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Technical Analysis Fallacy

  • #52,381
  • Jun 2, 2015 8:51am Jun 2, 2015 8:51am
Quoting fti
https://www.youtube.com/watch?v=xxjGzH1shyA
Oh Her Maj won't like that.......
check out the terrain - follow never lead
  • #52,382
  • Jun 4, 2015 4:16am Jun 4, 2015 4:16am
Hope all are well and enjoying some sunshine (well from the window anyways).

I would like to ask for some help with a situation of which I am quite unclear:

If you are against higher time frame trend with more than your scout in trouble, what is best approach:

  1. is it to close down all in loss then flip very much stronger (if you can early enough on) or
  2. close down some (limiting losses to be recovered later) and let smaller nos bleed then rescue but even stronger to recover losses from closed and bleeding trades or
  3. let all bleed & rescue with HUGE force

Today EUR is good example (I went long with H1 as clues were given in the feel... knew where market was somehow) but if you had gone short in error with big nos (not sure how you got the big nos in but just say you had) what is best approach? If you close down your big no of troops you limit losses and nos of troops required to rescue those losses later whether by flip or rescue - I guess if you let 1 or 2 bleed then it keeps you keen for the rescue or even flip. If you leave out all troops to bleed then you would need enormous force to rescue at wave F.

Any guidance on best approach would be most appreciated as I am trying to be tidier in my trade management and I am never sure what to do when in that situation... I have tried a few things and my favoured approach is close loss then flip stronger if can early enough OR close bigs guns in loss (to limit overall losses) and rescue even bigger later to recover all losses.

Regards

Alex

check out the terrain - follow never lead
  • #52,383
  • Jun 4, 2015 6:27am Jun 4, 2015 6:27am
Hi Alex

Every time you find yourself in this position you are presented with a different set of circumstances and risks to take into account, there is no do this if that happens. So in this case things to consider that may be of risk to your account are.

NFP tomorrow do you want to get dragged into that?
Do you have the funds for this to move much further against you?
Do you have the emotional control to be able to read/feel the market to take advantage of the rescue opportunity when it presents itself?
There is usd news soon do you want to hold through that?
What if the Greece thing produces some unexpected news release?
Are we now in/at/near a place on the charts/market that may see an opportunity for you to rescue?
Where may be the next opportunity, usually the swing highs and lows on the higher time frame, big round numbers etc?

There are more things but I think you get the idea, it is a case by case assessment that you have to do on the market, yourself and exposure of your account.
As say your options are many as you listed and there are other options using other pairs and crosses that as you progress on your learning curve you start to explore, these are numerous in combination as stated in AOW, so impossible to explain in any detail that would be helpful.

the basic thing is what is my risk here and can i afford to continue.

Regards

Phil.
-be careful about what you allow to be put in your mind-
  • #52,384
  • Jun 4, 2015 7:02am Jun 4, 2015 7:02am
Quoting phil13
Hi Alex Every time you find yourself in this position you are presented with a different set of circumstances and risks to take into account, there is no do this if that happens. ... the basic thing is what is my risk here and can i afford to continue. Regards Phil.
Hi - thank you... as I said I am not in need of rescue here (really the market gave such good clues for that long... they do not look like much but the turning candles (do not look like much) inside them showed clear strength at the right time- you could feel them there at the time but cannot see it in arrears apart from obvious ones)... but I have been wondering for some time now is there a more advisable approach over another - I have never had to rescue huge nos as yet but I guess I need to think about what would be required and I must have my cut-off risk in mind so maybe the answer is in that...... I will think about it some more. I guess I need more experience too of different situations/nos - I have not really had huge losses but I can see that trading bigger guns means bigger rescue nos and maybe I just need to think about that. I do use the sorts of things you say: highs/lows/BRN/news/spies/RoK/time of day etc for rescue when needed. I can see how rescue could run away with you once you move to larger nos - I am still quite small in nos and starting to think bigger.

Thank you for your help.... very much appreciated and I shall need to give this some more thought. I need to think about how you worded your answer and what it means to me. Maybe there is no best way .... I just thought that if you close down your big losing trades then you would need less nos to recover the loss (I have never actually done this tho') if price keeps running against you. I hate losing and so try to always recover everything when I can (if feel is bad tho' leave it for now).

