Just since we have been talking about patterns recently I thought I would put this post in before I sneak off to bed early tonight.
With only 15 minutes to go to the close of today’s trading, the Euro/Usd seems to have formed a good example of a Dark Cloud cover on the daily chart.
May be interesting just to make a mental note of that just to see what happens over the next couple of trading sessions.
Good night all :24:
Why is FX trading so hard?? The freaking Price only goes up or down… plus we have all these fancy technical tools… thousands of oscillators, MA, Fibos, Bollinger Bands, waves, S/R, japanese candlesticks, etc.
Then you look back in the chart and start to see that price respected those tools when you did NOT enter the trade or that price couldn’t care less about the same tools when you took the trade.
So we know those tools work perfect!! But only when you are NOT in the market!!!
Then… by elimination the only culprit of your failure is YOU… but you fail NOT because you are lazy, stupid, uneducated or because you do not study those hundreds of books about trading…
I tell you why you fail…
because you are [B]HUMAN[/B]
Yes… I just show you the holy grail 
If you are a Human then the odds are that you think like the majority of Humans (let’s say like the 95% that losses in FX )
Believe it or not… Human behavior is VERY predictible… and if you are a FX trader, being predictable is VERY bad, cause Banks are the masters at mind reading!!
But banks do not target just you… (although some times looks like that) … Banks target the liquidity of those 95% of the herd…
Remember that the theory says Markets DISCOUNT everything… and in FX being the most frontrun market in the world this can’t be more true…
So before you place a trade you have to get rid of that human behavior thing (even if you are a discretional trader) and SYNC your bias with the [B]bias of the market[/B] (real meaning: the bias of the Banks)
After all this philosophical BS I just wrote I have a test to see if you are part of that [B]herd[/B]…
This test actually I found it reading a post in a forum (do not remember if was here or at FF)… the poster said he had a mentor that asked him to play hundreds/thousands of times the game “Rock-paper-scissors” online…
In that game there are not any possible edge to be a consistant winner… just than you understand your “HUMAN” opponent
That is right… the edge is to exploit the human nature of your opponent… then you can be a step ahead…
But before show you the game I want you to see this video ([B]please do not skip it[/B]):
OK, Here is the game: Rock-Paper-Scissors: You vs. the Computer - NYTimes.com
Choose to play against [B]Veteran[/B]… Play at least 30 rounds… I bet it will remind you your last trades
completely agreed and it made me smile.
than bought eur/usd just after the ride down at .3073 and it made me one pip it’s a pity that I haven’t closed it, now I have to wait the Asian session. because there isn’t much speed now, I placed TP 1.3081 it’s just 9 pips, a good number, and BB band is right there. it should reach it
anyway, it’s an uptrend. I should buy another one tomorrow 
thanks for posting the game too, a little satisfaction that I can overplay a machine, haha. gave back a part from my self-confidence
it’s another question, that if we always anticipate, how can we go with the trend ?
just pick the shorter trends for anticipate and you’re at the longer trend … ?
it’s good that this game made me think of those things, thanks again!
play!
Wow Yunny great post! You guys are killing it in here!
Yunni, yesterday I closed the euro/us at 2 pips and as I realised it today I closed it well -ok it’s fortune. but today I also made 3 pips long, haha, though the trend seems not going that way…
and, if anticipation, who is with me in a short at eur/cad ? I would expect it better than against usd. but would try a short at usd/cad as well. thanks for any view and hi for the thread!
I had a pending order at 1.29 eu/cad which hasn’t fulfilled but in for the short and it’s already 10 pips. I think it’s for longer term. or must be sharp…
hm, I wouldn’t have thought that it can be so interesting. decided to go long from a a point and collect some pending orders short as well, than pray that I was right… okay, I like it (: built in, and call it spot-method, or spot trading, haha. ( setting the orders to pivot points can be better. ok, it’s not new, but if anybody has forgetted is, it can be)
Thanks again and have a good weekend.
ps: at eur/cad, I’m expect the price to be stretch till 1.2913 area , and don’t reach 1.2920, so I will short from there.
