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Technical Analysis Fallacy

  • #24,821
  • May 11, 2011 3:40am May 11, 2011 3:40am
Yes it's been a while, glad to see that you seem to be feeling a bit better.

I've been around, reading and re-reading the thread and working on mastering the dance; unfortunately don't feel that I have a lot to contribute at this point so I stay quiet, just read and learn.

Don't discount the power of mind over matter, there have been numerous documented cases of people defying all odds, doctors and other experts. Nobody goes before their number comes up, in the meantime live to the fullest.

Alex
If only I knew then what I know now...
  • #24,822
  • May 11, 2011 3:43am May 11, 2011 3:43am
Quoting cuthbert
Hi MaMood

You are right.....please tell me how can I capitalize the best of TAF.

Regards.
Hi,

hmmh - not sure how i put i best into words.
What you'll find here is not that much a trading technique, but much more about your trading attitude and YOU.

You can have a lot of valuable skills, in detail good MM, RiskManegement and chart reading, but you will still not be able to be in profit on the long run. If so, there is a very simple reason for that: You are not in balance with yourself.

There can be some distortion based in your private life. There can be some temptations/scorpions affecting your mindset, i.e. greed of anxiousness. When you start your trading session, you should be very calm, not upset in any way. No distractions. You have to be just ready for the market, nothing else.

Yeah you need a lot of skills and experience as well. But it will not make you any money without YOU in a kind of equilibrium ...

Well - it has been said many many times and I have no other advice for getting you started: Try to embrace the first 200 pages several times accompanied by practice on a demo account.

Wish you good succes!

Niels

p.s.: The usage of the word "capitalize" in your question may show up a little "issue" already....
  • #24,823
  • May 11, 2011 3:53am May 11, 2011 3:53am
Quoting piccolo
You ask the wrong questions. It has been discussed a million times and you will come up with the answer by yourself. Trial & error.

From my experience don't pay too much attention to ancient history, all you need to watch out for are spikes. The probability for an unexpected spike and you fully scaled in is pretty small. So your MM should withstand instant 200 pips against you. Happens once a year maybe. Major news releases are expected spikes so that shouldn't hurt you, since you will not ride them with full exposure.

Then there are scorpions.....
Hi Piccolo. Maybe that think about 200pips withstanding... I am afraid that he could understand as a single trade... And not from the snowball moneymanagement whole risk... you know what i mean...
  • #24,824
  • May 11, 2011 3:55am May 11, 2011 3:55am
Quoting piccolo
You ask the wrong questions. It has been discussed a million times and you will come up with the answer by yourself. Trial & error.

From my experience don't pay too much attention to ancient history, all you need to watch out for are spikes. The probability for an unexpected spike and you fully scaled in is pretty small. So your MM should withstand instant 200 pips against you. Happens once a year maybe. Major news releases are expected spikes so that shouldn't hurt you, since you will not ride them with full exposure.

Then there are scorpions.....
Good post and advice. Ray
  • #24,825
  • May 11, 2011 3:58am May 11, 2011 3:58am
Here from WSJ....

Government officials seem to have tipped that intervention isn't imminent. Finance Minister Yoshihiko Noda said Thursday "market conditions are different from those in March." He said Friday that the government will "closely monitor" the situation. Economy Minister Koru Yosano said Friday described the situation as "not of the yen's unequaled strength but the dollar's weakness."


V

PS: Possible BS
  • #24,826
  • May 11, 2011 4:02am May 11, 2011 4:02am
Quoting MaMood
But it will not make you any money without YOU in a kind of equilibrium ...

Well - it has been said many many times and I have no other advice for getting you started: Try to embrace the first 200 pages several times accompanied by practice on a demo account.

Wish you good succes!

Niels

p.s.: The usage of the word "capitalize" in your question may show up a little "issue" already....
i am recently trying to reread again and it has taken me already 2 weeks to read only 160 pages...

so dont expect to finish it on a weekend....

V
  • #24,827
  • May 11, 2011 4:03am May 11, 2011 4:03am
Quoting indianguyinny24
i am recently trying to reread again and it has taken me already 2 weeks to read only 160 pages...

so dont expect to finish it on a weekend....

