Putting things together

[Phaz3d]

Instead of talking about why I trade, let’s take 1 post to talk about why I don’t trade.

I’ll say it just once, but I’ve found it very mind opening. Study how price moves throughout the week. This is what I call Current weekly structure. Where is the high/low in the week? It just so happens that as this week developed, Friday was looking like a very high probability “null zone”. This means that in the context of breaking either the current weekly high or low, price on Friday wasn’t going to make an impact. Thus, while you don’t particularly need the weekly direction to go in your favor, it certainly doesn’t help. The more “I’m not sure” factors there are, the less likely I am to take a trade, esp if I’m only looking to hold for 20-60 pips.

[Phaz3d]

1. Gaps have a good probability to get filled
2. There’s a good probability that the first 24 hours of a week shapes the week’s highs and lows

[Phaz3d]

Gap is filled and the week is underway

I don’t guess where I think the market will go next, I just play the probabilities.
It’s only Tuesday, but let’s think for a second. Monday made a high, Tuesday made a low. We’re at a ~110 pip weekly range so far. How big is an average weekly range? What’s more likely here, Monday top with a Tues/Weds/Thurs/Fri bottom or a Tuseday bottom with a Weds/Thurs/Fri top? What’s the probability that we’ve seen the weekly top and bottom already (meaning the rest of the week is just sideways)?

It’s okay if you don’t have the answers, as long as you have methods to obtain them. You NEED an edge to succeed.

[Phaz3d]

Just like that, done for the week. No need to trade anymore when you get everything in 2 nights.
Trading is not easy, but it is simple. The two facts I mentioned in the opening were all I needed to guide my weekly trading. Anything in the blue box, which is really about 24 hours, was good enough of an antry point. It’s okay to take a couple of small losses looking to cherry pick as long as you don’t overdo it. No one is expecting to pick the topping bar as it’s forming - the point is to recognize that it might be the topping point in the hours that follow. No one point tells the whole story. The more parts that fit the narritive, the more likely that the narritive is true.

1. big red bar - could be the top but not trading it
2. breaking bar - big down swing for a bull move, could be correction or change. Don’t have to trade it either
3. 24 hour period following - if the objective is to trade towards the gap under the analysis that the gap will fill, then now would be a nice time to trade it. The bullish momentum has not resumed, and anything in the blue box or higher gives a 1:1 reward ratio or better. Under the assumption that the gap fill % must be greater than 50% (otherwise we would not be using it in our analysis pack), this is a no brainer trade. In fact, it has always been a no brainer trade direction, but we were waiting for a balanced opportunity to do so.
   
   
   
   

From here a possible trade would be bullish to 1.078x with current swing low 1.0738 as the bottom. But my goal is to trade the main weekly swing, and I’ve done that to my content.

[Phaz3d]

Missed out on an extra short day. Still trying to make sure I’m following my plan, and currently I don’t have one fully set for these kinds of scenarios, they’re a bit rare. Normally I wouldn’t trade today, but statisically it’s a long day. Should get up to 1.072x, but maybe not until next week. Either way, Looking for longs

[Phaz3d]

Trading has been so-so. I think there are some great ideas in my thinking, but they are not quite strung together well enough to produce the results I want. I know not many people will want to read or follow someone who isn’t strongly profitable, but I make the assumption that if there are others who were like me when I started, they would have wanted to read this sort of thing. The important take aways are not the results, the strategy, the trades, or systems, but rather the ideas. The ideas themselves can produce all of the above in a fashion that cannot be ignored.

I’ll make this one short(ish) and just highlight some scenarios that I’ve looked at in the past couple weeks and hopefully be able to shine some light as to how I view the market.

I always trade into the gap. Point 1 just didn’t work out for me. In this sort of scenario, it doesn’t really make a difference where I enter, because my risk is always the same, a percentage. This of course affects the profit because in order to get, say, a 1:1 RR, I would need to hold on to it for more if I had entered further down. But in this case it is not important because there was never a chance to really get much profit. It came down then up, never getting close to closing the gap.

Point 2:I can’t remember if I took a trade in the area marked 2, but again, this is kind of irrelevant. The point is that I have knowledge that there are forces that say that price should not have bottomed out as shallow as the point that it did on the right side of the marked “w” (in other words, it should have looked more textbook 1-2-3 down trend than “w”) and I had reasonable suspicion that it could have bottomed out where it did (giving an entry opportunity about 25 pips from the bottom). The key is to both be aware that both scenarios exist, and to find ways to reconcile these differences. Don’t tunnel vision and blindly pick the double bottom because it “works” and don’t have “analysis paralysis”, but rather find ways to make a decision before it is time to do so.

[Phaz3d]

Not making the money but the strategy is coming more into focus. I’m in no rush to do this, just to do it right. My timeline for completion on this project is about another 3-5 years, depending on how busy I am. I can afford to lose $5-10 bucks a week on trades for quite a long time, and at this rate my account is doing fine. One or two trades changes everything, and I know how to be patient. It’s all about playing the spots I know and building the proper infrastructure at this point.

