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Technical Analysis Fallacy

  • #23,001
  • Feb 14, 2011 8:13am Feb 14, 2011 8:13am
@Zoran and Fana. I did study the structure of the pyramid and agree that Fibonacci makes sense on a rescue. However, using on an attack means I am building an upside-down pyramid which is probably the least stable structure I can think of - that's where my mental block is I think.

@Auxesis - When you said how far the point where my bias would be proved wrong should determine my aggressiveness, I'm assuming the nearer it is the better as there will be a much smaller downside before I realise I am wrong and cut the position( and also I will not have missed the run up/down I am expecting, or have I got that completely wrong?

Thanks again for your input. Much appreciated.
  • #23,002
  • Feb 14, 2011 8:14am Feb 14, 2011 8:14am
Quoting auxesis
Outside of OANDA does anyone show a sweep below 9840 on Cad in the last few minutes?
A sweep on Alpari but only down to 9856 (on the 14.00 GMT 5M candle)
  • #23,003
  • Feb 14, 2011 8:16am Feb 14, 2011 8:16am
Quoting auxesis
Outside of OANDA does anyone show a sweep below 9840 on Cad in the last few minutes?
Hi Auxesis. FxPro live, 50pips
  • #23,004
  • Feb 14, 2011 8:26am Feb 14, 2011 8:26am
Quoting auxesis
Outside of OANDA does anyone show a sweep below 9840 on Cad in the last few minutes?
wow, just checked Oanda's usdcad.. the low was 0.9816.
what about it? any concerns?
must've been news-driven?!
  • #23,005
  • Feb 14, 2011 8:32am Feb 14, 2011 8:32am
Quoting ukmanthailan
@Zoran and Fana. I did study the structure of the pyramid and agree that Fibonacci makes sense on a rescue. However, using on an attack means I am building an upside-down pyramid which is probably the least stable structure I can think of - that's where my mental block is I think.

@Auxesis - When you said how far the point where my bias would be proved wrong should determine my aggressiveness, I'm assuming the nearer it is the better as there will be a much smaller downside before I realise I am wrong and cut the position( and also I will not have...
UK,

In effect you're building an upside down pyramid for a brief time, you have two bell curves working simultaneously, one is the momentum of price the other is size of your account, ideally you want to match the bell curves, so the bulk of position is in the steepest part of prices momentum. if that makes sense. You will quickly reduce that upside down pyramid as you exit, your average position to market will separate in the same manner it closes when adding. The longer you can stay in the momentum with bulk the more profit but at the same time you leave yourself in higher risk, it's a tight rope you walk, between greed and fear, so remember protecting the account is paramount to gain, tis better to take profit and cover than remain at risk as long as you have sufficient to ride, over time your ability to stay longer in the curve will grow.

Correct on the backside, for example if shorting you basically have two marks to contend with, the last major high and the last current high. Major high marks overall trend, price can retrace back to that level without breaking it and price still be in an overall down trend, the current high marks those waves that make up the larger move, in this case you want to short the waves going south, as long as it makes progressively lower highs you can ride, if it's making higher highs you're in a retrace.

If when I have a chance to trade, and I see price far away from the last major high ( in this case of a downtrend) I have to ask myself if I have the time and resources or even if it's viable to attempt it? Same applies for the small charts, If price is stretched away from the last base, it's best to wait for the next retrace measuring against the last high.

Hope that helps,
  • #23,006
  • Feb 14, 2011 8:37am Feb 14, 2011 8:37am
Quoting auxesis
Outside of OANDA does anyone show a sweep below 9840 on Cad in the last few minutes?
Hi auxesis, I was short the Cad at 9874 when it spiked to 9855. I jumped out at B/E when it turned back north. It was a pretty quick spike but only to 55. I am waiting for a much bigger retrace before shorting again.
  • #23,007
  • Feb 14, 2011 8:37am Feb 14, 2011 8:37am
I read this all the time, think about it - if fib levels were the reason the market turned it would turn on them all the time. It does not, so clearly fib numbers do not make the market turn.

The next question is well why do you see fib ratios in the markets, the answer to that is that sometimes they show up, but this means nothing. Quite simply almost any ratio will show up some time in the market, the only edge you can develop as a trader is following the big picture. Having researched a lot into this area I can tell you all that technical analysis is a tool to analyses the markets, but most of the books on analysis are useless. Elliot wave theory especially the one you can buy in a book is nigh on useless, I know because I studied them, look at the markets, then look at an elliot wave book with these "doggy" five wave counts on them.

Even Robert Minor, shows some blinker blindness in his counting, often completely ignoring waves or fudging over, what is clearly a wave, but does not suit his count

I enclose a screen shot, that I was discussing with a friend, he said the 5th wave is the top and I said no way its going up. I feel quite strongly about this as when you start trading you think that what you read in these trading books is correct, I mean if you buy a book on sailing, you don't expect to sink your boat following the advice in the book. In trading that is not the case. Most failed traders take to writing books, or giving advice, this forum is littered with so called experts, regurgitating titbits that they read in trading books.

Sadly, they are just following the crowd without a new idea in their heads.

All you need in trading is channels, trend, cycles, the rest is for the birds, you can make trading as complex as you want, at the end of the day, its about losing less then you make, so thats where money management comes in.

My advice to anyone here that wants to trade is find a trader and spend a week with him, learn what he does or she, and go from there.
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  • #23,008
  • Feb 14, 2011 8:42am Feb 14, 2011 8:42am
Quoting GEfx
Hi auxesis, I was short the Cad at 9874 when it spiked to 9855. I jumped out at B/E when it turned back north. It was a pretty quick spike but only to 55. I am waiting for a much bigger retrace before shorting again.
GE, thanks.

