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Technical Analysis Fallacy

  • #53,221
  • Nov 19, 2015 4:53am Nov 19, 2015 4:53am
Quoting alexandria
{quote} Thanks .... I just need to get back to trader mind ... not hospital mind... although come to think of it I think they may be same mindset.... oh well.......
Well, u could demo trade to feel get the feel back first, this allows for mistakes while getting back in the game with minimal damage
  • #53,222
  • Nov 19, 2015 5:03am Nov 19, 2015 5:03am
Quoting CookieMonsta
{quote} Well, u could demo trade to feel get the feel back first, this allows for mistakes while getting back in the game with minimal damage
Of course ... thank you........


.....May I ask how do you learn to attack better..... I was good at that when I focused on it but not so good now not sure why....
check out the terrain - follow never lead
  • #53,223
  • Edited 7:04am Nov 19, 2015 5:53am | Edited 7:04am
Quoting alexandria
{quote} Of course ... thank you........ .....May I ask how do you learn to attack better..... I was good at that when I focused on it but not so good now not sure why....
Hi, first and foremost, I would say my management method diverges from fti's so u have to decide if u want to diverge from it or not.

The reason why it diverges is because I can only afford 4 hours to trade a day, hence, I rescue sparingly, I close all positions at the end of the day, even losses, but they are always within easy rescue limits. So first off, let me say that the goal is to use a very small pullbacks to pyramid into a strong r&r, using a volatility leg range of 40 to 50 pips, 1 to 10 r&r is possible quite easily if you do it properly. Also, I typically trade only trends, and might scalp abit only when the markets are ranging.

So this strong r&r serves as a way to recover my book from losses easily, 9 mistakes and 1 good trade recovers all of them, using a log form money management. So suppose my scout is riding 10pips profit, after a v shape formation, like the one leighww has in one of her screen shots. I use the v shaped pull backs with higher high higher low to buy into them, so my money management is to add and attack to keep the low of the v shape formation pegged to 1x loss, so if it pushes well, its delta is strong in our favour, and if it push up ur in the money easily, and can buy more, I use 2x usually coz that's what the volatility supports for my paid, but I might pyramid lesser than 1x or go more than 3x if the volatility supports it. So the attack function size has inherent volatility embedded in it, so it becomes adaptive. So if the price push up and break back past the low of the v shape formation, I would exit, maybe at profits or some loss dependent on how u want to skew the net px, since inside the px to the exact low of the v shape formation, it may be break even, or a small loss. Because price should not act this way, it may mean trend change, hence I'm out and I slowly watch the markets again.

One thing is, ur ability to spot start of trends must be at least be good, and u pyramid the confirmation of trends aggressively while managing the net px, near the v shape low or high. So I would say this is a pure attack strategy meant for leveraged attacks riding foreign caps on initial scout, though to me scout = attack mode already. So try drawing 3 to 4 pull back and see how the px skews as u pyramid, and when it hits new high, take some in, then when it pullback, attack more. So I kind of do alot of attack these days, but I might totally not do trades if days like Tuesday happen with very congestive and ugly price action happen, I just watch the markets and then not trade, one point I need to make is ur market read must be a momentum trend market, otherwise it becomes very ineffective, so this method is what i call the 1:X attack method, because it factors the volatility into the position size, and if the trend looks to turn we should have enough time to identify and exit with maybe some profits to the book or at least minimal loss which can be easily recovered.

however, the way to scale out positions is still similar.

One thing i have to warn you though, is that this method is incompatible with fti's mo, because of the difference in accounting for the volatility and its management, if you switch from this mo to fti's mo for rescue half way through a trade, you might end up being over leveraged, and your account over exposed.

note: i would say i kind of diverged from this thread's mo already and my style is more similar to gann's so, hopefully im not messing up this thread.
  • #53,224
  • Nov 19, 2015 7:18am Nov 19, 2015 7:18am
Quoting CookieMonsta
{quote} Well, suits u, just asking a question, don't know why ur so defensive. I trade the new York morning only, there's ways to trade it with high r&r, but I guess u should trade ur own way, sry for intruding, good day to u.
Hi CookieMonsta,

No Problem. It really helps and purpose of visiting this thread again and again is achieved. I will look into this and include attacks too in my method.
  • #53,225
  • Nov 19, 2015 7:29am Nov 19, 2015 7:29am
Quoting CookieMonsta
{quote} Hi, first and foremost, I would say my management method diverges from fti's so u have to decide if u want to diverge from it or not. The reason why it diverges is because I can only afford 4 hours to trade a day, hence, I rescue sparingly, I close all positions at the end of the day, even losses, but they are always within easy rescue limits. So first off, let me say that the goal is to use a very small pullbacks to pyramid into a strong r&r, using a volatility leg range of 40 to 50 pips, 1 to 10 r&r is possible quite easily if you do it...
Brokers
Thanks for explaining your method... . it will take me some time to fully appreciate what you have said.... especially re FTI.... I really thank you for your reply.

