Technical Analysis Fallacy

Hi ALL,

Nice stuff going on, been busy it seem...
@dbrown101, I think a nice example would be the current running terrain for USDJPY.

Current daily is long. Nice, firm, and assertive with little rest and dips for sellers to bail, and buyers to launch. Effectively, I reckon, it is just stop feeding and shorts bailing out.

As we sit, seem like today, it might stall below 114 following yesterday late NY "risk off" event led by North Korea "nuclear" threat, and coincident with the indexes easing off today.
In London today, she again failed to make a higher high, and as a result, sellers came in to test again(as evident in short charts).
With that, 1) I could scout short, with a very reduce sizing. or 2) exercise prudence, and sit out till more signs are reveal.

With this lass, EURJPY look to be leading with GBPJPY, which both have rotated lower and USDJPY looking to be next to follow suit.

Just my 2 cents worth mate, hope that helps.

Regards
Ray

By the way, there is no trend reversal signs, trend is still LONG, scouting short is counter trend.


And don't worry bout the books, just read the thread, it is all inside this 2k pages. Read them all, its worth it.

ps. anyone heard from FTI? someone give him a tickle for some giggle?

Thank you everyone for your input!! you're posts are very helpful and appreciated.

http://www.reuters.com/article/us-gl...-idUSKBN18631L

fintech sure is making our industry more exciting

The 40 20 40 sandwich.

It's a sandwich because, 60% is the critical point, for a last rescue before rogue trader. So if you have entered troopers in till 40% it's best to enter with a 0.5 skew rather than fibo outwards, that is fixed position 40 entered, new based, attack at sublimest component, 20, 20 then leave it. This would mean 80% capitalisation commited. So a strong base of foreign caps is needed to be gained in order to trade past 40% of funds without exposing book too much. After that if 40% is commited, 20% is commited, as attack, and first sign of danger, 20% is taken out to regain 40 60 ratio, but if needed, prior profit can be taken out to reduce sigma of book as well as skew down and gain get more troopers ready for rescue ops or more.

This I guess is my insight into the breaking point and the mm skew, alternative mm skews can be used to optimizing for strong attacks without overexposure to risk. By understanding where the breaking point is, and load the exposure strategically.

pls forgive me this sometimes in my mind when i read the thread just for smile

Hello.

Anyone read this?
https://www.amazon.com/Deep-State-Ve...BVHQ0GNX11MJBG

Regards
Ray

Check these interesting stuff
http://www.zerohedge.com/news/2017-0...irst-time-ever

http://www.zerohedge.com/news/2017-0...methings-going

http://www.zerohedge.com/news/2017-0...le-no-one-will

http://www.zerohedge.com/news/2017-0...bid-cover-and-

Interesting stuff, losing position but danced correctly, and portfolio is up.

http://www.poweropt.com/Married_Put_Examples.pdf

Very good material


Regards

Hi FTI

Was not around for while due to health - hope you are doin ok and havin some fun. Missin your wisdom and naughtiness.


Alex

Richard Dennis failed because he didn't feel the trend, or at least enough of a feel of the trend. In his interview he did indicate he had some feel for price action, but for some reason, he decided to spurn the feel the trend part, if this is the case, the problem is probably the lack of training in the feel the trend portion, which implies rigidity in having to rely on probability and statistics to produce positive expectancy, and when it stops working for good, you blow up. Basically, live by the numbers die by the numbers, rigidity kills.

The lesson here is, stick to the basics, the feel the trend, dance the dance, mm and mindset, and not be rigid.

Trading based on patterns is more advantageous than trading on indicators ...
I personally prefer the so-called "123-Pattern" ...

Patterns mutate into one another, there is no fixed pattern which works but all patterns, in a sense work yet not work. It was their usage and the mo, mm to handle the mutations, aka dance the dance, which allows for sustained profitability in the variability of the markets nature.

Trading is a waiting game, not a chasing game ...
The axiom "waiting patiently" is only applicable when we know what we're waiting for, in this case, waiting for a specific pattern to form ...
When we know the pattern to wait for, we can also identify at which level the waited pattern will be formed ... thus determine the entry-price of a trade ...

Not wrong, but beware the rigidity, understanding the terrain helps you pick better 1 2 3 patterns, 1 2 3 pattern is an entry method, but without terrain help, you can get chopped up when terrain is fairly not conducive for such entry methods. Take away your need for 1 2 3 patterns to happen before entry and you will find you can perform better. 1 2 3 pattern is only a very small facet of terrain.

Just my opinion i guess, as i started learning out in that direction, but as fti says, patterns mutate into one another, ability to trade around it is what allows you consistent profits, aka you cut your edge in the markets.

Well, the 123-Pattern is just a tool to help us trade ...
And just like using other patterns or technical indicators, the challenge lies in applying it, i.e., having a proper strategy of when to play it and when to pass it ...
It's in this stage that a "rigid" selection must be applied by taking numerous other conditions into consideration, for example, the risk involved in playing the pattern, the ongoing trend of the instrument itself, and/or the general direction of USD (when playing major pairs) ... some people might also combine it with another/other signals ...

Don't know why you would call analysing general trend of USD analysis rigid, and such, but if what you say is you also do consider other factors, then it is a non rigid way of trading, 1 2 3 pattern is the entry, towards timing and market's current feel to move up, and other factors like USD strength, or eur strength, if you trading eurusd.

In fact what you mentioned about USD strength is ro3k here and is part of the analysis. This essentially makes your analysis less rigid rather than more rigid, as other factors are factored to consider and give you a better picture of what's going on.

