The big guy/little guy talk is a fascinating (true) tale, but more-or-less a distraction.
I am getting the impression you’re in two minds about it.
I think those of us who’ve been around the block a bit can agree there are any number of ways to approaching taking money out of the market.
I agree.
Whatever works, works: “smart” means pragmatic.
In the end it comes down to one thing…[B]profits[/B].
If that’s what you are trying to say we are in agreement.
Hey Me (LOL),
You again make some good points.
(Nice Avatar by the way)!!!
Let’s agree to disagree though!!! Let me put it this way: at 2% risk per trade I would have lost 2% per day ON ONE INDEX (the Dow) for the past ten days or so. That’s 20% of an account GONE and THAT would have just been on ONE index so ‘throw in’ the DAX, CAC, FTSE, S&P, NASDAQ, IBEX, SMI, and Nikkei225 and, well, you get the picture (and the STRATEGY would have been to short these indexes at pivot point R1 and / or R2 until stopped out). Two things here: pivot points ARE INDEED a VALID trading method (so no problem here) AND I’m ONLY risking 2% per trade (so no problem here either). See what COULD have happened??? Let’s say I was ONLY wrong HALF of the time. The account would STILL be gone and this in SPITE of ‘generally accepted risk managment’ as well as a ‘generally accepted method of trading’.
I have INDEED spent a lot of time trying to figure out that when I HAVE INDEED made some money what was different. The ‘common denominator’ THUS FAR: anything LESS than the four hour charts has spelled disaster for me so you’re quite right in your statement and observation (but I’ve not looked at shorter time frames for a LONG time now). Also: trading forex!!! I’ve always used forex to ‘cover’ my ‘mess ups’ on the indices AND YET I will NEVER REST until I’m able to trade PURELY the indices with success. (PLEASE don’t state the obvious in your reply)!!! LOL!!!
(Elder actually says that trading the S&P (with a small account) is like catching a very large tiger by a very short tail. Something like that). But for ME: that IS ‘the market’ and I want to be able to SUCCESSFULLY trade ‘the market’.
And yes: I’m surprised about what I WOULD HAVE BEEN DOING on (yet another) live account right now and about ‘missing out’ (when I COULD have / SHOULD have) been making money LONG these instruments.
I have to say though: even in this short period of time this thread has made me feel a lot better about my ‘current plight’ in life!!! Thanks to everyone!!!
Maybe there is SOME truth in my initial ‘ranting and raving’ and maybe none (or maybe it’s ALL true). I still would like to REALLY UNDERSTAND what makes this thing ‘tick’. Maybe that’s a bit much to ask given my relatively short ‘career’. Maybe it’s not that important??? I still DO believe that there is a ‘thread’ or a ‘key’ or something like that which I am NOT (yet) ‘seeing’. Maybe I’m just ‘full of it’!!!
Thanks again everyone.
Regards,
Dale.
Thanks, my avatar symbolises that I’m a Gold and Silver bull. 
To reply to what you wrote. Humm… To me you’re really missing a (if not THE) most important point of MM.
It’s not only the 2% risk per trade (or whatever number to limit the loss per trade). But maybe the 6% rule does ring a bell? Never have more than 6% at risk at one time.
Now don’t take me on these numbers (they’re OK for the stock market though), but the point is, does it help when you limit loss to 2% when you take on 10 trades at one time??? Guess not.
You’re overtrading man. :eek:
If you have a few loosing trades in a row, you should re-evaluate what you’re doing, how can you control this when you put almost all off your money at risk at once?
Me
Just a thought here, not to leave my long-time friend Dale alone (LOL).
Shutting off the opinion and perspective of others always re-centers me.
Andrewunknown, well said. Well said. I appreciate very much your contribution (although some “background” thoughts are a bit hard to catch, for me).
We have here a storm of feelings, I think. It is very easy to understand frustration and doubt, by you, Dale, that, for whom knows you, are spending so much in this business, and are loving it so much. Yes: in spite of what you’re writing here, your disappointment and “desperation” (LOL) come exactly from the fact that you cannot live without it. Otherwise you’ll be out, and without comments.