V
First 200 is only the beginning.. a lot of gems surface later on and in the lounge thread. You probably have read it all, I am just saying it for beginners.
  • #24,828
  • Edited 4:17am May 11, 2011 4:07am | Edited 4:17am
Quoting piccolo
First 200 is only the beginning.. a lot of gems surface later on and in the lounge thread. You probably have read it all, I am just saying it for beginners.
i double that....and dont forget the second version of TAF.....


http://www.forexfactory.com/showthread.php?t=104773


Where FTI did chip in many times and have some invaluable comments as well..


V

PS: sorry if i made this reading list VERY VERY long
  • #24,829
  • May 11, 2011 4:49am May 11, 2011 4:49am
Quoting indianguyinny24
Here from WSJ....

Government officials seem to have tipped that intervention isn't imminent. Finance Minister Yoshihiko Noda said Thursday "market conditions are different from those in March." He said Friday that the government will "closely monitor" the situation. Economy Minister Koru Yosano said Friday described the situation as "not of the yen's unequaled strength but the dollar's weakness."


V

PS: Possible BS
In so many ways what is being said is true.
But as of now, the levels of yen vis a vis the usd is in dangerous levels for a country that is dependant on manufacturing and exports as means for livelyhood.

Before the earthquakes in japan , already the usd was in waves of devalation, and that process was hurting all her other trading partners. After the earthquakes, it is scumous that Us would use the opportunity to mask monetary policy and management failures by appreciating the currency of a country in pain. Although the weak usd had a stabalising effect on avoiding panic sell off in Japan, but to appreciating the yen in the aftermaths only tends to unseat the purchasing power parity of other trading nation, creating artifical infaltion for weak nations.

I feel all this masking is blantant manipulation masking failure and incompetance and wasting away the assets of US own unknowning public. in the long run i feel the implications will be broad and evil.

Nevertheless i still feel in general that the yen appreciation while she is facing a natural calamity is not reflect of her real situation and will only delay and hinder her recovery process. While in the same instance creating unecessary purchasing power parity distortions for other trading nations.

Protecting against rioting markets is a noble function of central Banks. Blatant manipulation against market equilibriujms can only be concocted by evil minds.

I hope the Nihon will see thru this deceptions and protect the viability and competitiveness of their currency for their trading well being.

regards
  • #24,830
  • May 11, 2011 4:50am May 11, 2011 4:50am
Quoting piccolo
From my experience don't pay too much attention to ancient history, all you need to watch out for are spikes. The probability for an unexpected spike and you fully scaled in is pretty small. So your MM should withstand instant 200 pips against you. Happens once a year maybe. Major news releases are expected spikes so that shouldn't hurt you, since you will not ride them with full exposure.
This is a question I've struggled with, wondering what sort of spike I should be prepared for. I've generally been risking about 30% of total capital on a 500 pip spike, so ~9-10x leverage at max position size. Although personally I've never seen anything more than 150-200 pips without a chance to bail, I know JPY gapped pretty far after the earthquake. It seems like fti has mentioned 5 cent moves a few times before, so I wonder if taking more risk would be prudent. I feel like it's almost foolish not to be taking a bigger position when in profit, but at the same time I don't want to leave my self exposed to being wiped out on a spike because I got greedy. I suppose my major worry is that somewhere along the line a 10 cent move is not impossible, and risking any more would wipe out my entire account.
  • #24,831
  • Edited 5:10am May 11, 2011 5:00am | Edited 5:10am
Quoting fti
In so many ways what is being said is true.
But as of now, the levels of yen vis a vis the usd is in dangerous levels for a country that is dependant on manufacturing and exports as means for livelyhood.

Before the earthquakes in japan , already the usd was in waves of devalation, and that process was hurting all her other trading partners. After the earthquakes, it is scumous that Us would use the opportunity to mask monetary policy and management failures by appreciating the currency of a country in pain. Although the weak usd had a stabalising...

thanks for insight chief...

But sometimes i dont get it..... Speculators goes and bring down the Yen and then BOJ comes bring Yen back to some respectable level and then again the cycle starts again...

the country that is dependent on exports and people who bring down there value are may be some people like us....dont get it sometime...

