won't be out there long. Good trading!
cold huh? here too, cold relatively to the norm.
Seems the peeps downunder suffering heaps while God refilling the ocean.

regards
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