Right vs. Wrong

Trading Discussion
1

People always say theres no “right way” to trade.

unfortunately that is not the case. theres a right and a wrong way.
even thou i really dont feel like posting or discussing things on babypips due to the sheer amount of ego and wrong information that is beeing spread on forums- ill still post stuff here and share.

please excuse me that i do not have a full plan of a to b to c of what to post. i will post what i see of how things are beeing done versus things i have read here how some people think it should be done.

those are noguidelines of how to trade or what should be done or shouldnt. to find those guidelines is all up to you.

and everyone is welcome to post aswell if he/she got valuable information.

2

Do not use Logarythmic charts.

YOUR CHARTING TOOL (no matter which it is you purchased) has as default setting the logarythmic charts. This is a trap to all new people, the logarythmic chart is NOT for chart analysis purposes. Logarythmic charts are created for very long term trades (years and decades) but not trades anything less than a few years.

see a comparison of the gold chart of the last 5 years:

algorythmic char.jpg700×359 22.8 KB


nonalgorythmic chart.jpg700×359 21 KB

3

The Gann lines serve as confirmation.

There are 2 ways to draw gann lines:

1st: right

2nd: wrong

The Gann lines exist only of 3 lines. not more not less. every line more is simply plain useless, a distraction from the true action and a provider of missleading signals (losses).Many draw up to 10 Gann lines. that is simply said plain “bull-poop”.

The first line is the too steam trend, the second line is the first sign that the up (or down) trend is endangered and questioned. the third line is the TREND REVERSAL CONFIRMATION

any action before the brake of the 3rd line is useless.

as you can see line 4, 5, and 6 are only distractions and give you no valuable stignals anymore.

The SECOND ISSUE with Gann lines is simply that your charting tool has it as a feature. your charting tool thou has a prefixed formular to calculate the gann lines. sounds good doenst it?

-NO it is not good. Gann lines are way less complicated than that. they are best drawn by hand at the supports/resistances of significants. a preset Gann tool will draw them wrong since the highs and lows of the price action very rarely fit into a predefined mathematical formular.

the Gann lines do not have to have a specific area/distance inbetween them.

some distance must be in place, but no fixed rule of something like 75degrees, 45degrees and 35degrees. it varrys.

As you can see the break of the third Gann line triggered a big sell of in gold. and a potential trade of 46500 points (!!!) in 4 months. everything else, was plain and simple a distraction which could/would shake you out of the trade too early or make you initiate a stupid decition (a contra trend trade).

the wrong gann.jpg700×358 18 KB


the correct gann.jpg700×359 15.1 KB

and here as a comparison the completely useless computer-generated Gann:

computer generated GANN.jpg700×360 19.7 KB

4

Great thread,Turbo!!!

5

Thank You PMH!

as soon as i got the time ill post some more right vs. wrong stuff here

6

Certainly, any technical analysis feature can be misused. But I’ve never come across anyone using logarithmic charts for trading. And I’ve never even seen a chart with Gann lines on it before.

7

I don’t [I]think[/I] I’d even heard of “logarithmic charts”, in a trading context, before.

I’m not aware of ever having seen one at all - and they’ve certainly never been the [I]default[/I] setting of any trading software I’ve ever seen in my life. (Granted, I’m doubtless much younger than Turbo and he might have seen a lot of things I’ve never seen!)

8

What is the difference between a logarithmic price scale and a linear one? | Investopedia

Fool.com: Fool FAQ - Log Charts vs. Linear Charts

your lucky im no woman - otherwise id be offended by the age comparison :smiley:
im 33 btw and since you got a doctor title recently i doubt you are younger than 25, so we are not that far apart to classify it as “much” :stuck_out_tongue:

9

Your broker tells it you every day in and out.

Forex is the biggest market and therefore the most liquid one.

[B]1st:[/B]
you dont need to care for liquidity since 99% of retail forex trading is beeing done over the desk. 99% of trades taken by participants on this Forum will never be wired further than to the gamblinghouse of your broker.

[B]2nd:[/B]
the yearly global forex market size is estimated on $ 1.3^21

the yearly global derivatives market is estimated on $1.2^24

(For those not understanding these numbers= ^means “high” and high means that this is the amount of numbers after the dot. so high 24 means that there are 24 numbers after the dot (quadrillion= 100 000 trillion) and high 21 means there is 21 numbers after the dot (high 18=trillion----high 21= 1000 trilion))

Forex.:…$ 1 300 000 000 000 000 000 000
derivatives:…$ 1 200 000 000 000 000 000 000 000
worlds stock markets combined (just for comparison [1.14^20):…$ 114 000 000 000 000 000 000

the derivatives market is [B]much[/B] bigger than the forex market.

Anyways, trading derivatives is a completely different game than trading retail forex. i only wanted to bust the “myth” of forex being the ultima ratio when it comes to market size and liquidity. i do not want to tell anyone to start trading derivatives.

edit: arent those some really sick $-numbers when looking at prices of daily goods around you?

10

Yes, I think it’s nothing to.do.with age, you either have heard of.logarithmic charts or you haven’t - I am in the second category.

Also, absolutely true about forex liquidity access for retail clients: AmeriTrade, for example, have their own liquidity pool for client pricing, then if they cannot make that price it will go to a dark pool through Citi or other banks, but it basically will.never make it further: you retail order will never be sent to the machine rack sitting in the exchange (say, NYSE), therefore you will.never have access to top-level prices from the.exchange.
.

11

So what’s the point of all this, TURBO?

12

It’s free stuff, if you find it useful, that’s great, if not, that’s fine too. :slight_smile:

Meaning: Turbo is putting his findings/knowledge out there for free, and sure enough some of these

topics are definitely rare on Forextown/Babypips, so it is worthwhile per se :slight_smile:

THat’s my opinion, purely :slight_smile:

13

Well, I don’t deliberately want to be churlish, but advice not to trade off logarithmic charts is not really helpful as nobody does that. And likewise Gann lines.

