Technical Analysis Fallacy

Hi Baifu,

your guesstimation is right: I do not use hedging to expand my margin.

When I have more than one position in one direction I use a "hedge" (= same positions size in opposite direction) to neutralize or close my exposure in one step. After that I close each position out by another position in opposite direction. That is when you see several 0.00 sized positions. Do not know why MT4 is plotting it that way, but it does ...

Yeah - I'm using some scripts to handle my positon openings and closing by just pressing one hotkey. I'm a lazy guy, so I like it very simple :-)

All the best,
Niels

Hi again Friends!

Found another interesting snippet, that stands a little in conflict with the often mentioned statement of "blind leading the blind".

[...]

To be the trader you want to be, consider taking on a student/trainee. When someone is observing you and learning from you, you’ll be on your best behavior. With the teaching script, you’ll access behavior patterns that you would never enact in isolation. Alternatively, take on a peer mentorship role. The social motivation to live up to your best for your trading buddies will enable you to access your best behavior patterns.

[...]

It's taken from this book:
http://www.amazon.com/Daily-Trading-...4017661&sr=8-1

From my own experience I strongly agree with that. It is a very big push to ones dicipline and motivation, when he puts his actions under "public observation".

All the best,
Niels

Seems like u do love this book...

V

http://fxtrade.oanda.com/analysis/labs/toptraders



V

I saw where they were posting those stats, interesting info.

Interesting what you can get from it...

Copied pasted from oanda


Q: What’s shown in these charts?

A:By default, statistics are shown only for the 100 most profitable traders. Check "Show Least Profitable Traders" to overlay statistics for the non-profitable traders.

The following statistics are shown for each of our most traded currency pairs. They are calculated from the total number of trades placed by each group of traders.

The direction (percentage of trades long vs. short)
The profitability (percentage of profitable vs. non-profitable trades)
Average duration for all the profitable and non-profitable trades placed by each group.
Average Profit/Loss per unit in pips.

Q: What can I find out from these charts?

A:While this chart cannot predict future trends, it’s an interesting snapshot on the last 24 hours.

When you compare the two types of traders, look for trends. Which group is holding their trades longer? Are they taking a particular direction? Are traders profiting more from some pairs?

With the exception of the $/Y, most profitable have positioned themselves against the Dollar. Dugh?

Long Euro, Silver (silver has been very volatile) by far the majority, then Long Dollar vs.Yen and Long Gold.

Most Intriguing is Aussie/Yen with a 98% profitability, I like this pair and was long earlier although square at the moment, rate differentials are a big plus with this pair.

edit: what will be interesting to see is a correction day

Hmmm where can i signed up under your astute mentorship program Niels

Well for aussie yen... i have looked at this many times....and what i understand of this cross..

AU and UJ....

till UJ wont go Big time down....AU is right now on some amazing bull run...and UJ is not dropping like crazy....

so till AU dont drop crazy it is kinda safe to long this guy...

again my 2 cents.....

V

Long time ago i posted this...


A time comes in your life when you finally get it...when, in the midst of all your fears and insanity, you stop dead in your tracks and somewhere the voice inside your head cries out...ENOUGH! Enough fighting and crying and blaming and struggling to hold on.
Then, like a child quieting down after a tantrum, you blink back your tears and begin to look at the world through new eyes.

This is your awakening.

You realize it's time to stop hoping and waiting for something to change, or for happiness, safety and security to magically appear over the next horizon. You realize that in the real world there aren't always fairy tale endings, and that any guarantee of "happily ever after" must begin with you... and in the process a sense of serenity is born of acceptance.

You awaken to the fact that you are not perfect and that not everyone will always love, appreciate or approve of who or what you are... and that's OK. They are entitled to their own views and opinions.

You learn the importance of loving and championing yourself... and in the process a sense of new found confidence is born of self-approval. You stop complaining and blaming other people for the things they did to you - or didn't do for you - and you learn that the only thing you can really count on is the unexpected.

You learn that people don't always say what they mean or mean what they say and that not everyone will always be there for you and that everything isn't always about you.

So, you learn to stand on your own and to take care of yourself... and in the process a sense of safety and security is born of self-reliance.

You stop judging and pointing fingers and you begin to accept people as they are and to overlook their shortcomings and human frailties... and in the process a sense of peace and contentment is born of forgiveness.

You learn to open up to new worlds and different points of view. You begin reassessing and redefining who you are and what you really stand for.

You learn the difference between wanting and needing and you begin to discard the doctrines and values you've outgrown, or should never have bought into to begin with.

You learn that there is power and glory in creating and contributing and you stop maneuvering through life merely as a "consumer" looking for your next fix.

You learn that principles such as honesty and integrity are not the outdated ideals of a bygone era, but the mortar that holds together the foundation upon which you must build a life.

You learn that you don't know everything, it's not your job to save the world and that you can't teach a pig to sing. You learn that the only cross to bear is the one you choose to carry and that martyrs get burned at the stake.

Then you learn about love. You learn to look at relationships as they really are and not as you would have them be. You learn that alone does not mean lonely.

You stop trying to control people, situations and outcomes. You learn to distinguish between guilt and responsibility and the importance of setting boundaries and learning to say NO.

You also stop working so hard at putting your feelings aside, smoothing things over and ignoring your needs.

You learn that your body really is your temple. You begin to care for it and treat it with respect. You begin to eat a balanced diet, drink more water, and take more time to exercise.

You learn that being tired fuels doubt, fear, and uncertainty and so you take more time to rest. And, just as food fuels the body, laughter fuels our soul. So you take more time to laugh and to play.