But just saying, sometimes other factors halt the market from moving up temporarily and whip saw you around but not being rigid towards a 1 2 3 pattern for entry can help increase your win rate.

But in any case, just my opinion. Just consider this if today, everyone except you suddenly forgets about the 1 2 3 pattern, and you spot it forming and the general condition indicates a bullish outlook. Buying it is good, it probably works really well, because no one knows it yet, no one is in competition with you. So if tomorrow some market maker discovers this and also figures people place alot of stops below the low or above the high of this 1 2 3 pattern, what would he do? He probably would let the 1 2 3 form nicely, then gut the stops and form a complex pullback before letting price move up. Which is getting ready inventory to sell or buy to deliver to customers while hunting stops so they can't hit him while the move is going on and profiting from it right? As more and more people know about 1 2 3 pattern, the pattern would mutate and become more complex and variated. So the fact that 1 2 3 pattern is so well documented may attrite it's performance, but the generic form of a pullback is there, just that the pullback itself can mutate into many different forms of pullbacks, subpattern variations, still works, just different forms but pullbacks nonetheless, or mutate into something totally different.

It's similar to hfts, as more and more hfts come onboard, essentially they are hitting each other hard and when a bunch of them liquidates together, and other hfts catch wind of it and pile in, this causes a volatility expansion much larger than when there aren't as many hfts around. So the feedback loop of more and more hfts joining the game is causing the market to show bivariate volatility distribution. And this actually is good, when you catch wind of such swings, you can press the attack fairly well as the moves may not back and fill as much, but when caught out of position it may be abit messy to handle. But also this may would cause the average stay to be shorter, so the dance timings are faster paced. I mean, what I'm saying is, as more and more different strategy enter the markets, it will cause the markets form to change, some patterns might fade, mutate or re-emerge. Ability to understand this and trade around it will increase your P&L by a fair amount. And one way to do it is presented here in this thread.

I think the definition of "rigid" maybe best explained in examples ...
Let's say a Sell-123-Pattern is about to form. First, we wouldn't trade that sell-pattern if the risk involved is beyond our limit (percentage-wise or dollar-wise). Secondly, if the instrument is in uptrend condition, we better pass the sell-pattern, treat it like a trend-correction and wait for a Buy-123-Pattern to form. Likewise if we're trading major pairs, better not go against the ongoing general direction of Strong USD ...
I think this way of thinking is similar to your so-called "terrain" ...

Yep, well, you say it's "rigid" but i don't really think it's rigid. I mean if it's not within the money management limit, then it makes sense to just pass it up. No issues with this.

And as for the trend thing, makes sense too, eg recently the trump trades on USD, 1 directional, and most contrarian methods may be underperforming if there faded the extended move. So no issues here. I mean the markets sentiment is heavily long and there is no way to go short unless the market starts to develop weakness, and show a weak pullback to the upside to fade, indicating a lack of buyers, and lack a of momentum to push for higher highs. Otherwise it may be jumping the gun.

What you say makes sense and i cant see why you would call them rigid.

Just that the only rigid part was the 1 2 3 pattern, as the markets are more nuanced than that. And just as an example, the generic trend of eurusd is down, eur is weak, dollar is strong, USDjpy is up too and gbpusd is down too. But later, there is some numbers, and the eurusd broke a new low 15 mins before the numbers come out. So if you confirm strictly to the 1 2 3 pattern, it could be the case where, when the numbers come out, the markets hit the highs, take your stops out, the continue breaking lower and resume the major trend, and this would somewhat appear as a false upthrust. But you may have lost instead of gained a winner even though the main analysis of the direction is correct. That is continually assessing what the markets are doing, even after being stopped out. Like if the upthrust develops, and becomes a false break out, it may be an even better chance to reaverage more, as ducks are taken out, and impulse is moving back with main trend and a good chance is given to better the average costing. Though a better way may simply be to take profits into the down thrust 15mins before the numbers, let's the numbers come out, then see how the market tilts after that.

So my point was simply that the markets variances will try to shake people out before resuming the main trend by painting what people want to see, then gutting their stops, and the methods here allow for adapting to such variances.

Hello 4for4,

Whatever you are doing, if consistently profitable, you are right then.

Just one minor consideration: you might be using a pattern, signal, etc. You might be getting confident since it indeed works for you. At a moment, just once, due to whatever reason, having been 100% successful with your pattern, situation and conditions over years in run, push a button being 100% sure and therefore having a LEVERAGE (with no safe/proper MM). And the Market might not behave as it has ever been with probable consequences of severe damaging your account or/ and mindset - to apply another 100% certain pattern or signal which might bring you success over years again. And...

Could a pattern predict, e.g., earthquake?

by FTI. There are many ingredients within the above mentioned to survive and prosper, the AOW seems to be relevant.

Enjoy your trading!

Best regards, Exnav

P.S. Should an admiral or general get sick at a decisive moment, what could be contingencies?

To CookieMonsta and Exnav,
No trading strategy will work all the time on all timeframes for all instruments. That's why I always emphasize of having SL and TP for any open position ...
The "rigidity" that I mentioned is kind of having a checklist and all the items in the checklist should be checked first before proceeding. And #1 in the checklist is "Is there a possibility of a 123-Pattern forming in the instruments that I follow?" ...
And in my opinion, "consistency" is best measured annually as we will be experiencing the up-and-down of our trading activity within a day, a week, or a month ... (btw, I only use the D1 chart and higher to plan my trades)