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Technical Analysis Fallacy

  • #22,021
  • Jan 15, 2011 7:44am Jan 15, 2011 7:44am
Quoting Baifu
Aiyamarklah (apr 7 2010 "From the mouth of the dealer") posted a link and excerpts from Richard Olsen's blog (founder of Oanda), there I found the "How to Trade.pdf" which correlates amazingly well with the teachings of this thread except where regarding stop loss and the usefulness of big bank's trading algorithems.

I cannot attach the pdf (too large) hopefully you will locate the file by navigating his site, it is worth a read because unlike this thread understaning the pdf does not require reading lessons.

http://www.olsen.ch/publications/working_papers/...
Thanx for the link, Baifu.

Have not found the paper you mentioned above, but alot of other intersting stuff (High freqency financial Data anaylsis .....). reminds me back to my roots in digital signalprocessing several years ago at research lab at university ...

I'm sure it is not of any help in becoming more profitable, or getting closer to the Lady, when dancing, but (similiar to Fullperson): "It becalms my creativity/scientific scorpion a little"

BTW: Was never thinkink about the meaning of Oanda. Now I got it:
O(lsen) and A(....). But do not now the second founder. Anyone having the name at hand?

Wish you all a great weekend!

Niels
  • #22,022
  • Jan 15, 2011 7:53am Jan 15, 2011 7:53am
Quoting MaMood
Thanx for the link, Baifu.

Have not found the paper you mentioned above, but alot of other intersting stuff (High freqency financial Data anaylsis .....). reminds me back to my roots in digital signalprocessing several years ago at research lab at university ...

I'm sure it is not of any help in becoming more profitable, or getting closer to the Lady, when dancing, but (similiar to Fullperson): "It becalms my creativity/scientific scorpion a little"

BTW: Was never thinkink about the meaning of Oanda. Now I got it:
O(lsen) and A(....). But...
Hi Niels
I have found this about Oanda, but who knows?
http://www.oanda.com/corp/story/name?srccont=rightnav
  • #22,023
  • Jan 15, 2011 7:56am Jan 15, 2011 7:56am
Quoting MaMood

...........................BTW: Was never thinkink about the meaning of Oanda. Now I got it: O(lsen) and A(....). But do not now the second founder. Anyone having the name at hand?

Wish you all a great weekend!

Niels

Hi Niels,

Found the answer here
http://en.wikipedia.org/wiki/Oanda_Corporation

It stands for Olsen and Associates.

And the PDF you couldn't find can be found here
http://www.olsenblog.com/wp-content/..._Trade_5.2.pdf

Regards,
Bak
  • #22,024
  • Jan 15, 2011 9:23am Jan 15, 2011 9:23am
Quoting fullperson
lol, I'm sure fti would reply with something to the effects of:
"profit without risk? That's the holy grail!"

On second thought I believe that what piccolo is saying is right. We can't think too much into the basis when we attack because it will limit our resolve to attack. Momentum must be dictator.

In addition, I am looking into skews construction to satisfy my creativity scorpion. I found something that might be interesting for constructing skews. Attached. Pascal's triangle. Differing levels of aggressiveness, each row seems like attacks...
Buy low sell high / sell high buy low.

Attack and rescues are timing issues, skewing allows the trader to position themselves properly as the market unfolds. Ideally you sell/buy the retraces as the market turns for the next leg in the direction of the trend. Obviously you never really know where, or when, in advance that turn will take place so you use your scout to gain a feel for the markets action.

The attack takes place when you feel the market getting ready to break on it's run. Ideally you want to attack (add your troops) as close to that turn as possible and leave them in play to the very end of the following run. However emotions "and common sense" have a great deal of influence over your ability to "ride".

The skew snowballs up quickly and down quickly, with the goal of getting enough foreign capital to protect the remaining troops. Basically you have more profit gained than the loss incurred on the remaining troops if price reverses at that point. measured to the back side from where price started it's run.

Rescuing "much like attacking" you hold your "in play" troops negative profit for an opening where you can increase your size *attack" in an effort to average out on the following retrace. Notice "retrace" as rescues are going against the trend.

Inside the highs and lows are a infinite series of price movements, as such a mechanical method of entry/exit will only end up trapping you, Dancing is dynamic in it's relationship to price action. There's times to attack big (skipping levels of the skew) and times to just play a reserved skew and take the small profits the market gives. Above all is "risk management" and ensuring yourself that you are not in a position to be wiped out.

