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Technical Analysis Fallacy

  • #22,961
  • Edited 7:41am Feb 11, 2011 7:29am | Edited 7:41am
Quoting dannbb
no i am not considering paying for forex course.. i am saying i consider my current 5k account is my tuition fees for forex... learning on the job
This a dangerous mindset in my opinion. If you start out not caring if you lose 5k (because you will call it tuition fees instead of bad trading) then you will undoubtedly lose it one day.

Whilst I am aware that most traders blow an account or two, I don't think it's a good idea to set out believiing it will happen, or to accept it before it has happened.

If you did indeed lose the lot then all you will have learned is that you are not ready.

Lastly, whilst I know fti recommends having more capital than this and he is right, 5k is nowhere near as small an amount as some people start out with and certainly not small enough to blame for any deficiencies in your methodology. Why on earth did you hold onto a position for 4 or 5 months? I'm sure there is nothing in the first 200 pages that you said you have read 3 times that would lead you to trade in that manner. If you skim through the pages you will learn nothing. Worse, you will try to use an MO that is very dangerous if you have not taken the time to absorb it properly and work on your mindset.

Sorry if that all sounds negative but you seem to be treating it as a game.

People in here can cut you as much slack as you like but the market won't, it will destroy you if you are not careful.
  • #22,962
  • Feb 11, 2011 8:05am Feb 11, 2011 8:05am
Quoting dannbb
Thanks for the advise.. i seek further details..
1) Reduce positions
yes i can do that

2)and proof profitability for some time with it.
How long is some time? how to know when you are ready?
apart from the 500 pips saga which i had lose a total of 68 USD at the end of it.
I had manage average 10% every month for the last 7 months
but i still feel i am not ready yet.. some say 3 month.. some say 6 months..

no i am not considering paying for forex course.. i am saying i consider my current 5k account is my tuition fees for...
sorry mate, but you're just another wanna be that want's to show off and boast to everybody here that you're a forex - extra ordenaire... that you managed to learn and become a good trader in a very short time, just because you're a fast reader... boy, you must be another super hero

can't say anymore... but goodluck! for sure you need it

p.s. i envy guys like you who sounds trading forex is soooo easy thing - and sooo easy to learn ; that of course if you're a fast reader and knows how to skim important topics... great!
  • #22,963
  • Feb 11, 2011 8:22am Feb 11, 2011 8:22am
Quoting ukmanthailan
This a dangerous mindset in my opinion. If you start out not caring if you lose 5k (because you will call it tuition fees instead of bad trading) then you will undoubtedly lose it one day.

Whilst I am aware that most traders blow an account or two, I don't think it's a good idea to set out believiing it will happen, or to accept it before it has happened.

If you did indeed lose the lot then all you will have learned is that you are not ready.

Lastly, whilst I know fti recommends having more capital than this and he is right, 5k is nowhere near...
This is the post that make me decide to hold on..

http://www.forexfactory.com/showpost...&postcount=501

This is also the post that I want to be consistent

In that post (quote)

2. Frequently,cutting losses is just a way to reset, and starting the game afresh.
You collect enough of that, you may never come back to the real world.
Of course , we shall not keep fighting for lost causes.
Sure sometimes losses are unavoidable.
But if you harbour that losses is ok, then you're are being blinded.
(unquote)

what is lost causes? is USDJPY drop from 85.5 to 80.1 is lost cause?
I dont only have one position at 85.5.. i did the rescue skew down all the way to 81

What if I told you the 500 pips drawdown is just 3% of my trading capital?
What if I told you the 500 pips drawdown is 80% of my trading capital?

You can see that exactly same scenarios with different capital amount give different answers

I am not worry on my mindset.. i am just worried i cannot control my scorpions

It is ok on the harsh tone for me.. my numb skull is too thick

although i may sound like treating it as a game.. i am seriously consider this as my possible second career or backup skills-set in the event i got laid off from my full time job.. i just need to increase my capital 10X.. then i can survive with the 10% every month..
  • #22,964
  • Feb 11, 2011 8:25am Feb 11, 2011 8:25am
Quoting dannbb
Thanks for the advise.. i seek further details..
1) Reduce positions...
SOMETIME?

