What Really Turned My Trading Around

[njokie]

Hi rel finally am grasping the 20pip rule uve heard of the rumpled one hes helped newbies like me to understand how to trade from price extremes but i just want to thankyou because i got this info from this thread i cant wait for next week to try out the 20pip rule trades oh boy its taken me soo long to grasp it

[Relativity]

Hi rel finally am grasping the 20pip rule uve heard of the rumpled one hes helped newbies like me to understand how to trade from price extremes but i just want to thankyou because i got this info from this thread i cant wait for next week to try out the 20pip rule trades oh boy its taken me soo long to grasp it

Glad to hear that you are seeing it =>

[Relativity]

Update : I’ve solved the riddle of support and resistance.

Certainly the research does pay off!

Should I really share it?

[traderjosh]

Update : I’ve solved the riddle of support and resistance.

Certainly the research does pay off!

Should I really share it?

Absolutely. Lol

[traderjosh]

Think about why wicks exist. Wicks = areas where price stopped.

Then think which candle’s wick to pick, in relation of the open.

The open price of a candle is the close price of the previous candle. And vice versa.

Why do bodies exist? Bodies = direction of price.

Hmmmmmm. Good stuff

[njokie]

hi rel it was soo good reading this post u had posted in some thread by TRO
Relativity - Tue Jan 17, 2012 5:18 pm
Post subject: Lol.

Sometimes I want to laugh coz this method is too easy and yet people still don’t get it.

Anyway, my extensive research for the past 2 years still shows that 20 pips from extremes = king.

i was wondering of we can post charts on those trades from price extremes as in from current daily low/high

[njokie]

I can’t be bothered anymore. Really.

Now I know what Masterforex said before : at some point of your trading career, successful traders can’t be bothered to help others anymore. AKA ‘waste of time’.

Frankly, I find this truth so real not just in trading, but in other industries as well.

At some point, the masters just want to keep it to themselves. Not because that they are selfish. Its just that its also tiring to share, because the need to format out the material properly. They become even more selective at their choices of helping others (both a good and bad thing)

i totally understand am not yet a master but i dont think i would bare the stress of fighting those that oppose such a strategy or any other that works honestly i salute you for starting this thread

[njokie]

This might sound unrelated to trading, but here it is :

If someone claims to be telling the truth, don’t just take it as it is on the surface. Think about it for yourself. Check it out yourself to see if it is really true, both on the surface and within substance.

If you can’t see it, it doesn’t mean its not true. It just means you can’t see it (yet). It doesn’t matter if it is right or not (subjective). What matters more if it is true or not (objective).

yes i feel like one should continue searching for holy grail until they find it when i started i was told u shd stick to one strategy what if it doesnt work? well am now on this trading from price extremes i feel like am getting my breakthrough …let me find out if its true so far soo good

[Peirce]

This might sound unrelated to trading, but here it is :

If someone claims to be telling the truth, don’t just take it as it is on the surface. Think about it for yourself. Check it out yourself to see if it is really true, both on the surface and within substance.

If you can’t see it, it doesn’t mean its not true. It just means you can’t see it (yet). It doesn’t matter if it is right or not (subjective). What matters more if it is true or not (objective).

Too many traders do not have that wisdom.

[DeltaSkelta]

Relativity, I have been busy manually compiling my own statistics in excel, doing a lot of thinking and re-reading, and trying to derive my own understanding and style using some of the concepts here.

I would like your opinion on this, if you would be so kind…

this refers to AAPL stock instead of forex, but the concepts should transfer pretty well I think.

From my stats I have compiled, the average retracement of a H1 TF is about $1 (H1 average wick size), so when I determine it is trending, my goal should be to buy at the end of a retracement to catch the trend resuming.

So, after about a $1 retracement I would be looking to enter in the direction of the trend in the picture below, and I have decided that my SL should be around 1 retracement standard deviation (maybe 2, not sure) which is about $0.60. I think I should be looking to hold for about 30-60 minutes in order to catch $2-3 move in the stock based on M30 and H1 ranges.