You are riding a trend with strong waves and getting in on each new wave until it looks like it could be over....which is what I would do to a point although I am riding individual waves I guess. I am never sure if PB is going to be complex PB or a single wave and then run what is best way to attack simple PB and run - complex PBs give more opps tp enter.

Alex
check out the terrain - follow never lead
  • #53,226
  • Edited 9:05am Nov 19, 2015 7:50am | Edited 9:05am
Quoting alexandria
{quote} Thanks for explaining your method... and differences .... it will take me some time to fully appreciate what you have said.... especially re FTI.... I really thank you for your reply. Alex
hi, glad to help.

also just to elaborate about the log form mm, what it means is that, for each trade, if i allocate 1% as my cut loss level, when i cut losses, i would be at 99%.
so if i cut losses a 2nd time, it becomes 98.01% and so on, meaning everytime i take a loss, my next trade will have a smaller cut loss at 1% of the current account size. so it scales well for retail traders so as not to experience the risk of ruin as easily, and can recover the book easier by using leverage on the foreign capital from the scout to skew prices, and manage in relation to the volatility read. so with a robust r&r from properly attacking, a 1:10 r&r is possible, and can be achieved from a 40-50pip move, a 1:6 or 1:7 can be achieved from a 30pip move as well. so sometimes you happen to get into really good moves like a strong trend going into 100pips or more, you can easily get your account to 20x to 30x return on risk, but thats quite rare unless there are fundamental backdrops supporting the long on 1 side of the currency and short on the other side of the currency.

an example is if i have $1000 account size, my first trade's cut loss limit is $10, so if i cut at that, im left with $990, so my next trade's cut loss limit is $9.90, so my contract sizes factoring in the volatility becomes smaller as well, so say my first scout is 0.1lot, i would vary to 0.099 next, if you are using oanda fxtrade they calculate in units so fractionalizing below 0.01 lot is possible, whereas metatrader4 does not allow that.

so sometimes i rescue and the market moves in my direction and breaks a new high, i would switch to attack mo and use the above mentioned method, because if the rescue is successful and we break a new high, it is very possible the pull back can give rise to a 2nd leg, which warrants more size.

about the complex pullback and simple pullback, sometimes checking for relative strength in crosses and related pairs like eurusd vs usdchf vs eurgbp vs usdgbp, a interplay between these pairs can sometimes produce very complex pullbacks which extend multiple legs, so checking them out would be good, which is part of the 3 kingdoms.
  • #53,227
  • Edited 8:46am Nov 19, 2015 8:07am | Edited 8:46am
Quoting alexandria
{quote} Brokers Thanks for explaining your method... . it will take me some time to fully appreciate what you have said.... especially re FTI.... I really thank you for your reply. You are riding a trend with strong waves and getting in on each new wave until it looks like it could be over....which is what I would do to a point although I am riding individual waves I guess. I am never sure if PB is going to be complex PB or a single wave and then run what is best way to attack simple PB and run...
yes, that is exactly right, coupled with the mm used here, because im using leverage, so the mm's expansion rate is much more linear compared to fti's mm skew.
and also that is why the mm is 1:X to account for trend ride tolerance, because the trick is that, you can adjust to how much lower you want your net px to be so your tolerance level will be higher or lower to account for identification of a pull back failure transforming into a complete reversal, the technique overall is essentially to sense good support or resistance, and skew price correctly so you can exit with little to no harm to your book if the market does not act right, and recovery over multiple losses is easily done, such that 1 good trade recovers afew mistakes, so that your win loss ratio can handle runs of losses, and if your market read is good, you end up increasing your account drastically.

so this mo assumes you are retail and nobody is backing you with extra money if you lose money on trades, so recovery of account and its money management when you have a series of losses is most important, and also it is optimised for growing size while exposing very little, by the fact that using a logarithmic money management across trades this way, helps to linearize the risk of ruin by alot, and gives you more of an edge to survive when the markets are not performing.

