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Forex Reality Tour #1 - Market Trend %

  • #21
  • Jan 18, 2013 12:36pm Jan 18, 2013 12:36pm
Quoting zznbrm
Based upon responses so far, I'm going to go with the assumption that a good portion of these trending percentages are nothing more than high-level estimates based upon the imperfect science known as the "eye test". That is not too surprising I guess.

Now, judging by the lack of interest in this first Forex Reality Tour topic, I'm hesitant to continue on with more topics. Some other possibilities are:

95% of traders lose money
Always trade with the higher timeframe trend
Automated trading cannot be long term profitable
Basket charts...
Good to see you back around ZZ

What about SR?

Sorry I had some comments on the trend not trend thing but I was not interested enough to type them I guess.
  • #22
  • Jan 19, 2013 9:36am Jan 19, 2013 9:36am
Quoting Paradox
Good to see you back around ZZ

What about SR?
Hey Paradox...How's the trading going?

Absolutely, "Price obeys Support/Resistance lines" is a great topic. We have traders here using horizontal lines, trend lines, circles, pivots, moving averages, etc. as support/resistance. There certainly are times when price "obeys" some of these lines to the pip. I don't think anyone can deny there is certainly some truth about the concept of support/resistance within a forex chart. But there are times when these lines are completely irrelevant.

Maybe a few others topics:

Price/Trends/Retracements obey the fibonacci numbers
Backtesting is useless
Trading during big news events is account suicide
Piano teachers make great coders/traders
1% risk per trade is the best way to trade
Price movement and the phases of the moon/planets are correlated
History repeats itself
Some type of discretion must be used to be successful
Price movements are best during London/New York sessions
The addition of a certain filter increases profitability

I think many traders fall victim to the "eye test" conclusions...the illusions of the charts/market. Don't get me wrong, sometimes the "eye test" can be accurate. However, if traders (new and old alike) would take some time to really investigate some of these topics in depth, they would see they have indeed fallen victim to their perceptions instead of what is really happening.

Take this thread topic for example. From a few responses and general forum sentiment, I can conclude most traders feel that the 20% number is pretty good approximation. I don't necessarily agree with that number...I think it is a higher than that. Who's right? As I said in the 1st post, I don't really think there is a correct answer. The goal of this thread was not to determine the correct answer...the goal was to get someone to actually provide data to backup the number. Unfortunately (but expectedly), that has not happened.

Quite frankly, I think this is one of the fundamental flaws of many trading strategies - most traders have no idea what the market is doing, let alone what it will do. So many strategies depend on the trend, but so few define it well. They think it is trending, they enter a trade and then the market ranges, or worse, reverses. I think the use of a more concrete definition of trending/ranging would do most traders some good - it would give them important information to really determine the accuracy of their methods. Consistency in one's interpretations is critical to success in this business. I just think it is easier to be consistent with clear definitions than using the "eye test".

But, that brings up an important question. In trading, are we really interested in what the market did in the past or what the market is currently doing? Aren't we really interested in what the market will do? The real questions to consider are:

Is a currently trending/ranging market really indicative of what will happen in the future?
Is a trending/ranging market more likely to trend, reverse, or consolidate in the future?
If a market is currently in a higher timeframe (say, H4 chart) up trend, does that necessarily mean that all lower timeframe (say, M15 chart) entries should only be in that direction?

I'm not talking extensive year-long studies here...no logorithms, no pythagorean theorems, no pilgrimages to the depths of Tibet to study the roots of Pi. Just some simple topics to consider...
  • #23
  • Jan 19, 2013 11:54am Jan 19, 2013 11:54am
Quoting zznbrm
Now, judging by the lack of interest in this first Forex Reality Tour topic, I'm hesitant to continue on with more topics. Some other possibilities are:

95% of traders lose money
Always trade with the higher timeframe trend
Automated trading cannot be long term profitable
Basket charts have less noise than single-pair charts
Managing losing trades can't be profitable
Trading on smaller timeframe is just about impossible
Indicators are all lagging
All indicators are useless
LOL!
//----- .....

hey zz...... i really like the sound of this...... ........ most of my time is spent avoiding the 'trading discussion' forum for obvious reasons, so i missed your thread here..... i'm truely sorry.....

will toss out some thoughts here but will read the whole thread slowly to get a grip on whats been said..... please by all means continue, unless you prefer not to......

