It seems impossible to make money in the long run

Copernicus,

I think what you might be missing here is that this game is totally a different ball game for a retail trader vs a fund manger, due to many obvious aspects... so a successful long term trend following techniques used by a fund manager don't necessarily mean success for a simple retail trader... somewhat irrelevant IMHO.


Thanks for your inputs,

The post before related to a statement from member KmBioDmoneda that stated "As for the hedge funds, and magic men of forex, have you ever seen their trade history? Do you know how long they are opening or closing their positions for? How do you TRULY know they are swing trading? The reality is you DON´T because that information isn´t given to the public."

I just thought I would shed some light on the fact that there is really nothing too mysterious about the trading techniques of the majority of fund managers at least here in Australia. The fact is that if the Responsible Entity cannot understand the trading technique and risk implications of an investment manager then there will be no fund in the first place as it is the Responsible Entity in this regulated environment that holds the risk.

PS It is my experience that the trading game is tougher for the fund manager as the sums involved are far larger requiring skillful placement and the need for consistent returns is a priority. We have it lucky provided we stay out of their jaws :-)

So price action has no rules huh? Would you please be as kind enough to explain to me what is the definition of a reversal and an extension. As both of those is what creates what you see on your chart as price action.

What is your response suppose to reveal? Am I suppose to take your word that YOU WERE and trust that what you say is true? Your response has not revealed the lack of transparency by the hedge funds to their clients as for the positions which they take. Which impart doesn´t reveal if they are swinging or scalping.

patterns is one of the biggest influential factors in price action, if you understand patterns you'll know everything happening on a chart across all intraday timeframes.

Why not simply tell us all what is the definition of an ENGULF. Engulf is a part of price action, thus price action has certain rules as engulf has a very clear and specific definition.

You are talking about chart patterns here, not rules, which as I've already said, do not exist in price movement. Chart patterns provide an indication of future market moves, they do not provide rules.

Copernicus; I'll answer later.





It's time to lose money

TA doesn't work. Put a SL and pray.

100% agree.



I don't understand this.

According to me there are several values as there are several trading horizon. Is price more likely to move faster in daytrading perspective? Sure but it's not an organic aspect. I mean there is an explanation which is basically newsflow (economic, financial or political). And as a trader you could reduce this impact. For example I don't trade during the beginning of the US session and I avoid newsflow.



Price breathing isn't longer-term factor. You can use a very wide stop loss with a Intraday strategy and a very tight SL with a swing time frame. If you use chart pattern on 5min TF and using a 35 sl, we can say it's a wide SL regarding to the timeframe.


As you can see on this fictive trade, I may let the price breathes even on short time frame. What about using a 20 SL on a monthly chart? It may be the longest time frame but price doesn't breathe yet. So it's more a strategy's concept and it doesn't seems to be linked with the TF IMO.



I agree



I don't believe I can outperform neither HFT traders nor Hedge-fund managers (who use swing trading). I would be fine with just performing.

As you use an elaborated english, it's possible that I misunderstood what you wrote.

Hi Unabletrader

I hope your trades fared well last night (my time). I must admit I was getting a bit crotchety with festive season trading blues last night and decided to hit the hay for some much needed beauty sleep.

Look, before I get started I need to reinforce that these are my personal views only and I recognise that there are a variety of different trading styles that are very valid for many different circumstances. For some reason, members here thought I was criticising scalpers or those that use the lower timeframes when in fact I was just sharing an opinion that has consistently worked for me and gives me peace of mind in this very difficult market. I could have framed my posts a bit better, so I apologize to the scalpers out there if I offended. It was not my intent. I was feeling a bit of your pain expressed in your posts in that we all have or will go through moments in our trading lives where we question whether this game is just too difficult or simply a game of chance.

.....so here is my opinion only and why trading with a bias towards the longer timeframe seems to work for me.

Does timeframe matter?
Market behaviour is based on the collective action of its participants. When that collective action is orderly based on overall consensus, price moves in a predictable way. When that collective action is stochastic (unpredictable), the market becomes a game of chance. Generally the price of an instrument seeks to achieve fair value but this price movement continually overshoots it's underlying fair value due to the vast array of different agendas and lack of coordination of of it's participants. The majority of movements relate to institutional risk management decisions as opposed to speculative objectives. That bid or ask price is frequently a lure from an institutional desk to transfer it's risk as opposed to the outcomes arising from retail traders of similar mindsets. Now even though the results of an announcement leave you scratching your head and thinking that the market is just behaving peculiarly, that is attributed to the fact that each market participant have different day to day decisions on their agenda. They might for example be using that bullish announcement as a convenient method to offload risk in a particular instrument. In the short term, you just don't know. This is why stochastic movement makes up the majority of price movement at the lower timeframe. Institution A offloads risk and other market participants scramble as a result. These competing agendas on the short term timeframe however reach general consensus on the longer term timeframe in relation to what is regarded as fair value of the instrument. Every institution have their risk parameters which they operate in and few can survive for extended periods going counter to consensus in the long term. Yes there are the long term position traders who are prepared to bide their time till price moves their way such as those on the right side of the credit default swap debacle following the subprime collapse but they have balls of steel and they are in the minority as a rule.

