Rel's Philosophy of Trading Discussion

This is a thread that is open to all for discussion.
Feel free to throw in and work on ideas here and there, but please be objective and logical.
It is highly recommended that one reads my previous threads to get a better idea where I am coming from.

The Hunter and The Prey

Its is in my experience and observation that not all instruments are made equal.
If this is the case, then why are we seemingly trying to use the same strategies/tactics across the board?
Perhaps, lets use an analogy.
A trader is a hunter and the instruments are prey.
All preys come in different shapes, sizes and characteristics.
Try to pick on prey that is plentiful and easier to catch.
Know your limits on catching prey, and often, part of the limitations involve the evolution of your weapons.
The trader may have 1 weapon, few weapons, or many weapons at his/her disposal.
Usually, I think its best to have a few weapons that you are very familiar with.
The better tuned and designed the weapon, the better.
However, to tune a weapon correctly in order to suit you, in relation to hunting prey, comes with some experience, testing, experimentation, and trial and error.
It must also be battle environment tested, which means you must also design the testing.
Sometimes you are forced to invent something new from scratch.
Weapons that remain in your arsenal and stand the test of time over many battles is the dream of most traders.
For my case, those that remain are those that have very strong foundation principles.
One such weapon I have and is still actively using today is PTe (Pip Time Efficiency).
It is in fact, the 1 single key idea that has helped me navigate the markets over the years and has almost never failed me.
There was a period of my trading career when I almost threw the idea away.
I had likened it, perhaps like the AK47.
I don't like war, killing and fighting.
I only like the design, elegance and thought process placed into the weapon.
Don't throw away your old ideas. Perhaps one day, a part of it might come useful towards your designs.
Each step you take forward will get you closer to slay the prey better, so long you are prepared to test the idea in the heat of the battle.
Ideas and weapons that don't work will naturally melt in the heat quickly. Be prepared for that disappointment and go back to the drawing board.
Perhaps there's something you missed that would make the idea work 100%, rather than 50%. I had that issue with PTe.
Remember that the prey/instruments also evolve on their own, almost like Darwinian Evolution
Be prepared to design weapons that are robust and self adjusting to the changing environment.

Hey glad to see ya back Rel!
I recently finished my trading system well enough that I'm trading it live with a good sized account, just over seeing trades as most of them are long term and require little intervention not to mention it's EA assisted (fingers crossed all goes well, God willing).
I always need to be working on something to pass the time, so I dug some old projects out of the crypt!

I find that I'm heavily influenced by the following logic: If a rare event has occurred, what is the probability of a 2nd following? 3rd?
Also, I try to avoid "tools" that most traders use and try to look for a better alternative.

I pulled the Connor's RSI out of the crypt, it's similar to RSI but does not remain in "oversold" or "overbought" territory for long, more information can be found on it via google. It is rare to see CRSI (connorsRSI) reach values of 95 and above or 5 and below (and remain there) on any currency pair/timeframe. It also works on Stocks/Indices, predicting reversals pretty well but like any indicator not perfectly.

The logic behind using CRSI is the same as mentioned above, a rare event occurs, you would trade the following bars expecting a reversal.

I made a basic EA with with TP based upon Moving Averages, and Stoploss using an ATR value. I'd like to use something better than just a moving average, and stoploss... something based around probabilities but I don't know where to start. Anyways below is a picture of the EA, it does use a martingale multiplier of 1.2 which does not have much of an impact on drawdown. The growth % is pitiful but the EA does manage to perform "consistently" across a variety of TF's and pairs etc. It is my first attempt at automating CRSI so I decided to martingale it, I don't know how else I could use it... perhaps someone else will?

My question for you/others. What could be used instead of Moving Average TP, and ATR based SL? Also, should I remove the martingale function and focus on using greater moving average (or something else) values for better R:R?

This is a side project so I'm not desperate for help but any suggestions would be appreciated, I do like the CRSI as an entry indicating reversals maybe you guys will find it beneficial to your trading. Let me know your thoughts. Attached is the EA source code is available, along with indicator.

Btw, Sweet thread Rel! Care to provide a brief description on what "PTe" is? Never heard of it before, and alas google has failed me (tried searching it up)

Hi Rparm,
I am not exactly back but thanks... I am currently recovering from an operation, so right now I am just keeping my hands and mind busy =)
I don't quite like to trade rare events. I prefer to look for common events so that my mind can get into the motion and get used to it.

PTe as a foundation.


