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  • #1,221
  • May 4, 2017 8:22pm May 4, 2017 8:22pm
Quoting cat
{quote} This raises a lot of points, which I won't try and go into now. trading around the edges is fine as long as you know where the edges are! Generally though, buying the valley and selling the peak is a good template to have in your head. As for only buying when the price is above or selling when it's below an MA or whatever..if only trading were that simple - unfortunately it's not. We are always all looking for ways to simplify out charts/trading/strategy, and we should seek to do so, but that is very different to trying to find some holy...
On buying above and selling below the MAs I should have been careful with my wording there. It's not as simple as that you're right and I know that very well. However I also think that sometimes momentum that starts on lower TFs like 15sec and 1min slowly progresses to a major trend on higher TFsn shooting through higher TF major MAs. I've seen it happen on plenty of FX pairs. So it can go both ways.
...
  • #1,222
  • Edited 7:01am May 5, 2017 1:52am | Edited 7:01am
Quoting Piquant
{quote} On buying above and selling below the MAs I should have been careful with my wording there. It's not as simple as that you're right and I know that very well. However I also think that sometimes momentum that starts on lower TFs like 15sec and 1min slowly progresses to a major trend on higher TFsn shooting through higher TF major MAs. I've seen it happen on plenty of FX pairs. So it can go both ways.
Of course it does, all moves, whether 20 pips or 200 pips can be caught close to the beginning on a 15 sec time frame...all mine are. When people read that you trade off a time frame in the seconds rather than on 15 mins or whatever, they automatically assume you are a scalper, in and out for 10 to 20 pips. That is because most people cannot get their head round trading off of anything smaller than 1 minute, and even that's way too small for most people. What they fail to appreciate is that going right down to 10, 15, or 20 seconds can get you close to the very beginning of a move using a much smaller stop loss than you would need on a higher frame. And if you consider than most time frames are actually indistinguishable from one another in terms of appearance, meaning if you take the time frame away and show someone a 20 second chart next to a 20 minute chart, they wouldn't be able to tell the difference a lot of the time. For capturing the majority of the moves in any one day, small time frames for me are the way to go, and through them, I get around 90% of the best moves in the market, with losses obviously, but I get most of the best moves close to their origin. This also means that I don't have to go trawling off to look for other pairs, because even on a bad day on say GJ or Dax, there are still opportunities to make money.

Remember though, as I have explained before on this thread, the only reason I started using very small time frames down to 10 seconds or even smaller was because I started out with a 200 pound account- couldn't afford any more in the dark old days, so I was trading micro lots for several years before I was able to quit my job to trade full time. I had no choice but to go down to ten seconds if I wanted to keep my risk level to 1.5%. Slowly but surely I built my account. Had I risked more by trading off of a 5 minute time frame for example, I would have blown my account repeatedly I am sure, because when you are over leveraged, the psychological factor plays a far bigger adverse role in your trading than when your risk is entirely manageable.

I often hear traders claim that no trader ever becomes successful without blowing multiple accounts. But why does that have to be so? Why does anyone have to lose shit loads of money before they finally make it? If you start small, are willing to hang in there for as long as it takes, learning all the while, no rush to get to where you want to be, and you use proper risk management, you do not have to blow one single account. I never did, because if I had done, I probably would have quit trying to become a trader that very day such were the financial pressures on me at the time.
  • #1,223
  • May 5, 2017 7:06am May 5, 2017 7:06am
Relates to my last post.

http://www.investopedia.com/universi...ules/rule3.asp
  • #1,224
  • May 5, 2017 8:30am May 5, 2017 8:30am
Quoting cat
Relates to my last post. http://www.investopedia.com/universi...ules/rule3.asp
I have to say that I don't give much for the reasoning, or rather lack thereof, in the Lien-Schlossberg article referred to.

While it is more than understandable that you needed to keep tight control of risk when starting out with a small account, that doesn't paint the full picture when it comes to optimal trade size.

For people to whom optimal trade sizing really matters - e.g. quant funds - the matter is usually handled using the Kelly criterion. As Ernie Chan puts it in https://epchan.blogspot.se/2006/10/h...d-you-use.html:

Quote
Besides helping you to avoid bankruptcy, the Kelly criterion has another important mathematically proven property: it is a growth-optimal strategy.


