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Where is the EDGE in trading? The most important thing in trading!

  • #681
  • Aug 15, 2011 7:22pm Aug 15, 2011 7:22pm
Quoting reres
Why do i care about bollinger bands and other indicators? I dont care...i just havent seen any proof that they work in over 4 years. So thats why i said it doesnt work. I speak from my personal experience...if anyone can proove me wrong i would be the first to admit i was wrong about it. But in my experience so far this kind of trading is waste of time.
I appears that you don't want to know so much if they work or not, but rather you just don't want to put in the effort to make them work for you. It sorta seems that you are wanting someone to give you a specific method or pattern or system that is profitable.

I say this because people using these indicators and making money with them are proof they work, but that doesn't seem to be what you are looking for.....you want more specifics. You want proof they work...how they are used....you want someone to spoonfeed you rather than taking your own time to figure it out. Since you only trade the news ~30 minutes a day, it leaves you a lot of time to do this research yourself, ya know!

Maybe you actually can't figure them out, but I think most likely you just want a free ride. Just seems sort of lazy to me.....
  • #682
  • Aug 15, 2011 7:31pm Aug 15, 2011 7:31pm
The edge is you Daniel-San.
Wax-on, wax-off.
  • #683
  • Aug 15, 2011 8:24pm Aug 15, 2011 8:24pm
Quoting moneymaker2
I appears that you don't want to know so much if they work or not, but rather you just don't want to put in the effort to make them work for you. It sorta seems that you are wanting someone to give you a specific method or pattern or system that is profitable.
To be completely fair, there are a few technical indicators that simply do not work, at least the way traders usually use them.

Take the Commodity Channel Index (CCI) for example, introduced in 1980 by Donald Lambert.

Donald suggested that long positions should be initiated when the CCI exceeds +100 and then liquidated when the CCI retraced back to this point. Short positions are initiated/liquidated the same way except the trigger value is -100.

Backtested with 16 and a half years of data on 21 different futures contracts this system lost $1,021,684, commissions and slippage included. All the contracts lost money except the Yen (+3,525).
  • #684
  • Aug 15, 2011 9:31pm Aug 15, 2011 9:31pm
Quoting Mr Breakout
To be completely fair, there are a few technical indicators that simply do not work, at least the way traders usually use them.
Of course all indicators don't work!! I think even a beginning trader could tell you that!! Besides, I was only responding to a comment that was made based on your own question:
Quoting Mr Breakout
....why do you care about technical analysis, moving average, Bollinger bands and other TA indicators that supposedly do not work?
But sorry, didn't mean to intrude. I'll just let you two get back to your bickering....
  • #685
  • Aug 15, 2011 11:12pm Aug 15, 2011 11:12pm
Quoting moneymaker2
Of course all indicators don't work!! I think even a beginning trader could tell you that!!
Who told you that?
  • #686
  • Aug 16, 2011 1:54am Aug 16, 2011 1:54am
Quoting CounterParty
Forgive me for interrupting, but having read alot of these sort of discussions, and my own past few years of trading and being perhaps one of the biggest losers, what do you guys think of doing away with indicators and popular news and ideas, and playing counter-party to the masses as a way of profiting?

The mantra is that forex is a zero-sum game, so if the majority of people see that fundamentally and even technically sometimes, a currency must rise, well, we can't all bet on it going up, or there would be none to take money from!, so we must...
Going against the mass is like trying to pick bottom or top, won't work in the long-term. And for newbs or losing traders, they normally only trade pretty randomly. So taking an opposite position of what you took before will not make you a winning trader, cause you will still call random trades.
  • #687
  • Aug 16, 2011 1:56am Aug 16, 2011 1:56am
Quoting reres
Yes this is my edge at the moment but im looking for something for the future. This strategy has 2 problems.

1) its good at the moment but it might not be working in few years from now. More and more people are using it and more and more brokers are using tricks like freezing platform during news and other tricks. So in my opinion it is slowly dying.

