Why do we as humans always complicate things? The markets do not change, just people’s perception of what a market should look like. We all know the market either goes up or down, nothing else(and NO, the market does not go sideways). BULL: average up moves is greater than the average down move within a given period of time BEAR: average down is greater than the average up move within a given period of time. There is no sideways movement because that constitutes both bearish and bullish moves. If you don’t have a system that can predict major bull and bear moves then you don’t have a trading system, you have a complicated way of guessing. Take care and trade well
Market’s don’t change but market conditions do. Ranging/sideways markets are useful trading shorthands to describe… well, there’s no need to reinvent terminology eh?
As for the system, people’s own beliefs act as limitations - the requirement that a system needs to predict when a major move happens is one of them.
Good trading.
Well, two hours later and I’m done reading. What a thread!
Dale I feel for you, my long term plan is to trade pro, I’ve been doing this since December of 2008 and I traded on a simulator relentlessly until I’d hit my targets, I must have made 500+ trades on my sim over the past 8-9 months and if it were real money - I dread to think how much it would total!
You’re some 18 months ahead of me and I’d hate to think that over time the path I tread would lead to the same disappointment and disillusion, the feeling of ‘wasted time’ and opportunity must be overwhelming.
I ran a mile from trading indicators and the like and starting trading pure price movements on a 5 minute chart, S/R lines were my only tool. After a few months of this relatively fast time frame with no real tools other than my own eyes and perception I began to make profits, only then did I chose to go live.
I’ve advanced my trading style to use certain indicators, but only as confirmation and not as signals to trade - the signal to trade is my perception of price movement.
I don’t really have a huge amount to say other than this thread has proved both enlightening and down heartening.
I’m very positive I can make a living out of FX trading, I see no reason why you can’t, but as other have said perhaps now is a good time to wipe the slate clean and start with a fresh mindset?
As I have mentioned before, nothing changes but our perception. Why can’t we see the market for what it is? It either goes up or down. Sideways/ranging markets move up and down the same as bear and bull markets. The only difference is the average move(which shouldnt matter). If you have a system that behaves differently in the so called “different” market conditions then in the long run you will fail because it doesn’t adhere to the basics.
Hello,
Hey Bleek,
Thanks for the post. I’m pleased that you’ve been doing well on your own system. Please understand that the purpose of this thread IS NOT to discourage people (although I’m not going to lie to you and tell you that I myself am not discouraged at present or, rather, should I say, I’m a bit wary of moving forward here again). If I may make a suggestion though: for your own peace of mind (and my own selfish reasons) back test (I’m starting to hate that phrase more than MOST in the English language) you system (simulator) from, let’s say, January 2005 up until just prior to when you started (December 2008) and see what happens (and let me know if you don’t mind). A lot of things happened during those periods ranging (no pun intended) between HUMUNGOUS trends (where, aside from shortcomings like mine, veritable fortunes would have been made with a trend following system) and long periods of consolidation (WIDE range bound markets if you will). (My ‘analysis’ here is based on the daily movement of the Dow Jones Industrial Average and the S&P 500 but you’ll find that MOST forex pairs followed nicely).
fxelitetrader:
Thank your for the posts. If you don’t mind me asking: EXACTLY what do you mean by the phrases ‘average moves up’ and ‘average moves down’ ‘during a given period’ and also by the phrase ‘there is no sideways movement’? Would you mind giving me examples of these? (No offense but I checked on your other posts so I know I’m not dealing here with someone that started trading last week, made 1 000 pips, and is going to ‘hit the wall’ this coming week. The point is that you input would obviously be very valuable). I suppsose the reason that I’m asking is this: my ‘favoured’ indicators i.e. Wilder’s ADX and RSI both include in their calculations ‘average moves up’ and ‘average moves down’ (well: these calculations are based on the ratios of ‘up closes’ to ‘down closes’ with some ‘fancy footwork’ thrown in for good measure). I’m just interested to see how YOUR interpretation of ‘average moves up’ and ‘average moves down’ differs from these indicators (because WHO KNOWS: you may have ‘the key’ as to why these indicators fail so dismally). Your comment about there being ‘no sideways markets’ I’m afraid I don’t understand (although I can see your logic behind what you’re saying i.e. whether the move is up or down it’s still either bullish or bearish BUT I’d say that this logic would apply to individual, perhaps daily, bars but NOT market direction AS A WHOLE i.e. to me a ‘sideways market’ is one where although prices ARE INDEED moving up and down, bullish or bearish, the market AS A WHOLE is not moving anywhere outside of the upper and lower extremes of these bars).
