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Technical Analysis Fallacy

  • #54,701
  • Jun 3, 2016 2:53pm Jun 3, 2016 2:53pm
Hi fti,

I just got to this thread (some years too late) and really like your view on things.
For years i tried to make daytrading or Intraday trading work without any success due to certain factors (Daytime job, timezone i'm in which is Mexico, family life , crazy wife, crazy wife and ohh did i mention the crazy wife ;-) < Nah just joking, while the daytime job is a big one i must honestly accept that it was mostly due to my lack of patience and persistence.
So, as much as i wanted to "day trade" i recently decided to not go that route anymore and now focus on to End of Day trading.
As i saw in the beginning of this thread that you go more with the intraday moves of the market i would still like to ask you what your view is on this type of trading approach. As you have been on the institutional side of this market, is this (end of day) a way of trading you would recommend? End of Day trading certainly LOOKS much easier. Would you have any tips for someone going that route?
I apologize if this has been asked already somewhere along this thread.


Thank you for reading my post.

Reiziger.
  • #54,702
  • Jun 5, 2016 2:30am Jun 5, 2016 2:30am
Quoting phil13
{quote} Hi appleboy my friend there is much more to it but being a simple thing it gets very overlooked, such as i use it to help with direction and entries on lower time frames. it is hard to explain you must look at these closely and experience them as they form to see the better ones in the different situations... combine with momentum. searches do not bring up a lot of info about it. 13 is also lucky for me. regards Phil.
Momentum as in classical mechanics is the P=M*V of course in forex there is no mass and there is no velocity although some traders would swear by the fact that orders create other orders in the same direction, now this would be seen in auto correlation [Covariance(xt,xt−h)/Std.Dev.(xt)Std.Dev.(xt−h] Yet there is none =

0 1 2 3 4 5 6 7 8 9 10 11
1.000 0.008 -0.012 -0.002 0.035 -0.030 0.017 0.026 -0.004 -0.002 -0.018 0.005
12 13 14 15 16 17 18 19 20 21 22 23
0.014 0.015 -0.006 -0.012 -0.003 0.009 0.004 0.014 0.007 -0.011 0.014 -0.015
24 25 26 27 28 29 30 31 32 33 34 35
0.008 -0.001 0.005 0.002 -0.002 0.020 -0.003 -0.004 -0.005 -0.006 -0.010 0.006
36
-0.009
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AVT INVENIAM VIAM AVT FACIAM
  • #54,703
  • Jun 5, 2016 2:41am Jun 5, 2016 2:41am
Quoting fti
{quote} This peeps are ill trained. But as in deko and boko, its reflection of teacher/teachers. Anyway this is retail. It would be difficult to expect line of professional questioning. They not aware. either that or they all already know. But the silence is very deafening, that not even 1 asked why i would be so dead against placing stop orders in forexOTC markets. STOPs are there protect against overloss? thats what they would like you to think. DUCKS. Maybe there so much respect that there little intelligence of market structures? GUTs...

Well fti If "peeps" got into the trade and it's going against them at what point do you expect them to cut their losses? most likely these same "peeps" won't be able to recognize when it's a hopeless position or when to average down their position to bring their average price close to market. Most likely these "peeps" will find themselves with double the risk on the losing position.
AVT INVENIAM VIAM AVT FACIAM
  • #54,704
  • Edited 5:21am Jun 5, 2016 5:00am | Edited 5:21am
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http://www.bwater.com/Uploads/FileMa...Principles.pdf
THE ALL is MIND; The Universe is Mental
  • #54,705
  • Jun 5, 2016 5:26am Jun 5, 2016 5:26am
Quoting the redlion
{quote} Well fti If "peeps" got into the trade and it's going against them at what point do you expect them to cut their losses? most likely these same "peeps" won't be able to recognize when it's a hopeless position or when to average down their position to bring their average price close to market. Most likely these "peeps" will find themselves with double the risk on the losing position.
That is a good question (thanks for it as I have been thinking about it in my head - pointed out to me by FTI).... but there are so many different situations:

  1. you can close down a position(s) when a swing is taken out - but get in again later at new scout level (all the men in loss = new scout level) in same direction - e.g. if I am in deep PB in w4/5 and got in at deep wA or wB when deep wC hits I can close down my men in trouble - minimising the loss and getting in when w5 starts = less to recover and I am back running with main trend when I get in - FTI highlighted this to me recently
  2. you may be in with scout at wB and then rescue in wC (to bring average close to you) if abc is nice easy weak PB - if you had more than scout in you could still rescue without closing as abc is nice weak PB and not super deep strong one - so when wA is taken out slightly you do not need to close 'em down
  3. if you are against main trend then we need to think how can I get in with nice trend instead of my in trouble position(s) - and if you do try to rescue against this then you need to close rescue as soon as it fails (in and out like ninja) as this is super risky place unless you get strong clues of good rescue opp and that trend is moving your way again - also the flip may come in here or the move may be very far gone for flip (overbought/oversold.
  4. there is also news and time of day coming into play.

There are loads of situations so I think we have to be clever in our application and thinking (not rigid and flat) and this I am sure comes easier with experience- and a lot may be down to capital (although thinking I am invincible if I have a huge army does not mean I should take super risks of loss as I can always rescue later- this is egor (killer) - but I do think keeping losses low is VIP - I have often let it run against me leaving a lot to rescue later in a harder circumstance and wondered why I am doing this as it is crazy - maybe that is just me.

There are loads of possibilities and if anyone can offer any thoughts or advice - I am always most grateful.

Alex

check out the terrain - follow never lead
  • #54,706
  • Jun 5, 2016 12:19pm Jun 5, 2016 12:19pm
Quoting alexandria
{quote} That is a good question (thanks for it as I have been thinking about it in my head - pointed out to me by FTI).... but there are so many different situations: you can close down a position(s) when a swing is taken out - but get in again later at new scout level (all the men in loss = new scout level) in same direction - e.g. if I am in deep PB in w4/5 and got in at deep wA or wB when deep wC hits I can close down my men in trouble - minimising the loss and getting in when w5 starts = less to recover and I am back running with main trend...
When you are talking about Waves ABC this is a pre suposition a random chart also appears to have waves, formations, support and resistance. Over the last 5 years there have been 563 days where the euro has closed < open, while 542 days where it has closed > open. As I previously stated before the autocorrelation is what you would expect from a random sample, given these two empirical observations the position size you are using is inconsistent while your methodology is subjective, I don't think this is a viable long term strategy.
AVT INVENIAM VIAM AVT FACIAM
  • #54,707
  • Jun 6, 2016 2:16am Jun 6, 2016 2:16am
Hi redlion

So maybe I am not using correct wording to try to explain myself but for me I understand momentum as something that is a force that makes things move, even though my maths is no were near the level that yours is at I can understand the basis of the example given and your statement about it, the Oxford dictionary states as the definition for momentum the following..

1 Physics The quantity of motion of a moving body, measured as a product of its mass and velocity.

2 The impetus gained by a moving object:
the vehicle gained momentum as the road dipped

2.1 The impetus and driving force gained by the development of a process or course of events:
the investigation gathered momentum in the spring
http://www.oxforddictionaries.com/de...glish/momentum

Looking at the market charts using timed references (candles/bars etc.) we can clearly see movement and the only way I can explain what I see (or think I see) is by using the word momentum as a general reference to 2 and 2.1 above.