//----

it's important, at least to me, to have a rough idea of whether the market is ranging or trending..... to put it briefly, i use dashboards that track the average zigzags length along with it's last legs length and the latest correction from it...... in addition, the average length of the tsr and ccfp.....

this is all done on each timeframe 15 minutes up.....

my crude attempt to determine the trend/range %, was to take the 12/5/3 zigzag length in bars and to subtract every 5/5/3 retracement in bars....
so in the chart below with 2 zigzags, on the last yellow up leg, i'd subtract every red down leg..... this gave me a %..... every pair is different..... every timeframe is different..... and at best it's a very sad rough idea.....


in a trending market i give the trade more rope, in a ranging market might sinch up a bit..... as you can see in the usdjpy chart below, it has been trending for over 1200 pips above my buys..... that'll pay for a lot of rope......h
Attached Image(s) (click to enlarge)
Click to Enlarge Name: zigzag.jpg Size: 156 KB
Click to Enlarge Name: zz on the range dashboard.jpg Size: 201 KB
Click to Enlarge Name: zz on the range.jpg Size: 148 KB
to trade and code, keep both simple... no call to impress....h
  • #24
  • Jan 19, 2013 12:32pm Jan 19, 2013 12:32pm
Quoting zznbrm
Based upon responses so far, I'm going to go with the assumption that a good portion of these trending percentages are nothing more than high-level estimates based upon the imperfect science known as the "eye test". That is not too surprising I guess.

Now, judging by the lack of interest in this first Forex Reality Tour topic, I'm hesitant to continue on with more topics. Some other possibilities are:

95% of traders lose money
Always trade with the higher timeframe trend
Automated trading cannot be long term profitable
Basket charts have...
You have a lot of bones to pick, but I realize that arguing each of them would cause this thread to be a huge mess. I would like to say, however, that your comment on your automated system has several incorrect assumptions. I don't think anybody argues that automated systems "cannot" be profitable, especially over a shorter time frame where market conditions are likely to persist. The real question is whether or not the system will work for the long haul. While 3 years is a good sample, it also depends on how many samples you have to base your statistics on. "It hasn't failed me yet" is hardly an indication of whether the strategy will work in the future. You may in fact face a shift in market conditions and lose almost all of your profit before you cave. Black box systems that are used by institutional traders at the highest levels are anything but simple and are certainly far more complex with regards to mimicking human behavior than what people on forexfactory use.
  • #25
  • Jan 19, 2013 2:27pm Jan 19, 2013 2:27pm
zznbrm you could probably create a forex-based after-dinner conversation-starter game with all of those questions and topics there! You have a barrow load of questions which admittedly tackle common perceptions and could lead to endless discussions but I would personally have to question all those questions and say 'who would talking about this help anyway? What does this clarify, anything?'

For example 'all indicators are useless'. Why ask this question? It's controversial, it will get a lot of responses but who would they help? Those who win daily with indis will they be helped, or will it make those who trade naked charts feel a bit better about their own systems - or feel they are missing something? I just don't see the point in wasting (as I would see it) time on tackling questions of perception and personal choice when there is no right or wrong answer to many of them.