Thanks for you time.
Regards,
Dale.
Like I say you’ve been around the block a few more times than I have and even I’ve hit many walls and moments where I’ve asked myself the question “can I really do this?”
I take solace in the fact other people are making good money from trading FX. I was taught for a week by a Futures trade who was making very healthy, regular profits.
A few things I wasn’t told when I first looked in to trading are:
- The amount of time required, patience and perseverance are the name of the game.
- Mental energy, it’s very draining working hard analysing something only to be proven wrong over and over again.
- Emotional dexterity, yes it was said to not become ‘greedy’, stop out the losers and let the ‘winners run’. The reality is much more difficult.
- Exit strategies are paramount to your success, I’ve yet to truly find a book or online resource that lays out a clear and ‘foolproof’ plan for exits.
And of course the stress induced suicidal attributes of the traded mind.
Supposedly I have an IQ of 144, I guess that makes me quite bright - it’s one of the reasons I want this to work because I believe I can make it work, and the markets won’t beat me (that is to say, beat me to a pulp).
There’s no denying this is is hard work, it burns mental stamina, it tests your patience and resolve. The simulator proved to me that hard work, discipline and perseverance really is the name of the game - there’s no shortcut.
I think ‘trading’ in general is over simplified and over sold to the hungry wealth hunter, with countless adverts and mailshots telling us how quickly we can make money on the markets when the reality is quite different. BUT and it’s a big but, when I first stumbled across this world as the cynical young man that I am (and I really am for my age of 26) I pretty much had that delusion, thanks to the above ‘pimping’ of so many regimes and strategies that were �Guaranteed� to make you money etc etc.
Like I say in earlier posts, I found out through trading the signals, the indicators, the tools, that the reality is far from the marketing hype � thankfully I kept my losses to a simulator.
It�s not all doom and gloom however, for the first 10 years of my adult life I�ve been (past tense? It�s a bloody decade!) haemorrhaging money like it�s a waste product of my person, at my peak accruing �33k of debt (~$50k) and the gross part having very little to show for it!
So where�s the ray of light? Trading has turned me around, flipped me on my head, I�m now a very prudent person. I pay off �1,500 of debt a month, watch what I spend, stick in all in a spreadsheet and now actually think before I spend money. This prudency has come from the discipline and risk aversion I�ve learnt through trading, I never move or extend my stops, I never risk more than my �rules� state and I never flip a position unless it�s part of the plan.
Anyway I�m off on a tangent when I should be working�
If I may make a suggestion though: for your own peace of mind (and my own selfish reasons) back test (I’m starting to hate that phrase more than MOST in the English language) you system (simulator) from, let’s say, January 2005 up until just prior to when you started (December 2008) and see what happens (and let me know if you don’t mind). A lot of things happened during those periods ranging (no pun intended) between HUMUNGOUS trends (where, aside from shortcomings like mine, veritable fortunes would have been made with a trend following system) and long periods of consolidation (WIDE range bound markets if you will). (My ‘analysis’ here is based on the daily movement of the Dow Jones Industrial Average and the S&P 500 but you’ll find that MOST forex pairs followed nicely).
Back testing my �strategy� isn�t simple because a) I use GFT and I�d have to manually test and b) a lot of my trading comes down to my price reading experience, I rely on many factors before entering a trade but the very final piece is what my eyes are seeing in the candles � not what an indicator might be suggesting.
Not wanting to teach anyone here to suck eggs, vastly more experience behind these posts than that of mine, but I will be posting up my plans and rules both on here and through my blog for those interested.
Hey, you�ve got me at it now � typing far more than I intended. 
Post-script: I’ve typed this at work with not time to vet so apologies for any grammatical errors.
FXElite - I find that a bizarre way of looking at the market. If HFT tripled volume across FX, if Australia became the new financial centre of the world, if the average move dropped to a few pips/day, if central bank interventions became weekly events - would it effect my strategies? You bet it would.
