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How to properly use Technical Analysis

  • #121
  • Jan 5, 2012 9:07pm Jan 5, 2012 9:07pm
Quoting the redlion
i don't go digging around, your last post sounded sort of frustrated.

between "noise" and real movement. hey i get smacked around too in the market.

move stop to b/e and get b/e
don't move stop and get a loss

let it run and its a range
treat it like a range and get a trend

fade the fake out and get a break out
trade the break out and get a fake out.

i'll post some horrible trades i took this morning while arguing about immigration and politics in the stop loss thread.

which were completely stupid due to i did not follow my analysis and...
no i was just saying it how i see it for 99% of the chart from the time i have spent looking at them and poking them and seductively whispering in their ear in an attempt to court them.

my subjective observations, which may or may not have a degree of objective observation to them.
Congratulations ScalaFX for coming out of the closet!
  • #122
  • Jan 5, 2012 9:13pm Jan 5, 2012 9:13pm
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  • #123
  • Jan 6, 2012 5:04am Jan 6, 2012 5:04am
Quoting the redlion
i don't go digging around, your last post sounded sort of frustrated.

between "noise" and real movement. hey i get smacked around too in the market.

move stop to b/e and get b/e
don't move stop and get a loss

let it run and its a range
treat it like a range and get a trend

fade the fake out and get a break out
trade the break out and get a fake out.
Knowing when NOT to trade i believe is much more important (and key) to consistency, but of course, we still get the above scenarios

But there is a pivot between being consistent not trading (and missing the genuine moves) and being consistent trading (and collecting spanks). tit for tat.

Question; Everybody goes on a rant about entry/exit, not many go on a rant about NOT trading, and if they do they are pretty vague or subjective ala 'it doesnt feel right' bullcrap.

For one, confirmation gets you in late.

For two, how can one be objective and have set criterias/elements to NOT trade?

Im absolutely convinced its all about 'backing off' and not trading, as opposed to trading anything that moves.

Any ideas on this?

Quoting the redlion
i'll post some horrible trades i took this morning while arguing about immigration and politics in the stop loss thread.

which were completely stupid due to i did not follow my analysis and common sense and ended up giving back 1.5% i had gain in previous trades.
You sir, are a funny man

I know how to make this work consistently now, all I need is to find the guy from the movie 'Next' and swap brains talents with him (he can see 2 mins into the future). There you go! Problem solved
  • #124
  • Jan 6, 2012 5:17am Jan 6, 2012 5:17am
i find myself having the most trouble after a big run.

when i have already collected pips but the move is not yet done, i do not know whether to risk a correction or to get back in the impulse. Scenarios like this morning are more common then.

there is always correction and impulses, and when the market has traveled twice or three times its usual range, then i begin to see outliers in standard deviations, i see a loss in momentum and i break the rule of not trading two directions in the same day.................i get burned more often than not, because deviations, ranges, directions and momentum work better when catching them in the direction of the daily movement.

my rule is not to anticipate the correction, wait for it with no position and take advantage of the inefficiency before continuation of the impulse wave.

maybe you can give a scenario where you have noticed the most failure
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  • #125
  • Jan 6, 2012 5:42am Jan 6, 2012 5:42am
Quoting Pipalicious
For two, how can one be objective and have set criterias/elements to NOT trade?
i don't think that's necessarily as hard as you make it sound.

run a few thousand sim trades. track when you mostly win and mostly lose, and keep an eye on things as you are in the middle of it too. at the end look at where you especially sucked and where you especially didn't suck. re-run the sim and take a note of anything interesting at the times you should statistically be sucking as well as statistically not sucking.

surely you'll start to see markers for when you should close your platform without wasting the day losing money.

i put it to you that from data available on a chart alone i can more often than not pick days that are not going to move just from data on the chart around 6am london time. from that it's a fair call that the day has minimal expected news for a good half the day or more.

but, perhaps that's me seeing what's not there. go have a look and see if you can't find warning simple warning signs. maybe an MA or 2 will help grab your attention.
Congratulations ScalaFX for coming out of the closet!
  • #126
  • Jan 6, 2012 5:52am Jan 6, 2012 5:52am
another good scenario is today.

i have already collected 40 pips, the NFP is coming out, and I expect this data to be positive, due to the US economy gaining traction, last report on jobless claims was positive, things seem to be very slowly getting better. equities and yields are in the green, risk on environment.

although it broke yesterdays low by 8 pips
its has only dropped 28 pips from open, making some lower highs, we've already had two days totaling 309 pips impulse wave, so a correction would be plausible.

i am done trading for the night, its Friday and i Usually do not leave open positions, if this in fact the beginning of a correction there will be opportunities to take advantage of that Monday.

so this is one of those cases where i do not trade further

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  • #127
  • Jan 6, 2012 5:54am Jan 6, 2012 5:54am
Quoting the redlion
i find myself having the most trouble after a big run.

when i have already collected pips but the move is not yet done, i do not know whether to risk a correction or to get back in the impulse. Scenarios like this morning are more common then.

there is always correction and impulses, and when the market has traveled twice or three times its usual range, then i begin to see outliers in standard deviations, i see a loss in momentum and i break the rule of not trading two directions in the same day.................i get burned more often than not,...
TA can be a two headed dragon, it's great when your analysis forms the market, picks the way, trading is easy, but when the market moves outside the lines we are left trying to tweak our bread and butter in an effort to grab another piece of bread from the serving dish.