Here is my results from playing the game first time om veteran level;
Does that show that I am smarter because I win? Answer to that is no.
I won because after about 4 throws I decided to throw the one that would beat the computers previous throw. On balance, that strategy won more than it lost, as you can see.
Which probably illustrates what yunny is hinting at in as much as if I can predict, or at least come up with a short term strategy, that wins more than it loses, is it really too much to believe that the big institutions, with all their money and research resources, can learn to predict what we, the herd, are thinking???
Personally I think this is a fascinating subject, since I do have an interest, albeit not the best educated interest, in psychology (you need to really to be a taxi driver in Glasgow LOL!!)
But it does make me wonder if we have not, as a group, fully understood what is meant when we read of the “Psychology of Trading.”
I initially, and immediately, just assumed that the Psychology of Trading merely referred to our control, or lack of control, over our EMOTIONS, and NOT our REACTIONS. But maybe that ISN’T the whole picture after all.
At the risk of sounding like the most gullible of fools, maybe we ARE just being led down a predictable path by the big institutions and, lest we forget, the MEDIA
So now comes the big question … if that is the case, what are we going to do about it? Shall we spend hours analysing the market, marking all our S&R lines, trendlines and what not … then come up with a bias … and do exactly the opposite in order to win?
Right now taste, I don’t know the answer to that. I do know that I believe we have just opened a whole new door and what lies inside it could be the thing that changes the way you trade, or think about trading.
If anyone doesn’t believe it is possible to influence others to get them to react in a certain way, I would refer you all to this video.
In the UK there is a tv celebrity by the name of Derren Brown. He is described as a psychological manipulator, basically meaning he influences what you do by means of suggestion, not hypnotism. In this programme, which he did for Channel 4 here in the UK, he gathers together a group of middle management people, WHO HAVE NO PRIOR CRIMINAL RECORD, who believe they are attending a motivational seminar.
What he is actually doing is programming them to commit an armed robbery. The programme was called The Heist
Video lasts around 50 minutes, hope you watch it and then ask am I being manipulated.
[B]Just discovered that youtube won’t let this video be embedded on the forum. But when you click on the play button it does give you the link to watch it on youtube.[/B]
[video=youtube_share;p1V6rJ1qreA]http://youtu.be/p1V6rJ1qreA[/video]
If it turns out that it is possible to get people with no criminal record to commit a crime, a serious crime at that, it therefore is no huge step to understand how ordinary people can be brainwashed into becoming suicide bombers, terrorists etc.
Now I understand that this might be getting a bit deep, after all, it’s trading we’re talking about here. BUT, if you can manipulate people enough to do these things, is it really inconceivable that we can be manipulated enough to trade in a certain way or direction
During this weekend I will post exactly what I do set a Bias… It is not bulletproof but works well for me, and there lays another newbie mistake… following somebody else system.
You have to understand your tools, why they work and why they don’t work.
As we can see with HoG’s example to beat “Rock-Paper-Scissors”, there is an edge at any game play by humans… and HoG found [B]HIS[/B] edge, that can be different from my edge, or kores, or taste, or any other trader.
What you do is to adjust those tools to work with you…
Here at BP there are a excellent mentors like ICT, petefader, Forex School Online, etc. Their strategies have an edge, the concepts are good, the methods are great BUT a lot of new traders fail because they try to follow a system without being totally understood.
If you get the main direction of price right then the rest is easy… but what is the “main direction of price”??
It is [B]your[/B] main direction, [B]you set your bias in the time frame you are trading[/B]
Is great to see that I made you think about this topic…
and you made me think at an excellent time! timing is everything as they say
I am a total believer that price is manipulated in a way to lead the masses to get in the wrong direction. I see it happening on the charts everyday (unfortunatley more in retrospect than anticipating it!). I have learnt a thing or two from ICT regarding this subject and I see that all good traders in here are aware of it. So I totally agree with yunny and anyone who says that smart money have a way of predicting our normal behaviour. My comment of doing exactly the opposite of our analysis was more of a joke and to get yunny to write some more about setting the bias. I like the way he explains his thoughts and I look forward to it.
