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What are the big Ideas in successful trading?

  • #21
  • May 25, 2016 10:47am May 25, 2016 10:47am
Quoting simond2002
{quote} If there's a couple of sentences that really got me thinking today then it's the above. I have a feeling that in all its trading manifestations, "hope" is probably our biggest enemy. Someone once wrote that "hope is not an indicator" - it's one of my personal favourite quotes. Whoever penned it has "been there" I think. Hope is the thing that will keep a trader believing that he's going to see the market through someone else's eyes. It'll wed one trader to another in the "hope" that by some form of osmosis he'll turn losing into winning....

This is an interesting interpretation of the "hopelessness" idea. thanks for pointing it out. I have thought about it this way as well. But I was thinking more along the lines of "hopelessness" in the context of any particular trade.

Conversely, when the objective facts hold out, we need to "extreme doses of hope" in order to keep on holding onto our winning positions. So a good way to think about it maybe is that hope/hopelessness are two "skills/weapons" in your arsenal that you can deploy at will. Deploy hope when you see no objective reality that threatens your trade. Deploy hopelessness otherwise. Of course to be able to discern illusion from reality in this market takes deep understanding of market structure and patterns in the first place. Which unfortunately (or fortunately if not FX wouldn't be profitable) is extremely difficult.
Build good relationships with others.
  • #22
  • May 25, 2016 11:01am May 25, 2016 11:01am
Quoting shellsnail
I find that given the uncertainty inherent in markets, it always makes sense to "take some off" at key levels where the opposite trade may be favourable. More often than not price will come in and you get a chance to add your initial size back at a better price. IF it really blasts through the key level (which happens about 10% of the time), you can always add on the quick retraces. The only question in my mind is how much should I take off at these levels. I suppose it depends on the probability one thinks a reversal/retracement is likely.
Let me offer an example from today of a scalp I took that didn't work out (when I say "didn't work out" it was a b/e trade - bit of trade management issue, poor fill trading at market, and some scalping method stuff I'm currently working on).

Key point is that if I enter a position I'm able to halve, (for arguments sake let's say it's 2 x micros, i.e. the smallest double position I could take) then I would close 1 x micro, i.e. 50% at first target and let the other run at b/e to see if it can gain higher. In this case, trading like this would've paid half the entire position at target, and stopped out the other half at cost.

Other than the original entry, the probability of whether or not the remaining position will break out higher is arbitrary for me. The most important thing is banking the RR on one of the positions and not giving anything back on the other.

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  • #23
  • Edited 12:09pm May 25, 2016 11:36am | Edited 12:09pm
My mistake, I thought this thread was about Forex trading, not about hope, faith, Gods and fairy-tales.

Forex trading is akin to a martial art, most especially of a martial mind.

Sure, a martial artist can easily enter the room completely unarmed, and he can face 10 swordsmen intent on cutting him down with vicious slaughter; all of them armed with their swords and murder in their hearts.

Yet his position of hopelessness is in fact only the view of VOYEURS. He feels no hope. He feels no hopelessness. He is simply centred and he acts/reacts in the current moment. And he, our hero remains relaxed and only wonders "which of these these assholes is holding MY sword for me".

He takes that sword from him, and he slaughters 6 more too.

Should he take profit out by announcing "let's have a break guys, I'd like a drink of water"?

NO!

The battle isn't done until it is dusted off as victory. Be IN the fight. Or get the fuck out of it!

There are no Gods. There are only the fairy-tales in religion and in the minds of dreamers, and even kids don't believe them. There is profit, and there is loss, and it is a zero sum game.

A game of probabilities played out until the end.

The rest is just shit dribbling from the corner of the mouth of a dreamer.

