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Challenging a Loser

  • #1
  • First Post: Edited 2:54pm May 11, 2012 11:55am | Edited 2:54pm
What i propose here is a a new challenge only for the open minded.

A way of thinking outside the box and coming up with creative ideas.

Losing trades are rarely discussed here, and more importantly, WHY it was a losing trade. And if it is, the answer is always a conventionally opinionated reason.

If you know when NOT to trade, you will know WHEN to trade.

The markets are dynamic and this is why it is so hard to truly identify a high odds trade from an absolute flop of a trade.

This game is solely intended to inspire people and get them to see (and approach) things from a different angle.

If your open minded, like a good challenge and would like to share ideas, this is the place to be...

The Picture:

- Both patterns are visually identical.

- One is a winner, the other is a loser.

The Rules:

- Only allowed to use the data right in front of you.

- No bitching, no moaning, no sarcasm.

The Ideas:

- What process you would implement to spot (dissect) the difference?

- Would you use any tecnical tools, if so, why?

- Is there any difference in the data shown above? If so, where do you see it?

- Is there actually enough data in the picture? If not, why?

http://content.screencast.com/users/...20vs%20bad.png

Fire away...
  • #2
  • May 11, 2012 2:23pm May 11, 2012 2:23pm
I like the idea, but I cannot see your initial attachment....can you fix?
  • #3
  • May 11, 2012 3:47pm May 11, 2012 3:47pm
Hi

Nice idea

Well i would indeed need a lil more information , for both scenarios
A lil more background ie. Where there signs of weakness or strenght
Before the acutal action ?

Aswell as i would need to see where the action took place
Ie. At S/R ? , in the middle of a range? Etc.

And last but not least i would use Volume to identify buyng selling pressure
Or a lack of....

But nevertheless i try to analyse it anyhow as this is interresting to
See if with only the given info. What difference it would make

Well
I would say scenario A Was the winner
Even thou i probably wouldnt have taken the trade
As the 2nd and 3rd bar ar rather small and is a sign
Of a lack of demand (it doesent mean alot on its own thou) . If this would happen on a resistance Level i would think twice go long there ,
On the otherhand the biggest upbar could be the breakout of a range
And we saw some selling as we close a lil of the high , but the reaction
After the upbar is interresting as the bars tend to shrink or shorten torwards
The low of the bullish bar... Wich would indicate that selling pressure is
Reducing , now if that would be the retest of a breakout i would probably go long
There , as it took two downbars to test the work of one upbar... The low of the upbar wasent broken to .

On the otherhand scenario B after we saw some selling on the upbar
We now see two downbars with a decrease in size ie yes there was selling
But it dimnishes so probably not a big supply area ahead
Besides that i wouldnt short on a downswing
  • #4
  • May 11, 2012 11:38pm May 11, 2012 11:38pm
I see A as a successful long - this is just starting a long trend. I see a Minor pullback that has a breakaway

I see B is a short that you would have had to already been in at the break. This one doesn't have the right look for me to consider a valid short. Curve looks wrong.
  • #5
  • May 12, 2012 6:01am May 12, 2012 6:01am
Hi Pipalicious,
if that candlestick is H4 or weekly i will (refer to picture below) A buy and B sell (arrow) so both is a winner for me..
Attached Image
  • #6
  • May 12, 2012 7:02am May 12, 2012 7:02am
This is an interesting exercise...

I could have taken both setups, but only with additional information. To begin with, I would not have taken any of them "in a vacuum", with no S/R nearby.

A is basically a pullback, so for me to take it it should be a pullback to a resistance that just became support. That is, there is a S/R zone roughly at the bottom of the second of those two red candles. Additionally, I would like to take a look at a lower time frame to see what PA looks like at the "bounce".

B is a reversal... so again, if I were to take this trade it should be because there has been a bounce from an S/R area located more or less at the upper wick of the top candle. Again, I'd like to see the PA in a lower time frame.

In reality, and since up to the second red candle the information is the same in both setups, just with the information provided by price anything would be possible. That is why I would want the additional information of the S/R zones to stack the odds in my favor. Still, it is only statistics: any of the setups could go against you even if you do everything right and the S/R zone is where you want it. What you are doing with S/R is just slightly stacking the odds in your favor.