To this question about ranges and trends. You can't seem to accept the truth you have freely admitted yourself, which is there is no 'correct answer' to this because interpretation of a chart is so personal. It's like asking what does air smell like? You want to know the characteristics of an undefinable quality. It's subjective, which means there are no meaningful statistics available. If you had asked 'how do YOU define a market in trend' you would get some (personal) answers but to say 'what is the truth about when a market is in trend', well the premise there is that there is a definitive way to assert when a market is trending. There isn't, so the question you ask about requesting statistics is not valid. Not everything is black or white.
  • #26
  • Jan 19, 2013 4:38pm Jan 19, 2013 4:38pm
hi zznbrm,

lots of questions and i guess millions of answers,

perspective is key for me,how one perceives this market will determine there answers,every question you have asked makes up the whole.

lets just look at a few.

past history.

past history for me does have some relevance,if only to determine averages.those averages tell us something,is price above or below.thats usefull but not predictive.with that small piece of information we can add more.are the correlated pairs price trading above or below.are the value changes in tune with each other.
are the averages converging towards each other.creating a range in a particular time frame.can i consider with the information i already know, from above that if price moves from the bottom of the range towards the top that for some body trading a lower time frame would consider this as a trend all be it 12 pips or 16 pips.one guy calling this a range and another calling this a trend and on and on.why anybody suggests that small time frames in the long term cant be profitable baffles me, there's no difference whats so ever 1 min,1 hour,1 day 1 week they all trade between there average price and break .each one will mean somthing different to the time frame below.they are all circular in there motion .

what looks to be chaos and random from ones own perspective is clear and obvious to somebody else.

i guess the art to this would be to put these questions as the whole

could this be done with a rigid system and automated,hell i would think not but there some very smart people out there and im sure its being done,ive still got to rely upon my own self which has flaws

the fact that ive confused myself trying to put thought to type illustrates for me how confusing this bloody thing is when we try to break the simplicicity that the price can only go in two directions
  • #27
  • Jan 20, 2013 9:10am Jan 20, 2013 9:10am
Quoting hayseed
hey zz...... i really like the sound of this.............. most of my time is spent avoiding the 'trading discussion' forum for obvious reasons, so i missed your thread here..... i'm truely sorry.....

will toss out some thoughts here but will read the whole thread slowly to get a grip on whats been said..... please by all means continue, unless you prefer not to......
Thanks for stopping by hayseed. Your comments are always welcome on my threads!

Quote
it's important, at least to me, to have a rough idea of whether the market is ranging or trending..... to put it briefly, i use dashboards that track the average zigzags length along with it's last legs length and the latest correction from it...... in addition, the average length of the tsr and ccfp.....

this is all done on each timeframe 15 minutes up.....

my crude attempt to determine the trend/range %, was to take the 12/5/3 zigzag length in bars and to subtract every 5/5/3 retracement in bars....
so in the chart...

Man, you always have been the king of dashboards! This is a very interesting concept and exactly why this thread was started - to understand exactly how traders determine the trend/range %. I think the idea has much potential - use a longer-term zigzag to measure the trends and use a short-term zigzag to measure the retracements. "Rough idea" or not, it definitely deserves a closer look. Thanks for sharing with us!
  • #28
  • Edited 10:04am Jan 20, 2013 9:32am | Edited 10:04am
Quoting Kanzler
You have a lot of bones to pick, but I realize that arguing each of them would cause this thread to be a huge mess.
No bones to pick...just some topics that deserve a closer look. But this thread is really for a discussion about the trend % of the markets. I also listed some other topics that would possibly make interesting threads in the future...I probably should not have done that.

Quote
I would like to say, however, that your comment on your automated system has several incorrect assumptions. I don't think anybody argues that automated systems "cannot" be profitable, especially over a shorter time frame where market conditions are likely to persist. The real question is whether or not the system will work for the long haul. While 3 years is a good sample, it also depends on how many samples you have to base your statistics on. "It hasn't failed me yet" is hardly an indication of whether the strategy will work in the future....

I think there are lots of members of this forum who feel automated systems cannot work in the long term. Do a search and you will see many comments like that.

I think you misunderstood my comments about my system. I was responding to saulimus concerning the use of range bars in an automated system. In no way was I trying to prove anything about automated system profitability. Of course it is possible my system could stop working tomorrow. In almost 3 years, I've taken thousands and thousands of trades and have seen many different market conditions. I see no reason to think things will be different in the future...but of course I must admit it is possible the system will fail in the future.

