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Technical Analysis Fallacy

  • #22,661
  • Feb 2, 2011 2:23am Feb 2, 2011 2:23am
Quoting auxesis
After a while you will notice that many brokers shade their spreads in the direction of the current momentum, specially if you are watching more than one feed, shades are an obvious and visual tell.
Aux or anyone,

I remember fti complained his broker was shading him but I never understood what it meant and did not have the chance to ask.

What does shading the spread mean?

My guess: if bid is at 1.0001 and offer at 1.0002 (just an example) and I hit offer my order is slipped and filled at 1.0003, I asume momentum is on the buy side and the offer of 1.0002 is already consumed by the time I hit.

In other words I assume price simply responds to the distribution of supply and demand but "shading" implies choice / manouvering is made by the broker, may be something "shady" is at hand. How, what and why please. Not arguing any point, just want some education.

I have read fti posts regarding market maker maintaining his poise in the direction of trend and make market for retrace, duck sweeps and rubber band snap backs in the direction of daily trend, and darkstar / other threads on order flow etc. Each time I think I understand something comes up to present doubts and question marks.

Edit: does shade means the broker consumes the offer of 1.0002 for his own Book to build up his inventory because momentum is on the buy side, if yes, then may be I understand after all.

Regards,
Baifu

Happy Year of the Rabbit!
  • #22,662
  • Feb 2, 2011 2:29am Feb 2, 2011 2:29am
Happy Chinese New Year to all my fellow Chinese TAF members.

To all TAF members wishing you all a hopping success in the Year of the Rabbit!!!

@ Lovecraft - Do enlighten us with your valuable experiences with us


Pip Well
Philip
"Thinking Heart & Feeling Brain"
  • #22,663
  • Feb 2, 2011 2:33am Feb 2, 2011 2:33am
Quoting maheswara
gong xi fa cai to all celebrating

@mamood , just checked rank , great job ! (2nd place aint it ?)
@lovecraft , please post more , more insights only give us more understanding on how its all done at institutions , and understanding is never a bad thing
Good job Mamood

Steady does it, you make us proud

Baifu
  • #22,664
  • Feb 2, 2011 2:34am Feb 2, 2011 2:34am
Quoting Baifu
Aux or anyone,

I remember fti complained his broker was shading him but I never understood what it meant and did not have the chance to ask.
Happy Year of the Rabbit!
I don't know if this is what he meant but every time I hit the buy button on metatrader it hangs for a second or two....if the price goes immediately against me it fills at the price I asked for...if it goes in the direction I expected it too, I get a requote and if nothing moves for 3 seconds or so then it fills me at the price I asked for.

I may be a paranoid fool but the longest pauses are when the price does not move and the quickest fills are when it goes against me so it seems deliberate.
  • #22,665
  • Edited 3:20am Feb 2, 2011 3:09am | Edited 3:20am
Happy Chinese New Year to everyone!

@MaMood

I can only imagine how tough it must be to trade in the competition and your account at the same time. I am proud to see the confidence and ability gained through the years of practice of fti's teachings reflected in your results.

I am sure I speak for everyone when I say that you make TAF proud. Keep flying that flag high and all the best.

Behind you 100%.

Edit:

@Baifu

http://www.investopedia.com/articles...ce-shading.asp
  • #22,666
  • Feb 2, 2011 3:41am Feb 2, 2011 3:41am
This thread is awesome...

fti, i hope and pray for your health and peace!

gong xi fat chai!! to all chinese friends here.

i'm just a noob and much more to learn and still reading this thread
  • #22,667
  • Feb 2, 2011 4:15am Feb 2, 2011 4:15am
Quoting Vourvoul
@Baifu

http://www.investopedia.com/articles...ce-shading.asp
Thank you!

Rgs,
Baifu
  • #22,668
  • Feb 2, 2011 4:35am Feb 2, 2011 4:35am
If you applied the Dow Theory to EUR/USD and GPB/USD, we've been in a USD bear market since around the 22nd Sept 2010, when EUR confirmed a (dollar) bearish signal made by cable on 7th Sept 2010. Right now, if the trend continued we'd be looking to break through 1.63 with GBP and 1.4280 with EUR, to confirm a continuation.

How's that for a bit of ridiculous crystal-balling and poorly applied technical analysis?
  • #22,669
  • Feb 2, 2011 4:49am Feb 2, 2011 4:49am
Quoting maheswara
gong xi fa cai to all celebrating

@mamood , just checked rank , great job ! (2nd place aint it ?)
@lovecraft , please post more , more insights only give us more understanding on how its all done at institutions , and understanding is never a bad thing
Hey thanx my friend and all for your kind words.
That gives me an additional portion of motivation and to do my best for the coming 27 days till end of competition.
Hope I can stay that. Till now I have acchieved my daily goal day in and day out since first of december last year. Have never had a series without a single loosing day yet before.

Yeah, that is for sure only possible thanx to fti's teachings.

Found an nice snippet, that reflects an important discovery in my development:

"It's not your bad habits that count, but your good ones. That means your good habits must become so strong that they dissolve those which are not useful."