Now: everybody is free to go on the discussion as s/he wants, of course. But I must again agree with Andrew:
The big guy/little guy talk is a fascinating (true) tale, but more-or-less a distraction.
That’s a business, guys, isn’t it? When you run a business there is always a SWOT analysis to be performed. Competition is never mild. Costs are always higher than they should. Regulations are often too strict. Financial constraint too tight. Taxes too high. Competitors often incorrect and aggressive.
Here, in this business, there are brokers, that [I]of course[/I] try to make money on your mistakes (and not only). There are “big players” with weapons far more dangerous than ours (= retailers’). There are all the intricacies of macroeconomics, politics, national banks moves… and I know I am far less competent than most of you in listing all the like.
But that’s the game. The question, as in every other business, is whether, in this environment, there is a way for taking our little part of profits.
Now, from my side, I’m getting more and more convinced that the way is a methodical, patient, constant, ordered, systematic development of a “trading system” (everybody will have her own: rythm, candlesticks, indicators, news, astrology, if this is the “personal” way). What I find lastly very lacking in several of these online forums is exactely that: order and systematic thinking. I think that the web is a fund of excellent ideas about how to manage into the markets. The problem is that very often the good initial idea gets lost in rivers of discussions and does not reach its full potential because at the end it is impossible to remember the meaning of the initial intuition (or its merits & weaknesses).
Furthermore: I’m always more convinced that everybody (comprising book writers) have some part of the truth or of the puzzle, if you want. Nobody has the complete picture. Probably because it doesn’t exist “[I]the picture[/I]”, but a lot of ways for composing one. The smart “surfer” or “market researchers” is able to extract the piece of truth from all these sources and put them together in the original, profitable way.
Finally: I’m more and more convinced that the “one-good-for-all” system doesn’t exist. I would like, sometimes, to find a “scientific explanation” for that (Heisenberg’s principle for markets? LOL LOL LOL!). But as a feeling (and something more) I am convinced that every trading system will be better for some markets, and will have a life cycle. In that, Dale, you know that I do not agree with you. And to me it is no surprise that all the “published” system would have failed in some time in the history or on some market.
So: my conclusion is (for myself): “stop discussing about philosophy and go on (hard) working”. That’s [B]not[/B] to say that there is no merit in what all people are contributing here. Rather: it is very interesting. And it is not to say that philosophy isn’t important and nice. The contrary! But simply that I am currently so involved in trying to put together my pieces of the puzzle, I am so convinced of the beauty and the usefulness of all of them, I am so convinced that a way out exists, that I want to concetrate on that.
A suggestion for who would like to go on here. Dale is desperate and we all can understand why. We all had/have moments (short or long) in which frustration comes up and beats us. [I]Wouldn’t be useful for all if somebody comes in and tells us, clearly, with some figures, with some encouragement and maybe some hints, [/I][B]that IT is possible: he or she has managed and goes on?[/B]
Bye and thanks to all
Fabio
I need to come back to this one more time 
You wouldn’t have lost 2% per day, because on the first day, of after a few days, you would have been stopped out at a 2% loss. Than you should be looking for a new LOW RISK entry point. And I’m pretty sure that wouldn’t be on the same day. Unless you’re day trading and as said, you shouldn’t be doing that, regarding the trading problems you’re having at this moment. 
Meh, it’s interesting. Understanding the market player archetypes (“the bank”, “the fund”, “the pro”, “the retail noob”, etc.) is helpful, but it’s more the stuff of Forex lore and I think it’s of limited practical value. Insight into how hedgies, passively managed funds, other parties are held in tension and provide the market with structure and liquidity is also very interesting, but doesn’t have to mean a damn thing to a consistently profitable trader, i.e. a “smart operator”. I’m not saying this can’t add to your edge, and would never discourage education about the market in which we trade. Only (for those who might read and think otherwise) that there are many way to get at the same thing, which is:
I’d agree: as a trader, what “works” is whatever puts your PnL in the black.