IMO something else. Martingale is actually semi-good if you know what you are doing. You can read up FTI's posts regarding use of Fibonacci to size entries for Martingale.
Personally, I use 1,1,2. Meaning...
1st entry = scouting entry, to test market, 1 lot size (or whatever you declare as base size for MM)
2nd entry = main entry, to get profits, 1 lot size
3rd entry = rescue entry, to recover 2nd entry if it is 'lost'. Try not to get here.
You can do this if you have a roadmap of how the instrument moves.


Pip Time Efficiency
You can look at this post for a primer : http://www.forexfactory.com/showthre...73#post7795673
But my most recent improvements to PTe has been able to help me to improve my trading so much that I was blown away myself.
PTe will, on a quantifiable manner, answer these question that are almost never answered :
-Which timeframe one should be using MTF wise?
-When should I look to exit?
...etc
PTe answers these time related questions, in view of price. PTe questions a key foundation of the market. In fact, PTe became so good that I (finally) dropped range bars in favor of PTe. I suppose this is the closest to the holy grail as far as I can get. It has enhanced all my existing work to another level. e.g. improved interpretation of market states.

I would post more later.

How about for target you use CCI with similar logic yet less rare events. Set a CCI 30 and for shorts target -100 . Vice versa for longs. Possibly a CCI can be used as SL as well. Code it in and see where it goes. I don't have this skill so please share and we can test together if you think it's viable to your idea. Using CCI in this manner was something I placed to the side side years ago on my commodity trades. Worked pretty well.

The PTe principle.

Nobody seems to question the candlestick chart enough.
Ok, I do know a few traders who do question the conventional candlestick chart.
Those who had seen my work know that I question the chart a lot.
The market is raw tick data. It is the one true chart, but requires proper representation and interpretation.
We are humans. We need to organize chaotic data in such a way that it makes sense, so that our brains can make decisions.
That is why we use tools, to leverage upon knowledge and improve decision making.
Why do I see it this way? Good data -> Questionable Chart + Indicators = Questionable Signals -> Bad Results.
There are some tools available. JChart, Range Bars, Volume Bars, Market Profile and even the conventional candlestick chart itself...etc.
My focus is on conventional candlestick chart since it is IMO still one of the best representations of raw market data, organized by blocks of time.
It is actually logical, but I actually don't like it!
I do think it requires some improvement. It is a very old tool, but it doesn't mean we cannot improve it!
Do not assume the 'standard' representations e.g. M15, M30, H1, H4, D1 are correct.
According to PTe principle, the way almost everyone uses and see the candlestick chart is 'wrong'.
The best kind of trading, I think anyone who had thought about it carefully, is to make the most amount of money in the least amount of time.
That translates to Pip and Time terms, most amount of pips captured in the least amount of time.
This leads up to, Price / Time = Speed.
We can also define Speed of the instrument as 'Trend'.
This leads up to knowing that over Time, there is Speed slowdown, hence Price decay.
Knowing these answers do not answer where entries and exits will be.
In fact I've learned that entries and exits cannot be answered if we still had not answered the question; which chart should I be really looking at?
Consider this; if you are surfboarding, its nice to know where and when the high and low tides are for a particular beach for the day (e.g. D1 chart)
At the moment you are on the water, you know you won't be on it for long when you are catching an incoming wave (e.g. M30 chart)
There is no need to know how the tides are on a global level (LOL) unless you overheard there is a tsunami that is going to occur (e.g. SNB nuking the market and it can been seen clearly on W1 chart).
The example I've given is a rough example according to my previous threads, my improved PTe analysis has made the MTF choices much more accurate.

How does one become a predator in the market.