The skew is just a mathematical step in acceleration/deceleration of troop size, as it gives you predefined levels of entry/exit, so your brain isn't having to contend with the math of position sizing, instead leaving it to interpret price action and the charts. The increase of troop size brings your average position closer to market, in attack it gives increased length of ride, in rescue it brings average closer to break even. Manage your average.

fwiw.......

regards.
  • #22,025
  • Jan 15, 2011 9:55am Jan 15, 2011 9:55am
Quoting auxesis
Buy low sell high / sell high buy low.

Attack and rescues are timing issues, skewing allows the trader to position themselves properly as the market unfolds. Ideally you sell/buy the retraces as the market turns for the next leg in the direction of the trend. Obviously you never really know where, or when, in advance that turn will take place so you use your scout to gain a feel for the markets action.

The attack takes place when you feel the market getting ready to break on it's run. Ideally you want to attack (add your troops) as close...

Hi Auxesis,

brilliant as allways.
Will never reach your level of clearness in my explanations....
Respect!

Cu,
Niels
  • #22,026
  • Jan 15, 2011 11:16am Jan 15, 2011 11:16am
Hi friends,

here a little excerpt from the document mentioned by Baifu.
It's interesting, becasue we see discussions very oftenhiiting the topic, if it is possible to move/Manipulate the market. The follwing snippet gives an idea of how much money is neccessary to do so ...

Currency markets have a daily turnover of spot transactions of approximately 1.4 trillion USD; this is a mind-boggling number, equivalent to approximately 10 percent of the annual US GNP. The daily turnover translates into a flow per minute of 1 billion USD, which is still a lot of money. If we go a step further and compute the volume per second, then the turnover collapses to only 16
Mio per second, which equates to 8 Mio buying and another 8 Mio of selling volume for all exchange rates together.

On a second by second basis, the volume is a mere trickle; this is a huge contrast to the mind-blowing number for a full 24 hour trading day. For the individual exchange rates, the second by second volume numbers are a lot smaller: for EURUSD with the biggest turnover, the volume per second is 3.5 Mio USD and, for a minor exchange rate, such as USDCAD, only a trifle of 250′000 USD per second. The trickle volume on a second by second basis is also true for other markets, such as equity and fixed income markets.
There the situation is even more extreme; the volumes in these other markets are 10 times smaller for the fixed income and 50 times smaller for the equity markets.

[...]

Compared to the trillions that are traded every day, it is thus paradoxical that already small market orders can move the market. For minor currencies, 50 Mio is enough to move the exchange rate by 0.2 percent. For the major currencies such as EURUSD, the necessary amount is roughly 100 to 200 Mio depending on the time of day; these numbers are peanuts in the bigger picture. To move the EURUSD by 0.2 percent, a trade of 200 Mio USD needs to be made, which requires as little as 5 Mio USD in terms of equity. It is astounding that an economy with a GDP of 14 trillion can have its exchange rate moved by 0.2% due to the actions of a trader with 5 Mio USD of equity.
  • #22,027
  • Jan 15, 2011 12:20pm Jan 15, 2011 12:20pm
Quoting MaMood
Hi Auxesis,

brilliant as allways.
Will never reach your level of clearness in my explanations....
Respect!

Cu,
Niels
... totally agree!
  • #22,028
  • Jan 15, 2011 12:34pm Jan 15, 2011 12:34pm
Quoting fullperson
lol, I'm sure fti would reply with something to the effects of:
"profit without risk? That's the holy grail!"

On second thought I believe that what piccolo is saying is right. We can't think too much into the basis when we attack because it will limit our resolve to attack. Momentum must be dictator.

In addition, I am looking into skews construction to satisfy my creativity scorpion. I found something that might be interesting for constructing skews. Attached. Pascal's triangle. Differing levels of aggressiveness, each row seems like attacks...
... try re-read the AOW
"Ho Lu said to him: “I have carefully perused your 13 chapters. May I submit your theory of managing soldiers to a slight test?”
Sun Tzu replied: “You may.”
Ho Lu asked: “May the test be applied to women?”
The answer was again in the affirmative, so arrangements were made to bring 180 ladies out of the Palace. Sun Tzu divided them into two companies, and placed one of the King’s favorite concubines at the head of each ..."