Quoting shellsnail
{quote} This is an interesting interpretation of the "hopelessness" idea. thanks for pointing it out. I have thought about it this way as well. But I was thinking more along the lines of "hopelessness" in the context of any particular trade. Conversely, when the objective facts hold out, we need to "extreme doses of hope" in order to keep on holding onto our winning positions. So a good way to think about it maybe is that hope/hopelessness are two "skills/weapons" in your arsenal that you can deploy at will. Deploy hope when you see no objective...
  • #24
  • May 25, 2016 1:39pm May 25, 2016 1:39pm
Quoting Atokys
{quote} It depends on your very personal and subjective opinion.
My personal and subjective opinion don't make the market move. That is wishful thinking.

At least as far as the accumulated evidence thus far can tell, in the picture the market is both and at the same time in a range and in a downtrend at two slighly different time scales (not timeframes!). It isn't a "either...or..." situation.

Some times the two scales are sufficiently distant to consider the lower or the higher timeframe, forcing a decision toward the range or the trend. But quite often the time scales overlap even more. This is where people are wrong to select one of the two options and justifying their choice under the "it is subjective" excuse. This is the false dichotomy cognitive bias.

The Bayesian approach is to consider both with their respective probabilities and their potential outcomes to estimate an expectancy and a variance from which you can decide on the direction and the size, which can be zero, of a position. Here is where a machine can perform way much better than a human. Our brain is very bad at managing probabilities especially conditional probabilities.
No greed. No fear. Just maths.
  • #25
  • May 25, 2016 4:12pm May 25, 2016 4:12pm
Quoting dancingphil
The 2 points that you have made that I agree with are that.....
Spot on IMHO. Decisions should be based on probabilities, and levels that are recognized by the 'market'. The market doesn't care about levels related to the trader's P/L.
Quoting PipMeUp
My personal and subjective opinion don't make the market move.
Likewise agreed. Market moves are determined by order volumes.
  • #26
  • May 25, 2016 6:08pm May 25, 2016 6:08pm
get insider information and position yourself before the big move for big money
it rubs the lotion on its skin
  • #27
  • May 25, 2016 7:55pm May 25, 2016 7:55pm
Quoting shellsnail
What are the big Ideas in successful trading?
Stop directional trading. Stop naked trading. Stop taking a side in the market. Learn how to create your own Hybrid Straddles and Strangles while trading Spot Forex without regard for market direction. It is like learning how to walk across rice paper without leaving footprints. Grasshopper needs no explanation. If you think it cannot be done, then your rice paper still has footprints.

If you can't figure out the above and you must remain a "directional trader," then at the very least learn the methods of Scalping and how to measure the market for the optimal Scalp entry/exist where you are the stop. There are a billion different ways to Scalp profitably and consistently. However, it does require focus, time, energy, commitment and the ability to stick to your guns.

95% won't make the cut. Simply refuse to do what the 95% do that causes them to fail.

Nut & shell.
F-X-C-M | A Classic Retail Bucket Shop Scam Artist Who Manipulates Prices
  • #28
  • Edited 9:03pm May 25, 2016 8:43pm | Edited 9:03pm
Quoting hanover
Likewise agreed. Market moves are determined by order volumes.
What are order volumes determined by?

I would submit that order volume is determined by something else and that something else is determined by Fear & Greed. Moreover, both Fear and Greed are determined by someone else.

There are Market Makers and there are the Banks who fuel them and incentivize them. There is the Market Makers Spread which is not to be confused with the Bid/Ask Spread as seen on your trading platform - they are not the same concepts. Think of the Banks as the Grows and the Market Makers as the Drug Dealers. The Bank is simply doing business at a completely different level. They work in bulk. They are not interested in point-of-sale transactions. They are looking to off-set other assets they have out on the street in other markets.

The Market Maker on the other hand could be that "guy that you know" who sits in the same virtual shop as the broker/dealer - depending on the arrangement, jurisdiction, regulations, etc. They are both dealing on a platform that looks and functions quite different from the one the typical "retail" trader has access to.

Order volume and order flow is one thing. However, determining the relative price level of orders is quite a different thing and even more different is the Market Maker who sets those relative price levels in the market through psychological stimulation of buy/sell interest at the "retail" level. With a fair degree of consistency, the Market Maker knows where price is going before the Retail Trader does. It is the Market Maker backed by the Bank who has sufficient capital to cause hyper short-term fluctuations in price that stimulate buying and selling interest at the retail level.

