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Multi-Lot Multi-Timeframe Position trading

  • #121
  • Sep 4, 2014 4:11pm Sep 4, 2014 4:11pm
Quoting Graviton
{quote} I've been trying to simplify, objectify and improve my method for quite a while now. What could be a more objective trend criteria than the 5ema crosses above the 10sma and the RSI goes above 50% for an uptrend? Of course, most trends are very obvious when I look at the chart, but I still require confirmation by my objective criteria. It's the only way I can stay out of the tall grass doing this. Of course, there are still some subjective elements involved, like where to cut losses short. I've never seen a completely objective trading system...
I`m not talking about an objective trading system, but a clear definition to what a trend is, and a good tool to measure it , not to estimate it.Moving averages only estimate it or hint at it, but they dont measure it, thats the difference.

Well they wont be trillionaires because it would still depend on market volatility and other factors, if they market doesnt want to move, you cant make money off it unless you add more risk, but why would somebody add more risk than needed?

Well i`m been looking more deeply into the economic side of the trend, and there are some interesting aspects from the fundamental view too, of what a trend is, but it is a very complex problem and so far i couldnt find a good definition for it either, or a way to measure it truly.

But one i know for certain that it has nothing to do with retail traders as retail makes up a small fraction of the entire markets
"There's a sucker born every minute" - P.T. Barnum
  • #122
  • Sep 4, 2014 4:22pm Sep 4, 2014 4:22pm
Quoting Proximus
{quote} I`m not talking about an objective trading system, but a clear definition to what a trend is, and a good tool to measure it , not to estimate it.Moving averages only estimate it or hint at it, but they dont measure it, thats the difference. Well they wont be trillionaires because it would still depend on market volatility and other factors, if they market doesnt want to move, you cant make money off it unless you add more risk, but why would somebody add more risk than needed? Well i`m been looking more deeply into the economic side of the...
Some of the best traders of our time simply use moving averages to define a trend. See Ed Seykota, Marty Schartz, and some of Richard Dennis' work. What you're attempting to find is something that cannot exist.

Trends can't be measured, since they are not an inherent part of price. They are completely retrospective and subjective by nature. That is, trends don't exist in the now moment of time.

At best, you can only use tools that track a specific quality of price more closely. The price you pay for closer tracking is more noise.

Also, how does a moving average only "hint" at a trend. If price is above a 200 EMA, then the trend is up. There's no estimation or guesswork involved.
"Serenity, you sound like a frustrated Canadian living your life in the US"
  • #123
  • Sep 4, 2014 4:25pm Sep 4, 2014 4:25pm
Quoting SerenityFX
{quote} Some of the best traders of our time use moving averages to define a trend. See Ed Seykota, Marty Schartz, and some of Richard Dennis' work. What you're attempting to find is something that cannot exist. Trends can't be measured, since they are not an inherent part of price. They are completely retrospective and subjective by nature. That is, trends don't exist in the now moment of time. What you're saying is equivalent to the statement, "this love index only estimates love, but I'm looking for something to measure love." At best, you can...
The trend is the non-random part of the price, it it is non random in respect to the random noise and consolidation between, then it has a reason why it is non random isnt it?

That reason is the definition of the trend, if you know the reason,and until the reason persists, the trend will be there, that will be the true measurement of it.

Its not an abstract thing like love or stuff like that, its a fact which could be quantified, if we`d have the knowledge.
"There's a sucker born every minute" - P.T. Barnum
  • #124
  • Sep 4, 2014 4:55pm Sep 4, 2014 4:55pm
Quoting Proximus
{quote} The trend is the non-random part of the price, it it is non random in respect to the random noise and consolidation between, then it has a reason why it is non random isnt it? That reason is the definition of the trend, if you know the reason,and until the reason persists, the trend will be there, that will be the true measurement of it. Its not an abstract thing like love or stuff like that, its a fact which could be quantified, if we`d have the knowledge.
Serenity's point still stands though, you don't need the definition of the trend in order to make money.

