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Different approaches to trading?

  • #21
  • Aug 14, 2012 5:15am Aug 14, 2012 5:15am
Carry trade is interesting approach to trading.
  • #22
  • Aug 14, 2012 6:27am Aug 14, 2012 6:27am
Quoting future
99% of systems here goes like this: XYZ indicator line crossed something so you should buy/sell.
The problem here is that you are blindly following what your indicator tells you to do instead of using your indicator's signal as place to start looking for entries based on actually reading pa on the charts.

Martingale is for suckers.
  • #23
  • Aug 14, 2012 6:43am Aug 14, 2012 6:43am
why reinvent the wheel?

Why not just do what has always been done for the past 100 years?

Why do people want to "expand" their mind to different strategies before they even have a working one to begin with?

Is it because the "old", proven and tested ways are too difficult for the average joe?
  • #24
  • Aug 14, 2012 7:20am Aug 14, 2012 7:20am
I am using cycle analysis to determine likely pivots. There are cycles or vibrations that can be found by doing analysis on moving averages. It is a work in progress, but I would definitely consider it as a different approach.
  • #25
  • Aug 15, 2012 2:01pm Aug 15, 2012 2:01pm
Every day buying the currency that has fallen the most and selling the one from yesterday, without leverage. Any thoughts?
  • #26
  • Aug 15, 2012 2:10pm Aug 15, 2012 2:10pm
Shift to the daily chart, define the major Fibo and recent significant un-broken levels and you will ended up in the same cab where the fat guys are. As you know they move the market, so never loose.
Enter Signature
  • #27
  • Aug 15, 2012 11:32pm Aug 15, 2012 11:32pm
Look for a correlated move on the majors, to assess which currency/ commodity is the strongest/ weakest (against the USD). Then trade accordingly on the market turn.
H.D
  • #28
  • Aug 18, 2012 6:36am Aug 18, 2012 6:36am
Yeah, why not. Could be a simple, almost mechanical strategy. Anything can work if you win more than you lose, on average, with controlled risk. So write down those rules and backtest it on a year's data to see if it's viable.
If you know one of those MQL geeks, they could code it for you and then backtesting the EA is a piece of cake.

Quoting future
Every day buying the currency that has fallen the most and selling the one from yesterday, without leverage. Any thoughts?
forget about tomorrow, just steal away into the night
  • #29
  • Sep 21, 2012 6:18am Sep 21, 2012 6:18am
Any new ideas on this topic?
  • #30
  • Sep 21, 2012 6:40am Sep 21, 2012 6:40am
Yes,

1) Trade small
2) no SL
3) manage losers and winners like this: losers = minimize loss or better, winners = maximize gain or better.
  • #31
  • Sep 21, 2012 6:54am Sep 21, 2012 6:54am
Quoting DemoForever
future

A holy grail quest is the last thing you want to be undertaking,believe me.When i say keep it simple i am talking about your entry,exit,stoploss,mm,etc,etc.Imo that is not the hardest part of your future trading endeavours.Your trading approach should be as simple as possible,trust me.When you have built your own profitable,tested system then the fun begins,risking your hard earned cash!Good luck!
^^I'm 100% behind this.
  • #32
  • Sep 21, 2012 6:59am Sep 21, 2012 6:59am
Do extensive FA on all currencies then choose one that will (in your opinion) appreciate more than the rest in the next 6+ months as well as one that will depreciate. Match up those pairs and enter during retracements of the intended direction, committing 5% of acct within the next month.

Every month perform a market assessment and change pairs if needed.

Entries, position sizing, time-frames, & exits are discretionary so do whatever is comfortable.
  • #33
  • Sep 21, 2012 5:39pm Sep 21, 2012 5:39pm
I think I may have something different for you. If you lived in Australia, your currency is the Australian Dollar, and you had a global business where every month you would bring back home the profit made globaly, and all is in equal billions of AUD transactions, then, you would move, in theory, the EURAUD, AUDUSD, AUDJPY, AUDNZD, etc. proportionately - and since you would be buying AUD, then the EUR, USD, JPY, and NZD would depreciate by similar/equal move.

In other words, instead of concentrating on one pair, perhaps you may want to concentrate on the currencies' performance vs other pairs. By isolating the currencies, and how they behaves vs its counterparts, it will give you a good sense of trend/direction.

By knowing what is strong, you can buy - by knowing what is weak, you can sell, and by knowing what currency is mixed - you can stay away.
  • #34
  • Sep 21, 2012 9:03pm Sep 21, 2012 9:03pm
how about stop taking Technical Analysis so serious.

pattern recognition on past events that are already priced in will not predict future orders placement.

My thoughts are that the markets are a weak EMH, and as Soros et al put it reflexivity is a real market phenomenom.