Here are a couple Market Maker Spreads/Channels:

http://i63.tinypic.com/9amot2.jpg

Essentially, the Market Maker builds buy/sell interest into the market by sucking in retail traders and firmly establishing buy/sell orders on either side of the Market Makers "Spread." Once sufficient volume has been established by both buyers and sellers, the Market Maker begins the Stop Hunting Phase. This is the start of the Dumb Money Phase. Typically, the hunt will take place on the side of the Market Makers Spread associated with the "false direction." This is where you typically see retail traders claiming a "false break out." This is also typically the side of the Market Makers Spread where the imbalance of buy/sell orders was the greatest. Why? Well, that's simple. The Market Maker is grooming the environment so that the Herd Mentality will shortly follow the first installment of the Fear Cycle. This creates the Market Maker Spread or Temporary Channel seen above.

Once the initial stop hunting to the strong side of the Market Maker Spread has been completed, the market will appear to release to the strong side of that Channel. But, that's only temporary - the Market Maker already knows what they are about to do next. Soon, will come the Rip Phase. This is where Fear and Greed will combine in the retail market to establish that Herd reaction mentioned above in the opposite direction. All the while the Market Maker was selling when the retailers were buying, or buying when the retailers were selling - depending on which side of the Market Maker Spread saw the greatest imbalance.

After the Rip, retail traders who were on the wrong side reverse their positions (like so many sheep) and join the volume moving to the weak side of the Market Makers Spread. This is often times sufficient to begin shuttling price out of the Market Maker Accumulation Phase and into the Market Maker Profit Distribution Phase.

Here's a quick look at the Distribution Phase:

http://i63.tinypic.com/30kr13a.jpg

Of course, retail traders call these Market Maker Profit Distribution Phases, Retracements. The Retail Retracements are Market Maker opportunities to distribute their profit taking phase along the Y-axis until a point is reached along the X-axis where yet another Market Maker Accumulation Phase begins with the Market Maker Spread or Channel.

And, so the Life Cycle of the traded market goes on - all the while the retail trader is constantly behind the Market Maker buying (and selling) the drugs that the Dealers position in certain places in the market for the Growers... I mean, Banks.

Moral of The Story?

Take advantage of all Accumulation Phases by not being fooled by them.

That just about covers so-called "Supply & Demand."
F-X-C-M | A Classic Retail Bucket Shop Scam Artist Who Manipulates Prices
  • #29
  • May 25, 2016 9:12pm May 25, 2016 9:12pm
Quoting dancingphil
My mistake, I thought this thread was about Forex trading, not about hope, faith, Gods and fairy-tales. Forex trading is akin to a martial art, most especially of a martial mind....
Retail Forex Trading is about liquidity and the imbalance of buy/sell orders. It is about "Dumb Money" and its Fear & Greed. Retail Forex Trading is a PSYOP where one either learns how to identify Market Maker Accumulation Phases or one blows their account without such an understanding.

I've blown enough of them. I'm qualified to make that statement.
F-X-C-M | A Classic Retail Bucket Shop Scam Artist Who Manipulates Prices
  • #30
  • May 25, 2016 10:31pm May 25, 2016 10:31pm
Quoting PipMeUp
{quote} My personal and subjective opinion don't make the market move. That is wishful thinking. At least as far as the accumulated evidence thus far can tell, in the picture the market is both and at the same time in a range and in a downtrend at two slighly different time scales (not timeframes!). It isn't a "either...or..." situation. Some times the two scales are sufficiently distant to consider the lower or the higher timeframe, forcing a decision toward the range or the trend. But quite often the time scales overlap even more. This...
This is the poser of the market that you so very well described.