Hey ME (again LOL)!!! (Sorry)!!!
As a matter of interest: HOW do you get from ‘ME’ to ‘Gert’??? (And I ASSUME that YOU are somewhere near ME)???
Of course I KNOW you are right!!! I think my ‘penchant’ for trading like that comes from my ‘Wilder days’ i.e. never risk more than 10% per trade and never risk more than 60% of your capital at any one time (although he uses the word ‘margin’ and, although I know the DIFFERENCE, I’ve never ACTUALLY been able to get to the bottom of his Capital Management theory because one could ‘MARGIN’ 15% of your capital BUT, depending on LEVERAGE, this COULD mean that one was RISKING a HUGE percentage. Anyway: I have it on VERY good authority that Wilder NO LONGER recommends this type of money managment)!!! Suffice to say: given these HUGE percentages that I started OUT with (and have become ‘used to’) risking ONLY 2% per trade and possibly 20% in TOTAL has given me a very ‘false sense of security’ as it were.
Fabio:
YOU KNOW that I cannot argue with ANYTHING you say!!! LOL!!!
It’s just getting all VERY frustrating is all. As you well know (and to ‘feed’ this thread): I have a good system that would have (should have) made a lot of money in the past fourteen days. It has ALL the ‘trappings’ i.e. risk / money managment, stops, a directional indicator, ‘the lot’. Problem: WE KNOW that at SOME point (when the trend ends) it’s going to ‘give back’ a LOT of what it could have (should have) made. So THEN: we start messing around with stops right!!! SO: the stops that worked NOW will, in all probability, be the cause of loss after loss after loss!!! So: we start AGAIN!!! It is THIS type of frustration that will WITHOUT A DOUBT send me to the ‘nuthouse’!!!
Regards,
Dale.
OK just briefly and as an exception, but Me2995,
as I think this is something that Dale and I discussed several times together, let me put it a bit clearer.
If you have a losing trading system, i.e. profit factor < 1 (Profit factor = %winning trades * average profit / %losing trades * average loss), than you can have the best MM (actually we now call it “Risk management”) procedure of this world, but you’ll go on losing money. That’s clear like the laws of physics.
You’ll lose a bit at a time, and you can stay on the market for ages, probably. But you won’t make money, anyway. This is, I think, what Dale was saying. You’re right in telling that, with BAD money (risk) management, even a winning trading system (Profit factor > 1) can ruin you.
Bye
Fabio
I agree with you on that one Fabio.
Of course MM or RM cannot make up for everything, but the key is to stay in the game. Good MM will keep you out of the game when things go against you (only paper trading for a while). At that time you look at your system (methode) and try to get things going again.
Just reading all this, I thought discipline was the biggest issue here, while in fact Dale thought the only problem was his system.
Me.
The question is how I got from Gert to ME
Anyways, I don’t have much more to add, I guess you should try to keep your head clear and try to re-evaluate things.
Hi Dale,
Thank you for your kind words.
[I]So what are the causes of the current financial meltdown? [/I]
It�s not the subprime mortgages. They�re not inherently evil or the problem. It is the way that leverage was applied to these mortgage securities and the way the Bush Regime allowed them to be packaged in bundles and then stripped and resold and rehypothecated or leveraged to the point that all transparency was lost.
[I]
So what does transparency mean?[/I]
In the world of bundled mortgage securities, a loss of transparency means that nobody actually knows who the originator of the loans is anymore.
[I]And what contributed to this so-called Global Financial Crisis?[/I]
The repeal of the Glass-Steagall Act was something that Republicans long wanted, and it blurred the lines between commercial and investment banks. It allowed commercial banks to get into the securities business and to do leveraged transactions in a way they could not do before.
Furthermore the Bush Regime�s refusal to enforce laws that were passed in 1999 under the old Clintonian Regime, after the Long Term Capital Debacle, limited the issuance of derivatives to what are called single product cycle markets and also limited the amount of leverage that financial institutions could use in issuing and trading these securities.
