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Technical Analysis Fallacy

  • #23,421
  • Mar 16, 2011 8:23pm Mar 16, 2011 8:23pm
Quoting eraptheman
good luck! long battle ahead of you.
indeed. We'll see if I'm still around for the next 10 to 20 years
  • #23,422
  • Mar 16, 2011 8:31pm Mar 16, 2011 8:31pm
Lost my account for the first time on that blip... I don't get the yen... japan is getting hit hard every day and the yen just keeps rising... sigh! Then again... I knew I was going to get knocked out tonight... so my fault for not getting out... but I was long for 2-3 months and was down a lot anyway so I just thought... bugger it... let it burn if it burns. So much for long USD. Everyone keeps raving about how good of a trade it is... and yer... obviously not.
  • #23,423
  • Mar 16, 2011 8:41pm Mar 16, 2011 8:41pm
Quoting Atomic_Sheep
Lost my account for the first time on that blip... I don't get the yen... japan is getting hit hard every day and the yen just keeps rising... sigh! Then again... I knew I was going to get knocked out tonight... so my fault for not getting out... but I was long for 2-3 months and was down a lot anyway so I just thought... bugger it... let it burn if it burns. So much for long USD. Everyone keeps raving about how good of a trade it is... and yer... obviously not.
Deep freeze! When a trader reverts to "hope" hope the market comes back, etc etc. then it's over mentally, the next stage is the Deep freeze, abandoning hope and actually freezing instead of action as there's nothing left in the account to battle back, death spiral.

You have severe mental issues that you need to address before putting any more money in your account.
  • #23,424
  • Mar 16, 2011 9:07pm Mar 16, 2011 9:07pm
I put the money I was prepared to lose into trading... when I felt I was going to lose I was like... ok fine whatever...

The problem isn't some deep freeze whereby I can't act because of some mental thing...

The problem is that I don't understand markets so whenever I enter based on research, experience blah blah... I lose... when I try to keep my trades a max of 2% loss size i.e. exit strictly at 2% strictly (and I can do this without setting stop losses and I've got months of records to prove that)... I lose 100% of the time and the times when I followed this strategy... I lost record amounts of my account and I have no idea how I managed to fight back to break even after every 60% loss when following this strategy.

However... when I was fighting back to break even... for some reason I was able to get close to 100% winning trades for sometimes months on end to get back to that break even point and to be honest... I don't know what changes in the thinking but every time I would enter... I would make money and it was as simple as that... I would look at the screen... go... long or short depending on feeling and make money...

Whenever I get back to break even... I probably get complacent or something but basically I just start to lose again...

For this 2-3 month trade I basically said bugger it... longer term trade it is... started buying... went against me... continued buying... went against me... more buying... and now I'm out. Sure this has been said and resaid as a bad strategy but hell... from my experience following the 2% strategy is the worst idea of all so my logic was... well if the books are full %$#@ on that front... lets test this strategy...

Anyway... here's what I attribute my losses to... just not being clever enough to know where the markets are going. I've read heaps of books and according to them, what I say is mostly false but I don't care... when I follow the books I lose big and fast... when I follow myself... I'm totally inconsistent. I don't get trading no matter how much screen time I give it... no matter how much reading of world news I do... I just keep losing... it's not some brain freeze... it's just incompetency. I've spent 4-5 years on trading and I don't see it any clearer than when I got into it. Sure I can explain how markets are supposed to work a lot better now, what they are designed for and how they are supposed to move... well I can't explain these as perfectly as some but a lot better than 4-5 years ago but this knowledge doesn't seem to help with the bottom line of my trading.
  • #23,425
  • Mar 16, 2011 10:17pm Mar 16, 2011 10:17pm
Quoting Atomic_Sheep
I put the money I was prepared to lose into trading... when I felt I was going to lose I was like... ok fine whatever...

The problem isn't some deep freeze whereby I can't act because of some mental thing...