1 more skillset that is complementary to this is scalping, to scalp small pips when the markets are not moving well, and also the scalping mo helps your entry point to be more fine tuned, and when the market trends, you go in force and attack.

one thing about this is that, the scout itself does not need to be deployed in a trending market, it can be a head and shoulder's lower high as a short, only the subsequent attacks are deployed when the market trends and pullback, or you could use multiple timeframes to trade it, like 30mins tf trend while using 5min tf as entry management.

one way to benchmark volatility is that each 25pip is 1 handle, so 50 pips is 2 handles and so on, they act like very minor pivot points similar in theory to the 100pip pivots, so typically, a 25 to 30pip small leg can give you quite a good r&r maybe 1:5 or so. i investigated this by looking at the 1ATR organized into a histogram of each 25pip bins, like less than 25pip is a bin, 25 to 50 pip is a bin and so on, seems like 20 to 25pip is the minimum ATR of a daily range even on very low ATR markets for the EURUSD, and with this supporting evidence, and the fact that 25-30 pips support 1:5 r&r, this way of attacking has a very robust edge.

finally, for this method, knowing when cut losses is very important and foundational to its proper usage.
  • #53,228
  • Nov 19, 2015 2:02pm Nov 19, 2015 2:02pm
Hi CookieMonsta,

I am able to understand. But 1:5 RR with 25-30 Pip range is unbelievable. Please support with a chart as it make us feel the power of attacks. Thanks and sorry for asking this and that.

Thanks once again.


Quoting CookieMonsta
{quote} yes, that is exactly right, coupled with the mm used here, because im using leverage, so the mm's expansion rate is much more linear compared to fti's mm skew. and also that is why the mm is 1:X to account for trend ride tolerance, because the trick is that, you can adjust to how much lower you want your net px to be so your tolerance level will be higher or lower to account for identification of a pull back failure transforming into a complete reversal, the technique overall is essentially to sense good support or resistance, and skew price...
  • #53,229
  • Nov 20, 2015 4:30am Nov 20, 2015 4:30am
Quoting CookieMonsta
{quote} hi, glad to help. also just to elaborate about the log form mm, what it means is that, for each trade, if i allocate 1% as my cut loss level, when i cut losses, i would be at 99%. so if i cut losses a 2nd time, it becomes 98.01% and so on, meaning everytime i take a loss, my next trade will have a smaller cut loss at 1% of the current account size. so it scales well for retail traders so as not to experience the risk of ruin as easily, and can recover the book easier by using leverage on the foreign capital from the scout to skew prices,...

Great explain... thanks so much for your time my friend.... reviewing it to get feel of it....

I always use RoK and am learning more about how to use it in the doing......

I think I do not need to worry about the simple PBs... as I just need to go with flow i.e. feel being aware of not getting in too late in a run ..... ideal to get in at start of wave when it starts running as this is where it is safest when riding a wave or if you do get in later then need to ride out the PB and wait until it turns again in my favour if it does and take evasive action if it turns.

Do you study patterns H&S etc?

Alex
check out the terrain - follow never lead
  • #53,230
  • Edited 4:50am Nov 20, 2015 4:37am | Edited 4:50am
Quoting pannet1
Hi CookieMonsta, I am able to understand. But 1:5 RR with 25-30 Pip range is unbelievable. Please support with a chart as it make us feel the power of attacks. Thanks and sorry for asking this and that. Thanks once again. {quote}
Hi.... the Monsta has been very generous indeed so we need to work it out for ourselves as this way you will "feel" it.... remember the moth story.

Have fun with it.... chart it yourself
check out the terrain - follow never lead
  • #53,231
  • Edited 6:00am Nov 20, 2015 5:16am | Edited 6:00am
Quoting alexandria
{quote} Great explain... thanks so much for your time my friend.... reviewing it to get feel of it.... I always use RoK and am learning more about how to use it in the doing...... I think I do not need to worry about the simple PBs... as I just need to go with flow i.e. feel being aware of not getting in too late in a run ..... ideal to get in at start of wave when it starts running as this is where it is safest...
Hi, Alex, I usually get in on the pb, or I give up the trade, but sometimes the complex pb do happen, so the foreign cap helps me sit through the pullback, but ideally I try to catch it within a reasonable pip range not too far from the v shape's low.

