An Apparent Veneer of Structure over Random Chaos

[Sigma-D]

Bad advice is worst than none.

This is the sort of thing that gets my immediate attention. Short, pithy and an immediate appreciation of its value. It occurs to me that the more important lessons in my life have been of this nature.

i'd advise to look through archives and try to find posts by the more knowledgable traders such as 'shakone' and 'random123'.
Similar topic might have been covered some time ago if your lucky?

I already took your post yesterday on the potential significance of the holy trinity as a signal to do some research. And my efforts have been well repaid already. A pity they are not active these days. Any others you can think of that meet the brief?

 

[Sigma-D]

F's talking about managing the variable and fixed cost ratios together with leverage .......you make your choices of mix dependent on your (perceived) optimum business model as related to revenue stream

probably the classic Business example is outsourcing verses in house solutions .......but thats another story

horses for courses
N

Thanks for the additional information NVP, but I don't understand how I can use that in trading forex. My "perceived optimum business model" is to make ridiculous profits with little to no risk. There is no revenue stream as I'm not selling anything. I don't have any fixed costs. I can sit here all day, all week and it doesn't cost me a penny to run my forex trading 'business'. My variable costs are the spread on any trade I choose to take and any trades which don't turn a profit. I can control the spread to profit ratio by not aiming for small wins in relation to that spread - that's the only thing currently under my direct control. Number and size of losing trades are also my responsibility but over which I currently seem to have little control. I can work on that. Leverage is a function of risk and position size and also under my direct control.

My point being that all things over which I have direct control are already in place. What I need more work on is limiting the number and size of losing trades. I don't need to expend any energy over the profitable ones.

 

[Sigma-D]

Am still hanging onto the notion that I can't tell if trading forex at short timeframes is random or not so shouldn't expect any technical basis for anything to work and neither should I not. What I have started to notice is that getting in earlier in any move makes a lot of sense from the potential return perspective but also carries a significantly higher risk of failure to develop. Waiting for the move to be plainly obvious carries little risk in terms of getting the direction right, but significantly more risk of having enough left to make the entry worthwhile.

But there is something undeniably attractive about those dark pools which are totally devoid of all signals and information, stasis points, at which all moves are in potentia and from which all movement evolves. Is this a personal thing where I am an inherent seeker of tops/bottoms are do all traders gravitate towards what is effectively pointless greed? It makes far more financial sense to wait for the plain as day moves and then get on board for whatever it offers in terms of low risk of loss regardless of the number of pips made, but there is still this possibly quite unhealthy fascination with getting in the the greater portion of the move. Is this just ego?

 

[Forexmospherian]

There are some very good comments on your thread SD - and its worth pointing out that FX trading ( its the only instrument i know about) is just not black or white - there are lots of grey areas

You can have 2 identical traders - both using exactly same methods etc - but depending where the live in the world - and which brokers they use - and which time of the day they trade - one can be profitable - ongoing and consistent - whilst the other trader struggles to make even a living

FX trading is not just all guessing - it can be predicted with high probability on short time scales- like weather reading

i can read the weather normally brilliantly - over next 5 - 15 or even 30 mins

Ask me to guess the weather in 10 hrs time or next week or month - have not got a clue - and really not many have - as its fortune telling

Thats why good experienced short term traders - not just scalpers but traders who trade multi trades every day can be 65 -85% accurate - on going over 1000's of trade

Most longer term trader - cannot have the same predictability - ie they are happy at say 35% to 50% accuracy - they think thats good for fortune telling - and it is with clever MM

But this is the crux - you need to become experienced at reading charts and probabilities

I take say 150 -300 trades a month - but some of of those have RR's of 5 and 10 and even more - they are not fixed at 1 or 3

See flexibility etc etc

I will explain more a bit later when not trading etc - but keep an open mind - always listen to all experienced traders - I am sure you will gather good and bad info - and then you decide etc

Regards


F

 

[NVP]

Thanks for the additional information NVP, but I don't understand how I can use that in trading forex. My "perceived optimum business model" is to make ridiculous profits with little to no risk. There is no revenue stream as I'm not selling anything. I don't have any fixed costs. I can sit here all day, all week and it doesn't cost me a penny to run my forex trading 'business'. My variable costs are the spread on any trade I choose to take and any trades which don't turn a profit. I can control the spread to profit ratio by not aiming for small wins in relation to that spread - that's the only thing currently under my direct control. Number and size of losing trades are also my responsibility but over which I currently seem to have little control. I can work on that. Leverage is a function of risk and position size and also under my direct control.