How about a lifetime? Jump up from the 5k range, put your life savings on the line, or your livelihood, kids college tuition....... now in those aspects, you wanna guess how many traders out there, that have traded for their profession for years, have blown it?

You're always learning in this business, the day you think you have it mastered, is the first step towards bankruptcy.

Rules of trading.

#1 Capital Preservation.
#2 See rule #1

Everything else is built upon those two, You trade recklessly and you'll end up a wreck, not if, just when.
  • #22,965
  • Feb 11, 2011 8:29am Feb 11, 2011 8:29am
I will reread this passage many times.. so that it will burn into my memory.. thanks for the advise

Quoting auxesis
SOMETIME?

How about a lifetime? Jump up from the 5k range, put your life savings on the line, or your livelihood, kids college tuition....... now in those aspects, you wanna guess how many traders out there, that have traded for their profession for years, have blown it?

You're always learning in this business, the day you think you have it mastered, is the first step towards bankruptcy.

Rules of trading.

#1 Capital Preservation.
#2 See rule #1

Everything else is built upon those two, You trade recklessly and you'll end up a wreck, not if,...
  • #22,966
  • Feb 11, 2011 9:07am Feb 11, 2011 9:07am
Happy weekend all:-)
Inserted Video
  • #22,967
  • Feb 11, 2011 9:18am Feb 11, 2011 9:18am
Hi!

It seems that people still do not see the obvious.

1 / To play this game you need enough capital.
I'm sorry if you do not want to read this, but US$ 5000 is very
little capital. It's enough to learn, but not
live of FX. Unless you're a natural talent for the Forex market....
or you can live with a few dollars per day .....
or your level of risk is so high that sooner or later you will lose everything.
You need at least US$ 25000 to start more seriously.
Do not believe everything you read on internet forums, judge your own experience.

2 / The FTI method is the best you can find
FREE in the net, but you must not forget that he was
a bank clerk. I think there is no need to explain in
detail what that means.
You are not a bank employee, you don't receive an annual salary with bonus to
sit at the computer Monday through Friday and trading,
you don't have the capital of a bank, you don't have access to 1st class information,
you have no contact with other traders in other tier1 banks,
the news that you find in the net are old when you read them ...
I think this is so obvious ....
So, why do you trade every day?
You are not forced to do it.
Are you sure you see every day opportunities to earn money
taking a little risk? Is the daily trend so clear every day for you?

3 / Do I have to explain further how this business is?
You can live from FX, taking advantage of the weaknesses of the system,
but you should know that it was not made for that purpose. Wake up.
Again: the FTI method helps you to discover
weaknesses in the system, but you should adapt it to your
own situation. And your situation (ours) is very very weak in this market,
that's why FTI showed us the AOW, among other things...

I hope not to hurt anyone with this post.

Rgs,

Textor
  • #22,968
  • Feb 11, 2011 9:22am Feb 11, 2011 9:22am
Quoting textor
Hi!

It seems that...
Good post, +1
  • #22,969
  • Feb 11, 2011 9:30am Feb 11, 2011 9:30am
Hi dannbb,

great to see the consistent results you have been getting but based on the scenario, you may want to consider if you have been trading against the major impulse waves (countertrend) and whether the failed scout is worthy for rescue cos no doubt successful rescues may breed confidence and help to offset the losses but should they fail the higher skew involve may result in heavy losses as well and if one is too rigid (scorpion) and overstay the rescues, it may be a sure recipe for disaster.

This is actually what happen to me , i have been conducting successful rescues to the extend i felt i will never lose again until Mr Market
gave me a slap back to reality and i lost a big one for the day (10%).
This made me reconsider the rescue protocol carefully and to always listen to the market pulse (the master) and never deviate from it. Just like in war, scout purpose is to probe for trend but they should be sacrificed if necessary.

A larger a/c my be useful but understand the increase in psychological stress involved to see a larger sum of money in the red and also if mindset is able to hold steady and pull the trigger if necessary..