Thanks again.... will think about this some more.
check out the terrain - follow never lead
  • #52,385
  • Jun 4, 2015 7:19am Jun 4, 2015 7:19am
Hi Alex

so long as you are using the correct size trades for the amount you have in your account, the numbers will work whether you have a 1000 or 100,000 account, it is not size that kills you it is overexposure to risk.

you should alway trade your account with the risk you see in front of you now.

i personally used to practise for a long time the recovery skill, i used demo to do this, i would put the same amount of money in the demo as i would be trading and play with the sizes, to do this i would take two trades out in opposite directions, when the market moved (i would let it go 500-1000pips) i would cash in the winning side, mark the amount in my account and my mission then was to recover by any means without letting my account go below the level it was at.

the reason i choose up to 1000pips is because look at the runs that could go against you, before you may get chance to recover some/all.

regards

Phil.
-be careful about what you allow to be put in your mind-
  • #52,386
  • Jun 4, 2015 7:27am Jun 4, 2015 7:27am
Quoting phil13
....... i personally used to practise for a long time the recovery skill, i used demo to do this, i would put the same amount of money in the demo as i would be trading and play with the sizes, to do this i would take two trades out in opposite directions, when the market moved (i would let it go 500-1000pips) i would cash in the winning side, mark the amount in my account and my mission then was to recover by any means without letting my account go below the level it was at. the reason i choose up to 1000pips is because look at the runs that could...

Hi... that is a really good idea... thanks...... I did wonder before whether I should just try lots of rescues (I did try some before to get feel of rescue) but I did not want to train myself mentally to take bad trades as I think attacking is the harder skill in a way. But maybe now I know/feel so much more it would be good thing to try to get feel for nos in lots of different situations. I do quite like that idea...... really great.. thanks.


Thanks... lovin the sunshine....

Alex
check out the terrain - follow never lead
  • #52,387
  • Jun 4, 2015 7:42am Jun 4, 2015 7:42am
hahaha hahahaha
Inserted Video


Inserted Video
  • #52,388
  • Jun 4, 2015 8:22am Jun 4, 2015 8:22am
Hi Alex

A few things in AOW that relate to what we are speaking about, there is more this should help you though.

Regards

Phil.


AOW…….

24. Now the general who wins a battle makes many calculations in his temple
before the battle is fought. The general who loses a battle makes but few
calculations beforehand. Thus do many calculations lead to victory, and
few calculations to defeat: how much more no calculation at all! It is by
attention to this point that I can foresee who is likely to win or lose.

7. It is only one who is thoroughly acquainted with the evils of war that can
thoroughly understand the profitable way of carrying it on.

7. With his forces intact he will dispute the mastery of the Empire, and thus,
without losing a man, his triumph will be complete. This is the method of
attacking by stratagem.

15. Hence the saying: If you know the enemy and know yourself, you need
not fear the result of a hundred battles. If you know yourself but not the
enemy, for every victory gained you will also suffer a defeat. If you know
neither the enemy nor yourself, you will succumb in every battle.

1. Sun Tzu said: The good fighters of old first put themselves beyond the
possibility of defeat, and then waited for an opportunity of defeating the
enemy.

2. To secure ourselves against defeat lies in our own hands, but the opportunity
of defeating the enemy is provided by the enemy himself.

3. Thus the good fighter is able to secure himself against defeat, but cannot
make certain of defeating the enemy.

5. Security against defeat implies defensive tactics; ability to defeat the
enemy means taking the offensive.

7. The general who is skilled in defense hides in the most secret recesses of
the earth; he who is skilled in attack flashes forth from the topmost heights
of heaven. Thus on the one hand we have ability to protect ourselves; on
the other, a victory that is complete.

14. Hence the skillful fighter puts himself into a position which makes defeat
impossible, and does not miss the moment for defeating the enemy.
15. Thus it is that in war the victorious strategist only seeks battle after the
victory has been won, whereas he who is destined to defeat first fights
and afterwards looks for victory.

1. Sun Tzu said: The control of a large force is the same principle as the
control of a few men: it is merely a question of dividing up their numbers.

2. Fighting with a large army under your command is nowise different from
fighting with a small one: it is merely a question of instituting signs and
signals.