I could as easily say don’t trade off the weather systems of Jupiter, but nobody is doing that either so what would be the point?

(Except maybe to show I know a damn site more than other people about the weather on Jupiter?)

14

Just as well, if you ask me - there’s turbulence, long-lasting storms, and wind-speeds of up to 250mph: that’s even worse than J. Welles Wilder’s “delta trading” … :23:

15

Slightly off-topic, Turbo - forgive me for hijacking your thread - a similar topic to the logarithmic vs. linear charts

could be bid vs. ask charts, namely which one the charts on a trading software are set to:

Bid or ask price on your charts? @ Forex Factory

16

just because you didnt come across things and just because you didnt see different stuff than what you read in babypips school or at some other beginners places it doesnot mean others are at the same starting level like you are.

Gann lines have been featured in a hand full of threads in this forum, among threads with questions about them you will aswell find threads in the “free forex trading systems” sections where people are trying to show others how trading is beeing done.

about logarythmic charts. only because you never come across them it doesnt mean “insent the first few sentences from above here again” and that nobody uses them. there are threads on several forums asking “how to use logarithmic charts” etc etc.

you shouldnt judgy by your limited knowledge that things you dont know do not exist.

and anyway thanks for waisting my time to bother to answare to your rubbish. as always any concept of “forum” proves its inefficiency and uselesness in the form of “everybodies opinion” matters and everybody has to express his/her opinion and “knowledge” on things they (as you said yourself) never heard of before.

anyways i said in the first post “im not here to discuss stuff” so simply take it or leave it.

so whats your trolling for?

17

Go Turbo!!

18

youre never highjacking my threads PMH and more than welcome to add your knowledge!

good point and thanks for adding it!

19

What a fancy name… sounds like a great italian dish you must try!

and thats all about there is to be honest. the great name that has (as most italian words) a beatiful sound when you say it (Fonic).

But does it belong to trading? well, that is not my answare to give to you but i might can enlight you a bit about the mentality of people and why this Name of this very old Italian mathematician became so famous in the last 40 years.

everyone who is familiar with the Fibonacci knows its origin so i will not go into details about ths. I will only tell you the truth about why it is in trading.

In plain and simple words it is a abstract/variation of the much older “one third”, “two third” and “half (50%)” retracement psychology that is beeing used in trading ever since famous Dow briefly wrote about his “Dow theory” more than 100 years ago.

we all know the retracements.

38,2%
50%
61,8%

but why these numbers? well in simple explanation: those are the numbers of the Fibbonacci mathematician formula he developed a few hundret years ago.

the true and really important numbers thou are:

33%
50%
66%
keep those numbers in your mind, we will come back to them… now:

those are the “one third”, “2 third” and “half” retracements that are being used in trading ever since.
it is coincidence that these numbers are so close together but it is not coincidence that people use “Fibbonacci” instead of the “one third, two third and half” retracement.

Why you may ask?

see the name. doesnt fibbonacci sound much more mysterious and fancy than “one third, two third and half”? doesnt it soundmuch more complicated than “one third, two third and half”?

doesnt the name and the added value in complexity add some sorf of free interpretations to it and doubt of your own trading decition in case it does not work out with the Fibbonacci?

that is the reason why. people love to overcomplicate things and there are people who like to make things complicated and fancy so the masses (you, dear reader) buys the complex version of the simple knowledge.

Why? simply because a complicated explanation to a simple practice/theory/procedure explains much easier why you fail at applying it. everybody rather fails at something that is complicated than on something that is very easy.

So the next time you try to use the famous fibonnacci rather think of the infamous “one third, two third and half”-retracement theory and the different percentage numbers added to it.

and here, just for fun, i added a fibonacci and added the 33% and 66% of the “one third, two third and half”-retracement theory as blue lines to it. the schooled eye will see how much better these 2 blue lines worked together with the (anyways strongest retracement line the 50%) in comparison to the fibonacci percentages (38,2 and 61,8).

truthz about fibbonacci.jpg700×349 25.7 KB

and now a trick: you now saw those 2 slightly different theories and different numbers. you can use these differences (38,2 and 33% / 61,8 and 66%) as “reversal zones” in which there should occure some sort of price action and indecition when you switch to the next lower time frame. if there is indecition and price action you may find a great and low risk entry point into the developed trend (not counter trend) and a confirmation that the original (not counter trend) is resuming anytime soon. if it creates no price action and undecition (in a lower time frame) in this “zone” and looks like its shooting right thrugh it might not be wise to enter any positions at that time.

20

Well, let’s see - you started the thread with the message that there are in reality right and wrong ways to trade. As you said this on an open forum every member reserves the right to comment, whether you wish to respond / debate directly or not. BTW, critical response isn’t trolling, its simply an expression of an alternative opinion. If you can’t bear that without name-calling, then don’t post in public. If you can bear it but don’t wish to respond to me individually, that’s fine, but you have, so we are where we are.

With regards logarithmic charts and Gann lines, I know of them and I understand them. I don’t understand the utility however of posting something about them which purports to be useful to traders, when struggling traders to my knowledge don’t struggle because they are mistakenly using logarithmic charts or Gann lines. So my implication was that you posted on these subjects not to help traders but to show off your esoteric knowledge.

There are limitless numbers of wrong ways to trade so the only point of posting on these is to steer struggling traders away from the mistakes they are actually making, not away from things they had never even considered let alone knew about.

As for there being a right way to trade, I don’t accept there is only one. Surely there are infinite right ways to trade, probably as many as there are successful traders. So, posts on useful practical stuff would be very welcome I am sure.