[B]That�s what allowed leverage to expand so much.[/B]
Also capital requirements were waived, but the other big problem was allowing naked short positions. This created a whole new market for derivatives which hadn�t existed before. Derivatives had always been an institutional product which was kept within the �financial community.�
After all, a derivative product was simply an insurance policy and a hedge against risk. It was never meant to constitute a traded market with securities unto its own. Yet that�s what it became. Derivatives then developed into a massive CDS (Credit Default Swap) market, which hadn�t existed before.
Suddenly people who did not own securities and didn�t need any Credit Default Swaps started trading them as if they were a tradable instrument, or essentially a commodity. It had nothing to do with what they were actually meant to do, which was to insure a financial product.
All the wire houses like Goldman Sachs, Morgan, Lehman Brothers, Bear Stearns, etc. developed this market which hadn�t existed before. They saw an opportunity to create new markets and earn new trading revenues which hadn�t existed before by trading something which very few could effectively use.
[I]How did this market crash and burn then? [/I]
Credit Default Swaps, which were being used by everybody from Citibank to AIG because Glass-Steagall was out of the way, became not the exclusive domain of insurance underwriters like AIG, but were used by all of the �financial complex� in both investment and commercial banks. That�s what sunk Bear Stearns and Lehman Brothers. Why? Because they wrote them willy-nilly without any regard to what the actual underlying risk was.
AIG abandoned all �prudent man� principles and just wrote any type of risk contract for anybody who was willing to pay a premium � and they didn�t charge enough for these. They underestimated the risk. This was done simply so the contract could be written and traded. And what was the fee generated? At AIG the Credit Default Swaps which had a 70% likelihood of default were written on a 1% capital fee. That�s why $170 Billion in taxpayer money has been funneled through AIG, since AIG has now become only a funnel for US taxpayer money.
In other words, US taxpayer money goes in through the top of the funnel and then it runs through the bowels of AIG. It is then paid out to defaulted counter-parties or obligatees on the other end.
[I]So what would have happened if those trillions hadn�t been funneled through AIG?[/I]
If they had been written on a rational basis, the subsequent asset class bubble that developed from 2003 to 2007 would never have developed. The bubble in property, equity and commodity prices that occurred in that 4 year period would not have occurred without the ability to insure risk at artificially cheap prices.
[B][I]Why is this been done?[/I] [/B]
Because if the US government allows AIG counterparty obligations to go into default, then another Bear Stearns, another Lehman Brothers and another and another will be created.
Then markets will become absolutely illiquid as they were in March and September 2008 when Bear Stearns and Lehman Brothers collapsed.
[I]And why did they collapse?[/I]
[B]Because Lehman Brothers couldn�t meet its counterparty obligations. These instruments which were being traded suddenly had no market because they weren�t worth anything. Or the value of them was certainly unknown.[/B]
The reflation trade is based on the premise that if governments globally flood the marketplaces with money and with interest rates falling ([B]central banks purposefully adopting what they call �quantitative easing in order for long term interest rates to fall[/B]) so much liquidity is going to create demand.
[U][B]In order for reflation to work, consumption has to increase.[/B][/U]
Flooding economic systems with money is no good unless you�ve increased the availability of that money to those who want to borrow it, both business and industry and the people who then use the money to create consumption.
In conclusion, reflation is a bet and nobody knows how it will turn out…
Rgds,
cas
I hope we are getting somewhere with you Dale.
Even though I am a retired school teacher with much experience in diagnosing learning difficulties, I still do not know exactly what your trading problem is.
I have had great difficulty reading the long posts from the contributors here.
As I see it, one can yap, yap, yap, yap, yap but never get to the point.
I agree with [B]Me2995 [/B]that sound MM should tell you to [U]stop trading [/U]if you continue to lose.
This alone will prevent you from losing everything, even though you lose some.
I also agree that overtrading is not wise.
Further to that, I think that the post by Andre Mayer at the beginning may be the one with the sharpest insight.