So, in a sentence, any of the two setups could be a winner or a loser.
  • #7
  • Edited 7:19am May 12, 2012 7:02am | Edited 7:19am
Quoting Pipalicious
What i propose here is a a new challenge only for the open minded.

A way of thinking outside the box and coming up with creative ideas.

Losing trades are rarely discussed here, and more importantly, WHY it was a losing trade. And if it is, the answer is always a conventionally opinionated reason.

If you know when NOT to trade, you will know WHEN to trade.

The markets are dynamic and this is why it is so hard to truly identify a high odds trade from an absolute flop of a trade. Also, I prefer a lot more candles, one explanation as to all the exceptions in the study.

This game is solely intended to inspire...
To me, with this few candles, it's all candlework to interpret the chart areas.


A's part of a long-term run: You've got two balance patterns. The first is a spinning triangle, which is inside what's almost a three methods -- besides this, and because the first, white candles are essentially all momo, I wasn't even sure why the first candle was included.
This first balance is a build for the second one, which kind of repeats the first one (aka 3M) and is a pattern that's much more effectively a three methods.
Both balances apparently deal with old s/r lines. There's also tiny momo pushing PA up through each balance. The higher balance is kind of stately, so the upward momo's limited, especially given how even the almost- three white soldiers (except they aren't, since they work against a side pattern (3M), not a pivot high) are; there may then be retrace to the old s/r lines.

B's got a weak push off support with the A's almost-3M group of small white candles, because it must have touched an s/r line lower (instead of in the middle, as with A's established 3M) than the pivot-high candle's body's base. Return to below all the candles in B is a good bet, considering the size of and lack of shadow with the last candle's body; return also to that low s/r from below it seems also realistic, considering how weak price lifted from it and strongly it returns.


I don't understand what you mean when you say one is a winner and one a loser; and, I prefer to be ready to trade at all times and places. Any trade is viable, given a solid reason.
  • #8
  • May 12, 2012 8:22am May 12, 2012 8:22am
Quoting Pipalicious

Losing trades are rarely discussed here, and more importantly, WHY it was a losing trade.
many losing trades are just losing trades without any reason, as are winning trades.

Focusing on identifying losing trades and avoiding them will ultimately lead you down to the "I want a high win-loss ratio" route. Not sure if that is desirable.
  • #9
  • May 12, 2012 9:41am May 12, 2012 9:41am
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Attached Image (click to enlarge)
Click to Enlarge Name: BS.PNG Size: 13 KB
  • #10
  • May 12, 2012 10:35am May 12, 2012 10:35am
Quoting PipAdder
....... , any of the two setups could be a winner or a loser.
+ 1

Not enough info to decide.
  • #11
  • May 12, 2012 2:00pm May 12, 2012 2:00pm
First an assumption. If we are looking to go long...then we wait for price to break above the "mother" bar pictured here. But if the trade is short then wait for price to break below the "mother" bar.

Is really the recognition of a large bullish bar followed by two inside bars. These signify consolidation. Thus if your market bias is bullish watch for change in the market consolidation...visible by a break-out...one way or the other this strategy should produce a lead on the market.
  • #12
  • May 13, 2012 10:39am May 13, 2012 10:39am
Quoting Custos
Focusing on identifying losing trades and avoiding them will ultimately lead you down to the "I want a high win-loss ratio" route. Not sure if that is desirable.
Yeah i agree with you, but it isnt a case of eliminating them, it is a hypothesis:-

Are there actually any visual, or, numerical differences between a potential winner and a potential loser, PROVIDING, they both have the same 'looks'.
  • #13
  • May 13, 2012 10:40am May 13, 2012 10:40am
Quoting ha-pattern
I don't understand what you mean when you say one is a winner and one a loser
One is real.
One is fake.

The point here is:

Could someone make a trade decision if the only thing they could see are these few candles?

And if they couldnt, what 'information' would they require extracting FROM these candles, to improve odds?