The big idea would then be to take positions only when the scales are clearly distant where the the decision is forced which will give it a high percentile probability, isn't it ?
  • #31
  • May 25, 2016 11:14pm May 25, 2016 11:14pm
Quoting PipMeUp
///The Bayesian approach is to consider both with their respective probabilities and their potential outcomes to estimate an expectancy and a variance from which you can decide on the direction and the size, which can be zero, of a position. Here is where a machine can perform way much better than a human. Our brain is very bad at managing probabilities especially conditional probabilities.
The more I trade the more I find that this is what I am trying to do. Trying to figure out whether a move belongs to a small time scale or a larger one.

Quoting iDoubleStoch
Retail Forex Trading is about liquidity and the imbalance of buy/sell orders. It is about "Dumb Money" and its Fear & Greed. Retail Forex Trading is a PSYOP where one either learns how to identify Market Maker Accumulation Phases or one blows their account without such an understanding.
And then there's this. But I find that as long as we choose good locations to trade from and wait for the momentum to change on a small time scale OR use extremely tight stops if we want to probe the market with test positions, the problem resolves itself.

The more difficult problem is the one highlighted by PipMeUp.
Build good relationships with others.
  • #32
  • May 25, 2016 11:39pm May 25, 2016 11:39pm
...and always include cost in your trading.
some one once said, the market is a sum of two ends that equal to zero. Well, it is not like that.
cost = spread + commission + swap + slippage + latency + virtual dealing + delaying + + +
I did learned that we are not on two ends equally, we are at the end where cost favors the other side.

be prepared emotionally to deal with that, you are playing baseball where your turn get out at 2 strikes, the other team get out at 4 strikes. Odds are the other team will win. (not equally game)
bauta
  • #33
  • May 26, 2016 12:08am May 26, 2016 12:08am
Good day

When it comes to "hope", that feeling, that idea, I believe we have to realise, and accept the fact that HOPE is our most valuable commodity.

Without even realising it, everyone on earth probably "hopes" every minute of every day.

You climb in your car, turn the ignition, and nothing happens, the engine does not turn. Unconsciously, you were hoping the engine would turn.

Without Hope, there is no reason to do it. I, we cannot foresee the future, so we hope it will turn out all right.

Now with regards to trading. I do believe that Forex is centralized. If it were not, then pouring $4 trillion into a trade, it would just continue in one direction. However, it does not.
In a room somewhere, some old computer from the 1970's is still running the same program it always has. This is why we get candlestick formations, divergence with other indicators.

The only difference between traders, is that that they are are hoping for either the same outcome, or a different outcome.

I believe purely in Pivots, "(soft voice and macd)" for the reason that it is the fixed constant. And I use IG Index, with their charting and their Pivots, which are on the money to the pip every time .
I use macd because it shows what the "herd" is doing.

This is the EURJPY thread http://www.forexfactory.com/showthread.php?t=207265

I have posted my trades there over the last 2 days. lol. Think of it like a free signal service.

Now to answer the question at the heading of this thread.

What is my BIG IDEA? (what is it that I am hoping for)
I want to get into a position, where I trade $2000 a pip. I want to make 1000 pips a month.
The I want 100 people working with me, doing the same trades.

Convert the USD currency into South African rand, and I get enough money every month, to feed this nation. To house people with electricity and water, give medical and education to everybody. Then I want to run for President, or back a winning candidate. Then help this country out of the mess that it is in. Because it is possible, everything is possible with the right people all hoping the same thing.

If you stop hoping, then you have given up all expectations of nothing but the best for you and your family.

Live long, and be strong
Forex, awful to watch, AWESOME to play
  • #34
  • May 26, 2016 12:16am May 26, 2016 12:16am
Quoting iDoubleStoch
Moral of The Story? Take advantage of all Accumulation Phases by not being fooled by them.
Indeed. To whatever extent manipulation creates an indelible and recurring pattern in price movement, then discover the pattern, build a trading system around it, and you're on your way.

The detail in your post is very similar to material presented by an educator, whose training videos I watched around 3-4 years ago. Accumulation, deception, profit release.
  • #35
  • May 26, 2016 7:07am May 26, 2016 7:07am
Quoting PipMeUp
My personal and subjective opinion don't make the market move.
Of course it doesn't, darling, collective buying and selling does that. Obviously.

