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The Big secret to trading success

  • #381
  • May 3, 2016 10:20pm May 3, 2016 10:20pm
Quoting cat
With that little bit of gardening done, here it is , the secret to trading success, and you guessed it, it's trading with the trend in your favour.

There is no trend. Go watch this YouTube video if you don't believe me. https://www.youtube.com/watch?v=rnPMI4lOq8E

As The Rumpled One says:

"There is a big difference between facts and opinions. I bet you think that the terms "trend", "support", "resistance" are facts. When in reality they are concepts and opinions. I would wager you have read or heard "The trend is your friend" at least once. Let me set the record straight: There is no trend. Trend exist only in the mind of the trader. You could point to a chart and show me the trend, but I could counter with a chart for the same instrument, on a different TF, and show you the trend is opposite what you think it is. Trend is a concept. On the other hand the current Daily high and Daily low, Weekly High & Weekly low are factual. Ask any trader what those values are and they will give you the same answer. All traders will point to the same values - no matter what time period chart they are looking at. To win at trading, you must be able to discern between facts and opinions."

Think about it. Think about it more than once if you have to.
"Trading is a mental sport." - Ziad Masri
  • #382
  • May 3, 2016 10:33pm May 3, 2016 10:33pm
Quoting alphaomega
Trading with the trend will not put the odds in your favour! If it was so simple.....everyone will do it and we will see a lot more successful people. But we all know that's not the case and its a little bit more complicated. First of all, from all markets forex has the strongest tendency to revert to the mean. (this is a fact, proven mathematically and there are many studies on the subject) This means that classic trend following is pretty much the worst strategy you can apply. Especially if you trade short term or intraday like 99% of the people....

I cant give you the mechanical rules but if you say that mechanical (i prefer to use quant trading) doesnt work, then you should check out plenty of successful quant trading fund records - renaissance tech being one of the top player with 30+% annualized returns after fees - they are not HFT either. There are many others which are 100% quant driven and make money month in month out..

now for rules -- that you have to figure out yourself though i would say this - it usually involves something more than price (for non HFT strategies)...
Think : Trade : Live Life
  • #383
  • May 4, 2016 12:11am May 4, 2016 12:11am
Quoting Quickdraw
{quote} There is no trend. Go watch this YouTube video if you don't believe me. https://www.youtube.com/watch?v=rnPMI4lOq8E As The Rumpled One says: "There is a big difference between facts and opinions. I bet you think that the terms "trend", "support", "resistance" are facts. When in reality they are concepts and opinions. I would wager you have read or heard "The trend is your friend" at least once. Let me set the record straight: There is no trend. Trend exist only in the mind of the...
Asking current daily high and low of all traders will not yield a singular, uniform response. It is time zone dependent.
Hope for the best, prepare for the worst.
  • #384
  • May 4, 2016 12:17am May 4, 2016 12:17am
Quoting alphaomega
This is perfect fresh example for price manipulation from today(GBPUSD)! The insiders and MM's know the economic numbers before the official releases so in this case they manipulate the price UP before the news in order to position themselves before the crowd! {image}
Thanks for posting your conspiracy chart it really helps when people do this so we can all see where exactly the perceived problem arises, much appreciated.

I guess it is all in the eyes of the beholder because I certainly don't see the chart this way at all. Price will often take our a support/resistance just prior to a major news event. In fact sometimes it falls short and completes the task after the news event and then moves in the direction it is supposed to as per the news outcome. This is why we tend to see the market move in the wrong direction first.

Your chart only shows a very small myopic view of the situation that has been underway for the past 20 days or so. I don't trade this pair at all but I don't see anything at all that can be considered as even strange let alone manipulated. Price was simply testing the resistance, it took it out and the news made it reverse to take out the support. This is how the market moves every day on every chart constantly testing the support and resistance levels. Anyone who has been around long enough should know this very basic of structures. Two or more supports in a row and you have an uptrend to the next resistance and conversely.