This potential trade results in a fairly high reward/risk situation, but the only problem I can see running into is not picking the entry well enough as it is happening. You said in another post to not try and pick tops and bottoms…but when making this type of trade (continuing trend after retracement) it seems like you are kind of forced to pick a bottom, right?

Any potential big flaws that I made in my reasoning?

EDIT: BTW, these are M1 candles, and I am referring to a specific type of trade (catching a trend continuing)

[DeltaSkelta]

I do not know if my concepts transfer well into stocks.

When I mean trying not to pick tops and bottoms; what I really meant is that a dose of caution must be always there.

DO pick them and try to anticipate them. But DO NOT pick them for the sake of picking!

Yes, price will eventually turn. In any TF, there is always ONE highest high or lowest low. The question is always when. Not where. Where is way less impt than when / when is way more impt than where. This is because at any true turn of price, the bigger players (W1 and above) must agree. Otherwise, its usually a retracement / continued ranging.

Its good that you are applying the concept of time here. Looking for patterns of time that are in harmony with patterns of price.

Hmmm… Mr relativity has a unifying theory of space and time?

Sounds about right, I never thought about it like that before

“god doesn’t play dice”

[DeltaSkelta]

“Volume in terms of predictable structure”

By this, you must mean the structure of the candle (IE avg range, wick/body ratios, etc correct), So in effect you are saying that the smaller TF candles have a more normal distribution, while the larger TF candles are skewed? (meaning a much higher standard deviation/mean ratio)

So let me run a few scenarios to see if I understand what you are saying.

1. W1 candle may have a -1 stdev range, meaning it could be a consolidation period, most likely a ranging market on a smaller TF

2. It could be a way above average +1.5 stdev W1 range, meaning we are most likely in the middle of a strong trend.

These are just a few examples, but it seems that the irregularity of the larger players is what makes it so “hard” to make money. If those TF’s had a normal distribution, it would be ridiculous.

This one is going to be a bit of a stretch, but (reverse engineering what I think your stats say and mean) I would have to bet that W1 is king because of a combo of two things

1)skewed distribution - means there are important decisions to be made
2)higher range/time ratio - means it has the potential to MOVE

important decisions to be made + big moves = MAXXXXXX PROFITZZ

I hope I haven’t gone in the complete wrong direction.

[Peirce]

Nope you are precisely on spot.

You just have to do a quick eye check yourself : don’t need stats for this one.

Open up ALL timeframe into smaller subwindows each. Load up volume for each one. Zoom all out at max. You should see something very obvious.

Thats why I want to laugh at the 2 common schools of thought of FX traders.

predictable vs unpredictable
white swan vs black swan
experienced traders that say lower TFs are easy vs experienced traders that say higher TFs are easy
new traders that get killed in lower TFs vs new traders that get killed in higher TFs (LOL)

Both are right. Just that personality of the trader + perception made the difference.

What makes you laugh? Am I missing the joke?

[Peirce]

Frankly, think about it further. Don’t we ALL want the following :

-predictable entry
-predictable exit -> if in terms of loss
-semi predictable exit -> if in terms of profit
-unpredictable exit -> if in terms of profit

I like how a trader I watch a lot said it in his signature : 1. Big loss, 2. Small Loss, 3. Big Win, 4. Small Win — just prevent 1.

Any trader would want to kick himself if he gets stopped out due to ‘regular price action’.

If its regular enough and one can prevent it, then do it.
If its regular enough and one can exploit it, then do it.

20 pips. You chose it to be either :

• your SL, so that you can avoid getting stopped out too regularly and catch moves larger than 20.
  OR
• your max TP, so that you know what is a safe range to scalp

Which side are you on? Chose.

If you can “prevent” it then it should be “exploitable”, right?

[Peirce]

“Volume in terms of predictable structure”

By this, you must mean the structure of the candle (IE avg range, wick/body ratios, etc correct), So in effect you are saying that the smaller TF candles have a more normal distribution, while the larger TF candles are skewed? (meaning a much higher standard deviation/mean ratio)

So let me run a few scenarios to see if I understand what you are saying.

