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Technical Analysis Fallacy

  • #54,321
  • Apr 9, 2016 11:58am Apr 9, 2016 11:58am
Quoting fti
deeper maths. E=me2 {image} {image}
I am very very good at math till it consist 1,2,3,4,5,6,7,8,9 etc but when they put ABCD......Z I totally loss in jungle
don't predict direction, but dance with flow of water
  • #54,322
  • Edited 7:24pm Apr 9, 2016 6:05pm | Edited 7:24pm
Quoting priceaction1
{quote} I am very very good at math till it consist 1,2,3,4,5,6,7,8,9 etc but when they put ABCD......Z I totally loss in jungle
1234567890ABCDEF


1234567890ABCD ?????

01,02,03.......................................................FE,FF
These human creations.

ok

01 this God's creation, God is simple. Is either eternal or is not. Humans is stupid.

0101

010101

0101010101010101010101010101010101
+-+-+-+-+-+-+-+-+-+-+-+-+-

God's system, if not + then -
Humans system, if not + then -, but.......( after butt comes all the lies/whys/assumptions)
If one understands the basics.
The lies becomes very clear.

fti system, if not + then issue walking certificate. after 3 walking certificates gets phd. (please happily depart)
no whys, no hows and no buts
no excuses.

Nothing is forever, only God.

keynesian mantra-- at the end of it all we will all be dead.

regards

PS the cleverness of humans. Maybe i am only one can see truth? i am delusional.
anyway, is only 1 example of our stupidity. If you not believe , just look around you.
ya ya ya the earth is flat. if it was round, you may just fall off it when it rotates.
fair and square, but some is more fair than others. square absolutely.

http://www.infowars.com/chemo-and-ra...ore-malignant/


anyway, the point is there is no such thing as fair pricing.
nothing is ever fair.
You have to be crazy to believe.
Only if you can get pass that bias, then you can truely analyse.
Other wise is just professional lying. Humans are the most evil creatures alive.
Is easy pizy.
Just get observation then reverse engineer and explain? ya ya i am stupid. your ancestors are monkeys. mine God created.
There's even some who believes they can escape this world alive.
I know , all of us will die. The only question is when?
If i can figure that out.
Then i can try plan spend all my money when i am alive.
most people are stupid. The stupidiest is those die with billions unspent.

OK now can you understand , when is abcd?

Now i need to create some derivatives on my assets so that i can spend it all and still have the cake.
Maybe create also to spend my great grandchildren assets. Dead men no cares about anything. Let them sort it out when it matures. Otherwise there is still have the button. Either they sort it out or I leave notes for them. "But you can Press the fu king button."

Analyse this,
WWI they pressed button , reset.
WWII they pressed button, reset.
WWIII they press button reset. and God gives all the burnng hell. Permanently reset. all evil ends, good and bad evil.
  • #54,323
  • Apr 9, 2016 9:25pm Apr 9, 2016 9:25pm
Quoting fti
{quote} 1234567890ABCDEF 1234567890ABCD ????? 01,02,03.......................................................FE,FF These human creations. ok 01 this God's creation, God is simple. Is either eternal or is not. Humans is stupid. 0101 010101 0101010101010101010101010101010101 +-+-+-+-+-+-+-+-+-+-+-+-+- God's system, if not + then - Humans system, if not + then -, but.......( after butt comes all the lies/whys/assumptions) If one understands the basics. The lies becomes very clear. fti system, if not + then issue walking certificate. after...
only GOD is absolute truth all other things are relative!!!! and yes "the point is there is no such thing as fair pricing.
nothing is ever fair".
don't predict direction, but dance with flow of water
  • #54,324
  • Apr 9, 2016 9:35pm Apr 9, 2016 9:35pm
"fti system, if not + then issue walking certificate. after 3 walking certificates gets phd. (please happily depart)
no whys, no hows and no buts'.
3 is the key.
don't predict direction, but dance with flow of water
  • #54,325
  • Apr 10, 2016 1:05am Apr 10, 2016 1:05am
Quoting priceaction1
"fti system, if not + then issue walking certificate. after 3 walking certificates gets phd. (please happily depart) no whys, no hows and no buts'. 3 is the key.
nope.
is not so dang rigid.
But on my fingers, you can start from thumb or pinky.
Only 3 is the middle finger. Well at least on my hands they are.