I don't really look at these as definite pattern, but these have important s&r points which probe the big boy's position, so I keep watch to see how these formation fail or hold, as a way to scout without a position, so I use 30min tf for formation, and 5min for pb at these critical areas, as an example. The h&s as an example, what would losing traders do? They short the neckline blindly, so big boys who are wrong going long, cause a pullback near neckline to go short, primarily mm, so I enter short.

However, if it breaks neckline but traps the short and develop into double bottom, I bid long instead, that's to use losing trader's strategy as a way to probe the market remotely with no exposure. So that's 1 way to use patterns, same for 3 kingdoms, how each pair move according to their relationship shows each currencies strength or even show impending huge moves. Especially when the 3 kingdoms moves from a in sync phase to an out of sync phase or an anti sync phase, and back, these change in correlations shows how big boys in the know are pricing certain fundamentals which may not have hit the wire yet or even sudden explosive news, or they might show how the big boys knowing the true fundamentals are strong, step in a buy a news bearish news move, causing the move to on a bearish number to only move a small amount and immediately reverse instead. This one fti has mentioned in some of his posts where he looks at economic numbers and comment about it, being insufficient and such, that allows a look into their thinking process, and how we can sync in with the big boys, by looking at the numbers and the subsequent price action to see if they are inline or diverging from expectations.

This i believe is what jesse livermore mentions in his book reminiscence of a stock operator, the 2 most powerful guides, first, general conditions, next, the losers. This i believe is the guide of the losers.
  • #53,232
  • Edited 6:17am Nov 20, 2015 6:00am | Edited 6:17am
Quoting CookieMonsta
{quote} Hi, Alex, I usually get in on the pb, or I give up the trade, but sometimes the complex pb do happen, so the foreign cap helps me sit through the pullback, but ideally I try to catch it within a reasonable pip range not too far from the v shape's low. I don't really look at these as definite pattern, but these have important s&r points which probe the big boy's position, so I keep watch to see how these formation fail or hold, as a way to scout without a position, so I use 30min tf for formation, and 5min for pb at these critical areas,...
......shorting neckline makes them rigid and sitting ducks potentially and very very nervous if they hold.... we are trying to follow big boys



cheers

Alex
check out the terrain - follow never lead
  • #53,233
  • Edited 6:32am Nov 20, 2015 6:01am | Edited 6:32am
Quoting alexandria
{quote} ......shorting neckline makes them rigid and sitting ducks potentially and very very nervous if they hold cheers Alex
yes, and that is why they become our scouts, without us spending a single penny.

same for indicators, essentially you are looking to metagame your opponent and think one step ahead of him/her.

that would be the reason why fti stress so much on how the patterns are continuously changing and to dance with it.
  • #53,234
  • Edited 10:41pm Nov 20, 2015 8:37am | Edited 10:41pm
Quoting pannet1
Hi CookieMonsta, I am able to understand. But 1:5 RR with 25-30 Pip range is unbelievable. Please support with a chart as it make us feel the power of attacks. Thanks and sorry for asking this and that. Thanks once again. {quote}
Attached Image (click to enlarge)
Click to Enlarge Name: Image1.jpeg Size: 317 KB

Attached Image (click to enlarge)
Click to Enlarge Name: Image2.jpeg Size: 74 KB

as requested, expected loss 1x, return 5x, volatility leg range, 20pips

blotter of trade taken

first trade on blotter is not in the picture so please ignore it. also, 2nd and last trade are actually the same one, i simply scaled them out slowly, thats all.

note: after every pyramid, cut loss is re-evaluated each time and the yellow box with the comments apply only to the first initial scout trade.

note: first trade's loss was because i wanted to enter the 1x which is the first trade on the picture, it is clear that the short position is absolutely wrong, as the move upwards felt impulsive, hence it was cut immediately, and switched over to a long.

note: the volatility read, we can only know after the fact, the reason i took all 4 out was because the market felt very very jittery like someone was establishing a very strong wall of sell orders up there, and there maybe underlying distribution in the up wave. There is a possibility that the market could break out and trend more or could hold and break down or range, so taking out 3x is the best option, and allows for riding more profits while observing what the market is doing, then when i felt the usdchf is not doing as well, i decided to take all out therefore -4. therefore, the market reading skill precedes everything, money management only helps to put things in ur favour.
  • #53,235
  • Nov 20, 2015 8:50am Nov 20, 2015 8:50am
Quoting CookieMonsta
{quote} {image} {image} as requested, expected loss 1x, return 5x, volatility leg range, 20pips blotter of trade taken first trade on blotter is not in the picture so please ignore it. also, 2nd and last trade are actually the same one, i simply scaled them out slowly, thats all. note: after every pyramid, cut loss is re-evaluated each time and the yellow box with the comments apply only to the first initial scout trade.

