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And now for something completely different

  • #41
  • Feb 10, 2015 4:11pm Feb 10, 2015 4:11pm
“Nothing is constant, nothing is the way it has always been. So what I find is that people who are really good at this have great intuition, have great instinct. Their gut actually tells them something. The mathematics are important because they demonstrate you understand the problem.
But ultimately the decision about whether or not to take a given risk I think is really a human judgement call in every sense of the word.” Ken Griffin Citadel Investment Group from Niall Ferguson DVD The Ascent of Money
tradewith60
  • #42
  • Feb 10, 2015 4:13pm Feb 10, 2015 4:13pm
A Fallacy in “plan the trade, trade the plan.”
I followed the dictum for years – or at least I followed it as well as I could. “Plan the trade, trade the plan“. But like everyone else I had trouble with the second part and often chastised myself. That was until neuroscience proved that within uncertainty – like when our brains see markets – our unconscious compels us to make a judgment call.
You might call it semantics but the advice really should be “Plan the trade, trade the judgment call” – and then the plan should be all about how to make the best judgment calls.
Judgment calls – as opposed to baseball hits or the solution to an algebra problem – are all you are ever looking to do in trading. It is so NOT an exact science. But you can get better at better at making good judgment calls.
If you add a series of strategies that help you perceive the markets more clearly, your judgment gets better. There are all kinds of things neuroscience is showing – physical energy, emotional awareness, value of unconscious and non-deliberative thought… just to name a few to begin to work with.
Rethinking the oft-repeated advise in terms of neuroscience – in terms of what we know about that brain NOW – makes for better trading.

The ReThink Group...
tradewith60
  • #43
  • Feb 10, 2015 5:00pm Feb 10, 2015 5:00pm
Quoting panosmgr
Hello 60. I'm following with interest your "alternative" way. I like the simplicity... (no indicators). I also like that TP and SL are not... fixed ( I know that most people hate that). Although I watch very careful all videos I may missed something because English is not my native language. So, forgive me if I you have already answered these question... (I also understand that factors like... time to draw TL, time to start trading are not so... important)

a) Which pairs do you trade (except Gold and SP500)?

b) Do you always get as an entry...
A. JUST SP AND GOLD

B/C. NO I MOVE MY ENTRY TO FOLLOW THE CURRENT BAR, IF YOU LIKE IM FOLLOWING THE CURVE OF PRICE UNTIL WE GET A BREAKOUT OF THE PREVIOUS BARS HI/LOW

I STOP TRADING FOR THE DAY WHEN I HAVE HAD ENOUGH OR I AM TIRED

D. I ALWAYS USE THE RE-ENTRY, IT'S AN INTEGRAL PART OF THE THINKING, EVERY ENTRY CARRIES THE SAME RISK... THE EXCEPTION IS OF COURSE IF I DECIDE I HAVE HAD ENOUGH FOR THE DAY

Nice to have you onboard
tradewith60
  • #44
  • Feb 10, 2015 5:09pm Feb 10, 2015 5:09pm
Tuesday's close video here:

http://www.nakedforexnow.com/showthr...ll=1#post10632
tradewith60
  • #45
  • Feb 10, 2015 5:20pm Feb 10, 2015 5:20pm
Inserted Video
tradewith60
  • #46
  • Feb 10, 2015 5:46pm Feb 10, 2015 5:46pm
If we reduce the number of inputs the mind has to deal with we can make better intuitive decisions - if our entries are essentially a coin toss then why waste our brains ability deciding when and where to enter?.... build a simple repetitive entry system, based in logic, based on what the market does everyday, and then use your brain power to make good exit decisions.... Thats Flow trading strategy.
tradewith60
  • #47
  • Feb 11, 2015 1:15am Feb 11, 2015 1:15am
i opened a small account (live) and willing to try this method on it, I just need to clarify one thing, you have no rules at all as where you set your entry line (sell below buy above) none ?
  • #48
  • Feb 11, 2015 1:30am Feb 11, 2015 1:30am
Quoting EternalNewB
i opened a small account (live) and willing to try this method on it, I just need to clarify one thing, you have no rules at all as where you set your entry line (sell below buy above) none ?

Hi EternalNewB;

The line in the sand is set at the previous days close.