In other words, it's not just about downside but also about optimising the growth of your capital.

And if you make the thought experiment that you are managing a proprietary day trading firm - funding the activities of people such as ourselves - based on what would you allocate funds to people? Hit rate? Risk/reward ratio? A combination thereof? And how do you relate the supposed criterion to the growth of you own funds?

The answer is given by the type of reasoning originally developed by J.L. Kelly. See, for example, https://www.ece.uic.edu/~devroye/cou...e_Vercimak.pdf for a brief survey.

Personally, I have used the Kelly criterion to great benefit when trading options strategies - a situation which really proves the narrow-mindedness of the 2% rule.

And these days I have an R script for calculating it for my daily DAX trading - just to keep the finger on the pulse of my performance. My finding from that is that the optimal trade size is really the one that I have the guts to trade, which lies between the 2% and the output from the Kelly criterion.
  • #1,225
  • May 5, 2017 9:02am May 5, 2017 9:02am
The Dax looks so strong going into the French election doesn't it? Difficult to believe it will be anything but a Macron win, but after Brexit and Trump I guess one can't be too sure. Certainly the price is in clear water now, having broken into new highs, and technically at least it looks set to go higher and now the sky's the limit. The only technical feature I can see that might serve notice of a possible top is monthly diversion with MACD, but this will take a while to develop. The price is also very overbought in terms of its distance above both the weekly and monthly 200 ema, and as we all know, sooner or later, price always returns to its 200 simple or exponential moving average.
  • #1,226
  • May 5, 2017 9:42am May 5, 2017 9:42am
You know the posts on ff I love the most...the ones just after a big news release/speech or some other market moving event, and you always get the individual who posts something like..." OH THANK YOU DRAGHI/YELLEN/GOD...or whoever....you just gave me 5000 pips!!!
  • #1,227
  • May 5, 2017 10:42am May 5, 2017 10:42am
Quoting cat
You know the posts on ff I love the most...the ones just after a big news release/speech or some other market moving event, and you always get the individual who posts something like..." OH THANK YOU DRAGHI/YELLEN/GOD...or whoever....you just gave me 5000 pips!!!
They can't say that this time,, LOL.. dead NFP..

Dax to da mooon.
It's in fear when people show what they truly value.
  • #1,228
  • May 5, 2017 10:47am May 5, 2017 10:47am
Quoting Piquant
{quote} I appreciate you sharing your experience Skyway (I remember you from last year). I also have read this thread from page 1 until the very end many times over the last year and a half and still have yet to digest all of it. If it wasn't for this thread I don't think I would made the progress that I have made so far. I work with what I have from now on, I need to be consistent with my approach to figure out if I really have an edge. Maybe I don't, if thats the case I'll have further examine my approach and make further changes like you did...
For a very long while(more than 1yr) I was working around a set of MA and MACD that almost work -getting it set right took me a lot of effort and time. My current set which I use for some time now, I'm pretty comfortable with it and I don't foresee any changes or upgrades necessary.
  • #1,229
  • May 5, 2017 10:47am May 5, 2017 10:47am
One way of knowing whether you have devised a winning system ( apart from your account balance ) is to have a trading signal or perhaps trading signals that you recognize so often that they become your ' bread and butter trades ', that is, technical patterns that repeat themselves so often that you come to rely on them. They will not be identical every time obviously, but it will be a pattern, a formation, that you recognize every time as presenting a very high probability trading opportunity.

I would go as far as saying that if you do not have this/these repeatable patterns that you have become pretty efficient at identifying in advance and trading, relative to time frame, then you are either doing something wrong, or you have not yet reached the level of proficiency to be able to see them.

Any further thoughts on this will be appreciated.
  • #1,230
  • May 5, 2017 10:54am May 5, 2017 10:54am
Quoting cat
You know the posts on ff I love the most...the ones just after a big news release/speech or some other market moving event, and you always get the individual who posts something like..." OH THANK YOU DRAGHI/YELLEN/GOD...or whoever....you just gave me 5000 pips!!!
Hahaha .....I've read plenty of such draghi/yellen and now trump posts.....omg it's really funny lol.