You learn that, for the most part, you get in life what you believe you deserve, and that much of life truly is a self-fulfilling prophecy.

You learn that anything worth achieving is worth working for and that wishing for something to happen is different than working toward making it happen.

More importantly, you learn that in order to achieve success you need direction, discipline and perseverance. You also learn that no one can do it all alone, and that it's OK to risk asking for help.

You learn the only thing you must truly fear is fear itself. You learn to step right into and through your fears because you know that whatever happens you can handle it and to give in to fear is to give away the right to live life on your own terms.

You learn to fight for your life and not to squander it living under a cloud of impending doom.

You learn that life isn't always fair, you don't always get what you think you deserve and that sometimes bad things happen to unsuspecting, good people... and you learn not to always take it personally.

You learn that nobody's punishing you and everything isn't always somebody's fault. It's just life happening. You learn to admit when you are wrong and to build bridges instead of walls.

You learn that negative feelings such as anger, envy and resentment must be understood and redirected or they will suffocate the life out of you and poison the universe that surrounds you.

You learn to be thankful and to take comfort in many of the simple things we take for granted, things that millions of people upon the earth can only dream about: a full refrigerator, clean running water, a soft warm bed, a long hot shower.

Then, you begin to take responsibility for yourself by yourself and you make yourself a promise to never betray yourself and to never, ever settle for less than your heart's desire.

You make it a point to keep smiling, to keep trusting, and to stay open to every wonderful possibility.

You hang a wind chime outside your window so you can listen to the wind.

Finally, with courage in your heart, you take a stand, you take a deep breath, and you begin to design the life you want to live as best you can.

- - by Sonny Carroll

Morning Friends!

Royal Wedding in London.
Japanese Bank holidays ... good moment to spend some time on reading some good books.
I guess you know it already: I have a new snippet again :-)

The key to regaining self-confidence in such a situation is to turn

the focus from making (or losing) money to the actual process of trading.

All the best,
Niels

Also an interesting observation I made.
Was analysing my performance of this month...

I made 2.625 raw pips (not multiplied by size)
I lost 4.359 raw pips.

I was shocked!
But I made 15.5% profit this month!???!??!

There are a lot of findings inside this numbers, but the most important is, that I made my profit based solely on pure Money-Management:
The losing positions have been very small in relation to the winning ones. That's why it is important to attack and rescue very dynamically.

(The other finding, that I have to verify, I was trading most of the time against the trend. So seems there is some room for improvement for me ....)

Hope this is of any help for you ...

All the best,
Niels

Hi Fti,

It's been 3 weeks since I started reading your thread seriously and I'm trying to implement your concepts with a demo account for now.

I want to thank you (and all the contributors) because it's the first time that I'm trading with the knowledge that the outcome will be a result of my skills (MM, MO, emotion control, strategy planning).

The concepts of SL, TP, trailing stop, etc always created so much conflicts within me and hope always stepped in and messed my trades (will it hit my targets? stops? how far? with what R:R?)

Actively managing risk looks so obvious after reading your concepts but it was somewhat difficult to implement without guidance.

Thanks again and when I'm finished reading (I'm in post 5000 right now) i hope to be able to contribute with my own experience

i have found that trading this way has bee working for me with incredible success.

find direction of price by fundamental and technical analysis,
establish surveilance of terrain and market structure, open price, highest price, support, days range.
trade in lower time frames to position yourself for the overall move, by snowballin your position. in essence one should not want to grab the crumbs at the 5 minute, hourly, or four hour day trading, one needs to daily manage the snowballing position to obtain the broader market movement.

how to snow ball? start with 123=6 troops
lets call this the ancor, or spearhead of the attack, we have 3 progressively larger attempts at averaging down the spearhead, if the market moves the opposite way we can effectively take the punches and let the rubber band build, however our exposure is not so great that we cannot rescue if wrong on a corrective wave.
i use two variables if things are perfectly timed and im building my spearhead 123, is my ideal skew, but if im taking the punches too hard and the danger of me trading against the current i usually use 122= 5 becasue i can rescue with 5,15, i dont use a third attempt because my capitalization is such that resources would be drained.
if the spearhead is effective i continue to build in fibo progression on price weakness or corrective waves (5,8...). the goal here is not to obtain a quick profit/ win a small battle, but to postion ourselves for the DAILY time frame movement, by effectively snowballing our position foraging on enemy resources and deffending ourselves from loss, using the 5 minute TF, the 15, 1hr, 4hr for surveilance of terrain so i dont trade on change pictures.

basically im swing trading, by actively managing the market on the now.

and indianguy that was a great poem/piece very inspirational!!!!! you have talent

Its very good that you are dancing well and in tune with the markets. Its appears for the most part you are strategically pyramiding. This style has been very successful in this market regime. However, markets are not always so one sided. Please be cautious because you must adapt to market conditions and they certainly will change maybe even this year or next. Markets have been very easy to trade post Lehman collapse 2008. Really doesn't take the skill it used to. All I'm saying like FTI says dance well and be like water. Have a nice weekend.

Thanks indianguyinny24

Any word on FTI?
Thanks
Jaro

Yes and yes....that turning always works. Focus on trading well and the money will be there...assuming the trading method is sound.

Excellent snippet. Have had the book for some time...will have to dig out some more nuggets for myself again.

Thanks for sharing,

FX4

P.S. Keeping my eyes and ears open for updates on FTI.

Hey MaMood,

So do you pay the spread and extra commissions (if any) for "neutralizing" a position?

Thanks