regards
  • #54,326
  • Apr 10, 2016 2:01am Apr 10, 2016 2:01am
Quoting Jacque
{quote} fti, in asking the qns d1=d2? there is already much deep maths in it involve probability and normal distribution. i guess u are jesting about only requiring simple math? i looked into the formula, i think the volatility input has much confusion. i see that in BSM, it is the 1SD of the ln return of a specific period measure of historical price. the period used should correspond to the maturity of the option in qns. infact, the volatility input changes as the maturity change. this volatility togther with the mean assumed from GBM of px movement...
hi, jacque,

just my 2cents, from my limited time being exposed to a demo options account in forex, IV is just like spot market, so in the options market, instead of just dancing 1 variable, spot price, u are now dancing the spot price wrt strike, IV and time decay, and the dealer is in between, so the dealer should know something. since im a computer science grad, ill just say, models are subsets of certain real life situations, and by that since the world is so complex, its extremely and if not, impossible to have a complete model which is accurate of everything, that is the extent to which models begin to break.

on the maths portion, its not really required, or at least i don't look at it that way, its a language meant to represent a system or problem case. if u strip away all the numbers and variable and simply look at the message it is conveying, ur understanding will be crystal clear. one example is to look at IV, it is the belief the participants in the markets held about the future volatility, if they believe its undervalue, they buy it, and if its expensive they sell it, but its their belief. its similar to dancing the spot, if you believe its bottoming because feels like market is accumulating, and seems abit impulsive to the upside, you might deploy a scout.

if we apply what is taught here about how the market dances, we can have a greater understanding of options. after that, if we extend it further, whatever is taught here about spot, can also be applied to be used with options too, in using spot to adjust your strikes and view with how the market manifests after you have entered your options position. in a sense we can have an extra edge by complementing what is taught here through dancing spot together with trading options. and the edges can also be from the ability to adjust through spot on the fly, as well as limited risk exposure in the market, especially to black swan events, i.e. trying to extend profit, while keeping risk level low(delta and gamma of book wrt losses). this in itself can tie in with the blitzkrieg, presented here.

just my humble opinion of how more edges can be created when we combine spot dancing with options trading.
  • #54,327
  • Apr 10, 2016 2:10am Apr 10, 2016 2:10am
Quoting CookieMonsta
{quote} hi, jacque, just my 2cents, from my limited time being exposed to a demo options account in forex, IV is just like spot market, so in the options market, instead of just dancing 1 variable, spot price, u are now dancing the spot price wrt strike, IV and time decay, and the dealer is in between, so the dealer should know something. since im a computer science grad, ill just say, models are subsets of certain real life situations, and by that since the world is so complex, its extremely and if not, impossible to have a complete model which...

also try understand this.
It not matters if you driving a 911.
if 1 critical component breaks, the whole breaks. kapish?
tweaking 1 component affects all components.
there ain't no free lunch. something gains something gives.
make the excuse.

Actually i am a very tough person.
but heart gave. so now i live middle fingered life.
ya ya ya dang lies. where the fu king tough.
the strongest point is the weakest link in the chain.


regards
  • #54,328
  • Edited 6:52am Apr 10, 2016 2:14am | Edited 6:52am
Quoting fti
{quote} also try understand this. It not matters if you driving a 911. if 1 critical component breaks, the whole breaks. kapish? tweaking 1 component affects all components. there ain't no free lunch. something gains something give. make the excuse. Actually i am a very tough person. but heart gave. so now i live middle fingered life. regards
yes, and that is why you showed the engine, in order to show that everything is connected, just like the butterfly effect, sometimes when changes are made, there can be unintended consequences, that is usually how tail risk happens, usually is ass-u-me. that is why i do demos before deploying systems to trade real cash, and even then i deploy small cash to test out how robust the method is before risking normal size capital on it. but before all these, i would try to calculate against what happens to my position if market crashes hard against me, that to me is most important.

if long volatility, premium is paid for safety, mainly in terms of opportunity cost as well as some cash, and to overcome that, dancing skill level needs to make up for it. but we can study implications between spot and options markets as well as how they move. one intuition is the period historical ATR of the spot market vs the current markets range vs the premium quoted by the broker for that given period, like 1 week's ATR vs quoted premium for 1 week option, which tells us how much of a premium we need to overcome the market, with respect to the premium we paid, couple that with the rescue into attack mo when the chance arises. however, the implication would imply that you have to trade in and out of the markets often otherwise it is just not worthwhile to trade this style, its only suitable for running fulltime books and not suitable for part time trading. advantages come when because of some reason, market crash, but you are long say 4 puts and 2 long spot, effectively a long straddle. however, the timing period for this needs more investigation to find a best fit for a compromise between opportunity cost and risk premium and other factors. as well as to profile for how much more efficient is trading without options going to be compared to with options, and how much risk is being undertaken comparing 1 with the other.

just one more, liquidity, options can be a form of invisible liquidity, in terms of actual liquidity as well as what it prompts other participants to do when exercised. liquidity has always been the main sustenance of the market, once its taken out, its over for the market.
  • #54,329
  • Apr 10, 2016 2:18am Apr 10, 2016 2:18am
ahhh sakura

hahahahaha no mosquitoes meh?


