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Technical Analysis Fallacy

  • #45,021
  • Mar 3, 2014 7:04am Mar 3, 2014 7:04am
Hi, there is something that i noticed, and wonder if it is true, that each move would have crosses with a strong confluence like for the GBPJPY pair, if the GBPUSD is up and the USDJPY is up too, while the EURUSD is not very strong in its moves, while the EURGBP is down, that means there is a high probability to the GBPJPY pair going up?

so if we were to extend the 3 kingdoms to other pairs, we can likewise look at EURUSD and USDJPY and GBPUSD and EURGBP to trade the EURJPY, depending on whichever has the clearest chart and clearest indication as to where the market wants to go?

Hence there is no rigidity as to which pair should we trade, we just pick the chart that has the clearest trend to trade.
  • #45,022
  • Mar 3, 2014 10:15am Mar 3, 2014 10:15am
Dear FTI;

Wish you well and also your PC.

If you able, please help this post on Red Riding Hood that you post. Post # 26067
http://www.forexfactory.com/showthre...7639&page=1304

Well Wishes
  • #45,023
  • Edited Mar 4, 2014 12:43am Mar 3, 2014 11:43pm | Edited Mar 4, 2014 12:43am
Hi fellow readers,

Would like to seek your advise on adapting the MO to trading equities. Understand from earlier posts by fti that he trades asian index using the same MO with delta hedging - if I have misrecalled any content and this is inaccurate, I ask for your indulgence.

My question how to adapt it to equities with the constraint that it cannot be delta hedged - i.e. cant buy options. Reason for my asking is that if the day so happen to be in retrace, then it will turn into a rescue ops which may be needed to carry overnight after the market close. Given no options purchase, then the position cant be delta hedged for the overnight. And if the overnight limit is small, it means that losses will have to be booked. One method that hit me was to book the losses first and note the avg cost before the position was closed, on the next day, then resume the rescue ops by entering 1 spiral higher. This is all assuming higher time frame does not show trend change yet. Would like to seek your views and any alternatives on this.

Also on MM: I quote the AOW:

Quote
"The equivalent to an army corps, according to Ssu-ma Fa,
consisted nominally of 12500 men;
according to Ts`ao Kung,
the equivalent of a regiment contained 500 men,
the equivalent to a detachment consists from any number between 100 and 500, and the equivalent of a company contains from 5 to 100 men.

For the last two, however, Chang Yu gives the exact figures of 100 and 5
respectively."
Unquote

My recollection on fti's MM is that the book exposure should be at max 10% unleveraged. It was also mentioned that with rescue ops, up to 30% could be exposed. With the above passage 12500/5 = 2500 troops, assuming 1 company is an attack force (1/2500 =0.04% of cap required per troops), then, my modelling results is:

Rescue 1,3,9; 7 levels and 7 stage skews with fibo progression, 2% daily vol
% cap deployed at max attack skew is 37%

Max % cap at risk at 3rd level rescue due to daily vol is 10%
Max % cap deployed at 3rd level rescue is 517% = 1:5 leverage
Max means all 7 levels of 7 stage skews deployed in battle and rescue has failed at first and 2nd level and now is at 3rd level i.e. 9 in 1,3,9.

Conclusion: 37% of book is exposed at 0.04% per troops, need to increase total troops to acheive 10%

If 12500 is taken as the total required troops then, 1/12500 = 0.008% cap per troop, given the same rescue, attack and vol conditions:
% cap deployed at max attack skew is 7.4%

Max % cap at risk at 3rd level rescue due to daily vol is 2%
Max % cap deployed at 3rd level rescue is 103% = almost no leverage
Max means all 7 levels of 7 stage skews deployed in battle and rescue has failed at first and 2nd level and now is at 3rd level i.e. 9 in 1,3,9.

Given vol is now 2StdDev, then %cap at risk due to vol is 4%, very conservative

Would like to hear your opinion if the modelling is similar to what you have done. Thanks very much!

Regards

Add:
I note that with 1,1,2 rescue and 12500 troops, max %cap in use due to troops deployment at 3rd lvl rescue is 37%, very close to what fti mentioned of 30% booked exposed in rescue ops. I note that each person has different risk tolerance, thus the purpose of this exercise is to clarify on the methodology of the modelling. Thanks.
THE ALL is MIND; The Universe is Mental
  • #45,024
  • Mar 4, 2014 6:58am Mar 4, 2014 6:58am
OMG.
Just to prove a point.
They spying on everyone's blotters?
How evil can it get?
Can this be right? Is their blotter public domain info?
Someone should sue the daylights out of the spys and donate the proceeds to charity.

http://www.efxnews.com/story/23148/m...s-limit-orders

regards
  • #45,025
  • Mar 4, 2014 7:55am Mar 4, 2014 7:55am
Quoting fti
OMG. Just to prove a point. They spying on everyone's blotters? How evil can it get? Can this be right? Is their blotter public domain info? Someone should sue the daylights out of the spys and donate the proceeds to charity. http://www.efxnews.com/story/23148/m...s-limit-orders regards