Quoting dannbb
This is the post that make me decide to hold on..

http://www.forexfactory.com/showpost...&postcount=501

This is also the post that I want to be consistent

In that post (quote)

2. Frequently,cutting losses is just a way to reset, and starting the game afresh.
You collect enough of that, you may never come back to the real world.
Of course , we shall not keep fighting for lost causes.
Sure sometimes losses are unavoidable.
[i]But if you harbour that losses is ok, then you're are being blinded....
  • #22,970
  • Edited 10:43am Feb 11, 2011 10:18am | Edited 10:43am
Quoting dannbb
This is the post that make me decide to hold on..

http://www.forexfactory.com/showpost...&postcount=501

This is also the post that I want to be consistent

In that post (quote)

2. Frequently,cutting losses is just a way to reset, and starting the game afresh.
You collect enough of that, you may never come back to the real world.
Of course , we shall not keep fighting for lost causes.
Sure sometimes losses are unavoidable.
But if you harbour that losses is ok, then you're are being blinded.
(unquote)

what...
--------------

I wish you all the best with your endeavours but I would still advise you to read the thread CAREFULLY again, and study it.

fti does not like to accept losses, this is true. On the other hand he only recommended attempting a rescue when your trade was mis-timed, not when it was against the trend. 500 pip drawdown would seem to indicate you read the market wrong. Having an exposure for 4 or 5 months is also not part of the basic MO.

It's fine if you want to go your own way and, as I said, I wish you all the best. I just think you could end up in a lot of trouble if you pick and choose the bits of fti's methodology that you like.

I'm certainly not writing from the perspective of somebody who knows it all and I have made quite a number of very stupid trades since I've been reading this thread. I just thought you might benefit from my stupidity and not have to go down the same road yourself.

On the subject of what textor and others have wrote regarding capitalisation..well it seems we all have different views on that matter. 5k is not enough to live on, no. But I believe it is enough to trade profitably if you scale your positions accordingly.

Cheers
  • #22,971
  • Feb 11, 2011 10:18am Feb 11, 2011 10:18am
Quoting textor
Hi!

It seems that...
  • #22,972
  • Edited 6:01pm Feb 11, 2011 12:28pm | Edited 6:01pm
I've been reading the posts today and thought I'd add my 2 pips. The discussion on capitalization, draw downs, implementation of the fti approach, etc. has been interesting.

I would suggest that anyone new to trading consider separating the "learning to trade" activities from the "learning to be a trader" activities. Both are presented here in fti's material. Start with the "learning to trade" activities. Study the first 200 pages of this thread, learn all you can about PA, study TA, and study technical indicators (to learn that their benefits are limited at best). Study several tens of thousands of charts on different time frames. Somewhere in the middle of all this study, open a demo account and practice in a risk free environment. If you can not double the size of a demo account, then you are not ready to move to the next stage. Period. No exceptions. However, you must understand that just because you can double a demo account does not mean you are a trader.

Once you double a demo account (you double it by consistently implementing your trading stategy), you are ready to open a small ($500) live trading account. This is where the "learning to be a trader" activities begin. Blowing an account is NEVER acceptable. As one of my early mentors said, you are the steward of you money and it is immoral to throw it away.

If you can not turn a $500 account into a $10,000 account, then you are not ready to call yourself a trader. I have mentioned here several times that I would never risk 10% of my account on one trade, and believe this is foolish behavior. In fact, it is very unlikely that you will ever become a successful trader if you allow that much risk on one trade. Let your success tell you that you are a trader. Having financial resources to continually fund an account does not make you a trader, it makes you a successful traders best friend!

Finally, one thought is exploding in my mind now. If you are willing to accept a 500 pip loss on a trade, but are looking for 20 pip positive trades, then you will need 25, positive, 20 pip trades to recover. That means you must be the greatest trader in the world to recover your loss. Put another way, if you are willing to accept large losses but happy with little gains, you have already lost and should find another hobby.

IMHO and FWIW.
  • #22,973
  • Edited 1:28pm Feb 11, 2011 1:06pm | Edited 1:28pm
Excellent advice GEfx.
  • #22,974
  • Feb 11, 2011 2:25pm Feb 11, 2011 2:25pm
Quoting GEfx
I've been reading the posts today and thought I'd add my 2 pips. The discussion on capitalization, draw downs, implementation of the fti approach, etc. has been interesting.

I would suggest that anyone new to trading consider separating the "learning to trade" activities from the "learning to be a trader" activities. Both are presented here in fti's material. Start with the "learning to trade" activities. Study the first 200 pages of this thread, learn all you can about PA, study TA, and study technical indicators (to learn that their...
Great post
  • #22,975
  • Feb 11, 2011 3:26pm Feb 11, 2011 3:26pm
Quoting MaMood
Hi Friends,

thanx for your kind and encouraging words.
Very happy to be part of our little comunity :-)

Have been riding on my moutainbike for 2 hours yet and was able to get rid of my frustration and disappoitment.