You also state that the market is random and also say that there appears to be waves etc. in that random behaviour, by looking at the movement we can sometimes judge/guess the direction to come for a short while, price can only do two things stand still or move, it will have to move at some point so our concern should be which way up or down so 50/50? By looking at the current now move compared to the previous we can gain clues possibly to the next price push direction in this random action, if we avoid the higher risk events and note how price generally moves during the day (we are trading short term mainly) we can use this as a strategy to possibly get on the right side of the move after we have tested our intended direction, the scouts as you know are supposed to be very small compared to our main entry, this allows for the lower risk test phase of the trade, I found the problem for most is they marry their idea of direction (as I did when I started) and so do not trade with correct money management to allow for the mistakes they will make due to this random action, what is the point in testing something if you are not going to listen and act on the low cost initial results from the scouts, I know you have been around this trading forum for a while now and I guess you have been trading for most of that time maybe longer, so there is no need for me to say that trading in a consistently profitable way takes far more research and experience into other things than just trading by entering one large trade and hoping you are right, fear and greed within is the biggest obstacle to learn to overcome.

Everyone trades in a different way, I have found there is no one size fits all, I have tried many things that others claim they are working with consistent profits, I personally could not get anything else I tried to work consistently enough for me until I read and started to understand what is written in this thread, I understand that not everyone will be able to make this way of trading work for them, this does not mean that it is not profitable long term, it just means as I had with the other ways of trading it is not something that they can get to work for them for some reason.

The only other thing I want to say is that formulaes, theorys and science are constantly evolving and our understand of something now may be changed tomorrow as we understand more and find better ways of explaining and calculating things.

I am not the best at explaining myself sometimes as I am dyslexic but I try to do my best at it, I hope you can understand what I have written though.

Regards

Phil.
-be careful about what you allow to be put in your mind-
  • #54,708
  • Edited 4:41am Jun 6, 2016 2:45am | Edited 4:41am
Quoting Reiziger
Hi fti, I just got to this thread (some years too late) and really like your view on things. For years i tried to make daytrading or Intraday trading work without any success due to certain factors (Daytime job, timezone i'm in which is Mexico, family life , crazy wife, crazy wife and ohh did i mention the crazy wife ;-) < Nah just joking, while the daytime job is a big one i must honestly accept that it was mostly due to my lack of patience and persistence. So, as much as i wanted to "day trade" i recently decided to not go that route anymore and...
ahhh crazy wifes.
yeah you have a few and the excitement never stops.

In our business, whenever a position is carried over the calander day, we call it carry trades after swaping it forward tom next.( value tomorrow to next day swaped) every position carried incurrs cost of funding depending on the swap/interest rates diff.

When traders carrys risk in minutes ,it would most ly take a whole day to manage. I trade all 3 zones, sometimes clown around in the twinlight zone, if markets force me stay in office too late.
if you trade in days tenure, you would need need manage it for weeks , sometimes up to months.
if you trade in weekly tenire you mostly trade a few positions a year. That would make you an investor.
If you investor, i suggest you trade things that are better stores of value, eg property.
Paper derivatives are normally more volitile than crazy wifes. So i do not like overstay positions unless i know insider information.

I did once had a discussion with a quandraff wave theorist, he did show me a viable 144 years position ride.
I declined his employment, because ....... you know.

Anyway, i don't think i can go without sleep for more than 1 week, while managing my positions.
The thing is i like drive myself , eventhough i have a driver.
i believe in , if i have to die on the road. Better be my mistake than someone elses. my character.

regards

PS: mostly i make diver sit next to me, unless is when i attenting conference and need make a big man arrival.
otherwise i i scare the daylights out of em. I had advance driving licence. Mostly they do the mobile maintance. I used to have tendency destroy engines.
the carbon never builds up.

sorry i forgot answer your question.
I do have carry positions sometimes, they very small relative to my book.
Normally they are left over mistresses, who got me excited about some fundamentals.
sometimes snow balled positions, until they turned profitable or breakeven my position cost.
I mostly babysit my trades.
And i seldom reckless but macro managing is not my cup.
Had many a time premature ejected positions, just because i was too tired squeeze evry drop of blood from em.
esp if i feel ita a dang stone,and i am tired.