V
  • #24,832
  • Edited 5:42am May 11, 2011 5:16am | Edited 5:42am
Quoting indianguyinny24
thanks for insight chief...

But sometimes i dont get it..... Speculators goes and bring down the Yen and then BOJ comes bring Yen back to some respectable level and then again the cycle starts again...

the country that is dependent on exports and people who bring down there value are may be some people like us....dont get it sometime...

V
BOJ can only intervene to stop the diarea markets causing.
If she rallys too much, then will only play into the hand of the specuating masses. thereby attracting new waves of selling to force her hand to give away free money. I feel there's " too big to fails" behind the game. Not know if its with CB blessings. But i suspect is not Nic Leeson.

So she need time her responses well. Already i believe the jap presses are begun printing, so the impact will hit markets. The problem is the printing need consistent managing less they over do and create for themselves problems to arrest down the road. Phantom money supply can cause wild sudden galloping inflation and can cause uncontrolable volatility. How to retract that which pumped out into the markets?
More QE2???

Medicine cannot be administered in extremes. Need be gadually administered and symptoms closely observed. DROPPING MONEY FROM HELICOPTER IS LAST THING THEY WANT TO DO.

regards
  • #24,833
  • May 11, 2011 6:42am May 11, 2011 6:42am
Quoting usw
This is a question I've struggled with, wondering what sort of spike I should be prepared for. I've generally been risking about 30% of total capital on a 500 pip spike, so ~9-10x leverage at max position size. Although personally I've never seen anything more than 150-200 pips without a chance to bail, I know JPY gapped pretty far after the earthquake. It seems like fti has mentioned 5 cent moves a few times before, so I wonder if taking more risk would be prudent. I feel like it's almost foolish not to be taking a bigger position when in profit,...
Hi usw,

long time no see.
I'm not sure, if I get your problem right.
But I want to clarify something. Here is a lot of talk about spikes.
But what exactly do you mean with that?

We are used to babysit our trades. It is an imminent part of this MO. So what is a spike?
Have you ever seen a spike of 100 ot 200 pips in a minute? I'm not talking about news vola like with NFP or FMOC statements, because we should have squarred down our exposure long before the release. So we are talking about a sudden spike of 100 or 200 pips in a dramatic speed, so that we can not react in any way.

I have not seen something like that. There have been always some wave structure in very strong moves too. I'm not advising to try rescues based on that small congestion/retracements. But We have another tool in our chest: The flip.

I do not see any reason to discuss theoretical risks of such monster spikes, becasue there is no need to let it run against us with full exposer.

Not sure, if I could make clear the point and also not sure, if I got your point...
So please feel free to ask :-)

Cu,
Niels
  • #24,834
  • May 11, 2011 7:00am May 11, 2011 7:00am
Hi fti, it is good to see you leading and participating in this community that you created. God bless! Hope you are feeling better and on a road to recovery. Take care.
  • #24,835
  • May 11, 2011 7:09am May 11, 2011 7:09am
Hi Niels,

Yes I was referring to times when the market gaps and there is no liquidity, most commonly seen during news time. Of course I do not trade fig releases, so that cuts down on most the risk right there. The most recent example I can think of is a 50 pip spike at the London open when the ECB intervened in the EUR/JPY. Perhaps I am being unrealistically paranoid to fear something much bigger? It's just my thought that those types of moves are inherently unpredictable, and sooner or later over a career they become a possibility, and 100% is 100% loss no matter the account size.
  • #24,836
  • May 11, 2011 7:36am May 11, 2011 7:36am
Quoting usw
Hi Niels,

Yes I was referring to times when the market gaps and there is no liquidity, most commonly seen during news time. Of course I do not trade fig releases, so that cuts down on most the risk right there. The most recent example I can think of is a 50 pip spike at the London open when the ECB intervened in the EUR/JPY. Perhaps I am being unrealistically paranoid to fear something much bigger? It's just my thought that those types of moves are inherently unpredictable, and sooner or later over a career they become a possibility, and 100%...
Yeah you are right: a 100% loss is a 100% loss. And I agree, that pondering about possible risks has the biggest benefits before the event :-)

The only think I'm not sure about is that 100% loss thingy mentioned above. If you are foccused and nimble it is something that I can not imagine about. But better too careful, than too reckless ..