Sell below this level buy above.
  • #49
  • Feb 11, 2015 1:51am Feb 11, 2015 1:51am
Quoting 60minuteman
{quote} A. JUST SP AND GOLD B/C. NO I MOVE MY ENTRY TO FOLLOW THE CURRENT BAR, IF YOU LIKE IM FOLLOWING THE CURVE OF PRICE UNTIL WE GET A BREAKOUT OF THE PREVIOUS BARS HI/LOW I STOP TRADING FOR THE DAY WHEN I HAVE HAD ENOUGH OR I AM TIRED D. I ALWAYS USE THE RE-ENTRY, IT'S AN INTEGRAL PART OF THE THINKING, EVERY ENTRY CARRIES THE SAME RISK... THE EXCEPTION IS OF COURSE IF I DECIDE I HAVE HAD ENOUGH FOR THE DAY Nice to have you onboard
Thank you 60 for your answer
  • #50
  • Feb 11, 2015 1:56am Feb 11, 2015 1:56am
60MM,
Love this approach. Thanks for your time, teachings, and links to Denise Shull. Been at this game for 10 years+, although only recently switched to FX because of timezones, and this is a nice refreshing approach. Feels like I am truly engaging my 'right brain' after years of being systematic (previously engineering background - all 'left brain' really, apart from the flashes of inspiration/intuition in being creative) and trying to suppress emotions and wrap shopping list set of rules and logic around everything. It can be exhausting. So am following your thread with much trepidation!
Keep it up!
  • #51
  • Feb 11, 2015 2:30am Feb 11, 2015 2:30am
Quoting 60minuteman
{quote} Hey PP, great to see you again... I would go further and say that all figures and quantitative analysis of a strategy is irrelevant, all I am concerned with is what I believe. Do I believe that under normal market conditions it is logical that I will make more than I lose trading this way? YES 100% Do I need more than that? NO... Facts are what happened in the past and often bear very little relevance to the future so I choose to base my risk decisions on what is logical. For the strategy to work I need the market to oscillate up and down...

Good to see you too 60. I am just trying to understand how you are recording your results. Given that you have stated elsewhere that every trade carries the same risk. So my understanding, regardless of where you place your stop, you always risk x% of your account per trade. So the amount of pips you make per trade will have a different £ value per pip dependant on initial stop size. Regardless of where you move your stop after entry, your initial risk will determine your gains and it will most likely be different for every trade you take. So 'r' value will be more appropriate when figuring out if you are making more than you are losing.

Or

Are you risking a fixed £ amount per pip? If so your initial risk value will be variable so every trade will not carry the same risk given that some swing highs/lows to place your stop will be larger than others.
  • #52
  • Feb 11, 2015 3:02am Feb 11, 2015 3:02am
ahhh now I understand...

I risk the same £ amount per pip on every trade.
tradewith60
  • #53
  • Edited 7:59am Feb 11, 2015 5:14am | Edited 7:59am
Okay, so can you elaborate when you state that every trade carries the same risk? I can't see how this is possible if your stop is variable depending on how far the previous swing is. I understand it in terms of coin toss, but the stop is generated by the user not by probability. I understand also that you would also use your gut feel to close a trade earlier than the stop if need be. But I see a conflict of risk here with regards simple rules, probability and potential profit.

By placing a line based on the past price action, you are projecting a bias which I do not see different in relation to trading SR levels for example. Why have one line, why not a line that moves with price or with time for example? Isn't your way of seeing the market momentum-contraction-momentum etc a theory just as any other theory based on a pattern such as supply/demand zones for example. It seems you are suggesting to trade the theory in terms of entry, but exits should not rely on the theory but be instinctual. Also, the theory must be simple as possible so as to replicate it but also not rely on it - i.e coin toss probability will out weigh the chances of success compared to any chance based on a theory. Isn't this what Mark Douglas advocates in Trading in the Zone?

So your simplicity really boils down to mastering one's mindset, and trading patterns, confluence etc etc really is just a fallacy which will corrupt the mindset making profitability much more difficult to achieve.
  • #54
  • Feb 11, 2015 6:09am Feb 11, 2015 6:09am
Quoting Porkpie
Okay, so can you elaborate when you state that every trade carries the same risk? I can't see how this is possible if your stop is variable depending on how far the previous swing is. I understand it in terms of coin toss, but the stop is generated by the user not by probability. I understand also that you would also use your gut feel to close a trade earlier than the stop if need be. But I see a conflict of risk here with regards simple rules, probability and potential profit. By placing a line based on the past price action, you are projecting...
wowo PP... you ask some difficult question, I will do my best to answer them...

The outcome of every trade no matter where you place your entry or SL is uncertain, therefore I consider every trade to carry the same risk (I am deliberately trying to avoid using any sort of measurement in trading as I believe it offers no real benefit to a traders profitability.)