Inserted Video


regards
  • #54,330
  • Apr 10, 2016 2:18am Apr 10, 2016 2:18am
Quoting CookieMonsta
{quote} hi, jacque, just my 2cents, from my limited time being exposed to a demo options account in forex, IV is just like spot market, so in the options market, instead of just dancing 1 variable, spot price, u are now dancing the spot price wrt strike, IV and time decay, and the dealer is in between, so the dealer should know something. since im a computer science grad, ill just say, models are subsets of certain real life situations, and by that since the world is so complex, its extremely and if not, impossible to have a complete model which...
cookie, tks for your thoughts. i posted that because i disagreed with fti when he said he only learnt simple arithemtic during the course of his career. the option formula involved much maths only learn thru university. he posted me a rocket engine. mass balance, energy balance, conservation of momemtum. something take something must give. i think i know where to start. knowing fair price allows u arbitrage. tt's the holy grail. but fair is only relative, just like put call parity. is unfair w.r.t put price, so there is aribitrage. but it doesnt mean, the parity price is a a fair price w.r.t the risk factors.

btw, blitzkrieg is not presented here. it requires much capital beyond ants. but what is relevant in lesson 3 has been presented - the sliding between skews and incorp of fundamental view into it.
THE ALL is MIND; The Universe is Mental
  • #54,331
  • Edited 2:44am Apr 10, 2016 2:31am | Edited 2:44am
Quoting Jacque
{quote} cookie, tks for your thoughts. i posted that because i disagreed with fti when he said he only learnt simple arithemtic during the course of his career. the option formula involved much maths only learn thru university. he posted me a rocket engine. mass balance, energy balance, conservation of momemtum. something take something must give. i think i know where to start. knowing fair price allows u arbitrage. tt's the holy grail. but fair is only relative, just like put call parity. is unfair w.r.t put price, so there is aribitrage. but it...
no probs. haha the maths is quite complex since its a complex system. but i just think cutting through math and understanding what the model is saying and robustly testing against the cases the model can't handle is the way to go, since the black scholes always say 99% its right, but it just takes 1% to kill you. thats the 1% u must look out for actively. thats probably what killed ltcm. if its risk, it must be kept in check all the time.

yep, the blitzkrieg i wrote about is my interpretation of it, less the dealing part, since fti's background is that of a dealer so he needs to make price. what is applicable to us is the ability to hold even in crisis events (but dependent on impact on book, but ideally we want to be able to already factor crashes into our model, since its those times which off us very quickly), and let the market calm down and make strategic decisions based on it. once we can solve for such an event, which is the worst case scenario for any trader, we have a very robust mo to work with.
  • #54,332
  • Apr 10, 2016 4:27am Apr 10, 2016 4:27am
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  • #54,333
  • Apr 10, 2016 4:34am Apr 10, 2016 4:34am
Inserted Video



eeeer okok we race the bears?

regards
  • #54,334
  • Apr 10, 2016 5:03am Apr 10, 2016 5:03am
Quoting Jacque
{quote} cookie, tks for your thoughts. i posted that because i disagreed with fti when he said he only learnt simple arithemtic during the course of his career. the option formula involved much maths only learn thru university. he posted me a rocket engine. mass balance, energy balance, conservation of momemtum. something take something must give. i think i know where to start. knowing fair price allows u arbitrage. tt's the holy grail. but fair is only relative, just like put call parity. is unfair w.r.t put price, so there is aribitrage. but it...
just my opinion, the holygrail for retail accounts is when you can manage the markets when the market condition is changing from 1 type to another or has already changed from 1 type to another when you have positions in the market, from say quiet ranging market into strong momentum market to the downside when you are long the market, which is counter impulse. options become a tool for you to sync in with the market's trend again. the problem with arbitrage is its a big boys game, no retail trader can pull it off because of cost of trading, it just makes it inefficient to trade, and in alot of cases, ur profits will be eaten up by spreads and commission, as well as the infrastructure to carry it out cost alot. so for retail traders, whats ideal is to take on smaller risk wrt possible gains and manage from there, the rest its all up to market to provide opportunity and skill to capitalize, keeping risk level low and extending profit levels.