I'd think you'd be better off if you put your focus elsewhere, you'll never get a clear definition of a trend or WHY it exists. Like Mark Douglas says, in order to have certainty in any one of your trades you'd have to know what ever market participant in the world is thinking at that very moment (and in the future).

I don't think that's going to happen.

edit: Just realised how off-topic this is, sorry Graviton.
  • #125
  • Sep 4, 2014 5:02pm Sep 4, 2014 5:02pm
Quoting SerenityFX
...That is, trends don't exist in the now moment of time. At best, you can only use tools that track a specific quality of price more closely...

Precisely correct. Which is why so-called "trends" are the biggest form of Historical Indicator in existence. Yet, many trend Traders and fundamental Traders refuse to admit that they use "indicators." They use the biggest and most visible indicator on the planet, and yet they still claim they don't use "indicators" and that TA is nonsense. Huh? I don't get it.
F-X-C-M | A Classic Retail Bucket Shop Scam Artist Who Manipulates Prices
  • #126
  • Sep 4, 2014 5:21pm Sep 4, 2014 5:21pm
Graviton,

If you want a real measurement of the Dominant Market Bias, then you need to start studying that which exists beneath the level of price action you are observing. The only way you can accomplish that, is to develop a set of tools (indicators) that give you insight into the fundamental movement of price between each bar of data the market produces. When you do this, you will come to realize that price is not the singular point on a two dimensional chart that you previously though it to be. Your definition of "price" will change and your beliefs about where "price" goes "next" will change as well, because you will have a better understanding about the behavior of "price."

In turn, this will cause you to realize that "price" is predictable within certain frameworks and that those frameworks have historical and empirical verification. "Price" is alive. It lives, breaths, has a respiratory rate, a pulse and a body (structure). It is a kind of Life Form, for lack of a better term. An organism of sorts. One that loves to replicate structures, similar to the way our bodies replicate cells. Every cell in your liver will be fully replicated and replaced in a matter of time, yet you will still have the same liver at the end of the replication process. Your hair, your finger nails and your skin - all of it will be replaced anew - yet, your basic structure as a human being will not change.

Market "price" share some of these Replication characteristics. A market Price Structure that exists today at one price level will be replicated tomorrow at a different price level, yet the internal behavior of price as it goes through this replication process will be very similar and often times very predictable.

Only a certain amount and degree of homework studying the right tools will reveal this to you. I can sit here until I am blue in the face explaining it to you, but you have to experience Price Structure for yourself in order for it to become real to you.

All the best on your journey for the discovery of the Structure of Price.
F-X-C-M | A Classic Retail Bucket Shop Scam Artist Who Manipulates Prices
  • #127
  • Sep 4, 2014 5:43pm Sep 4, 2014 5:43pm
Quoting iDoubleStoch
Graviton, If you want a real measurement of the Dominant Market Bias, then you need to start studying that which exists beneath the level of price action you are observing. The only way you can accomplish that, is to develop a set of tools (indicators) that give you insight into the fundamental movement of price between each bar of data the market produces. When you do this, you will come to realize that price is not the singular point on a two dimensional chart that you previously though it to be. Your definition of "price" will change and your...
Absolutely true. My "toolset" for doing this is a spreadsheet with some calcs and logging 30m OPEN data...From there I log targets and keep up with their success rate. After 3 different pairs and multiple years at this, my findings are:

- This isn't a method to "time" the market.
- Price action (and it's underlying variables) do give VERY good clues on where price needs to achieve for probability of reversal to increase.

Every target calculated doing what I do DOES get hit. It's always just a matter of when.
"Holy Grail" exists - accepting where is the first step.
  • #128
  • Sep 4, 2014 5:58pm Sep 4, 2014 5:58pm
Quoting TradeDream
{quote} Serenity's point still stands though, you don't need the definition of the trend in order to make money.
I never said that you do, but a clear understanding can minimize unpleasand events impact on the account, and reduce the DD or maximize the profits.

Quote
I'd think you'd be better off if you put your focus elsewhere, you'll never get a clear definition of a trend or WHY it exists. Like Mark Douglas says, in order to have certainty in any one of your trades you'd have to know what ever market participant in the world is thinking at that very moment (and in the future).