Cu,
Niels

  • #22,670
  • Edited 5:25am Feb 2, 2011 5:05am | Edited 5:25am
http://vimeo.com/9953368
  • #22,671
  • Feb 2, 2011 8:30am Feb 2, 2011 8:30am
Quoting MaMood
Hi Friends,

inspired by btr5596's posting I did some research about ACI.
Seems to be interesting. Pondering about doing such kind of certification as well ....

However, found some book that gives you all the needed maths for the different financial instruments, to pass the certification diploma.

Here it is ....
http://www.amazon.co.uk/Mastering-Fi...d_bxgy_b_img_b

or a little older version of it here:

http://ebookee.org/Mastering-Financi...t-_706201.html...

Hey Mamood, have you downloaded anything from this ebookee site?
  • #22,672
  • Feb 2, 2011 9:58am Feb 2, 2011 9:58am
Quoting triger88990
http://vimeo.com/9953368
  • #22,673
  • Feb 2, 2011 10:16am Feb 2, 2011 10:16am
Quoting btr5596
Hey Mamood, have you downloaded anything from this ebookee site?

Yep - why are you asking?
  • #22,674
  • Feb 2, 2011 10:38am Feb 2, 2011 10:38am
Quoting MaMood
Yep - why are you asking?
I was wondering if it was a legitimate site or not. I searched for several books and was surprised that all of them were there.
  • #22,675
  • Feb 2, 2011 11:06am Feb 2, 2011 11:06am
Quoting btr5596
I was wondering if it was a legitimate site or not. I searched for several books and was surprised that all of them were there.
Yeah - that's a good question, indeed.
I'm not sure myself about that "issue".
But to be honest, this site is well known in the world.
If there would be anythiong against copyrigths, I would assume the publishers would have requested some legal action against it.

But unfortunately I do not know it :-)
  • #22,676
  • Feb 2, 2011 1:03pm Feb 2, 2011 1:03pm
Hi Friends,

still reading "The way of the Peaceful Warrior".
Found the following snippet. Offered some room for thoughts. Especially cause we are very often stating, that trading is boring in some way ...

"[...]You now see everything through a veil of associations about things, projected over a direct, simple awareness. You've 'seen it all before'; it's like watching a movie for the twentieth time. You see only memories of things, so you become bored. Boredom, you see, is fundamental nonawareness of life; boredom is awareness, trapped in the mind. You'll have to lose your mind before you can come to your senses.[...]"

Cu,
Niels
  • #22,677
  • Edited 1:36pm Feb 2, 2011 1:14pm | Edited 1:36pm
Quoting MaMood
Hi Friends,

still reading "The way of the Peaceful Warrior".
Found the following snippet. Offered some room for thoughts. Especially cause we are very often stating, that trading is boring in some way ...

[size=2][indent][left]"[...]You now see everything through a veil of associations about things, projected over a direct, simple awareness. You've 'seen it all before'; it's like watching a movie for the twentieth time. You see only memories of things, so you become bored. Boredom, you see, is fundamental nonawareness of life; boredom...
Hi Niels
This is very important, i see it on myself, sometimes terribly caught with rescues...
- In the past i was focused on "system, method, orders...".
- Now i know, that it was naive. Trading without menthal stability is imho gambling. And it is not easy to reveal to self, that it is gamble...
  • #22,678
  • Feb 2, 2011 1:31pm Feb 2, 2011 1:31pm
hi guys new in this thread.hope can learning n sharing.:nerd:
Gold Expedition Return This Year: -16.4%
  • #22,679
  • Feb 2, 2011 2:33pm Feb 2, 2011 2:33pm
Quoting lovecraft
maheswara,
thanks for the encouragement, but I'd like to say that I think the fti method does not require any knowledge of how the institutions do it.
I see your point , I just have the curiosity towards anything remotely related to trading even if its just a general thing.
I believe you worked extensively in a lot of sectors in trading , and I simply like to read what experienced people writes
To Live is the rarest thing in the world , Most people exist , that is all
  • #22,680
  • Feb 2, 2011 8:15pm Feb 2, 2011 8:15pm
@sylar, hello and nice to meet you.
@maheswara, understood. If it interests you, a lot of my previous trading was not in forex and did not involve directional bets. But I find fti's teachings to be such a great way of explaining how we should have managed our books. Trading index skew requires a bookrunner to stay as mathematically hedged as possible. The problem is that you can never know if you are actually hedged, because all models require you to make certain assumptions about the market. That is, you can be hedged as much as possible according to your model, but you don't know if your model is right.

What you wind up doing is consciously taking on a particular type of risk, such as gamma, which you think can be managed more effectively than other types of risk,according to the type of exposure you have at a given point in time. Mostly, taking losses are discouraged as you can neutralize any further ratcheting up of a particular risk factor, until that portion of your book is taken back to break-even by the market. For TAF practitioners, you face the same uncertainty in that you do not know the actual direction of the market, whether it is trending up or down or just in a corrective phase; yet you have to make a judgment as to how to manage your exposure.

Some volatility traders, instead of trying to work with simpler but more robust models, were always looking for that one perfect model which could perfectly describe the market at all times, and spit out pinpoint theoretical values. The fallacy of technical analysis.
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