The clarity thread

Welcome, in this thread we are covering various aspects of trading and of life!

This thread is twin with Howard and the 1000 trading adventures (2014)!, a trading-journal of a 2014 brand-new trading account, mostly "high-risk" trading.

thank you !

You are welcome!


Well i see is not easy to start a discussion, in fact maybe there is nothing to discuss about.
moonday is always a slow day

Yes, now that i think about it, the real purpose of this thread is to just have some chatting

So.. Cheers!

Nice idea spaceduck, but what to talk about? that is the question.

is the thread open to simple newbie questions - how to draw a trend line, which MA is best and so on.

Do you have a prefered method?
Will you be chatting about funymentals (the area most have difficulty with)

are we just opening up the chat box and seeing where this goes?

If so what's the people's view on Australia's new leader?

Wow that was a good contribution, let's see.
I would say, let's forget about "technical" stuffs (how to draw a trendline, what ma to use, what "method" is good), at the end the only thing accountable for a profitable trading is the experience gained in the years, so any talk about methods and indicators would be counterproductive and dangerous in some way.

Let's keep it opened chat box as you said, and let's keep it in the present moment!
Interesting question about the Australia's new leader, i'm just totally ignorant about that, out of my radar.

Seems like the most important events of these days are the syria theater, the taper, the german elections and just for today the evolution of the italian government crisis (though these last 2 events are not soo much impactful i guess).

What can we say, seems like a great time in terms of opportunities, the syria situation is very interesting, and the incoming taper also, good to keep an eye on equities, and why not, on gold too.

you should add Spain and the euro to the watch list also, it seems that the inflation/GDP reports have been tampered with and are way of the mark.

while the world watches for it's next peace keeping mission (although syria has nothing of use to the world) the accountants of the euro play fudge thy numbers and see if anyone notices.
syria is a short lived issue - it's about saying to the world, torturing your people will not be tollerated - just stick to bombing them please.

the issue with spain is that the inflation numbers and GDP don't stack up against the other reports - job numbers, production, construction, unemployment etc.

hello,

About syria and gold. Do you have a trading plan now? (for example buy gold if us declare war), or are you waiting that the market decide the direction up or down and then enter?

i'm kind of 99% technical, but i see foundamental events as catalysts (still not sure if the foundamentals are catalysts of the market, or if the market is the catalyst of foundamental events, kinda weird).

however, my "plan" for now is be bullish on gold, at least in the short-term, seems there is still some space to go, and bearish usd.
In case of "war" (peace mission!), i don't exclude some sort of upside spikes for gold, the "catalyst" effect.

And that's my view at the moment, how about your?

Sorry, i was thinking that you were a foundamental trader.



I trade since 3 years and test about 1000 indicators here in FF. I am at the point of thinking that only one moving average is sufficient for trading. I test it with EA and the result was quite good. But after 3 years of research, and complicated stuff, i cant believe that its so simple despite the result of the EA. What do you thing about that?

No problem, and sorry for the numbers (i deleted them, better to keep them out of this thread, otherwise we may fall in the confusion of trading signals and different opinions etc.).

Why always thinking that trading needs complicated "rules" and dozen of indicators. The price action is showing everything you need. Just trade what the price is telling you.

The biggest deal is to understand what you see on chart ...

I will answer on what i think about that (EAs, moving average, simply systems).

What i think is, when trading following a system/method, you'll always be 1 step behind the market, sometime with some luck some profit may come, but in the longrun is a carnage.

Market makers (and big partecipants) don't care at all about moving averages, Fibonacci, trendlines, indicators, candlestick formations, etc.. and sometime don't even care about foundamentals datas.
So, all this methods may work one day and may not work the day after, their outcomes are random (it's a very ugly truth, i know).
Sad..!

Thank you for your answer. So do you know what they care about ? How they trade? What are their method?


In your first post you said that the average discussion quality in FF is very poor... why? what are the most important things to learn to become a trader? You eventulay can oriented or focus your thread to something important...

Some observations:

Disclamer: those are just personal guessing, personal opinions/observations, what i think is "true".

1) With "They", i mean the market partecipants with capitals big enough to move the markets, we "know" that they are banks, governments, hedge funds, pension funds. (etc?)

2) I'm not sure that they work together, i mean, there is no co-operation within them, this is a zero-sum game so when somebody make profits, some other is loosing money (this may not apply on the retail-world, but it do apply in the big funds world).

3) the number of those partecipants is big, and somehow there is a sort of anonymity in the market. This mean that even if they it's a zero sum game, is not really like a competition, it's just free market (i win you lose, but who are you? i don't know, and i don't care).

4) How they trade, this is the most interesting point.
First, let's start saying that "they" do not Always win, "they" do not have the perfect method, "they" loose money like retails do, "they" are not all winners. After all, when price go up, buyers are making money, sellers are loosing money. In every given moment, some of "they" is making huge profits, and some of "they" is loosing huge sums. So, there is never a constant winner, all "they" sometime win and sometime loose.

And this bring us on the next point, their method.

5) "They" are soo many, and every one of them have their own method, huge banks have trading desks with hudrends/thousands of traders, each of them with their own personal method, that like methods here in FF, sometime work, sometime not work. Sometime profit, sometime loss. Even the big banks, we know from time to time have loss problems, if they would have the perfect method and make money all the time from the markets the financial crisis would not exist, but...
but, the market is just a market, the amount of money in the market is the sum of the capitals invested by "they", it is not an infinite number, and the market is not a separate entity, it cannot scientifically exist a "method" that "win" all the time, it can be seen as a kind of unlimited goldmine from a retail perspective, but analyzing it from a "big fish" perspective, the market is a limited marketplace where no magic (method/holygrail) can exist.