Wish you all the best!

Niels
  • #24,837
  • May 11, 2011 7:53am May 11, 2011 7:53am
Quoting MaMood
If you are foccused and nimble it is something that I can not imagine about.
Even though we are babysitting our trade, what can we do when there is no one to take the other side? If something spooks the market and you can't find a buyer till 5 cents away, all the nimbleness in the world won't save you if you're over exposed. Just I think you may be right that much more than 100 pips is extremely unlikely. Perhaps FTI can comment?
  • #24,838
  • May 11, 2011 8:18am May 11, 2011 8:18am
Quoting MaMood
Hi usw,

long time no see.
I'm not sure, if I get your problem right.
But I want to clarify something. Here is a lot of talk about spikes.
But what exactly do you mean with that?

We are used to babysit our trades. It is an imminent part of this MO. So what is a spike?
Have you ever seen a spike of 100 ot 200 pips in a minute? I'm not talking about news vola like with NFP or FMOC statements, because we should have squarred down our exposure long before the release. So we are talking about a sudden spike of 100 or 200 pips in a dramatic...
Back in 2008 and 2009 it happened a few times. I remember one time for sure because I got caught. It was news of a emergency FOMC rate reduction. This happened as a surprise before everything really began going to hell and before the market got used to the crisis.

Bottom line the market has way to many black swan events. The worst can really happen at anytime. Just imagine a well timed rescue from the price action were all used to. But instead another flash crash type action takes place and price moves 1,000 pips. This is not impossible. Easily can wipe out an account no matter how good a trader you are. Thats why this method is still dangerous. As FTI says a double edge sword and requires great skill and restraint to wield. That is more important than just about anything else he has stated.

I may sound cynical I don't mean to really. But there are so many newbies on this thread talking about their trading has totally changed since they adopted these methods. That is not true its misguided false confidence. They don't have the experience, skill and capital to wield the sword. They feel like winners because they can rescue 90% of the time with ease. But the market will eventually take everything they gained when it moves in a non typical way and they have a full rescue deployed. That is why skill and experience is critical to success. 2-3 months of trading and reading a thread will not create a professional mindset. Mindset is real or its not don't try lying to yourself you either have it or you don't. Sorry to sound negative all I'm saying is manage risk and expect the unexpected. Good trading to all. Oh just found a real good FX app on Iphone and Android. Most of the fx apps suck but this one is pretty good its called TradeInterceptor.
  • #24,839
  • May 11, 2011 8:41am May 11, 2011 8:41am
Quoting Guerrillawar
I may sound cynical I don't mean to really. But there are so many newbies on this thread talking about their trading has totally changed since they adopted these methods. That is not true its misguided false confidence. They don't have the experience, skill and capital to wield the sword. They feel like winners because they can rescue 90% of the time with ease. But the market will eventually take everything they gained when it moves in a non typical way and they have a full rescue deployed. That is why skill and experience is critical to success....
Yep I tend to agree with what you said above. I think the best approach to learning fti's material is to first learn how to trade, then learn how to be a trader, then learn how to rescue. It looks like a lot of people here have it backwards. fti has said many times that you need to know when to take the loss. If you are focused on rescue all the time, then it is just a matter of time before you may miss the signals and get really hurt.

IMHO, fti has tried to get people to move well beyond their tallent and intellect for trading, and tap the core of their character. We have seen too many cases where a new trader deploys troops to rescue, but lacks the skills or character to recognize their mistake.

Trade well!
  • #24,840
  • May 11, 2011 9:12am May 11, 2011 9:12am
Quoting piccolo
Hi fti,

Happy to see you virtually well, judging by the number of posts. I hope you feel well and with energy levels high.

Microsoft has a very long list of bought & killed products. They have this crappy product "Office Communicator" or now renamed "Lync" which they can't sell because everybody uses Skype for free, lol.

It is funny to see Microsoft as a "business software" company valued less than a gadget maker Apple.

I wonder if we will ever see MetaTrader for Mac or Linux. Most trading platforms are windows based which is a pity....
Hi Piccolo, MetaTrader can be run on Linux quite easily. I have it running on mine. If you have the desire to run it on Linux shoot me a PM and I would be glad to help you get it going.

Mike
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