You have to ask yourself why are you doing all this.
The market is basically a bidding war.
People can play it unfairly, but the market is always right.
You can only control how to read and participate it.
The chart is a representation of the war.
In any war, you need the best weapons available for you. Do you?
In any war, you need mental endurance and strength to last. Do you?
You do not want to be in the heat of the battle and have a brain freeze.
That is the worse moment to ask yourself 'what the hell am I doing?', especially when losses are mounting up.
When you are getting gains, morale boosting is helpful, but do not let the gains blind you emotionally.
You might had gotten the gains out of pure luck, or calculated odds, but it is still all about luck.
The battlefield is chaotic enough, you need to find ways to stay sharp and be prepared.
Battle experiences will generally help. But it can be a heavy price for some.
Training will get you halfway there. Unfortunately, its not easy to create an 'official training guide'. Currently there isn't as far as I know.
Perhaps one day, it will, but I don't know how that would affect the market.
What I do believe is that it will continue to evolve, along with the weapons and tools, but the rules of the game remain the same.
Hunt down the pips and eat them. Don't be a prey to others, be a hunter.
Don't stop evolving, because one day, you can become a prey if you don't.
The seemingly only way to not to end up being a prey is to stop playing the market. Personally, I don't buy into this logic.
This is because life itself is also a game of being a prey or a predator. I don't like it, but it is a reality.
Thank goodness it is also not the only reality.
There are nice people around who want to make the world a better place, in different ways, like example, empathy kindness and compassion.
Perhaps the motion of a prey or a predator originates from our evolution roots as humans. I do hope it will evolve its way out into something nicer in future.
Otherwise, for now it is here to stay as evolution is a slow process according to Darwinian Theory.
It is a continuous process, inch by inch, edge by edge. It cannot be done in a day.
Give yourself some leeway to grow and learn in this journey. Making money cannot be rushed.
This is because there are other more important things that will make or break you as a person.
I actually found out by personal experience that a better personhood does make a better trader.
This is because having a clean psychological slate is one of the strongest edges ever.
It will also reveal to your on a personal level, why do you want to so badly succeed in a career where 95% fail, to be that 5% predator.
I am not fully there yet, but I know I am already getting there
The journey is tough and has taught me more than just about trading, but about life itself.
I am happier today not because of the money and the potential I have, but it is because I found a reason to live and be happy.
Trading taught me how to question everything. The predator questions everything, assumes nothing.

I like your way ot thinking. I need to read some more from you. ♦

Thank you... =)

PTe and MTF

According to PTe on EURJPY, there are 3 key findings that assisted me.
I am sorry I can't reveal the full scope of the research here, but only the results.
Price structure in relative to time is most efficient on M15 80% to 90% of the time.
Price structure in relative to time hits its 1st strong level of decay on H2 80% to 90% of the time.
Price structure in relative to time hits its the next strong level of decay on D2 60% to 80% of the time.
There are many various levels of decay between H2 and D2, but these levels are considered medium to weak e.g. giving results of 50% or less.
That tells me a lot of things. It means that if one wants to be efficient in trading, higher timeframes beyond D2 is unnecessary.
I think this is good news, because it means that we only need to know what has happened the last 48 hours to make a decision to catch a decent number of pips within 15 mins to 2 hours.
This also means that on the chart, we need monitor the last 2 D1 candles + the last 24 H2 candles + the last 16 M15 candles.
You will be able to see the most immediate support and resistance levels that you must respect in order to make trading decisions.
Do you see the MTF structure being established by PTe and not some arbitrary choice or lack of research and justification?
The last 2 D1 candles, framed as itself (higher TF)
The last 24 H2 candles, framed as D2 (trader's TF)
The last 16 M15 candles, framed as H2 (lower TF)
I think this is fair enough, for both the market and the trader.
If you are in a losing position beyond 2 days, chances that are it is not good for your personal psychology and the market isn't quite going to return to your opening position.
I don't know how the results are for other pairs. All I know is that my work will automatically calculate these values for me for me to decide if the market structure according to PTe has shifted.
6 months worth of data is more than enough to determine if a consistent enough structure exists or not, and I can vouch that PTe says that it does.
Someone asked me about more specific details of PTe, I shall just copy and paste parts of it here from a Skype conversation.
Remember the hard work is on your own and of your own.
No one will feed you and no one owes you anything.
I am not going to release anything else other than key concepts that you can take away and put into your own use.
Think about it carefully.
I won't explain about PTe any further after this post.

I don't think this is the best way to get answers of MTF, but what choice do I have?
I am not satisfied with many answers I've looked into from others.
If anyone has a better idea, chip in!
If it doesn't make sense to you and you don't like it, speak up.
If it doesn't make sense to you and you don't understand it, read it again and also do your own calculations.
I had searched for an answer to MTF timeframes selection and I believe this is my best possible answer.
Since every instrument is different, I believe the MTF timeframes selection are going to be different.
This work IMO tackles the root problem of all the problems we see as traders using charts.
This is also why I refuse to use the same strategy for different instruments.
This is also why I decided to just stick to EURJPY and nothing else.
Focus is key, and it does help.
There are plenty of trading opportunities in terms of PTe on EURJPY for a long time, so why should I change?
The only day I would change instrument is when PTe says that efficient movement and daily ranges have dried up.
Its no big matter and I accept that interest and money has shifted away from it.
It means another pair has the same interest and money, but also losers and winners I am seeking for.
Presence of losers and winners fuel the market, making it extremely liquid.
One can say that PTe measures the liquidity and looks for price structure on MTF terms.