Hi fti, great to see you here I came across the blotter earlier in the day and thought that it would be some kind of red herring. If that blotter was accurate, I am confident that MS will take actions to protect its interest but the catch is that any $ won from lawsuit won't go to charity..

fyi - i have replied to your PM with additional information. Wish to get your input before tomorrow morning if you are able. I will be sharing additional info in a new PM in a short while. Apologies for flooding your inbox
THE ALL is MIND; The Universe is Mental
  • #45,026
  • Mar 4, 2014 8:20am Mar 4, 2014 8:20am
Quoting Jacque
{quote} Hi fti, great to see you here I came across the blotter earlier in the day and thought that it would be some kind of red herring. If that blotter was accurate, I am confident that MS will take actions to protect its interest but the catch is that any $ won from lawsuit won't go to charity.. fyi - i have replied to your PM with additional information. Wish to get your input before tomorrow morning if you are able. I will be sharing additional info in a new PM in a short while. Apologies for flooding your inbox
noted.

for boutique/small funds 25%ps is industry standards.
for sizes above 1/2 to 1 yard , there no way they will pay so much.
normal for above 1 yard is 0.05%, tops at 1%

For trade MO, try not model it and become rigid.
For MM you already done the maths.
You can set your daylight and overnight parameters, the structure, it will depend on your performance.
You probably find your equilibrium after at least 2 quarters.

Goodluck on your endevour.
Have kind mindset with lots ambition control and you will go a long way.


regards
  • #45,027
  • Edited 8:56am Mar 4, 2014 8:44am | Edited 8:56am
by the way.
the bear's mos cow norodny reported they dumped 10 yards from their basket of foreign reserves in OMO( open market ops) yesterday.
Mostly is suspected to be neigboring currencies.
be watchful.

regards
  • #45,028
  • Edited 9:25pm Mar 4, 2014 8:26pm | Edited 9:25pm
Quoting Jacque
Given no options purchase, then the position cant be delta hedged for the overnight.
You not seems have good understanding of delta.
delta not necessarily mean options only.
Please try read more about the subject.
And please never say this to your employer.
If he understand the greeks, you will draw very shallow picture and low understanding of strategic positioning management.

For laymen is understandable.
For pros, if one not have full hold of subject , is best listen to the experts.
Ask questions instead of draw erroneous conclusions is wiser.

There will never be delta zero positions, in traders blotters.
always only hedged(neutral) deltas. Try read indepth about delta subject.

For homework try calculate delta of butterflies.
and butterfly positions not exist only in options.

Also try make boxes without using options. Boxes are delta neutral for given time span.
You may get light bulb there.


regards

and remember delta neutral does not mean zero. means neutral AS AT only.
  • #45,029
  • Edited 10:59am Mar 5, 2014 12:39am | Edited 10:59am
Quoting fti
{quote} You not seems have good understanding of delta. delta not necessarily mean options only. Please try read more about the subject. And please never say this to your employer. If he understand the greeks, you will draw very shallow picture and low understanding of strategic positioning management. For laymen is understandable. For pros, if one not have full hold of subject , is best listen to the experts. Ask questions instead of draw erroneous conclusions is wiser. There will never be delta zero positions, in traders blotters. always only...
Hi fti, my appreciation to you and thanks for pointing out my errors. There is much to learn. I am currently perusing Sheldon Natenberg's book - Option Volatility and Pricing: Advance Trading Strategies and Techniques. My read of the book is still preliminary, would you recommend any specific order of reading the chapters? Also, would you recommend other materials written on the topic of greeks management of a portfolio please.

On the "AS AT", is it referring to as of now, this moment in time only? The portfolio is only delta neutral at this moment in time given that price movement is small as small time passes and all other conditions (volatility, interest rate, etc) that may affect the delta of the hedge or the underlying are fixed. delta is partial derivative with respect to underlying price only, thus this means all other conditions including time are fixed. Appreciate if you could let me know if my understanding is on the right track.

Also, will peruse the homework. Thank you

Regards
THE ALL is MIND; The Universe is Mental
  • #45,030
  • Edited 6:20pm Mar 5, 2014 6:05pm | Edited 6:20pm
Deleted
THE ALL is MIND; The Universe is Mental
  • #45,031
  • Mar 6, 2014 2:13pm Mar 6, 2014 2:13pm
Hi, my name's Junior and i'm from Brazil, sorry about my poor english.
So, is there a step by step of FTI stile trading here?
I had try to read all posts this thread but... it's very hard to do that...
Exists a manual? anything compilated?

Regards...
  • #45,032
  • Mar 6, 2014 2:47pm Mar 6, 2014 2:47pm
Quoting juniormaiafx
Hi, my name's Junior and i'm from Brazil, sorry about my poor english. So, is there a step by step of FTI stile trading here? I had try to read all posts this thread but... it's very hard to do that... Exists a manual? anything compilated? Regards...