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  • #54,709
  • Edited 8:19am Jun 6, 2016 7:21am | Edited 8:19am
Quoting Reiziger
Hi fti, I just got to this thread (some years too late) and really like your view on things. For years i tried to make daytrading or Intraday trading work without any success due to certain factors (Daytime job, timezone i'm in which is Mexico, family life , crazy wife, crazy wife and ohh did i mention the crazy wife ;-) < Nah just joking, while the daytime job is a big one i must honestly accept that it was mostly due to my lack of patience and persistence. So, as much as i wanted to "day trade" i recently decided to not go that route anymore and...
I have sat to think how i can say somethings that may be meaningful way answer your question.

Generally, markets are driven by many factors.
The longer your trade tenure, the more the differing factors comes into play.

In the short tenure, the most critical/dorminant factors are the timing factors.
In shortest time frames are the buying and selling, which drives the prices.
This why you see random walk plays in prices.

As time expands, these entry and exits of trades will look like meaningless noise.
So many position traders will try filter away these noise factors.
But many forget that trends are expanded developments from these noise factors to continue into trends.
Trends are the the basic components position traders would be interested in.

AND the basic building blocks of trend comes from the noise motion. And by these observations can one be able to decipher whats happening create the "eye" of the storm that will prevail.
In other words, although one may like trade a directional bias. This does not mean that one should ignore the short forms. Because one can improve on one's cost of the position.
Ultimately a continuing trend, is just the carry over impact of the same noise , manifesting itself into the directional impulse that the trend will inherit from the noise information.

Moreover , its during these noise stages that positions costings and exposures can be managed and re advantaged.
So trading in the short tenure is the way to trade.

every body loves a pretty girl, but one must not forget, it takes her days draw herself.
I hope i making sense.
eeeer every body like eat cake, but to make one need skills in many aspects which adds up to the final result.

also making small money helps build up neccessary risk capital for punting. And is safer and more consistent to making small money.
Its ants job.
Learn manage the timing and the bias will take care of itself.
Trading is all about timing. With or without the bias.


regards

Trading long everyday for 100 days is same as married to long position for 100 days.
more over some days i can have fling make money in my shorts, when the trend is resting. Is called retracements.

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  • #54,710
  • Jun 6, 2016 8:33am Jun 6, 2016 8:33am
Quoting phil13
Hi redlion So maybe I am not using correct wording to try to explain myself but for me I understand momentum as something that is a force that makes things move, even though my maths is no were near the level that yours is at I can understand the basis of the example given and your statement about it, the Oxford dictionary states as the definition for momentum the following.. 1 Physics The quantity of motion of a moving body, measured as a product of its mass and velocity. 2 The impetus gained by a moving object: the vehicle gained momentum as the...

On the Random part: I concede that the market is so complex it acts as a random sample runs.test, lack of auto correlation, hurst exponent, distribution curve etc... However there are in previous discussions with other traders as well as on big fundamental news events and research papers from Princeton (which i posted at some point one a thread somewhere [i would have to go back look for it and site it] ) there are evidence of predictability so it is not entirely so that the market is actually random at some points.

now when I question your use of momentum is because (and I could be wrong) if something carries some sort of momentum previous day movement should carry on until an equal force stops / reverses it in a different direction correct? so if last Friday for example the daily return for the euro was 1.92% [log(1.1367/1.1151) ]. Then by logic it follows Today is long bias unless an equal force is applying bearish pressure ? am i making sense? we can surmise that some part of the EURUSD movement is at least being affected by the expectation of rate hikes (or lack there off) given the soft performance of the US economy. There is also other events such as the Brexit and the uncertainty this may bring to the EU. We can continue to add variables to our model which as you mention to a certain extent it brings at least close to 50/50 isn't this a binomial distribution (Bernoulli trial). If momentum was indeed present then when we lag the time series should we not see corr(r_0,r_-1) = [ covariance (r_0,r_-1)/standard deviation (r_0,r_-1) subsequently corr(r_-1,r_-2) , corr(r_-2,r_-3) ....and so on] am i making sense?