Life and Death

Recently, there are a couple of notable deaths in my life.
These are people who mattered in my life and I am indeed sad that they passed away.
However, it has also increased my intensity to succeed in the market more.
I've realized that I have to live for myself and not for others.
I can't please everyone, and I already know that well, given the hardships I've gone though a lot.
I think its not easy to live for myself in such a way that others can benefit, but I think it can be done.
Thats part and parcel why I share a small part of my work.
I've also questioned if I should reveal more and decided that some of it remains for me and me only.
Perhaps that will change in future, when its time for me to leave a true legacy.
But I believe in doing it already now anyway, at least a small part of it, since we will never know what can happen tomorrow.
The reality of death can be scary, and we are living in a very unique time of humankind.
I believe we should not let the issue of money blind us from this.
We are all very much mortal.
I do know that yes, there are people who are living below the poverty line.
I won't recommend trading as a job for them, but I would encourage them to try their best.
I do not believe in 'social responsibility', but in 'human responsibility'.
Try to make the best out of your life and regret less.
I don't regret what I've done so far in my life, regardless if it is 'fruitful' or not.
Economic realities might measure parts of it as 'bad decisions', but I don't see that we need to live purely on that motion.
It doesn't mean I don't know what it means to be poor, I was poor once.
I only wanted to make the best out of my limited time here on earth.
Money is at best a tool to help me get there, and I've considered strongly trading as one of the vehicles.
I have my own problems in life that money might not be necessarily be able to solve.
On the surface, it does appear money can solve everything, including my personal issues.
Let me assure you, it doesn't, and that includes death.
I have enough experience to tell anyone that money cannot solve my problems.
I admit that although it can lighten the load a fair bit, it still can never get to the root of the problem.
To me, thats what's life about, to make do with what is available to me.
I think I am already very fortunate, compared to 7 billion people in the world.
What kind of odds is that, thats partially why I also refused to believe in any religion anymore, no offense but thats my choice.
I've given up on the 'what if' questions in my head and decided that I would 'just do it', with whatever I have now.
That doesn't mean I am reckless, it means I am much more rational and way more committed in personal decisions.
If one decides that living honestly and not lying to oneself is important, then trading as a career isn't difficult.
I am also sure for the 2 people who had passed on in my life would say the same thing.
One of them is a statesman, the other is a professional sports-better.
These are 2 careers that have their own set of difficulties and problems, but doesn't every career has its own quirks as well?
I am confident that both of them passed on without much personal regrets.
Carpe Diem, Seize the Day. Make your Lives Extraordinary (Dead Poets Society)

Hi Rel,
my deep sympathy for the events.

I have a question because I can't follow your thoughts logically:

I understandy that you divide M5 value by 5 time expected factor.
But why are you dividing M10 value by 2 time expected factor? Shouldn't you divide it by 10 time expected factor, because M10 is expected to be 10 times as fast as M1? You take M5 as reference with 10/5=2, but I think taking M1 as example makes more sense.

Just an example, why your remarks don't make sense to me:
Suppose we have timeframe M5, M8 and M10.
M5 = 2 pips per min / 5 time expected factor = 0.4 PTe
M8 = 2 pips per min / 1.6 time expected factor = 1.33 PTe (8/5 = 1.6)
M10 = 2 pips per min / 1.25 time expected factor = 1.6 PTe (10/8=1.25)

This example illustrates that by randomly defining a new time frame, here M8, the PTe values change. If you divide it by the M1 reference, it won't get changed by M8.
Am I misunderstanding it?

Thanks and regards,
feuerTrader

Hi feuer,

Thank you for your comments. I appreciate it.

Yes I understand about the M1 reference range and the 'random defining a new timeframe'.

The idea is not to get PTe values of each timeframe as individual results. If we do this, IMO its too one dimensional and its not easy to link up the results together into one big picture.

The expected factor helps to get relative and normalized PTe values for 'all' timeframes, like a chain. I want to link up the timeframes this way to see if there is an overall time/price structure within this chain, that each timeframe has a expectant based relationship with the lower and higher timeframes. The overall structure is too important; price and time cannot exist without other relative upper and lower dimensions of price and time.