Tymen about over trading:
Lets assume you know every candle from every moment into the future.
Would you trade it? or consider it “overtrading”?
Would you say “Oh no I am not trading more then the xx pips because it would over-trading?”
Would it be “unethical” ?
Now my understanding might be quite wrong here. :o
But Dale was referring to all these indexes he is trading and he has only a limited amount of money.
Now [B]Me2995[/B] referred to that as overtrading.
By this, I understand (possibly wrongly), that Dale is trading too many positions for the amount of funds he has.
I still don’t know where we are going with all this???
I don’t know either about this thread here. I also actually did not want to refer to dale or Me2995 trading. The word “over-trading” just struck a cord.
I actually posted it as a general consideration about “over-trading”
Of course nobody knows about the future. If we knew, all this wouldn’t matter.
There are 2 ways you can over trade (as far as I know):
If you do one of these (or even both :eek:), something is wrong.
Me
We may actually be starting to hit on one of Dale’s trading problem points!! 
Hello everyone,
First to cas:
What I meant by the question ‘is HOW and WHY’ was HOW and WHY do YOU have this ‘understanding’ (which you have now so eloquently expanded on). I’ve done much reading and ‘documentary watching’ so I do ‘sort of’ understand the reasons for the debacle and the financial crisis (although the way that YOU have explained it really does put everything in perspective for me). But it’s the KNOWLEDGE and UNDERSTANDING that you evidently have that I’m after. I guess what I’m saying is this: HOW does one ‘pick up’ on these things. I mean: I’ll see or hear something (on Bloomberg TV or CNBC or Bloomberg Radio) and I’ll make an ‘assumption’ of what I THINK is going to happen to, let’s say, the indices. I’m NEVER right. It’s THIS type of ‘insight’ that I believe I’m lacking and would like to at very LEAST start to develop this type of understanding. And OF COURSE it’s made FAR more difficult by the fact that in any given day: you’ll find diametrically opposing views on the SAME subject on the SAME platform WITHIN HOURS!!! Again though: thank you.
Tymen and Oskar and ‘ME’:
Thanks again for you interest shown and the time you have taken to respond here. To be honest: when I started THIS thread it appears (in hindsight) that I was not sure whether to be ‘questioning’ or simply making statements to see whether or not other people agreed with me (perhaps even VENTING about was what I was doing). I THINK what I was TRYING to say was this: I have a BIG problem with so-called ‘technical analysis’ (which to me encompasses everything from support and resistance to indicators) ON IT’S OWN. I believe that my LACK of UNDERSTANDING is what is holding me back. Let me explain further: as I said earlier I’ve read MANY books ALL of which are ‘technical in nature’ and by well known authors and ‘gurus’ in this business (as you well know). (And BY THE WAY: such studies of late are NOT limited to Wilder i.e. I’ve REALLY and TRULY EXPANDED my ‘Wilder horizon’ somewhat)!!! LOL!!! BUT: ALL of these systems fail at one point or another and sometimes VERY BADLY. I don’t believe my problem is a lack of understanding of any of these systems or the concepts explained in ‘the books’. I am NOW TRULY of the belief that what is ‘missing’ here is an UNDERSTANDING of WHAT is ‘going on’ FUNDAMENTALLY and WHY price moves WHEN it does. I now DO understand and I now DO implement strict money management although I know that based on one of my posts it may not SEEM as such. Don’t get me wrong: I’d not be trading ALL of those indices AT ONCE (although I will not lie to you and tell you that it’s not tempting)!!! LOL!!!