1. W1 candle may have a -1 stdev range, meaning it could be a consolidation period, most likely a ranging market on a smaller TF

2. It could be a way above average +1.5 stdev W1 range, meaning we are most likely in the middle of a strong trend.

These are just a few examples, but it seems that the irregularity of the larger players is what makes it so “hard” to make money. If those TF’s had a normal distribution, it would be ridiculous.

This one is going to be a bit of a stretch, but (reverse engineering what I think your stats say and mean) I would have to bet that W1 is king because of a combo of two things

1)skewed distribution - means there are important decisions to be made
2)higher range/time ratio - means it has the potential to MOVE

important decisions to be made + big moves = MAXXXXXX PROFITZZ

I hope I haven’t gone in the complete wrong direction.

The weekly range can be exploited. A lot a math is not required. You don’t have to be a forex pro to do it either. This BabyPip thread shows a recurring weekly trade 301 Moved Permanently You may bang your ahead against the wall because it is so obvious in a “why didn’t I think of that” moment

[njokie]

The weekly range can be exploited. A lot a math is not required. You don’t have to be a forex pro to do it either. This BabyPip thread shows a recurring weekly trade 301 Moved Permanently You may bang your ahead against the wall because it is so obvious in a “why didn’t I think of that” moment

thenx peirce for the link i was looking to exploit daily low so this link will really help

[slfocus]

Hi Relativity,

I have been following your teachings for sometime now, still on a demo account though. But the results are interesting. Thanks for your effort. I have one question. After all this thread has seen and heard, I want to take you back to the very first post of this thread - stats and bell curves. I’m still having a real difficult time understanding those stats. Its really disturbing cos I’m fairly good at maths but somehow can’t digest this. Could you possibly explain once more how you concluded the 20pip rule…

Thanks in advance

[DeltaSkelta]

Hi Relativity,

I have been following your teachings for sometime now, still on a demo account though. But the results are interesting. Thanks for your effort. I have one question. After all this thread has seen and heard, I want to take you back to the very first post of this thread - stats and bell curves. I’m still having a real difficult time understanding those stats. Its really disturbing cos I’m fairly good at maths but somehow can’t digest this. Could you possibly explain once more how you concluded the 20pip rule…

Thanks in advance

lol I was in the same position as you, I excel at math, but I had the hardest time realizing what was being said in those numbers. I will try to explain what I see and hopefully relativity can confirm or disconfirm.

the first stat pic:

IN the first stat, where wicks and bodies are measures, the D1 wick median falls within the ballpark of 20 pips, the mean is also in the same ballpark at about 36. You know that price reaches a certain point, and then retraces about that amount all the time, because that’s what a wick is by definition. Price went there and came back (retracement)

Now with the bell curve, I still have a hard time really understanding it in my bones, but what I see is that the distributions of the wicks and bodies remain about the same all the way through. The wicks on the other hand, have a highly skewed dist. with a 20 pip ballpark falling right about the midpoint. At 20 pips it has a decision to make : keep going, stop, or go back.

Second stat:

M5 and M15 barros swings fall within the 20ish pippin zone. the important part to note here is that by the nature of the swings, a 5 min swing which is 20 pips can continue onwards into a H1 or H4 swing. Realizing that the average candle it 1/4 wick 1/2 body and 1/4 wick, look at the swings as if they were candles and think about it. What is happening?

Third stat:

This is calculating the “speed” of each candle TF, essentially relating time to what you already know about candle length and space.

You have to sit and meditate on these numbers to really see what they mean, I have done so for hours and hours. Sometimes it is maddening because you can’t wrap your thick head around it, but just keep trying and understanding little bit by little bit until it all makes sense. I know it took me a while, and I’m sure it took relativity a while as well, after all read his first post about his past days of trading…

[slfocus]

Now its beginning to make sense. Thanks a lot DeltaSkelta. I’ll still have to … sit and meditate on those numbers as you mentioned … to fully realize my grasp of it. lol.

At least I have a foundation to base my thinking. Thanks

[FringFX]

Relativity,
just glancing at the first page now.
how do you compute those stats? I am not that good in math but it’s interesting.
Thank you for sharing!