Also i dont look for certainty, i dont believe that it exists, i only need a reliable probability number.If X is the probability that this trend will continue until Y date, then my trade risk will be set according to that.

Without this information the uncertainty is very high,because at any moment you enter in the trade the market can go against you, because you already joined in too late, after the trend has been formed and you cannot know if it will continue or not.

Moving average is only a measurement tool, and a poor one, from past data, how can you forcast anything from it?
"There's a sucker born every minute" - P.T. Barnum
  • #129
  • Sep 4, 2014 6:08pm Sep 4, 2014 6:08pm
Quoting TradeDream
{quote} Like Mark Douglas says, in order to have certainty in any one of your trades you'd have to know what ever market participant in the world is thinking at that very moment (and in the future).
It took me years to accept the implications of this quote, yet it is the pinnacle of successful trading. Thank you for posting it.

Searching for the "why?" and "how?" questions takes the fear out of trading. If we know why something works, we no longer have to fear it not working. The problem is, "why" and how" can only be answered if the question warrants a "cause and effect" model. Unless we are dealing with the hard sciences, there can be no true "why" or "how."

Without getting into the problems of modern day philosophy, a much simpler approach is to accept the discomfort of not knowing, finding a system that shows profit (despite not understanding why it works), and continue to trade it.
"Serenity, you sound like a frustrated Canadian living your life in the US"
  • #130
  • Sep 4, 2014 6:15pm Sep 4, 2014 6:15pm
Quoting Proximus
{quote} I never said that you do, but a clear understanding can minimize unpleasand events impact on the account, and reduce the DD or maximize the profits. {quote} Also i dont look for certainty, i dont believe that it exists, i only need a reliable probability number.If X is the probability that this trend will continue until Y date, then my trade risk will be set according to that. Without this information the uncertainty is very high,because at any moment you enter in the trade the market can go against you, because you already joined in too...
This will be my last post for a while (stepping away from the comp), but let's establish a few things:

Trend followers assume forecasting is inherently unreliable and unachievable. If you don't understand why this is true, look into the writings of good trend followers, they explain this well.

Moving averages are not a past data tool. I can look at a 20 MA for EURUSD right now and tell you its present value.

Uncertainty always exists in trading. You cannot minimize uncertainty. This is conceptually impossible. It's the equivalent of saying "I'm going to minimize probability."

TradeDream's point still stands. Perhaps the largest hurdle for any trader is understanding that you won't know.
"Serenity, you sound like a frustrated Canadian living your life in the US"
  • #131
  • Sep 4, 2014 6:44pm Sep 4, 2014 6:44pm
Quoting Proximus
{quote} I never said that you do, but a clear understanding can minimize unpleasand events impact on the account, and reduce the DD or maximize the profits. {quote} Also i dont look for certainty, i dont believe that it exists, i only need a reliable probability number.If X is the probability that this trend will continue until Y date, then my trade risk will be set according to that. Without this information the uncertainty is very high,because at any moment you enter in the trade the market can go against you, because you already joined in too...

The point is you can never truly "forecast" anything in the markets. You have a tested edge or edges and you act on them time and time again. They can include moving averages or whatever you like.

If you don't resonate with moving averages, find something that you do. Just don't look for certainty because it'll get you nowhere fast.
  • #132
  • Sep 4, 2014 7:00pm Sep 4, 2014 7:00pm
Well, I can tell you exactly "why" the Euro went down today. The ECB decided to spread Euros around to avoid a recession. I see a clear cause and effect relationship there. I can understand the "why" for something like 20 to 30% of long term trends via fundamental analysis. Those that I can't explain, I don't trade. Well, actually, I understand the "why" of most of those as well. The best statistical analysis says that more than half of price action is the result of completely random action. If you plot a chart of 2,000 coin flips, you'll see long trends up, ranging, consolidations, reversals, and long trends down. It will look just like a price chart. Those are all the result of completely random action and no system in the world can accurately predict coin flip 2001.
  • #133
  • Sep 4, 2014 7:05pm Sep 4, 2014 7:05pm
Quoting SerenityFX
{quote} This will be my last post for a while (stepping away from the comp), but let's establish a few things: Trend followers assume forecasting is inherently unreliable and unachievable. If you don't understand why this is true, look into the writings of good trend followers, they explain this well. Moving averages are not a past data tool. I can look at a 20 MA for EURUSD right now and tell you its present value. Uncertainty always exists in trading. You cannot minimize uncertainty. This is conceptually impossible. It's the equivalent of saying...
If not forecasting a trend, but atleast a tool which tells me that is it wise to enter now or the trend is already at an end?