Looking to short for the week with the stop at 1.1230. Happy trading and catch you guys later.

[Phaz3d]

Market short at 1.1752 TP 1.1735 (1HR swing low) SL 1.1781 (1HR Swing high). basically 1:1 on this, I’m very interested to track this one til it hits.

[Phaz3d]

Very clean, very little drawdown. I will definitely be looking into this more!

[Phaz3d]

Same thing, looks like it happens about once a week so far but I’ll wait a couple of months to see this one play out.
The real questions will appear when the set up fails. So far this is quite a good set up though, primarily because the exits are fairly safe, and most importantly, there is plenty of time to get in. I work, have hobbies, and do love my sleep. Having a couple hours to get into a trade without heavily affecting R:R makes all the difference.I use to be a big fan of hyper low risk, hyper high reward, low probability, but each pip means too much and at an amatuer level it’s not worth pursuing.

[Phaz3d]

Was looking for a calm week and kind of got it. I’m not expecting much to occur until next week, as 1.1635 and 1.1850 looks pretty locked up. The Tuesday launch was slightly unexpected. I got most of the move but it wasn’t as big as I’d like. Fortunately, I have some ideas on how to add. Overall I’m pretty satisfied because I’m not full time in this and got in and out when it was possible.

The up move was textbook breakout mode.

The short was simply because I thought that the high of the week was locked in, so my risk was protected. I got out because I realized that the bulk movement (period) was probably done and we could be floating in dead space for the rest of the week and a 50% retracement of the down move was about as likely as a 50% extension of the low. So while I could have had a small loss, I took the chance and got out at a small profit instead.

THEN I came back later and realized that another low at that time was extremely likely, but I didn’t want to muck around in it so I entered short again and took a conservative TP and bailed.
9/10 on execution, 4/4 on calls, and enough money for a burger and some nice fries.

[Phaz3d]

Working smarter not harder is so true it hurts. When you get to the heart of TA, it’s really just as simple as it sounds. Find a pattern, test it, and respond accordingly. As I’ve developed in my journey, I’ve taken the approach to building a wave model to be my background. Then I look at the tops, bottoms, middles for signs of reversals or continuations. This use to be an extremely laborious task, and any changes in the base model would require me to start the process over again because the focal points (tops/bottoms/middles) can then be changed. Finding ways to effectively generate all of these focal points whenever a change is needed has saved me probably dozens or hundreds of hours, and in practical terms, weeks and months since I don’t spend 8 hours a day at a trading desk.

[Phaz3d]

A bit quickly here:

Got pretty handled today, and these sorts of bottoms make retailers go mad and into tin foil hat mode. But looking back, I took two longs when I should have taken jut one. Or rather, I took two longs when I should have taken one short and one long. Think I may still have been down overall, but it looks and feels a lot better than taking two losses. The key for me has been not to go into panic mode, but to clear my head and think back, “Was this the right trade, given all the information I knew and could have known on hand?”

Just as you are taught to not make decisions when upset, you should not make strategy changes to alterations after a loss. The absolute key is to have a rock solid trading strategy, and to be able to pin point problems and study them and look for solutions. It is easy to look at this type of movement and say “next time i’ll only close if my stop loss is hit AND if the bar closes under the stop”. This would have been a killer series of trades, but I know not to do that. First, because I know I can’t be awake during these hours and make that call, and secondly, I don’t have the capability to program an EA to make that call. I also don’t know how much extra average loss I would be incurring on trades when I am clearly wrong. These questions are not trivial, but they also do have real tangible answers. Being able to understand this aspect of trading has been critical in my experience.

As an aside, this is a slightly dangerous short, but played correctly will net a small profit to recoup some losses

[Phaz3d]

I thought I’d put in a little blurb here because… well, I can! I recently tried to get back into the trading game and after some coaching and therapy (not necessarily trading related), I’ve been keeping my mouth shut more because it keeps me out of trouble haha. I pick a lot of fights people.

I realized that I really want to keep people away from making the mistakes I did, but that it’s not always my place to force that ideal onto others. If people want to donate their money, so be it. Of course, I didn’t come up with all my ideas myself, it came with the help from reading what a lot of other really great (and articulate) people have written over the many many years. Here’s what I have to say.

From a philosophical (logic) standpoint, everyone must understand that the routes they choose as traders have pros and cons. Traders must understand that these should be FIXED. If I trade manually, I cannot complain that ‘I would make money, if only I had a robot’. If I trade with an EA, I cannot complain that ‘I wish sometimes there was an override button’. These are FIXED. Now, I can trade both with an EA, and I can turn off the EA and trade manually. However, EACH trade can fall under only ONE category. Such is the same with how we approach TA/FA.

IF you choose the TA route, you have 2 options, discretionary vs mechanical. These are FIXED. If you trade discretionary, you will NEVER know your true edge or profitability. You CANNOT. Yes, you have past p/l, win rate, charts, graphs, whatever, but the fact that there was no precise moment of trade means that no 2 traders of the same system will make the exact same trade at the exact same time.