I suppose ‘in a nutshell’ what I’m getting at is this: I believe I know and understand FULLY quite a few ‘traditional trading systems’ now and a whole lot of ‘trading concepts’ but they ALL DO FAIL at some point and sometimes for very long periods of time too. As an example: a simple EMA system detailed by Larry Williams AND Alexander Elder would have resulted in four to five months of continuous losses on EUR/USD last year. Wilder’s ADX (DMS) (as I have proved BEYOND a doubt) would have taken FIVE YEARS to show a decent profit. Bill Williams’ trading system would have missed (most of) this recent rally had you followed it ‘to the letter’. A FINE example of THIS is his AO which STAYED RED on the four hour charts of the Dow for three quarters of this rally!!! And the REAL scary part here is that it does not matter WHICH books I have read and which systems I’ve ‘coded’: they are ALL alike. It does not matter that Wilder calls HIS swing system ‘The Swing Index System’ or if Larry Williams refers to a system using three bar reversals or if Bill Williams uses Fractals or an EMA ‘offset’ by a few bars. Bill Williams’ Balance Line (the Alligator ‘jaw’) generates IDENTICAL SIGNALS TO THE BAR to Wilders ADX. The ‘core’ of these systems are identical which tells me that they will AND DO ALL fail at SOME point in time. As a matter of fact: both Larry Williams and Alexander Elder actually detail the ADX FORMULA in some of their books AS WELL as its use. BUT I KNOW from MUCH ‘paper trading’ of ADX: there is no way IN HELL that ADX would have made money consistently over a five year period (and, as a matter of fact, the drawdowns for two CONSECUTIVE years, on GBP/JPY, as an example, were HORRENDOUS, and I do not believe for one minute that ANYONE would have ‘stuck’ with ADX for that long HOPING and BELIEVING that ONE DAY their ‘ADX ship would come in’). I believe with more UNDERSTANDING of the markets a person would be able to avoid these failures (most of them at least). This is why I was asking the question earlier: can ‘technical analysis’ or a ‘technical trading system’ be CONSISTENTLY PROFITABLE WITHOUT FUNDAMENTAL KNOWLEDGE AND UNDERSTANDING. I think that the answer to THIS question is what I’m trying to find.
I hope that THIS post (at least) gives the thread some direction.
Regards,
Dale.
hey dale i am reading through your thread now. First I want to say the obvious. Don’t give up your dreams there will always be an emtyness there if you do.
Having said that I have only now started to find consistant success in forex and believe me it is small scale and I still have lost a lot more than I have won.
The reason I am finding success is simple. I look at price on a higher timeframe and I watch how price responds in key support and resistance areas.
thats it.
I look at what price is doing so I can get an idea of who is running the show bulls or bears.
All of my concepts are not my own but rather a mix of james16 and alternative technical templates.
In att I learned how important support and resistance is, the whole supply and demand. I learned that when price touched a level more than once that level was important.
In james16 I learned simple price patterns that were usually reversal patterns and I learned that when these simple patterns appeared at key levels this was a very powerful setup.
the simple things i look for are pin bars inside bars outside bars very basic simple stuff.
There are alot of people that pay attention to fundamentals but I have decided to adopt the philosophy that price will reflect what the people feel about all these things.
Dale I seriously want to encourage you to consider getting rid of every single indicator that you love. and start out with a bare chart and an open mind. when you look at the chart ask yourself what is price doing? where is price likely to go?
there is so many great and successful price action traders out there. If you come over to the james 16 thread here in the free systems section I will be happy to help you get started.
I have always thought of you as a good man and it takes a big man to step up and publicly admit you are not finding success in your way of trading. There is hope for you and me for that matter
I’ll talk to you soon, john
You know what?
Just stop reading books, stop watching the “Mindless” “Talking Heads” (well paid unfortunately) on TV. You read enough, listen enough, so now is the next step, practice is giving you the necessary tools. So start trading with very small units.
I was told once
PATIENCE IS A VIRTUE
5 years later I am still waiting for an answer. He claimed he had a foolproof roulette system, and told me always the above sentence, ~every 6 month. Not that I am interested in roulette, he is a friend for many years.
Everything we can see on charts is hindsight, we just try to make “educated” guesses of the future. Sometimes we succeed and sometimes not. As long as we have more successes then losses we are just fine.
KIS(S) is the answer, go with S/R systems and you can make money. go with Tymen candlestick and you can make money. The main thing, JUST DO IT.
Hmmmmmmmmmmmmmmm did I just vent a little???