2) it has upside limit on how much u can make and it only takes 30 min per day to do this. So why not concetrate on some long term strategies that can be profitable in the future? I would be happy...
I thought that kind of strat already died a couple of years ago.

well, and there are plenty of strats that can give you 20% a year with low risk. Start doing some research and don't be so fucking lazy.
  • #688
  • Aug 16, 2011 2:38am Aug 16, 2011 2:38am
Quoting CounterParty
Forgive me for interrupting, but having read alot of these sort of discussions, and my own past few years of trading and being perhaps one of the biggest losers, what do you guys think of doing away with indicators and popular news and ideas, and playing counter-party to the masses as a way of profiting?

The mantra is that forex is a zero-sum game, so if the majority of people see that fundamentally and even technically sometimes, a currency must rise, well, we can't all bet on it going up, or there would be none to take money from!, so we must...
Going against the mass.... It does work but like Custos said it analogous to picking tops and bottoms. You never know when is the right time to get in. A large stop loss might work here.

Quoting Custos
I thought that kind of strat already died a couple of years ago.

well, and there are plenty of strats that can give you 20% a year with low risk. Start doing some research and don't be so fucking lazy.
I might be lazy but im doing lots of research now. So whats wrong with doing research on forum as well? An advice here and there always points u in the right direction.
  • #689
  • Aug 16, 2011 2:48am Aug 16, 2011 2:48am
Quoting moneymaker2
Of course all indicators don't work!! I think even a beginning trader could tell you that!! Besides, I was only responding to a comment that was made based on your own question:

But sorry, didn't mean to intrude. I'll just let you two get back to your bickering....
Hi moneymaker,

well i think noone of the indicators work. Why not? Because there are 1000 of them and they are ALL derived either from the price or from the momentum. So overall you could trade just with the 2 of them.

I tried combining on demo, ma crossovers, macd, osma histogram crossing zero. rsi line ect...on the long term it didnt work. Not only that but i faied to see any logic behind why that would work. Its all lagging. S/R lines. fibo can also be drawn on many many different way and yet people will always find some patterns to fit their model. So in my opinion it doesnt work.
If we are talking about indicators i just want someone to explain why it would work in first place .
  • #690
  • Aug 16, 2011 4:32am Aug 16, 2011 4:32am
Too many noise about indicators do not work, and is not useful. All noise.

Most of successful computer trading systems from simple one to HFT are using some indicators in inside. Don't complaint indicator, but, complaint that you fail to use indicator. Don't like indicator is ok, you do other way to trade, freedom! But, don't complaint indicators, please! Otherwise, you may be rejected at job interview as low IQ by the bankers or traders.

IMO, most of major indicators are workable for you to use. It is a key:
1. fully understand of the indicator, find good tutor to learn it; most of so-called fx guru are not good tutor.
2. fully understand of trading strategy which use the indicator.
3. more practice.

Any tool is good tool, but, you have to know how to use the tool for your favour.

Cheers!
  • #691
  • Aug 16, 2011 8:00am Aug 16, 2011 8:00am
Hi, you can trade AUDUSD only buy positions. AUDUSD gives positive swap daily 1,4 pips (august 2011) on FxPro.. Some brokers gives less swap and some also gives you negative swap on buy positions.

Attached Script displays on your chart what is the current swap.

I created a very simple EA that opens a trade on daily candle open if trend is up. Take Profit = 1000 pips and Stop Loss = 500 pips
Parameters are not optimized.

Fortunately the MT4 backtester calculates swap.
Take a look at Attached backtest (from 2006 - 2011) as you can see the profits are huge and the losses are even less than 500 pips because of the positive swap. See page 6 on the backtest. Order is stoped out on -500 pips and almost no losses.
Attached File(s)
File Type: pdf file____C__Temp_StrategyTester4.htm.pdf   162 KB | 378 downloads
File Type: mq4 ScriptTestSwap.mq4   2 KB | 311 downloads
  • #692
  • Edited 9:43am Aug 16, 2011 9:32am | Edited 9:43am
Quoting reres
Hi moneymaker,
I tried combining on demo, ma crossovers, macd, osma histogram crossing zero. rsi line ect...on the long term it didn't work. Not only that but i failed to see any logic behind why that would work. Its all lagging.

Yeah I know I said I was done with this pissing match thread but I just had to add one last thing............ Not sure why I am bothering because you seem to be already set in your thinking or lack of, but here goes, maybe a light bulb will turn on......