The problem is that I don't understand markets so whenever I enter based on research, experience blah blah... I lose... when I try to keep my trades a max of 2% loss size i.e. exit strictly at 2% strictly (and I can do this without setting stop losses and I've got months of records to prove that)... I lose 100% of the time and the times...
Have you ever analyzed even before putting a trade...that whats the max loss u will bear and walk out ......

also have u thought what kind of thing market needs to do so that u will get that loss....

Know your enemy know yourself.....

V
  • #23,426
  • Mar 17, 2011 1:11am Mar 17, 2011 1:11am
Hello Atomic Sheep.

I put the money I was prepared to lose into trading...

The problem isn't some deep freeze whereby I can't act because of some mental thing...

IMHO, your problem is strongly menthal. Because you dont reveal to yourselves that it is and what you have written is imo totally mess. Sorry for saying that.

Ask yourselves : Do i really understand what the traders wanted to say? What is good for me and where are my weak sides? Where should i start? Do i have a plan? Something disturbing or affecting my trading? It is only trading i professionaly care? ..................... Regards
  • #23,427
  • Edited 2:21am Mar 17, 2011 1:57am | Edited 2:21am
did you see the trend? When trend is against you and impulse is too strong, you cannot win. Rescues are only for mistiming, not for misdirection. Why did you not cut loose the position? The momentum should have caught your eye for a quick reverse. If you are nimble (which you really should be aka using small position in times of danger) then you should not be in too deep.

In addition, holding onto a position for too long if you do plan on rescuing (which you shouldn't) should be quick. This is why smaller time frame is helpful. When you trade on 1hr, your have to go to 4hr or more for rescues. The thing is, when we do a rescue we have to be actively managing like fana stated. This means you are baby sitting your position (watching the screen for opportunities, reducing exposures when necessary, timing the market) during the whole rescue process. Staying glued to your screen when trading is called daylight hours. If you "feel" you are losing control, you should be out.

I am uncertain of your fearlessness. True fearlessness should come from confidence over many battles. Knowing yourself and the enemy (as stated by indianguyinny) and having knowledge of tactical and strategic positioning.



Quoting anthoniex
No Stop Loss...
ready for battle, NO FEAR!
  • #23,428
  • Mar 17, 2011 2:07am Mar 17, 2011 2:07am
Hi Anthoniex. What you showed is H1 graph. When M5, you can do rescues of that. This is in active managing, not sitting on one position. Regards



Quoting anthoniex
No Stop Loss...
ready for battle, NO FEAR!
  • #23,429
  • Mar 17, 2011 2:10am Mar 17, 2011 2:10am
It will be hard to unlearn things which you have been taught, but I'm sure you like challenge. Work on mindset first. 2% rule is highly rigid. Your mindset should never ever be "whatever".

Goodluck


Quoting Atomic_Sheep
I put the money I was prepared to lose into trading... when I felt I was going to lose I was like... ok fine whatever...

The problem isn't some deep freeze whereby I can't act because of some mental thing...

The problem is that I don't understand markets so whenever I enter based on research, experience blah blah... I lose... when I try to keep my trades a max of 2% loss size i.e. exit strictly at 2% strictly (and I can do this without setting stop losses and I've got months of records to prove that)... I lose 100% of the time and the times...
  • #23,430
  • Mar 17, 2011 2:14am Mar 17, 2011 2:14am
Well... I'll agree that my mind is somewhat of a mess... but that's what I'm getting at... how on earth do I sort it out.

Secondly... no there was no trend... usd/jpy has been trading in a range for about 2-3 months now... and when I heard about the tsunami... the nuke plant + all the news supporting the fact that USD should be a pretty decent thing to get into... I basically said... ok well... the japanese crisis is a no brainer imo... the USD outlook just helps the situation... lets proceed to buy as the range is likely to end... and now... the speculators are saying... repatriation... lets short sell shall we boys? so basically... I had my opinion... but I was wrong and boj's 76 billion was erm... too damn late... besides... I don't think they'll just put a floor on the currency so I wasn't relying on them too heavily but every little bit helps. I was just thinking logically... USA is in a better spot than Japan... so money should fly that way but it didn't. And yes... I risked a lot but that's got nothing to do with anything. I'm just annoyed at being wrong all the damn time. Like I said... I don't really care about having lost... I'm more worried about the fact that I haven't learned anything in the process. That's what's frustrating.