as for the arithmetic part, i beg to differ though, options is made up of intrinsic value + time value, if you use a sim to plot out the curve for gamma, you will see if we freeze time and IV, and let spot move wrt strike, you see how the time value changes, because delta of intrinsic is always 1 if ITM, so the only thing can change is the time value, component calculation input is time left and IV wrt strike to spot distance. but often only the intuition about how it moves is needed. once you can explain those concepts without using complicated maths and symbols and stuff just the core concept, you have understood it to a great extend.
then next u just see how price moves with a combination of changing spot to strike values, time values and IV values, as well as what might cause them to change and what is best practice to manage them.
  • #54,335
  • Apr 10, 2016 5:43am Apr 10, 2016 5:43am
Quoting CookieMonsta
{quote} the problem with arbitrage is its a big boys game, no retail trader can pull it off because of cost of trading, it just makes it inefficient to trade, and in alot of cases, ur profits will be eaten up by spreads and commission, as well as the infrastructure to carry it out cost alot.
eeer good try.
Inserted Video


regards
  • #54,336
  • Apr 10, 2016 5:53am Apr 10, 2016 5:53am
Quoting fti
{quote} eeer good try. https://www.youtube.com/watch?v=m6j6dUjN2_I regards
my guess is broker/dealer already factor in the arbitrage into the spreads, whats left is pairs trading or the kind, but that is a statistical arbitrage, but is not riskless, when their correlation tear, u can lose on both ends, mainly event based, like brexit can cause these kind of correlation to tear strongly.
  • #54,337
  • Apr 10, 2016 10:41am Apr 10, 2016 10:41am
hahahahahahahaha
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  • #54,338
  • Edited Apr 11, 2016 3:33am Apr 10, 2016 5:18pm | Edited Apr 11, 2016 3:33am
becareful that spybot anti-beacon.
Is trying run my CPU to death.
Maybe its compromised?

I just killed the service.
Need try uninstall it before it fries my CPUs.

regards
  • #54,339
  • Edited 4:22pm Apr 11, 2016 3:46pm | Edited 4:22pm
Quoting CookieMonsta
{quote} my guess is broker/dealer already factor in the arbitrage into the spreads, whats left is pairs trading or the kind, but that is a statistical arbitrage, but is not riskless, when their correlation tear, u can lose on both ends, mainly event based, like brexit can cause these kind of correlation to tear strongly.
I have been thinking how to tell you.
there is one type broker. Their function is broking.
there is 2 types dealers.
1 type broker for their customers with back to back prices. these called dealers.
1 type make markets, these called market makers.
the % of market maker dealers during my watch was 7/197 banks for my time zone.

there is 1 type so called dealers, they are called traders. some say they proprietary.
these, they are their own customers. they create events. their customers does not trades. invests.

I would really like to know what you're guessing about.

Try guess this.
1 in every 5 humans are chinese.
Guess how many are in china.
1st guess where china is.
By the way , what is the meaning of middle kingdom. where is the middle?
on my maps, middle kingdom is India.

If you have difficulty understand my point.
Is very simply do not generalise anything.
all human cubicals and boxing is mostly bias.
it depends on which side of the fence you insist to take.
Try guess how many shades of grey there is. Is black a shade of grey? or is it a colour?
and i not even asked you guess how many shades of black there is.

In my world, i don't guess. Is either a + or a -.
if - it walks.

regards
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  • #54,340
  • Edited 8:02pm Apr 11, 2016 4:33pm | Edited 8:02pm
PS: Sorry that i feel the dealers exuberance again.
In the dealing world, this the reality.
There no shades. Is book net + or net -.
Theories and hypothesis, is a luxury for the incapable. Mostly liars or unlearned.
Markets teach and one knows, is not possible lie to the book. only maybe the employer.
Those who can, do.

regards

Fishing is not trading activity.
I cannot see the gain in killing the brain cells of retail traders.
Is not productive teach fishes climb trees.
Not even if they are crocodiles.

remember, no one wins with the maths.
Is a combination with terrain management.
Know self and know enemy, no fear 1000 battles.
The maths everyone knows, even the robot.


1000s ways make $1-bro, 1 way lose 1000+bro
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