Your mindset here is you seem to be trying to predict instead of react..... Yes indicators LAG.... So does price in reality the price you see now is already past and is history. That is however why I trade re-actively. I depend on momentum and human nature.

You have to get out of the prediction mode and look at the bigger picture which is trends. Look at human nature and how it reacts to the market and how it moves the market.

You may want to refresh your memory and look at post #33 again in this thread...... those results are from a simple mechanical trend following method, READ REACTIVE not PREDICTIVE. Trading is a game of probability not prediction. This is where trade management also know as money management, risk management etc comes in ... Yes there are periods of draw-down....... that is what is known as the cost of doing business.

Take a look at this method "50 Period SMA vs Price". This is a very simple MA price cross system WITHOUT any risk manegment at all, it is always in the market....... It would not take a rocket scientist to improve this method with a bit of trade management.

Yes some markets are better than others.... Thats where you use you cognative abilities..... Don't wast your time with non trending markets, your job is to find the markets that have the best trends.... not too difficult, can you say HEAVILY TRADED MARKETS......

Anyway regarding the boring little mechanical method I use, it takes longer to boot up the computer and open my trading platform than it does to make the trade entry. The market is the EUR/USD .....

I started forward testing the foundation of that method over 4 years ago, the original method has not had a losing year in that time, there have been losing months but the year has always finished positive.

And with that I bid you all a fond adieu.

PS..... Or maybe you should try this snake oil instead......http://www.forexfactory.com/showthread.php?t=108462
  • #693
  • Aug 16, 2011 12:00pm Aug 16, 2011 12:00pm
Quoting reres
I tried combining on demo, ma crossovers, macd, osma histogram crossing zero. rsi line ect...on the long term it didnt work. Not only that but i faied to see any logic behind why that would work. Its all lagging. S/R lines. fibo can also be drawn on many many different way and yet people will always find some patterns to fit their model. So in my opinion it doesnt work.
If we are talking about indicators i just want someone to explain why it would work in first place .
I think maybe the problem is that you are looking for a hard and fast "if/then"-type rule using indicators. Instead, use the indicators, along with everything you currently use, for information on where price most likely will go in the future. Many are "lagging" indicators, in that they are based on what price has done over the last X-number of periods....but the results of a 10 period EMA is projected as a value at the current time. Maybe how it was derived came from the last 10 periods, but it gives you a graphic representation of that value during "this" period, which is not lagging.

Speaking if Moving Averages...depending on the period chosen, they provide an indication of short term support or resistance; where price might hesitate. For short term traders, this might be a place to look at taking profits.

Now take RSI....gives an indication of potentially overbought or oversold conditions. Can be used with a divergence in price (I've shown that already). It provides an indication that price may drop to the next support level or rise to the next resistance level.

Now take Bollinger Bands.....look at them as a "fence" for price. You get price penetrating the BB, it doesn't like to stay outside for very long, especially when the open and close of the candle occurs outside the BB.

In my opinion, don't use indicators so much as signal providers, but to help understand the overall picture of what price is doing. Get to know how the charts look.....find particulars just by observing for long periods of time. Notice at what levels RSI tends to reverse and how price reacts when it does. Notice how when price starts sliding down the lower BB, the first "up" candle is typically just a quick retracement rather than a reversal.

See how the time frames look when compared with each other; you can quite often use higher time frames to predict not only the direction of price, but the area it will end up at. When price stalls on one time frame, check out a different one to see what MA it is at. Typically there is a reason (support and resistance) for it to do so, you just have to find the time frame that shows it. When you do, now you know what to look for when price does this again, as it always does.

Granted, all this is based on my experience and that the way I trade is typically for 10-30 pips profits. Perhaps they don't work so well if you are shooting for a 100-300 pip move, I don't know. I just recommend not getting so caught up in the specifics of "why" they work, just understand what they are showing you that can add to the overall picture of what is going on.

The bottom line is, you have to be able to interpret the information the charts (whether you choose to use indicators or not) are giving you.....THAT is what makes you a good trader!!
  • #694
  • Aug 16, 2011 12:12pm Aug 16, 2011 12:12pm
Quoting hanslachmann
Hi, you can trade AUDUSD only buy positions. AUDUSD gives positive swap daily 1,4 pips (august 2011) on FxPro.. Some brokers gives less swap and some also gives you negative swap on buy positions.