P.S. USD/JPY went up momentarily last week when the news of the tsunami hit and then the positions reversed with a rather weak down move which suggested to me that the market was low volume (I still think I'm right on that one) and also that there isn't much strength behind the speculators... so I thought the fundamentals would be strong enough to at the very least support the support for the range.
  • #23,431
  • Edited 2:39am Mar 17, 2011 2:19am | Edited 2:39am
Hi again. This "comments" of politics, fundametals... these all discussion is NOT what you should grasp First. These are the first 200pages. Please, start there again. Your picture now is off-topic to the "trading methodology" here!. Regards

- example : think of this : Why one should beat the forex from data from newspapers (at least 10min left) or chatting room... What is this "advantage" about?


Quoting Atomic_Sheep
Well... I'll agree that my mind is somewhat of a mess... but that's what I'm getting at... how on earth do I sort it out.

Secondly... no there was no trend... usd/jpy has been trading in a range for about 2-3 months now... and when I heard about the tsunami... the nuke plant + all the news supporting the fact that USD should be a pretty decent thing to get into... I basically said... ok well... the japanese crisis is a no brainer imo... the USD outlook just helps the situation... lets proceed to buy as the range is likely to end... and now......
  • #23,432
  • Mar 17, 2011 3:20am Mar 17, 2011 3:20am
found something cool about fib numbers: in a series of any consecutive fib numbers in the series (call them a b c). b^2 =ab +- 1. Funny thing is that if we treat the 1 as negligible in the long run, our equation collapses to b = a. Thus the +-1 is integral to the fib series, especially if you think without the +-1, the b=a equation can be resolved to be correct if a were multiplied by Phi. Cool stuff, off topic, but thought I'd mention it
  • #23,433
  • Mar 17, 2011 3:47am Mar 17, 2011 3:47am
Quoting Atomic_Sheep
Well... I'll agree that my mind is somewhat of a mess... but that's what I'm getting at... how on earth do I sort it out.

Secondly... no there was no trend... usd/jpy has been trading in a range for about 2-3 months now... and when I heard about the tsunami... the nuke plant + all the news supporting the fact that USD should be a pretty decent thing to get into... I basically said... ok well... the japanese crisis is a no brainer imo... the USD outlook just helps the situation... lets proceed to buy as the range is likely to end... and now......
sorry to hear of your mis adventure. Blinded by bias?

I myself is also long usd/yen
but muy long euro and cable and evrythingy else saved my butt.
mostly i am long the euro/yen still.

All indications from news and info, pointed that the boj was repartiating yenback to support her economy.
So they selling all their reserves to do so.
Short yen is the basic trend. And because of the nature of the manmade disaster after the natural ones, indicate pain for japan for the long term. During my active times in banks, 130 yen was norms.
However you still need to dance the flow of the markets.
Position risk should be small relative to your daylight positions. Gambling is not a good MO for trading. However we cannot take the gamble out of unexpected volatility.
But you cannot take volatility risk out of your portfolio. Not unless you trading cash.ie no leverage.
What i like to do is to take position risk(gambling) only in cash and the leveraged activity is just supplement activity for ROI enhancement. That puts the per position risk to less than 10% of my portfolio.
This good time think about these things now, as the opportunity presents. Like i said before 500pips moves are possible in fast volatility, and it behoves us that our trading activities must have this inbuilt contingencies. I had seen in my life time multiple and contineous 500pip runs, in the most scary of uncertainties. Although we cannot cover all posibilities we should acertian that the portfolio should beable to survive 2 standard deviations.

regards

most euros already tp.
need add some usd/yen soon to improve cost.

I advice you all please be nimble and try not get reckless minset. The times are very trying.
  • #23,434
  • Edited 4:01am Mar 17, 2011 3:50am | Edited 4:01am
Quoting Atomic_Sheep
Well... I'll agree that my mind is somewhat of a mess... but that's what I'm getting at... how on earth do I sort it out.