About other lesser volatile pair Eu and uchf are possible candidates with low spread and smaller intra-day moves (provided draghi news is not scheduled for the day) which is suitable for the learning stage. Uchf tends to correlate inversely with Eu.
  • #1,231
  • May 5, 2017 11:04am May 5, 2017 11:04am
Quoting cat
One way of knowing whether you have devised a winning system ( apart from your account balance ) is to have a trading signal or perhaps trading signals that you recognize so often that they become your ' bread and butter trades ', that is, technical patterns that repeat themselves so often that you come to rely on them. They will not be identical every time obviously, but it will be a pattern, a formation, that you recognize every time as presenting a very high probability trading opportunity. I would go as far as saying that if you do not have...
agreed.. before this your pretty much a traveller.. the things you did while you were a traveller in the desert help you now but the bread and butter definitely keeps a calm/ consistent approach .
It's in fear when people show what they truly value.
  • #1,232
  • Edited 11:36am May 5, 2017 11:09am | Edited 11:36am
Quoting cat
One way of knowing whether you have devised a winning system ( apart from your account balance ) is to have a trading signal or perhaps trading signals that you recognize so often that they become your ' bread and butter trades ', that is, technical patterns that repeat themselves so often that you come to rely on them. They will not be identical every time obviously, but it will be a pattern, a formation, that you recognize every time as presenting a very high probability trading opportunity. I would go as far as saying that if you do not have...
Yes, I agree fully.

In fact, my trades are taken off only on this particular setup alone, the rest of the price movements lies somewhere in the vast expanse, I don't care about it. I have my setup coded, and that took a very long time to achieve.

I don't know if I'm correct about this, but from my research this particular pattern will occur on any timeframe, meaning you should see the same price movement from weekly down to 1m timeframe on any asset. The difference lies in the way you chose to trade, ie. position, swing, intra-day swing or scalping. That is an individual preference that depends on the trader's expectation and personal circumstances. They should trade out just the same no matter what our individual choice is.

This pattern/setup starts with/base on our understanding of how the market moves. For me, I don't know the why the market move this way, I only know the how. That's why in my earlier post above I mentioned about the 'Concept' - this is the starting point, and tons of work goes in to validate it.

Your 2nd para, though it may sound harsh, is right on target. You either have it or you don't - let's not kid ourselves. Take it as a bar/standard that wannabe traders must achieve.
  • #1,233
  • May 5, 2017 11:13am May 5, 2017 11:13am
Quoting cat
One way of knowing whether you have devised a winning system ( apart from your account balance ) is to have a trading signal or perhaps trading signals that you recognize so often that they become your ' bread and butter trades ', that is, technical patterns that repeat themselves so often that you come to rely on them. They will not be identical every time obviously, but it will be a pattern, a formation, that you recognize every time as presenting a very high probability trading opportunity. I would go as far as saying that if you do not have...
You've hit the nail on the head. In fact, if there is a "Holy Grail" in trading I'd say that this is it - the eventual clarity we reach having waded through all the nonsense.

Those "patterns", which in selling+buying terms form as a direct consequence of bias changing in real time (or as near as can be) from one direction to the other are evident on all pairs and across all TFs. Accepting that those patterns exist, recognising them, understanding them for what they are, contextualising and thus timing one's way into them is, the journey we each take as we learn to trade. If we remove everything but time and price from out charts those patterns will remain. It's the one thing "they" can't hide from us.
  • #1,234
  • May 5, 2017 11:50am May 5, 2017 11:50am
Thanks for that feedback guys, it's interesting that you relate to what I'm saying about having those patterns that you recognize and which repeat themselves, for whatever reason ( it doesn't matter why ) over and over again, on any time frame, on any pair. As simond said, if there is a holy grail to trading, then this is surely it - the ability to spot these patterns forming in advance and to be ready and waiting for the signal to enter the trade when it comes. There will naturally still be losses, mistimed entries, even complete howlers when you are caught badly on the wrong side of the market, but as long as you have this consistent ability to recognize particular patterns which you know will give you winning trades a high percentage of the time, you have got this game pretty much sewn up provided you keep your trading tight and methodical and don't do anything stupid.