when you are talking about scouts and you position sizing you are essentially scaling in and i assume averaging down at some points. Am I mistaken? what mechanism do you use to keep your risk consistent so your losses doe not outweigh your winners?
AVT INVENIAM VIAM AVT FACIAM
  • #54,711
  • Jun 6, 2016 8:53am Jun 6, 2016 8:53am
I have to agree with fti (if i understood him correctly) here is the simplest way I can convey my Idea.. sometimes the tools we use skew our view of the thing we are measuring. Bid/Ask <-- this is the market. in reality there are no timeframes (there might be holding times but not time frames in the sense everyone in FF talks about) so when you look at a 5 minute chart or a daily chart it almost seems like a fractals, like patterns within patterns, a 5 minute chart is somehow different than a daily chart. This I claim is not true. BID/ASK that's it ...when we use candles we are measuring this BID/ASK in specific blocks of time. Open,High, Low, Close of x time what can you deduce from this? but as fti said take into account the cost of holding a currency overnight as the interest difference in the Central Banks will incur a cost (rollover rate). The more time you allow this BID/ASK to go up,down,up,down,up,down the more volatility you are subjected to hence the different approach to position sizing.





Quoting fti
{quote} I have sat to think how i can say somethings that may be meaningful way answer your question. Generally, markets are driven by many factors. The longer your trade tenure, the more the differing factors comes into play. In the short tenure, the most critical/dorminant factors are the timing factors. In shortest time frames are the buying and selling, which drives the prices. This why you see random walk plays in prices. As time expands, these entry and exits of trades will look like meaningless noise. So many position traders will try filter...
AVT INVENIAM VIAM AVT FACIAM
  • #54,712
  • Jun 6, 2016 10:19am Jun 6, 2016 10:19am
Quoting fti
{quote} This peeps are ill trained. But as in deko and boko, its reflection of teacher/teachers. Anyway this is retail. It would be difficult to expect line of professional questioning. They not aware. either that or they all already know. But the silence is very deafening, that not even 1 asked why i would be so dead against placing stop orders in forexOTC markets. STOPs are there protect against overloss? thats what they would like you to think. DUCKS. Maybe there so much respect that there little intelligence of market structures? GUTs...
TMU = Treasury Marketing Unit
OTC = Over the Counter
may i ask what OCO and MOC is ?
  • #54,713
  • Edited 11:27am Jun 6, 2016 11:03am | Edited 11:27am
Quoting appleboy
{quote} TMU = Treasury Marketing Unit OTC = Over the Counter may i ask what OCO and MOC is ?
one fills cancels the other order.
market on close.


regards
  • #54,714
  • Jun 6, 2016 11:39am Jun 6, 2016 11:39am
ahhhh Thank You to a nice friend.

may God laugh at your life too.

regards
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  • #54,715
  • Jun 6, 2016 11:46am Jun 6, 2016 11:46am
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regards
  • #54,716
  • Jun 6, 2016 12:43pm Jun 6, 2016 12:43pm
Quoting the redlion
{quote} On the Random part: I concede that the market is so complex it acts as a random sample runs.test, lack of auto correlation, hurst exponent, distribution curve etc... However there are in previous discussions with other traders as well as on big fundamental news events and research papers from Princeton (which i posted at some point one a thread somewhere [i would have to go back look for it and site it] ) there are evidence of predictability so it is not entirely so that the market is actually random at some points. now when I question your...
Hi redlion

Been trading and just finish for the day now.

I can generally agree with what you are saying but if momentum is not the force behind the market moves what is? But to be honest it does not matter what I do or do not call this force that moves price, I know what I see and works for me, the momentum thing is the simplest word I can use to explain my view of it to others.

Yes, I am scaling into my trades.

The mechanism I use to keep my risk consistent and avoid taking more losses than winners is me and my experience so far, if you have time take a look at my journal (from post 212 for the most recent stuff) and that may explain it a bit more, I really do not have a fixed rule or specific set of data that I use for this, it depends on the situation I find myself in at any given time that I need to adjust too.
Years ago when I used fixed stop losses it just slowly eat away at my account, now I take full responsibility for every action I take in the market.