Yes it is, read 200 pages of this thread...and then you will get the steps.

V
  • #45,033
  • Mar 6, 2014 11:11pm Mar 6, 2014 11:11pm
Quoting indianguyinny24
{quote} Yes it is, read 200 pages of this thread...and then you will get the steps. V

i just heard stay away from news peeps.
silence is golden.
I would post the song but maybe not. Read all 2000 and go bananas? for him, he better read all 3000 of it.
If he knows whats good for him.


http://www.reuters.com/article/2014/...A2603X20140307

regards
  • #45,034
  • Mar 6, 2014 11:17pm Mar 6, 2014 11:17pm
Quoting fti
{quote} i just heard stay away from news peeps. silence is golden. I would post the song but maybe not. Read all 2000 and go bananas? for him, he better read all 3000 of it. If he knows whats good for him. http://www.reuters.com/article/2014/...A2603X20140307 regards
an apple a day keeps the worms away?
don't say a word.
maybe somones listening.

of course someone's listening.
its a public discussion forum.
"Tappy my line again" and i will release my dogs.
wait wait i got ta go release something else first. : rofl:



regards
  • #45,035
  • Edited 11:49pm Mar 6, 2014 11:34pm | Edited 11:49pm
Quoting fti
{quote} an apple a day keeps the worms away? don't say a word. maybe somones listening. of course someone's listening. its a public discussion forum. "Tappy my line again" and i will release my dogs. wait wait i got ta go release something else first. : rofl: regards
just needed tell mom open the yard doors for the doggies go to poop.
so how the weather there now vic?

here is hot hot hot and water may become major problem.
gonna be problem wash the dogs, thanks goodness i not need wash the cars.

regards

maybe i should speak to my bro outlaw about his new water system.
but is dificukt drink own urine when not have kidney problems?
anyway i not like bio nano filters.
shit is still shit, even after filtered.
oooops
  • #45,036
  • Mar 6, 2014 11:51pm Mar 6, 2014 11:51pm
Quoting fti
{quote} just needed tell mom open the yard doors for the doggies go to poop. so how the weather there now vic? here is hot hot hot and water may become major problem. gonna be problem wash the dogs, thanks goodness i not need wash the cars. regards maybe i should speak to my bro outlaw about his new water system. but is dificukt drink own urine when not have kidney problems? anyway i not like bio nano filters. shit is still shit, even after filtered. oooops
what makes me so sure the pills i taking everyday, not made from it .
start a new industry?
recycled patty?: rofl:

regards
  • #45,037
  • Edited Mar 7, 2014 12:13am Mar 6, 2014 11:56pm | Edited Mar 7, 2014 12:13am
Quoting fti
{quote} what makes me so sure the pills i taking everyday, not made from it . start a new industry? recycled patty?: rofl: regards
new water , new , new beep? :r of:

someone gave me new formula make tons $.
id tryed and tested . put marinated news paper as bao fillings.: r o fl:: ro fl::r ofl:


regards

nothing so bad actually.
paper, wood, it can be eaten.
whatyou think curry powder is?: r ofl:

any one tried the dogshit rolls from thailand yet.
Is my favourite.
eeer........ don't tell me.pls
i just love it with my pineapple rice.: )
  • #45,038
  • Mar 7, 2014 12:21am Mar 7, 2014 12:21am
Quoting fti
{quote} just needed tell mom open the yard doors for the doggies go to poop. so how the weather there now vic? here is hot hot hot and water may become major problem. gonna be problem wash the dogs, thanks goodness i not need wash the cars. regards maybe i should speak to my bro outlaw about his new water system. but is dificukt drink own urine when not have kidney problems? anyway i not like bio nano filters. shit is still shit, even after filtered. oooops

Weather is amazing here Chief....not as cold is NYC.....Cali is great now...

V
  • #45,039
  • Edited 12:36am Mar 7, 2014 12:24am | Edited 12:36am
Quoting indianguyinny24
{quote} Weather is amazing here Chief....not as cold is NYC.....Cali is great now... V

the big guns friction no heat meh?

ai ya life.
I though would be heat wave, season.

remember hor.
after wave 1 , abc then wave 3 , abc then 5th wave leh.
big one. pray no extended 5th wave hor.
extended, everyone will be at edge of seat. margin call days


regards
abc
c in hakka is sound same as die hor, becarefull no go c.

before c , cut loss hor.
  • #45,040
  • Mar 7, 2014 12:33am Mar 7, 2014 12:33am
Quoting fti
{quote} the big guns friction no heat meh? ai ya life. I though would be heat wave, season. remember hor. after wave 1 , abc then wave 3 , abc then 5th wave leh. big one. pray no extended 5th wave hor. extended, everyone will be at edge of seat. margin call days regards
big guns are there....they heatup fast too.... we are very small players so just sit in sideline...


i cant trade...but i am really seeing what this EU and UJ is doing...everything is just stopped....seems there is no market....

if i was trading i think this time losses would be 10% this time then my threhsold of 5%.....

V
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