Technical analysis is valid to a certain point but every one thinking that it is actually predictive might be the problem.

TA i dare say is another indicator in a very random like market that over shoots and creates inefficiencies.

as Thewls put it try the good ole tested strategies but always cover your ass.
and when you hedge do not just pay double commission use the right tools for the job, calculate positive probability expectation.

UNDERestimate your abilities, be MORE risk averse and treat the market AS IF it was random.
AVT INVENIAM VIAM AVT FACIAM
  • #35
  • Sep 21, 2012 9:05pm Sep 21, 2012 9:05pm
Quoting Dick Clark
I think I may have something different for you. If you lived in Australia, your currency is the Australian Dollar, and you had a global business where every month you would bring back home the profit made globaly, and all is in equal billions of AUD transactions, then, you would move, in theory, the EURAUD, AUDUSD, AUDJPY, AUDNZD, etc. proportionately - and since you would be buying AUD, then the EUR, USD, JPY, and NZD would depreciate by similar/equal move.

In other words, instead of concentrating on one pair, perhaps you may want to concentrate...

on that SAME thought process you can analyze the WORLD RESERVE currency and get an IDEA of where things might go globally in all capital markets.
AVT INVENIAM VIAM AVT FACIAM
  • #36
  • Sep 21, 2012 10:36pm Sep 21, 2012 10:36pm
Quoting the redlion
on that SAME thought process you can analyze the WORLD RESERVE currency and get an IDEA of where things might go globally in all capital markets.
Hi,

Technical analysis is a valid method to analyze the market. The problem I find is that TA is not as obvious as so many may think. For example, how many traders know that a MACD is the spread of two moving averages? and that spread has another moving average shadowing the spread? If traders understood that, most likely they would not rely on it as heavily, since moving averages can be an innefective tool to use on their own.

Also, there is no volume information in currency spot trading. This is a great disadvantage, since without it, it is difficult to measure true demand for the pair. An alternative way of measuring demand, is to use something like the USD Index, where you can determine from a basket of pairs how the overall currency is performing.

A trader needs to breakdown the data used for the fancy modern charts - and begin from simple common sense theory. This in my opinion, is the only way to fine tune your technical approach. Nothing is more disciplined and consistent than an algo. At the very least an algo has to scan the market to provide the trader with the best opportunities.

Fundamental analysis is hardly an effective way to trade since it is difficult to determine from it alone in which direction and how much momentum it has behind it. TA can provide the trader with that information - bias/volatility/momentum/new highs/lows, in short, it provides you with non judgemental information. For exmaple, "algo, show me a market that look like it is trending". and the better you define trend, the better the algo will show you what you are looking for.

The trick is to find the right variables so it gives you a good picture of the kind of market you wish to trade.
  • #37
  • Sep 22, 2012 1:38am Sep 22, 2012 1:38am
I have been trading for the last 6 years. Just eight months earlier, I tried another approach (which may be new to most), and got much better results. I was told that there are mainly two approaches, (one fundamental, second technical).
As my experience suggests, there is little evidence to support technical. We were always trained to rely on support/resistance, SMA and so on. If you take it objectively and open any MT4 chart, from back testing you may agree that there is very little to support/resistance; it is all in our mind-psychological. In theory, an expert will go something like this.....if the first resistance is broken, then the price will go to second resistance, if it is broken then the third resistance..if nothing happens then this means a new trend bla bla bla. To most traders, it seems logical and works nearly every time. What they fail to grasp, is that it is how the market moves (up and down, up and down) therefore, the market is going to touch (or nearly touch) at least one of those resistance. DONT AGREE let me give you an example and ask you to open a MT4 5 min chart. We have been told that if the resistance (lets say the high of the day is broken and after breaking it if the price retrace then there is every chance that the second wave will be stronger than the first. Actually, this is not true, check it yourself.
I am not going to touch the fundamental part because how many experts you have seen who can predict the market (with lets say 80% accuracy). As I was told, when got some training seminars, tours at CBOE, NYSE and LSE that most experts who are good at trading are reluctant to share their best secrets. MOST. It does not mean that they wont give you excellent advice but MOST of them will keep their best secret to themselves and expect you to learn it for yourself. This said, if the market has to make a decisive move, it will do it in 1 min or 5 min interval (sometimes rarely). therefore, most of us who are trading 4 hr, 1 day or even 15 min don't get the full benefit of the move. it is best for scalpers, but scalping is not a good strategy ( my opinion).
SO WHAT DO I PREFER. it is the probability of price going from one point to another point based on historical trends. Remember, the only Nobel prize won in financial markets was based on probability..
Enter Signature
  • #38
  • Sep 22, 2012 3:35am Sep 22, 2012 3:35am
Quoting Dick Clark
Hi,

Technical analysis is a valid method to analyze the market. The problem I find is that TA is not as obvious as so many may think. For example, how many traders know that a MACD is the spread of two moving averages? and that spread has another moving average shadowing the spread? If traders understood that, most likely they would not rely on it as heavily, since moving averages can be an innefective tool to use on their own.