Here is another example: 2 cars are about to race against each other (drag race).

One is a Lamborghini Gallardo.
The other is a Lamborghini Gallardo.

Which one of the 2 have a higher odds of winning?



Quoting ha-pattern
Any trade is viable, given a solid reason.
- What are your reasons?
- What do you base them on?
- Is the information on the chart not enough?
- Do you require more historical candles to make a better decision?
  • #14
  • May 13, 2012 10:42am May 13, 2012 10:42am
Quoting gspajon
Is really the recognition of a large bullish bar followed by two inside bars. These signify consolidation. Thus if your market bias is bullish watch for change in the market consolidation...visible by a break-out...one way or the other this strategy should produce a lead on the market.
Interesting point of view. Your essentially looking for 1 candle (mother) along with direction.

What else do you think is possible?
  • #15
  • May 13, 2012 10:42am May 13, 2012 10:42am
Quoting PipAdder
In reality, and since up to the second red candle the information is the same in both setups, just with the information provided by price anything would be possible.
If all you look at are these few candles...yes, they both look the same.

However, if you know they both look the same on the surface, then, what do you look for to see the real differences between them both?

Quoting PipAdder
Additionally, I would like to take a look at a lower time frame to see what PA looks like at the "bounce".
So you would look 'inside' these visible candles to see how PA acts or looks like at the bounce. What do you look for at the bounce?

- Is it Patterns...? If so, why.
- Is it something else your looking for?
  • #16
  • May 13, 2012 10:46am May 13, 2012 10:46am
Quoting microsuck_36
Hi Pipalicious,
if that candlestick is H4 or weekly i will (refer to picture below) A buy and B sell (arrow) so both is a winner for me..
I dont understand what timeframes have to do with this (by the way, its m1).
  • #17
  • May 13, 2012 10:56am May 13, 2012 10:56am
Quoting Pipalicious
Yeah i agree with you, but it isnt a case of eliminating them, it is a hypothesis:-

Are there actually any visual, or, numerical differences between a potential winner and a potential loser, PROVIDING, they both have the same 'looks'.
well, I would rather focus on the characteristics of a winning system versus a losing system.

Any system will produce a lot of losers, which can't really be differentiated from the winners. I tried several filters to filter out the losers. Guess what, the best winners got filtered out too. While the win-loss increased, the profits decreased. That is why it is dangerous to focus on losers, a perfectly good system might get destroyed by trying to tune up the win-rate.

And as a conclusion, we have good bets, bad bets, winning bets & losing bets.
Any bet that is based on a sound winning system is a good bet. If it becomes a winning or losing bet the next trade is irrelevant, since in the long-term profits will roll in. The only thing to avoid is bad bets, which are either based on nothing or a bad system.

At least that is my opinion.
  • #18
  • May 13, 2012 11:01am May 13, 2012 11:01am
Quoting Pipalicious
I dont understand what timeframes have to do with this (by the way, its m1).
Then that is all the info I need to decide either would be a loser type trade.
  • #19
  • May 13, 2012 12:54pm May 13, 2012 12:54pm
Quoting Pipalicious
If all you look at are these few candles...yes, they both look the same.

However, if you know they both look the same on the surface, then, what do you look for to see the real differences between them both?



So you would look 'inside' these visible candles to see how PA acts or looks like at the bounce. What do you look for at the bounce?

- Is it Patterns...? If so, why.
- Is it something else your looking for?
You look at the underlying tick by tick chart.
You look for a flow of price change that indicates a real move.

I don't know how to define it. But it would seem that a consistent move with very little opposition for a length of time would be something to consider.
Thanks for all the fish
  • #20
  • May 13, 2012 1:41pm May 13, 2012 1:41pm
Quoting Custos
well, I would rather focus on the characteristics of a winning system versus a losing system.

Any system will produce a lot of losers, which can't really be differentiated from the winners. I tried several filters to filter out the losers. Guess what, the best winners got filtered out too. While the win-loss increased, the profits decreased. That is why it is dangerous to focus on losers, a perfectly good system might get destroyed by trying to tune up the win-rate.
Solid reasoning as usual
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