Is it harsh to talk about this when there will be traders out there who have not yet reached the level of proficiency where they are able to routinely and consistently spot high probability trades? No, I don't think so, because I would hope that above anything else it will give them the motivation they may need to keep on studying those charts, because like any puzzle, and I regard trading as a pretty complex puzzle that has to be solved, the more you work at it, the closer you get to puzzling it out.
  • #1,235
  • May 5, 2017 12:54pm May 5, 2017 12:54pm
Have a very nice weekend all of you. I think the markets may look very different on Monday morning than they do right now. My heart says Le Pen, but my head says Macron. We'll know soon enough!
  • #1,236
  • May 7, 2017 12:36pm May 7, 2017 12:36pm
Quoting cat
This is a generalization, and there are set ups where you can trade into one of the big MAs, though this will require too much detail to go into, and even then it may confuse, but it all depends upon where they are on different time frames, so attempting to go further with this will likely only confuse more than it will help. I do have however an example I can post this weekend, which relates back to a losing trade Piquant had which he posted a couple of weeks ago or so, where he traded directly into a big moving average and got stopped out pretty...
Apologies for not posting this yet, In fact, I must have deleted the examples I was going to show, and cannot remember exactly which ones they were, but I'll find one or two others as soon as I have the time and post them here. Piquant asked me about fibonacci as well, as he doesn't use them much and is not sure how he should be plotting them, so I'll put a few examples of that as well. The most important fib levels for me are 61.8% and 76.4%.
  • #1,237
  • May 7, 2017 9:37pm May 7, 2017 9:37pm
Quoting skyway
{quote} For a very long while(more than 1yr) I was working around a set of MA and MACD that almost work -getting it set right took me a lot of effort and time. My current set which I use for some time now, I'm pretty comfortable with it and I don't foresee any changes or upgrades necessary.
If its working out for you
I hope we'll soon some positive results after all that hard work. Do you trade full time or hold a job on the side ?
...
  • #1,238
  • May 7, 2017 9:47pm May 7, 2017 9:47pm
Quoting cat
{quote} Of course it does, all moves, whether 20 pips or 200 pips can be caught close to the beginning on a 15 sec time frame...all mine are. When people read that you trade off a time frame in the seconds rather than on 15 mins or whatever, they automatically assume you are a scalper, in and out for 10 to 20 pips. That is because most people cannot get their head round trading off of anything smaller than 1 minute, and even that's way too small for most people. What they fail to appreciate is that going right down to 10, 15, or 20 seconds can get...
on 200$ acc I had a bigger account a year ago, but I wasn't making any money. After that experience I realised having bigger account doesn't necessarily translate into profits. If you know how to trade you'll make good money out of a 200$ acc (which is where I started few months ago) if you don't know when to buy or sell you wouldn't be making a dime out of a 100,000$ account.
...
  • #1,239
  • May 7, 2017 10:48pm May 7, 2017 10:48pm
I see diversion forming on 4h to 2m on DAX it looks to be overbought on the anticipation that Macron will win (correct me if I'm wrong I wasn't following the election closely). Now that he's won, and the price already high as it is with diversion forming on pretty much every TF I would be looking to sell.
...
  • #1,240
  • May 8, 2017 2:19am May 8, 2017 2:19am
Quoting Piquant
I see diversion forming on 4h to 2m on DAX it looks to be overbought on the anticipation that Macron will win (correct me if I'm wrong I wasn't following the election closely). Now that he's won, and the price already high as it is with diversion forming on pretty much every TF I would be looking to sell.
Yes, now that the Eurozone looks safe, for now, we might see the Dax come down from these dizzy heights. Take a look at the weekly chart. Look back to April 2015, that big weekly candle which finished on the Friday of the 10th April. It looked as if Dax was going to the stars, and then next week see what happened - wallop! It came crashing down. Last week's candle was very similar to that one, and we are about the same distance above the weekly 200ema than we were then. so I wouldn't be at all surprised to see us beginning at first a steady decline followed by something much faster as all the longs realize Dax is not going any higher, as happened in 2015. I would say a return now to 10,600 or lower to 10,000 could be on the cards. We'll see.

Also, there's big diversion with MACD on the monthly chart if Dax is going to come down now, indicating a return to 10,000 over the summer months is easily within range.
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