Be happy with what you've made from the market, most instead feel somehow left out when the market keeps moving after they exit.

fwiw, regards
  • #128
  • Jan 6, 2012 5:57am Jan 6, 2012 5:57am
Quoting auxesis
TA can be a two headed dragon, it's great when your analysis forms the market, picks the way, trading is easy, but when the market moves outside the lines we are left trying to tweak our bread and butter in an effort to grab another piece of bread from the serving dish.

Be happy with what you've made from the market, most instead feel somehow left out when the market keeps moving after they exit.

fwiw, regards
exactly, those are very wise words.
AVT INVENIAM VIAM AVT FACIAM
  • #129
  • Jan 6, 2012 6:16am Jan 6, 2012 6:16am
A Real Fallacy

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  • #130
  • Jan 6, 2012 1:52pm Jan 6, 2012 1:52pm
Knowing when or when not to trade.

In the quant world this is called knowing the "market regime" required by your strategy. You can take this to the next level, and automatically switch strategies based on your market regime forecast.

Two examples of this approach, one using GARCH volatility forecasting and the other using an ensemble of strategies to predict the current regime:
http://quantumfinancier.wordpress.co...lity-forecast/
http://www.scribd.com/doc/77376831/M...market-regimes
  • #131
  • Oct 18, 2012 5:15pm Oct 18, 2012 5:15pm
to add to this thread..... I believe volatility is also very important as it gives a clear expectation of what targets should be.

using the program R, I have made analysis of returns, and ranges.

the best way to have stops not hit is to take volatility into account of the specific target period we are attempting to invest or trade.

if one is to place a stop at .13% due to this is one standard deviation of hourly candles then one must be out or at least understand that that specific volatility pertains to the hourly candle and conversely our target cannot exceed more than one standard deviation as our limit order wont be filled.

the daily .66% and the monthly is 3%

to make a conversion from one to the other.

to look forward from daily to monthly is price* squared root of (time)
to convert from daily to hourly is price/ squared root of (time)



this is very important as one cannot have unrealistic expectations.


the market is a lot more random than it looks and treated the risk "as if" it was random is good grounding for risk management.

now the speculation factor is not random has to be calculated according to information that we find pertinent or relevant.

correct me if i am wrong but

the smaller the time frame the more reliant we are in "momentum"

the higher the time frame the more reliant we are in macro economic expectations.
AVT INVENIAM VIAM AVT FACIAM
  • #132
  • Oct 18, 2012 5:28pm Oct 18, 2012 5:28pm
I think one of the biggest fallacies that people commit when trading is that they are looking for a system, or a technique, a pattern, in the data that can bring an edge.

"keep it simple" is the motto.

however the market is not simple, it is in fact complicated and chaotic.

Fundamentals are incredibly important and I am sorry to say that you have to understand the macro economic drivers, and make realistic models, or realistic predictions given the data.

what will interest rates do to a currency
what will GDP growth or Contraction do
what will inflation or deflation do
what will the current political climate do to the economy

and how does the economy of a country affect the appreciation/depreciation of a currency.

deficits, surpluses, exports and imports

all these factors need to be taken into account, no only for the position traders but for the scalpers.

there is only one market......and the tick will eventually make a minute then a five minute then a fifteen minute then an hour, four hours, daily , monthly chart.

understanding that a chart when you break it down is really visual statistics
and understanding the limitations of statistics is a good idea.
as we are making predictions through our data we can use the charts to corroborate the orders being transacted.

when looking at a chart or actually just a raw price feed, the important things to me are

average returns and standard deviations of returns
ranges
to get an expectation of what targets I should be looking at.

then you have direction.....macro economic and looking at the chart
but the chart is like looking at the road you ALREADY traveled.....you cannot predict the turns and perils by looking at the rear view mirror.
AVT INVENIAM VIAM AVT FACIAM
  • #133
  • Edited 5:55pm Oct 18, 2012 5:51pm | Edited 5:55pm
Quoting the redlion
the best way to have stops not hit...
Not implying this about you, but i think that one of the biggest downfalls with people's trading is their trying to avoid their stop being hit.