My point being that all things over which I have direct control are already in place. What I need more work on is limiting the number and size of losing trades. I don't need to expend any energy over the profitable ones.

just like advertising dude ..............50% of what you spend is wasted .....but you can never find out how to identify that 50% ........

N

 

[NVP]

FX trading is not just all guessing - it can be predicted with high probability on short time scales- like weather reading

i can read the weather normally brilliantly - over next 5 - 15 or even 30 mins

Ask me to guess the weather in 10 hrs time or next week or month - have not got a clue - and really not many have - as its fortune telling
Regards


F

another great analogy ...............watch the morning TV .........if they call it as high pressure then you can guarantee it pretty much will happen as predicted .........as soon as conditions go to low pressure all bets are off re predictions ............just like trading ................learn to read the market to optimise profits .......and stay away from the low pressure !

N

 

[Sigma-D]

The only problem with using metaphor, be they weather or business methods, is that they break down to almost pointlessness at the finer level of detail needed to actually trade. Metaphor is great for broad brushstrokes and general tendencies, similarities and parallels and it's an extremely useful device for getting in the back door of the unconscious mind, but for the delivery of information at a level of specificity necessary for utilisation into profitable trading methods they miss the mark unfortunately.

Not that I'm not grateful for your inputs as it doesn't hurt to review anyone else's opinions regardless of style, format or structure. Nothing is wasted. Bit like a rabbit on the slab.

 

[Devilicus]

I already took your post yesterday on the potential significance of the holy trinity as a signal to do some research. And my efforts have been well repaid already. A pity they are not active these days. Any others you can think of that meet the brief?

In relation to this thread?
Or just other posters who you may not be aware of whose posts you should maybe look into along with some threads etc?

 

[NVP]

The only problem with using metaphor, be they weather or business methods, is that they break down to almost pointlessness at the finer level of detail needed to actually trade. Metaphor is great for broad brushstrokes and general tendencies, similarities and parallels and it's an extremely useful device for getting in the back door of the unconscious mind, but for the delivery of information at a level of specificity necessary for utilisation into profitable trading methods they miss the mark unfortunately.

Not that I'm not grateful for your inputs as it doesn't hurt to review anyone else's opinions regardless of style, format or structure. Nothing is wasted. Bit like a rabbit on the slab.

maybe not for you S .........but using storytelling and analogies is just one of the many essential ways of ensuring information is communicated effectively between parties ......we all work differently

N

 

[Sigma-D]

In relation to this thread?
Or just other posters who you may not be aware of whose posts you should maybe look into along with some threads etc?

The latter. The three members you mentioned yesterday were/are all high quality and I imagine anything they and those like them get round to discussing would be a useful part of my education. But I really don't want to be a pain in the botty so please don't feel obliged to expend a load of effort. Just any other names that spring to mind, whenever they spring to mind would be great.

 

[Sigma-D]

maybe not for you S .........but using storytelling and analogies is just one of the many essential ways of ensuring information is communicated effectively between parties ......we all work differently

N

Yes, I wasn't disputing its worth as a useful device when considering the wider perspectives, just that it's light on detail which is where we all end up eventually and is what we need to work with at the coalface. I've seen a few threads which meander on for quite some while with soaring generalities and never manage to get their feet on the ground. Interesting reading and useful as far as it went, but they all stop short of being useful in any operational sense.

As you say, we all work differently.

 

[Devilicus]

The latter. The three members you mentioned yesterday were/are all high quality and I imagine anything they and those like them get round to discussing would be a useful part of my education. But I really don't want to be a pain in the botty so please don't feel obliged to expend a load of effort. Just any other names that spring to mind, whenever they spring to mind would be great.

I've sent you a pm with some names and some threads.
I don't know if it necessarily hits the mark, but it can't hurt.
THe glory days have gone, but their words remain

 

[timsk]

I've sent you a pm with some names and some threads.
I don't know if it necessarily hits the mark, but it can't hurt.
THe glory days have gone, but their words remain

Hi Devilicus,
Why not post the list here or at least Cc your PM to me - pretty please! The idea behind the [Best Threads] initiative is to highlight those threads that members' think are of particular value and a cut above the rest.