MA is a past tool they look at past X bars ,period. What is on the right side of the screen nobody knows for certain,but we can estimate it based on a probability.

You can minimize uncertainty, thats what the edge is about and perhaps risk management, but you cant eliminate it, so please dont confuse minimization with elimination.

Quoting TradeDream
{quote} The point is you can never truly "forecast" anything in the markets. You have a tested edge or edges and you act on them time and time again. They can include moving averages or whatever you like. If you don't resonate with moving averages, find something that you do. Just don't look for certainty because it'll get you nowhere fast.
Nobody said that i shall forecast every tick of the market with 100% certainty, by forecast i meant estimation based on a probability, where that prob should be >50%, otherwise its not useful.

That is the edge.

Yes i`m not saying that MA is crap, infact quite the opposite its a good tool for measurement of the past events, but it can never really forecast or estimate anything.

By using only MA you can only hope that the trend continue, and have absolutely no knowledge of it when will it end.MA crosses are pretty much lagging thats why.
"There's a sucker born every minute" - P.T. Barnum
  • #134
  • Sep 4, 2014 7:13pm Sep 4, 2014 7:13pm
Quoting Graviton
Well, I can tell you exactly "why" the Euro went down today. The ECB decided to spread Euros around to avoid a recession. I see a clear cause and effect relationship there. I can understand the "why" for something like 20 to 30% of long term trends via fundamental analysis. Those that I can't explain, I don't trade. Well, actually, I understand the "why" of most of those as well.
Yes, exactly, thats an obvious cause, and a very visible one.So that particular trend was caused by an ECB decision, so until that decision holds, the trend will more likely than not hold too.This is the measurement of it.
You can spice it with some MA's for a good entry, but yeah, basically its fundamentals.

Quote
The best statistical analysis says that more than half of price action is the result of completely random action.
About >75%, is noise, random, but only to retail, those who have the orderbooks doesnt consider it random


Quote
If you plot a chart of 2,000 coin flips, you'll see long trends up, ranging, consolidations, reversals, and long trends down. It will look just like a price chart. Those are all the result of completely random action and no system in the world can accurately predict coin flip 2001.

Not quite because the distrib of the price is different from the distrib of the coin flips, thats why trends can be longer than normally expected to be.
But its not about accurately predicting, its only about estimating it with an edge.
"There's a sucker born every minute" - P.T. Barnum
  • #135
  • Sep 4, 2014 7:21pm Sep 4, 2014 7:21pm
This just doesn't seem that complex to me. The problem is you are looking in the wrong place for your answers. No chart, indicator or manipulation of price data can predict the end of a trend in advance. Only a basic understanding of the fundamental factors driving the trend can provide that answer. The downtrend in the Euro will end when the European economy improves. I can't say what day that will be, but I'll bet you my house it wont be today, or tomorrow for that matter. I'd say odds are better than 95% that the downtrend in the Euro will continue for another 2 months or more. A large economy just can't turn around any faster than that. How much more certainty do you need?
  • #136
  • Sep 4, 2014 7:41pm Sep 4, 2014 7:41pm
Quoting Graviton
Well, I can tell you exactly "why" the Euro went down today. The ECB decided to spread Euros around to avoid a recession.
Establish an account with some value less than $10k. Target 30 pips per day. Set a goal to double the account in 13 days. How successful will you be relying on what the ECB tells you it is going to do with Euros to avoid a recession. Not very successful. Out of those 13 days, you will have just one day where you get such fundamental guidance. So, what's the alternative to growing your capital on schedule. You will need to pick and track a number of currency pairs (if you intend to do this in the currency markets) and then hope and pray for such market moving news. You will then have to hope and pray that the market continues moving in the direction of the initial impulse coming out of the news or economic release. People sit around and wait for market moving news all the time - I'm not saying it is impossible. However, I am saying that to be the kind of Trader who grows Revenues on a consistent basis instead of making an inconsistent profit every now and then, requires a Systematic Approach to Trading that Fundamentals alone cannot yield. This brings up the matter of Signal Availability. One of the cornerstones of a good trading system.