Rgs
  • #22,029
  • Jan 15, 2011 3:12pm Jan 15, 2011 3:12pm
[i]There are many things about chapt 13. Here are my thoughts:
-My troops are my units, they are loyal to the grave. Under any officer's hands they would be useful.
-The general (my mindset, strategist and ability to dance) will dictate clear reasonable orders based on a whole host of variables like terrain.
-The officer (my trigger finger and ability to listen to general despite fear ect) will act according to the general's strategic orders. If the officer fails to listen to the general's orders, it's all over (being hesitant, fear, ego scorpions).

"If words of command are not clear and distinct,
if orders are not thoroughly understood, then the general is to blame."

-The general however (me) is still learning, so I still issue poor decisions.

But if his orders ARE clear, and the soldiers nevertheless disobey,
then it is the fault of their officers."

- The scorpions leading the troops must be dealt with.

@Auxesis, than you. I think the segement that strikes me most is:
Ideally you sell/buy the retraces as the market turns for the next leg in the direction of the trend. Obviously you never really know where, or when, in advance that turn will take place so you use your scout to gain a feel for the markets action.

**The thing is, I don't really use any time frames besides 5min for direction. If I see market form with good momentum I will dance it with smaller troops and flip when necessary. But when good trend arises on 5min, I will be more likely to press for attacks. I find this gives "harmony" to market form and direction.

Perhaps this is wrong and I should follow direction of daily TF? But would sure be rigid.

Quoting Gro
... try re-read the AOW
"Ho Lu said to him: “I have carefully perused your 13 chapters. May I submit your theory of managing soldiers to a slight test?”
Sun Tzu replied: “You may.”
Ho Lu asked: “May the test be applied to women?”
The answer was again in the affirmative, so arrangements were made to bring 180 ladies out of the Palace. Sun Tzu divided them into two companies, and placed one of the King’s favorite concubines at the head of each ..."

Rgs
  • #22,030
  • Jan 15, 2011 3:30pm Jan 15, 2011 3:30pm
Quoting Gro
... try re-read the AOW
"Ho Lu said to him: “I have carefully perused your 13 chapters. May I submit your theory of managing soldiers to a slight test?”
Sun Tzu replied: “You may.”
Ho Lu asked: “May the test be applied to women?”
The answer was again in the affirmative, so arrangements were made to bring 180 ladies out of the Palace. Sun Tzu divided them into two companies, and placed one of the King’s favorite concubines at the head of each ..."

Rgs
is in this section more ... but this should suffice
  • #22,031
  • Jan 15, 2011 4:00pm Jan 15, 2011 4:00pm
How To Trade

http://www.olsenblog.com/wp-content/..._Trade_5.2.pdf
  • #22,032
  • Jan 15, 2011 4:46pm Jan 15, 2011 4:46pm
-usually when fti mentions "180" means you are heading in wrong direction. 180 could also be special number?
-Splitting of troops done when the army is larger than yours, one for diversion and one to catch the enemy
-women being in army shows any type of troop can be led using similar methods

Are you pushing me towards sliding rescue/attack MO? Or something else?
  • #22,033
  • Jan 16, 2011 3:43am Jan 16, 2011 3:43am
Quoting Vourvoul
Thank you for these Niels. They look quite interesting.

Perhaps a missing ingredient... let's see
Just finished "Blink" and I have to say that I did not like it at all. The point the author (whose writing style I did not like) wants to make can be easily demonstrated in just a few examples. He uses a lot more with needless detail just to fill the pages. Repeating points made throughout the book using other peoples' research without sharing any personal insight.

It seems his agent wanted him to write a book to cash in on the success of another book of his, "The Tipping point".

Well, MaMood, let's see what "The Buddha's brain" is like...
  • #22,034
  • Jan 16, 2011 4:09am Jan 16, 2011 4:09am
Regarding recent literature recommendations, If you allow me to go ahead and to suggest some valuable reading(that's just in my opinion):

http://www.buildfreedom.com/tl/tl12.shtml

all the materials are for free, you can find many research work through the site

The most appeling to me is the freeze-frame technique,it was a huge help of improvement in my day by day life.

I would love to hear your opinion after you go through the material

all the best!
  • #22,035
  • Jan 16, 2011 4:20am Jan 16, 2011 4:20am
Quoting triger88990
Regarding recent literature recommendations, If you allow me to go ahead and to suggest some valuable reading(that's just in my opinion):

http://www.buildfreedom.com/tl/tl12.shtml

all the materials are for free, you can find many research work through the site

The most appeling to me is the freeze-frame technique,it was a huge help of improvement in my day by day life.