I believe the opposite is true - the lack of flexibility will kill you in the long run. Or are you really saying you have found a single non-discretionary automated strategy (which is what we’re talking about here) that has performed continuously, reliably and successfully since FX records began?
Yes, sounds crazy but its true. I don’t always catch these moves(hey, we all got to sleep and do other things besides trading) but I can’t tell when last my stop has been hit and I lost money(take profit is usually at sl). Grant you I’m not making hundreds of pips every week but I make atleast 10(that’s the lowest I made in while). My system is not automated and it never will because I believe there is something to learn each day when it comes to trading(and life itself). Hell I test different strategies practically every 3 months, well variations of the strategy I used now to see if I can up the efficiency. I will always remain a student of trading until I CAN predict every tick 
The best advice I can give anyone is that YOU are the only indicator in trading and that is the only one you need.
Hello dpatsero…I didn’t read completely through the thread but I think I got the gist.
My idea is simple…use all the time, books read, money lost, and agony and experience you have to your advantage. You don’t need anything else…just do pretty much the opposite of what you do now. If you think that price is going to go down buy and if your feeling bullish…sell sell sell.
This is what i do and it works pretty well, except when i’m right of course.
Regards
Aha… well that explains it then. You are talking about discretionary strategies - a very different kettle of fish.
Market conditions are easy enough (well, some may say hard enough) to adapt to if you’re trading them in front of the screen, but if you’re automating, you need to distinguish between a DD and a fundamental shift (such as extreme market turmoil).
Very valuable advice.
Following your advice triggered a aussie dollar buy signal c9800 friday/sunday a week ago.
The yen would be next in line with a signal c84.74 going into 2011.
Capital flows are the primary element of one’s focus to generate and maintain profits.
Very refreshing reading your post.
Well: talk about a ‘blast from the past’!!! LOL!!!
It was VERY INTERESTING reading my ‘rants and raves’ on this thread from early last year when it was started!!! LOL!!!
I’m pleased so say though: things have changed pretty drastically since then!!! What I’ve come to realise is that unless you were BORN into this business AND THEN only if your first job was as a FLOOR TRADER: don’t try to ‘over analyse’ this business and be careful of ‘information overload’ as it will only ‘lead to tears’. Unless you’ve been doing this for MANY MANY years and have some type of ‘inside track’: you’re NOT going to be in a position to get a ‘feel’ for market direction etc. I don’t believe. Find a good technical trading system or methodology (and this includes anything and everything from PA to S&R to indicator based trading systems that work) and (THIS IS THE ‘KEY’): STICK TO YOUR TRADING SYSTEM OR METHODOLOGY RELIGIOUSLY!!! AND MANAGE RISK!!! You then cannot and will not go wrong!!! As I’ve noted in many other posts (especially since starting this thread back then): I’ve always had one or two excellent trading systems right at my fingertips but prior to two or so years ago I seconded guessed those trading systems based on all of this OTHER ‘information’ that’s available. A good example: when stocks started plummeting during the sub-prime crisis these trading systems were SCREAMING to go short on various stocks and currency pairs. What did I do??? Listen to the analysts that said that many of the large financial institutions would not be allowed to fail and ‘how low could they go’. Well: we all know how that turned out!!! Had I simply followed the said trading systems I’d be writing this from a very large motorised yacht in the Bahama’s that belonged to me and was fully paid for. Get the picture??? I’m not saying it’s ‘easy’ but it’s also as difficult and as confusing as you make it.
Regards,
Dale.
This particular post I was referring to has a powerful message. It is timeless in it’s simplicity and therein lies it’s power. Markets have functioned under the influence of money flows for hundreds of years and that has not changed to this day. I doubt it ever will because certain things never change.
But this is only going to work if the said technical system is consistantly profitable.
I’ve always had one or two excellent trading systems right at my fingertips but prior to two or so years ago I seconded guessed those trading systems based on all of this OTHER ‘information’ that’s available. A good example: when stocks started plummeting during the sub-prime crisis these trading systems were SCREAMING to go short on various stocks and currency pairs. What did I do??? Listen to the analysts that said that many of the large financial institutions would not be allowed to fail and ‘how low could they go’. Well: we all know how that turned out!!!
Hello,
Too true:
But this is only going to work if the said technical system is consistantly profitable.