If a short term trader is trying to catch some momentum for example, he could first work out the point where a standard deviation is not just a standard deviation but could likely be the end of the momentum.
That could be the stop. Then the entry is the level that is a normal standard deviation from continuing momentum that will offer the trader a positive expectancy trade by way of risk:reward and/or win rate when the momentum continues (or doesn't offer a standard deviation with risk:reward/winrate requirements and a trade is not entered).

If the stop is hit it means the possible end of that market phase and no reason to be in the trade, then the planning on how to trade the deviations in the new market phase begins or should already have been worked out (whether that be chop, range or trend reversal). It doesn't mean the trade is wrong, it means the market condition you are trying to exploit could be over.

If a trader can find a way to distinguish between market conditions and learns the usual ranges of their instrument during the conditions and the times they trade then the rest is pretty straight forward. It also allows the trader to adjust to ranges if the market changes ranges change over time as some do.

Post was not meant to be this long
  • #134
  • Oct 18, 2012 5:58pm Oct 18, 2012 5:58pm
Quoting havaiana
Not implying this about you, but i think that one of the biggest downfalls with people's trading is their trying to avoid their stop being hit.

If a short term trader is trying to catch some momentum for example, he could first work out the point where a standard deviation is not just a standard deviation but could likely be the end of the momentum.
That could be the stop. Then the entry is the level that is a normal standard deviation from continuing momentum that will offer the trader a positive expectancy trade by way of risk:reward and/or...
I agree with your post (by the way....my hunger for knowledge is bigger than my penis...so you will get no pissing contest from me)

on that note.....I you believe I am mistaken be brutal....correct me.

I am not an authority, I rather be lead to the right path than die mistaken



the million dollar question here is how would you go about achieving what you suggested.
how do you know when it is a change in equilibrium not just a standard deviation.

what objective parameters do you use?
AVT INVENIAM VIAM AVT FACIAM
  • #135
  • Oct 18, 2012 6:14pm Oct 18, 2012 6:14pm
Quoting the redlion
on that note.....I you believe I am mistaken be brutal....correct me.
I don't believe your mistaken at all, i think you're one of the better and more informed posters on the forum, happy for any of my posts to be picked apart too

I agree completely with using standard deviations and volatility to help determine entries/stops/exits. I look for entries after certain deviations and rather than do what i said in my previous post i enter with very small stops. I get stopped out a bit more and just re enter. I find i can usually lose less pips in the multiple small entries when i am wrong than i would have if i used the full stop in one trade.
  • #136
  • Oct 18, 2012 6:28pm Oct 18, 2012 6:28pm
Quoting havaiana
I don't believe your mistaken at all, i think you're one of the better and more informed posters on the forum, happy for any of my posts to be picked apart too

I agree completely with using standard deviations and volatility to help determine entries/stops/exits. I look for entries after certain deviations and rather than do what i said in my previous post i enter with very small stops. I get stopped out a bit more and just re enter. I find i can usually lose less pips in the multiple small entries when i am wrong than i would have if i used...
this is actually what I was talking about, that understanding the volatility for the specific holding period and using the targets in this two ways

1- normal oscillations
2- and positive mathematical expectancy

if you are using the hourly then .13%*current price = normal volatility you can expect from this candle.

as illustrated before a stop close to market will be hit more often thus increasing the risk of death by a thousand stops.
a too lax stop increases % of account at risk

so the way I cope with this is by bringing the stop a little closer to market and having the tp order within volatility. but always keeping +15% expectancy.

example if daily target is .66% from open then my stop is .56% from open as to on a random market with 50% accuracy i will always be on top 15% and will be realistic within the confines of what the market gives.

hope this was clear.

the % I use are as a result of historical statistical studies of returns, and sigma of returns.

of course using realistic targets is not an edge on it's own

understanding of economics, and technical analysis .....as you have already said when I perceived price to be "oversold" in a current perceived uptrend then finding the point where price is either an outlier or a change in market condition brings the least risk when combined with realistic targets.
AVT INVENIAM VIAM AVT FACIAM
  • #137
  • Nov 25, 2012 7:32pm Nov 25, 2012 7:32pm
Quoting [B
dii[/b] ]
And please stop acting like you are the authoritative figure on trading (unless you are really successful at it. Are U?) and tell people who they should learn from and what they should or should not do in their trading. Your experience with Fti method is not the litmus test of whether it is feasible or not. Just because you cannot figure it out doesnt give mean others couldnt. Just look at the track records of those who have openly reported their results.






yayayaya black schole this and that..so authoritative but simple question dont know how to answer. really Successful or

not? Your definition.
  • #138
  • Last Post: Mar 8, 2019 10:05am Mar 8, 2019 10:05am
Quoting zznbrm
{quote} Interesting modifications to the standard Donchian Channel you have there. I'll be interested to hear what else you have to say about it. {image}
zznbrm

still around? do you recall what the modification was on this?
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