You are absolutely correct, "it hasn't failed me yet" is hardly an indication of whether the strategy will work in the future. But that statement was not meant to prove anything. It was meant to indicate my comfort with range bars and that I'm going to stick with them until something changes.

If I wanted to prove long-term automated trading can be profitable, I would have posted my statements/trades/equity charts from the beginning. But I have no desire to do that. I know what my system can do...and that's good enough for me.

Quote
Black box systems that are used by institutional traders at the highest levels are anything but simple and are certainly far more complex with regards to mimicking human behavior than what people on forexfactory use.

That may be true, but sometimes simple can also be profitable.
  • #29
  • Edited 10:16am Jan 20, 2013 9:50am | Edited 10:16am
Quoting stevexyg
zznbrm you could probably create a forex-based after-dinner conversation-starter game with all of those questions and topics there!
LOL!

Quote
You have a barrow load of questions which admittedly tackle common perceptions and could lead to endless discussions but I would personally have to question all those questions and say 'who would talking about this help anyway? What does this clarify, anything?'

Just some topics/statements/questions that deserve a closer look in my opinion.

Quote
For example 'all indicators are useless'. Why ask this question? It's controversial, it will get a lot of responses but who would they help? Those who win daily with indis will they be helped, or will it make those who trade naked charts feel a bit better about their own systems - or feel they are missing something? I just don't see the point in wasting (as I would see it) time on tackling questions of perception and personal choice when there is no right or wrong answer to many of them.

Do a search of this forum and there are plenty of folks who have said indicators are useless.

If you don't like a particular topic of a thread, then you should probably not participate in it.

Quote
To this question about ranges and trends. You can't seem to accept the truth you have freely admitted yourself, which is there is no 'correct answer' to this because interpretation of a chart is so personal. It's like asking what does air smell like? You want to know the characteristics of an undefinable quality. It's subjective, which means there are no meaningful statistics available. If you had asked 'how do YOU define a market in trend' you would get some (personal) answers but to say 'what is the truth about when a market is in trend', well...

Reality is what it is...and I fully accept that. I'm not sure I ever asked "What is the truth about when a market is in trend". I guess it is possible there is one perfect way to identify trends/ranges, but I doubt it. From the beginning of this thread, I've stated that defining trends/ranges can be very personal. In fact, in the 1st post I even said that "Asking 100 people how they define a trend may result in 95-100 different answers". It does not get much more personal than that.

I guess I don't understand what's wrong with asking how people determine that the market trends x% of the time. We've determined that many people simply use the eye test and thus produce a rather crude approximation of the trend %. But then we also have folks like hayseed who posted a more systematic approach to determining the trend %. Doesn't seem like we are hurting anyone here, are we?
  • #30
  • Jan 20, 2013 9:59am Jan 20, 2013 9:59am
Quoting diceman555
hi zznbrm,

lots of questions and i guess millions of answers,

perspective is key for me,how one perceives this market will determine there answers,every question you have asked makes up the whole.

lets just look at a few.

past history.

past history for me does have some relevance,if only to determine averages.those averages tell us something,is price above or below.thats usefull but not predictive.with that small piece of information we can add more.are the correlated pairs price trading above or below.are the value changes in tune with...
There are so many ways to trade the forex market...there are dozens (hundreds) of instruments to trade...there are thousands of different ways to interpret price movement...there are thousands of indicators available to organize price data in just about any way imaginable.

I think how you use past history, correlated pairs, and averages makes lots of sense. Thanks for sharing your thoughts.
  • #31
  • Jan 20, 2013 11:35am Jan 20, 2013 11:35am
Quoting zznbrm
No bones to pick...just some topics that deserve a closer look. But this thread is really for a discussion about the trend % of the markets. I also listed some other topics that would possibly make interesting threads in the future...I probably should not have done that.