I see this chart having several supports taking it up in the form of a 'trend' to the next resistance which was the so called spike in question. Not withstanding the 20 days it took to climb this high but the actual resistance was laid down 2016.01.04 21:00 now that really takes some planning to conspire to do this sort of thing. I don't have a clue why these levels are retained in the chart memory, nor do I care, I do know it has nothing at all to do with tops and bottoms seen drawn as a range on your chart.
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  • #385
  • May 4, 2016 12:27am May 4, 2016 12:27am
Quoting alphaomega
This is perfect fresh example for price manipulation from today(GBPUSD)! The insiders and MM's know the economic numbers before the official releases so in this case they manipulate the price UP before the news in order to position themselves before the crowd! {image}
Did you go all in at the point where you knew this move was the result of manipulators? Sometimes I see markets moving in a direction on lower tick volume, I have never been able to pull the trigger on that. Did you do it?
If you are good at something, never do it for free--Joker
  • #386
  • Edited 12:58am May 4, 2016 12:30am | Edited 12:58am
Quoting Quickdraw
{quote} There is no trend. Go watch this YouTube video if you don't believe me. https://www.youtube.com/watch?v=rnPMI4lOq8E As The Rumpled One says: "There is a big difference between facts and opinions. I bet you think that the terms "trend", "support", "resistance" are facts. When in reality they are concepts and opinions. I would wager you have read or heard "The trend is your friend" at least once. Let me set the record straight: There is no trend. Trend exist only in the mind of the...
All forms of chart representation are a form of interpretation as the graphical representation in time is simply a rudimentary record of transactional activity. The reality is that what we interpret as resistance, trends, momentum, reversals....you name it, is simply a simplified model or interpretation of transactional behaviour of participants neatly described over a hypothetical time interval. Before charts were used, we had a ticker tape as a representation of transactional activity. Applying this representative model, then we would utilise other terms to represent the behaviour of this activity which are more useful forms of interpretation for this particular representation.

We apply concepts such as momentum, trend, resistance etc. as proxy models drawn from other sciences and mathematical concepts as a useful way to interpret this activity and should recognise that this interpretation is 'relative' to the the context of the observer and how specifically that interpretation is being used. Momentum may be a useful word to describe price behaviour, but do we really believe that such a scientific concept drawn from mechanics is truly representative of price behaviour. Who is bumping into who here? The term 'momentum' in the context of participant behaviour is simply a useful representation that seems to fit the data and gives us clues (or better guesses) in how the future behaviour may unfold.

If we say that mean reversion is the only reality then you could ask....how the hell did price make it's excursion away from the mean without directional price action of some sort to be able to mean revert in the first place? Do we need to be so definitive in our judgments to call one interpretation 'wrong' and the other the 'truth'. History has shown us time and time again that those that make a call on a truth statement regarding the reality are sorely disappointed. To treat any price action behaviour as a truth statement as opposed to a model is simply bogus, but as with the scientific method, we apply the best models we have to interpret the empirical.

Here is an equity chart of a mean reversion strategy applied to the S&P500 index that has a strong track record since 2002.
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While mean reversion today may represent an effective way to currently trade many asset classes under current market conditions, it was not always the case. Here is the same equity curve over a longer timeframe since 1960......ouch that would have hurt.
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To say that 'trends' don't exist assumes that all manifestation of directional price behaviour or price bias are simply 'illusions' however using statistical models that avoid any form of subjective interpretation, we clearly see evidence for this activity which can collectively be applied to all time-frames available. It may not be neatly described by certain definitions of a trend, but the overall nature of price action bias with directional extent has been studied to death over hundreds of years and cannot simply be swept under the carpet as 'illusory'. If price did not go higher or lower over a specified timeframe and were just illusory concepts, would there be such a thing as traders or more importantly investors out there?