At 8cst, Oanda's tic(5 sec) charts show a spike from 9868 to 9816. Wondering if it's corrupt data, or blatant sweep?
  • #23,009
  • Feb 14, 2011 8:47am Feb 14, 2011 8:47am
Quoting Mike Haran
I read this all the time, think about it - if fib levels were the reason the market turned it would turn on them all the time. It does not, so clearly fib numbers do not make the market turn.

The next question is well why do you see fib ratios in the markets, the answer to that is that sometimes they show up, but this means nothing. Quite simply almost any ratio will show up some time in the market, the only edge you can develop as a trader is following the big picture. Having researched a lot into this area I can tell you all that technical analysis...
Mike Haran,

Thanks for the reply but your post has nothing to do with the discussion, Fib reference in this thread refers to a mathematical progression of adding and subtracting from an open position optimizing profit.

Not levels of retracement/extension in price action .
  • #23,010
  • Feb 14, 2011 8:54am Feb 14, 2011 8:54am
Quoting ukmanthailan
@Zoran and Fana. I did study the structure of the pyramid and agree that Fibonacci makes sense on a rescue. However, using on an attack means I am building an upside-down pyramid which is probably the least stable structure I can think of - that's where my mental block is I think.
I do remember some discussion about linear attacks early on in the thread and from memory this is fine. It is probably best to start this way until comfortable and some foreign cap has been built up.

First attack sequence is 1 1 1, so linear.
  • #23,011
  • Feb 14, 2011 8:59am Feb 14, 2011 8:59am
Auxesis (and Zoran), your posts are always helpful to me but I need time to digest the last one.

I just tried a 1-2-5 on cable and took 45 pips on that last move with the 2 and 5 (scout still in). I put the 5 in a bit too late though and closed it and the 2 at around 1.6022 as the momentum started to fade for a few mins, could have been better...

Cheers
  • #23,012
  • Feb 14, 2011 9:09am Feb 14, 2011 9:09am
Quoting ukmanthailan
Auxesis (and Zoran), your posts are always helpful to me but I need time to digest the last one.

I just tried a 1-2-5 on cable and took 45 pips on that last move with the 2 and 5 (scout still in). I put the 5 in a bit too late though and closed it and the 2 at around 1.6022 as the momentum started to fade for a few mins, could have been better...

Cheers
Great you have a big cushion for your scout, don't ride it below 5981 the last low, if you feel price is still north.
  • #23,013
  • Feb 14, 2011 9:20am Feb 14, 2011 9:20am
Quoting auxesis
GE, thanks.

At 8cst, Oanda's tic(5 sec) charts show a spike from 9868 to 9816. Wondering if it's corrupt data, or blatant sweep?
Makes me wonder, too. I got the spike, but not as deep as you. I'm going with sweep.
  • #23,014
  • Feb 14, 2011 9:26am Feb 14, 2011 9:26am
Quoting Mike Haran
I read this all the time, think about it - if fib levels were the reason the market turned it would turn on them all the time. It does not, so clearly fib numbers do not make the market turn.

The next question is well why do you see fib ratios in the markets, the answer to that is that sometimes they show up, but this means nothing. Quite simply almost any ratio will show up some time in the market, the only edge you can develop as a trader is following the big picture. Having researched a lot into this area I can tell you all that technical analysis...
Welcome! You might hear this a few dozen times, but it is best to read/study the first 200 pages of this thread before posting. Once done, you will better understand TA and its proper role in trading, at least from our perspective, BTW, I think you need to review your wave count, as I see 5 not 7. However, there is little discussion here on wave counting and such.
  • #23,015
  • Feb 14, 2011 3:16pm Feb 14, 2011 3:16pm
Any news about Chief???


V
  • #23,016
  • Feb 15, 2011 12:23am Feb 15, 2011 12:23am
Quoting indianguyinny24
Any news about Chief???

V
Hello Vice,
Last time heard from him he was recovering at his mother's home, didn't get update from him since then.
By the way, there's no message from his friends. That mean no bad news.
  • #23,017
  • Feb 15, 2011 1:45am Feb 15, 2011 1:45am
Morning Friends,

back from my "meditation" about last weeks events.
Hope I'm back agian in the here and now to start trading again.

Seems I have to read some pages here in TAF since last wednesday ...

Wish you all a great week!

Niels
  • #23,018
  • Feb 15, 2011 1:47am Feb 15, 2011 1:47am
Quoting MaMood
Morning Friends,

back from my "meditation" about last weeks events.
Hope I'm back agian in the here and now to start trading again.

Seems I have to read some pages here in TAF since last wednesday ...

Wish you all a great week!

Niels
Finally:-).
Hi Niels. Thats great:-)))))
  • #23,019
  • Feb 15, 2011 2:00am Feb 15, 2011 2:00am
Quoting MaMood
Morning Friends,

back from my "meditation" about last weeks events.
Hope I'm back agian in the here and now to start trading again.

Seems I have to read some pages here in TAF since last wednesday ...

Wish you all a great week!

Niels
good to see that you bounced back already from the challenge. really happy for you.
rgds/kevin

good trading y'all.
  • #23,020
  • Feb 15, 2011 2:17am Feb 15, 2011 2:17am
The only Holy Grail in trading:


Market Volatility = Market Fear = Market Uncertainty


Learn to use a simple volatility indicator above all.
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