Secondly... no there was no trend... usd/jpy has been trading in a range for about 2-3 months now... and when I heard about the tsunami... the nuke plant + all the news supporting the fact that USD should be a pretty decent thing to get into... I basically said... ok well... the japanese crisis is a no brainer imo... the USD outlook just helps the situation... lets proceed to buy as the range is likely to end... and now......
You need to check your ego at the door if you are to begin exploring the notion of forex trading. I know that you have spent 5 years on this so far, but based on what you posted above, you have learned nothing, especially about yourself. Most of what you say in your post is justifying your long positions when the market was clearly -- clearly -- in an down trend (the most recent consolidation/sideways move/range movement did not change the trend). If you had been trading with the trend yesterday, then you would have had a very different day than the one you had. As long as you try to "out think" the forex you will fail. The charts are your boss (not what you think should happen), and your job is to listen to your charts. Based on your results yesterday, your charts have fired you.

Edit: I took a long position on the $/J after the deep fall yesterday and got out when the gap had been filled last night at 79.40. Not too interested in following the yen around now and will wait to see what the charts tell me.
  • #23,435
  • Edited 6:33am Mar 17, 2011 3:52am | Edited 6:33am
Quoting Atomic_Sheep
I put the money I was prepared to lose into trading... when I felt I was going to lose I was like... ok fine whatever...

The problem isn't some deep freeze whereby I can't act because of some mental thing...

The problem is that I don't understand markets so whenever I enter based on research, experience blah blah... I lose... when I try to keep my trades a max of 2% loss size i.e. exit strictly at 2% strictly (and I can do this without setting stop losses and I've got months of records to prove that)... I lose 100% of the time and the times...
Hey, Atomic. You have fucked up majorly, but there is no need to look from hindsight and say to yourself " Ouh, see this is where I made a mistake next time I won't enter long like that". Next time it will be different from the last time, even after 20 years of experince you won't be able to foretell the market direction, you never know for sure.Judging by the pattern of you P/L, you obviously have a systematic flaw in your approach as most of us retail traders have.You have to work on this systematic flaw if you intend to continue with forex.
For example,I found the that my PL has the following pattern:
- if I profit 30% of intial capital, afterwards I reach -30% of inital capital
- if +50%, then cames the moment of -50% of inital capital
- can you guess what happened after I doubled my account?
Obviously I also have a systematic flaw in my approach. Now I'm sitting on +20% and wondering if I would end up -20%, eventually. I have been analyzing myself and the market simultaniously to find out what the flaw is. IMHO, if you want to follow the 2% DD rule then read stuff related to game theory, probabilities and statistics. If want the long term trading then read books like this one: "Intermarket Analysis Profiting from Global Market Relationships" by John J. Murphy.

You have enough experience to have found patterns in the market that repeat from time to time and can be taken advantage of. I'm not talking about charts patterns only, but patterns as a whole. Most importantly always keep the risk parameters in tune and try to pay the lowest price in order to find out that you are wrong in the market. Now you have paid the ultimate price.

My 2 cents, good luck to you and happy trading to all TAFies
  • #23,436
  • Mar 17, 2011 4:30am Mar 17, 2011 4:30am
Quoting Gro
... fifty brave people "Fukushima Fifty" rescue in Japan power station ... THANK'S PEOPLE!!!
many brave samurais.
bansai!

regards
  • #23,437
  • Mar 17, 2011 5:05am Mar 17, 2011 5:05am
Inserted Video
  • #23,438
  • Mar 17, 2011 5:21am Mar 17, 2011 5:21am
http://www.bbc.co.uk/news/business-12768098

G7 finance ministers are to hold a conference call to discuss how to deal with global market volatility.
The call is expected to take place on Friday morning, Japan time.


"It seems inevitable that the yen will be part of a broader discussion on stabilising global markets," said Alan Ruskin of Deutsche Bank.
"It would be nothing short of amazing if they fail to at least make some veiled threat of intervention," he added.