I think there are lots of members of this forum who feel automated systems cannot work in the long term. Do a search and you will see many comments like that.

I think you misunderstood my comments about my system. I was responding to saulimus concerning the use of range...
Thanks for your reply, and that's fair enough. If it works for you and you're satisfied/making money, good. I guess there's just some part of me that distrusts systems in general as opposed to methods, and when newbies get caught up in the system rat race where scammers galore are lurking, I have a strong desire to steer them another direction. My belief is that trading is more of a skill than a set of rigid rules, but others will disagree and always will.
  • #32
  • Edited 1:47pm Jan 21, 2013 1:47pm | Edited 1:47pm
Quoting zznbrm
Do a search of this forum and there are plenty of folks who have said indicators are useless.

If you don't like a particular topic of a thread, then you should probably not participate in it.
RUDE!

You've created here an open thread and 'if I don't like it' it's perfectly acceptable for me to make valid criticisms of your analysis. If you don't like that don't open a thread asking for peoples views. Do you just want posters on here saying 'yes you are right' or do you want answers from different viewpoints to your questions?

Plenty of people say indicators are useless? I think not. And anyway just because 'plenty of people' think something does not in any way give that belief validity. Plenty of people believe in God, does that make him a reality? Does that make me wrong if I don't belive in God? And does that mean I must follow the crowd and believe in God to get on in life? Most complaints re: indicators are actually about them 'lagging' or showing the past but not many people say they are useless - more to be used with discretion and perhaps not as the only consideration in trading decisions.

I think the problem I have with your questions generally is they are too vague and wooly. I mean this for example 'Is a currently trending/ranging market really indicative of what will happen in the future?' What does that mean exactly? Are you asking does a range today indicate as to what an instrument will do tomorrow??? That's like asking 'if the sea is rough today, how will the sea look tomorrow?' It's a nonsense question. Can you rephrase it because I do not understand it atall as a question that can be answered - and any attempt at an answer to it would have to be so unspecific as to be completely useless in informing trading decisions.
  • #33
  • Jan 21, 2013 3:07pm Jan 21, 2013 3:07pm
Quoting stevexyg
RUDE!

You've created here an open thread and 'if I don't like it' it's perfectly acceptable for me to make valid criticisms of your analysis. If you don't like that don't open a thread asking for peoples views. Do you just want posters on here saying 'yes you are right' or do you want answers from different viewpoints to your questions?
Easy there stud. You said and I quote, "I just don't see the point in wasting (as I would see it) time on tackling questions of perception and personal choice when there is no right or wrong answer to many of them."

To that I responded, "If you don't like a particular topic of a thread, then you should probably not participate in it."

I don't see how that was rude. If you find responding to a particular subject would be wasting your time, then don't respond. It is as simple as that. I hate to see people wasting their time - it really does no one any good.

I greatly appreciate your feedback...keep it coming.

Quote
Plenty of people say indicators are useless? I think not.

Ok...we disagree...I've seen that comment many times.

Quote
And anyway just because 'plenty of people' think something does not in any way give that belief validity.

You are absolutely correct. I never said the statement was valid...in fact I disagree with it. I just think the statement "indicators are useless" would make for good discussion.

Quote
Most complaints re: indicators are actually about them 'lagging' or showing the past but not many people say they are useless - more to be used with discretion and perhaps not as the only consideration in trading decisions.

Great...thanks for your opinion.

Quote
I think the problem I have with your questions generally is they are too vague and wooly.

Once again, thanks for the feedback. But most of these questions are not mine. In fact, I disagree with most of them. But they are questions/statements/topics brought up by various members of this forum and I think would make interesting topics for further discussion. Yes, many of them are quite vague and that is why I listed them. Vague comments do very little good here. Just like the premise of this thread, "the markets trend 20% of the time". I am interested in the reality (as seen by the individuals making those statements).