Signal Availability sets the stage for what you can expect in terms of building a Revenue Model. Most Retail Traders don't use a Revenue Model because they have no consistent process by which to expect Trade Signal Availability to remain constant. There is so much that you need to learn here, I just don't have time to cover it all.

Suffice it to say that if trading is really going to be optimized then it must be conducted as the Business it was intended to be. A good Trading System is algorithmically linked directly to a reasonable Revenue Model. The two are inextricable and go hand-in-hand. When the Trading System gets weak, the Revenue Model is automatically adjusted to modify the Trade Profile which includes Lot Sizing, Leverage, Pips Targeted, Maximum Draw Allowable, Time In Trade and Cost Basis Per Trade. There is a dynamic relationship between the trading system and the attached revenue model.

Consistent growth of capital is the primary reason for having such components in place. It allows for the optimization of growth during all market conditions, including those times when trend Traders are sitting on the sidelines trying to figure which way the wind is blowing.

The predictive nature of a trading system is not linked to coin flips, but the empirical data driven from the research of the inputs used to build the system. Either the results exist in back-testing and walk-forward testing, as well as in live testing, or they do not exist. One cannot force predictability - it is either there or it is not there. To enter a trade with negative expectation because of the belief that the market is random, is tantamount to gambling at a casino in a game where the rules of the game are not even understood by the player. That's a hobby, not Trading.

Entering the market with negative expectancy is proof positive that not enough homework in the areas that matter most has been done by the one trying to become a Trader. Absent positive expectancy, no model for revenue growth can ever be established! And, if anyone is out there trading without an expectation for increasing profits and growing account size, then they are simply in the wrong business and completely misses the point. Positive expectancy must therefore no only exist, but it must be an intricate component of a good Trader's Trading Model and Revenue Model (witch must include a Risk Mitigation Model for optimal performance).

The market's predictability resides in its data, all other non-relevant rhetoric aside.
F-X-C-M | A Classic Retail Bucket Shop Scam Artist Who Manipulates Prices
  • #137
  • Sep 4, 2014 8:19pm Sep 4, 2014 8:19pm
Quoting Graviton
This just doesn't seem that complex to me. The problem is you are looking in the wrong place for your answers. No chart, indicator or manipulation of price data can predict the end of a trend in advance. Only a basic understanding of the fundamental factors driving the trend can provide that answer. The downtrend in the Euro will end when the European economy improves. I can't say what day that will be, but I'll bet you my house it wont be today, or tomorrow for that matter. I'd say odds are better than 95% that the downtrend in the Euro will continue...
Yep.Thats true, technicals cant predict price, and they werent ment to, technicals for me are only to position my trade at a better S/R level.

Yes i know about economy, as you can see on my profile i`m a fundamental trader, but if fundamentals were so simple then i would already be billionaire.

The problem of uncertainty still persists with FA too, for example how bad the economy needs to be for a downtrend to develop, or how good must it be for an uptrend starts.

You see, its just a simple guess, FA as raw as news trading is almost as uncertain as pure TA, so FA needs to be quantified aswell, to give a more reliable answer.