3. To ensure that your whole host may withstand the brunt of the enemy’s
attack and remain unshaken– this is effected by maneuvers direct and
indirect.
-be careful about what you allow to be put in your mind-
  • #52,389
  • Jun 4, 2015 8:31am Jun 4, 2015 8:31am
Quoting fti
Any person with a good brain on their shoulders, will ultimate come to the realisation that these are just tools. Tools that are built on historical and lagging databases. Moreover the rigidity of the parameters used in the studies imposes rigid responses to changing market conditions. Have we forgotten that the market is a live beast that learns and adapts to trader behaviours?

Many have forgotten that the market is the sum total of the behaviour of the participants engaged in the market place. These tools are used for measuring the markets health,...

I couldn't agree with you more, on your opening thesis. It adds substantial credibility, you being "credentialed" in a publically recognized formal study program and desgination. I have had so many similar conversations and conclusion presented, only to let that discussion differentiate the "maturity factor" of those traders in the discussion. There are other boards and websites, where experienced traders have expressed the same conclusions, only to be heckled and banned from those (childish) forums, because they haven't experienced same conclusion, or risen to that level of maturity.

Essentially, anything taking a smoothed average must wait, and that wait classifies it as lagging; must wait until the period designated is fulfilled, whether static (SMA - simple moving average) or rolling (EMA - exponential moving averages) before it can finish its calculations, and then submit its summation for display on any chart.

Go one step further and consider the muffled result of renko, and other complex bar-types on charts. Many times the newer improved renko bar types either are geared for 1 tick increments (hence reducing its original intent of bunching larger tick movements into singular bars) or including tails (as in OHLC bars and Candlestick bars). These new and improved car types further push back the "lag factor", and try to then remove the "lag factor" by making the interval of the renkos shorter and more responsive than initially designed; all to address your initial premise that T/A (technical analysis) for the most part has a lag factor that limits its "immediate" usefulness in live trading. T/A is excellent for seeing in a big picture what has happened, and predictively suggest (based on historical experiences) what may happen.

Live trading continues to be one of the most dynamic endeavours that humans can engage in.

Let the discussions begin, no continue, and I hope to share in them foing fwd.
  • #52,390
  • Jun 4, 2015 10:59am Jun 4, 2015 10:59am
Quoting phil13
Hi Alex A few things in AOW ......
Hi

Thanks for reminder... I do not refer back to AOW enough..... so I will take time to think these through.......I am still pondering on my view..... after having a break I thought it would take me some time to get back into things but it seems not... and I seem to progress even more..... still so much more to learn.... never stops and why should it and I MUST refer back to AOW more (note to me).


When I think back to where I started with trading to now... wow what a journey and I am glad sth brought me to this thread... I am so grateful for it and to FTI and you and others. I seem to have taken a few steps to get here but they all add up now. Ain't life great especially when the sun shines.


Regards

Alex
check out the terrain - follow never lead
  • #52,391
  • Jun 4, 2015 11:08am Jun 4, 2015 11:08am
Quoting Meiserly
{quote} I have had so many similar conversations and conclusion presented, only to let that discussion differentiate the "maturity factor" of those traders in the discussion. There are other boards and websites, where experienced traders have expressed the same conclusions, only to be heckled and banned from those (childish) forums, because they haven't experienced same conclusion, or risen to that level of maturity.
If you are heckled and attacked when you say sth, maybe it is because you are correct and they do not like it... never stifle fair debate.

Regards
check out the terrain - follow never lead
  • #52,392
  • Jun 4, 2015 11:18am Jun 4, 2015 11:18am
my homeland Pakistan
http://www.dawnnews.tv/news/1022077
don't predict direction, but dance with flow of water
  • #52,393
  • Jun 5, 2015 3:18am Jun 5, 2015 3:18am
Quoting priceaction1
my homeland Pakistan http://www.dawnnews.tv/news/1022077

What wonderful photographs
check out the terrain - follow never lead
  • #52,394
  • Jun 5, 2015 4:04am Jun 5, 2015 4:04am
Quoting alexandria
{quote} What wonderful photographs
thank you
don't predict direction, but dance with flow of water
  • #52,395
  • Jun 5, 2015 6:56am Jun 5, 2015 6:56am
Quoting priceaction1
my homeland Pakistan http://www.dawnnews.tv/news/1022077
ahhh yes beautiful.
lets pray the masters of the universe not bring their bulldozers moves in.
rent also cannot.

regards
  • #52,396
  • Edited 7:37am Jun 5, 2015 7:12am | Edited 7:37am
Someone asked some questions.
Here's the reply.