Quote
I mean this for example 'Is a currently trending/ranging market really indicative of what will happen in the future?' What does that mean exactly? Are you asking does a range today indicate as to what an instrument will do tomorrow??? That's like asking 'if the sea is rough today, how will the sea look tomorrow?' It's a nonsense question. Can you rephrase it because I do not understand it atall as a question that can be answered - and any attempt at an answer to it would have to be so unspecific as to be completely useless in informing trading...

Man, you are a fiery one aren't you? It is nice to see so much passion about trading, God, and the sea.

I think you got it. I don't know as much about the sea as you do, but I do know something about trading. I think it is a very valid question for a trader to ask themselves:

If today is a trending day, does this make it more/less/equally likely that we will have a trending day tomorrow?

Or maybe the entire London session consisted of a strong up move - historically what does that mean for the afternoon New York session? It might be very important to know that 52% of the time the market ranges for the remainder of the New York session, 22% of the time it has a strong retracement, and 26% of the time it continues heading north. Seems like important information to know when deciding whether to close your long trade or to keep it open. Does this data guarantee anything about the future? Of course not. But might be interesting nonetheless.
  • #34
  • Jan 21, 2013 4:21pm Jan 21, 2013 4:21pm
Quoting zznbrm
Or maybe the entire London session consisted of a strong up move - historically what does that mean for the afternoon New York session? It might be very important to know that 52% of the time the market ranges for the remainder of the New York session, 22% of the time it has a strong retracement, and 26% of the time it continues heading north. Seems like important information to know when deciding whether to close your long trade or to keep it open. Does this data guarantee anything about the future? Of course not. But might be interesting...
OK that's getting specific and yes it's no doubt interesting and very important to know. That's better, much much better.

So why couldn't you have just opened this subject up with a question like 'I'm interested in how a strong move upwards on a London open could have consequences for the US afternoon session. Specifically how statistically we could show the likelihood of further buying or ranging or retracement of the market when US comes online and how we could trade this US session with a better chance of being on the right side of the market by basing our positions on the statistically most likely unfolding scenario.' You could easily have formulated something like that and it would have offered a more coherent line of enquirery.

I don't want to over do it with this but again a question like your latest one:

'If today is a trending day, does this make it more/less/equally likely that we will have a trending day tomorrow?

That is just an absurdly simplistic and lazy line of questioning as is the way in which you have been throwing up statements/questions the logic behind which you are now claiming you don't necessarily follow or agree with. That's not the impression you were giving out, from here anyway.

Trading like life is all about attention to detail so while I admire your questioning enquirery and your keen interest in discussing what may be generally accepted misunderstandings I do believe you should think more about formulating detailed questions of your own rather than simply trying to present wooly questions on wooly misunderstandings. You will only get wooly answers. Sea you around.
  • #35
  • Jan 22, 2013 10:05am Jan 22, 2013 10:05am
Quoting stevexyg
I don't want to over do it with this but again a question like your latest one:

'If today is a trending day, does this make it more/less/equally likely that we will have a trending day tomorrow?

That is just an absurdly simplistic and lazy line of questioning as is the way in which you have been throwing up statements/questions the logic behind which you are now claiming you don't necessarily follow or agree with. That's not the impression you were giving out, from here anyway.

Trading like life is all about attention to detail so...
Thanks for taking the time to publicize some of my many deficiencies related to properly formed thread titles and questions. Although at this point in my trading career I'd rather concentrate on trading and trading-related topics than the nitpicking of my grammatical skills, I must admit getting some constructive feedback is always helpful.

It's a good thing for me there is not much correlation between profitable forex trading and properly formed questions...or I'd be in a world of hurt.

Come to think of it...maybe I should take some time off to study at the local community college. I bet they have a "Queen's English 101 - How to properly form trading-related questions to satisfy even the most scholarly internet users" course. I'm sure my boss at McDonald's will re-work my schedule. I mean, he is a high school junior so he should understand about working and going to school at the same time.