I wonder how you could infer that meaning from my original message; that the interpretation of a trend or range and how to trade on these concepts are your personal opinion. Its as though you subscribe to the common FF myth that a form of analysis must 'make the market move' to be useful. Analysis is used to appraise the conditions that arise from market movement. Your own analysis does not, in fact, move markets. Sheesh.

All measurements of trend involve taking a current reading and a historical reading and comparing them. The direction of the trend depends upon the method we use to perform the comparison. Real instruments fluctuate minute-to-minute, day-to-day and year-to-year. We have, therefore an enormous supply of historical points to use to determine trend. As such, we can determine as many instances of trend as we please, in any direction that we please.

When we speak of trends we are necessarily projecting our own definitions. Therefore...
Quote
At least as far as the accumulated evidence thus far can tell, in the picture the market is both and at the same time in a range...
This is a statement of opinion.
Quote
and in a downtrend
This is a statement of opinion.
  • #36
  • May 27, 2016 8:05am May 27, 2016 8:05am
This picture is taken from Rasmussen & Williams, Gaussian Processes for Machine Learning. Let's forget all the maths around the GPs.
Attached Image (click to enlarge)
Click to Enlarge Name: ARD.png Size: 44 KB

Let's imagine the 7 samples are a price series and we would like to smooth it with some MA to see if it is a range or a trend. We have the usual tradeoff smoothness vs fitting, also known as "WTF the period I shall use". To make it simple, Automatic Relevance Determination (ARD) aims to find the most likely correct tradeoff. Are those 7 points in a range or a trend? The top picture shows there are 2 locally optimal parameters. They are shown by the two pictures below. One is better than the other. The global maximum is "that's more likely a uptrend". This is not obvious from the samples alone (at least to me). The little green cross I added to the picture is the "ground truth" of the real parameters the authors used to actually generate the 7 samples.

There is no statement of opinion from the algorithm. It has no personal and subjective opinion about the 7 samples. It just fit the two most likely models to the data using Baysian inference and a lot of numerical integrals.

My point is that both the models are good and both should be considered together rather then discarding one and only keeping the global optimal. We have two estimations of the likelihood. One for each models. We can thus weight the range and the trend money management wise. You know how to distribute the risk between the two alternatives derived purely from maths.

Now I agree that how to trade this range assuming it is a range and how to trade this trend assuming it is a trend are personal matters. How much to risk altogether is all about your own risk of ruin acceptance. Yet once your RoR tolerence is known the %-age at risk may be deterministically and objectively estimated.

My second point was that because the price is fractal-like this resolution should be done multi-scales. All the results for all the scales is to be considered altogether. I'm not saying it is easy. I'm not saying I succeeded in doing it ^^-

The small range inside the wider downtrend in my first example has to be considered. There is no "I discard the range because I want to see a downtrend". Both are there. Each one has its scope. The lowest scale will quickly be defined by the cost of trading. But for the highest scale the duration of some of the trades may become too long for your liking. The choice of the scales is yours. It is indeed a personal opinion/decision. Does it make sense to stay 6 months in a trade to expect 50 pips? I have my idea on the answer. There is no need we agree on it. Lifespan expectancy is also to be considered...

New data will come and all this hierarchical model set will be reconsidered/reconstructed. New trading decisions will have to be made.
No greed. No fear. Just maths.
  • #37
  • May 27, 2016 10:55am May 27, 2016 10:55am
Quoting Rtm
what is success to you? plan your trade(s), trade your plan. patience. success is discipline friends.

couldnt of said it better myself
Learn, a forex trader must, unlearn and relearn he will.
  • #38
  • May 27, 2016 12:08pm May 27, 2016 12:08pm
Quoting dancingphil
There are no Gods. There are only the fairy-tales in religion and in the minds of dreamers, and even kids don't believe them. There is profit, and there is loss, and it is a zero sum game. A game of probabilities played out until the end. The rest is just shit dribbling from the corner of the mouth of a dreamer. {quote}
I agree with a lot of your opinions. I would state one thing; Everything is based on un-proven belief systems. Be it god, evolution, profitable traders on Forex factory ect....
Its been years since I have seen the phrase "shit dribbling." Love it!
  • #39
  • May 27, 2016 2:55pm May 27, 2016 2:55pm
From an Auction Market Value Theory perspective.........................