Look at the NZD selloff after the recent rate hike, 99% of the time after a hike the price goes up, yet this was an exception, these nasty events only increase the uncertainty and the risk, wouldn't it be better if we were to quantify it and know exactly the probability of this nasty thing to happen ?
I`m working on this
"There's a sucker born every minute" - P.T. Barnum
  • #138
  • Edited 9:34pm Sep 4, 2014 9:13pm | Edited 9:34pm
Quoting Graviton
Well, I can tell you exactly "why" the Euro went down today. The ECB decided to spread Euros around to avoid a recession. I see a clear cause and effect relationship there. I can understand the "why" for something like 20 to 30% of long term trends via fundamental analysis. Those that I can't explain, I don't trade. Well, actually, I understand the "why" of most of those as well. The best statistical analysis says that more than half of price action is the result of completely random action. If you plot a chart of 2,000 coin flips, you'll see long...
That's great after the fact analysis, but that will never help in the moment of trading. The Euro went down for 1,000s of reasons. That's just "the" reason for why it went down today. If price goes up tomorrow, you'll hear a possible reason for what drove it up. So you "know" what caused the euro to go down today. That doesn't give us any indication what governmental/political/global forces will cause it move up or down tomorrow. It doesn't give us any place to establish a well-defined entry or stop level.

You obviously have never bothered plotting 2000 coin flips. The end result looks quite different than a currency, stock, commodity, etc. There exists a consistent net movement when probability is not 50-50.

I'm not in the mood to debate why price isn't random, why fundamental analysis is funny analysis, etc, etc. There are plenty of people willing to answer the "why" questions on FF instead of trading. I'll just stick to executing what I see in the now moment of time.

I say this all the time, but again, look at what the people who make money in this business are doing. You'll notice interesting trends (no MA needed) about how they perceive the markets.

If you're profitable, continue to do what works for you. If you aren't, consider looking at what those who are profitable do.
"Serenity, you sound like a frustrated Canadian living your life in the US"
  • #139
  • Sep 4, 2014 9:38pm Sep 4, 2014 9:38pm
Quoting SerenityFX
{quote} That's great after the fact analysis, but that will never help in the moment of trading.
How rude! To accuse me of after the fact analysis. I posted this here Sept 3, post 98, prior to the ECB announcement. Check the time if you like:

" It not hard at all to learn why the Eur/Usd has been trending down for the past several months, dropping about 900 pips since May 2014. The European banking problems and high unemployment has been all over the news. The surprising good numbers in the US economy have also headlined the news. Weak Euro, Strong USD, Technical E/U down trend confirmed by fundamentals."

That was unnecessary. I won't be answering anymore of your posts. You may continue to post here if you do not offend any others here with your deplorable manors.
  • #140
  • Edited 10:25pm Sep 4, 2014 9:49pm | Edited 10:25pm
Quoting Proximus
{quote} The problem of uncertainty still persists with FA too, for example how bad the economy needs to be for a downtrend to develop, or how good must it be for an uptrend starts.
Well, it is a risky business after all. But the risks can be managed in many ways. For instance, I don't initiate a trade on fundamentals. I wait for a solid trend to develop, then I look to see if there is a solid fundamental reason for it. Therefore, I never enter a trade that isn't already strongly trending based on FA that might never move the market, or as you pointed out, may move it in the opposite direction than was anticipated. When Trend is down and fundamentals say it should go up as in the NZD trade, I consider that fundamentals have refuted the trade and I simply don't take it, no matter how pretty the trend. So for me, it's trend first, then look for fundamental confirmation. Not the other way around, enter on fundamentals and hope a trend develops around them. It works very well for me, but each must find their own path.

Quantifying Fundamental Analysis is something I just don't know how to do. It has been clear for a long time that the European economy was in bad trouble. It has been clear this year that the US is doing better, with rising employment and GDP. So those are examples of clear situations. Just like it has been clear for a long time that the Swiss National bank will prevent the Franc from rising above the maximum they have set relative to the Euro and that the Japanese government and BOJ want the Yen to fall in value. There are many things that are less clear, and if I can't see through the fog, I just don't take the trade. That's the only way I know how to handle it, so there are many trades that I just do not take where either the trend is not clear or the Fundamental Analysis is not clear or is contradictory.
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