I make the ASSUMPTION though that whatever technical system is used has been paper traded and thoroughly tested which, UNFORTUANATELY, was the case with me back then i.e. they WERE profitable up to that point (even although I was not managing risk and was not REALLY taking ALL of the signals if the truth be told). My mind (with a little help from various analysts I might add) just could not comprehend a drop in price from $50 (or so) to $4 (Citigroup) or the demise of a company like Merryl Lynch (and at the time the very same thought process kept me from shorting something like EUR/JPY or GBP/JPY) and therein lay the problem and hence my points made. Same thing with Gold when it was at $700 an ounce i.e. trading systems ‘screaming’ shorts but analysts ‘screaming’ +$900 and ounce. It went down to $500 FIRST and took about a year to get to $900!!! LOL!!!
As a matter of fact (although I’m not sure if this is pertinent on this thread or if I REALLY feel like ‘opening old wounds’ but anyway): I’ve always wondered how somebody that trades S&R would have survived those days (if they did). I mean: look at any financial stock back then or most of the ???/JPY pairs. A S&R trader (as I understand it) would have been buying at various support levels not so and back then none of them held. The Dow and S&P are fine examples of what I’m talking about i.e. there must have been MANY support levels that were broken on the way down without price even pausing to look back (if memory serves me correctly anyway i.e. I sat ‘spellbound’ looking at charts day after day after day back then).
Anyway: it’s ‘water under the bridge’ really and I’m just sorry that I didn’t know back THEN what I know NOW about everything (including knowing myself).
Regards,
Dale.
Hello,
Good point I guess. But I wouldn’t have the ‘guts’ to be honest. I mean: at what point do you say that support has not held and conversely that resistance will hold at that point??? I’ve always been curious about this.
Regards,
Dale.
broken support becomes resistance on a re-test
broken resistance becomes support on a re-test
I thought that was covered in S/R trading 101. I remember learning that my first week of trading, now I make money off it…go figure
Hello,
It probably IS covered in ‘S/R trading 101’!!! LOL!!! That being said: I’ve read many different ‘versions’ e.g. there must be two re-tests or three re-tests. That type of thing.
Don’t get me wrong i.e. I was not trying to start YET ANOTHER thread about S/R trading. It was just a thought that I had while I was ‘re-hashing’ some past experiences for someone.
I have many thoughts like this of course. One FINE example is the ETF trading systems by Larry Connor’s!!! As many will know: Connor’s advocates that you DO NOT trade with stops as (in his words) ‘stops hurt’. Well HERE’S THE THING!!! First I’ve always wondered how one would manage risk given that there are no stops. And second: let me tell you that had you been trading those systems during the same period you’d have lost a LOT of money.
Come to think of it: I don’t even know why I mentioned all of this i.e. I MYSELF am not seeing a point to my own posts right now!!! LOL!!!
And for what it’s worth Matt:
Again no ‘set rule’. The Turtles: simply a breach of the previous 20-day high. Wilder’s systems: a close above or below ‘perceived’ S/R levels. But with these systems it’s the risk management that makes them profitable not so much their accuracy (if that makes sense). That’s why the ratio of winners to losers is so low.
I guess it will always fascinate me how different people, looking at the same chart, will see different things. One thing I found the other day was amusing (I’m not sure if that’s the right adjective though). Bill Williams uses ‘Fractals’. Essentially: you would buy on the break of an up ‘Fractal’ and sell on the break of a down ‘Fractal’. BUT a ‘Fractal’ in the TRUE sense of the word is supposed to depict a change in direction (S/R). I saw YET ANOTHER trading system the other day that would have you sell on an up ‘Fractal’ if the last two bars that formed the ‘Fractal’ were bearish and buy on a down ‘Fractal’ if the last two bars that formed the ‘Fractal’ were bullish. Two totally opposing interpretations of a ‘Fractal’ and yet both systems make money (well APPARANTELY anyway i.e. I ‘went off’ Bill Williams a good few years ago)!!! LOL!!!
Regards,
Dale.
Ive thought the same thing when I was experimenting with S&R and looking at historical charts, I came to the conclusion S&R is a very unsafe way to trade thats just my own opinion, not to say others couldnt trade very well that way, its just not for me.