Man...this thread turned out better than I expected.
  • #36
  • Jan 22, 2013 11:28am Jan 22, 2013 11:28am
Good news...I caught my manager before he left for high school. He said he would be open to working my schedule around the English class I enrolled in this morning. He likes how I handle the deep fryer and does not want to lose my expertise in that area. He even gave me a small raise...yes!!!!!

In fact, he thinks the class is a good idea. He is a little concerned about some of the questions I've asked the customers like "What can I get you today?". He would also like me to be a little more detailed in my queries.

I'm not going to have much time to continue this wonderful thread or address the other possible topics. Thanks to those who participated! stevexyg seems like a smart guy...I'm sure he'll continue to share his experience and wisdom with everyone.

Ok, back to the fryer I go. Good luck everyone! Before I go, I wanted to leave you with a story I just found on the wire. It sure is a scary world out there.

Bizarre Scene Disrupts Monetary Policy Meeting

London - A meeting between Chancellor of the Exchequer, George Osborne, and his top fiscal advisors turned into a bizarre scene today in London. Chancellor Osborne was discussing monetary policy with his advisors when he stopped and asked a seemingly simple question, "How do we fix this situation"?

At this point, an unidentified man from the back of the room started screaming, "How can you ask such an absurd question? There are so many possible answers. It is a bogus question! Either reword the question or get someone in here who can form the question in the proper way. No wonder this country is going to shit, one of the most important people in British politics can't even ask good questions."

At this point, security stormed the room and escorted the man out. As the man was hauled out of the building, he was overheard saying, "What a wooly question! What a wooly world we live in! Did anyone study English in school?"

One of the Chancellor's advisors had this to say about the altercation, "That man was like a rabid dog! You should have seen the look in his eyes. I've never seen anything like it. I, for one, will think twice before asking general, open-ended questions in the future!"

Outside the Chancellor's office on Downing Street, a government worker stopped to talk to reporters. "Yes, I know the man who caused the disruption in there. I work with him. He is obsessed with currency trading, the ocean, sheep, and properly formed questions. I knew something like this would happen one day, he was like a ticking time bomb!"

The Chancellor's office refused further comment. The suspect was taken to a local hospital for evaluation.
  • #37
  • Jan 22, 2013 12:34pm Jan 22, 2013 12:34pm
I found that a highly enjoyable read zz your imaginative talents are wasted in 4x - and in MacDonalds restaurants. Might I suggest you cancel the English lessons and try Creative Writing classes instead?

Despite that you are in danger of missing the point. its not about correct use of a language but about clarity of thought. When you think clearly you think deeply and when you think deeply you use or do your best to use language that expresses thought in the outside world. You shouldn't make the mistake of believing that there is something snobbish about expressing yourself to the best of your ability. if you are genuinely interested in trading you are genuinely interested in life, thinking, the ways your mind works and language. Language is a very peculiar thing. words are just signifiers aren't they?

yes a good thread zz, good luck at the burger place and if I come in don't spit in my chips.
  • #38
  • Jan 22, 2013 6:10pm Jan 22, 2013 6:10pm
Thanks for the response. Seems like alot more discussion has happened since I decided to respond so maybe some of this is dated.

I never questioned the trend % convention since I just never thought it was relevant. I have spent alot of time looking at whether markets are mean reverting or not and which of these two philosophy has the best path to a profitable strategy. From a pure statistics standpoint it seems to me the markets are consistently mean reverting. But this inefficiency is rarely larger than the transaction costs. As for trending it just seems farely random statistically but this is were there is enough inefficiencies to actually make a profit. Strange.


Since it might help me clarify my opinions I will give a brief response to all your topics. Maybe someone can set me straight on something.


1. 95% of traders lose money
The most boring useless discussion we could have.

2.Always trade with the higher timeframe trend
This is what I think is true. Always trade in a market type and timeframe that is in sync with your personal psyche. The above statement is true for a large subset of people I suppose.