Attached Script displays on your chart what is the current swap.

I created a very simple EA that opens a trade on daily candle open if trend is up. Take Profit = 1000 pips and Stop Loss = 500 pips
Parameters are not optimized.

Fortunately the MT4 backtester calculates swap.
Take a look at Attached backtest (from 2006 - 2011) as you can see the profits...
That's good Strategy, my friend. However, you need to know when to close your trades in profit. Money management (your risk exposure). Your TA...
  • #695
  • Aug 16, 2011 6:33pm Aug 16, 2011 6:33pm
Quoting reres
http://wingstarfx.webs.com/newstradeeducation.htm
Thanks for the link.

Yes a few interesting ideas here and there. I like the concept of combining options and Forex trading for example. I used to do that when I was trading Futures. For instance I would buy Corn contracts and immediately buy Put options, for downside protection, instead of using a regular stop.

That said simply buying put or calls does not work in the long, due to time decay. It is a well known fact that only the sellers of these options make money over the years, as the Myron Scholes model for pricing options is "rigged" and will always give the advantage to the option sellers (writers).

Anyway.
  • #696
  • Aug 16, 2011 7:12pm Aug 16, 2011 7:12pm
Quoting Mr Breakout
Thanks for the link.
Np. U see u learn sth new every day no matter how many books u read so dont jump to conclusions too fast. Scroll down the page and see how much money was Glen making. But some of the brokers just didnt pay him out due to the fact that he used those unregulated ones. Lesson to learn...only use regulated ones in Uk or USA and u will get paid. All of the rest is unreliable.

Quote
Yes a few interesting ideas here and there. I like the concept of combining options and Forex trading for example. I used to do that when I was trading Futures. For instance I would buy Corn contracts and immediately buy Put options, for downside protection, instead of using a regular stop.
Good strategy but i dont use it much. I prefer to use binary options on news events. On market makers who offer them the notion of implied volatility is not calculated into the model so there is sth to take advantage of. If there is some mispricing in the market thats the edge to exploit.
  • #697
  • Aug 16, 2011 7:20pm Aug 16, 2011 7:20pm
tradestar1, moneymaker: good posts both of you!
So to sum it up: TA can be a good extra tool for trading expecially on long term. Ok i can agree with that, but i still disagree with anyone who is claiming he got scalping system or 1 min timeframe ta system that works on short term. There is just too much noise down at that level.
  • #698
  • Aug 16, 2011 7:30pm Aug 16, 2011 7:30pm
Quoting Mr Breakout
That said simply buying put or calls does not work in the long, due to time decay. It is a well known fact that only the sellers of these options make money over the years, as the Myron Scholes model for pricing options is "rigged" and will always give the advantage to the option sellers (writers).
Sure it does, if you buy enough contracts and trade short term. Buy 100 contracts and a $0.10 move in the option price is $1000 profit (minus commissions). The trick is to only trade those stocks that have a large daily range, pick the stock whose price is close to a strike price, trade just out of the money if possible, and then that $0.10 move is pretty easy and usually pretty quick (usually less than 3 hours).

But buying long term, you are probably right. Much easier to predict a short term move in a stock than a long term.
  • #699
  • Aug 16, 2011 7:53pm Aug 16, 2011 7:53pm
Quoting moneymaker2
Sure it does, if you buy enough contracts and trade short term. Buy 100 contracts and a $0.10 move in the option price is $1000 profit (minus commissions). The trick is to only trade those stocks that have a large daily range, pick the stock whose price is close to a strike price, trade just out of the money if possible, and then that $0.10 move is pretty easy and usually pretty quick (usually less than 3 hours). .
I used to play the option game and I got burned bad. Sure you can make a "quick" $1,000 profit if you aim for a small $0.10 move, but if the stock never exceeds your strike price or if it goes south your could lose $5,000 or more depending on the price of your out-of-the-money option. Volatile, high range stocks have expensive options.
  • #700
  • Aug 16, 2011 8:02pm Aug 16, 2011 8:02pm
Quoting reres
...but i still disagree with anyone who is claiming he got scalping system or 1 min timeframe ta system that works on short term. There is just too much noise down at that level.
candles look the same whatever the timeframe, do you agree?
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