Today has been a test for a proper mindset and stress resistance and I failed. If I had managed my position actively when EU was going down, I would have probably reached my daily goal without problems. But instead of that I was frustrated and upset and left my trading room ....

VG challenge was offering the big chance of managing...
Hello Niels,

Though you did not get the goal for which you started, I think very key mental and emotional trading muscles were developed. Your daring to step out and take the challenge is commendable.

I am sure the next time around you will be closer to laying hold to it. Sometimes we don't realize the mental stresses associated with managing the Big Bucks. In those circles I am sure the pressure never lets up.

Keep going for it...don't quit. Those who are there now have had their journey. Congrats on stretching yourself. You do have what it takes in my opinion.

All the best in December,

FX4Newbies
Trade what you see, not what you think or feel. Let the market come to you.
  • #22,976
  • Feb 11, 2011 5:55pm Feb 11, 2011 5:55pm
Quoting textor
Hi!

It seems that...
im agree with this statement
the FTI method helps you to discover
weaknesses in the system, but you should adapt it to your
own situation. And your situation (ours) is very very weak in this market,
that's why FTI showed us the AOW, among other things...

thx textor
regard
sumakianlee
  • #22,977
  • Feb 11, 2011 6:08pm Feb 11, 2011 6:08pm
Quoting textor
Hi!

It seems that people still do not see the obvious.

1 / To play this game you need enough capital.
I'm sorry if you do not want to read this, but US$ 5000 is very
little capital. It's enough to learn, but not
live of FX. Unless you're a natural talent for the Forex market....
or you can live with a few dollars per day .....
or your level of risk is so high that sooner or later you will lose everything.
You need at least US$ 25000 to start more seriously.
Do not believe everything you read on internet forums, judge your own experience....

no truer words

@ GEfx

cannot aggree more
Success consists of going from failure to failure without loss of enthusiam
  • #22,978
  • Feb 11, 2011 7:42pm Feb 11, 2011 7:42pm
This is true. We don't have info: order flow. That is the reason why we have to follow price action closely. We are at best guerrilla fighters.

Quoting textor
Hi!

It seems that...
  • #22,979
  • Feb 11, 2011 8:10pm Feb 11, 2011 8:10pm
Salute FTI,

Been following your thread for 2 years now. Thank you for a great journey in trading and also in life. You're the best.

Wishing you a speedy recovery.

God bless you.

ZZ
  • #22,980
  • Feb 11, 2011 8:20pm Feb 11, 2011 8:20pm
Thanks for all the kind advise..keep them coming, dont worry about the harsh words. my numb skull can take more abusive beating

Thanks auxesis ,
You're always learning in this business, the day you think you have it mastered, is the first step towards bankruptcy

This sentence is golden.. keep you on your toes all the time. I had print that out in BIG font and paste them on top of my monitor.

Thanks Textor, your post should incorporate to all forex account opening
screen
You need at least US$ 25000 to start more seriously.

Working on that since the day I realized the forex marketing hype of "making big buck with $500 only" is all BS.

So, why do you trade every day?
You are not forced to do it.
Are you sure you see every day opportunities to earn money
taking a little risk? Is the daily trend so clear every day for you?

Gefx had actually done a very good breakdown of why..

You can live from FX, taking advantage of the weaknesses of the system,

I really hope this will works as the time spent in this is irrecoverable,money lost is not end of the world, it can be make back, but you can never reverse time.

Thanks sgwaverider,ukmanthailan,


Both of you had touch on risk control, i understand that, Gefx had put it clearly which stage i am in.

Thanks Gefx, this is excellent post for newbie trader

Your post had gave me the crystal clear situation analysis and direction, by any chance you are project manager trained?


I am still stuck at "learning to trade" phase, i had lose focus on "learn all you can about PA, study TA, and study technical indicators", instead I focus on account balance

This explain why I keep having the nagging feeling of not ready and i couldn't point a finger to which part is it.

Capitalization and risk control, this is part of "learning to be a trader"


Thanks again

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