Japan's Finance Minister Yoshihiko Noda declined to comment on whether or not Japan would step into the market but said he would keep an eye on developments.
"I will be closely watching market moves today," he said.
The minister has blamed speculation for the yen's surge.
"Market moves have been nervous amid speculation, while trade has been thin," Mr Noda said.


However, economy minister Kaoru Yosano commented on Thursday that financial markets had not yet been destabilised enough to warrant a currency intervention by the G7 to weaken the yen.
"We would like to get psychological support from the G7," he said.
The economy minister also said the Japanese government did not yet intend to buy shares in order to stop the stock market sell-off.
  • #23,439
  • Mar 17, 2011 5:59am Mar 17, 2011 5:59am
Well I've got a program which trades profitably... but it only makes 0-10% p.a. which isn't worth it imo. I get an equal to greater amount from just leaving the money in the bank which is where most of my money is atm.

I predominantly traded EUR/USD but started trading other currencies as well about a year ago. Can't say I see too many patterns when I look at the charts. All the moves seem pretty dissimilar to me. Every time something happens it's a surprise to me. Sure there's the robotic buy every time stochastics are at the 20 level or when that ema crosses the other... but every program that I made which followed those rules or any other combination imaginable always lost money except for the one that I described earlier so to be honest... I don't believe in any repeatable patterns. I made some money recently after reading a stock trading book and discovering a perfect cup and handle pattern... but that was probably the first time ever that I took something out of the book... applied it and saw it work. Haven't see the same pattern since anywhere else despite the book being adamant that these patterns are common. The dropping markets might have something to do with that. But my point is that after writing hundreds of programs and looking for patterns... sure I saw possible patterns... but after back testing them... none of them resulted in profits i.e. none of them if followed strictly worked.

I've read the first 200 pages and more of this thread... and I think I've read it something like 3 times now... I've created a document with all of fti's posts and read and read them as well. But I still have no idea what it means to follow the markets and being nimble and all that, nor what it means to follow the trend. I don't draw lines on my charts... and I don't look at other indicators because as I said... I didn't find much use from the indicators based on my back testing. But nor do I see how looking at the chart is any different to basing decisions based on technical indicators. Prior price action is just an indicator like any other. Hence, I started trying to follow the news... trying to figure out what was good news... what was bad... what could be trusted... what couldn't etc etc... obviously this doesn't work either or at least I don't get it.

And in regards to my psychology... either I'm totally oblivious of my thinking but in all honesty... I have no idea how I'm supposed to tell what psychological factor is influencing me at any given time. It's impossible not have psychology influence ones decisions, so how on earth are we meant to trade without psychology? If I think back to some of my trades... I can pick what psychological factor may have influenced my decision... but like MyTbo suggested... this hind sight analysis is useless. I agree... because I keep making mistakes which costs me trades and there's no way of telling what psychological factor may be influencing my decisions for any given next trade so I don't bother analysing past trades in that regard. The only conclusion which I came to from past trade analysis was that I was over trading which I've managed to curb but that didn't change my bottom line... just reduced my anxiety when trading but everything else has remained exactly the same.

I'm sick of reading trading books because they all say the same generic rubbish and I've ceased learning anything new from them for quite a while... but no other useful sources have surfaced in their place. Sure there's the argument of... if you want to write a thesis on gold fish... don't use books... observer the fish and then write the thesis... but no matter how much screen time I put in... I don't get any closer to having a clear enough picture about it... to begin writing something worthwhile. Just wanna figure out what I'm doing wrong... that's whats killing me...
  • #23,440
  • Mar 17, 2011 6:05am Mar 17, 2011 6:05am
Quoting Fana
Hi Anthoniex. What you showed is H1 graph. When M5, you can do rescues of that. This is in active managing, not sitting on one position. Regards
The fact that Anthoniex posted an H1 chart is not really relevant Fana - that drop was 200 points over three 5M bars - you can't perform a rescue in the middle of that. Admittedly, if you keep your position sizes safe, relative to your total capital, it might not have been an irrecoverable situation but during that quick drop you would have had the choice of bailing out, flipping or sitting tight, and not much else (certainly not rescuing).
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