If you follow, you’ll understand that when we demand a REAL EDGE from the market, or proof, the instant we do that, we are no longer trading discretionary systems. If you want your edge to be defined, you must do so with math.

I used to think many people were okay with being discretionary traders, that things would just ‘flow’ and they would ‘get it’ or not. But other time I’ve come to see that a lot of traders really just want success at any cost. They want a system that REALLY wins. This means they want mathematically based models. It MUST be. But so many traders are scared of math for some reason. It’s what I call trader hell - the desire to make money, without the desire to put in work into it. This is where almost all true failed traders fall. It is without question. How many traders quit saying ‘yea I tried it but I couldn’t get the hang of it’ or it wasn’t for me, or I realized I didn’t want it that badly, or something like that. How many traders say ‘it’s rigged, there’s no proof, it’s all bs, it’s 100% random’?

I know these traders do not really mean what they say. I know they are mad, but have not really cared about winning, as they wanted justification for their losing. What was that quote? Every man gets what they want from the market? It’s more true with time I believe. I know they do not really mean it because you’ll find that these traders know almost nothing about the market. Truly. There are so many FACTS about the market. Things that if you take the data, do something to it, and count it, are true. People say ‘oh but if something is 60% now, it might not be 60% later’ But just look. If you take 5 minute data from last month, and then you take 5 minute date for every other month this year, and they all fall within expected standard deviation, there is no arguing. It is simple math. I mean really. If you’ve tried your hand at the numbers, and couldn’t find anything, then great. You’ve given it your best shot, and you can at least say you know of things that statistically are random, or have no traceable edge, etc. but at least you have that.

To end, here are some things I think about. Traders:
-do not care enough about math
-do not question things enough to look for answers
-do not understand that any trader HAS to create a model of the market. They may not call it one, it may not be written down, but it must exist.
-do not question the model enough

To be concrete, here are some things I am thinking about:
What makes an MA good?
Should an MA minimize the number of bars that do not touch the line?
Should it have minimum variation in slope from bar to bar? (because MA = 1 is very accurate but useless)
Should it have a maximum number of bars before price touches the MA? (mean reversion strategy)
Should it minimize the time it takes between moving from a positive slope to negative slope? (MAs at trend reversals)
Is it possible to combine MAs without using multiple MAs?
Is there a way to know when price is moving towards the fast MA vs the slow MA?
Is it possible to have a “morphing” MA that slows down or speeds up based on price volatility?

[Phaz3d]

From a pure probability standpoint, it is not very hard to find 80+% or 85+% probability trades. The reason why they are untradeable is because of what the trader must sacrifice to obtain that probability’s in terms of risk reward. In the 10% that they trade doesn’t work out they get killed. The difference between a martingale that works and one that doesn’t is the difference between a gambler and an extremely successful trader.

The goal is to obtain as many 90%+ nuggets from the market, and find maximums to contain risk. Due to sizing, there can be a considerable amount of leverage, but one still must retain a strong pure edge in the market… these spots must be picked very carefully.

[Phaz3d]

Observe, model, question, answer, adjust, repeat. Should I find something that seems worthy, move onto system design, backrest, adjust, clean, demo. Not going to be active much while I wait for the demo to play out. If it does (~10% likely, 2-3 weeks to determine), it’ll be back to the board with intent focus

[Phaz3d]

Took a while to debug an issue with trading through the oanda api. When placing orders, it doesn’t appear that their backend properly formats price to be traded, and takes whatever you give it. Floats in programming languages can be very strange sometimes - what looks like 1.2312 can be read into the language as 1.23119999999, and oanda will neither round nor accept up to its precision number (pipette). Instead, it will try to place the order using the long variant, and result in an error. I suppose it’s technically the coders job, but I would think oanda would write it as a note somewhere or at least have their customer support be aware of how to deal with it is the nature of floats in programming.

First full week of demo today, end of this cycle should be end of this week to move into a small live account.

[Challenge11]

Hope you don’t mind me chiming in for some suggestion.
You’re thinking too much ! to be precise of the wrong things.

Everything you need to understand market movement is on your bare charts.
Instead of brainstorming ideas in your head which often tend to be useless (I’ve been there) study your bare charts.

Learn to see High’s and Low’s on your chart and on your specific TF.
HH HL up
LH LL down does it make sense.

And if you see a HL where would you buy ?
and vice versa for LH

previous support becomes resistance
previous resistance becomes support.

go from there…
learn the language that market speaks! not your ideas.

[Challenge11]

And if you think market is random you’re in some serious trouble !
Because it isn’t.
You can’t simply assume it is random because of your inability to read market movement.

Thats a friendly reminder.

[Phaz3d]

Thanks but I understand how highs and lows work. I also don’t ever recall saying that the market was random so if you could kindly quote where I said that it would be helpful.