The only thing I think about your final trades, you are getting in with more nos at the worst time, you could have scaled up sooner...... normally I would get in stronger near start and make nos smaller near end as it has greatest risk....... just my thoughts..... but nice explanations.... I understood your method perfectly...

Alex
check out the terrain - follow never lead
  • #53,236
  • Nov 20, 2015 8:52am Nov 20, 2015 8:52am
Quoting CookieMonsta
{quote} yes, and that is why they become our scouts, without us spending a single penny. same for indicators, essentially you are looking to metagame your opponent and think one step ahead of him/her. that would be the reason why fti stress so much on how the patterns are continuously changing and to dance with it.

I had never thought of the ducks as my scouts but I really like the thinking so I will borrow it....... nice really nice.....

Alex
check out the terrain - follow never lead
  • #53,237
  • Nov 20, 2015 8:52am Nov 20, 2015 8:52am
Quoting alexandria
{quote} The only thing I think about your final trades, you are getting in with more nos at the worst time, you could have scaled up sooner...... normally I would get in stronger near start and make nos smaller near end as it has greatest risk....... just my thoughts..... but nice explanations.... I understood your method perfectly... Alex
Hi, alex, yes the last trade was bad, in actual fact, it should not be there at all, haha, gotta tame my scorpion, but got out in time if not would have been all sunk.
  • #53,238
  • Nov 20, 2015 8:54am Nov 20, 2015 8:54am
Quoting CookieMonsta
{quote} {image} {image} as requested, expected loss 1x, return 5x, volatility leg range, 20pips blotter of trade taken first trade on blotter is not in the picture so please ignore it. also, 2nd and last trade are actually the same one, i simply scaled them out slowly, thats all. note: after every pyramid, cut loss is re-evaluated each time and the yellow box with the comments apply only to the first initial scout trade.
he is going down the rigid path, beware. see his previous posts.

@pannet, everything is already in front of you. where are you looking? are your eyes open, are you reading thread? is not what fti said on thread makes you feel the very sharp and powerful overwhelming mega super power of attack? you read thread on fti's opinion on r:r? did you learn aow or not? what's with the r:r that makes it unbelievable? and why you even surpirsed with the r:r to being with?
THE ALL is MIND; The Universe is Mental
  • #53,239
  • Nov 20, 2015 8:54am Nov 20, 2015 8:54am
Quoting alexandria
{quote} I had never thought of the ducks as my scouts but I really like the thinking so I will borrow it....... nice really nice..... Alex
glad u liked it, it was a rough idea which i had before i started reading this thread, but it was based on indicator traders failing, but after reading this thread, i realized it could be applied this way too.
  • #53,240
  • Nov 21, 2015 10:21am Nov 21, 2015 10:21am
Quoting CookieMonsta
{quote} {image} {image} as requested, expected loss 1x, return 5x, volatility leg range, 20pips blotter of trade taken first trade on blotter is not in the picture so please ignore it. also, 2nd and last trade are actually the same one, i simply scaled them out slowly, thats all. note: after every pyramid, cut loss is re-evaluated each time and the yellow box with the comments apply only to the first initial scout trade. note: first trade's loss was because i wanted to enter the 1x which is the first trade on the picture, it is clear that the short...
OMG CookieMonsta,

Picture speaks loader than thousand words. I hope this will help lot of noobies visiting here and me too. You are a very selfish and cunning trader. Hats off to you. Your everu entries seems to be at no risk. Yes, there is risk because when 2nd attack is delivered PA may go and hit the SL of the scout. Same is true at every level but since you re-access the SL every time, it's a way to go.

There is always a habit in human being where when they see a certain setup they pounce (at every level). Yes, Theoretically I know but habitually do I follow. That's a different question. If theory becomes habit, that's where you start making money.

My heart goes out to you and wish you good luck. I hope every one visiting this thread now will benefit from this.

Thanks a lot once again.
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