Just watched Derren Brown’s the Heist. If it is true … he is an amazing guy! … could be all staged tho … so cannot really tell unless I experience it.
It’s not staged. He takes his “psychological influence” show on the road in the uk and does various tv shows of the same ilk. It is amazing to see, all through the power of suggestion.
Oooohhhhhh, makes you think though eh?
I have no secrets… everything I going to write here is available for free on the internet and for sure better explained…
What I want to do here is show it in the most simple way I can. I truly believe the simpler the better.
Let’s start…
Tools you need to set a Bias:
Eyes and Brain - optional tool: ZigZag
Concepts you need to set a Bias:
Fractal Nature of the Markets
Trends in the Dow Theory
Peak and Trough Analysis
Optional concept: Elliot Wave Theory
The links are only for reference, no need to read them all.
Now an exercise:
Your bias would be that the market is in an up move and you’d be looking to buy on a dip. sell at a top.
Thanks yunny. My view:
Then again its also wise to note one thing looking at that picture. There could be a huge crowd of sellers just above the current price point and for all we know they could take price back down again all the way. We’ve only seen two areas where buyers have come in - The beginning and the first dip.
I agree with Aesthetic that bias is bullish with higher lows and higher highs … but just to give another scenario price could need more liquidation to reach a higher high and therefore move down towards the stops which are just under the previous low. This would also be around the 61% - 79% fib retracement area which would clasify as a deep retracement.
I have to say that my biggest problem with bias is that each timeframe will give me a different bias so for me to make it work I have to kind of focus on one timeframe and wait to see if my assumptions take place.
OK guys, I just wanted to add this post while we have the chance.
I don’t want to interrupt the Bias conversation but just since the opportunity to do this has arisen, I thought I would quickly add it in.
The other day I added a post just to highlight the fact that the Euro dollar had formed a Dark Cloud Cover Reversal Pattern on it’s Daily chart. Friday’s trading subsequently did produce a drop in price for that pair and I was wondering how we would have traded the Dark Cloud cover, had we decided to do it.
So I made a quick video this morning looking at the Dark Cloud cover and what I personally would have been looking at in order to make an entry decision to go short on the strength of that pattern.
As I say in the video, this is NOT an instruction video as to how to trade a dark cloud cover, the entire video is a question how we WOULD trade it, and these are only my thoughts. You may totally disagree or have a different way of looking at it and that would all be fine.
I did also say on the video that I would try to add some still images in case anybody wanted to mark things that they would have done differently. However shortly after I made the video my charting platform went down for weekend maintenance so that may have to wait until Sunday before I get a chance to do that.
The quality of the video is not the best in the world so I will also have to work out how to improve on that. See what you think and all opinions welcome.
[video=youtube_share;dAbtcvWBPeM]http://youtu.be/dAbtcvWBPeM[/video]
I bet you said: this is too easy … is this what he is going to show??
Answer is yes. 
With only three sets of data (the three arrows) we have sync our bias with the market
As HoG and Aesthetic said, the Bias is Bullish (HL/HH), and saying: buy dips and sell rallies is correct.
Now the question is: what is definition of buying dips and selling rallies???..and I mean NO words, but what do you actually do in a real chart with real money???
the answer will come in next posts 
Aesthetic: I love that you used the chart to explain your point of view. By now, we all agree if we see this kind of move, we have to look to buy dips and sell rallies
In your image you showed a possible move… yes that kind of move is likely to happen BUT with the info of this chart that will be a not so good decision. We have to focus on those turning points we clearly see in order to make a decision.
Clue: You set your Bias in the timeframe you are placing the trade
Forgot to add: Of course is a must to mark any strong S/R levels in higher time frames… I will post a couple of examples later…