Over the long term, and you have to believe this for it to make sense, price is reflective of the fair value of the instrument concerned. This is the entire basis of 'value-investing' and why the majority of market participants are bottom-line fundamentally inclined. What this means is that price movement over the course of time oscillates around it's intrinsic value.

This is not saying that fundamental analysis is the be all and end all. Indeed, given my confidence in price action on the longer term timeframe, consensus is built into the price history of the instrument and the longer term price move eg. on W1 and M1 is a fairly accurate reflection of general market consensus, so I take my fundamental cues by using Technical Analysis on these timeframes to avoid information overload and announcement bombardment. How important is the pending announcement and what will be the immediate response and how long will it take the market to fully absorb it. I would love to know these answers as we all would, however I think we can all appreciate that it takes time for the market to equilibrate to the news feed. To trade announcements is a tough sport and more suited to an algorithm than a discretionary trader. The speed of the bugger can leave you in its dust.

On the short term timeframe, you cannot determine with any degree of confidence the reason for the price move given that it is impossible to have perfect information of the motives surrounding each participant. It is like trying to determine the weather for a particular day based on the mechanics of a very small sample of atoms taken from a cloud. At these levels you need to employ gaming systems as opposed to traditional trading systems to hopefully reap rewards in this inferno.

As you step out towards the longer timeframes, the charts may look the same irrespective of time scale, but built into these charts are the fundamental driving factors of price driven by market consensus as opposed to chance. Impacts of single announcements are simply waves on this sea which can be ridden and not alarming calamities experienced on the shorter timeframe. Zones of support and resistance on the M1 timeframe are significant beasts to be aware of as it captures the combined views of a large portion of market participants. You obviously pay more attention to these dominant price constraints than say S/R on the H1 timeframe or lower. On the lower timeframes these longer term price constraints are still there and to most short term scalpers, these important price levels become regions of significance.

When you attempt to interpret an M1 chart, it is more than likely that it is fundamental factors of the underlying instrument that is regarded by the chart reader as the overriding reason for the price movement as opposed to the actions of its participants but in reality, we all know that it is actually market behaviour that has resulted in this price move....but there has been general consensus in this price move and this consensus can be attributed to a shared view of intrinsic value.

Now within the longer term timeframes, there is still price uncertainty, but the impact of this uncertainty is significantly reduced and where principles of mean reversion come into play to give shorter term traders a more predictable edge in attempting to harvest this market. To the longer term trader, these overshoots in price (overbought and oversold) conditions give critical information on where to place system constraints (eg. limits/stops) and to allow for considerable breathing room for price to amble between these price extremes. What this is saying, and this is an opinion only, is that there is ample fairly reliable information in a long term chart to provide strategies for both short term traders and long term traders to utilise without having to trade based on decisions occurring each second. It also ensures that symptoms which are killers for traders like overtrading are reduced to a minimum and allows for longer term planning to be undertaken to set the trap (setup).

....anway, cheer up mate. You obviously know your stuff by the content of your posts. I just think you are having a testing patch at the moment and need a quick timeout or confidence booster before returning in splendour to take this bull by it's horns. :-)

Regards

C

PS For some unknown reason I have been stamped as a Swinger......I don't think that holding trades for months at a time can truly be classed as swing trading but if that's the label that's given to me....then so be it. So please leave your car keys in this container and let's get the party started/ tic :-)

Cheers smikester...... I have a tough skin and appreciate having a forum like this to chew the fat and also occassionally vent when the chips are down as we all do, so I will be around for a while. This market gives me enough headaches as it is so I am here for a happy ride, not a confrontational ride. Have a great New Year. :-)

Check out profile Of trader ngdmnd. You can see his trade explorer EmoDTrading

Still in the game after two months. Market gives some hope sometimes: how much time?

Copernicus: You deserve an answer I can't provide due to my English level. But thank you very much for your contribution.