If I wish to consider "risk" in terms of protecting my account then I will not rely on any measurement as such but I will use logic and rational thought... So let's assume I wish to be cautious and grow my account slowly, I will use the smallest size lot possible and only increase with profits. If I decide I want to grow my account very quickly then I will take on larger positions knowing that I also increase the chance of my account being lost.... Similar to a basketball team, if they go all out attack they will score more (possibly) but also run greater chance of letting my points through, you couldn't measure that exactly because it depends on uncertainties, how well the other team plays? how attacking they are? luck? etc etc... "it's no good knowing what to do, you must also feel it"

ok, yes the line is no different to SR or any other technical study, except: 1. It requires none of my intuitive brain power to place the line, there is no question where it is or isnt. It has been proven that the best traders have the ability to use their intuitive mind effectively and it has also been proven that we have a limited amount to use before the brain becomes 'tired' - Secondly, most research suggests the more inputs we have to consider the more likely we are to become tired quickly and then make mistakes or impulse decisions.... 3. most traders believe the SR line is significant my line carries no significance at all, if it fails there is no one to blame, just the market doing its thing...( important shift in mindset)

2. the sine wave theory is just a theory but the important part is I believe it - "it's no good knowing what to do, you must also feel it"... Harry Markowitz the nobel prize winner for economics stated that you can do all the study you want but that will always be secondary to what you believe. EVERY decision you make comes from a feeling and a judgement call - what you believe is essential.... on top of that I just think it's far more logical than SR....

As a final note, I want to make it 100% clear that I am not saying that certain technical approaches will not work, on the contrary I think any system will work, can be profitable.... BUT the idea that you can measure risk, plan win rates, predict the future based on what happened in the past is highly irrational, not logical and you could say already proven to fail. To make them work you have to 1. accept the outcome is always uncertain, 2. stick to either a wide stop or large win strategy, 3. learn to make intuitive decisions instead of impulse to reduce mistakes...
tradewith60
  • #55
  • Feb 11, 2015 6:30am Feb 11, 2015 6:30am
taken from Rethink group website.....

Jamie, Psych Risk Management & Living to Trade Another Day
This is a true story.
3 years ago today (I have this weird memory for dates), I spotted Jamie Dimon and Bill Daley sitting outside Gibsons in Chicago. I just happened to have come from a lunch with Patricia Crisafulli who had written the House of Dimon and I had her book with his picture on the cover in my purse. I crashed his table and he graciously opened a discussion about what I might have Tricia write for me as she is also a ghostwriter. I said “well net net, a new psychology of trading”. To which he said, “oh really, tell me more”.
In a lot fewer words, I said what I said over at AllAboutAlpha a few months ago. Until we wake up and get serious about the missing psychological dimension in risk management, these disastrous losses will keep on happening. It isn’t about the Fed, it can’t be handled by regulations and surprisingly it fundamentally (from the human mind’s POV) it isn’t even really about greed.
It IS about getting out of our misguided quant religion and accepting what we know about how our minds REALLY make judgment calls. From there we take on the task of systematically exposing/analyzing/accounting for all of the truly omnipotent subjective factors.
The complex math has its place. But it also tricks us. It is actually easier, makes us feel good and then wham, does us little good until it is too late to solve the problem. Once the math is telling us the positions are careening out of control, the rest of the world is trading against us. It happened at Bear Stearns and now it has happened to their adoptive parents (ironic huh?). It happened before that at LTCM.
This is the thing – really taking the neuroscience of decision-making, emotion and social thinking seriously is handing us a solution on a nicely arranged silver platter.
1. Realize that all markets, but particularly exotic ones, have a limited number of players and those players can all play against you. It is musical chairs and occasionally the music stops. You may have gotten a chair every single time in the last 100 games but there is always the next time – the time when you have indeed forgotten what it feels like to not get a chair.
2. Go back to Harry Markowitz and Asset Allocation 101. Knowing what you believe is step #1! Jamie said “we believed …” on the conference call last night but how much analysis of those beliefs did they really do?
3. Analyze one powerful emotion – for its presence and degree. Don’t deny it is there. Psychological research says it is – frankly, particularly in competitive males. Academically, it is fear of future regret and in practicality it is fear of missing out.
In both 2 and 3, you can start with a very simple scale, that everyone making new risk decisions has to answer to every time. 1-5. 1 = “I don’t believe it at all” or “I have NO “FOMO”.
5 = “I believe it like I believe the sun rises in the east” or “I am so sure this trade is going to work that I can’t not make it.” Forget my friend Jamie, how would Corzine have answered? How would it have worked if his board instigated and completed a thorough discussion of these psychological questions?
The odds of the “egregious, stupid” mistakes would go down. Plain and simple.
(Oh just for the record, Tricia is great but I did write MARKET MIND GAMES all by myself and I did send Mr. Dimon a copy back in January .
tradewith60
  • #56
  • Feb 11, 2015 9:08am Feb 11, 2015 9:08am
Quoting 60minuteman
{quote} wowo PP... you ask some difficult question, I will do my best to answer them... The outcome of every trade no matter where you place your entry or SL is uncertain, therefore I consider every trade to carry the same risk (I am deliberately trying to avoid using any sort of measurement in trading as I believe it offers no real benefit to a traders profitability.) If I wish to consider "risk" in terms of protecting my account then I will not rely on any measurement as such but I will use logic and rational thought... So let's assume I wish...
Hi 60,