Furthermore we have significant evidence of the performance results of trend following FM's over 30-40 years that demonstrate that whatever it is they call a trend, is clearly an exploitable behaviour that has an edge.....so we have to be careful in being definitive in our statements such as 'trends don't exist'.

In fact we have to be very careful in making assumptions on any method of exploiting price behaviour without having a full understanding and context as to what we are talking about.

As science has showed us time and time again.....there are simply no truth statements out there.....just models....that hopefully best represent the reality. Those traders which use the most representative model of the reality are most likely capable of trading with a definitive edge.
  • #387
  • May 4, 2016 12:31am May 4, 2016 12:31am
Quoting Quickdraw
{quote} There is no trend. Go watch this YouTube video if you don't believe me. https://www.youtube.com/watch?v=rnPMI4lOq8E As The Rumpled One says: "There is a big difference between facts and opinions. I bet you think that the terms "trend", "support", "resistance" are facts. When in reality they are concepts and opinions. I would wager you have read or heard "The trend is your friend" at least once. Let me set the record straight: There is no trend. Trend exist only in the mind of the...
No such thing as trend?
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If you are good at something, never do it for free--Joker
  • #388
  • May 4, 2016 12:43am May 4, 2016 12:43am
Quoting stt
now for rules -- that you have to figure out yourself though i would say this - it usually involves something more than price (for non HFT strategies)...
Very intriguing mate! And from the research I'm doing at the moment I would definitely agree with this.
You reap what you sow.
  • #389
  • May 4, 2016 1:04am May 4, 2016 1:04am
Cool, now you need a degree in physics in order to succeed.
  • #390
  • May 4, 2016 1:12am May 4, 2016 1:12am
Quoting HeyYou
Cool, now you need a degree in physics in order to succeed. Let's say I do, not enough, you have to be a central bank. Then what ?
Na. Trading is just an applied science for some....an art form to many. We can draw on the sciences and particularly physics of complex systems to hopefully make better guesses using less subjective models of participant behaviour than mere gut instinct or intuition......but the only thing you can say with any form of definitive statement is that the models will simply become more far reaching and better representations of the reality without ever solving the reality riddle of 'the grail'. Let's just call it a 'perpetual work in progress'.
  • #391
  • May 4, 2016 1:17am May 4, 2016 1:17am
Quoting Copernicus
{quote} Na. Trading is just an applied science for some....an art form to many. We can draw on the sciences and particularly physics of complex systems to hopefully make better guesses using less subjective models of participant behaviour than mere gut instinct or intuition......but the only thing you can say with any form of definitive statement is that the models will simply become more far reaching and better representations of the reality without ever solving the reality riddle of 'the grail'. Let's just call it a 'perpetual work in progress'....
Exactly Copernicus. It's the search for perfection that makes things complicated.
  • #392
  • May 4, 2016 1:20am May 4, 2016 1:20am
Quoting HeyYou
{quote} Exactly Copernicus. It's the search for perfection that makes things complicated.
Sure is.

We may have found Newton complicated....but dealing with Einstein.....or........Feynman....... well that is a real effort in stepping outside the comfort zone.....and they weren't traders which as we all know is the hardest nut to crack.

The important thing is that we stay humble and continue the quest.
  • #393
  • May 4, 2016 1:27am May 4, 2016 1:27am
Quoting Copernicus
{quote} Sure is. We may have found Newton complicated....but dealing with Einstein.....or........Feynman....... well that is a real effort in stepping outside the comfort zone.....and they weren't traders which as we all know is the hardest nut to crack. The important thing is that we stay humble and continue the quest.
I think that we overthink. Trading draws the smartest from other professions. Lawyers, Doctors, Engineers. I think we sometimes want to over think what is there before us. I used to do that.
If you are good at something, never do it for free--Joker
  • #394
  • May 4, 2016 1:29am May 4, 2016 1:29am
Quoting Copernicus
{quote} Let's just call it a 'perpetual work in progress'.
Like making a model of a cloud to represent all clouds in the sky. So then we divide them into types but still we cannot make a model which represents all of a certain type because there are simply too many variables.