I would love to hear your opinion after you go through the material

all the best!
wow, thanks for sharing.. recently I just realize directly from my trading experience that, it's not technical-fundamental, even money management that make me successful in market, but mental analysis
  • #22,036
  • Jan 16, 2011 7:52am Jan 16, 2011 7:52am
Quoting Vourvoul
Just finished "Blink" and I have to say that I did not like it at all. The point the author (whose writing style I did not like) wants to make can be easily demonstrated in just a few examples. He uses a lot more with needless detail just to fill the pages. Repeating points made throughout the book using other peoples' research without sharing any personal insight.

It seems his agent wanted him to write a book to cash in on the success of another book of his, "The Tipping point".

Well, MaMood, let's see what "The Buddha's brain" is like...

Hi VourVoul,

thanx for your feedback.

Well - agree, that the author could have presented it in a more condensed way. But at least I hope that the basic idea has some value to you....


Sorry, if I have wasted your time ...

CU,
Niels
  • #22,037
  • Jan 16, 2011 10:24am Jan 16, 2011 10:24am
Quoting MaMood
Hi VourVoul,

thanx for your feedback.

Well - agree, that the author could have presented it in a more condensed way. But at least I hope that the basic idea has some value to you....


Sorry, if I have wasted your time ...

CU,
Niels
No need to apologize Niels,

I rarely consider a book a waste of time. "What flows though the mind sculpts the brain" right?

The idea behind the book (intuitive decision making) is definitely something I would be interested in studying further so the presentation of the idea had some merit in that I will be looking into actual ways of improving this "intuition".

The writer just presented the idea without actually suggesting any ways to exercise this innate skill.

Please don't let my comment hinder you from suggesting any further reading you found intriguing/interesting/beneficial.

Thank you again.

P.S The Buddhas Brain looks more to my liking but will have to wait for next week

P.S.S.

Quoting triger88990
Regarding recent literature recommendations, If you allow me to go ahead and to suggest some valuable reading(that's just in my opinion):

http://www.buildfreedom.com/tl/tl12.shtml

Thank you Triger. Interesting read.
  • #22,038
  • Jan 16, 2011 12:54pm Jan 16, 2011 12:54pm
Just for info:

.
Attached Image
  • #22,039
  • Jan 16, 2011 2:46pm Jan 16, 2011 2:46pm
dbFX opening quotes for EU 1.3396/1.3401
  • #22,040
  • Jan 16, 2011 2:49pm Jan 16, 2011 2:49pm
Just for info:
Let's recap last friday ...

2026 GMT [Dow Jones] U.S. SUMMARY: Trading was volatile Friday and the EUR ended the day slightly higher. China's decision to raise reserve requirements for banks kept a lid on risk appetite, while some mixed U.S. economic data kept the USD from clawing back some of its recent losses. EUR sentiment also improved after ECB President Jean-Claude Trichet said the central bank could raise interest rates later this year to combat inflation. "The euro-dollar [remains] supported by Trichet's hawkish comments, and while we are long-term bearish on the euro, we would expect the euro to continue to rise and we like it to hit the $1.36-$1.38 area in the next week or so," said Mary Nicola, currency strategist at BNP Paribas in New York. EUR/USD at 1.3387 late Friday vs 1.3365 late Thursday, USD/JPY at 82.85 vs 82.80, EUR/JPY at 110.95 vs 110.67, GBP/USD at 1.5867 vs 1.5835, USD/CHF at 0.9635 vs 0.9637. USD Index at 79.068 vs 79.155. Stocks gained, driven by a rally in the financial sector after J.P. Morgan Chase posted a 47% jump in 4Q profit, beating analysts' expectations as revenue increased and loan-loss reserves were sharply reduced. J.P. Morgan's shares rose 1%, while shares of rival Bank of America jumped 3.3% ahead of its earnings results due this week. Dow added 0.5%, Nasdaq +0.7%, Philly semicons +2.7%. Treasurys lost ground, giving up an earlier rally as optimism on earnings in the financial sector overshadowed a bout of disappointing economic releases related to U.S. consumer activity; 2-year yields flat at 0.581%, 10-years +2.4 bps at 3.327%. Gold futures skidded to a 7-week low as stability in broader markets weakened the yellow metal's safe-haven allure. February Comex gold settled at $1,360.50/oz. February Nymex crude settled up 14 cents at $91.54/bbl. ([email protected])

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