Regards
-be careful about what you allow to be put in your mind-
  • #54,717
  • Jun 6, 2016 3:02pm Jun 6, 2016 3:02pm
Quoting fti
{quote} I have sat to think how i can say somethings that may be meaningful way answer your question. Generally, markets are driven by many factors. The longer your trade tenure, the more the differing factors comes into play. In the short tenure, the most critical/dorminant factors are the timing factors. In shortest time frames are the buying and selling, which drives the prices. This why you see random walk plays in prices. As time expands, these entry and exits of trades will look like meaningless noise. So many position traders will try filter...
FTI,
Thank you for your wise words.
You see, timeframe (or choosing a timeframe) to trade from and even multiple timeframe analysis has always been my "kryptonite" so to speak. It's always "Trade the trend, Trade the trend" but a retracement on a Daily chart could be a big trend on the hourly chart.
I see your point clearly tho . Thank you very much.
  • #54,718
  • Edited 10:14pm Jun 6, 2016 9:58pm | Edited 10:14pm
Quoting Reiziger
{quote} FTI, Thank you for your wise words. You see, timeframe (or choosing a timeframe) to trade from and even multiple timeframe analysis has always been my "kryptonite" so to speak. It's always "Trade the trend, Trade the trend" but a retracement on a Daily chart could be a big trend on the hourly chart. I see your point clearly tho . Thank you very much.
ahhh you are wise too. Very.

Trade the trend is correct mindset.

In fact, market makers know where the markets are at, at all times.
This is because when they make prices if it trades at the bid then market is at the bid or lower.
If it trades at the offer, then market is at the offer or higher.
In that sense market makers always knows where the markets are at.

For non market making traders, the best easily available chart info available is the 5 mins.
This is because unless one plots linear charts, the 5 mins charts will be the lowest denomination skeleton/bar charts available to the masses.
This is why i use the 5 mins , when i have no access to market making facilities.

Where one will end up depends on the markets lead.
where, meaning what chart time frames. Different terrains types coupled with different implimented strategies will lead the dance.
Therefore no 2 traders will be at the same chart time frames, although it can happen. This because no 2 traders would be on same money management strategies.
Only that if 2 traders are equally skillful, they would have similar strategies in the bag.Which will lead them to the same hill.

regards

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and then.....

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  • #54,719
  • Edited 10:33pm Jun 6, 2016 10:19pm | Edited 10:33pm
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Some drums to cue the pending impulse? I like this drums very much, especially when played on repeat, nice rhythm
Cant find .. a piece.. to go after the drums when the attack comes..

Rgds

If what history dictates is true, DNA and genetic in us have at one point in other, been primative and in the early ages. Some part of music, cue some sentiment emotions unknowingly, or subconsciously. I find this track prepare for an impending impetus... nicely very nicely, gets the heart pumping with my bassy sub woof.. heh

Wow, this good too.
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Fall in love with the process, and the outcome takes care of itself.
  • #54,720
  • Edited 11:37pm Jun 6, 2016 10:45pm | Edited 11:37pm
Quoting RelaxRay
https://www.youtube.com/watch?v=G24_1FbBrbg Some drums to cue the pending impulse? I like this drums very much, especially when played on repeat, nice rhythm Cant find .. a piece.. to go after the drums when the attack comes.. Rgds If what history dictates is true, DNA and genetic in us have at one point in other, been primative and in the early ages. Some part of music, cue some sentiment emotions unknowingly, or subconsciously. I find this track prepare for an impending impetus... nicely very nicely, gets the heart pumping with my bassy...

ahhh drums.

sub woofing, oh ok where the.........

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naughty wolfing?

okok gear up, lock and load.
battle well my friends.

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protect the free markets. use it or loose it.
eeeer free hor, no play monopoly...................... creating poverty and too big to fails..
make a living.

Help the needy. its a dang good agenda for living.
Good fortune, my friends.


regards
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