Hi Fti,

Thank you for the information that you've provided. I have to say, there is a lot of work here. I still have 8 years to read!! I have been reading for nearly 3 days!

I have just completed the part were you discuss MM and snowballing. I call this scaling in and out, I assume from my understanding, it is the same thing.

I would like to check my understanding with you, I hope you don't mind. ( I am yet to find out if you go into the art of war).

Snowballing on a winning trade is simply adding to a position?

Snowballing on a losing trade; this one is harder for me to understand. if I use an example it may help me articulate.

If I had a short position on an hourly chart and the market moved against me, I would look at a 4 hourly chart to see if my analysis was still correct, I would then ignore the 1H chart and trade the 4H instead?

What I don't understand is, If I am using the 4H chart, why would I add to the position?

I hope you don't mind me emailing you directly, I appreciate for you, this is 8 years ago. for me this is here and now..

Thank you for your time

Scaling in out of trades is just a tool to use to manage, thats why its called MM (money management) . Money management means managing resources when dealing with the situations. Ones ability stay safe distance from the cliff. Normally it depends on the skills that the user has developed. Is ok take an adventure sometimes when resources are plentiful. Otherwise safety first.

sunzi bing fa is documents in public domain.
Is not difficult to find it.
I will not discuss that document because it means different things to people of different experience and skills sets.
Inserted Video


Why would you add to the position?
Simply the answer is that you not want trade against your committed positions.
So if you married or engaged, you may sometimes find you in a disadvantaged position.
You can either divorce the position. Which would mean lots pain. or you will need have lots patience and wait for right time do the enjoyable thingy.

If you on 4H , if you ignore the 1H, then what do you do the many hours between?

Inserted Video


regards
  • #52,397
  • Jun 5, 2015 7:18am Jun 5, 2015 7:18am
Quoting fti
Someone asked some questions. Here's the reply. Hi Fti, Thank you for the information that you've provided. I have to say, there is a lot of work here. I still have 8 years to read!! I have been reading for nearly 3 days! I have just completed the part were you discuss MM and snowballing. I call this scaling in and out, I assume from my understanding, it is the same thing. I would like to check my understanding with you, I hope you don't mind. ( I am yet to find out if you go into the art of war). Snowballing on a winning trade is simply adding...

haha!

That was me

My eyes bleed from so much reading
  • #52,398
  • Jun 5, 2015 7:40am Jun 5, 2015 7:40am
Quoting Talzus
{quote} haha! That was me My eyes bleed from so much reading
ya i think my fingers also shorter from years of too much typing.
try not to rush. You will not understand or be able internalise what is read until you experienced it.
To know is good.
To understand is better.
But nothing beats ability DO/impliment.


regards
  • #52,399
  • Jun 5, 2015 8:05am Jun 5, 2015 8:05am
Quoting fti
{quote} ahhh yes beautiful. lets pray the masters of the universe not bring their bulldozers moves in. rent also cannot. regards
Hi chief only for your eyes!!
http://www.dawnnews.tv/news/1021007/...hdi-bukhari-bm
http://www.dawnnews.tv/news/1020508/...hdi-bukhari-bm
http://www.dawnnews.tv/news/1020162/...hdi-bukhari-bm
http://www.dawnnews.tv/news/1019794/...hdi-bukhari-bm
http://www.dawnnews.tv/news/1019255/...hdi-bukhari-bm
http://www.dawnnews.tv/news/1018817/...hdi-bukhari-bm
don't predict direction, but dance with flow of water
  • #52,400
  • Jun 5, 2015 8:06am Jun 5, 2015 8:06am
Quoting fti
{quote} ya i think my fingers also shorter from years of too much typing. try not to rush. You will not understand or be able internalise what is read until you experienced it. To know is good. To understand is better. But nothing beats ability DO/impliment....
Indeed. Once I have read it all, I will go back and re read.I think I am just scratching the surface with the lessons yiu have given. I'm sure they will provide insight after several re reads at different levels, akin to your stories.Touching on the question I sent you; I don't understand why you would increase position size on a losing trade, maybe if you thought it would start going back the way you thought to begin with, then your getting a better entry. Outside of that have a miss understood?I am at the bit where you are leaving for Christmas holiday. I look forward to reading more...
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