3. Automated trading cannot be long term profitable
I guess I tend to agree with this. Probably to my detriment I over think this stuff alot. I can't seem to get over the fact that any automated system started with a discretionary decision to apply it to a specific market at a particular time in history. As a real example. I have made some money by just buying carry currencies with no stop. I have been farely lazy and undisciplined so I imagine I would have done better had I automated a system for this. But above all I am under no delusion that my success is anything more than a single discretionary decision that I happened to be correct about.

4. Basket charts have less noise than single-pair charts
This is definitely true. Basket charts have much more statistically exploitable patterns. They also have much higher transaction costs and are no more likely, in my experience, to have tradeably exploitable patterns. (See #2 answer)

5. Managing losing trades can't be profitable
Really??? As opposed to just letting them run?

6. Trading on smaller timeframe is just about impossible
All trading is just about impossible. (see #2)

7. Indicators are all lagging
8. All indicators are useless
Is it just me or is the same as #3. By definition a profitable automated system could be turned into an indicator that is both not lagging and not useless.

9. Price/Trends/Retracements obey the fibonacci numbers
Oh man this one needs a whole post so maybe I will just not touch it now. To some degree this is completely true and yet at the same time it is irrelevant untestable rubbish.
What is true is price obeys price and it moves.

10. Backtesting is useless
Probably. I would replace useless with inadequate

11. Trading during big news events is account suicide
The artifical spread widening at least on brokers I use would definitely stack things against you. I just can't understand when price is spiking in your favor and you just want to exit to the panicing fools you can't get a good fill. Somehow this seems contrary to my understanding of microstructure. Maybe someone can explain this too me.

12. Piano teachers make great coders/traders
Unless you count vaguelly being able to punch down the right notes I can't play piano. I do have a personal opinion about whether coders make good traders. I would say my ability to code and analyze my thoughts has mostly been a huge distraction from the activity of intellectually understanding and trading price action.

13. 1% risk per trade is the best way to trade
This is the one that really really bugs the shit out of me. Along with what % return is possible. Or what dollar amount is possible. I mean the market is close to impossible to understand statistically but if you have an edge and you look at your personally situation and psycology then these type of questions are elementary statistics. If you can't understand it you shouldn't be trading. If you are going to bitch at someone elses unrelated numbers because you projected them onto your situation/capital then you are an idiot.

14. Price movement and the phases of the moon/planets are correlated
Most definitely this is true. Since there is no direction you also can count negative correlation. It happens all the time. Seriously though, you can call me a quack but, I think there are patterns and rhythms to everything. You can use this to predict as well as most more rational indicator ideas I see.

15. History repeats itself
For sure it does but only after everyone is sure it is not going to. On a serious note I have developed some pattern recognition idea in the past and I am surprise how much this is not true. It is really hard to find a significant number of past patterns to make any inference about the future. Maybe someone can enlighten me about this.

16. Some type of discretion must be used to be successful
Must is a strong word. As with all abstract subjective mental endeavors I think machines are a long way from the top performance of humans.

17. Price movements are best during London/New York sessions
See #2

18. The addition of a certain filter increases profitability
I can't imaging that the addition of a filter would not change profitability in some way.
  • #39
  • Jan 22, 2013 7:36pm Jan 22, 2013 7:36pm
Great. All I need to know now is: What is the best risk-reward ratio?
  • #40
  • Jan 22, 2013 9:12pm Jan 22, 2013 9:12pm
Quoting zznbrm
I'm sure my boss at McDonald's will re-work my schedule.
hey zz.... a couple times a week a few of us meet at mcdonalds for breakfast.....

we kick around all sorts of questions and ideas just to get each others opinion...... many of our wonderings are about trading and just as many are not......

it helps me to get anothers perspective, cause it's quite possible mine could be wrong..... it's one way i learn......

well meaning threads here on ff often end up in a free for all cyber fight....... my views seem to differ so much from the status quo here on ff that i tend to keep them to myself..... after all i'm wantin to learn but i already know how to bleed......

you know what's funny...... i do wonder about most if not all the subjects you mentioned.....h
to trade and code, keep both simple... no call to impress....h
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