Tim.

 

[Sigma-D]

There appear to be two primary classes of trader on these boards. The first give away their expertise and experience without fanfare and with consciousness of ego and probably even without self-awareness. You get hit by something profound and realise ‘this is a person to whom I need to pay attention ’. They’ve already brought something to the party, they’ve already delivered and they don’t feel the need to embellish or over-explain. It’s a short, pithy, powerful punch of insight that you instinctively recognise and appreciate.

“Bad advice is worse than none.”

“In reality, you could generally say that the more liquid things are, the tougher they are to trade.”

“Most people cut winners short and let losers run and that is all there is to it.”

The second class are comparatively more verbose, but something happens in my head and the message gets lost en route to the extent I end up wondering if there was any message at all.

 

[Sigma-D]

If the forex market were not random there would be no questions, no seeking no mystery no striving. A causes B causes C. Boilerplate. Operations Manual. Standard business model.

The fact there is so much discussion, styles, techniques, argument, discussion, methods and systems and outright failure is precisely because there is no rhyme nor reason nor logic.

 

[Sigma-D]

How many bulletin boards, books, videos, methods, systems, discussions and training courses are there for the activity of tying shoelaces?

The further you get toward the random end of any spectrum the greater the BS you have to endure.

 

[wallstreetwarrior87]

What I have started to notice is that getting in earlier in any move makes a lot of sense from the potential return perspective but also carries a significantly higher risk of failure to develop. Waiting for the move to be plainly obvious carries little risk in terms of getting the direction right, but significantly more risk of having enough left to make the entry worthwhile.

It makes far more financial sense to wait for the plain as day moves and then get on board for whatever it offers in terms of low risk of loss regardless of the number of pips made, but there is still this possibly quite unhealthy fascination with getting in the the greater portion of the move. Is this just ego?

So would you say these plainly obvious moves were random?????

Or, is it that you can spot them easier? If so, is the market ever random?

There is a massive difference between the market being efficient and the ability to understand efficiency. This is the area which then becomes branded "random".

Then you add your observation about ego:cheesy: Good point BTW.

If we could just admit we dont understand. We would then progress at a much faster rate than protecting our ego by stating that something is random.

Taking it a step further;

We would then work out that it is us as an individual that destroys our true value, and not the costs, spread, time etc.

 

[Sigma-D]

I really enjoyed reading this post. Lots of issues to consider.

So would you say these plainly obvious moves were random?????

If it is random you could expect flat price action, whipsaws, spikes, moves of 3 bars and 30 bars - the whole gamut. Basically everything we see on a spot forex chart could be as a result of random action. If the price has been running along doing not much in particular and then you get 6 up bars, I'm suggesting there is a higher probability of the next bar being an up bar. That's what I mean by 'obvious' moves. Where the price has shown an intent to move in one specific direction and the inherent order of the move sticks out like a sore thumb from the relatively incoherent noise prior to that move.

Or, is it that you can spot them easier? If so, is the market ever random?

I'm not sure. That's the whole point. If I can't tell if it's random or not, treating it as if it is shouldn't make any difference. If I assume there is a technical basis for the price action (which I have been up until recently) it still didn't make any sense as the technicals appear to work as often as they don't - i.e. random.

There is a massive difference between the market being efficient and the ability to understand efficiency. This is the area which then becomes branded "random".

I can't argue with that. But I thought the current view was that markets were not efficient? And if they (forex specifically) were efficient would that make it any easier to discern the method? I can only judge that form price action and technical analysis. That my results are so poor suggests either I'm rubbish as an analyst and/or it's all random and eschews any attempt at layering a veneer of order over it.

If we could just admit we dont understand. We would then progress at a much faster rate than protecting our ego by stating that something is random.
Taking it a step further;

We would then work out that it is us as an individual that destroys our true value, and not the costs, spread, time etc.

I totally acknowledge I get in the way of my trades. If I messed with them less, I'd make more. I'd ideally like to plug my simple approach into the chart and let it get on with without any manual override.