This is overall an attempt to answer MTF relationships. I do not know of any other way to try, unless someone else gets more creative.

When you start plotting all the values on an XY chart, you should see something. You will be able to see which timeframes are the 'weak links' or 'strong links'. Once you have your results, plot a custom timeframe on your charting platform, and observe the selected timeframe. Note the volatility and think in terms of how this timeframe's volatility is relative to upper and lower timeframes. The PTe results will give you some level of expectancy, since now there's a basic model of the time/price volatility structure.

Thanks for your fast answer, Rel!
Currently making my thoughts and playing around with combining the numbers, but it seems to be possible to derive some facts out of the data ...

Finally optimized my PTe indicator on a live basis, updating itself every 1 min. It would not lag and doesn't require MT4 custom charts, which are crumblesome to work with. Now I get to see these MTF relationships much more clearly, rather than working off excel.
http://i59.tinypic.com/1zebk2c.png

FYI Major Move Life Cycle is now at version 9, currently evaluating the results via Evaluation v3.

Something that I don't understand.
Why are people making up trading rules without solid evidence and research?
Perhaps I would want to explain this again.
Lets use the classic 1-2-3 swing pattern.
Why looking for end of retracement swings is much easier than end of impulse swings?
There are many problems when trying to tackle this problem

1-Not all will survive to find accuracy and results
This is the most important and requires a shift in mentality.
We live in the day and age where lack of accuracy is not an excuse, because accuracy determines results.
This is because the data and technology we have compared 30 years ago vs today are worlds apart.
I still do not understand why and how people could find success eyeballing charts and saying they saw a 1-2-3.
Perhaps that is considered 'magical' 30 years ago when TA/WA is still very young, or even hundreds of years ago when Dow and Elliot made their respective discoveries for TA/WA.
I have very little patience with old school traders. I don't disrespect them but I think being new school, trading rules should follow evidence and research as well.
I agree experience plays a part and that's all old schoolers have, but if we have technology, why not try?
How can not we make almost no progress in attempting to read these swings in a non-subjective manner?
I am speaking in terms of exploring so many aspects and perspectives to TA/WA and only a few came close to quantifying swings.
I believe today we are on much better terms of leveraging available technology to achieve both accuracy and results.


2-Not all charts are made equal
This is why I invented PTe, in order to best determine which is the best possible chart(s) to apply my swing work onto.


3-Not all swing indicators are made equal
Lets say there are a few who came close to quantifying swings, yet I see more problems that require solving.
Most swing indicators use a combination of any of the following :
a-time rolling block
b-price rolling block
c-trigger time
d-trigger price
...to determine how a swing is drawn. I've tried so many combinations of these 4 and came to the conclusion that trigger price is the most important.


4-When #2 and #3 are properly optimized and combined, then we can start talking
Because then proper statistical analysis can be used to determine if certain things work and how well e.g. 50-61.8 retracement levels for 2nd swing
in a 1-2-3 pattern, regardless if 3rd swing is failed or success as impulse.
In this case, I am looking at the behaviour of the wick at the end of the 2nd leg, relative to the swing ratio between 1 and 2.
Length of 2a leg = start of swing to end of swing
Length of 2b leg = start of swing to end of candle close (if down candle) OR end of candle open (if up candle)
By experience and observation I had seen this happen a lot but I wanted clear cut numbers to tell me if I am seeing things clearly or not.
http://i59.tinypic.com/2dm6mgk.png
http://i57.tinypic.com/bec5zb.png

MMLCv9

Nowadays I really get to enjoy trading swings with by the pip accuracy. There's still a little more finetuning to be done e.g. implementing M5 to finetune entries.

Patterns are everywhere and they do repeat a lot. Use them.

There are a couple of guidelines that hasn't change... (you can refer to my previous threads to see why)
1-Always look for a way to analyse D1 data in such a way that you have a good idea where today's low and high are going to be at. Once you get there, half of your battle has been won.
2-Don't go overboard with MTF, even though it is important. Your brain can only handle so much.

http://i58.tinypic.com/1zn65h4.png

Enhanced v9 further after careful thought..... but now with swing 2 'solved' and guided with automation, now its really all about getting end of swing 3 correct. So far I have to do it manually.

http://i59.tinypic.com/21kjqsx.png

Nice pic. Looking a little like something someone else is working on.

Anyone wants to bet?

http://i59.tinypic.com/2mzfxqx.png

Short to 135.30ish