Good to see you back

What you say makes me think...

Yes, one can consider trading as gambling in the sense that the outcome of each and any trade has 50% chance of being a loss (slightly more if you consider the spread: each trade starts as being a loss...).
But - can you be 100% sure that what you call intuition is not some sort of intuition based on how the price reacts to whatever the price drives into while moving?

In other words, how can you wipe out of your decision making process all your analysis of price movement? (being price momentum, S/R lines, time of the day, whatever...)

Take care,
Slow & steady
  • #57
  • Feb 11, 2015 9:28am Feb 11, 2015 9:28am
Quoting patapouer
{quote} Hi 60, Good to see you back What you say makes me think... Yes, one can consider trading as gambling in the sense that the outcome of each and any trade has 50% chance of being a loss (slightly more if you consider the spread: each trade starts as being a loss...). But - can you be 100% sure that what you call intuition is not some sort of intuition based on how the price reacts to whatever the price drives into while moving? In other words, how can you wipe out of your decision making process all your analysis of price movement? (being...
what we are saying is be aware of your feelings and use the data from them because all decisions begin with an emotion/feeling.
If you have a feeling based on seeing price react to a level then by all means use it to act.
Be 100% sure that is what is happening and that it is not an impulse decision based on fear....

There are techniques to do this but first you need to be aware of it and how important it is.

Again I am not saying you have to avoid analysis to decide when and where to enter, BUT, that will not be enough on it's own!

nice to see you again too Patpouer
tradewith60
  • #58
  • Feb 11, 2015 11:12am Feb 11, 2015 11:12am
60MM,

I came across your thread an found it quite interesting. Like Gearys, I'm a left-brain type ( physicist ) , so it will be a bit of a challenge for me, but I've realized that indicators don't work. I like the mathematical certainty of indies ( again the math/physics training ) but the market always seemed to be mocking my sqiggly lines. To be honest, I was about to give up trading as unwinnable - all the usual excuses, the "big boys" were hunting my stops, the game is rigged, etc. So your approach is very refreshing, will definitely subscribe to your thread.
  • #59
  • Feb 11, 2015 11:58am Feb 11, 2015 11:58am
Quoting 60minuteman
{quote} what we are saying is be aware of your feelings and use the data from them because all decisions begin with an emotion/feeling. If you have a feeling based on seeing price react to a level then by all means use it to act. Be 100% sure that is what is happening and that it is not an impulse decision based on fear.... There are techniques to do this but first you need to be aware of it and how important it is. Again I am not saying you have to avoid analysis to decide when and where to enter, BUT, that will not be enough on it's own! nice...
OK I tend to agree with that - stop denying that emotions come into play in the decision making process.the simple fact of acknowledging the weigh of these is indeed very important in my opinion. Take care
Slow & steady
  • #60
  • Feb 11, 2015 12:05pm Feb 11, 2015 12:05pm
Quoting gravitist
60MM, I came across your thread an found it quite interesting. Like Gearys, I'm a left-brain type ( physicist ) , so it will be a bit of a challenge for me, but I've realized that indicators don't work. I like the mathematical certainty of indies ( again the math/physics training ) but the market always seemed to be mocking my sqiggly lines. To be honest, I was about to give up trading as unwinnable - all the usual excuses, the "big boys" were hunting my stops, the game is rigged, etc. So your approach is very refreshing, will definitely subscribe...
Hi G, welcome...

Im sure a very common story for many and if you were feeling like you needed a break then nothing to lose by throwing out the 'rule' book and being completely contrarian for one last try!...

Follow along, I will show all my trades at least for the next month, by which time everything worth knowing will have been covered anyway...

good luck,

Even if you decide to go back to indi's - Do 1 thing... pick a very high RR or wide stops....
tradewith60
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