Market generated data/info is closely tied to something real and observable in the market;whereas an indicator is the result of a computation--typically from a moving average related process, removed from observation.

Using "market generated information" means using only inputs or information provided by the market itself. For example, using only a market's high, low, and closing prices in your analysis.

What makes the high, low, and closing prices market generated info, distinguishable (objective) from other prices? The time in which they occur. Without the element of time, prices would be indistinguishable in all but name.
i.e. what makes the closing price distinguishable from any other price on the chart? The time at which it occurred. Every price tick carries two pieces of information, price and the time when it occurred. If your data doesnt include the element of time, it is not market generated data/info

What makes the use of linear price series a "non permitted practice" in Auction Market Value Theory? What makes one price distinguishable from any another price? Again, The element of time. Price over time makes any one price, objective & distinguishable from another. Not by measuring price against price.

Every price tick carries two pieces of information, price and the time when it occurred. If your data doesn't include the element of time, it is not market generated data/info.

A moving average related process removes/doesnt include the time element. (non permitted practice) And the process itself comes from "outside the market" (outside/removed from observation, not market generated). Technically being "outside info" (subjective) also a non-permitted practice.

From an auction market analysis perspective, the use of Technical analysis is a non permitted practice, because of the data used and most indicators result typically from a moving average related process.

Again, if your data doesnt include the element of time, it is not market generated data/info
A mathematical computation using market generated data" (variables) is a permitted practice

When your computation excludes the element of time as with most technical analysis (i.e. MA's oscillators, etc.), you are essentially measuring "price against price". The only thing that makes those prices indistinguishable from one another is the Time at which it occurred .

Without the element of time, you are measuring "price against price", which has no informational value. Price has no meaning or informational value, unless you know the time in which it occurred.

Measuring price against price does not have the same informational value as measuring "price over time"...

The idea behind using market generated info is to remove your own opinion from the equation and allow you to trade the actual market, rather than trade what you believe the market should be doing. An advantage to using market generated data for your analysis is the results lend themselves well to statistical validation rather than a belief system.........just my opinion from an Auction Market Theory perspective
Markets are not efficient, rather they are effective - Jones
  • #40
  • Edited 4:59am May 28, 2016 4:48am | Edited 4:59am
Quoting PipMeUp
There is no statement of opinion from the algorithm. It has no personal and subjective opinion...
Being objective in the method you use to measure and define a 'trend' or 'range' does little to avoid the fact that accepting such a definition is completely subjective.

You are being objective in saying that within a chosen price series your chosen model objectively defines a 'trend' and/or 'range'. Of course, when you define your scope of study you can objectively describe what has happened in the past. The market (the totality of buyers and sellers) may not share your definition and the limits you set. Allusions to 'trends' in the present/future such as in a statement like "the market is trending" or your own "shall I stay with the down trend..." are necessarily a projection of an expectation of the future; a notion that does not rise above the level of an opinion.
Quote
Now I agree that how to trade this range assuming it is a range and how to trade this trend assuming it is a trend are personal matters. How much to risk altogether is all about your own risk of ruin acceptance.
Risk tolerance aside, the very idea of trading with the 'trend' (or against it, if you fancy losing) contains a belief about the nature of markets and an inherent expectation of the future. Modern trend following is mostly inspired by, if not derived from, the ideas and observations of Jesse Livermore penned by Lefevre. Objectively defining what constitutes a 'trend' (even if you use a complex definition involving different fractal resolutions) cannot avoid the fact that speculation based on this concept is very much rooted in one's personal opinions. Of course, if you are speaking of some non-speculative trading strategy then do pardon me.
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