Best bet is to trade in the direction the cloud is blowing and stop trying to analyse the cloud itself.
  • #395
  • May 4, 2016 1:33am May 4, 2016 1:33am
Quoting jmn5611
{quote} I think that we overthink. Trading draws the smartest from other professions. Lawyers, Doctors, Engineers. I think we sometimes want to over think what is there before us. I used to do that.
That's where a systematic approach comes in. Define some form of logic regarding participant behaviour, test your hypothesis like the B**ggery to see if it has worked over the past over as wide a range of market conditions as you throw at it....to hopefully find an edge (which you will never actually be able to prove with 100% certainty).....then when live just strictly manage risk and rinse and repeat.....and let the profits come by default.
  • #396
  • May 4, 2016 1:41am May 4, 2016 1:41am
Quoting Copernicus
{quote} That's where a systematic approach comes in. Define some form of logic regarding participant behaviour, test your hypothesis like the B**ggery to see if it has worked over the past over as wide a range of market conditions as you throw at it....to hopefully find an edge (which you will never actually be able to prove with 100% certainty).....then when live just strictly manage risk and rinse and repeat.....and let the profits come by default.
There still need to have the thinking in overdrive to derive this systematic approach which ...........
  • #397
  • May 4, 2016 1:42am May 4, 2016 1:42am
Quoting Copernicus
{quote} That's where a systematic approach comes in. Define some form of logic regarding participant behaviour, test your hypothesis like the B**ggery to see if it has worked over the past over as wide a range of market conditions as you throw at it....to hopefully find an edge (which you will never actually be able to prove with 100% certainty).....then when live just strictly manage risk and rinse and repeat.....and let the profits come by default.
Precisely. My edge is that I expect a certain number of pips per day. The number of pips falls well within the historical daily range of my primary pair. When I get those pips I adjust my position size for the next day. If I do not get those pips I adjust my position size for the next day. Rinse and Repeat.
If you are good at something, never do it for free--Joker
  • #398
  • May 4, 2016 1:42am May 4, 2016 1:42am
Quoting Nala66
{quote} Like making a model of a cloud to represent all clouds in the sky. So then we divide them into types but still we cannot make a model which represents all of a certain type because there are simply too many variables. Best bet is to trade in the direction the cloud is blowing and stop trying to analyse the cloud itself.
Good analogy. Trade a gross feature of the cloud formation as opposed to trading the detail of it's composition. We can all probably agree about the general mechanics of the gross feature. We however may significantly differ in our interpretation of the detail. When I talk 'Trend' that gross feature of price action is what I am talking about and I define it using statistical methods as opposed to eyeballing. Others may define trend as a an 'exact formation' which is where subjectivity comes in.

I therefore trade the gross feature defined by it's broad extent as opposed to the specifics such as 'a perfect entry' or 'perfect exit'.
  • #399
  • May 4, 2016 1:45am May 4, 2016 1:45am
Quoting skyway
{quote} There still need to have the thinking in overdrive to derive this systematic approach which ...........
ROFL .......Never said it was easy
  • #400
  • May 4, 2016 1:50am May 4, 2016 1:50am
Quoting Copernicus
{quote} Good analogy. Trade a gross feature of the cloud formation as opposed to trading the detail of it's composition. We can all probably agree about the general mechanics of the gross feature. We however may significantly differ in our interpretation of the detail. When I talk 'Trend' that gross feature of price action is what I am talking about and I define it using statistical methods as opposed to eyeballing. Others may define trend as a an 'exact formation' which is where subjectivity comes in. I therefore trade the gross feature defined...
Except, this has been done by Darryl Guppy a few years ago. That is why I posted the chart that I did. Trend can absolutely be objectively defined.
If you are good at something, never do it for free--Joker
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