Also, there is no volume information in currency spot trading. This is a great disadvantage, since without it,...

your response seems intuitive but if you run some random charts simulator you can claim the same thing. It would be foolish to think the markets are a true random walk but it's more random than people think. Looking at a price chart and thinking that is all you need to trade the markets gets people in trouble.

MACD,STOCH,RSI, ADX, and all those indicators need to be broken down as you say if you cannot calculate it by hand you have no business using it is my rule of thumb same with Parabolic SAR.

now standard deviations and statistical analysis only tell you the past and cannot by definition be predictive....where i do agree with you (or from what i gather from your post) is that Fundamental analysis is not the be all to end all.

but people taking this business seriously should study
Economics
Finance
Accounting
Mathematics
Psychology
statistics
Probability theory
Risk Management

and then read the literature by Ivy league universities on the studies of the efficiency of the markets. I maintain that the markets are more random than people think...not to say a good strategy is not possible, there are pretty good traders out there unless you think it is just random luck.
Attached File(s)
File Type: pdf market micro structure.pdf   523 KB | 401 downloads


Attached File(s)
File Type: pdf ta study.pdf   183 KB | 511 downloads
AVT INVENIAM VIAM AVT FACIAM
  • #39
  • Sep 22, 2012 7:40am Sep 22, 2012 7:40am
Quoting mkser
I have been trading for the last 6 years. Just eight months earlier, I tried another approach (which may be new to most), and got much better results. I was told that there are mainly two approaches, (one fundamental, second technical).
As my experience suggests, there is little evidence to support technical. We were always trained to rely on support/resistance, SMA and so on. If you take it objectively and open any MT4 chart, from back testing you may agree that there is very little to support/resistance; it is all in our mind-psychological. In...


Hi mkser,

That is awsome that you been trading for 6 years. I remember when I first started my journey to learn how to trade, and thought it was going to be about 6 months before I became a billionnaire. 8 years later, I am a lot better, but still learning how to trade. I doubt that most appreciate the effort it takes to have a good clear method to profit in the market. It takes a lot of failure/being wrong.

The thing about a chart is that you can see whatever you want to see on it. I remember back in the day watching a trader, which I respect, draw ellipses and trendlines on the right side of the blank chart, and would come in the chat and call the time in the future the market will move and direction. Some see short position when the market has had a move almost verticaly up. Other see CCI ghost trades - in the x/y plane, your judgement and internal bias will dictate what the market will do irrelevant of the reality of what the market is doing. And really, that is as far as what the market is going to forcast - what it is doing now.

Take s/r levels. First, you are dealing with a timeseries of data. Your scope selection is very important, and obviously it must be material. When an auditor goes to a firm to test a balance sheet, he for certain won't use a small balance to ensure that all the money is there. The scope must include the largest balances. What I am trying to say is that a 5 minute s/r is not material. A daily chart, with at least 3 months of data provides better levels to trade from. Even with this type of levels, here is the main mistake:

The mistake is the logic being applied by us as humans when we take those trades. For example, a trader sees resistance being tested, and shorts it! Why in the world would a trader short resistance?, because their logic is one of a bargain hunter. What he is missing is to measure the force of the trend. There are many tools that attempt to measure the force of a trend, however, it is up to the trader to review those indicators, and critic them - because none are bible.

I find math to be the key of a successful trader. Similar to Newton explaining nature using math. A good strategy must be measured, and only math can do that. So, fundamental is just an overall opinion, and anyone with a good ear will be able to detect from the chatter, if they pay close attention, which market and how it may move. This can be effective, however, it can't be measured.
  • #40
  • Last Post: Sep 22, 2012 7:56am Sep 22, 2012 7:56am
Quoting the redlion
your response seems intuitive but if you run some random charts simulator you can claim the same thing. It would be foolish to think the markets are a true random walk but it's more random than people think. Looking at a price chart and thinking that is all you need to trade the markets gets people in trouble.

MACD,STOCH,RSI, ADX, and all those indicators need to be broken down as you say if you cannot calculate it by hand you have no business using it is my rule of thumb same with Parabolic SAR.

now standard deviations and statistical analysis...
I agree, the ideal trader must be an excellent student. She/he must study even the Dalai Lama - lol!

I haven't studied the random walk theory much, but will make sure to take some time this weekend to brush up.
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