When i say the average discussion quality in FF is poor, i point to the fact that most of the discussions here are about "systems" "methods" "indicators" "rules" that no matter what, have Always a random outcome, add to it a fixed stoploss, a MM (the more the capital the more the lotsize used), and mathematically there would be a ruin in the longrun.
No matter what the system, indicator, rules, EAs, etc.

So, nobody have the holigrail, nobody know the futures (not even "systems" or "methods"), nobody win all the time,
Yet there is still a huge number of tradable markets, many of them exist from centuries, and will continue to exist for centuries, being of extreme importance for the humanity and the Worldwide economy.

In other words, any system/method have a random outcome, but there must be something out there that is not soo random, otherwise the importance of markets would be not soo huge (imagine the worlds economies based on something random, unbeliveable).
That's the interesting thing, while any system/method have a random outcome, the market itself is not random at all, the charts of today are the same charts of tomorrow's Yesterday, if the price today go down is because some entities have sold huge amount of contracts (more than the buyers was willing to buy at any given price), and those short-contracts will be still there Tomorrow, and the day after, unless they will be bought back, etc. Any movement is real, is not something that magically disappear, it's a plot of countless huge real trades (not "demo" ones) that are being opened and closed for a reason or another.

The perfect method don't exist, but yet from centuries there are traders that extracts consistent profits from the markets, this is the paradox that encloses the "important" thing a trader must learn.

The thread is always open for and welcoming any comment/idea/discussion as Always

My system uses no indicators, but it does look at market events across pairs.

Exchange rates, as presented to retail traders, remain mathematically balanced across pairs; as such, it is nearly impossible to profit from temporary market distortions. While it IS possible (I've done it), the profitable closures are so rare that one wonders: why bother?

However, sometimes pairs become aligned or grouped -- relative to their simultaneous position at some earlier point in time -- on one side or the other of their mathematical "family". I have no idea who drives this, or whether it is a random/natural occurrence. I just know that it happens. I interpret it as a noteworthy market event; I observe that it happens a few times per week and I use it as a trigger to take certain logical actions within a well-behaved synthetic hedge.

Almost all of the synthetic hedges we see discussed on this forum site do not properly treat lot sizing based on exchange rates. Hence, the assumed hedging properties are not there.

Once a trader understands how to set up a properly proportioned, or "well-behaved" hedge, he says "Now what?" because there is very little movement, negative or positive.

Some action needs to be taken to tip the basket of trades into profit.

Think about what that might be. Clarity helps.

Spaceduck,

I think there doesnt actually exist a paradox. The markets are non-random and it is possible to extract consistent profits from the market.

The reason it seems like a paradox is that most people (on the internet) believe some version of that. "If everyone thinks like that, it must be true." The belief that forex is a 'zero-sum game' also helps propagate this belief. It is clearly not non-zero. If there exists so many losers, than how the hell can the winners 'balance' the losers, (the winners/banks/pros use way way less money then the losers)?

But we can use an existential proof to totally squash the ideal that consistent profits are impossible. There exists consistently profitable traders.

The only reason more people dont actually do well is because trading is currently unscientific. Traders who are experienced and are good chalk their success down to 'experience.'

However, if they decided to dissect their experience, they would find that there is nothing random about their intuition, and their intuition/method can be described precisely with a lot of effort on their part.

It's a zero-sum game, of course it is.
True 99% of retails loose money, but the capital they move is soo little that it really make no difference at all in the market (without considering that most of retail brokers don't even place trades on the real market).
About the big traders, the istitutional ones, my guess is that the winners/loosers balance is near the 50/50.

Retails are not market partecipants, they are like people watching a football match and betting on it, their actions cannot at all influence the match, i see in the statistics here on forexfactory for example, take gbpusd for example, total 130 lots, what are 130 lots on gbpusd, they are being bought and sold tens of times on any given second between the big players, retail trading have nothing to do with the real market, it's just passive gambling.

So, the 95/99% loosers apply on the retails, that's true. But on the professional/institutional level, my guess is probably 50/50, perfectly zero sum game.


About the randomly of the market, of course the market is not random, the outcome of a trade based on a "method" or "system" is random, and that's why 99% of retails are loosers (they adopt the system style of trading).

The difference between the profitable traders and the loosers, is that the loosers are locked in the "system" mentality, it's painful and scary to accept the idea that there are no magic systems.
The profitable (experienced) traders have after many years been forced to accept the fact that the "system" way of trading cannot work, and that's the first step for the success.


When in my first post i've written that the FF discussion quality is low, the meaning of that is simply that year after year the average mentality is "system" based, the ones who trascend it, stop writing (of course, how can you write about something that is not resumable on a system way, with rules etc).

This is why i opened this thread, i want to try to at least in this thread, adopt a non-system non-method way of looking the market, slowly... trying to keep it clear and detailed, but without give too many informations too fast, that would create a wave of confusion.
For now seems we're going good, the basic concepts are getting explained thanks to the contribution of everybody.

Good job so far
Keep them coming

A non-system is a system

Seriously, do you mean PA? but you can write about PA and resume it on a "system"...

I have no idea what are you talking about.

But its very interesting, i like trying to see the market in a different way. All big discovery have been made like that, with differents eyes...

once you start to look at the market from a supply and demand point of view and don't have 12 indi's on 400 charts - - you're going to confuse a lot of people

Richard farleigh - Taming the lion - - - good book to read to open the mind, and get an idea on how the big players play.
Van Tharp - trade your way to finacial freedom - - - my book of choice, but i'm a technical trader with a difference anyway.

our goal as traders is not to try and decide which way the market will go, but to recognise when it is going and join the ride, take our little peace and get off before they realise we've hitched a ride and come to check our tickets.

I have no idea where this thread is or will go - but i like the thought process behind it.